9AM HOUR: After the Massive Sell-Off and AI Rout, NEC Director Hassett on Jobs and Post-Election Markets 11/6/26

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1:06Good Friday morning. Welcome to Squawk on the Street. I'm Carl Quintanillo with David Faber, Mike Santoli, a post-9 of the New York Stock Exchange. Kramer's on assignment. It's a big day for him. He's hosting the CNBC Investing Club annual meeting. And what a day to have it, because stocks are looking for some stability after the biggest single-day route in six years, trying to reclaim 7 ,400 pre-market. Jobs number was solid, better than every forecast at 165K. December Fed odds do jump a bit. 10-year, not quite back to 4.9. Our roadmap begins with tech trying to recover from the sell-off. NASDAQ coming off its worst drop in a year and a half.

1:41MAG 7 sheds more than a trillion in aggregate market cap. Plus, as Carl said, a surprise job support. The U.S. economy added 165 ,000 jobs in October. That was higher than expected. And that man right there is going to help us with the first reaction. NEC Director Kevin Asset will join. And Texas Governor-elect Gina Hinojosa speaking out on data centers, vowing for more protection, adding, quote, there are no rules and laws to protect Texans. We begin with tech on track to recoup some losses from the sell-off yesterday, some on the street expressing concerns, though, about the AI trade going forward.

2:16Goldman has a note this morning saying, quote, continued semis pressure as a result of the view that by 28, we won't have enough data center shells, that is land, power, shell, and therefore we'll likely have too many semiconductors and not enough data center shells for them to go into. Here's a look at how rough a week it's been for the chips, including Marvell, SanDisk down 30 to 30, respectively. The Sox in June, Mike, was a double for the year, now 27%. Yes, up 27%. And I think that's part of the tricky thing here. because it's down almost 40 % from the highs. It's completely following the trajectory of past bubbles.

2:54And so you've done enough damage in the short term, but you still... I think the action this week, and yes, the concerns about are we going to get into an oversupply situation with chips because we can't finish data centers, that's been a rolling issue for months, and now it's a crescendo. It's why Micron trades at under four times forward earnings. The market is saying those earnings aren't going to be there or they're going to be an anomaly because we're going to go into a loss situation at some point in the cycle. But what was fascinating is the velocity of the declines. It got a little bit disorderly.

3:29It showed me that the AI trade was more crowded and there was more complacency than I would have expected. It really seemed like you had cleaned it out to a fair degree coming into this week. And it was poised to rebound. The weird action after the election, it made some sense. Okay, we're going to buy the hyperskills. are going to buy non-AI tech. The market is kind of handicapping a rebalancing of the economy away from AI-led growth. But then it turned out that just the tripwires in semis tripped everything else too, because the rest of the market got overdone to the upside, right? So I hate the whole broadening issue and these pullbacks that are halted because we suddenly buy healthcare and staples just because semis are down and we buy Apple because Nvidia's off.

4:13That stuff broke down yesterday. So I think one of the kind of excesses of this market or one of the strange elements of it for months has been this implausible mechanical rotation that protected the indexes. So now maybe we can have the makings of a real washout. And part of the washout is, you know, getting sentiment, you know, to be very depressed, having reports of hedge fund liquidations and losses, retail selling actually hit yesterday by various measures. So I think that's where we sit The market's oversold enough to bounce. Sometimes you don't want to just see a tentative bounce like this.

4:49But without a doubt, the bear case is having its day. And so now you can make a decision as to whether we've just hit a more stable equilibrium of price, valuation and sober expectations. It's been quite a week, of course. Let's not forget where we came in this week. We were worrying a lot about or talking a lot about capital. Capital being the differentiator in terms of access to it. concerns about it given all the big companies that reported over the last week, almost all of which were negative free cash flow. Amazon enormously, only Microsoft obviously positive free cash flow for the week and sort of trying to work our way through that.

5:28And then we had that Wednesday after the election that I think served in some way to make people perhaps a little complacent in terms of, well, maybe the damage won't be as bad in terms of this fear around a data center slowdown. Yeah, exactly. And because, I mean, obviously we watched Amazon and Alphabet and Microsoft stocks soar on Wednesday. We saw differentiation. It's not like the neoclads were up that day. They were down. We saw those companies that sold to the data center getting hit. And yet then we got the deluge yesterday. And some people were sort of a little surprised, I guess, given they thought the market reaction Wednesday was the one that we could have some faith in.

6:06There was a logical rationale you could you could lay out about that reaction, which was, you know, again, hyperscalers are in a better capital. By the way, Amazon and Microsoft are up for the week. They are, right. So it's not like it's completely gone away. They were still down less yesterday than the broader market. So there are still some people trying to play with some nuance here. I'm pretty receptive to this notion that Goldman's desk put out today, a different note, where they said you essentially had Wednesday everybody taking off their hedges that they had into the election. And so you had a very hedged-up market.

6:36People were waiting. And then you thought you got the relief and the kind of exhale. And so then you came into yesterday less hedged. And also you had some technical tripwires hit in terms of how the sell side navigates the options exposure, all this stuff, right? That's the mechanical piece of it. The bigger story, I think, or what you have to decide on is the market is suggesting in its action we are past peak CapEx growth. We are past peak earnings revision growth. We're probably past peak kind of tech contribution to earnings. Are you adding nominal GDP growth to that as well? Exactly. And so if you have a variant view versus that, the market's giving you an opportunity.

7:20If not, if you think this looks like a real top, because it would look like this if it were a real top, even if it's not. Although maybe the more important Goldman note today is whether this is 98 liquidity or March 2000 structural tech unwind. they would argue it's 98. Once liquidity returned, once the Fed cut, you could resume. It wasn't a complete change of idea. And there's been no sign of a slowdown in compute demand, at least. I mean, AMD, the numbers that we got from Lisa Su and the forecast in terms of being in shortage for 2027, and any number of the companies that have reported or did last week, for the most part, I mean, it's been a pretty uniform theme that it's not about our need for compute.

8:06And when we get to Anthropic, which I'm sure we will, we all know their needs for compute are never stopping, nor are open AIs. So I don't know, Carl, maybe that end demand question, which was in question in March of 2000 in a real way, because we saw significant breakdowns among companies that were the key part of sort of the demand picture on that boom. does not exist right now. And we may slow the ability to deliver on that demand, but it's not as though they're not still asking for it. And to that point, we did hear from Governor-elect Ina Hossa on CNN yesterday talking about Texas being a pro-business state, trying to protect rural communities, give them some leverage as data centers come in.

8:50Here's what she said. We have always been a pro-business state in Texas. But what changes now with me as governor is it has to be a partnership that benefits Texans. And right now what has happened is data centers have moved into mostly rural communities, and there are no rules and laws to protect Texans, and Texans are being taken advantage of. So the difference is we will have laws to protect Texans, and we need to stop what we are doing with data centers until we have those protections. We can have a strong economy, strong industry and protections for the people of Texas. Those things are not mutually exclusive.

9:28And I'll make sure as governor, I lead to ensure that that happens. She was a little more aggressive in her presser about selling land, public land to SpaceX and telling Parks and Wildlife, no further action until I'm in the seat. Yeah, I thought that collectively the remarks were taken as a bit of a comfort in the sense that projects underway, we're not going to halt anything. We're really going to try to just keep things, you know, in bounds in terms of how the new data centers get approved as opposed to, you know, really halting them all together. So, you know, it is kind of interesting that we saw it coming, maybe not to the degree in terms of the political response.

10:06And now it's, I think, a matter of we're challenging a lot of the sort of lazy positioning, which came at a time when we've already been going through this deal where the credit markets are rationing access, you know, to these projects. So I don't know that it was just about, oh, no, they're going to be banned. It's about maybe we're kind of all the incentives point to overbuilding. Right. I mean, that's what we kind of know. And so you were willing to play the bottleneck because even if you're overbuilding, they're going to be beneficiaries. And when credit and capital, you know, David, as you say, are the constraint, there's nothing to buy.

10:39Right. There's no bottleneck to buy. Right. NVIDIA with GPU bottleneck, you could buy it. Hyperscalar capacity, you could buy it. Memory was a scarcity, you could buy it. AI, industrial power, you could buy those sectors. If credit and capital are the constraint, there's nothing to buy. Except treasuries. You know, and that's what's been going on for a month. Yeah, indeed. Mortgage rates down to 717. That's pretty remarkable. Meantime, the president this morning taking to Truth Social, responding to Tuesday's midterm losses in the pullback in the market yesterday, saying, quote, you only have yourselves to blame, calling the market drop such a sad thing to watch, and then voicing his support of the AI trade today, saying he's 100 % in favor of, as he calls it, superintelligence, and will work with the many states in the U.S.

11:26that want to become rich by having them. They are gold, and only foolish leadership will say no. Joining us to discuss that first reaction to the jobs number at the White House this morning is National Economic Council director Kevin Hassett. Kevin, happy Friday. Always good to have you with us. Hey, good morning, guys. Of course. I don't want to get in the way of the jobs number, but can you expand a bit on how the president is thinking about the SI build out? Sure, absolutely. We've spoken about it quite a bit. The president has a strong federalist view that any, you know, locality that doesn't want to have a data center doesn't have to allow the data center into their town.

12:04But that the benefits over time of job creation, lower energy prices because they're bringing in power generation and so on will be apparent to some. And the people who choose to put data centers around the country will probably see big positive benefits from that. And the bottom line is that we saw something like 40 ballot initiatives. They were trying to constrain data centers. And, you know, we respect the localities that decide that's what they want to do. But America is a big place. And right now, the data centers scheduled over the next couple of years aren't affected by these ballot initiatives.

12:40And the stuff after that, you know, there's plenty of room in the U.S. for data center growth to continue as it was projected ahead of the election. Would you then expect migration of projects into states where governors are supportive? Yeah, that's exactly what's going to happen. Or what will happen will be that the benefits of the data centers will be so obvious that people decide to change their minds about the way they regulate them. But, you know, it's a fast-moving thing. It's a new thing. definitely if you ride around DC if you go over to Loudoun County that you see a lot of big data centers and it's changing the character of communities and we want the communities to decide you know do I have space where we can do that over there and it doesn't change the character of my community or is it really going to fundamentally alter my community and I think it's just right in the democratic process for people to make that decision on their own locally.

13:34Jobs number was good as we said at the top it beat every forecast at 165. factory 19 K is the highest since the fall of 23 I assume you think some good things are kicking in yeah I think that that if you look at all the data that we got this week that you know we had initial claims for unemployment insurance about the lowest we've ever seen which means that people aren't getting fired and you know getting fired is one of those things that has the biggest disruptive effect on people's lives and on the economy a second thing we saw from the joltz data was that people were actually quitting. So people think the data market is so strong that they can leave their job and go look for another job, maybe because they don't like their boss or they want a higher salary.

14:18And now we see a jobs number that's through the roof. It's more than double the consensus. And the revisions for the previous couple of months were up about 80 ,000. And so we're now looking at the last three months of really runaway job growth. Basically, low, low initial claims. The unemployment rate even went down and labor force participation went up. And so that's as good a job market as you're likely to see. And Kevin, are you concerned at all, as occasionally Wall Street has been, about the dependence of economic growth on the AI CapEx trend, whether we're getting an unbalanced economy, if that's in fact where most of the momentum is from?

15:02You know, it's actually a worthy concern. But if you look at the numbers, then the thing that really jumps out at me, and you guys have heard me talk about it on the show before, is that the factory construction jobs, which are really, you know, very often related to, like, drug company announcements or expansion and auto production and so on. But factory construction jobs are now up to about 120 ,000 since President Trump took office. And so those factories are being built. And as the factories are being built, they're going to create jobs. They're going to create output. And it's really, really positive.

15:34So if you think the 3.4 % GDP growth we just saw was a peak, then you've got a problem making that case given how much construction, factory construction there is. And it's not just data centers, not at all. Kevin, market's been going through a lot this week, as you know. Two questions on it. One, are you thinking about wealth effects going into 27 and more of a drag on consumer? And do you expect the president to give a more expansive talk about the markets and the economy? Because some argue this week has largely been heavy on pools and ballrooms and the Oval. Well, first of all, you know, it's an election week.

16:16And so people are talking about a lot of other things beside the economy. But in the end, you know, economists like me, our job is to just explain truthfully what's going on in the data. The data right now are singing a beautiful song. And I expect that the momentum from that is going to continue. Now, the market dropped a lot yesterday, I think, in part because data centers have been a big, big part of the financial market story. And there's a lot of uncertainty about what the political change is going to mean for data centers going forward and for the companies that have these very intricate relationships with each other, where they're lending money to each other to buy chips and then renting space on the chips that they just sold to the guys and so on.

16:58So it is a somewhat complicated process and we've now got a new majority that maybe is going to go in there and muddle around in there and I think that markets are anxious about that. But I think that the economic strength that we see everywhere else is so strong and of course in the end you could take something that's growing as fast as the data centers and make it grow a little bit slower, and you still have a blockbuster economy. And so I think we're still very, very optimistic about what's going to happen going forward. Kevin, if it's a kind of blockbuster economy, we have job growth above trend today.

17:33You know, we still have also had those tightening financial conditions around the edges. Where do you think that interplay is between those circumstances and what the Fed is likely to do in the next meeting or two? Well, I think that we'll, again, respect the judgment of Kevin Warsh and the Fed, and they'll be watching the data. You know, I think Kevin gave a really interesting speech where he talked about how he's going to be focused like a laser beam on the inflation data, and that just because we've got some growth or some employment growth like we see today, that doesn't mean they have to hike.

18:05You know, what he wants to do is see is it supply side, demand side. If it's supply side, then you can have growth without runaway inflation. And so they'll watch the inflation data closely and decide what the right thing to do is. But again, I think we've got supply-side-driven growth. I've been making the case for a couple of years. Inflation should be decelerating because of that. And I think that that's more or less what we've been seeing, aside from the blip from last month. Finally, Kevin, Kramer and David and I earlier in the week were doing a parlor game on at what point would the government ring the register and sell some intel?

18:38Is that even a discussion these days? It absolutely is something that people have talked about, like what the ramp looks like down the road, but I don't have anything to share with that. I think that the president and the team are very excited about the deal they made with Intel, and they think that it's been really reassuring to see the company turn around so sharply over time. I know that there's hiccups in all the chip companies over the last couple of weeks, but we think that production of chips in the US is a key national security issue and the fact that Intel isn't going anywhere is really good news for American security and for the American chip market.

19:22Kevin, appreciate it. I hope to talk again soon. Have a good weekend. Kevin Hassett. Okay, thanks guys. Take a look at the pre-market here. Some movers to get to, and we'll dive a little deeper into the jobs internals. You can see Dow futures a little bit weaker here, but NASDAQ is looking for a bounce on some oversold conditions, as Mike said. Stay with us. With the Discovered Cashback Card, it's payback time when you earn cash back on everyday purchases. Activate and earn 5 % cash back at different categories each quarter on up to$1 ,500 in purchases. That's 5 % cash back at different places each quarter, like grocery stores, on gas, and at restaurants.

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20:37They 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. 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. We promised you a surprise guest. It's actually our partner, Jim Kramer, who's here ahead of his annual club meeting today.

21:12Jim, you're busy today. I know, and I've got a good speech to give in a few minutes. It's not all that positive, to be honest. But I was just up there, and there's kind of a metaphor I'm worried about. The theme music they're using for me is timber. And I don't want that to happen, but you never know. Can you share some thoughts about yesterday? Yeah. I mean, I think that yesterday was two parts. I think some of it is about Iran having a good quarter last night. It's about the neoclouds. I mean, you're a county official, and you see the vote. So you're doing a deal with Nebius and you say, oh, who's Nebius?

21:49That's changed. That's something to worry about. Those three companies, Jensen, of course, Jensen wanted backing those. And then I talk about what really happened yesterday, because I would think that why do these stocks that have nothing to do with tech go down? And that, I think, is, yes, there could be capital gains coming that's going to make it so that we have less money in the market. And, of course, corporate tax go up. Now, that's 2028. But in a couple of months, that's what we're going to be thinking about is 2028. I wish I had more positives because I think price can be a positive. I do think that maybe I'm too bullish on this, but if Anthropic can just get done, then I think I'd feel better.

22:27Well, I'm glad you brought it up because it's still, you know, of course, a key for this market, frankly, is Anthropic and the potential initial public offering of that leading AI lab. And many of us expect perhaps it would get priced as soon as a couple of weeks from now. So not next week, but the week after. But we'll see, given this market action, Jim. I mean, you know, you've got to figure out what can clear what price and what size. And that certainly seems to be coming in. So any ideas around$2 trillion, maybe even around$1.5 trillion, may be overdone. What is also key is filling in that blank in that S1, which we still don't know.

23:03There are numbers around now being reported of annual revenue run rate for the company. Is it more than$80 billion? Could it even be approaching$90 billion? We don't know the number. I don't feel comfortable going with the number at this point. I know others are sort of reporting things around. We'll see. But it's still a key, as we used to talk about, to this market, what that number will be because it undergirds so much else. Even if you do have a slowdown in data center demand. Exactly right. I know, Michael, you had some good comments. The semis, we don't really have a bounce level. Doesn't that concern you that there's no place we can just say, AMD, it's this price?

23:42Yeah. I mean, we're still, like I said, up 20%. I think you need about a 20 % rally from here in the socks to get back to the 20-day moving average. That's the definition of is it a dead cap bounce or not. But I do kind of regret. I don't know if you think the valuation of Anthropica is a little bit less important than getting it out and getting the cash in the door. and then, you know, right? I mean, if it's a down round versus the last private valuation, you're still going to be selling, even at$1.3 trillion, if you sell$100 billion, you're still selling a relatively small percentage of the overall company.

24:13You want to set yourself up as well, though, for being able to hit the market again at some point because their capital needs are never ending. And getting, you know, access to the credit markets with the cash you have on the balance sheet. Now, there is some question as to whether they would be anywhere near investment grade. But, you know, just to remind people from the amended S1, we got on Monday. It's been a long week. Total committed spend is$895.4 billion,$447.5 billion expected before the end of 2030. That's a lot of money. Now, they do have$130 plus billion on the balance sheet or something around that in cash and marketable securities.

24:47They could raise another$100 billion in a deal if they get it done. So that gives them some cushion for a while. But you want to price it, Mike, so you can also get back to the market at some point. I assume so. But I do think, Carl, one of the problems we have, again, is that there was a mandate. Now, we talked about a clearing event at the election. We didn't think it would be a clearing event that would attack us. Exactly. But I do think that if I am an analyst who's trying to get ahead of this, I might just say I want to take numbers down XYZ. And if we take numbers down, let's say, for SanDisk, we suddenly cut SanDisk.

25:21We had some people cutting Qualcomm, but that's really about it. We take numbers down for, dare I say, micron. What would happen is we could have another leg down. And that maybe takes us to some level of support. But AMD was at 200 just a couple of months ago. I mean, real quick, Jim, because you've got the open bill. NVIDIA is what? 12, 13 times next year. OK, NVIDIA is actually at support level. That's the only one that's at support level. You going to stick around or you got to go? I can stick around. Are you kidding me? Let's get the opening bell here at the big board on Wall Street. It's a Hawaiian-based American Savings Bank.

25:59Made its debut in December at the NASDAQ in Times Square. It's Canary Capital. A digital asset investment management firm celebrating the launch of the objective stake ETM. And it's SIBO in Chicago. It's the SIBO Global Derivatives Annual Summit. As we're going to open just shy of levels, Jim, that were sort of midday bounces yesterday. I do think that it is Friday. I didn't want a real down opening because that could actually control the negative thinking. I'm seeing stocks like Procter and Walmart getting hit. And I'm trying to figure out, literally, this is how fraught this market is, whether that's good or not.

26:40I mean, do we want some of these safety stocks to get hit because the employment number wasn't bad? And we certainly don't want a recession. on. Well, actually, hiring breadth got better, not worse. Yes. We're moving farther away from a recessionary level of hiring breadth. I mean, do I want Fed Chief Warsh to get even more hawkish? I want Fed Chief Warsh to be predictable, which so far he has been. David, you know that we are in a backdrop. Let's go back to Wednesday. Maybe we have lower oil because the war goes away. Tariffs go away. We need that thesis to come back. And the thesis of you're not in my backyard, NIMBY data center to somehow be put a little up.

27:22Yeah. I mean, right. If you get inflationary fears sort of receding a bit. That said, we're going to be debating the impact of the Democratic blue wave for quite some time. I mean, Jim, we don't know. We have no real sense as to how much data center construction will truly be slowed. How much to Kevin Hassett's points and others will simply move to other states. I see, you know, Google is starting something in Wyoming, for example, which has abundant natural gas, I think, or you tell me. Geothermal. And a lot of land. Did you see Michael Semblis, his piece yesterday, he did a dot plot about where people were against data centers and where they were for.

28:05Well, the dot plot to the left looked like just a sea of blue even was supposed to be dots. That's against. And to the right was North Dakota. Hubbard was the only, or Harwood, North Dakota was the only town that turned down a restriction measure. That town is going to be more data centers there than any place in the universe. Oh, by the way, we had Kathy Wood on. She talked about the better to have them in the space. Google did a piece which says they only cost 100 times more if you put them in North Dakota. Although Jonas this morning is writing about Elon adding a million jobs. Yeah, Jonas.

28:39Wow. And you heard Ron Barron on Squawk. Yeah, but look, it's great to have all the bulls come out. We need them. Because we need a washout. We need them to be completely different. You want to know where to hide. Right. We want to know where to hide. And I think that's been the problem with this market for a while is there was always something to offset some of the concerns. By the way, week to date, SpaceX and Tesla together accounted for like 10 % of the decline in the NASDAQ 100. That's kind of an anti, you know, that's an election reaction in itself of a different sort. Obviously, there's data center stuff in there, too.

29:11But it is interesting. They're trying to bounce today, as you see. Well, you would have anticipated that SpaceX is viewed as a hyperscaler, potentially, as obviously one of the key companies offering compute. Or is it the biggest neocloud? I mean, that's the kind. I know. Right, I know. I try to not call them that. The thesis is the same in the sense of the reason Amazon and Microsoft are performing better in the broader market this week, is that conceivably the price of compute will only become more dear, right? Per gigawatt hour will only go up if there's less of it available in the future. By the way, we're going to say goodbye to the Cybertruck as they end production of that car.

29:45And may I just say goodbye to me? Not yet. And then Lilly market cap is almost to Teslas this morning. Wow. Yeah. Not much separating those two now. You know, it's funny. Lilly has been a beacon throughout this, but we don't talk about it enough. In part because it's been a beacon forever. But I do believe that Lilly is a$2 trillion stock. I think it's going to be. Double the Langone prediction. I think you have to take it up because when we had Dave Ricks on the show, I mean, the studies that they're doing now, and they all tend to be actually going really well, indicate that you need about 15 % of the populace on GOP-1 to really get the maximum out of it.

30:24What does that mean? Well, that so many people will be better off. The system will be saved by that many people. The health care system will actually end up saving money. Okay, I'm going to give you one. But I was talking to someone who was positive on AI. And I said, after calling him a damn fool, not understanding what Tuesday was about, he goes, all right, how about this? Your grandchildren are going to live to 175. That's what AI is about. That's what they should be selling it for. I said, but how about me? Now, he goes, the same. And I go, oh, OK, well, my grandchildren are going to have so much federal debt.

30:55What do they want to do at 175? He goes, no, don't lose the narrative. The narrative that the people are not promoting, even Jonas, is maybe dramatically longer life. And David, I know you're so grouchy yet, but you're grouchy at this age. At 150, you would be a nightmare. Remember the day Larry Fink came on and talked about retirements are going to have to be completely rethought? Yes. If you're going to live to 110. I don't know what we're going to be doing all day long, but yeah, okay. Well, I've seasoned tickets to the Eagles, so I could just... Maybe they'll speed that. I could have 50 years of money.

31:29That's eight Sundays a year. All right. What else? But look, I just find that the narrative, we've got to get the narrative. It's very hard because David Ricks is really the only guy from health care that has been able to tell a story about AI. Brian Chesky last night told a very good story about how Gen Z demanded AI in order to be able to travel. His stock is bucking this trend. This is almost an all-time high here this morning on Airbnb. Back above 190, I think, at the open here. That's nice. That's a real counterintuitive move, yeah. Oh, my God. Let me ask you. Michael, one of the problems I'm having is that I see a lot of people still feel what I would regard is that that's just a couple of hedge funds.

32:08Once they're clear, we're fine, like Leopold. But I don't think this is a Leopold situation. It doesn't seem like it is right now in terms of it being this sort of like localized, concentrated, one real note of leverage. Now, I mean, I think it's part of the process. You want it to get a little sloppy and have people de-risk and reset everything. But it's not clear to me that it is that kind of, like, moment as opposed to a process. Yeah, it's not a crescendo. And by the way, the 98 thing. That's my issue with the 98 thing, too. Paul Cain should talk about a crescendo. Where's the crescendo? But that said, October was a brutal month for so many of these hedge funds.

32:43I mean, Gavin Baker got—I mean, so many of them. I don't want to—got crushed. And then they come into this. There are some that are basically going to be done. We didn't show the low, huggier hedge fund manager. Yeah, Dan, I love your hedge fund manager. But, I mean, yesterday was particularly rough. I don't know how much is capitulation. Maybe a good amount of it at this point. Where in terms of would you rank people? Hedge fund managers, data center builders. I mean, where just in the circles of hell? In the circle of, yeah, favorite people of the current electorate. A notch below child molester.

33:20What do you think they're going to want to know today at your meeting, especially after the retail action yesterday. Well, that's funny. I just had this terrible moment when I laughed, and I start my speech by saying, listen, we're not in a laughing mood. Why? Because the losses could really compound here as people try to gravitate to other sections. And I think that they almost have to because the concentration of what turned out to be data center is a little broader than a lot of people were thinking. You felt like you were being protected. And the best one is the one that you've brought up repeatedly, which is catapult.

33:52Ah, cat. I mean, Caterpillar was a company that was doing great. They didn't raise the numbers. We didn't know how that happened. David was working on the Monarch Project, David, right? What project? The Monarch Project. Yes, of course. Which is the huge number of Caterpillar engines put together. And we didn't know, but they actually have a bit of a pollution problem. I think the new blue wave is not going to want that. Wow. Yeah, 550 yesterday. The moves have been extraordinary. That said, we do have a significant rebound in some of the most beaten down names. Dell is up about 7.5 % after watching its stock down, what, 40 % in a month?

34:28Dell and AMD are the two best quarters, so those are the ones. AMD shares a rebounding of the tune of about 10%, NVIDIA about 6%, Oracle not that much, 2.5%, but just keeping an eye on so many of the names that have been. You want to look at what percentage of yesterday's loss you're getting back. That's what you're working against a little bit. Even Marvell is up. Marvell? Marvell. Shocking. Oh, my God. Yes. There's a law that we're going to pass like Camelot. But I'm going to stress, actually, the worries, the woes after the blue wave. I will say, obviously, there's pockets of opportunities.

35:05But my point is, is that the blue wave has not been fully discounted in the market because it turned out to be so such a repudiation of many things that we even do. I felt that it was a repudiation of big money. I mean, almost 1896, the silver, you know, there's a cost of gold speech. It's William Jennings Bryan. And he wins. He won in that Tuesday election. Last one I'll throw at you, Jim, is the firm. There was some quarter-on-quarter increase in 30-day-plus non-performing, tax peloton. Yes. Now, look, I went over that with Max Levchin, and he pretty much convinced me not to worry. Look, I know that you should never look at any delinquencies that spike and say not to worry.

35:49But I've come to know Max over multiple years, and he's been right in saying that this is seasonal. He's been right in saying this can be explained. I think he is the kind of banker that is going to fit well in the new regime of Senator Warren because he doesn't charge interest. You know, that historically has been his method. By the way, I signed up. David, you'll love this. Yes. I signed up for a credit line. I got it in 90 seconds. Really? Yeah. I got a card. And I got the information. I'm not kidding. 90 seconds. 90 seconds. Great. What are you going to do with it? You're going to buy another house?

36:24Well, no. Okay, good. No, I'm going to buy stock on margin with my card. Perfect. That sounds like a great idea. Actually, yeah, maybe you should do those zero-day options. Some states you can fund a DraftKings account with a credit card. Oh, geez, they missed the account. Yeah. All right, so last question I have. Last year, we have this tape with me. Last year, I did not have my glasses. You mean for the meeting? For the annual meeting. Okay. Yes, glasses, no glasses. I kind of like them. I make glasses. Yes. I use them as a point sometimes. I make glasses. I don't know who I'm talking to when I make that point.

36:57You know, Carl. They make you a little less crazy, the glasses. Yeah. Oh, okay. There you go. I guess that's what I want. Less crazy. We'll be listening or watching. Thank you. But I wanted to come by. It's a big day. I didn't want to dismiss what's going on here. I'm so happy you did. I was sad that you weren't here to begin with. Not that I don't love having Mike here also. This is an embarrassment of bridges. Do you know what's your biggest week next week? Do you know what reports? No. Does it Paramount report? What? Oh, my God. Paramount Day is what? Actually, that'll be my word. Were you Skydance for us?

37:32By the way, Jim, you weren't here for me talking about Charter, which is down about 5.5%. Got a$20 billion market value. It's almost an equity stub at this point. It's the debt side of Charter. The large cable company under the Spectrum brand, of course, offering wireless and broadband services. I will say this. Good. Where do they offer? Because I have it. I don't see anything. Only 77 ,000 in the third quarter. 77 ,000? That was better than the 112 ,000 from a year ago, and they only lost 256 ,000 video customers over the course of the last 12 months. Oh. Not bad for our parent company. They can do that for a long time.

38:08It's only 1.8 % of their overall that they lost. And we don't even have Starlink. I'm switching to Starlink, a point for Charter, and I'm willing to pay Starlink 10 times whatever they're asking for. What is upsetting investors this morning on Charter is the loss of 233 ,000 Internet or broadband customers. Remember, they also own Cox now as well. It's a large company here with some 34.3 million Internet customers in the country. The last question I have. Yes. Will you be, maybe marry one of my, get divorced, marry one of my kids? Because this T-Mobile$800 duo is for family members only. So I won't be able to get you one of the five.

38:48So are you still going to get five or are you just down to four? I am going to get five. Okay. No, I just wanted you to join my family. I can get six and really crush it. So anyway, guys, I got to go to my annual meeting. Yes, let's go. Thank you so much. Thank you for coming on. That was good. It only happens once a year. He is. I mean, yeah, you, you. All right. Thanks, Jim. Oh, I did want to mention, so everyone should be pegging. Jim, you've got to go. No, everyone should be pegging you in this column this morning. She works in the Manchurian Candidate, and she works in the Godfather, and finishes with a face in the crown.

39:23One of her best columns ever. She's been on fire lately. Thanks, Jim. Thank you. So, Mike, above or close to 7 ,400 here, kind of the inverse action of yesterday. Best down name is NVIDIA. Worst name is Walmart. Yeah, I mean, most stocks are down, so we have another kind of decline in the average stock, but you are seeing the hardest hit mega caps start to work a little bit. So it's starting with the most washed out sectors building from there. You know, you do have this little lift in Treasury yields in response to the jobs number. It's not in a zone where the absolute, you know, levels are going to be threatening.

39:56Could be a complication if we start to rebuild expectations for December rate hike, but that's not really today's business. started to talk about that 1998 analogy. And I think there's a little bit of a struggle for people to reach for things that in retrospect look like there was a silver bullet solution, which was in 1998, you had, you know, obviously Greenspan. It was a global margin call. It was a macro event. It was not different sectors of the economy trying to rationalize their valuations and their earnings. And then everyone yesterday was talking about Liberation Day. And, you know, There was sort of some elements are as oversold since Liberation Day.

40:33The volatility index of the Nasdaq and the S &P are up there again. And I feel like people are, in retrospect, thinking that it was a more easy and obvious call than it was to say that if the president walked back a little bit, we were going to rip to new highs. First of all, the S &P was down almost 20 percent in a few weeks. It wasn't like we just had a 6 percent decline. And I think at the time there was a rational belief that the administration wanted to buckle the economy. They were talking about pain before gain. They were saying this is what we need to do. And I think there was a rational belief that it wasn't going to be an easy fix.

41:11So right now, I don't think it helps to think in those terms. I think it's mostly about it's a correction until proven otherwise. You've definitely wrung out a lot of the valuation excess. You've reset sentiment a fair degree. The problem is, as I said, ultimate market peaks look like this, with valuation compression and peak earnings and all the rest of it. So it's hard to tell one from the other in the moment. I do think that the way the market responds to these oversold levels is going to be a big help. And again, it's a process, not a moment. Do options get more dangerous in an environment where the S &P demonstrated it can drop 3 % in a day?

41:50I mean, they get repriced, that's for sure. I mean, arguably, with what the hedge funds were dealing with in October and what the overall market mechanics have been, the real bubble has been in the dispersion trade. So everybody, implicitly or not, was long dispersion, which is meant to mean if one part of the market goes down, another one goes up, there's always a way to rotate away from danger. And that has been finally pierced a little bit. That didn't work in October. That was the main reason, right? All their hedges actually went in their face. Yesterday, we had the first 80 % of all volume to the downside in a year.

42:26Yeah. And so I do think you're coming to some interesting levels. If you look at the NASDAQ 100 on a two-year basis, you've declined almost to the 2025 highs. So it's kind of like, I don't want to say now or never, but it's sort of really a reset back to a world before you got this bonanza of earnings this year. Let's keep that in mind. We went from, you know, 30 times on the NASDAQ 100 to down, you know, probably in the low 20s now. Yeah. Although now there's discussion. I mean, if the three month average for jobs is going to be 137, do wages follow? Then do margins follow? Wages did actually outperform.

43:02Yeah. 3-1 was a beat. Yeah. Yeah. Outperform a little bit. I don't think it's time to, you know, extrapolate that for now. And I think the market is OK with where macro is. It's much more about, you know, can we survive any retrenchment in data center expectations? That's definitely the story of the bond market this morning. Trying to balance what's important this moment in time on the jobs number or perhaps a rethink of GDP growth in the coming year as a result of the data center story. But the 10-year, still at 488. Don't go anywhere. Weren't agents supposed to take things off your plate? Building another to handle the others is a bit much.

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45:02Welcome back to Squawk on the Street. I'm Sarah Eisen today in Pebble Beach, California. What a time for a tech conference with this market setup. But I'm here to speak to some of the biggest players on the front lines of the AI revolution. Starting in the next hour, you'll hear from Jane Frazier, the CEO of Citigroup, the host of Today. You'll hear from Sarah Fryer, CFO of OpenAI, on what's going on with fundraising there and the data center build out. And Enrique Loras, his first interview since taking the helm at PayPal about eight months ago, rebuffing a takeover offer and trying to engineer a turnaround.

45:36It's a big hour coming up when we come back on Squawk on the Street. According to our research, longer term, it will bring more power and lower electricity prices into these communities. Right now, they're thinking about higher electricity prices. And we're seeing natural gas prices falling here in the United States. This is locally priced. Natural gas powers a lot of our electricity. And I think that is going to start coming through. It's a market force that will come through and I think ameliorate some of the concerns out there. That's Art's Kathy Wood on Morning Call this morning offering her perspectives on data centers.

46:19The Innovation Fund is an interesting chart. It's not good on five-year, but it's not bad on two-year. Yeah, it's participated on the two-year. Obviously, you know, the kind of, I mean, SpaceX doesn't hurt and Tesla and all the rest of it. And the fact that we've gotten, you know, the AI trade kicking in. I don't think a lot of people doubt that the build, the infrastructure creation that we're doing is probably going to lead to greater capacity in very good ways. Yeah, the issue now is nobody wants it the way it's being done. They didn't ask for it. They don't want it in their neighborhood. And, you know, I think that has to be sorted.

46:56I mean, there's an instinct to say if 80 % of everybody agrees on something, it's probably overstated what the problems are. Maybe. I do want to just step back for a moment and remind people the labs continue to move forward at an exponential pace. And we are getting closer at Anthropic to recursive self-improvement, basically where the models create the next model without really any human intervention whatsoever. And by the way, the design of the chips, which is now being added so much by AI, Jalapeno, for example, from OpenAI, are becoming much more energy efficient. Well, that's the issue. There are things happening under the surface that could change the whole equation anyway.

47:33Right. So the slower it goes, the more it seems like this way of doing it, brute force, the number of electrons is all that matters, maybe looks like it gets disrupted and you get stranded assets. I know. It'd be smart to have some delays. Could be. It could, hopefully. Of course, people have figured it out. To the degree we're watching the bounce activity today, NASDAQ with a gain here of almost one and two-thirds percent. Dow, of course, slightly negative. And we're above 7 ,400. And the Russell went from a pretty deep loss to a gain now. So trying it. We're trying it. Back in a moment. You've been listening to the opening hour of CNBC's Squawk on the Street.

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48:41To 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. 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.