Bill to end shutdown moves to House, CoreWeave cuts full-year sales outlook

Here's a detailed summary of the YouTube video transcript:

Key Concepts

• Market Overview: Mixed market sentiment ahead of the opening bell, with S&P 500 and Nasdaq futures showing downward momentum, while the Dow holds flat to slightly positive.
• Government Shutdown: The longest government shutdown in history is nearing its end, with the Senate passing legislation to reopen it. Expected to impact Q4 GDP but rebound in Q1.
• Economic Data: The shutdown has led to a lack of crucial economic data, making it difficult to assess the economy and for the Federal Reserve to set monetary policy.
• Consumer Sentiment: Concerns about the impact of the shutdown on consumer psychology, particularly for lower and middle-income households, despite overall strong earnings.
• AI Trade: Continued focus on AI stocks, with mixed signals from individual company performance and investor sentiment regarding a potential bubble.
• Coreweave: A notable AI-related stock experiencing a significant sell-off after its quarterly results and a disappointing 2025 annual sales forecast.
• Nvidia: SoftBank's sale of its Nvidia stake for $5.8 billion is a point of discussion, though SoftBank claims it's unrelated to Nvidia's performance.
• Federal Reserve Policy: Expectations lean towards a 25 basis point rate cut in December, with a 50 basis point cut considered unlikely unless there's a drastic drop in jobs.
• Delta Airlines: Highlighted as a well-run company in a challenging industry, trading at a low forward P/E ratio, but facing headwinds from the government shutdown and industry-specific issues.
• Tech Catalysts: Discussion on potential future drivers for the tech sector beyond the AI trade, including continued earnings growth from "Mag 7" companies, the transition to AI solutions, and potential rate cuts.

Market Performance and Opening Bell

The broadcast opens with a mixed market picture just before the NASDAQ opening bell. S&P 500 futures are down over 0.2%, the Dow is roughly flat, and the Nasdaq is experiencing downward momentum, down about 0.5%. This follows a strong rally on Monday, where the S&P 500 saw one of its largest single-day gains in a month (up 1.5%). However, momentum has stalled, with Nvidia and other AI players seeing a slight dip. The Dow is holding onto some positive momentum, up about 0.2%.

Trending Tickers and Earnings

Coreweave is a significant trending ticker, down over 9% at the open. Despite beating quarterly expectations, the company's 2025 annual sales forecast fell below Wall Street's expectations, leading to a sell-off. This highlights the market's sensitivity to forward-looking guidance, especially in the AI sector.

The Nasdaq is seeing a pullback this morning after strong momentum yesterday. Nvidia is down over 2%, and Tesla is down nearly 1.5%. These were notable gainers on Monday.

However, there are bright spots:

• T-Mobile is up 1.6% at the open.
• Gilead Sciences is up over 1%.

The Dow is holding onto momentum, with top gainers including Home Depot (ahead of its report next week) and Clorox. Merk & Company is also up about 1%. The overall picture at the open is mixed, with the Dow showing resilience while the Nasdaq and S&P 500 are moving lower.

Earnings Season and Government Shutdown

The discussion touches on the prolonged nature of earnings season, humorously described as a "big blob" that will continue until December.

Government Shutdown Update

Jennifer Shanberger reports on the government shutdown, noting that the Senate voted to reopen the government with eight Democrats joining Republicans. The legislation now moves to the House, with a vote expected on Wednesday. President Trump has indicated he will sign the bill, leading to an expected government reopening by Thursday or Friday. This shutdown is estimated to have lasted about six weeks.

Economic Impact of Shutdown:

• GDP: The Congressional Budget Office (CBO) estimated a 1.5% hit to Q4 GDP, with a rebound to 2.2% expected in Q1.
• Data Lag: The shutdown has resulted in a lack of official government data, which is crucial for investors and the Federal Reserve. The September jobs report, already collected, will likely appear stale. The economic picture is expected to remain "foggy" for a while due to the need to collect new data and the impact of furloughs.

Market Psychology and Consumer Impact

Lou Bassin expresses surprise at how long the shutdown has lasted, noting that markets typically treat shutdowns as "political theater" rather than a significant risk. However, this shutdown has begun to affect "Main Street." Bassin is concerned about the psychological impact on consumers, especially those working without pay, and the potential for ripple effects on government services and economic growth. He points to fast-casual restaurants like Chipotle struggling as a potential indicator of the consumer reaching a breaking point. Despite these concerns, Bassin emphasizes that he trades based on earnings and cash flows, which have been strong overall, creating opportunities even as the market hits new all-time highs.

Consumer Spending and Fed Policy

Brian Sazi and Lou Bassin discuss the risk of potentially weak economic data to a market at record highs. Bassin believes investors are banking on the Federal Reserve cutting rates in response to weak data. He anticipates a 25 basis point cut, not a 50 basis point cut in December, as suggested by some Fed presidents. Bassin notes that historically, the consumer has been surprisingly resilient, with only two periods of quarter-over-quarter declines in consumer spending (during the financial crisis and COVID-19). He is watching to see if the current situation is an anomaly.

Jennifer Shanberger adds to the consumer discussion, highlighting that while there's a deal to reopen the government, there's no deal yet on healthcare premiums. She reiterates the "K-shaped economy" where the higher-end consumer is doing well, but the middle to lower-income consumer is struggling. Increased healthcare premiums will further pressure consumer spending.

Brooke De Palmer mentions speaking with an economist who believes the low-income consumer is already in a recession. De Palmer is watching for results from Walmart and dollar stores, as these companies provide insights into both low- and high-income consumer behavior, with consumers seeking value and lower prices. She notes that even government workers living paycheck-to-paycheck have been significantly impacted by the shutdown, while others are managing, but are being "choiceful" and "mindful" heading into the holidays. The end of the shutdown before the holiday season is crucial for retailers.

Federal Reserve Rate Cut Expectations

Regarding a potential 50 basis point rate cut in December, Jennifer Shanberger states it's "completely off the table" unless there's a drastic reduction in jobs. Fed officials indicate continued softening and potential fragility in the labor market, but not an emergency situation, supporting a 25 basis point cut. She recalls speaking with Fed Governor Steven Myron, who, after ADP data (and before Challenger data showing major layoffs), suggested continued softness but not a changed economic snapshot. The median expectation was for three cuts this year, making another rate cut in December a reasonable scenario, but likely 25 basis points.

The AI Trade and Coreweave Analysis

Lou Bassin addresses the AI trade, specifically Coreweave. He views Coreweave as an outlier, suggesting it was primarily a reseller. He contrasts this with other companies in the AI utility and energy trade, like Wolf and Cipher Mining, which are announcing numerous deals, indicating intact growth. Bassin sees SoftBank's Nvidia stake sale as a "victory lap" for SoftBank rather than a warning sign, given their history of private investments. He sees no demand destruction in the AI space, citing strong results from AMD, chipmakers, and increased capex from hyperscalers for data centers, all pointing to stronger demand. The key question, he notes, is whether this demand translates into profits for hyperscalers.

Brooke De Palmer provides an update on Coreweave's price targets and analysis. The stock is moving lower, down over 12% at the open. The YF tools show an "exorbitant" P/E ratio. Over the past three months, the stock is down over 30%. Heading into the report, the company needed to meet high expectations, and its 2025 annual sales forecast did not impress the street, leading to the current sell-off. The CEO blamed a third-party data developer for delays impacting the sales forecast. Companies in this space need to prove outstanding earnings growth to impress investors.

Paramount and Delta Airlines

Paramount is in focus after its first earnings report since merging with Skydance. While the market likes Paramount's increased cost-cutting promise ($3 billion from $2 billion), the quarter was not a "slam dunk." JP Morgan analyst David Karnnowski reiterated an "underweight" rating, citing significant execution challenges in direct-to-consumer and film entertainment, with benefits not expected until late 2026. Concerns remain about near-term cash outflows and long-term risks in TV media.

Delta Airlines is highlighted as the "stock of the day." Brian Sazi praises Delta as one of the best-run airlines, noting its stock price has risen about 2% during the government shutdown, despite airport chaos. Delta reported record Q3 revenue and raised full-year guidance. It's adding premium seats and has a well-regarded employee profit-sharing system. Sazi is baffled that Delta trades at only 7.8 times estimated forward earnings, compared to the S&P 500's roughly 22 times, largely due to AI moves.

Roundtable Discussion on Delta

• Lou Bassin: While Delta is a well-run company, he views the airline industry as a "great place to incinerate investor capital" due to its low margins and difficulty in running. He doesn't believe the tailwind of low energy prices will persist. He notes that historically, during the COVID era, Delta traded at about 6.1 times forward earnings, suggesting it could trade lower. He remains on the sidelines.
• Jennifer Shanberger: Agrees that airlines are typically "trades" rather than "investments" due to the capital-intensive nature of the industry. She points out that the government shutdown is creating a "cloud" over airlines, as canceled flights due to air traffic controller shortages translate to lost revenue. Even with the government reopening, it will take time to untangle flight schedules and reassign staff. Additionally, some air traffic controllers have retired, requiring restaffing.
• Brooke De Palmer: Notes that the "premium consumer" flying first class has supported Delta. She highlights that Delta, American Airlines, and United are trading around similar forward P/E ratios (around 7.8), while JetBlue trades at a much higher 53 forward P/E.

Yahoo Finance Invest Event

The broadcast promotes Yahoo Finance's annual Invest event on Thursday, November 13th, starting at 8 a.m. ET. The event will feature live global coverage of key market themes like AI and crypto, with top industry figures. Brian Sazi will interview Delta Airlines CEO Ed Bastian at the event.

Next Major Catalyst for Tech Trade

The question of the day is about the next major catalyst for the tech trade, beyond the AI bubble debate.

• Lou Bassin: Believes it will be "more of the same" – strong earnings growth from the "Mag 7" companies, which have reported over 20% earnings growth for the first three quarters. He emphasizes the need to see a transition from huge capital expenditure (capex) to profits generated from AI solutions, not just chips. He mentions companies like OpenAI potentially going public in 2026 and the need to see their revenue and profit models. He estimates that charging every Apple user $30 per month might be necessary for AI to be a viable business model. He sees opportunity in AI in healthcare, citing Tempest AI.
• Jennifer Shanberger: Suggests that one more rate cut before year-end could be a catalyst, provided the economy doesn't enter a recession and data holds steady. This would create a tailwind for the Mag 7 and big tech names.
• Brooke De Palmer: Cites several factors: the end of the government shutdown, the return of government data, and the resolution of "tariff turmoil." Bank of America analysts suggest that once these macro factors are out of the picture, investors can refocus on the AI spending cycle and support momentum without distractions.

The segment concludes with thanks to the panelists and a preview of Julie Hyman's coverage of market catalysts.