Global trading disrupted by CME outage, Apple set to become world smartphone leader for 2025

Key Concepts

CME Outage: Disruption to global trading due to a data center fault at the Chicago Mercantile Exchange, affecting futures and options across various markets.
Labor Market Weakening: Goldman Sachs analysis suggests a further weakening of the labor market, with significant immigrant workforce departures.
Holiday Shopping Season: Increased online sales for Thanksgiving and Black Friday, with AI playing a role in personalized shopping experiences.
Tariffs and Supply Chain Issues: Impacting prices of electronics and other goods, particularly during the holiday shopping season.
Apple vs. Samsung: Apple poised to become the world's top phone maker, driven by iPhone 17 series success and a weaker dollar, while Samsung faces challenges in the low to mid-tier market.
Value Stocks: Stocks trading at a low price relative to their earnings, assets, or cash flow, offering potential for upside.
Value Traps: Stocks that appear cheap but continue to decline due to deteriorating business fundamentals.
AI Data Center Debt: Significant debt accumulation by companies partnering with OpenAI to build data center infrastructure for AI development.
Federal Reserve Policy: Expectations of interest rate cuts in the near future, driven by a focus on unemployment over inflation.

Market Sunrise: Friday, November 28th

CME Outage Disrupts Global Trading

A significant data center fault at the Chicago Mercantile Exchange (CME) caused a widespread outage, disrupting live trading in futures and options across multiple global markets. This halt affected contracts for major indices like the S&P 500, as well as trade in US Treasuries and US crude oil for several hours.

Labor Market Concerns and Immigration Policy

Goldman Sachs analysis indicates a further weakening of the labor market. This comes amidst President Trump's call for a "permanent pause" on migration from "third world countries," announced on Truth Social following an incident involving National Guard members. Recent data reveals that over 1.2 million immigrants departed the workforce in the first seven months of 2025.

Holiday Shopping Season: Online Surge and AI Integration

The critical holiday shopping season is seeing a significant rise in online sales. US online sales on Thanksgiving were projected to increase by 6% year-over-year, reaching $8.6 billion, according to Salesforce. This period, encompassing Thanksgiving and Black Friday, typically accounts for about a third of US retailers' annual sales and profits.

Black Friday is anticipated to drive $78 billion in global online sales and $18 billion in the US. Generative AI is transforming the shopping experience, enabling more personalized gift recommendations. Tools like ChatGPT, Microsoft's Bing Copilot, and Gemini can assist shoppers by processing preferences (e.g., for an eight-year-old nephew who likes Legos, action figures, and sports) to suggest suitable products, such as the previously unknown Lego sports sets.

However, the shopping landscape is complicated by tariffs and supply pressures, which are quietly increasing prices. Electronics are particularly affected, with video game console prices rising earlier in the year. Microsoft had to increase console prices twice, and Sony raised the PlayStation 5 price by $50. Even the original Nintendo Switch, released in 2017, has seen a price increase. While computers and displays are exempt from tariffs, they are subject to broader market issues like the data center buildout, leading to more expensive memory. Consumers are advised to look for good deals, as seen with a $100 discount on a PlayStation at Best Buy.

Apple Poised to Overtake Samsung in Smartphone Market

Counterpoint Research reports that Apple is set to surpass Samsung as the world's top phone maker. Apple is projected to ship 243 million iPhones in 2025, capturing a 19.4% market share, compared to Samsung's 18.7%. This marks the first time in 14 years that Apple is number one.

Apple's success is attributed to the strong launch of the iPhone 17 series, performing well both domestically and in the crucial Chinese market. Samsung faces potential challenges in the low to mid-tier smartphone segment from Chinese competitors.

The impact of tariffs on Apple has been less severe than anticipated, partly due to the US-China trade truce and a weaker dollar, which boosts its international sales. The competition is expected to intensify, with Apple planning an entry-level iPhone 17e and a foldable smartphone to rival Samsung's Galaxy XFold series. Despite Apple's projected market leadership, Samsung Electronics' shares have outperformed Apple's by nearly nine times in 2025 so far.

Identifying Value Stocks: A Black Friday Shopping Guide

Jared Blickery, Yahoo Finance's Markets and Data Editor, offers guidance on spotting value stocks, comparing it to finding bargains on a sale rack. A value stock is defined as having a low price relative to its earnings, assets, or cash flow, offering potential for upside if expectations improve.

However, investors must be wary of value traps, which are stocks that appear cheap but continue to decline due to deteriorating business fundamentals, such as falling earnings, shrinking industries, or impending dividend cuts.

Yahoo Finance's Screener can be used to identify undervalued growth stocks. A preset search for "undervalued growth stocks" yields over a hundred names. Key filters include:

Trailing Price-to-Equity (P/E) Ratio: 0 to 20 (paying under $20 for each dollar of last year's profits).
PEG Ratio: Below 1 (price is low relative to earnings growth).
Earnings Per Share (EPS) Growth: At least 25% above one year ago.
Exchange Listing: NYSE or NASDAQ.

When building a personal stock shopping list, it's recommended to:

Exclude companies under $1 billion in market cap.
Look for companies paying a dividend by sorting or filtering for forward dividend yield. Caution is advised, as a high dividend yield can sometimes signal an expected dividend cut.

Examples of potential value traps discussed:

Pfizer: Stock price has dropped significantly after its COVID business declined. Despite a substantial dividend (around 6-7%), cash flow is tighter due to R&D spending, leading to a weak PEG ratio. The focus is on current income with questions about long-term growth.
Ford: A cyclical value stock tied to the US economy, with a significant dividend yield (around 5-6%). Profits are pressured by EV losses and a volatile auto cycle, with downward guidance. A negative PEG ratio suggests expected earnings shrinkage. While up over 30% this year, it's still down 50% from its 2022 highs.

Key factors to watch for when managing a value stock portfolio:

Earnings Results and Guidance: Monitor profit growth trends.
Dividend Changes: Observe hikes, pauses, or cuts, as these can indicate financial stress.
Performance vs. Benchmarks: Compare your basket's performance against the S&P 500 or NASDAQ.
Interest Rate Expectations: Shifts in rates can influence the dynamic between value and growth stocks.

The Stocks and Translation podcast offers further deep dives into market jargon.

Trending Tickers

Jefferies: Facing scrutiny from regulators, including the SEC, regarding its role in financing transactions tied to the bankrupt auto parts company First Brands. The review focuses on whether Jefferies adequately disclosed risks and its own exposure.
GameStop: Experiencing a sharp rise, driven by renewed retail buying and social media chatter, ahead of its earnings report next week. Trading volumes have placed it among the most active stocks.
Delivery Hero (Europe): Shares jumped nearly 14% after Bloomberg reported that major shareholders are pushing for a sale, following a period of underperformance. The stock has been identified as trading at a discount.
Puma and Burberry: Both apparel and fashion stocks are trading lower due to continued weakness in discretionary spending in the Eurozone and concerns about demand in China (for Burberry).
Alibaba: Stock is struggling for direction after unveiling new smart glasses powered by its Quen AI model. The device features real-time translation, multimodal recognition, and on-device processing, highlighting Alibaba's aggressive push into consumer AI and its potential to compete with Western AI players.

Small Business Saturday and Supply Chain Challenges

Small Business Saturday is approaching, with events organized across the US. AI tools like ChatGPT can help shoppers find local businesses by inputting geographic and product preferences. Many small businesses are also leveraging platforms like Shopify to facilitate shipping. Shoppers can also search for specific criteria, such as "veteran-owned" small businesses.

Small businesses are navigating significant supply chain challenges, exacerbated by tariffs. Some have stocked up and sourced locally to mitigate high prices, but these costs are often passed on to consumers. Patience is requested from consumers as businesses pass on these increased costs to remain viable.

The AI Data Center Debt Pile

OpenAI's data center partners have accumulated approximately $100 billion in debt, a sum comparable to the six largest private borrowers globally combined. This debt is being financed through loans, special purpose vehicles, infrastructure credit, and private equity structures. Companies like SoftBank, Oracle, Corewave, Cruso Energy, and Blue are borrowing heavily to build the data center infrastructure required for OpenAI's AI advancements.

The cost of credit protection on Oracle's debt is nearing record highs, suggesting market skepticism. The rationale for this borrowing spree is the immense compute power needed for training and running advanced AI models. However, HSBC estimates that OpenAI faces annual costs in the hundreds of billions of dollars, while its current revenue is projected to be around $20 billion for the year. This raises questions about how the company's ecosystem will sustain these debt levels, even with its high valuation and rapid revenue growth.

Trading Outlook for 2026 and Fed Policy

Sahil Matani from 90/91 Investment discusses predictions for trading in 2026. While Nvidia's guidance suggests the AI bubble is not imminent, there's a reassessment of whether unit costs in AI can remain negative. Investors are expected to focus on productivity gains that justify the massive AI data center spending. Matani views the risks of a "super bubble" as decreasing due to increased investor skepticism, but remains optimistic about AI's transformative potential, particularly in professional services.

The dynamic between AI's impact and Federal Reserve policy is crucial. The market's conviction about potential Fed rate cuts in December has increased, leading to a more positive market sentiment. The key for investors is to assess whether growth or inflation will dominate in the coming year. If inflation prevails, bond and equity correlations may turn positive, making investments more challenging. If growth dominates, a more benign environment for bonds and equities is expected.

The prevailing view is that inflation is set to decline, leading the Fed to adopt a more accommodative policy, prioritizing unemployment. This suggests a December rate cut and further cuts next year, with 2026 anticipated to be a strong year for investors.

Market Check-in

Gold: Futures prices from the previous night are noted. Trading in the spot market has been choppy due to the CME outage, though some forex markets at the CME are reportedly reopening.
Asian Markets: Mixed, with Japan's Nikkei achieving its third consecutive day of gains following a drop in inflation to 2.7% in October.
European Markets: Mixed this morning as investors digest the end of a volatile month. Shares of Novo Nordisk are up, possibly due to investors buying the dip after the company agreed to cut prices for its obesity drugs for Medicare users.
US Markets: Wall Street indices are facing a losing month in November, despite gains overnight. A significant decline in mega-cap tech stocks has driven the November downturn, as investors re-evaluate the speed at which AI-driven businesses can translate hype into sustainable profits.

Ramsan Karamali concludes the broadcast, encouraging viewers to stay with Yahoo Finance for continuous market coverage.