House readies for vote on spending bill to reopen US government, Trump to host Wall Street execs

Key Concepts

• Government Shutdown: A temporary closure of government operations due to a failure to pass appropriations bills.
• AI (Artificial Intelligence): Technology that enables machines to perform tasks that typically require human intelligence, such as learning, problem-solving, and decision-making.
• Data Centers: Facilities that house computer systems and associated components, such as telecommunications and storage systems.
• Monetary Policy: Actions undertaken by a central bank to manipulate the money supply and credit conditions to stimulate or restrain economic activity.
• FOMC (Federal Open Market Committee): The principal monetary policymaking body of the Federal Reserve System.
• Stablecoin: A type of cryptocurrency whose value is pegged to a stable asset, such as a fiat currency or a commodity.
• Retail Investor: An individual investor who buys and sells securities or other assets for their own personal account.
• Institutional Investor: An organization that pools large sums of money and invests those sums in securities, real estate, and other investment assets.
• M&A (Mergers and Acquisitions): The consolidation of companies or assets through various types of financial transactions.

Government Shutdown and Economic Impact

The US House of Representatives is preparing for a vote that could end the longest government shutdown on record. The Senate passed a spending bill on Monday evening, which has now moved to the House for a final vote expected this afternoon after 5:00 p.m. Eastern. Despite the potential end of the shutdown, airlines have warned that flight disruptions will likely persist.

Economist Daniel Ortman highlighted the significant economic cost of the shutdown. He stated that if the government fails to pay its contractual obligations for six weeks, it could result in a drop of approximately 2% of Gross Domestic Product (GDP), potentially wiping out the year's economic growth. Unlike shorter shutdowns where postponed activities are usually recovered, this prolonged shutdown has led to unrecoverable losses, such as cancelled flights and delays in licensing and permitting, which hinder trade and commerce. Federal workers are also facing uncertainty about receiving their owed pay, impacting consumer demand.

AMD's Outlook and AI Push

Advanced Micro Devices (AMD) shares are rising in pre-market trading as the company has increased its outlook. AMD anticipates its data center sales to grow by 60% over the next three to five years. Currently, data center revenue stands at $16 billion. The company is significantly increasing its focus on the AI space, aiming to capture market share from competitors like Nvidia.

SoftBank's Strategic Investments and AI Focus

SoftBank's shares experienced a significant decline, falling as much as 10% at one point, though they later recovered somewhat. This downturn followed the sale of SoftBank's entire stake in Nvidia for $5.88 billion. SoftBank has made substantial investments in AI-related ventures, including a significant bet on OpenAI, the owner of ChatGPT. The company is also acquiring chipmaker AI in a $6.5 billion deal and has agreed to purchase the robotics business of Swiss group ABB for $5.4 billion.

Other companies are also making substantial investments and projections in AI. Germany's Infineon has raised its sales forecast for chips used in AI data centers, and Foxconn, a supplier for Nvidia, expects revenue from AI server production to nearly double.

Earnings Reports and Company Performance

Several companies reported their earnings, with notable performances:

• Crocs Holdings: Q3 results surpassed forecasts, leading to a nearly 9% increase in its share price in pre-market trading. The company also raised its full-year outlook, with the CEO citing strong sales momentum heading into the holiday season. Crocs now expects net sales to increase by at least 34% year-over-year. Q3 revenue was $993 million, with earnings per share of 54 cents.
• Circle Internet Group: Reported Q3 revenue exceeding expectations. The circulation of its USDC stablecoin more than doubled year-over-year to approximately $75 billion. Revenue increased by 66% to $740 million. This marks a significant turnaround, as Circle reported a net loss of $448 per share in the previous quarter.
• Foxconn: The Taiwanese company, the world's largest contract electronics manufacturer, reported profits that topped estimates, driven by a robust AI server business. Foxconn anticipates a strong year ahead due to the continued explosive growth in AI computing demand. While historically known for assembling Apple's iPhones, Foxconn also manufactures AI servers for Nvidia and Amazon and will now collaborate with OpenAI.

Yahoo Finance Invest Event

Yahoo Finance is hosting its annual Invest event on Thursday, November 13th, starting at 8 a.m. Eastern from its New York City studios. The event will feature a full day of live global coverage focusing on key market themes such as AI, crypto, and the economy, with insights from leading figures in corporate America. Questions for the guests can be submitted on the Yahoo Finance community channel.

Brian Sussy, Executive Editor of Yahoo Finance, described the event as a "mindblowing celebration of investing for all investors." Key themes to be covered include AI, crypto, and the economy. Notable guests include:

• AI: Max Lechin (Firm CEO), Alexis O'hanian, and Yoni Assia (eToro co-founder and CEO) will discuss AI's impact on financial services.
• Crypto: Michael Saylor ("Bitcoin King") will share his strategies for Bitcoin amidst market volatility. Vlad Tenev (Robinhood co-founder and CEO) will also be present, as crypto has significantly boosted Robinhood's financial performance, contributing to its nearly 300% year-to-date stock increase.
• Economy: Former Fed Governor Lael Brainard, Robert Smith, and Muhammad Ali will discuss economic outlooks, potential Fed rate cuts, and the impact of AI on the economy and labor market.

Sussy expressed concern about the impact of AI on the US labor market, noting that many companies are implementing AI to replace workers, making it crucial for individuals and businesses to adopt AI to remain competitive.

Market Trends and Stock Performance

• AI Infrastructure: Coreweave, a cloud accelerator for Generative AI, saw its shares fall over 16% yesterday after a post-earnings slide but is now rising in pre-market, up around 2%. Investors are taking profits after a significant year-to-date gain of over 125%.
• AI Chip Trade: Infineon Technologies, Nvidia's German partner, is seeing its stock rise on Q4 results that were largely in line with expectations. Infineon highlighted growth in its sales of chips for data centers, despite a slowdown in the automotive sector. The company is developing new power delivery solutions for data centers in collaboration with Nvidia.
• Obesity Drug Trade: Major players like Novo Nordisk, Eli Lilly, and Pfizer saw significant gains yesterday following the end of a bidding war for Metsera. While Novo Nordisk lost the bid, its stock is showing signs of a comeback after a prolonged slide. Eli Lilly continues its strong upward trend.
• Crypto Miners Turned AI Players: Companies like Bitdeer are recovering from yesterday's losses after Tether disclosed selling about 20% of its stake. CleanSpark and Terra Wolf are trading lower, with CleanSpark announcing a new convertible notes offering. Investors are closely watching these companies' pivot into AI computing power providers.
• Space Sector: Rocket Lab Corporation is a focal point in market action. After slightly beating earnings estimates, the company is benefiting from analyst upgrades and buy ratings, driven by bullish sentiment on continued demand for satellite launches and space services. Rocket Lab is building a backlog of orders and pursuing an M&A strategy to diversify its offerings beyond launch services, including satellite capabilities. The company is developing its Neutron rocket for larger payloads, though its launch has been delayed to mid-next year. Despite the delay, investors are optimistic about the potential for larger contracts and the company's strong financial position. Rocket Lab's revenue was up 48% due to its Electron rocket services.

Travel Sector Outlook

The travel sector is facing turbulence, partly due to the government shutdown, raising questions about whether the sector's boom is over. A Deloitte report indicates a decline in planned holiday trips among US consumers to an average of 1.83 per person, down from 2.14 a year ago. Planned travel budgets have also decreased by about 18% to roughly $2,334. Even high-income households are reporting feeling financially worse off and are opting for cheaper travel options. The shutdown is exacerbating these trends, with potential ripple effects across hotels, restaurants, airports, and rental car agencies. This comes at a time when many businesses are already contending with inflation, labor shortages, and higher import costs due to tariffs.

Market Performance Overview

• Asia: The Nikkei was up, supported by tech strength and a yen-fueled lift for Japanese manufacturers, as the yen fell to a nine-month low, making Japanese stocks more attractive.
• Europe: European stocks opened higher, with the FTSE 100 experiencing some profit-taking after hitting a record high, driven by hopes of the US government shutdown ending.
• Wall Street: US stock futures are rising as investors digest a rotation out of big tech into more defensive sectors. The market awaits the key House vote on ending the government shutdown, expected around 10:05 p.m. Eastern time.