Closing Bell - Closing Bell Overtime: 10/16/26

Episode Date: October 16, 2026

From the open to the close, “Closing Bell” and “Closing Bell: Overtime” have you covered. From what’s driving market moves to how investors are reacting, Scott Wapner, Melissa Lee and Michael Santoli guide listeners through each trading session and bring to you some of the biggest names in business.  Hosted by Simplecast, an AdsWizz company. See pcm.adswizz.com for information about our collection and use of personal data for advertising.

The bell is bringing an end to the trading day at the NYSE Access Capital, ringing the bell, closing out the week at the NASDAQ Garen. Welcome to closing bell over time with your life from Studio B at the NASDAQ market site. I'm Melissa Lee along with Mike Santoli. Stocks falling once again today with chip stocks and the AI trade leading the way lower. The Dow losing 180 points. S&P 500 down 1%. 2% loss for the NASDAQ composite, 2 and a half percent for NASAC 100. CoreWeave once again getting crushed.

Stock down 12% today, losing a quarter of its value this week. despite several Wall Street analysts saying the sell-off is overdone. The selling, whacking software sector as well, the IGV down 5%. Oracle, once again, a victim there. Only 10 days after joining the S&P 500, meantime, Twilio was its worst performer today. Other high momentum areas of the AI buildout, including chips, memory, optical, and energy, all hit home. Investors once again seeking safety and the comfort, dividends of utilities and staples, energy, the best performing sector today as oil rises,

for the week. The Dow managing a gain. S&P 500 down more than 1% NASDAQ indices with the biggest losses. Let's get the first take on the close for the day and for the week. The day itself was interesting. We still had core we've, you know, major pressure on the market there, even though rates remain sort of tame in the scheme of things. Yeah, government rates remain tame. Credit markets remain unsettled. So if you're debt financed, AI related, if you're consuming capital to build it, the market doesn't want it right now. It's a tricky spot because the source of most of the earnings growth, really, the lion's share, is coming from these areas where everybody's questioning how sustainable it is. And, you know, people want a

broader market. You mentioned the Dow is up for the week. The Equal 8 S&P is up for the week, and the NASDAQ 100, is down 5.5%. So it almost never happens kind of smoothly and painlessly. I do think there were some signs, again, in the middle of the day that it would seem like some forced action, you know, maybe some kind of liquidations going on. There was a real grab for volatility protection in the middle of the day. So who knows if that's an unwinded. I would point out, the Semiconductor index, the NASDAQ 100, Oracle shares, all of it. They're coming down to levels that have only been broken in that mid-July sell-off. So you see right there for semis, you see it for NASDAQ-19. So there's a chance you can kind of settle above those levels.

For the S&P as a whole, kind of doesn't look like a whole lot. It's down two and a half percent off its high. And if you don't break 7,600 on the S&P, you're still making higher highs along the way. Yeah, but as you mentioned, I mean, careful what you wish for. We said this time and time again. The broader market means that financials outperform. We have consumer discretionary do well. Homebuilders got a bit. You know, all these interest rate sensitive sort of areas got a bid on the week.

But look what happened to the overall market. We did see sort of weakness across the board. So what do you want here at this point? Yeah, we sort of thought that the main source of pressure was Treasury yields, you know, kind of getting escape velocity to the upside. So they've now flattened out and come in a little bit on a kind of risk haven bid. And what led today in terms of upside pressure on the S&P, Apple, Exxon, Berkshire Hathaway. So it couldn't get more defensive.

Well, there was also a lot of movement in the energy market on more supply concerns. Pippa Stevens joining us now with more details. And it was kind of a sudden midday surge in crude. Yeah, so the first thing is that we are going into the weekend. And as these escalation fear seem to grow a lot louder, that is definitely a factor behind this. But, you know, we have a trifecta here that we're watching. That is, Iran is stepping up its attacks in the strait of Hormuz, including sinking a container ship in the last few days. Then you have Ukraine vowing to continue attacking Russian refining infrastructure.

There was a few days of pauses over that after President Trump said that he had brokered that ceasefire deal between the two, which is clearly not the case. And so Ukraine is once again attacking Russian refining infrastructure. And then we also have this growing threat of a wider regional conflict with the Houthi stepping up their attacks on Saudi infrastructure. And so taken all together, there is now definitely concerns here about, you know, supply risks looking forward, especially with the midterms coming, and then the idea that we have some more military assets on the way to the Gulf, you know, what is that signal that the White House is thinking about kind of after the midterm, what's going to happen next, and what does that mean for crude pricing? And so it seems to be that refiners are now trying to secure all

of these barrels and trying to get ahead of that. And then, of course, the action still does remain in the diesel market. We've regained all of the temporary losses from last week after that deal was announced. A lot of questions there, and of course, there is now a legal challenge to that order. but also you do have to wonder with diesel where it is right now. If Russia could be exporting more, they would be. And so there's also kind of this consensus that, okay, these numbers are pretty meaningless here because they can't actually increase their exports. I guess there's always a skepticism, though, even from the beginning,

that Russia would not be able to export that amount because they don't have the capacity. They don't have the ability. And the attacks from Ukraine really have, you know, slim down their ability to meet the demand. That's right. And so they are still exporting a little bit, but, you know, it's nowhere near what they were before. And, you know, they say, oh, it's because we want to keep supplies at home and make sure we're okay at home. One factor is that the Russian harvest season is now wrapping up. And so their demand for diesel will go down a little bit so that could ease some global pressures.

And maybe they could export a little bit more. But that doesn't seem to be because of any sort of deal. That's more because of how their economy works. But I do also want to note that geopolitics are obviously driving this. But Matt Miller at – Matt Millie, I should say, Miller-Taybach did note that Brent on a weekly basis is now golden-cross with both the 50 and 100-day-day-moving averages moving higher. And it's only happened five times in the past 30 years. And every time after that has been followed by further upside. So a little bit on the technical indicators and the trend looking forward as well.

All right. Pippa, great to see you. Thank you. Pippa, Stevens. Let's continue the discussion on this week's sell-off. Corrieve, of course, sparking the concerns. But it's spread throughout tech with the NASAC down more than 4% this week. That's its worst week since June.

Joining us now, Janice Henderson, Investors, Global Head of Macro of Richard Bernstein. Richard, great to have you with us. Take a step back. How do you interpret what it went on this week? Was this a pause? or is this a reason to sell off? Yeah. So, Melissa, you know, I think we're at the point in the cycle where traditionally the Fed takes the punch bowl away from the party, right?

We haven't had this in a very long time where the Fed begins a tightening cycle. People refuse to believe it's a tightening cycle, key word. They think it's one and done. But ultimately what happens is the Fed starts removing liquidity, taking the punch ball away from the party. And I think that's what you're starting to see where the most. speculative parts of the equity market are sort of the canaries in the mind shaft. I realize everybody thinks that these are big, very successful companies, but I mean, they have been very, very speculative stocks. And so you're seeing that start to happen. I think, you know, to Mike's point before,

the market is beginning to broaden because of this. There's a lot of signals coming out that the Fed is going to take the punchball away from the party. But Richard, do you think that broadening is a part of a healthy process, or is it just kind of, you know, this sort of urgent rotation, this sort of mechanical action that we've seen time and again, because it's not clear that if these dynamics continue, the kind of old economy, for lack of a better term, is going to remain unscate. Yeah, I think both, Mike, I mean, to give you kind of an answer for everybody, both. I think there was a short-term knee-jerk reaction that goes on, but also, you know, I think it's very healthy for the economy that the market broadens because it means the cost of capital is going down for the majority of the economy.

If you think about the AI data center type industry, they've basically been getting free money. People have been throwing money at them. But at the same time, the rest of the economy has been starred for capital. And so, you know, I think if we do see a broadening of the market, we do see valuations adjusts and the remainder of the market, that implies that the cost of capital is going down for the broader economy. I would actually argue that's very, very healthy. And so I think it's both. It's both a knee-jerk, but there's also a real fundamental reason.

You would think that going down the cap scale then would be a good thing if the cost of capital is going down for the rest of the economy. You like small caps. You like mid-caps? Right. So, Melissa, that's a really important point because, you know, most people would say, gee, if the market goes down, small caps do badly. But remember what we've seen in the last several days, several days, mind you. But what we've seen is long-term interest rates falling and small caps doing better because the anticipation is that their financing rates are going to come down. And if that comes down, that's good for smaller companies.

And so, again, getting back to what we're just talking about, you know, the broadening of the market may be very, very healthy for the overall U.S. economy. May not be healthy for data centers, may not be healthy for tech. I get that. But in terms of recalibrating the cost of capital over the entire economy, I think it's very bullish. You've kind of been on the story that inflation was not going to go quietly for a while now. And you saw some evidence of that this week. CPI, PPI, we don't really know what we're dealing with in terms of whether this is another wave that's going to quickly pass through or not. But that feedback loop of sticky inflation, Fed says they needed to get down to 2%.

You know, how does that allow things like small caps, which we're down this week, how does it allow them to kind of get? get free of those concerns. So, Mike, I'm not kidding myself in terms of thinking that if the Fed really does take the punchball away from the party, traditional high beta sectors of the economy are going to still do well. Those stocks are going to do well. I'm not suggesting that. I think that if the Fed is serious about fighting inflation, and I think they have a real problem on their hands right now, because we just saw a bunch of, I would argue, quite hot CPI,

PPI, import prices. I mean, one of the things that's not getting enough attention is that core import prices, we all tend to look at energy, but core import prices are now rising faster than the core CPI. The United States is now importing inflation. That's the exact opposite of what we've seen over the past 30 years. And so the Fed has a real problem on their hands. You know, let's hope that they can navigate this and we don't have a recession. But I think the reason you're seeing things like consumer staple will start to perform a little bit better now is because that that recession probability and that fear is starting to creep into the markets. So, Richard, just to go back to the idea of broadening, does that mean that we're just simply

rotating out the tech trade or trimming our exposure there? Or is there a real doubt about the earnings power of that sector, which would then mean that perhaps there's some doubt about economic growth overall? Yeah, exactly. I would say, again, both. I'd hate to give you all these wishy-washy answers. It's both. I think that there is a real question about the future profitability of these companies, and you're seeing that in CDS spreads and defaults and all those kind of things that people tend to look at. That is really starting to happen. And everybody's saying, well, it's just this company or it's that company. Remember, Canary's in the Mineshaft, you know, risk doesn't all of a sudden manifest. There's little bits that pop up here and there.

And I think the market is starting to digest that. But realistically, you know, if we can get a cheaper cost of capital, that would be good. Now, the second part of what I was going to say was, remember, every time you get a change in leadership in the marketplace, it's preceded by volatility. And I think we are seeing that. I think we've seen it in fits and starts. But this is another period where we're seeing volatility and the market is trying to rotate to other areas in the market. For somebody like me, I truly believe that the long-term story is not in the leadership that we have seen over the past two, three years. I think it's in this broader, leadership, both U.S. and non-U.S.

Yeah. Sometimes the baton gets dropped a couple times before it's passed. We'll see how it goes, Richard. Thank you very much, Richard Bernstein. Thanks, guys. All that sell-off that we've seen in tech sent investors to some more safe haven trades, including Staples. Walmart was among them, up

14% this month. As a result, its valuation has gotten pretty high. Take a look at where it stands in terms of forward PE. It is now not too far from 40 times forward. And that compares to Amazon, which has seen its PE to climb from 40 down closer to 20. So essentially, they've changed hands in terms of who has the bigger premium. Clearly, Amazon trading a lot more

on the cloud services business and how expensive that's going to be. One explanation, take a look at free cash flow yield. So basically, Amazon is intentionally going negative free cash flow here for a while they do this cloud build out while, you know, Walmart is more or less keeping it stable, allowing 1% to fall to the bottom line. So, brings up the question, has Walmart gotten too expensive? With us now is DA Davidson Senior Research Handelist Michael Baker. He's got a buy rating on the stock at a price target of $132. Michael, it's good to see you.

And I mean, on the one hand, there's the Walmart that's viewed through stock market eyes as just sort of an instrument of safety. On the other hand, it's a business. And the fundamentals, I think, seem to encourage you to think that the valuation is justified. Exactly. And thanks for having me on, Mike. The business has really changed over the last few years where they've been adding a lot of these higher margin alternative businesses, the 3Ms, as I call membership, media and marketplace, all higher margin businesses, all growing faster than the core business.

And so that's expanding their margins. That margin expansion allows them to invest back in things like price and delivery and agenda commerce and all those types of things to win market share. So it's really offense and defense at the same time. Great place to hide. Absolutely, valuation has expanded from where it was historically. It is actually down a little bit from the peak earlier in the year at about 45 times. You compare it to Amazon. I compare it to Costco.

Costco's trading it about 45 times. If Costco can have that kind of multiple, why not Walmart? Why wouldn't you compare it to Amazon, Michael? I'm just curious. I mean, on so many fronts, they do, in fact, compete. And I know their businesses are very different. but if you take a look at an Amazon valuation, I'm not sure you cover the stock,

but I'm sure there are investors. You're getting inbound calls saying, why not Amazon instead? You're getting basically that AWS kicker for free. Right, exactly. And my colleague, Gil Loria, covers Amazon. I think in Mike said earlier in the segment, the difference is that that AWS business

is seeing a lot more capital thrown at it. It's becoming more competitive. And I think that's really where some of the issues are in terms of that market. margin, that multiple compression for Amazon, rather than their retail business, which I think is doing very well. So, you know, Walmart somewhere maybe in between Amazon and Costco, but again, at this point with their alternative business is getting bigger, but the retail business is still the majority of the earnings for Walmart. Again, we compare it. We still prefer to compare it to

other retailers, Costco being the other leader in the space. By the way, we just did see the Kelly School at the University of Indiana, ringing the bell at Cibo, closing things out there for options trading. And so, Michael, does the state of the consumer feed into the thesis at all? You often hear Walmart's a net beneficiary if the consumer's pinch, but of course, if, you know, hiring consumers are shopping there, that's good, too. Absolutely. Yeah, Walmart should benefit from taking markets here in a tougher economy. Inflation is hurting consumers. And Walmart, wins in that environment. They have the wherewithal to invest in price and give consumers the value

that they need at a time when every other price that the consumer is paying is going up. So we expect them to take market share again while maintaining margins because of those higher margin alternative businesses that really helps them fund those price investments. One theme that we've seen from Walmart over the last few years is increased market share with higher-end customers who are now coming to Walmart. Part of that is a value, but also the investment in convenience that Walmart is making. They're doing really well online. We think they're winning the delivery wars. And again, that has to do with scale and their ability to invest in being able to deliver, you know, same day, next day within a couple hours. So they're really well positioned, I think, in this tougher economy.

Michael, how do you think about those higher margin businesses and how they fare in an inflationary environment? Do they, are they a little bit more pressured? I mean, Walmart will benefit, you know, when the consumer is facing, you know, tough times, but are they going to sell as many memberships for instance, or the consumer is going to buy those items on the marketplace that are not sort of the core essential items. Yeah, it's a fair point. But what I would say is all those alternative businesses have been growing really well for Walmart, but they're still really small. So they still have a lot of runway to go in terms of growth or market share relative to some of their competitors. So I think their ability to take market share can certainly outweigh any kind of macro pressures as relates to those specific businesses. They're just, you know, certainly Walmart's big, but not as big as others.

So there's still plenty of runway for them to go. All right. Michael, great to speak with you. Michael Baker, $132 price target on Walmart. KFC and the NBA, both making some big changes. We'll have those details coming up. Plus, we'll have much more on the big tech selloff as a NASAC 100. Hosts its worst week since last April. Closing bell overtime.

Be right back. KFC is switching to Coke from Pepsi. By early next year, all 3,700 KFCs in the U.S. make the switch. It will not apply to other young brands chains, so Taco Bell keeps its partnership with Mountain Dew. The deal could be a $500 million annual revenue, a hit to Pepsi, but that's still a small slice of total sales of nearly $100 billion a year. Pepsi also lost the Costco contract for Pepsi last year. But maybe the most famous convert was Warren Buffett. He famously drinks five cans of Coke a day. I think it's Cherry Coke specifically. He had previously been a Pepsi devotee. But in 1985, a friend

who as a Coke executive, gave him early samples of Cherry Coke. At the 1986 shareholder meeting, Buffett said, after 48 years of allegiance to another soft rank, your chairman in an unprecedented display of behavioral flexibility, has converted to the new Cherry Coke. Henceforth, it will be the official drink of the Berkshire Hathaway Annual Meeting. He liked the product so much. He eventually bought hundreds of millions of shares of the company's stock.

That is a great... That's right. By far, the largest shareholder. And, you know, at the meeting they have now, they will diversify. They have Desani water as well, which is a Coca-Cola product. Right, right. So it's not just a soft drink. It's not just the sugary carbonated stuff.

But it is, you know, it's fascinating. These are the kind of eye-catching big contracts like KFC. Right. It seemed to matter. Maybe not so much dollars and cents in the long term, but really stark outperformance by Coke over Pepsi. And I think most of it has to do with the snacks business. Yes.

You know, PepsiCo really weighed down by packaged food, just not being the right place, maybe some pricing missteps. But now... Costs, just costs in general. Lots of costs. And, you know, Pepsi's dividend yield is now twice what Cokes was when it used to be the flip.

And for Yum, I mean, they have a lot riding on a turnaround in the KFC brand. Kentucky Fried Come Back is what they're calling in. And beverages is part of it. I mean, they're even offering in some stores on a test basis, ice coffee, and Boba drinks, which I have no idea.

I didn't know they went well with fried chicken, but I guess they're trying it out. Is that also the Colonel's recipe for boba drinks? I don't know. That works out. All the spices in there. Draft Kings and Fandul's parent Flutter, both taking an intraday dip after the NBA announced new rules for its gambling partners. Certain types of bets now will be prohibited, including first of bets, such as who will score the first point or get the first rebound, who will win the opening tip also banned, and parlaying several player statistic unders together for a bigger payday.

So in other words, under a certain number of points or baskets, two of the players banned for gambling recently were said. to have left games with injuries after playing only a few minutes, making under-bets on their stats winners, essentially just trying to remove the possibility that an individual player can influence the outcome in an easy way to a bet. There's also these rules related to players on these short-term contracts who are kind of marginal players for whom a financial windfall, perhaps getting paid for something else, would be more meaningful than, you know, a big star is making tens of millions already. Yeah. And it's obviously in their interest. the platform's interest to sort of rein this behavior,

and nobody wants to be gambling on a platform they think is rigged and the odds are stacked against them. No, no doubt about it. The sort of the hygiene of the betting ecosystem matters. I got to go rewatch Uncut Gems because there was a big basketball parlay in there, and the opening tip was the first piece of it. That's not going to happen in movies anymore, I guess. We often hear about cash on the sidelines, but not so much lately.

We'll look at investors' cash reserves and what it could mean for the market. Stay with us. Interactive brokers following nearly 3% today following earnings while customer accounts increased 35% year over year. The company said stock and options volume trading decreased 24% and 1% respectively. Customer margin loans also increased by 36% to more than $105 billion. It was a rough few days for the brokerage stocks, the Schwab also seeing losses down nearly 5% this week. And Mike, you're taking a look at margin borrowing in relationship to cash. Yeah, this is kind of the overall sort of cash cushion that invests.

have. So this with this chart is showing, it's from Ned Davis research. It's the cash reserves in brokerage accounts divided by the total margin debt. So the lower this goes, the more leverage is in the system. So the higher the borrowings are relative to cash. We're below where we were, really, in the kind of tech bubble days. Also before COVID, where you obviously also had a pretty exuberant market. Now, there might be some factors that are driving this that are different. First of all, I think a lot of investors get their cash swept out of their brokerage accounts and use bank deposits more. And then there was this story. Walsh Journal had it. Robert Frank for us has been on this, this tax avoidance strategy, which essentially has people take loans against their stock

holdings, a long, short type of strategy that might be ballooning these margin balances. Schwab called that out this week as well. So we don't know how much we have to, you know, kind of discount that and say these numbers don't mean people are necessarily borrowing hand over fist to buy risky stocks. But it does show you that there's just not that much of a buffer in terms of the cash there. I mean, the Schwab number was really interesting in terms of margin. It doubled year on year. We also saw it out of the brokerage firms, too, was Bank of America, Morgan Stanley. So, I mean, this is across the sector here. It definitely is. Now, part of that, it goes up with market values, but it's going up faster than market values. And that does show, look,

it's it's bull market type activity for better or worse. Time now for a CNBC News update with Frank Holland. Hey, Frank. Hey, Frank. Hey, good afternoon, Melissa. The man who stopped the deadly Oregon school attack yesterday is the father of two girls who attend that school. That's according to his mother who said in a statement read to reporters on Friday that her son chased down and shot the teenage gunman. Three children and a teacher were killed in that incident. The nation's measles outbreak continues to grow to CDC is now reporting 4,410 cases this year, an increase of 330 in just one week. At least 451 patients have been hospitalized from the outbreak, which has affected 45 states and Washington, D.C., with Pennsylvania reporting the most cases of any state.

And Goldman Sachs CEO, David Solomon, has been named the next chair of the Business Council, succeeding former Target CEO Brian Cornell at the head of the invitation-only group. Other members of this year's executive committee include Jeff Bezos, Ken Griffin, Satya Nadella, and Lisa Sue. Back over to you. Frank, thank you. Well, Netflix announcing a new chief content officer last night. Could the move help fix the company's engagement struggles and get investors back on board? We'll discuss that when closing bell overtime comes right back.

Welcome back to closing bell overtime, live from the NASDAQ market site. Tech stocks selling off today hard with the NASDAQ down more than a 2%. The S&P 500 went all of August and September without a 1% drop. It's now had two in the last three days. Corrie, once again, the main culprit, the stock losing a quarter of its value this week. Credit concerns spreading throughout tech sector, Oracle down 10% on the week. We did see rotation. Seven of the 11 S&P sectors had gains on the week, led by Healthcare and Staples.

Well, it's been a rough go for Netflix recently with the stock down 41% from its 52-week high on concerns that it's losing share of TV viewing hours. Now ahead of its earnings next week, the company's shaking up its C-suite in an effort to revitalize its viewership. Julia Borson joins us now with more. Hi, Julia. Mike, in a big shake-up, Netflix appointing Fox and Disney veteran Peter Rice as chief content officer replacing Bella Bajaria. Now, this comes on the heels of Netflix laying off 6% of its. staff earlier this week. And as Eptopia reports that Netflix subscriber churn doubled between the second quarter and the third quarter, it's also amid concerns about weakening engagement. Nielsen reporting that Netflix's share of U.S. viewing time is down one percentage point year

over year to 7.8% in July versus YouTube gaining nearly as much to 14.2% of viewing time. BMO is lowering its revenue estimate for the quarter on the management shakeup, saying, quote, Bryce has the credentials to serve as Netflix's chief content officer, but the sudden departure of Bajaria likely signals to us that user engagement may have remained soft throughout Q3. Netflix has been ramping investment in non-traditional content, bringing over YouTubers to do shows for Netflix and investing in podcasts. Now investors are wondering how Bryce's appointment could indicate strategic shifts, perhaps around theatrical releases, or potentially offering other services on Netflix's platform. form. Guys? Julia, is there a theory as to why there was such a big uptick and churn?

I mean, is it just a matter of the summer slate didn't seem like it really got buzzy or dazzled anybody? I would say there are a couple of factors here. One is that there wasn't a breakout hit new show. A lot of this comes down just to the schedule and to timing, right? When shows are released, they tend to have more big releases or they will this year have more big releases in the fall. then there's also this broader issue that everyone's reckoning with right now, which is competition with YouTube.

YouTube, as I mentioned, more and more share of viewer time. It's seen as the behemoth that everyone is chasing in terms of engagement. And so I think there are these two factors here. And I think what Netflix is trying to figure out is how much it should try to replicate YouTube style content with those creators, with more podcasts, and how much they should be leaning in to what was always their bread and butter, which is traditional TV series and movies. And I think Rice has that experience in the traditional content industry. He's seen as having really great taste and the questions who he might hire and what other executive changes we might see as he puts his team in place as they try to improve the quality and the engagement around that traditional content. Well, they do more of that non-traditional programming as well. Julia, thank you, Julia Borson. So could that executive shakeup really be a fix to Netflix's engagement struggles? Joining us now, Matt Bellany, he's a founding partner at Puck.

great to have you with us. Thank you. Julia had mentioned that Bryce has great taste, but this is a woman who actually greenlighted Bridgeton brought on Squid Games, went full on into live sports. And I'm just wondering, do you think that this switch, this shakeup is a fix or was she was, but Jerry made a scapegoat in this whole thing? Well, listen, you got to look at the numbers here. And the reality is that Netflix is down more than 40%.

Now, we can argue whether that's because of the engagement issues or whether it's because they tried and failed to buy Warner Brothers, which got a lot of investors thinking, wait a second, if everything's great at Netflix, why are you going after and willing to pay tens of billions of dollars for a traditional studio? And I think that this is a bit of a scapego. They had to do something. Bajaria was seen as someone who broadened out the company's content mix. She brought in populace fair, a lot of crime documentaries, foreign shows, global shows. And There's a sense at Netflix that they need stuff to be buzzier. They need some hits that people are talking about.

And year-to-year comps are K-pop demon hunters from last summer. And that, they didn't have a version of that this summer. I guess, Matt, that's sort of them being a victim of their own success. They have huge penetration. They already have the lead in, I guess, viewing hours, depending on how it's measured. And so it's a matter of trying to go for those hits. Does that also mean taking bigger risks? or maybe acquiring other types of IP?

Well, yeah, I mean, Peter Rice is coming in from his last job at Disney, and he was there when, you know, came from Fox when Disney bought Fox. So there's some speculation that Netflix may even try to go after another traditional studio, perhaps NBC Universal, where Peter Rice could play a role in integrating those two companies. He also has tremendous experience with sports rights. And the thinking is that Netflix may go even. further into sports, whether it's a big NFL package. They just did a deal to get soccer rights in Spain, and that that may be where they find

a lot of the answers on the engagement front and honestly, making better shows and movies. The Netflix movies have been criticized for not penetrating and being things that people talk about. I think they have problems because they don't offer theatrical distribution to their filmmakers. Maybe that will change with Peter Rice coming in. But Peter Rice has tremendous relationships with filmmakers, and Netflix sees that as a boon to their engagement. And certainly great content, films, whatever.

I mean, that's going to keep people engaged in theory. But YouTube is really the issue here, isn't it? And does that, does bringing in great films and these different formats really solve for the problem of the competition brought on by YouTube, which is a different kind of content? Yeah, and YouTube doesn't pay. for its content and Netflix pays $20 billion a year up front for its content. So it's a really hard thing.

And the answer is they have to do both. They have to have great content and new and often new content to satisfy subscribers and prevent churn, but they also have to be willing to go into these new areas for them, like podcasters. They're looking at audiobooks. They're looking at every perhaps genre of content where they could conceivably go after YouTube. They're looking at ingesting other television networks like they did in France, where they could be the home of a linear feed of a particular channel. They could be the home

of other services like Amazon and Apple have been selling other services. There's all sorts of things they could do to increase engagement. And I think you're going to see them try. They've got to take more risks on this because what they're doing isn't really working. Yeah, it's, it's, it's fascinating as they sort of become a quasi bundle. The ad platform, I mean, it just doesn't really move the needle anymore. It seemed like there was a big deal. They were going to go into lower subscriber rates for ad supported. And yet it just doesn't seem like they have the kind of content or the ad serving engine that yet really has gotten to scale. It is growing and it's still early days for Netflix and ads. But when you talk to ad buyers and compare a platform like Amazon Prime

video, which comes attached to the Amazon behemoth, which is very good at selling ads. They've been much more successful in transitioning over to their ad tier for video, in part because they opted everybody in that was a subscriber to prime video, and Netflix didn't do that, but most of the growth in subscribers is coming from that ad tier and people who want to pay less. So I think you're going to see improvement there, but they got to have the buzzy shows. They got to have that engagement that. that gets people in in order to sell those ads. And maybe sports is the answer, maybe more live events, maybe podcasts,

but they've got to have it all. Netflix is an everything machine. They've got to have it all. Yeah, sports is really the way you concentrate the attention. We'll see if that is a priority. Matt, great to talk to you. Thank you very much. Matt Bellany.

Thank you. It has been a volatile week for Treasury yields as concerns over AI debt and inflation takes center stage. Up next, is there an attractive entry point? point in the bond market or should investors wait for the volatility to pass? Closing about overtime. We'll be right back. It was quite a volatile week for bond yields as investors weighed hotter than expected inflation against worries over the credit market in the AI ecosystem. The 10-year yield traded in a range

of more than 25 basis points in just the past two days. So are Treasury's reclaiming their flight to safety status as investors continue to sell big tech and AI-related names? Joining us now is RBC Global Asset Management, Head of Fixed Income, Andre's Skiba. Andre, good to see you. Great thing. You know, for weeks as Treasury yields marched higher, a lot of folks would say, ah, but credit spreads are very tight, and people are happy to sort of take on the corporate risk. Was there a bit of a flip this week? What's your read on the action?

Look, this is the first time in a while when we see Treasuries rally into weaker markets, so that safe haven status at least has been reclaimed for the last few sessions. And it's telling us a couple of things. The first thing it's telling us that what we have seen as pretty much a capitulation trade in long treasury positions that has been washed out from the markets over the course of this summer and the beginning of this autumn, that that is quite advanced, that treasuries can start reclaiming that risk aversion trade status. So as far as we're concerned, particularly with the market, pricing in around three hikes, ahead, a lot of the bad news is in the price. So we're actually, we're pretty positive on the

front end of the Treasury curve in this market. Okay. And how about the long end? It's 5.3, it sounds like you think 5.3% is going to be the highs of the cycle. Well, we feel that yields definitely can move higher when investors fear about the deficit outlook, when investors fear about the so-called bond vigilantes having an attack at Treasury yield levels. to reflect difficult fiscal backdrop in the US. But it's very difficult to see a dramatic seller from here. A lot of the readjustment has already happened. The other thing that we want to highlight is that we're only few months away

from inflation data becoming easier. Once we start getting year-over-year comparisons ending with the start of the conflict around March of this year, so around March 27, we should get easier comps for inflation data, and that will take some pressure of the Treasury market as well. And then in terms of the credit side, how concerned are you about some of the disorder

and some of the AI-related debt, and do you think it's going to potentially really choke off future issuance? I think we're having a very strange situation in the markets right now, where on one side you have the whole AI-related complex and actually quite a few of other TMT-related names that are in a bear market. And it's not been happening for the last few days. It's been happening now for a number of months.

When you look at fixed income space, actually, if you did not hold a single AI-related bond in your portfolio this year, you would be outperforming your peers. So this dynamic has been in place now for a while. At the same time, you have other sectors, anything that is not AI, not TMT, trading very strongly, because investors like the yields. They like the strength of corporate earnings, and they want to take advantage of these valuations.

So we're seeing a very strong demand, much more bull market-like, away from TMT and especially AI, and a bare market feeling in AI. So I'm just wondering about the future capacity that still needs to be built at what price and I mean when we take a look at how core leave debt is trading how Oracle debt is trading how closed off as a market at this point many pockets of the market are frozen right now like when you are a high yield issuer and you would like to come to the market with a data center deal or a chip financing deal right now it's pretty much impossible and a market is looking for a clearing level where valuations get attractive enough to get new investors new

demand coming through. In the meantime, I think a lot of investors want to see earnings, want to see what kind of picture will we see coming from the earnings starting next week within the space. And also, you just want to see some stability. No one wants to catch a falling knife. But at the same time, people realize that there is more than a trillion dollars of CAPEX that needs to be funded. So this has to happen sooner or later. And the most of the more information we have about how healthy adoption rates are, how healthy revenue growth is within the space, the more demand will come back into this market, but at higher yield levels. Are these trading off of, you know, kind of the value of the GPUs at this point? I mean, they secured implicitly by essentially, you know, how much these things hold their value?

To be very honest, Mike, I think we trade much more of sentiment than anything else right now in a similar way as, Earlier this year we've seen capitulation in long treasury trades. We're equally seeing hedge funds capitulating on long AI credit trades across our markets. And that trade doesn't happen in one day. It doesn't take one week. So when that capitulation is finished, when positions have been degrossed, then we think the market can focus on fundamentals. And hopefully this earning season will provide more than,

enough ammunition for people to reflect fundamental views rather than market panic. Andre, great to see you. Thank you. Always a pleasure. It's a bird. It's a plane. No, it is Tesla's long-delayed roadster that was unveiled last night while it was very eye-catching. It won't do much to revive Tesla's auto business, but could higher gas prices and lower model prices do the trick instead. We'll dive into that. Closing bell overtime. Live from the NASAC market site, we'll be right back. Welcome back. Evy sales were cut in half just a year ago after the federal tax credit for the vehicles went away, but they are showing signs of life as gas prices

continue to stay high. Phila Bow joins us now with that. Hi, Phil. And Mike, these are numbers that were crunched to us by J.D. Power, which tracks the sales data every single month. And what they've noticed is that you're starting to see a slight increase in EV sales as the prices that people are paying for EVs without the federal tax credit have come down. So in the third quarter, the average transaction price. That's what you and I pay when we buy a pure electric vehicle, 47-136. The average incentive, by the way, 9,333. I guess we lost Phil. Yeah, I guess so.

But I do think he was about to talk about, you know, obviously it's becoming slightly more affordable. And I also wonder if traditional internal combustion engine cars, the prices keep going up, so on a relative basis, even without the tax credits. you get the all-in cost with the gasoline, and maybe it's a little better. But what I wanted to ask Phil about was the Roadster, which has all these SpaceX features. All we can talk about, yeah. Obviously, it's not going to be much in terms of sales because it's a very nichey sort of product.

I think it's $200,000 is the base. So not a big Tam. But at the same time, it sort of makes the case that it makes more sense for SpaceX and Tesla to be combined. If you can actually have a car that integrates rocket features. Definitely, yeah. Oh, there's no doubt about it. I mean, I think that the sort of the general kind of financial and industrial logic was already there, but the more they do these collabs, obviously this video is showing it's literally using a lot of the technology that are used in the rockets.

I do happen to know somebody who put in a deposit on the roster in 2017. So nine years ago, they started taking deposits of like $50,000, and we're going to have it soon. And so we'll see, you know, if that's worth it at this point. But, yeah, I think there's a lot of commentary today about, look, you know, the clock is ticking on a potential merger here. You can't drive this car on the road, by the way. Yeah, we should say that, I guess. Yeah. Tell your friend.

Yeah, it's not going to come, you know, standard equipped with that feature. Let's get you set up with what is coming up next week. More earnings on the way. Netflix and SpaceX reporting on Tuesday. Meta and Tesla on Wednesday on the economic front, there's lots of housing data. Homebuilder sentiment is out on Monday, and on Tuesday we will get housing starts and pending home sales. Plus, consumer sentiment is expected on Friday. So we'll start getting those hyperscalor earnings,

which should either help turnaround or maybe help pressure the tech sector. I do think the consensus is definitely forming that. You know, we just have to kind of, you know, brace ourselves until we get to hyperscalor earnings. Although historically, most quarters, some are encouraging. Some you see sell the news. Interesting that wasn't SpaceX kind of a hastily scheduled earnings report? Like within a couple of days, I thought Adam Jones. at Morgan Stanley today said, that was a little strange that they decided on a couple

days notice to sort of put it on the calendar. So we'll see if there's something interesting there. But yeah, you do wonder if the market wants to kind of grab for the perceived stability of the earnings as opposed to, you know, worrying about the macro and where this really kind of violent rotation is going to land ultimately in both the stock and bond markets. That's going to do it for overtime. Fast money starts right after this quick break.