Stock Market Suffers Historic $2.5T Loss & How Steve Kornacki Won the Midterms

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rhetorical tics we'll feature the best submissions to highlight before the end of the year this is going to be eye-opening neil i don't think anyone can hold a candle to your good morning and i stand by my neil's numbers but i do think there's some good let's rides floating around out there if you want to show off your best neil in toby impressions and potentially get featured at our end of the year show you can send an email to morning brew daily at morning brew.com or dm us a video on social media at mb daily show now a word from our sponsor runway neil i'm itching to make something have you tried runway no i can't so i mean runway the company helping people bring their biggest creative ideas to life runway's creative suite gives anyone the power to generate edit and finish video images and audio for marketing campaigns including social and product content that way teams of every size can produce the full volume of high quality professional and on-brand content they need and with runway agent you can tell it about your project product audience or live campaign and it finds the angles most likely to land then it starts building concepts ads localized creative and more sign up for free at runway.com slash morning brew and get 25 off paid plans with the code morning brew well that was painful in the matter of minutes yesterday traders went from swimming in a blue lagoon ushered in by the democratic route at the midterms to falling down a waterfall the sp500 erased over two trillion dollars in value in less than an hour all 30 companies in the dow fell the vix a key volatility index jumped as high as 70 a bigger move than anything we saw in the early days of covid and the nasdaq had a shocker by market close the tech heavy index was down five and a half percent that shed more value than on any other day in its history beating out even covid and liberation day moves when all was said and done and newton got the last laugh because what goes up must come down yesterday's decline was double the size of wednesday's post-election rally the same chip maker and ai related stocks that have spent years wrenching the market higher by the scruff of its neck were suddenly the same ones dragging it down nvidia fell nine percent and is now down on the year broad sitcom fell ten percent qualcomm dropped thirteen percent tesla and spacex both had nearly ten percent wipeouts and neocloud's core weave nebius and iron threw up all over themselves falling more than 15 each even oil which had fallen below 90 a barrel on hopes of a thaw in the iran war reversed course and ended the day higher neil on wednesday stocks were soaring because investors thought a divided washington would check trump's power and push the iran war towards its end but the relentless unwinding of the ai trade showed we may have jumped the gun this is a true panic one analyst told the wall street journal that is 100 about the chip stocks and the potential slowdown in the ai trade here's what happened on tuesday across the country there were 45 data center related proposals on ballots 44 of them landed on the anti data center side that's almost a worse record than the chargers meanwhile statewide races we've had we had democrats antagonistic to data centers come on become governors of texas georgia and ohio where more than 40 percent of all planned data center capacity is slated to come online this is a huge business problem for tech stocks but also the entire stock market without either is no ai investment that's what's been propping up the economy and the stock market for the better part of two years so that is exactly what they're reacting to that 44 out of 45 record wait what was the one that passed yeah i know you know which is the one it was in harwood north dakota so that's exactly what they're reacting to that 44 out of 45 record so 800 people 800 people in harwood north dakota so yeah if you want to build a data center that might be the only place you can do it right now there was nowhere to hide that was the issue yesterday obviously this was a tech driven sell-off it was an ai driven to sell off but every single sap 500 sector was down you're supposed to be able to rotate into safety you you know go to things like consumer staples healthcare these industries that aren't affected by this tech boom and bust cycle and yet everything was in retreat uh a potential market watchers pointed to is the fact that leveraged etfs have become super popular these days whenever leverage enters a market where people are borrowing to buy more stocks every move is going to be amplified a couple times over so that's might have been one of the reasons why we saw just up and down the market everything was unwinding the question now is is data center build out going to be totally on ice or is this just going to be sailing with a bunch of icebergs and we've had a bunch of analysts come out and say look this is not going to be a freeze across the entire country there will be a identity centers still being built jp jp morgan asset management said we expect the ai boom will remain on track but may become costlier slower and more consolidated in the coming years sequoia capital partner pat grady also said this is going to probably elongate the timelines for the data center buildouts so you had a little pushback to this complete meltdown yesterday saying this is not going to be the end of the day but it is going to be the end of the day this is going to be the end of the day because one of them the investor gavin baker pointed to what's happening in texas there's the governor-elect there gina ino hosa this was a very closely watched race when it comes to the data center build out because she was saying that she wants to put a moratorium on day one but when you parse through her statements exactly she said that all currently permitted permitted data centers in texas will be allowed to finish construction which covers basically all of 2027 and well into 2028 so you're hearing that there might be a compromise worked out where ai companies pledge you know to be better neighbors to these citizens and then these governors and these towns that are wanted to ban or restrict data centers can somewhere meet in the middle because there's still a lot of jobs at stake i mean we've talked about the market but if the ai buildout does indeed you know get on ice then that's a problem for the u.s economy as well remember ai investment is projected to account for nearly two percent of u.s gdp this year that is a larger percent of total gdp than even the railroad build out of days gone by so that is one thing to watch just how is it going to affect the economy as a whole jobs market as well linkedin estimates that there's 750 000 new u.s jobs uh tied to the ai industry specifically construction is uh very uh vulnerable there which is why you're kind of seeing some of these mayors and governors who are are stepping into their new roles saying actually we don't want to completely get rid of all these jobs these data centers are bringing to our areas of the country so maybe we adopt a softer tone it's still up in the air right now one thing to look out for too is the potential to move some of this build out overseas because if it's difficult to build a data center in america maybe it's easier to go over to malaysia and build a data center there and met as president's dina powell mccormick said i can tell you that every hyperscaler is now thinking about do we need to build outside the united states that's potentially going to be a potentially something to watch if this investment is going to flow outside of our borders question going forward are people going to btfd which is by the freaking dip and so far i'm looking at futures this morning looks like they're back in the green the nasdaq is up 1.2 percent the smb is up 0.2 percent so the sell-off at least for now everything could change in an instant is is not continuing as we try to head into the weekend on maybe a green note it feels like whatever we say at the beginning of the day is going to reverse course because whatever we said yesterday completely was not true we're just reporting the news it was a good day on wednesday it was a bloodbath yesterday we'll see what happens today welcome to stock of the week dog of the week where toby and i pick one stock that gave an inspiring victory speech and another that conceded defeat i won the pre-show pie eating contest so i get to go first my stock of the week is steve kornacki mbc's sneaker wearing encyclopedic indefatigable political map guru helped the network dominate the battle for eyeballs on election night elevating his status as a superstar internet creator kornacki cam a dedicated stream focused solely on kornacki and his analysis that ran nearly 11 hours earned a record 29 million views across all platforms tuesday evening and 6.1 million views on youtube topping all streams on television his presence fueled nbc to average more than 6.7 million viewers in primetime ahead of network rivals abc and cbs as well as cable channels cnn ms now and fox news it marks the first time that nbc has won a midterm night in total viewers in 24 years these midterms are being hailed as the so-called creator election in which internet streamers and independent journalists seem to go toe-to-toe with legacy outlets for coverage and analysis as the votes rolled in. But even among that sea of would-be challengers, Kornacki stands out for having cultivated a rabid fan base that appreciates his ability to translate the flood of data coming in on election night into digestible takeaways. Toby, this is a guy with a very particular set of skills, and he's meeting the moment. Yesterday, our producer Ray wrote in Slack, we should get Kornacki on the pod. You replied, ever the realest, a little late now, but we definitely should have. But then our co-workers started chiming in. One co-worker, Jake, wrote, I'd die for that man. This dude, he's a data nerd, but people just have this intense fandom for him. There's fan edits for him on social media. They have him running around talking about Iowa primaries set to the NFL theme music. He's just electric. And we were saying, I hope he's getting paid a lot of money because A, no one can really do what he does. He's very good at what he does. But B, he's attracting viewers like, nobody else can. The fact that he's lapping Fox News, the fact that Kornacki's a bigger draw than the biggest news network in the world is because he just is so good. So he is the attraction, and he's doing the attraction, attracting, and I hope he's getting his bag. I think he is. We've talked about this moment of monitoring the situation. There's so much data coming in. MTS, where people just want to feel informed. They want data, but sometimes it's too much, and they want somebody to explain it to them, and there's no better distillation of what that is than Steve Kornacki when he's up at the board telling you what the results in for Mecklenburg County mean as opposed to, is it outperforming Kamala Harris a few years ago, et cetera, et cetera. But let's talk about this creator election. Do you think that creators sort of put their stamp on this particular election? We saw so many live streams. We saw all these independent journalists, whether it was Jim McAuster, Katie Couric, or Piers Morgan, Chuck Todd, Don Lemon, and then streamers such as Hassan Piker. They were trying to draw viewers away from the cable and network channels that people most flock to. We also had things like, you know, Kalshi and the New York Times Needle presenting even other ways to consume news. I mean, this is a big night. 31 million people watch the midterm elections on TV. I don't know whether the creators kind of elevated themselves against the legacy media channels because they have just so many resources, and this is a night where you kind of want a lot of resources. You want journalists, at these places where the polling is coming in, you want the Steve Kornacki types at the big board telling you what happened. So I don't know if, I don't know how well these streamers did exactly, but it's interesting to watch this kind of power play going on within media. I mean, 2024 was dubbed the podcast election. 2026 may be, you know, the rise of the political live streamer. That's what we will most remember, well, not most remember this era for, but one of the ways that we will remember this era. Moving on, my dog of the week, is AI agents because no one's really using them. AI agents like Meta's Muse and the Startup Instinct have been having a moment for their ability to carry out tasks like canceling subscriptions or checking into flights for you. But while tech circles have been losing their minds over their autonomous power, companies aren't really seeing many agents in action. During Uber's third quarter earnings call, their CFO revealed that during Halloween week, one of Uber's busiest weeks of the year, the total number of Uber rides booked by AI agents was. four. Now, 50 people did order Uber Eats using an agent, but considering Uber processed 320 million rides and Eats orders that weekend, 54 ain't really moving the needle. Uber isn't alone here either. DoorDash's CEO told analysts that they had received just hundreds of orders from agents across the nearly 1 billion total orders the company handled in Q3. Expedia's CEO saw similar behavior, noting that while AI has been popular for inspiration in trip planning, we haven't seen it change the way people are actually booking. The thing is, it's not cheap for companies to run these agents. Everyone from Meta to Elon Musk's Grokbot are sinking hundreds of millions of dollars into powering them without a clear business model to recoup that investment. So right now, paradoxically, agents cost a lot to run, but aren't powering much commerce where companies were hoping to take a cut and make some of their money back. Not a recipe for success. The context here is that there's this theory that many people believe that the rise of AI agents present an existential crisis for companies like Uber, DoorDash, Airbnb, Instacart, etc. Because if you have an agent go out and do your shopping or your booking for you, then they don't have any brand loyalty. They're not going to open up the DoorDash app just because that's on the homepage of your iPhone, which is kind of what we do. They'll just go to wherever the best deal is and they'll be absolutely ruthless about it. So this viral essay came out earlier this year saying, yeah, we might see disintermediation of Uber and DoorDash because of the rise of AI agents and all these companies. It's sold off big time. But now you hear these CEOs talk and you think maybe this is a solution in search of a problem. Tony Hsu, the CEO of DoorDash said, when it comes to a task that's as simple as ordering food, we tend to see that come directly to DoorDash. Dara Khosrowshahi, the CEO of Uber, said that the average time to book a ride is only 50 seconds in the company's app. Reordering a favorite food only takes 90 seconds. Brian Chesky, the CEO of Airbnb said, you know what? People kind of love to plan a trip. 80% of the time, a lot of travelers say they enjoy spending time researching trips. There is a lot of joy in that. So why would you have an AI agent do that? So really interesting to hear these CEOs come out in their earnings call and saying, yeah, like we don't know what these general purpose agents are going to do for people because it literally takes 50 seconds to order some food. But on the flip side, of course they would say that because they are looking out for their own interests. And of course the CEO of Uber would say, wow, the Uber app is extremely easy to use. It is true though. Like it's bearing out in the data. I think one of the big hurdles that AI agents need to get over is the trust problem. The more you hand over to them, the more effective they are. But that means you got to hand over your passwords, your email accounts. You got to put your credit card up into a vault and say like, hey, you can use this for certain purchases. And it's a really fine line that they're walking. There is this YouGov survey, more than 2000 UK adults, fewer than one in five trusted AI assistants to make everyday purchasing decisions. In six in 10, I think this is the key stat said they would stop using an AI shopping agent after it made just one mistake. So they're on extremely thin ice. They cannot mess up. And I think that is one of the reasons, I mean, we have instinct, we have these agents and I never wanted to book anything for me. 'Cause I'm like, what if it just completely does something wrong? What if my flight isn't actually booked? It helps with the research, but that final step of actually executing the purchase where companies think they're gonna make their money back, that's something that a lot of people still say, that's a little bit too far. It's too far for me. - Final note on this is that even as they're maybe disparaging the broader AI agents produced by Meta, OpenAI and Instinct, all of the companies that we talked about are rolling out or already have their own AI agents within the platform. So they absolutely believe in the agentic future. They just want it to be theirs and not a third party's. - All right, we're gonna take a quick break and come back with a story about Zelda right after this. Neil, would you consider yourself someone who follows trends when it comes to marathon running? - Yes, that depends. When it comes to marathon running, yes. But when it comes to toe socks, no. - Well, you're not alone because advertisers are mixing trends too. 70% of advertisers are raising CTV budgets in 2026 and much of that budget is being pulled straight from social. - Yeah, since social CPMs have increased pretty significantly, a lot of advertisers just see their dollars working harder on streaming and they often end up on Roku. - It's easy to see why. Roku's self-serve platform helps you go live in minutes with 100 million logged-in households. - Plus, Roku is offering a $5,000 match on your first spend with Roku Ads Manager. - Use code "BREW5K" to access the offer at advertising.roku.com/mbd. Neil, as I'm sure you know, business travel doesn't always go according to plan. - Yeah, don't I know it. That's how I ended up sleeping on my uncle's tugboat for three nights. - With Hotels.com, many hotels offer free cancellation, giving travelers the flexibility to adjust plans when needed, and with 24/7 customer support, help is available whenever travel disruptions arise. - Whether plans are set in stone or still taking shape, find a stay that fits at hotels.com/morningbrew. That's hotels.com/morningbrew. - Morning Brew Daily Show is sponsored by AXA XL. - Innovation has always kept the world moving forward, but it also comes with risk. - As a leading global insurer, AXA XL pushes the boundaries to protect your business and empower your innovations. - They're facing into risk for a future to be imagined. - Learn more at axaxl.com/facing-into-risk. That's axaxl.com/facing-into-risk. Disclaimer, this advertisement does not constitute an offer or solicitation, nor a description of any products or services of AXA XL. - Last fall, when Grand Theft Auto VI announced it would be released on November 19th of this year, basically every single upcoming video game, pushed up their launch to get out of the way. After all, you simply cannot compete with what's being called the biggest entertainment release of all time. But not everyone backed down, not Link. Yesterday, Nintendo released The Legend of Zelda: Ocarina of Time, in what's expected to be the second biggest video game launch this year. The game itself is a refresh of the original Ocarina that came out in 1998, and that V1 is legendary, considered one of the best, most influential video games in history, and the only one to maintain a 99 out of 100 rating on Metacritic. the follow-up almost 30 years later has similarly rave reviews the stakes for nintendo are so high it released its switch to console last year to much hype but after a period of strong sales it's had to jack up prices due to the memory crunch thanks ai yesterday it reported that switch to sales punched 41 last quarter from a year before and it's banking on the new zelda to boost those numbers going into the holiday season no one knows how this november video game battle will ultimately play out but in the best case scenario it'll resemble barbenheimer two huge simultaneous entertainment releases that rather than cannibalized each other lifted demand for both because of a halo effect so toby this is a big gamble i think the halo effect is in play though because these games appeal to different audiences the same people who want to roam around in grand theft auto it's probably not the same people who either grew up with zelda or are a kid coming to for the first time so yes grand theft auto is kind of this pac-man force in the video game industry where uh literally 30 nearly 30 of us gamers said they intend to buy grand theft auto 6 so it is just obviously going to be the biggest game that has ever hit this industry but there is room here for another audience one who's not in interested in you know living in vice city or miami and it's interesting what's going on in the video game industry in general because it's doing terribly so we're talking about these two games being so successful but really they are the exception to the rule xbox has been laying off thousands of developers it's in the middle of this big reset it's collapsing fortnite developer epic also cut more than 1000 jobs because of this sharp downturn in the gate live service game space memory costs are eating up hardware the switch 2 has had to raise prices from 450 to 500 in september consumer spending on hardware across all console makers is down nine percent so far in the u.s this year compared to the last so these two games are being released at a time when the video game industry and you know specifically hardware console makers in general are just doing so poorly obviously if you're sony or microsoft you're thinking thank god for uh grand theft auto because maybe that'll boost our console sales that are absolutely flagging but still i just think that the video game industry beyond just the input costs going up the fact that they are having to reckon with free to play games like i mean fortnite and roblox are just absolutely gigantic right now it used to be if you put all this time and effort into making a triple a game people would buy it but now there's so many free options out there uh even on the platforms like stream that who knows if the triple a 80 70 game bundles are going to be a thing in a couple years so definitely a time of disruption and reckoning for the video game industry maybe these two are the saviors that it needs now let's bring to the finish with some final headlines all right the golf league that tried to upend the sport by throwing around billions of dollars in saudi cash has officially folded after five seasons roughly five billion dollars spent and some of the biggest contracts handed out in sports history lives lawyers told a bankruptcy court yesterday that the league is abandoning its comeback plans and will instead liquidate the final nail in the coffin came when the p firm bc partners which had proposed a 300 million dollar lifeline after saudi arabia's wealth fund decided it was done footing the bill also pulled their support live burst onto the scene in 2022 poaching stars like john rom and bryson de chambeau with guaranteed paydays 25 million dollar tournament purses and a focus on team golf but while live succeeded in inflating player prize pools and forcing the pga tour to rethink its business model never built a sustainable one of its own now comes the awkward part where all those stars left in the lurch have to figure out what tour they're allowed to play on again what a divisive and very expensive era for pro men's golf neil the funniest thing about this bankruptcy filing was that people were looking through and they found that live golf had bought more than 850 domain entries including domains that would perhaps be used against it by critics and i'm talking things like every type of permutation of terrorist golf league that you can imagine terrorist golf league.com terrorist golf league.org terrorist golf.com terrorist golf.org and at the same time they bought things like f live golf.com they wrote it out f live golf league.org so they had bought all of their faces they kind of knew that people were a little pissed at them so they made sure that they had all the domains that people would want to use against them i think there's some really interesting takeaways from live's legacy but one of them according to yahoo sports i think is pretty insightful is that there is a big golf world out there it is not just europe and the united states and the pj tour and dp world tour and all these other tours would be wise to remember that because live events in the southern hemisphere were regularly topping six figures in attendance so as we examine the wreckage from live golf a lot of the existing golf tours and golf leagues should be looking at some of the lessons that we learned from this and that is that a lot of people in the southern hemisphere whether it's australia south america or australia or southeast asia they love golf and you should absolutely cater to them finally an italian chef has emerged as a hero or a villain depending on where you stand after he was fired from a restaurant for refusing to play golf refusing to put pineapple on pizza the incident happened a few months ago in brisbane australia where david tambarella chef at the now closed la costa restaurant refused to put pineapple on pizza at the request of customers because it was and i quote an insult to his culture because of this refusal and other alleged infractions tambarella had been fired from the restaurant and on tuesday lost an unfair dismissal claim before the fair work commission in its ruling the commission noted this wasn't a one-off it was the third time that the chef had refused to put pineapple on pizza in the past four years toby a man of principle or obnoxious pizza snob i just think people over debate pineapple on pizza and actually i i there's this instagram account that i've been following for a while now called matthew solely chef and basically what he does is add toppings to pizza more controversial than pineapple he's like this is so tired like pineapple is it's a sweet fruit but there's so many other combinations out there and his top pizza combo that is better and more controversial than pineapple is grapes grapes in prosciutto he's like this is the best pizza ever created so i i'm removing myself from the pineapple you're not answering the question yeah because i think it's just been litigated to death at this point you know it's fine like let's talk about grapes on pizza that's more exciting to me so i would love some restaurateurs or you know pizza lovers to weigh in on this debate whether it's tired or not and also please try grapes on pizza grapes and prosciutto because apparently matthew solely chef says it's the greatest pizza he says it's a 5 000 out of 10 i'll tell you why it's not tired in this particular instance in brisbane australia because brisbane is in the state of queensland australia that is australia's pineapple heartland this produces all of the country's commercially grown pineapples so people eat a lot of pineapples there's a huge pineapple monument like this is pineapple country so when you refuse to put pineapple on pizza it hits a little harder there it's more of an insult and it would be maybe anywhere else so when this italian chef says it's an insult to my culture to put pineapple on pizza you have maybe the locals saying well it's an insult to my culture as well that you're not putting pineapple on this particular pizza there the big pineapple is 52 feet tall that is a very large pineapple right there also just kudos to you for brisbane and in queensland right there that was very good pronunciation it's pretty easy that was pretty good though okay thank you that is all the time we have thanks for starting your morning with us and have a wonderful friday and an even better weekend and i'll see you in the next video to share your thoughts on the episode or anything else send an email to morning brew daily at morningbrew.com or dm us on instagram at mb daily show let's roll the credits emily milliron is our supervising producer raymond lu is our senior producer our producer is olivia graham and our associate producer is olivia lake technical direction by nina miller hair and makeup go together like pineapple on pizza or grapes on pizza i guess and our show is a production of morning brew great show today neil i wish you all well business news today it's everywhere and it moves fast but knowing more gives you an edge from your job to your finances to big life decisions it is the news shaping the decisions you make every day so if it matters this much why is it still so hard to keep up with well that's where morning brew's newsletter comes in and we have one goal to make business news easy to follow think of it like a smart friend explain the news after they did all the research for you and the best part our newsletter is completely free so head on over to morningbrew.com slash subscribe and see why over 4 million people start their day with Morning Brew.