Good morning everybody. Welcome back to another episode of the market open. We are live. It is Thursday, October 23rd. It has been a pretty quick week. I mean, we are one day away from Friday, but we're here. We're live. We got a lot to talk about. Thank you everybody for being here. Got a bunch of different headlines going on in the pre-market there. We are going to get into tomorrow. We will be getting CPI data. So, I think today's market activity is definitely going to be a bit contingent on the perception of that CPI data. And we're going to talk about some of the overall projections that some of the street has on what they think will happen with CPI.

On top of that, you have a relatively green pre-market. You're not seeing too much red. We did have a pretty nasty day yesterday that ended up recovering towards the end of the day, which was good to see. Not a full recovery, but you did get somewhat of a bit of recovery. So, now we have to see if that recovery can continue. S&P 500 is green in the pre-market along with a lot of the other risk assets. So, we'll talk about that and we're going to see if that can continue to be green.

Now, S&P, okay, just flipped red. It was green like 10 minutes ago. But overall, it's not as bad as it was yesterday when yesterday was down about 1.2% to 2% at the worst of it. S&P 500 right there down about 0.4%, AMD down half a percent. SoFi down 0.4%. Google actually green, Grab green, Amazon green. Hoodie down a little bit and then Palantir down about 0.74%. We also have a new Palantir contract that we'll talk about, a $200 million deal with Lumen Technologies. So we'll get into that contract and discuss what's going on with Palantir as well.

We have some updates on the China trade negotiations. We'll talk about that. Hopefully we are getting closer to somewhat of a capitulation from both sides to give a little bit and take a little bit and hopefully we get something where it's like, all right, this is what's going to happen. And maybe that ends up taking place before the meetings in South Korea with Xi. Trump will be going to Malaysia. He's going to do an announcement at 3 p.m. in the Oval Office today. Don't know what the announcement is going to be about. Last time it was about in vitro fertilization. So it might not even be about the economy, but we're going to see later at 3 p.m. what he talks about. And then I believe tomorrow he goes to Malaysia and then next week he goes to South Korea for those negotiations with President Xi.

On top of that, you got Tesla down about 4% right here in the pre-markets. We will be discussing what happened with Tesla. Look, it was not the best earnings in the world. It was definitely not the worst earnings in the world. So, the street's giving it a bit of a sideways reaction. 3% down is similar price to where Tesla was last week. So, I think if you're a Tesla shareholder, it's not that big of a deal. But, nonetheless, we'll discuss kind of what Elon said on the call and the core arguments that were made on the Tesla earnings. They did miss on EPS unfortunately by about 5 cents. They beat on revenue and then we'll keep going from there.

We do have a bunch of other companies in the pre-markets that reported earnings. Pretty much all of them again beats on the top and the bottom line which is really good. So far 85% of companies that reporting the S&P 500 have beat their earnings. And if that can continue going into next week, which is going to be the biggest week for big tech earnings, then that should be good for the broader markets as well.

All right, so let's get started with the first story. And this first story actually is something I didn't mention for the past couple minutes. But I think it is the juiciest story. And so we might as well start off with this one. And that is the story of Quantum. So what happened over the past week? A lot of these quantum names ended up going down 30 to 40%. It's been pretty much a bloodbath in the quantum ecosystem.

Last night actually when I was doing my deep dive, I was working on the Nebus deep dive for tomorrow. I was doing some research writing on Substack and then I looked over on Twitter and this was the first headline that popped up and I knew this was going to be the story of the next 24 hours and it has become the story of the next 24 hours. The Trump administration is in talks to take equity stakes in quantum computing firms including NQ, D-Wave, and Regetti. I mean, I saw the headline and I was just like, you got to be kidding me. This can't be real life. But this was the headline.

Now, to be fair to the Wall Street Journal, Reuters came out this morning and said there's a commerce representative that said they are not specifically in conversations with these companies, but the sources that the Wall Street Journal was using says no, they are in conversation with a lot of these quantum computing companies. And as a result, NQ up 8% in the pre-market, D-Wave up 16% in the pre-market, and then Regetti up 9% in the pre-market. All these stocks are down about 30-40% for the past week.

So there's two angles to this. First of all, I want to do the angle of what it would be like if this were to happen while acknowledging at the same time that there were government officials that said this is not happening. So, right now, it's kind of a story of he said, she said. We don't officially know if this is going to happen or not, but the stocks are up right now in the pre-market based on the rumor that it's going to happen. And you know, the rumor coming from the Wall Street Journal will definitely get a lot more people to think that there is a possibility for this.

So, I went down the rabbit hole and I tried to understand what would be the incentive and motivation for this. And there was a couple people on Twitter that pointed me to this direction. And look, when you go down this rabbit hole, it does start to make a lot more sense. The deputy secretary of defense for the US government is a person named Steve Fineberg. Okay. Fineberg also co-founded a hedge fund called Cerebras Capital Management and he was the CEO for 30 years of this hedge fund before he left in March of 2025 which was like seven months ago to become the deputy secretary of defense. That hedge fund has a position to the tune of hundreds of millions in NQ which is about 2.4 million shares.

So look again we don't know exactly what's happening here but this is starting to make a lot more sense to me. My gut intuition on this is if this were to happen, if the United States government were to take equity stakes in these companies, I do not think it's because Trump believes in quantum computing. I do not think it's because the administration thinks quantum computing is the next evolution of technology that they need to have a major focus in by taking an equity stake in. I personally think again gut reaction that there are some people in that administration that want to make sure they can pump their bags. That's kind of what it's looking like.

And here's my reasoning for why. And I'm open to change my opinion. Number one, why does the US taxpayer have to subsidize quantum? I can understand why the US taxpayer has to subsidize lithium. I can understand why the US taxpayer has to subsidize semiconductors from a national security perspective. I can understand why we have to subsidize rare earth minerals and metals because at the end of the day, all those products are necessary in every part of our daily life. I have no idea why we have to subsidize quantum.

And another reason I don't understand why we have to subsidize quantum, Google just to the bullcase of quantum, Sundar just announced that they had a massive breakthrough in Willow yesterday that was not subsidized by the US taxpayer. That was Google as a company with their free cash flow because they actually generate revenue unlike some of these companies are able to invest and put the R&D into building out quantum computing. So from that perspective, I don't necessarily understand why the United States government would have to subsidize some of these companies.

And it also doesn't make sense to me why the taxpayers have to foot the bill for that because these are private companies working on it. We didn't subsidize Nvidia when they were working on GPUs 20 years ago. They worked on it. They developed the intellectual property and then it ended up becoming a reality. So I don't know exactly why that's the case.

On top of that, if you read through the article, it's a $10 million funding award, aka a $10 million equity stake, that the United States is thinking of taking if this were to happen. Based on the reporting from the Wall Street Journal, these companies are worth 15 to 20 billion. $10 million is absolutely nothing. I mean, $10 million, it's like a 0.001% stake of of of these companies. This is not like a $8 billion stake like they took in Intel. So from that perspective, it's also pretty weird because at the end of the day, it's like, well, wait a second. $10 million is absolutely nothing. So the headline in and of itself is more important than the equity stake.

10 million is not real, bro. These companies are worth almost $20 billion. What's the point of 10 million? Like that's not even an equity. That's not like a real stake in the company where the United States could be focused on like, oh, we have this massive stake. We need to make sure we support that the company does well. So look, from my perspective, if this were to happen, and again, you have conflicting reports this morning saying it's not going to happen, but then again, the stocks are reacting as if it is going to happen based on their prices going higher at 9:30. We're going to see when the market opens how this plays out.

If this does happen, then the US is basically classifying all these quantum computing names as something that's in the interest of national security to the tune of semiconductors and rare earth metals. I don't know if that's necessarily the case. Maybe that is the case. We're going to see what the Trump administration says. If they only take a $10 million equity stake, I don't think at that point it's just a headline because 10 million is nothing substantial to get the street excited or really to get like people excited that the government actually cares about these companies.

And then finally, based on going down a little bit of a rabbit hole, you see some of the people that are part of the administrations, see some of the positions they have in terms of their hedge funds and money management funds, and you start to realize, you know, maybe some people told Don to take to put a little money into quantum to get the street excited. So, that's what we got going on right now. We're going to see how this ends up playing out.

Ultimately, we're going to see what the future of quantum computing looks like. But, that is the headline. And look, here's the thing, and this is why as much as I'm not interested in buying these stocks at these valuations, definitely not interested at shorting, and I've, you know, not even taken a put position or bought any of the inverse short funds because at the end of the day, a lot of these names are driven by hype and narrative. And if the narrative becomes that the US government wants to make sure that quantum succeeds, for whatever reason, the US government is super interested in it. Uh, yeah, you're likely not going to see quantum stocks go to zero.

I mean, you're likely not even going to see them take that 30-40% draw downs that they taken over the past week because once the government's on board, you have a backstop. You have a backstop by the government. So, I don't know. Now, Sprrowley's thoughts on this yesterday was that this is a perfect short opportunity because this is stupid and that it's going to lead to an even better entry to people, you know, going short for a lot of these names. Again, I just think shorting these names is tough because you've got to be so right about the narrative and you might just not be right about the narrative.

But it is kind of wild to see that the Trump administration theoretically could take a stake in some of these quantum companies. It also makes you wonder like again what is the purpose of the government and the sort of venture capital strategy because I can understand it when it's for Intel because like look if China invades Taiwan we need our new chips. I can understand when it's for rare earth metals because if China has massive export controls we have to have our own rare earth metals. At what point does it just become a grift? Like at what point is like, "Oh, I'm just going to take a stake in Facebook." Now it's like, "Well, there's no need for the government to take a stake." Yeah, but the government wants to take a stake. It's like, well, that doesn't make sense. I'm gonna take a stake in SoFi. We need to make sure we secure online banking in the United States.

Like, at what point does it become just the government literally doing whatever they want to do to pump different sectors. And I am not a fan of that. I think a lot of people that believe in free market capitalism would not be fans of that. But, nonetheless, that could be something that's playing out. So, we're going to have to see over the coming years how this ends up happening. Very curious to see when the market opens. Does the market actually believe in this story? Does they do they believe in this narrative or do these stocks end up getting hit?

All right. So, cool. That's what we got with Quantum. Let's get into some of these other stories. Tesla, so let's talk about it. Tesla, they missed on the bottom line. Came in line with expectations on the top line. 422.15. This is what you have right now. We listened to the call yesterday, me and Steve. I mean, it was an okay call. Elon was a bit more energetic than he was from 90 days ago, but it wasn't necessarily that different in terms of a lot of promises and not necessarily an explanation on how they're going to get there.

My my thing with Tesla here is that energy next year, even if it if it doubles, it doesn't make a material change in the business in terms of the earnings growth. Uh robots are not coming next year. In fact, Elon did say that the production for Optimus is going to start in 2026, aka they're going to build production lines, which is super bullish, but that doesn't mean that Optimus is going to be shipped in any meaningful commercial application. So, you're not going to get Optimus growth in 2026.

So, the only thing left then is vehicle deliveries and FSD. Let's say vehicle deliveries are slightly up because rates come down, but they're not up like crazy because the EV credit goes away. The only other vertical I see for Tesla is FSD. And Elon did talk about FSD yesterday and he mentioned that FSD is going to be the reason why Tesla continues to win. His exact quote on FSD was that uh here's the thing. The simple killer app is that if you can text in the car, if we can get unsupervised epic so FSD to be so good that you can text and drive, everyone will buy the car. I'm 100% confident we can make this happen.

Look, I think it's very important to be long Tesla and have exposure to the age of physical AI. I just logically now that it's at this valuation don't see in 2026 what is the growth curve that can change earnings growth. Tesla is growing negative 30% year-over-year and it's trading at 200 times free cash flow and you know 200 I think it's 145 times PE like and the multiples are whatever right Tesla's never really traded on multiples but the point is this is not a stock that's at 250 it's not at 200 it's not at 150 it's not even at 300 it's now at 422 and it's not growing.

And so I don't know if 2026 is the year where they switch to growth. It's just when you have an Nvidia that's growing and an Amazon that's growing a Google that's growing it's a little tough to bet on something that already has such a stretched valuation and stretch multiple that is not showing the growth. I mean, a lot of these growth stocks that are growing, you can disagree with the multiples, but if they're actually growing, you can at least say they can grow into the valuation. Tesla's going to really have to put up some numbers in 2026 and maybe that's not the year. Maybe it's 27 and you just have to be patient with it in order to get that growth rate, but as of now, that's just not there. And I think every Tesla investor has to be pretty honest with with, you know, that reality of what's happening.

Nonetheless, the call ended by Elon saying, "Please vote for the the pay package." So, they did have a bit of a sales pitch right there. I think he will end up getting that vote. I think November 6th is the actual shareholder meeting. They also skipped over a bunch of questions that people cared about like future products, which also I think pissed off a lot of shareholders because, you know, they didn't really talk about the stuff that people wanted to to hear about. So, it was a it was eh quarter like it is what it is. It wasn't too good, wasn't too great. Stocks relatively flat and I think that's what a lot of people expected for us to get on Tesla as well.

Let's do Palanteer. So, Palanteer, this was an important thing this morning. Palanteer inked a deal with 200 million or worth 200 million uh with Lumen. So, this was actually a really uh interesting deal because when I went to AIPCON, uh Palunteer had a similar deal that was like this or they had they talked about their Lumen partnership, but now we actually got some real stats on what this Lumen partnership look like. By the way, Karp's going to be on Fox News today. Karp is going to be on Fox News. So, we're going to get to see Karp live. Uh this is a week before earnings, so it's going to be really nice to see him.

But here are some details from the partnership. Luminer industry leaders building core infrastructure for the AI era today announced a multi-year multi-million dollar strategic partnership to help enterprises across every industry deploy AI faster and more securely in complex multi cloud environments. Uh CEO of Lumen said pounce or freeze data while Lumen moves it. Together, we're uniquely positioned to enable enterprises to unlock their ambitions with unprecedented scale and speed.

And then you had Karp on the press release say, "Our partnership with Lumen has reached new heights. American companies need to unlock immediate value from AI. We are proud to work with Lumen to enable the infrastructure and intelligence layers for our customers to become AI winners. Uh 200 million. So look, uh if you're long Palunteer, I think more and more of these commercial deals are going to continue to operate.

One of the things about Palanteer is that and this partnership with Lumen is that it's going to have downstream effects on a lot of the third-party distributors and vendors that Lumen works it works with which is what the press release was going into and so this should really help their kind of go to market approach in regards to dealing with more commercial growth and you know if we can get that 50% number going into Q3 I do think the stock has some good room to potentially run. I did buy a little bit yesterday at 172.38 and so I bought a little bit of the dip yesterday um on some of the downside weakness.

SMCI. Whoa. 5% down. Okay. What's happening with SMCI? I don't see a single headline. Oh. Oh, boy. Hold on. SMCI provides. Is this earnings or is this uh No, this is not earnings. This is I guess they had earning this is it looks like a preliminary update for the first quarter. SMCI. Okay. So, let me let me just pull this up. I guess it is no no their earnings call is scheduled for November 4th, but they did give a preliminary update.

Okay, so the numbers are uh new design wins exceeding 12 billion for 2026. Q1 revenue at 5 billion. Oh, that misguidance. Street thought 6 to 7 billion came in at 5 billion. Delayed Q1 revenue shifts to second quarter due to order upgrades. Strong demand seen for Blackwell ultra GPUs and liquid cooling solutions. Company reiterates fiscal year 2026 revenue target of at least 33 billion. Earnings call on November 4th. Okay, so they missed estimates.

They missed estimates. I mean, it looks like they got it for six to seven a couple months ago and they came in at five billion. Potentially, they could have missed estimates for a good reason. Aka, they had uh supply chain bottlenecks on their demand because they are saying they do have strong demand. But nonetheless, if you miss estimates, that's not the best in the world. There you go, SMCI right there. 49.46.

First of all, remember that big crypto like round table that uh the Fed had a couple of days ago. Here's uh what Brian Armstrong had to say about that round table and uh basically where crypto legislation is starting to get a lot more clarity in the United States.

>> Yeah. Well, we had great meetings with the Democrats on in the Senate and on the Republican side today. And the good news is that there's strong bipartisan support and will to get this market structure legislation done. It's important for America and the 50 million Americans who've used crypto want to see it get done. And so one date we heard floated was let's try to get this markup done uh before Thanksgiving. I think that there's 90% of the issues are already aligned on and agreed and there's draft text going back and forth. A lot of great crossunctional uh collaboration happening there. That last 10% are the remaining issues and everyone committed to get in the room together and work it out and hopefully we'll see some draft text or get it out of committee by Thanksgiving.

>> Yeah. So, you got Brian Armstrong, CEO of Coinbase, feeling pretty damn bullish about uh the legislative commitment that the United States will be able to take for crypto. Yes, the government is shut down still. This is the 22nd day of the shutdown. However, they did have that roundt which like I guess wasn't really part of the government. It was part of the Fed even though the Fed is part of the government but they still have that shutdown or they still have that roundt and Brian Armstrong does feel bullish that there can be some updates on crypto.

Andreessen Horowitz, one of the best venture capital firms in the country did put out their state of crypto report and uh there was some pretty interesting things that they said in the state of crypto. They've been pretty big crypto investors for a while. Couple of slides I wanted to highlight. Take a look at this. They said stable coins have officially found product market fit now rivaling the world's largest payment networks in transaction volume. And the reason for this is because the US is recognizing the strategic value of stable coins as they can become a top holder for um uh for treasuries.

Real world assets are bringing traditional finance and crypto on chain. 30 billion including corporate bonds, actively managed strategies, government debt, stocks, alternative funds, commodities, private credit ex private credit, etc. have come on chain. This is what I think Vlad is very excited about in the context of Robnet because he thinks if we get a lot more real world assets on chain to the tune of you know Larry uh Larry Frink thinks $4.5 trillion could end up happening uh to come on chain that would be a massive market and if Robin takes just a small part of that four and a half trillion that comes on chain that would be a massive move for their ecosystem.

Speaking of Robin, by the way, Kathy Wood bought the dip yesterday. 150,000 shares of Hoodie, probably at that 122 to 125 range. We did get all the way down to 120, backed up to about 128 in the pre-markets today, but Kathy Wood also did buy the dip on Hoodie.

This is what Jameson Greer said on what's going on with China and essentially how they think this negotiation is going to play out.

>> So in Geneva, we had an agreement where they would limit their rare earth export controls. they'd keep their retaliatory tariffs down and we would suspend a good portion of our our tariffs uh on the reciprocal tariff. And so we we kept our part. We kept that tariff low and we had very cordial and constructive discussions over the summer and then again a couple of weeks ago the Chinese decided they were just going to go ahead and expand those controls on rare earths again not not on just us but on on the whole world. And now you hear a lot of narratives uh from the Chinese side of their surrogates saying well you know the the Americans have put a lot of controls on us over the past few years or they put out a new rule that would you know to to avoid evasion of US export controls that they didn't like or their fees on ships. So they're trying out a lot of different u narratives when the reality is they just want to exert economic control on the world. They started in April with the rare earth magnets. They're using every anything else that has happened as a pretext. The reality is we made a promise in May to keep our reciprocal tariff on them at 10%. We kept that promise and they have not kept theirs.

Okay. So obviously tensions are a bit high in regards to the US-China relations on these rare export or rare earth export controls. Again, Trump has been deescalating to an extent over the past couple of days, but that meeting in South Korea really is going to set the tone for if we can get to a reasonable deal.

And you know, tensions with China are not the best, but also tensions with Russia. Russia just escalated yesterday as we have now sanctioned two of the biggest oil companies in Russia.

>> Today is a very big day in terms of uh what we're doing. Look, these are tremendous sanctions. These are very big. Those are against their two big oil companies. And we hope that they won't be on for long. We hope that uh the war will be settled. uh we just answered uh having to do with the various forms of missiles and everything else that we're looking at, but we don't think that's going to be necessary. Uh we would like to see them just take the line that has been formed over quite a long period of time and go and let's, you know, go home. Uh last week they had almost 8,000 soldiers killed. Many Russians were killed last week. Many Ukrainians were killed last week. We think it's ridiculous and would like to have it in.

As a result of sanctioning the oil companies in Russia, uh oil prices are up 6%. This is uh one of the biggest one-day moves or at least early morning moves that we've seen on oil and uh it's quite incredible because you know oil below 60 in and of itself was like you know generally really good for the economy, really good for gas prices, all that stuff. Uh but the fact that it's back up now again Trump said the sanctions might be temporary and the you know oil might or the oil the oil situation with Russia might be resolved if they get to a ceasefire or at least end the war.

Unfortunately, Tessy getting hit right here. Down about 5%. 418. There's the red candle. It was at 447 yesterday. Uh missed on EPS. They came in line with expectations on revenue. Let's see if people step in and buy the dip or if this one continues to take a bit of a hit. Palinger goes green with that $200 million contract that they announced with Lumen Technologies today. Hoodie 128.41. Let's see if Hood can get back up to 130. Kathy Wood did buy the dip of about 150,000 shares yesterday. S&P goes green 668. Not too bad on the S&P 500.

Nvidia right there 180.50. That's up 0.13%. SoFi that's up half a percent 27.40. I did buy my 500 shares of SoFi. Average is 26.88. So you guys can stop asking me to buy SoFi before earnings because I bought it. I'm in. We're either going to bag hold or we're either going to ride it higher. But SoFi right there 27.30. That's green. Grabby Grab that's up 1% 5.67. Google 253.75 that's green. Amazon 218 that's green. Salesforce is up. Meta's up. PayPal's up. ELF is up. Apple's up. SMCI still down based on those preliminary earnings that they gave on the missed expectations of revenue, but it was down a lot worse. It was at 46. So rebounded here back up to 51.50.

Let's look at some of the high momentum names. Oaklo down 2.7. Again, Oaklo has been down every single day this week. It continues to get hit. How about the quantum stocks after that Wall Street Journal announcement? D-Wave up 14%, NQ up 5% and Regetti up 7%. So again, the Trump administration, Wall Street Journal reported yesterday thinking of taking equity stakes on these companies. You had some senior officials come out and say we are not negotiating with these companies for an equity stake, but the market doesn't care. The headline alone is enough to get these stocks to get higher. And so, you know, the shorts are really getting hit if you did go short over the past couple of days based on this announcement. But those stocks continue to go green.

All right, Tanner's excited. He's excited for SoFi. Not the most excited for Tessy, but Tessy right here, 425. Still trying to go green on the day. You got pretty much everything going green except Tessy. Nvidia high of day as well, 182. And you got the S&P chilling out at that 670 level as well.

All right, folks. I think that is pretty much it for the day. Um, we'll be back on the close. I think we'll have Chris on today for the macro Thursday. What is the earnings picture for today? Oh, wow. We actually have some big earnings. We have Intel. That's a big one. We have Ford. Uh, we have Deckers. We have a couple other companies. Fix, but Intel and Ford are the big ones. Intel and Ford are the big ones.

carp's going to be on at 3 p.m. 3 p.m. So, I'll get the clip of that and I'll probably post it on Twitter as soon as it comes out, but 3M Eastern and we'll watch it on the market close when we get into the the end of the day.

All right, that's what you got. Cool. I'll be back on the market close. Uh Karp will be live at 3M. We'll get that clip. I think Chris will be on today. Uh we got Intel Ford earnings and then we'll see if we can kind of close out the end of the week to be as strong as we were closing out for last week as well. All right, there you go. Thank you everybody. Appreciate it. I'll see you guys on the market close. Bye everybody. Have a good one.