Closing Bell 11/3/26

Alphabet

Across the shows: 54 speakers in other episodes, 41 bullish and 34 bearish calls, past 30 days

• Richard Saperstein · Treasury PartnersBullish

  Search threat from AI is overblown; Google has chips, compute, a frontier model and cash to compete.

  Saperstein acknowledges that the market sees an existential threat to Google's search business, which generates about $320 billion a year. Growth in that business has slowed from 19% to 12%. He argues Google has four key advantages: chips, compute, a frontier model, and cash. Together these let it build a consumer agent and compete with Meta. He will not throw the stock out of the portfolio, and his firm has owned it for over a decade.

  “the narrative is there's an existential threat against their search business. ... Now Google has four key things. They've got chips, compute, they got a frontier model, and they've got cash. So they can always string together a consumer agent and compete with Meta.”at 32:09

Block

• Mackenzie Sigalos · CNBCUncertain

  Block's lending push raises credit risk; longer loans may mean more customers fail to repay.

  Block is stretching out its short-term loans and charging more for them. Sigalos says that should lift profit, but longer loans also mean more customers may not pay them back, and she calls this the bear case. She adds that Block has shared less detail on credit in past reports, and that Cash App user growth has been roughly flat for three quarters. She presents the credit concern as the main bear argument rather than a firm personal call.

  “Block is stretching out its short term loans and charging more for them. That should lift profit, but longer loans also means that more customers aren't going to pay them back, and that is the bear case here.”at 40:11

US stock market outlook

• Alexandra Wilson-Elizondo · Goldman Sachs Asset Management

  Recent selloff is a local pause with many opportunities; earnings remain strong and stocks have repriced.

  Wilson-Elizondo acknowledges that leverage in a single trade carries risk, but calls the current move a local pause with plenty of opportunity. She says prices have already repriced and that some of the tech stack looks compelling. She also points to earnings that remain strong. She sees the market as rotating within stocks, not leaving them, with the current move as indigestion before a rebound.

  “I think anytime you have a lot of leverage in the market to a singular trade, there's that risk. But, you know, I think it's more of a local pause right now, and there's a lot of opportunity.”at 6:46

• Dan Greenhaus · Solus Alternative Asset Management

  Market has been sideways for five months, but breadth is improving as ex-tech stocks hit new highs.

  Greenhouse notes the market has traded sideways for about five months. Excluding tech and communication services, the S&P 500 is at a new high, and the equal-weight index is close to one. He argues this reflects rotation rather than a broad breakdown. He concedes that defensive sectors leading the move are not enough to sustain the market, but stock-picking opportunities are plentiful as investors wait for confirmation that the rally can continue.

  “Semis, have been trading sideways for a while. The whole market has generally been trading sideways for about five months. However, the S and P 500, if you x out tech and you x out comm services, is making a new high.”at 9:37

• Cameron Dawson · NewEdge Wealth

  Market can still hit new highs as high-beta tech peaks; defensive safety trades look stretched.

  Dawson argues the overall market can still make a new high even if higher-beta names have already peaked, citing 2000, when tech peaked in March while the S&P 500 peaked in September. She warns against perceived safety trades, noting Staples trade at a 29% premium to the S&P 500, the maximum over the last ten years versus a 6% average. Some signs of life are appearing in regional banks, hotels, restaurants, transports, and aerospace and defense.

  “The market can still make a new high even if you have higher beta names part of the market already having peaked. ... I would say being careful around some of these perceived safety trades. You have Staples trading at a 29% premium to the S and P 500.”at 12:27

• Richard Saperstein · Treasury Partners

  Trimming equities after a four-year rally; clients are overweight stocks and risks are rising.

  Saperstein says his firm has been trimming equities all year, shifting from a view of how big the opportunity is to how it will be funded and what return it earns on capital. He says the market is up roughly 120% in the last four years, so many clients are overweight equities. He holds mega caps but trims peripheral positions, and says he is not whistling past the graveyard. Risks such as disruptive technologies and geopolitics have existed for years, yet the market kept rising. He is reallocating assets because of these risks.

  “Look. We've been trimming equities all year... in the last four years, the market's up, what, a 120? ... So a lot of clients are overweight equities right now. So it's very important for us to start trimming.”at 28:24

Credit markets

• Alexandra Wilson-Elizondo · Goldman Sachs Asset Management

  High-quality credit at around 8% is attractive; investors are now paid for risk and quality.

  Wilson-Elizondo says investors can get high-quality paper at about 8% from some of the most important companies in the world. She contrasts this with a few years ago, when investors bought hundred-year bonds at zero yield. Now investors are paid for complexity, risk and quality, and she argues this makes a lot of the market very attractive.

  “I would actually take the other side saying, you can get high quality paper at 8%. I mean, these are some of the most important companies in the world.”at 6:46

• Richard Saperstein · Treasury Partners

  High-grade municipal bonds at 4.5-5.25% tax-free are attractive; buying aggressively now.

  Saperstein's firm has been buying high-grade municipal bonds and is buying very aggressively now. Yields are 4.5-5.25% tax-free, and for clients for whom preserving capital matters more than generating returns, munis are an important asset allocation. The bonds have long maturities of up to 30 years with call features around ten years, and they trade at 4.55-5.25% tax-free. Every state has munis, so investors can find bonds that match their risk and maturity needs.

  “We're buying very aggressively now. Why right now? Well, because yields are four and a half, 5% tax free. And for our clients who, where the return of capital is more important than return on capital, it's a very important asset allocation.”at 28:35

AI chips & semiconductors

• Cameron Dawson · NewEdge Wealth

  Semiconductors may have peaked in June; stocks may need tactical rather than long-term ownership.

  Semiconductors trade at about 16.5x forward earnings, a multiple that suggests earnings are near a peak, even though earnings estimates are expected to double over the next three years. The market looks confident that earnings will keep growing while trading the stocks as if the peak has already arrived. Charts increasingly look like a peak, as in the KOSPI. Dawson says the group could still rally 25-30% just to get back to a downtrend line, so owning the names may only make sense for tactical reasons.

  “I think we have to open our minds up to the idea that June could have been the peak in semiconductors. Now that doesn't mean that you can't own the names. It means that you might have to own them for more tactical reasons.”at 8:40

• Dan Greenhaus · Solus Alternative Asset Management

  Chip stock pullback reflects sector rotation, not a peak; a positive AMD outlook could restore the uptrend.

  Greenhouse disagrees that semis have peaked. Chip stocks had a huge rally into the summer, then traded sideways, and they remain well above their earlier levels. He views the recent weakness as a broad rotation out of tech into other areas, driven by fear in tech. He says positive commentary from AMD's Lisa Su could help reassert the uptrend. He acknowledges there is a big divergence between confident earnings expectations and the trading multiple that will have to be resolved.

  “what you've seen more than I think any questioning of a peak in semiconductors is just the the broader rotation that that you alluded to. ... if Lisa Sue has some positive things to say, I think you might be able to reassert that uptrend.”at 9:14

AI bubble & tech valuations

• Dan Greenhaus · Solus Alternative Asset Management

  AI is probably in a productive bubble that only shows in hindsight; bubbles are needed to build.

  Greenhouse argues that nothing gets done in a free-market democracy without enthusiasm that becomes a bubble, citing tulips and productive assets like railroads. He says we are probably in such a moment with AI, which will only be clear in hindsight. In one or two years, the industry may have built too many data centers and brought too many gigawatts online. He adds that a bubble is not necessarily negative, but it can be for investors depending on the time frame. He says no one can identify the peak in real time.

  “nothing really gets done without a bubble, but that's not necessarily a negative. ... we're probably in one of those moments right now that'll only reveal itself in hindsight one or two years, we'll have built too many data centers, too much power, too many gigawatts are coming online.”at 13:44

• Richard Saperstein · Treasury Partners

  Large-cap tech is cheaper on PEG than staples, so investors pay less for growth there.

  Saperstein's firm is concentrated in large-cap growth and still likes large-cap tech. On PEG ratios, large-cap tech trades at 0.6 to 1.5 times the growth rate, while Procter & Gamble and other staples trade above three to 3.5 times. He argues investors are paying less for growth in tech than in defensive groups, which justifies holding these names.

  “If you look at PEG ratios, the PE ratio to the growth rate. Large cap tech is point six to one, one and a half. Whereas if you look at Procter and Gamble or other industry groups, they're over three, three and a half. So you're paying for less growth.”at 31:45

US elections & politics

• Dan Greenhaus · Solus Alternative Asset Management

  Divided government after the midterms won't much affect markets over the next two years.

  Greenhouse expects Democrats to take the House, with the Senate a toss-up. Even if Democrats take only one chamber, government will be divided, with no majority to pass major legislation and likely investigations. He says gridlock has historically been viewed positively by markets when nothing needs to get done, and that the government is not doing much anyway. He rejects the idea that this environment creates particular volatility, arguing that investors focused on companies and cash flows will not be affected much over the next two years.

  “Just with respect to the volatility comment, would just push back. I don't know why that environment creates a particularly volatile investing environment.”at 6:11

US Treasuries & yields

• Cameron Dawson · NewEdge Wealth

  Bond yields may be peaking, which with 4% nominal GDP would support stocks next year.

  Dawson argues the market could be near a local peak in bond yields. Combined with about 4% nominal GDP growth next year, she sees this as strong support for stocks. The argument is brief and rests on the yield peak and the growth backdrop.

  “We'd argue you could see local peak bond yields. Add all that together with 4% nominal [GDP] next year, that's, you know, really good mood music for stocks.”at 7:39

Earnings & corporate profits

• Cameron Dawson · NewEdge Wealth

  S&P earnings growth slows sharply next year but forecasts have not yet peaked, so returns can persist.

  Earnings are forecast to grow 36-40% this year, slowing to 15% next year, with further growth of 14% in 2028 and 12% in 2029. Dawson argues the market is struggling with the second derivative: growth is still strong but less aggressive. Forward estimates have not yet started to level off, and she says returns will only flatten once those forecasts do.

  “You have a market that's going to grow earnings by 36, maybe up to 40% this year. That slows to 15% next year, but there's no contemplation forward earnings estimates that we peak.”at 16:57

AI infrastructure & data centers

• Richard Saperstein · Treasury Partners

  Hyperscalers' cash flow funds AI capex; their debt issuance is fine since they are underleveraged.

  Saperstein measures the return on AI capex by looking at cash. Funds from operations at Microsoft, Amazon, and Google have averaged growth of about 150% over three years, with Amazon and Microsoft at roughly $240 billion and Google at about $270 billion over the next twelve months. That is stratospheric cash being reinvested in their businesses. When the host notes cash is declining and companies are turning to capital markets, he says there is no problem because these companies are underleveraged and can use their balance sheets efficiently.

  “we go right to the cash, the funds from operations. ... These are stratospheric amounts of cash they're creating to reinvest in their businesses. So if we're gonna look for the returns on this investment, look at the cash. It's there, and that's why we own these stocks.”at 33:11