The Nasdaq’s AI IPOs, Tesla’s Q3, Gloomy Economic Sentiment 10/22/26

Adena Friedman · Nasdaq, Inc.

AI is driving strong healthcare IPO demand by shortening time-to-value for biotechs.

Healthcare IPOs have been strong this year after a few tougher years. Friedman attributes part of this to AI: it could speed up clinical trials, drug discovery and paperwork for biotechs. That shortens time-to-value for investors, which she says is driving demand for healthcare IPOs.

“I think part of that is AI... they're going be able to hopefully speed up trials, speed up drug discovery, speed up paperwork... I think that's really driving demand for healthcare IPOs.”at 19:09

Adena Friedman · Nasdaq, Inc.

IPO window is less open after higher interest rates raised the cost of capital.

The IPO environment has softened a little in the last few weeks. Friedman links this to the cost of capital: higher interest rates have made the environment softer. Investors are taking longer to build models that account for unpredictable factors. She describes the window as less open than before, not closing.

“there are also cost of capital matters, and so I think that having interest rates go up a bit has made it a little bit of a softer environment... I look at it as a little less open than it was before.”at 19:28

Adena Friedman · Nasdaq, Inc.

AI is a very durable trend; the challenge is implementing it securely, so she is pretty bullish.

Friedman distinguishes durable trends from noise and argues AI is a durable trend, not a passing fad. She says AI will transform every industry it touches, which is everyone. The constraint is execution: AI must be deployed securely, at scale and resiliently, with protections in place. On that basis she says she is pretty bullish, and that people should not worry that it is 'too good right now'.

“this is a very durable trend. It's just a matter of our ability to implement it. We have to do it the right way. ... So I'm pretty bullish on it.”at 24:18

Rebecca Patterson · Council on Foreign Relations

AI boom is too much of a good thing at the wrong time: crowding out and tightening, long-term positive.

Patterson says AI is good for the economy and stock markets, but it arrives at the wrong point in the cycle, on top of an already okay economy. It crowds out capex elsewhere and makes housing projects harder. It pushes up costs as workers move to data centers. It crowds out demand for US Treasuries when the government needs it. It also creates instability: Korea's KOSPI rose 115% in six months, then fell 40% in four weeks, driven by Hynix and Samsung. She is hugely positive long term. In the short term there are timing issues: whether a disinflationary productivity gain arrives quickly, whether very high earnings expectations are met, and whether a cyber or other shock intervenes.

“AI is too much of a good thing at the wrong time. It's obviously a good thing... Long term I'm hugely positive, but in the short term we have some timing issues.”at 31:27

Steve Liesman · CNBC

Polls can't settle the midterms; turnout and enthusiasm could still shift the outcome.

Liesman reports a CNBC poll showing Democrats ahead 52% to 45% on congressional control and Democrats 10 points more enthusiastic. He says campaigns always try to prove polls wrong. The president is campaigning hard in the final two weeks, and turnout is very hard to model. He notes the president's base is stable, and the outcome depends on whether non-MAGA Republicans and Democratic Socialists cross the line.

“I think what people forget is I present a poll like this, and the expressed objective of every campaign is to prove my poll wrong.”at 11:34

Adena Friedman · Nasdaq, Inc.

Tokenized equities should be on the core market; derivative and off-exchange tokens lack price discovery.

Friedman says Nasdaq is focused on tokenizing the core market, so that a tokenized share is the same security the investor owns. She objects to two other forms. Under the SEC innovation exemption, shares trade outside the market system with no visible quotes or trades. In the derivative form, platforms hold the stock and issue tokens, so investors do not own the company and trading is not visible. She argues issuers need full trading visibility, price discovery and centralized liquidity.

“And so I think as an issuer, you want to know what's happening in your stock. You want to know all the trading. You want to have price discovery. ... That's where we have concerns about those two other ways of tokenizing.”at 22:21

Rebecca Patterson · Council on Foreign Relations

AI investment is adding pressure that pushes the Fed toward raising rates.

Patterson argues AI is creating another force pushing the Fed to raise rates, and that the Fed has discussed this. The AI boom is happening on top of an already okay economy and is private-sector driven, not stimulus. Had it happened in 2009 or 2020, it would have been less of a challenge. The timing turns a net-positive development into a policy headache.

“So it's creating another force that's pushing the Fed to raise rates, and the Fed's talked about that.”at 32:29

Rebecca Patterson · Council on Foreign Relations

France's political and fiscal strain is the risk that could spread contagion to the US.

Patterson says France keeps her up at night. Governments in France, the US, UK and Japan are holding on to power by delivering cost-of-living help, and austerity gets punished at the polls. France has had six prime ministers in five years. A bailout would need the ECB, which is distracted by a leadership change, and its tools have conditionality France does not meet. Her view is that it will get worse before it gets better, with the April French elections a risk, and she sees 2011 as the template for contagion to US markets.

“France is the one keeping me up at night... And I think we could see contagion to The US... it's gonna get worse before it gets better”at 33:30

Rebecca Patterson · Council on Foreign Relations

US can't cut discretionary spending enough; needs entitlement reform plus both spending restraint and tax increases.

Patterson argues the US cannot fix its fiscal position by trimming discretionary spending alone, since that pool is too small. Entitlements such as Social Security must be addressed. She rejects the idea that taxing more and spending more will work, and says growth from the US's deep capital markets and reserve-currency status may not be enough to grow out of the debt. Fiscal responsibility will require both cutting and raising revenue. Both parties are to blame, and the election will not force the needed learning.

“You can't take enough out of discretionary spending in [the] United States to fix this. We have to do something with entitlements, social security to grow... taxing more and spending more is not gonna allow that.”at 35:59

Rebecca Patterson · Council on Foreign Relations

Debt worries are becoming a market driver; year-end fiscal fights could make bond markets very volatile.

Patterson says current interest costs on the debt, higher yields and the rising debt burden make this period worse than 2011-2012, and that debt issues are becoming a market driver. A lame-duck session, a debt-ceiling debate and a reconciliation bill in December, when market liquidity is thinner, could push bond markets to be very volatile. She expects a very unpleasant year-end for markets. She also frames this as a slow-motion debt loop of higher yields and interest costs.

“the debt issues are becoming more of a market driver. If we have a lame duck session, debt ceiling debate, a reconciliation... bill, in December when market liquidity is thinner, bond markets could be very volatile.”at 37:57