#430 Chris Whalen: The GOP’s Extinction Event, Rate Hikes Ahead & Why He’s Buying More Gold

CoreWeave

Across the shows: 85 speakers in other episodes, 25 bullish and 92 bearish calls, past 30 days

• Chris Whalen · Whalen Global Advisors LLCBearish

  CoreWeave is likely to be downgraded as a weaker AI data-center player.

  Whalen argues that the Democrats' push for an AI build-out moratorium, together with a lack of power and resources for data centers, will hurt weaker companies in the sector. He expects downgrades for Oracle, CoreWeave and the rest of the group, while stronger companies gain.

  “I fully expect Oracle would get downgraded, CoreWeave, the rest of them.”at 3:01

Oracle

Across the shows: 40 speakers in other episodes, 10 bullish and 36 bearish calls, past 30 days

• Chris Whalen · Whalen Global Advisors LLCBearish

  Oracle is likely to be downgraded as weaker data-center builders struggle with power and capital limits.

  Whalen argues the environment for AI build-outs has turned hostile, with Democrats calling for a moratorium. He says the US did not have the power and resources to finish these data centers anyway. Weaker players in this space may go away, while stronger ones benefit. He names Oracle, CoreWeave and the rest as likely downgrades, and says even Meta may be downgraded.

  “I fully expect Oracle would get downgraded, CoreWeave, the rest of them.”at 3:01

Advanced Micro Devices

Across the shows: 13 speakers in other episodes, 14 bullish and 0 bearish calls, past 30 days

• Chris Whalen · Whalen Global Advisors LLCBearish

  AMD could fall further because it is overvalued on AI hype.

  Whalen says the post-election selloff gives an entry point, but he would not rush. He argues stocks like AMD and Micron could go lower because they were very overvalued. He says the overvaluation was a function of AI hype, and the environment has turned hostile to AI with the Democrats' calls for a moratorium on build-outs.

  “I think some of these stocks could go lower, the Micron's and the AMD's and the rest because they were really overvalued. And that had been a function of the AI hype.”at 7:32

Micron Technology

Across the shows: 26 speakers in other episodes, 26 bullish and 14 bearish calls, past 30 days

• Chris Whalen · Whalen Global Advisors LLCBearish

  Micron could fall further because it is overvalued on AI hype.

  Whalen says the post-election selloff gives an entry point, but he would not rush. He argues stocks like Micron and AMD could go lower because they were very overvalued. He says the overvaluation was a function of AI hype, and the environment has turned hostile to AI with the Democrats' calls for a moratorium on build-outs.

  “I think some of these stocks could go lower, the Micron's and the AMD's and the rest because they were really overvalued. And that had been a function of the AI hype.”at 7:32

Annaly Capital Management

Across the shows: 1 speaker in other episodes, 2 bullish and 0 bearish calls, past 30 days

• Chris Whalen · Whalen Global Advisors LLCBullish

  Annaly is one of his favorite positions, with a diversified model and stability from servicing assets.

  Whalen holds a big position in Annaly as an income play and is happy the stock has moved back toward book value. He says Annaly has built diversification by owning mortgage servicing, which behaves the opposite of a bond when rates move, giving stability other mortgage REITs lack. About 20% of its capital is in servicing assets, which gives it tools to manage risk. He also notes it is an issuer of securities, unlike a plain mortgage-backed-securities buyer.

  “that these other firms just don't have. And that's why I like the company. I think they're one of my favorite positions.”at 26:11

Flagstar Financial

Across the shows: 2 speakers in other episodes, 2 bullish and 0 bearish calls, past 30 days

• Chris Whalen · Whalen Global Advisors LLCBullish

  Flagstar is a turnaround he bought at a very low price and is his only financial holding.

  Whalen says Flagstar is the only financial stock he owns because he bought it very cheaply. He describes it as a turnaround situation. In his five-factor quant model, Flagstar ranked third in the top 100 for the survey, even though it has weak earnings and a high P/E, because of how the model's criteria treat it. He contrasts this with the large banks that had been in the top 10 in 2025.

  “The only one I own is Flagstar because I got in very, very low. It's a turnaround situation.”at 28:41

US rates & the Fed

• Chris Whalen · Whalen Global Advisors LLC

  Fed board may shrink to four governors because nominations are stalled in a gridlocked Congress.

  Some governors whose terms are ending may retire without replacements. Whalen expects no new Fed governors to be appointed, because the White House and Democrats cannot agree on nominees, and nominees without a pre-agreed deal are unlikely to be confirmed. He says the Fed has recently run with four governors, so that outcome is plausible. He sees gridlock in Washington as the cause.

  “I don't think you'll see any Fed governors appointed. ... We could see the Fed down to four governors which has happened in recent years.”at 16:55

• Chris Whalen · Whalen Global Advisors LLC

  Expects Warsh to hike at least a quarter point in December, though not enough to slow the economy.

  With 165,000 October jobs, unemployment at 4.1%, big deficits and mortgage rates still high, the economy is running hot and not slowing. Whalen argues Warsh is now free of election-year politics to act, and that he must hike to keep credibility, as Volcker waited for the right political moment in 1980. Whalen does not think Warsh will raise rates enough to meaningfully slow growth, since that would take a lot of tightening. He also notes the Fed can act at any time, which he likes.

  “So I expect to see at least one quarter point rate hike, you know, this year, obviously December. ... because if he doesn't, he's going to lose credibility.”at 23:19

• Chris Whalen · Whalen Global Advisors LLC

  Warsh has managed his start poorly and needs better public communication and more Hill engagement.

  Whalen says he has not been impressed by how Warsh has handled himself, pointing to a slow start and too much word salad in public. He thinks Warsh needs more time on Capitol Hill, especially with Democrats. He frames it as a learning process, since Warsh was only a governor before and is now chairman and must be sensitive to how he is perceived by the public and Congress.

  “I have not been impressed by the way Kevin has managed himself so far. He needs to work on his delivery when he's in public.”at 24:07

US elections & politics

• Chris Whalen · Whalen Global Advisors LLC

  Democrats now own the affordability issue, and energy and food price pressures will stay with them.

  Whalen argues the affordability problem is still baked in regardless of which party controls Congress: energy prices, diesel shortages and expected food price increases will persist. Since Democrats now hold power, they will have to address the problem. He expects affordability to be a top-three issue going into the 2028 election.

  “I think the Democrats now end up owning the affordability issue.”at 2:20

• Chris Whalen · Whalen Global Advisors LLC

  The GOP midterm loss is positive for mainstream Republicans, as it ends the Trump-era policies that drove voters away.

  Whalen calls the loss an extinction event but thinks it is good for mainstream Republicans, as the mainstream Democrats' wins showed. He says Trump's immigration crackdown on Latino voters who had supported him and the unpopular Iran war drove the defeat. He argues the loss marginalizes Democratic socialists and gives moderate Democrats a chance to retake their party. Republicans need to return to pre-Trump basics: pro-business policy, fiscal responsibility and listening to voters.

  “I think it's positive for mainstream Republicans just as this election was positive for mainstream Democrats.”at 3:43

US housing

• Chris Whalen · Whalen Global Advisors LLC

  Mortgage lenders face significant consolidation and exits as volumes shrink and rates stay high.

  After talking to mortgage executives, Whalen says the sector is worried. Lenders trying to make up for falling volumes are doing more exotic and rental loans, which has a finite endpoint. He expects consolidation and some firms exiting entirely, along with downsizing and realtors losing business. Mortgage rates near 7.4% would need to fall to about 6.5% before volume moves, and he does not expect that soon because deficit concerns keep long rates elevated.

  “I was with the mortgage executive roundtable yesterday, there's a lot of concern. I think you're going to see some, unfortunately, some significant consolidation.”at 7:43

• Chris Whalen · Whalen Global Advisors LLC

  Manufactured housing will be a bright spot because off-site construction is cheaper and quicker than building on-site.

  Whalen argues that on-site construction costs are too high. Building in New York costs around 40% more than the market price of units, and the replacement cost of a Westchester house is about $1.6 million, so builders cannot sell at a profit. Manufactured units are well made and cheaper than site-built homes, and the site work is simple. He compares it to off-site-built bridges in New York, such as the Mario Cuomo and Gowanus bridges, which he says cut cost and improved quality. He sees it as a primary way to meet first-time buyer demand.

  “So, I think manufactured housing is going to be one of the bright spots in the sector going forward.”at 11:33

Gold & precious metals

• Chris Whalen · Whalen Global Advisors LLC

  Gold has probably reached a floor, and he is adding to his gold positions.

  Whalen calls the recent gold drop a short-term reaction, not a change in trend. Supply and demand is tight, since the market is actually short metal. He has been slowly adding to his gold positions and plans to keep doing so. He says he missed much of the prior upside, so he sees the last six months as an opportunity, and believes gold has probably reached a floor. He expects US demand to stay limited, but foreign investors' demand to be large.

  “At the moment, we're actually short metal in the global market. So, I think to me I've been slowly adding to some of my positions in gold. And honestly, I'm going to keep doing that.”at 27:24

• Chris Whalen · Whalen Global Advisors LLC

  Gold does not track deficits or the economy; it is a long-term wealth-protection asset driven by supply and demand.

  Whalen argues that gold and precious metals should not be tied to the federal deficit or economic metrics, because they are two different worlds. Hard assets such as copper respond to supply and demand, and gold is about people protecting wealth long term, as an inflation hedge. He compares it to Annaly buying mortgage servicing rights to protect capital from volatility. He says investors need a medium-term view of precious metals.

  “with gold, you can't try and relate them to things like the federal budget deficit and everything else because ultimately gold is about people trying to protect their wealth long term.”at 32:28

AI infrastructure & data centers

• Chris Whalen · Whalen Global Advisors LLC

  The US lacks the power and resources to build all planned data centers, hurting weaker builders.

  Whalen argues Democrats' calls for an AI build-out moratorium would not matter much anyway, because the US did not have the power and resources to finish the data centers. He says voters worry about electricity costs and quality-of-life effects, citing the many data centers in suburban Northern Virginia. He expects stronger companies to gain and weaker ones to fall away.

  “we didn't have the power and the resources to get these data centers done anyway. So I think it's going to end up being good for the stronger companies that are playing in that space.”at 2:46

US growth & recession risk

• Chris Whalen · Whalen Global Advisors LLC

  The economy is running hot and high rates are not slowing growth.

  October's 165,000 jobs and a 4.1% unemployment rate, together with a large federal deficit, show the economy still running hot. Whalen argues that rates are not especially high and nothing is slowing growth. Because of this, the Fed would have to raise rates a lot to cool the economy, which he does not expect.

  “Economy is still running hot. ... is it doing anything to slow down growth? No.”at 4:45

Oil & fuels

• Chris Whalen · Whalen Global Advisors LLC

  Diesel inventories are at the bottom, and some markets will see diesel shortages at gas stations.

  Whalen says diesel stocks are already at the lowest level they can go, so there is little buffer. He expects some local gas stations to run out, since they cannot sell diesel they do not have. He treats this as part of the energy-driven affordability problem that remains regardless of the change in government.

  “you're already seeing diesel stocks at the lowest that they can go. They are literally at the bottom of the barrel. You're going to see shortages in some markets where gas stations are simply not gonna be selling diesel.”at 5:17

Agriculture & food commodities

• Chris Whalen · Whalen Global Advisors LLC

  Food prices are likely to rise significantly next year, as the affordability pressures are still in place.

  Whalen says the change in government does not alter the price pressures already built in, including energy and food. He expects a pretty significant jump in food prices next year. He says this will be a problem the Democrats now have to address.

  “with food prices next year, I think you're gonna see a pretty significant bump.”at 5:33

US stock market outlook

• Chris Whalen · Whalen Global Advisors LLC

  The sell-off offers an entry point, but investors should not rush because some stocks may fall further.

  Whalen says he is not worried about the sell-off after the midterms. He sees it as a possible entry point for people who wanted to get into the space. He advises not to hurry, since some AI-linked stocks like Micron and AMD may go lower after being overvalued on AI hype.

  “I think it provides an entry point for people that wanted to get involved in the space. I wouldn't hurry.”at 7:26

US dollar

• Chris Whalen · Whalen Global Advisors LLC

  Investors and reserve managers are slowly reducing dollar exposure and moving reserves into gold.

  Whalen describes a gradual shift in which people are lightening up on dollar exposure and putting more reserves into gold. He links this to comments from Trump and Treasury Secretary Scott Bessent that did not resonate with markets. He sees it as part of the broader reason long-term rates and gold are moving as they are.

  “you've had this slow progression of people lightening up on dollar exposure, putting more of their reserves in the gold”at 9:35

US Treasuries & yields

• Chris Whalen · Whalen Global Advisors LLC

  The 10-year yield will not fall to 4%, because deficit worries that pushed rates up this summer have not changed.

  Whalen disagrees with Jim Bianco's bond-rally call. Long rates rose on their own this summer because of deficit concerns, and the deficit has not gone down. He points to Treasury needing to raise around a trillion dollars, and says that the 10-year may already be fairly valued given inflation expectations. He says a 4% 10-year is not coming, so the bond rally trade needs caution. He expects a 7% mortgage rate to be the normal level rather than the 2 to 3% rates of the COVID years.

  “But we're not going down to 4% on the tenure. ... You gotta be careful with that trade because why did rates go up all by themselves this summer? ... Has the deficit gone down? No.”at 19:08

Commercial real estate

• Chris Whalen · Whalen Global Advisors LLC

  Several mortgage REITs will exit the market within a year because they lack volume and risk tools.

  Whalen says there is not enough mortgage volume to justify many mortgage REITs. Straight mortgage REITs that buy mortgage-backed securities and hedge interest-rate risk lack the tools to manage themselves in this market. He contrasts this with Annaly, which issues securities and holds mortgage servicing assets, giving it more ways to manage risk.

  “I think you're going to see several mortgage REITs exiting the market in the next twelve months. They're just not going to be able to stay in business.”at 25:31

Banks

• Chris Whalen · Whalen Global Advisors LLC

  Banks have some value, but he prefers recovery stories over the large-cap banks.

  Whalen says there is some value in banks, but he would rather own story stocks that are likely to recover or change than buy the large caps. He points to his quarterly survey, where large banks that were in the top 10 through 2025 have dropped, while two Canadian banks and smaller institutions rose. He notes Citi has been the best performer among the large caps despite the weakest financial profile, and says people love the stock.

  “Yeah, I think there is some value. But I would rather own the story stocks that are kind of going to recover or change then go out and buy the large caps.”at 29:54