Good morning everyone. Welcome to NYSE Live. I'm Kristen Scher here in studio at the Stock Exchange. While the major indices are pointing to a mixed open as voters head to the polls on Election Day, corporate earnings are driving much of the action that we've seen here in the stock market. And after Monday's market close, tech giant Apple released its first earnings report under its new CEO, John Turnis. We'll dive into what traders are taking away from those results here in a minute. And chip giant AMD will disclose its quarterly figures this afternoon. Investors are also focusing on developments overseas, with ICE Brent crude oil, the international benchmark, trading at about $102 a barrel, as of course the Middle East story is still hot. Plus, traders are tracking the latest moves when it comes to employment, with job openings data arriving later this morning ahead of Friday's all-important October jobs report. Let's take a look at what's on tap this hour.
We've got big news about the new NYSE-affiliated venue for trading tokenized securities. We're going to talk with the CEO of fintech and tokenization company Superstate for more. Plus, as Americans head to the polls for the midterms, Wall Street expert Jay Woods will stop by and tell us why, as he puts it, the market doesn't care about your politics. We're also going to hear from the CFO of Urban Life, an NYSE-listed company, about its third-quarter results.
Let's start with the markets as we always do here on NYSE Live. We are 30 minutes away from the opening trade on this Tuesday, November 3rd. The AI trade, of course, is dictating market movement. Investors digesting Apple's fourth-quarter results, which did drop on Monday afternoon. Joining me now in person here in studio is Gil Lauria. He's managing director and head of technology research at DA Davidson. Gil, it's good to see you.
Yeah, great to have you here in studio amid a lot to discuss.
Let's start with the state of play when it comes to this AI trade. How would you describe it?
Well, I would say that what's happening right now is AI is working out great. All the companies that have reported about their AI business reported better than expected results, better outlooks, more visibility, and it's actually the rest of the technology sector that's slowing down. That's not what the market is saying right now, though. It's actually the AI stocks that have been beaten down the most, in spite of the fact that that is still going strong. So the market is interpreting any weakness as a sign the AI trade is over, when in fact it's actually the AI investment, the AI ecosystem that's thriving right now. We think that'll balance out.
So I guess, would you call it a rotation that we've seen maybe out of this AI trade, but one that you would anticipate will see buyers in the future?
Exactly. And of course, we have to get through the elections. Once the elections are over, we have more visibility as to what policy is coming. When everybody feels more comfortable about that, feels more comfortable about the fact that we can still build data centers, we expect investors to rotate back into the AI sector, into the semis, into the hyperscalers.
We just need to get through today. Is there data or commentary that indicates to you that after the midterms some of these policymakers will become more friendly to these AI data centers and the buildout?
Yes. The fact is that the lobbying is happening at a federal level for Senate candidates, House candidates, when in reality data center decisions are made at a municipality level. So as long as you can prove to a community that your data centers are not going to be intrusive, not going to be polluting, not going to be noisy, you can build data centers regardless of what the federal and state level policies are. So there's been a lot of discussion, a lot of campaigning. Once the campaigning is over, we can just get back to microeconomics. Does this community want a data center because it'll drive the local economy without being polluting? If they do, then we're going to proceed and AI is going to have the supply of compute that it needs.
So, some of the backlash, if you will, that we've heard about data centers during this campaign cycle is, as you referenced, right, that they are polluting, that they drive up cost, that they are noisy, among other factors. Is that true?
It is for old data centers. Yes. Many data centers were built in locations that are too close to people, with generators that are polluting and noisy, and with tax breaks. New data centers aren't getting built that way. New data centers are getting built without tax breaks while investing in the local community with some new technologies like Bloom Energy that allows it to run without making noise and without polluting. So the change has happened, the market has spoken, and therefore we do expect data centers to get approved as they all move to this new reality.
How does Apple, after its earnings last night, fit into this AI story?
The good news is that it doesn't fit at all, and it doesn't need to. In fact, Apple has been a safe haven from the AI trade, and it'll go back to being that once we get through today, because Apple did the right thing. A couple of years ago they decided we don't need our own frontier model, we don't need to build data centers, we're just going to focus on what we do well, which is build a very compelling ecosystem for consumers. At the time there was criticism; as we sit here today, they clearly made the right choice.
They don't need to participate in this race. They can wait to see who wins in the race, and they'll incorporate it into their ecosystem.
Whatever model we use, whatever agentic personal assistant we use, we're going to be using it on an iPhone. We're going to be using it through a Mac, and they're going to get paid. So they don't have to participate. They don't have to put hundreds of billions of dollars into the ground. They don't have to hire $100 million AI engineers. They can just sit there and wait. And the market has rewarded them for that. The market is saying, you know what, because your cash flow is intact, we're going to pay a premium for Apple. And again, there's going to be some puts and takes after last night's earnings today, but once we get past that, Apple will go back to being a safe haven.
So, how would you interpret the results that we got from Apple last night, and of course the new CEO?
Yeah. So it was a little bit of a shaky start because what's happening is last year was the best iPhone upgrade cycle in five years, right? iPhone 17 was the biggest cycle since iPhone 12.
And what happens when you have a great iPhone upgrade year is the next year is a down year.
And that's what we're going to start seeing. We're going to start seeing units go down. Now, fortunately for Apple, they have room to increase prices, which they did — double-digit price increases across many of the products and services — but that still means decelerating growth, and investors are going to react to that today. And the other thing that happened is memory is very expensive, and so they are having to buy memory at far higher prices than they used to. Even the price increases they took are not enough to make up for that. Gross margins will be down, and they said they'll probably be down for the rest of the year, for the balance of next year, and that's what investors will react to today. Having said that, they've secured memory for the next few years, they've locked in the prices, so even that should fade away over time.
All right, Gil Lauria, managing director and head of technology research at DA Davidson. Gil, thank you so much for joining us in studio.
All right, everyone. And well, you're taking a live look there of our studio that's going to pan into that trading floor because up next, we've got an important update about a new NYSE-affiliated venue for trading tokenized securities. Stay with us on the program.
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Welcome back to NYSE Live. Well, pending regulatory approval, the new NYSE-affiliated venue for trading tokenized securities has expanded its group of transfer agent partners. Joining me now with more here in studio is Robert Leshner, CEO of Superstate, one of the NYSE's transfer agent partners. Robert, welcome.
Kristen, thanks for having me on the show.
So good to have you on the show, and especially here in studio. Let's start with a scene setter for our viewers. In your view, why is tokenization important now?
So tokenization is important now because it facilitates an upgrade to how securities settle and how they transfer. So historically, the settlement process going through the DTCC has a lot of steps to it, and it's this process that works extremely well. What tokenization offers is the opportunity to move assets into an exchange process, settle them, and effectuate the entire end-to-end trading flow much faster and with less error. And tokenization offers the ability for more participants to participate, and those securities to operate 24/7 and in new ways.
So greater access and more efficiency is what I'm gleaning.
That's right. And new experimental use cases and new trading approaches entirely.
Okay. So I want to hear from you why you think Superstate is a good fit to be part of the NYSE's tokenization initiatives.
So, Superstate and a number of other transfer agents are really responsible for recording who owns a security, right? Who owns a share of a public company. This is a process that, you know, we've been doing for a number of years now, where rather than recording ownership in a database or a spreadsheet or paper contracts offline, we record it in token form, and that allows these shares to be transferred into a new system like the New York Stock Exchange's digital trading venue.
Yes. And so we and a number of others have been piloting tokenized securities. Right now, you know, there's been a lot of use cases that we've demonstrated on Ethereum, on Solana, on public blockchains, and that we're going to be able to take that experience and merge it with what the NYSE is doing.
How would you describe the capabilities of the NYSE platform that you are paired with?
Well, you know, it hasn't gone live yet, but what I would describe is, you know, NYSE has always been at the forefront of trading technology, right? And the way exchange happens, and the exchange, you know, the order books and all of that is still going to operate, you know, using what works today, right? Which is best-in-class, but it doesn't occur on a blockchain. The blockchain really is to accelerate how securities move into the system, how they move out of the system, and how they're settled. And so, you know, I think this is, when it goes live, going to be an incredibly novel trading venue.
Give us a sense as to more of the capacity in terms of volume that this will be able to manage, including with the trading technology. Of course, for our viewers, they know it well based on the pillar platform that we provide.
Yeah. So, you know, a blockchain is, you know, an incredibly secure approach to storing information, right? It's not meant for incredible throughput. It's meant for incredible confidence and conviction in the balances on the blockchain. Who owns shares? Being able to answer that question with like definitive authority. When off-chain execution happens, that's high velocity, high throughput, lots of data. And so assuming that you pair off-chain execution with on-chain transfer of ownership, you get a system that can scale pretty much infinitely, right?
And just to be clear for our viewers, right, that are warming up to tokenization, they're understanding more about it — you are that on-chain offering, right?
Exactly. Okay. So, the development of the platform is certainly a path to the future. How will the issuer and shareholder experience compare to what we see in the current environment?
Well, fundamentally, it's superior, right? And the reason for that is right now when you own a share of stock in a brokerage account, there's a lot of steps between you, the investor, and the public company, right? With tokenization, you get a much closer relationship between the issuer and the shareholder. You're directly on the company's books and records when you own a tokenized share through a transfer agent like Superstate. And that's a significant improvement. Those shares can still, you know, go into the New York Stock Exchange's digital trading infrastructure, they can still be owned by a broker, but there's a lot less steps. And so this can speed up shareholder communication. This can speed up dividend payments. This leads to more accurate record-keeping. And, you know, even though it's a remote possibility, in the event of bankruptcy or credit events, there's a much tighter relationship between the owner and the company itself. And so there's less risk at the very tail ends of finance.
How does this focus fit into the overall operations of Superstate?
You know, it's important fundamentally. At Superstate, we're focused on tokenizing securities across a number of different asset classes, but public equities are really the jewel of US capitalism, right? And so, being able to help facilitate public company shares moving more effectively in token form is something that we and a lot of the other participants in this market are incredibly excited for.
Anything more you want to share with our viewers, Robert?
Well, the future is bright. You know, we're at an early stage now of tokenization being used for trading. You know, but I think over the coming weeks, months, quarters, and years, we're going to have huge advances that people can start to look at as success stories of why a share should be tokenized in the first place.
All right, Robert Leshner, he's CEO of Superstate, a new transfer agent partner with the New York Stock Exchange, and of course the platform that it's building to enable tokenization. Robert, thank you so much for joining us.
Great to have you. All right, everyone, stay with us on NYSE Live because up next, we're going to hear from the CEO of Perplexity about the impact that the shift in AI is having on the fintech space. That's next.
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Welcome back to NYSE Live. Some of the biggest names in the fintech industry convened at Money20/20 USA last month in Las Vegas. The NYSE was on the scene as the event's exchange and content partner. Jenny Durkin spoke with numerous leaders at the event, including Aravind Srinivas, co-founder and CEO of AI-powered answer engine Perplexity. Here's what he had to say about the shift that AI is having, of course, on the fintech space.
It's been a big shift in terms of people perceiving these as tools to more of an operating system for work. So, a lot of Perplexity use one year ago for the finance vertical was looking up stocks, doing some research on like what's happening in the world, getting news related to stocks, asking questions about where to invest in. But now you can connect your portfolio through a Plaid connector inside this agent product we have called Perplexity Comet and actually turn it into a recurring automations platform, starting from simple things like track my daily spend and pack all my budget and like keep me under control, to actually helping you construct your portfolio, building your own personal Bloomberg terminal, helping you understand how to build towards a certain investment strategy, and you're still in control. You're not giving the agent full control of like making all these trades on your behalf or making purchases on your behalf. You're still doing that, but you're using a really world-class, accurate, agentic operating system to make all your decisions. And we've seen that like one-third of all this usage on these kind of use cases are just recurring automation. So that is the biggest paradigm shift from react to questions to background tasks and processes that keep running your personal finance. So everyone's the CEO of their own life. Perplexity is their CFO.
That's a great, that's a great one-liner. I really appreciate that. On top of everything else, very busy man. You've been building artificial intelligence tools that can shop, they can book travel, they can complete tasks on behalf of users. How close are we to a world where AI is actively making purchases on our behalf?
I actually think we can do that. But contrary to what a lot of people think, people are not interested in letting AIs purchase on their behalf. People want AIs to help them decide what to purchase. It's the research and analysis part that is actually like where AI is adding real value, and that's what people come to our products for. Actually making the purchase has been one click for two decades. It's pretty easy once you know exactly what flight you want. Once you know exactly what item you want to purchase, it's not that hard to actually click and purchase. In fact, doing it through an agent is a waste of time. But using AIs to actually like do the research for you, study a thousand websites, look through all the reviews, identify what like the product is really doing compared to what it claims, personalizing to your preferences, what the AI understands about you, and giving you like a clear set of suggestions is all about accuracy and search. That's really our like specialty. We've consistently ranked the best on deep research benchmarks, finance search benchmarks, like all these benchmarks that I care about — hallucination rates being low, auditability trail for how the AI came to the decision in terms of where it picked the information from, the citations, observability of like the agent traces — that's where like people build trust and make decisions, decisions worth like starting from a few hundreds of dollars all the way to hundreds of millions of dollars, that whole spectrum. We want to like be the best AI there. Letting people actually do the purchases has been super easy. Like you can book a flight in one click or two clicks right now on United App. So that's not that difficult.
The trust layer is a big part about that. I'm glad you talked about trust, right? If I'm a user, I want my AI agent eventually in time to be able to spend money on my behalf. But how do you make sure that I as the consumer really have trust in the overall process so that my AI agent is truly empowered to act on my behalf?
It comes in various layers. Like, so trust is subjective there. Let's talk about objective things. Accuracy — you want to build the most accurate AI out there. You want to have verifiability. So, citations — when AI pulls financial information, you want it to tell you exactly where each number came from or how it was calculated, all the way back to like the source, which could be the official filings of the company. Bring in proprietary data from Morningstar or PitchBook or FactSet or LSEG, and allow the user to actually go and look at the specific table you pulled information from. Work with like highly secure connectors like Plaid, bringing your personal information but don't actually store any of it in your logs. So allow the user to feel secure about what information you're accessing. And lastly, like build secure sandboxes for all these agents to run so that they're not doing anything rogue, and be transparent about it. We open-sourced our sandbox platform last week called Space, and we pressure-tested it for letting agents actually go rogue and looking at all the ways in which they are like bypassing the guardrails, and then adding those new guardrails to like prevent that, and going a few iterations like that, and actually open-sourcing it so that we get more eyes on it, and that way we can make it even more secure. And a lot of new clouds are coming forth to adopt it. And so you have to own the trust layer through a lot of accurate, verifiable, open-source work, and continue building that by making like progress on like verification, citations, accuracy, and try to communicate more of that in an open manner.
You have no shortage of competition when it comes to the future of AI-powered search — Google, OpenAI, you name it. How do you think Perplexity not only today but in the near-term future continues to stand out from others?
We have one thing that we've been saying, which is we actually don't want to compete with anybody. We want to be the Switzerland of AI, which is the most model-neutral orchestrator. Everybody else is building their own models, so whether they like it or not, they have an incentive to drive traffic or token flow to their own models, because nothing else justifies the capex to actually build all these data centers and invest a lot into training your own models. Whereas Perplexity is only orchestrating whatever is the best model for the task, whether it's our own fine-tuned models or whether it's somebody else's models. And so we work with all of them. We like to think of them as contributors as part of our supply chain. And we give them valuable feedback on how people are actually reacting to their model releases on our app, whether they're able to like get some traffic share from somebody else's model on our platform. And they love it. They value real feedback from us, and they view us as a neutral platform for agent orchestration. And the nice thing about Switzerland is there's only one, and that's where we want to be.
