Hi, I'm CNBC producer Katie Kramer. Today on Squawk Pod, a massive market selloff just days after a change election.
This is why people like divided government. They didn't like it that much yesterday.
Is the pace and the size of big technology and the influence of its leaders too much too soon? We'll talk to noted investor Ron Baron, billionaire and bull on Elon Musk's SpaceX and Tesla.
You got this brilliant guy, once in a lifetime person building these businesses that no one else can build.
He thinks political retribution against Musk and others is not an option.
Phil, can you predict this?
So why bother? Let's talk about the business.
Then Kalshi CEO Tarek Mansour, the money traded on these midterms. Who predicted the blue tsunami? Prediction markets and the polls were right this time.
It's like asking does Apple stock react to the quarterly earnings of Apple. Like the markets are not creating information. They're weighing all the information that's out there. And what's unique about the markets is that they're weighing information from a much broader set of people.
It's Friday, November 6th, 2026.
My horoscope said I'm supposed to be optimistic today. So good luck.
Squawk Pod begins right now.
Good morning. Welcome to Squawk Box right here on CNBC. We are live at the NASDAQ market site in Times Square on a Friday morning.
Barely, barely. I'm Andrew Ross Sorkin along with Joe Kernan. Becky is off. Let's take you through some of the highlights or maybe low lights from yesterday's market selloff. It came just a day after averages jumped following the midterm elections. Fears of a clampdown, really more than anything else, on the AI trade once Democrats assumed power in Washington, leading to the worst day for the major indexes since markets sold off in the wake of President Trump's Liberation Day tariff announcement. You may remember some now 19 months ago. The NASDAQ and the small cap Russell 2000 falling into correction territory. And then the Magnificent Seven stocks collectively lost a trillion dollars in market cap. In total, the NASDAQ lost roughly $2.5 trillion in market cap in one day. On Truth Social last night, President Trump saying, quote, "The stock market crashed today because the Democrats had a big Tuesday. So sad to see. You only have yourselves to blame." Exclamation point. Meanwhile, the VIX hitting its highest level since March. Of course, that is an indicator of the jitters.
We ought to show today's shows, but it should show yesterday. It was up about seven or eight points.
And that's the real issue. We should also show you Treasury yields and we should also show you energy. Though those are maybe less the issue at the moment. The 10-year at 4.8, the 2-year at 4.4, and then energy WTI crude at 90 bucks. You can get Brent now at 98.21.
And all of this leading to questions about the Anthropic IPO, which we'll talk about in just a little bit, because that of course has been underpinning so much of the economics of everything.
We'll let people decide what it's worth. I was just throwing out numbers, but I'd say they'd be happy with 1.5 trillion now. I think they'd be very happy.
Watching it yesterday as it slowly just got worse and worse.
Yeah. Watching it as it slowly got worse and worse, I was thinking about the day before and what a head fake that was, with a lot of people saying this is when you put some governors on presidential power, the market loves it. Well, that lasted about five minutes. And it made me wonder, I hope it's not the new normal, Andrew, but what really got me as I watched it was the S&P. Okay. Oh, it's down 70, 80, 90, 100, 200, 300. That's where I started thinking, this is serious, because we went from not that far from highs at 7,800 and ended up heading down to... it ended up down four and a half percent. That didn't match the NASDAQ. The NASDAQ was headed down 2,000 points at one time, and that was down five and a half percent.
By the way, I'm not sure it's so much about what you think is happening in Washington per se as to what you think is going to happen in the states. So when you hear this new governor in Texas say, "I'm for AI data centers, but I want to create laws before we permit new ones."
We have always been a pro business state in Texas, but what changes now with me as governor is it has to be a partnership that benefits Texans. And right now what has happened is data centers have moved into mostly rural communities and there are no rules and laws to protect Texans, and Texans are being taken advantage of. So the difference is we will have laws to protect Texans.
That could take time. What do those laws look like? How does that work? You heard Dina Powell make a comment after this that... would they ultimately start to build data centers in other countries as a result of this?
Every hyperscaler is now thinking about, do we need to build outside the United States, because they're enormous investments and hedging those investments is a wise thing to do.
Well, that's Elon talking about going to space, but in terms of just the speed at which we can actually build these data centers, what that means, and does that actually create a slowdown on the other end of this AI trade?
I was going to... since we don't debate anymore and we only converse, I was going to, if you were going to ask me what was going on, I was going to say why don't you just be me and you know exactly what I would say. Don't you? You can give my five reasons for why that happened yesterday. So I don't even want to bother or try to talk you into anything, but we're in some dicey times here. The scary thing for me, Andrew, is okay, Elizabeth Warren, chairman of the most powerful financial services... I don't know what that means. I saw Bernie yesterday.
Bernie doesn't... it means hearings. It means investigation. It doesn't mean new laws.
You know why? And that's what we come back to. What makes me both gratifying but frightening to me is that Donald Trump at this point, even though he may have been somewhat culpable on what happened, he's all that stands between a Democratic Congress and... so you're going to, even you, I think at some point are going to have to count on him to be the bulwark from some crazy things happening. This is why people like divided government.
They didn't like it that much yesterday.
And then I started thinking about how the market went up when Trump said he might be willing to... I don't want him working with... what type of...
Okay, Andrew. No, social security fine. Healthcare may be fine. But they aren't going to come to his side or Republican side on anything. So anything that gets done is going to be him going over to their side of things.
And he was a Democrat for how many years? Ten years or eight years ago, he was talking about raising taxes on the wealthy and he got talked into that and then he got talked out of it.
Well, so do you think that taxes are on the table? That's a question.
I know. There was an interesting piece in the Wall Street Journal yesterday about estate taxes and whether wealthy Americans are going to be calling their accountants to try to figure out how to gift money and do all sorts of things over the next two years because of a concern that actually if there was a Democratic president in 2028 that all of a sudden there...
Making my point for me again.
I know, I'm making it for you. No, that's what I asked you to. Oh, actually, I don't know why I started talking because I said I was going to let you.
Let's talk about one more. So Bernie Sanders, you heard what he was saying about AI yesterday. Is he on the far left of the party? He's kind of in the center now, isn't he? He's almost a moderate Democrat. When you think of the DSA people, those policies that some of them were espousing, I don't think Americans really understood what the ramifications could be. They just hated Trump so much that some of that went. But if any of that stuff becomes law...
I have a semblance of confidence that those that are truly in this sort of social piece of the wing are not strong enough to actually bring the whole party to be nationalizing businesses, if that's where you're going with this.
Not just that, but there are half measures that are well on the way to doing that. And now we're back to...
But we've been nationalizing our own businesses this administration, so it's okay.
And you know what else Trump yesterday said? I'm blaming the Democrats for the market. He's the president when it goes down historically, and you look at all the numbers and the receipts.
He's going to be the one, and maybe somewhat responsible that the Democrats are in this position right now. So it's... my horoscope said I'm supposed to be optimistic today. So good luck.
A lot of football on tomorrow. Kind of exciting, right? Let's look at some of the big tech names. Nvidia lost 9%, Broadcom 10%. Both AMD and memory chip giant Micron shed about 17%. Neoclouds sealing a lot of the pain. CoreWeave lost almost 10%. Magnificent 7 stocks also dropped but less than some of the hardest hit tech names. The iShares semiconductor ETF saw its worst day since COVID hit in March of 2020. Elon Musk companies Tesla and SpaceX both got hit down at least 9%. Some investors worried that Musk could face congressional probes and worse.
If you listen to these wackos that have a podium somehow, Scott Galloway character, and other strict regulation under Democrats... the list, Andrew, included we've run up so much obviously on all this stuff that that's not surprising. There's been some pre-shocks to all this in the last couple of weeks, has there not? There's the circular financing that's going to come home to roost.
The thing that I'm watching is what happens in the next two weeks, funds. What about some of the biggest funds? Did that look like they were liquidating yesterday because they had to?
I don't think we're there on that. There were some rumors about some of these funds that are AI, you know, leveraged AI funds out in the valley. I think some people were focused on those yesterday. I'm more concerned about this Anthropic IPO as sort of the lynchpin, because baked into the cake of the valuations of some of the... of Amazon, of Google, of all of the... of Microsoft, all of them have stakes in Anthropic. And by the way, they all have stakes in OpenAI. And so if you don't get the Anthropic IPO off at whatever valuation you think, therefore the valuation of OpenAI is not the same all of a sudden. And then the question is what... and they've made commitments, they've made huge commitments to both the hyperscalers and to neoclouds and others for all of this compute. Either they're not going to be able to get the compute because of regulation, or they're not going to be able to pay for the compute because the economics of the business aren't good enough.
But the optimistic viewpoint is it will work itself out for AI, and it's almost an unstoppable force.
Absolutely. I'm just saying...
But then there's valuation, a period of time where it gets complicated.
It's just the momentum is unstoppable.
But then you should be buying all these stocks today if that's the case.
Can't buy anything. You know, all we can really have is Comcast and Verizon. Both of which were up yesterday.
I saw that. I saw a defensive play.
Why would you notice those?
Let's talk about this story, because I think this is going to have a huge ramification for the Republican party one way or the other and what happens in 2028. Secretary of State Marco Rubio brushing off reports that he's considering leaving the Trump administration. In an interview with the New York Times, Rubio said he loves the work he's doing and it has always been his plan to work for President Trump until the end of Trump's second term. Now, Rubio also serves as President Trump's national security adviser. He ran for president, of course, back in 2016 when he was little Marco, and has been viewed as a top potential candidate for 2028. Rubio declined to speculate to the Times on his political future. Though it is worth commenting that it is impossible, actually illegal from what I understand, to run for president in 2028 as the Secretary of State. Meaning you cannot be in that role and also be running in any meaningful way. It's almost a physical possibility. So if he is going to run...
He would have to step down at some point.
He will serve out this term as Secretary of State, president, unless he decides not to after what he said yesterday. That's the way this works. If something could change tomorrow...
There's also an argument to be made, potentially depending on what you think is happening in the country. If he thinks that the country has moved away from Trump, it may be that he says to himself, 2028 is not my year...
That's possible, too. I don't know. Did DeSantis move up even more after...
Oh, no. I think the big move on DeSantis in terms of prediction markets and whatnot, right?
Still below Vance and Rubio, though, right?
I don't know. Would you... do you believe Marco here?
I believe he doesn't... I believe that he believes in this moment that he may be doing that, but six months from now...
You would definitely not bet your life on it, would you?
No, I would not. Would you?
I wouldn't bet my life on just about anything right now.
Coming up on Squawk Pod: Ron Baron, the legendary investor and noted Elon Musk backer, on his confidence in the world's richest man and why he isn't all that concerned about headlines.
These are things I normally don't care about. I don't think about elections. I don't think about price of oil. Only thing about macro is inflation. I think that everything you want to buy is going to double in price every 14 or 15 years. And investing in stocks, that's the way you can hedge against losing your buying power.
You're watching Squawk Box on CNBC. I'm Joe Kernan along with Andrew Ross Sorkin. Among today's top stories...
There he is. There I am. That's a pretty good tweet, isn't it? Huh?
Right. You proud? You good with that?
It's all good. It's great to see you. A big day for Ron Baron. The Baron Conference taking place today at Lincoln Center. And ahead of that, we've got a special guest right here on set, the man himself, Ron Baron, founder and CEO and portfolio manager of Baron Capital. Ron has been a longtime backer of Elon Musk, of course, first becoming a shareholder of SpaceX in 2017. And we've got so much to talk about.
And 2014 Tesla even earlier. And you've got a big day. So we're going to talk about the big day in just a moment, but help us understand how you're thinking about what's just happened both politically, but what's happened in the markets specifically as this relates to the Musk Empire.
Well, there was election and the Republicans lost, and a lot of Republicans who were elected have spoken negatively about Musk.
You mean Democrats who won?
Democrats, right? And so the way I think about it, to start with a little commercial, these are things I normally don't care about. I don't think about elections. I don't think about price of oil. The only thing about macro is inflation. I think that everything you want to buy is going to double in price every 14 or 15 years. And investing in stocks, that's the way you can hedge against losing your buying power, which is going to fall in half every 14 or 15 years. That's all I think about: companies that can grow a lot. And then trying to find companies that... and how have we done? So basically, I started the business in 1982 with $10 million. 1992, $100 million. So from the $100 million, we made 700 times our money in 34 years. That happens to be 21.2% a year. Say, well, gee, you invested in that and made $100 million turn into $70 billion. And so you say, well, you got Elon Musk. Well, without Elon Musk, instead of being $100 million to $700 million to $70 billion, it's $100 million to $40 billion. So basically, that's a difference between making 21% a year and 19% a year. So the idea is to just be long-term investing. Don't care about all these other things. As far as what's happened though politically, seems to me that when the president wasn't the president, I was friendly with him, and my politics weren't exactly the same as his, but he has been responsible for the impetus to re-industrialize our country. And so it'd be a bad thing if we were in America relying on silicon only coming from Taiwan. And so here he's... he's probably the only person in this country who is able to build things at scale at attractive prices. Only one. So can you think of another name, another person who can build? So here he's talking about building in, you know, Texas.
You're talking about Elon now.
Elon. Yes. That happens to be a 100 million square foot building. So he's building the 5, 10 million square foot building. He's the only one who builds these things at scale. And when he does that, that's job creation, right?
So he's creating hundreds of thousands of jobs and making people more successful and giving them better lives, but hundreds of thousands of jobs, probably millions of jobs. He's the biggest job creator in the country. And you have people who are speaking against him, and all he cares about is, you know, why does he work all these crazy hours and sleep four or five hours a night? But so how are you as an investor though, how are you thinking about what the next two years look like, because I think there is an expectation that Democrats are going to put a real spotlight on this company, on his companies plural. SpaceX of course has government contracts. There could be hearings. You hear people talk about going back and looking at his role with DOGE. I mean, you can go through the list. And what that does... by the way, one of the things that I even think about is Elon is one of the most focused people and, by the way, very good multitasker too. But hard to be a great multitasker if you have to live in Washington, attending hearings and prepping for those hearings at the same time you're managing these businesses. And what that does just unto itself, let alone any other kind of regulation or other thing that could happen. And whether this should even factor into your investment calculus at all.
And the idea is that you go to a hearing, he doesn't have anything wrong. Why would there be a hearing? Because people want to make themselves on television. I don't... you know...
Scott Galloway calls Elon Musk a traitor, invokes Rosenberg executions. So do you just... is that just... you can be the biggest horse's ass on the planet and still get some...
Anyone can say anything they want. That's the benefit of this country. You can say whatever you want anytime. Doesn't mean it's accurate.
It starts affecting things though. I think it...
I think all these stupid people believe it, and we got plenty of them in the country right now.
Obviously it doesn't matter. You got this brilliant guy, once in a lifetime person, building these businesses that no one else can build. Feeling that we're going to have to take silicon and make it in this country. No one else is doing that. He's building... figuring out there's not enough power here.
Okay, let's sort of take the hearing piece away though. The...
It's a real concern though.
Which I think is a meaningful concern, but it seems to be something that he either doesn't think is a concern. I would be concerned. I'm in denial too because we can't believe it.
But my different question then is you hear the governor of Texas, for example, talk about wanting to implement regulations around permitting for these data centers and the like. You hear other blue state governors throughout the country, by the way some red state governors as well, and whether this is going to create a slowdown in terms of the ability to build. And he is, as you just described, a builder.
Why bother? Why waste your time on that? Let's talk about the business.
Okay. So, right now you talk about data centers, and data centers are critical to be able to use AI. And if you don't have data centers, you can't have AI. So Elon figures out... what he does is he thinks about bottlenecks. Where is there a bottleneck to getting more data centers? And so that's one of them, and it's more compute. So what he did is he said, gee, we have a number of companies that can create large language models, and that's what they're doing, and great, and we're doing that too with Grok. In fact, he's the one who started the whole thing, right? Who started OpenAI, and Anthropic comes from the person who worked at OpenAI.
So you have that, and then what you need is compute. And in order to accomplish that, in order to have data centers, you need compute. So he thought that compute was the barrier, was the roadblock. So what he did is he said, what we're going to do is we're going to build lots of compute, more than anyone else. And so he did. And as a result of that...
Shockingly, I mean amazingly so fast, faster than just about anybody else. If you take other people, it takes them about two and a half years to build a data center for a gig, and it costs them $50 to $60 billion. And they rent it out... the neoclouds rent it out to hyperscalers, and they get for it around $10 or $12 billion a year in rent. Cost them $60, get $10 or $12 billion a year in rent, and they get long-term leases, five-year leases, because you can't borrow money unless you have a five-year lease. What our guy does... he said he doesn't need to borrow money. And what he does is he goes out there and instead of spending $60 billion, we spend $35. Instead of taking two and a half years to build it, we did it in four months. We're now doing it probably in eight months. And when we do it in that time period, instead of renting something for $10 or $12 billion, what are we renting it for? We're renting it for $50 billion. Right? Spending $35 billion...
And getting even more for it.
And getting $50 billion a year for it right now. And so as a result of that, he's now getting from Anthropic, who needs to have compute. Anthropic comes to him, and we're a competitor with Grok, and Anthropic comes and they say, "I'd like to rent your compute, because I have all these orders for my business, but I don't have enough compute to... my place will be dark, right?" And so he rents compute for him for $3.1 billion a month, is what he's paying to Elon for using the compute, until Elon needs it for Grok. And as soon as they cancel these leases, at some point they will, then we're going to replace it with Grok.
So that's interesting. Your expectation is... and I've thought about this, because I've thought to myself, Anthropic probably doesn't want to be paying these prices...
But the other guys can't open a data center either.
Centers either. So there's going to be this complication. But you're arguing even if Anthropic ends these leases and ends up trying to use cheaper compute elsewhere, to the extent they even can, that then Elon's using the same data centers for Grok, and you believe that he's going to be able to make more margin.
