The Exchange – CNBC

Episode Summary – November 12, 2025

Episode Overview

This episode of "The Exchange" dives into a busy day across U.S. equity and debt markets, with a focus on the post-shutdown economic outlook, the evolving risks and opportunities in growth versus value investing, the complexities behind rising retail prices, and the AI boom’s impact on credit markets. The podcast features interviews and analysis from top CNBC reporters and notable guests including Vinny Krishna (Barclays), Rick Santelli, Alex Straton (Morgan Stanley), Tony Wang (T Rowe Price Science & Technology Fund), and insights from the Cerebral Valley AI Summit.

Key Discussion Points & Insights

1. Market Overview & Strategic Outlook

• Equities Mixed, Dow Hits Record
  • The Dow reached new highs, boosted by cyclicals, while the Nasdaq lagged due to underperformance in tech mega-caps.
  • Facebook (Meta), Nvidia, Palantir, and Oracle were all lower on the day as debt and spending risks caught headlines.
  • AMD surged after bullish long-term growth projections.

Interview: Vinny Krishna, Head of US Equity Strategy, Barclays

Main Points:

• Shift from Value to Growth:
  • Krishna recently downgraded value stocks to ‘negative’ while maintaining a positive stance on growth, particularly in tech.
  • “The sector composition and…consumer sentiment going down will sort of hurt the kind of sectors which are more in the value space…” – Krishna [01:58]
• Momentum and Quality:
  • Both momentum and quality factors were moved to ‘neutral’. Krishna notes large cap support from Big Tech, small caps benefit from possible rate cuts.
• Economic Risks, Not Recession:
  • Krishna isn’t forecasting a recession, but cautions about “the scale of spend and key questions about the returns on that spend” in tech, especially hyperscalers relying increasingly on credit markets.
  • “If the size of capex…gets dependent on the credit markets…that combination…is going to have a fairly negative consequence. But that's not our base case.” [03:53]

2. Bond Market Focus & Debt Dynamics

Report: Rick Santelli from CME

• 10-year Note Auction & Yields:
  • $42B in 10-year notes auctioned at 4.074% (slightly above market expectations).
  • Demand was average; dealers took down 10.5% vs. historical 11%.
  • “It really is a steady eddy auction. But a lot of attention paid to it…because of the real lack of any main driving fundamentals or lack of data.” – Santelli [06:25]
• Treasury Supply Set to Rise:
  • Ongoing/future government funding needs expect to keep Treasury supply elevated.
  • “The only question is…how…Treasuries divide some of the issuance down the road up...Supply has to go up because we're not really cutting anywhere.” [08:11]

3. Government Shutdown & Release of Economic Data

Live from Capitol Hill: Emily Wilkins

• Shutdown Nearing End:
  • House members expected to vote to reopen government after 43 days.
  • A handful of Republicans/Democrats are expected to cross the aisle to secure a deal.
  • Lawmaker travel snafus add a layer of irony and urgency; one member reportedly rode a motorcycle overnight to D.C. [11:59]
• Impacted Data Releases:
  • September jobs data is “ready to go”; October’s will be delayed due to staffing gaps during the shutdown.
  • Backpay and clearing of airport congestion expected post-reopening.

4. Retail Prices – Apparel & Footwear

Analysis: Alex Straton, Morgan Stanley

• 3% YoY Price Increases:
  • E-commerce data shows modest (not dramatic) apparel inflation post-April “Liberation Day.”
  • "In our view where you're really going to see the rubber meet the road…is this month onwards." – Straton [15:20]
• Pricing Nuances:
  • Retailers shifting to higher-priced product categories (e.g., workwear vs. tees) account for some increases, not just tariffs.
  • Full tariff impact not yet realized—expect more visible price changes in late 2025, especially for footwear due to wholesale lead times.
  • Department stores (e.g., Macy’s, Kohl’s) showing higher price points, likely due to strategic mix shifts.
  • “The price part…is just one piece…We're pretty cautious on the holiday season...inventory imbalances…rising promotional levels…negative sentiment indicators.” [21:51]

5. Housing Market Snapshot

Report: Diana Olek

• Buyers Step In Pre-Winter:
  • Mortgage applications rose 6% last week—highest since September, likely due to more listings and modest price softening.
  • Refinance demand dropped but remains much higher YoY thanks to lower rates.
  • “As I said, it's just a little more supply…and prices are starting to soften…sellers…are making better deals right now.” – Olek [27:03]

6. AI Boom & Credit Concerns

Report: Sima Modi

• AI “Hyperscalers” Issue Debt at Record Pace:
  • Projected up to $1.5T in new investment-grade bonds over next 5 years—could require private credit and government support.
  • Oracle is most aggressive; credit default swaps hit 2-year highs as investors hedge AI buildout risks.
  • “It’s not so much the size but the speed at which hyperscalers are issuing billions of dollars of debt.” – Modi [29:18]

Interview: Tony Wang, T. Rowe Price Science & Technology Fund

• AI Debt Not Yet a Red Flag:
  • Wang acknowledges ballooning debt, but maintains conviction in AI’s productivity and profitability potential.
  • “No one's taking their foot off the gas pedal…it's an absolute imperative investment…We're still early in the S-curve of adoption.” – Wang [31:01]
• AI Winners & Valuation:
  • Names like AMD (+115% YTD) and Palantir (+139% YTD) have “early mover” advantage; Wang thinks runway remains—but investors must assess actual use-case profitability.
  • “I think there’s a lot of exciting things…if they can deliver, there's place for them.” [34:38]

7. Art Market Surges Alongside Stocks

Report: Robert Frank from Sotheby's

• Art Auctions Rebound:
  • $1.4B in art on the auction block, up 50% YoY as stock gains boost collector confidence.
  • Major masterpieces and notable collections (e.g., Klimt, Lauder collection) expected to fetch hundreds of millions.
  • “Thousands and thousands of people coming to this exhibit…Part of it…new headquarters, but also…these three klimts, which is rare to see at once.” – Frank [38:41]

8. Financials Rally as Tech Rotates

Conversation with Leslie Picker

• Rotation into Banks:
  • Financials (especially big banks like Goldman, JP Morgan, Morgan Stanley) outperform as investors rotate out of tech amid shutdown resolution.
  • JP Morgan & other big banks benefit from increased deal activity and capital markets revival.
  • Regional banks still lag due to credit concerns.

9. LIVE: Cerebral Valley AI Summit – The ‘Bubble’ Debate

Report: Deirdre Bosa in San Francisco

• Startup Sentiment:
  • Bubble talk is the “elephant in the room”: optimism remains, but founders now stress revenue & real-world adoption over “hype.”
  • Amjad Massad (CEO, Replit):
    • “There's a 10x increase in revenue in this category…We're on our way to being profitable next year.” [44:00]
  • Private-to-public pipeline:
    • Massad intrigued by going public: “I've never gotten a good answer [for] why companies are not going public…That makes it more attractive to me. So we're looking into it.” [44:56]
  • “There is a healthy dose of reality…for every company looking at $1B, many will not make it…There’s talk about the Gartner hype cycle leveling off…” – Bosa [46:27]

Notable Quotes & Moments

• Vinny Krishna (Barclays, on growth vs. value):
  “We have been consistently positive on growth…value has exposure to segments which…face cost pressures…eventually consumer sentiment…going down will sort of hurt the kind of sectors which are more in the value space…” [01:58]

• Rick Santelli (on government debt):
  “Supply has to go up because we're not really cutting anywhere. And much of the fighting that's been going on keeping the government closed…adds to more money being spent…” [08:11]

• Alex Straton (Morgan Stanley, on retail):
  “Where you're really going to see the rubber meet the road…is this month onwards…We should see more on the horizon soon.” [15:20]
  “Retailers are mix shifting into higher price point categories…not necessarily exactly related to tariffs in my opinion.” [16:33]

• Tony Wang (T. Rowe Price, on AI investment):
  “No one's taking their foot off the gas pedal…it's an absolute imperative investment…I'm looking for…use cases…that are going to be driving spend going forward.” [31:01]

• Amjad Massad (Replit CEO, on IPOs):
  “I've never gotten a good answer why companies are not going public…That makes it more attractive to me. So we're looking into it.” [44:56]

Timestamps for Key Segments

• [00:49] – Markets snapshot & Vinny Krishna interview
• [06:25] – Rick Santelli on 10-year auction and debt
• [09:16] – Emily Wilkins from Capitol Hill: government shutdown
• [14:22] – Retail inflation and Morgan Stanley analyst Alex Straton
• [25:29] – Diana Olek on housing/mortgage trends
• [29:18] – Sima Modi on AI debt; Tony Wang interview
• [36:12] – Robert Frank from Sotheby’s on art market
• [39:47] – Leslie Picker on financials’ rally
• [43:19] – Deirdre Bosa live at the Cerebral Valley AI Summit

Takeaways for Listeners

• Growth Still Favored: Despite risks, strategists favor growth (especially tech) over value, with broad optimism but clear caveats about credit and capex dependency.
• Debt and Credit: The speed and scale of corporate and government debt issuance is a mounting concern across sectors, especially as AI infrastructure spending intensifies.
• Retail Prices Rising, but Complex: Apparel and footwear prices are up modestly, but factors include product mix and coming tariff effects—not just sticker hikes.
• Markets in Rotation: Capital is rotating out of tech and into financials, and banks benefit from improved deal flow as the shutdown ends.
• AI Reality Check: Founders and investors are becoming more focused on revenue and real world adoption, acknowledging bubble risks even amid strong top-line growth.

Listeners walk away with a sharp view of how shifting market conditions, government policy, and the AI boom are reshaping corporate strategy and investor sentiment heading into the final stretch of 2025.