Mark opened State of the Market this morning saying “The NASDAQ can sell off. Who knew?”

And honestly, after the year we’ve had, I get the surprise.

So what happened?

You can watch the replay below or check out the wrap up under it:

Right before the show, PPI came in hot. Like, really hot. Mark said it landed at double what everybody expected. Core was more than double, and year over year sat at 6.3%.

He was hoping for a soft number. Not today.

And that was just the first surprise.

“This is a number that six months ago would’ve caused bonds to tank,” Mark proclaimed. Which he said because bonds were doing the exact opposite today.

He has the 10-year sliding from around 5.40% down to 5.05%, and he thinks it’s going under 5%.

The NASDAQ dropped more than 1% for the second day in a row, and Mark said they’re taking it “out to the woodshed,” which is a very Mark way of describing a selloff. His read is that money’s running away from AI worries and hiding out in Treasuries.

He’s calling it “a sea change moment on rates.”

So who’s getting thrown out of the AI party? Dell, for starters.

Dell sat at a 52-week high on Friday. Four trading days later, it’s down more than $100. “Dell was told to go outside, cut its own branch off a tree,” Mark said. If you grew up in a certain kind of house, you know exactly how that story ends.

Hans had a calmer take. He said this stuff happens slowly, then all at once.

Politicians don’t want data centers, neighbors don’t want them, and there’s a bunch of bad information floating around about water usage. Demand can go to the moon, but in his words, “the build-out can’t build out if you don’t allow it to happen.”

He still likes Dell, though, which I’ll give him credit for saying out loud on a day it got smoked. He sees it as an on-premise AI play, selling to companies that want to run AI in their own buildings, and he doesn’t think anything slows that down. Mark pointed out Dell started the year around $118 and, even after this beating, it’s still up roughly 300%. So yeah, rough week, but nobody’s holding a fundraiser.

Taiwan Semi dropped about $18, roughly 4%, on earnings Mark said looked great. Hans shrugged it off. He called TSM central to everything and said investors are getting picky inside the AI trade itself, which is how you end up with Arm near six-month lows and ASML near highs on the same tape.

Then they got to CoreWeave, and the gloves came off a little. Mark said its credit default swaps are exploding and he thinks its bonds are trading around 15%. He asked Hans point blank if this is the Pets.com of AI.

Hans called it the poster child. He told a story about seeing some guy online, maybe 23, totally confused about why AI stocks are falling when the demand numbers are so good. Hans’s internal monologue: “Buddy, you ain’t been around long enough.” Then the actual lesson: “What happens in manias is eventually the bottleneck is money.”

He doesn’t think anybody lets CoreWeave go under, since the assets are still worth something to somebody. If you own the common stock, though, he wasn’t exactly reassuring. “They usually get hosed in the end,” he said. Being joined at the hip to OpenAI isn’t helping it either.

Speaking of OpenAI, Mark said eight states are suing OpenAI over ChatGPT harming kids. “OpenAI just can’t win,” he said, and this week, it’s hard to argue.

Hans thinks the market needs these big AI IPOs to happen anyway, since these companies plan to spend a trillion dollars over the next few years. He also threw out his guess on Anthropic’s timing. He doesn’t see it going out election week or the week after, because California might still be counting ballots.

He’s betting on November 12 or the 17th through the 19th.

Then Mark asked the question I think a lot of you have been asking yourselves. He wanted a dollar sign in the chat from anybody who did the responsible thing and bought dividend payers with real earnings and low debt, then watched them spend 18 months “sucking wind like me in a 5K.”

Plenty of dollar signs showed up. I’ll leave the 5K part alone.

Hans thinks those folks finally get paid.

He said breadth hit something like a 28-year low, which means the indexes look fine while most of the stocks underneath them are getting left behind. He pulled up RSP, the equal-weight S&P, and liked the nine EMA curling up. Mark noted RSP’s still about $10 under where it was on August 13, even with the big indexes barely off their highs.

“I think it could be a generational opportunity,” Hans said. He wants to own things you can touch and feel, “that people need, and that you can’t code in an afternoon.”

Hans runs a dividend portfolio built around exactly the kind of names they spent the back half of the show on.

He looks for stocks with a solid dividend that he thinks he can squeeze some extra income out of, sends a monthly report, and meets with members live.

He had a class on it at 2 p.m. today. Mark pointed out it’s $7 for the whole year, and that you can’t get a Starbucks or a copy of US Weekly for that anymore. He’s right about the Starbucks. I’m not checking on US Weekly.

Grab Hans’s dividend portfolio for $7 a year.

Charles Delvalle

Editorial Director, Option Pit