10AM Hour: Stocks Rip on Back of Democratic Midterm Victories, Orlando Bravo on Election and Tech, AMD CEO on Data Center Demand 11/4/26

Steve Leisman reports October ISM services at 54.5, just below the 54.8 forecast, meaning the modest miss does not materially change the picture: services and the broader economy remain in expansion above 50. Business activity slipped to 53.8 from 56.5, while new orders strengthened to 59.9 and employment rose to 51.4, its second consecutive month above expansion territory. Prices paid eased only one point to 73 from 74, still well above the roughly 60 level normally viewed as comfortable. The two-year Treasury yield was around 4.6% and the ten-year near 4.92%. December Fed-cut odds rose to 82%, with roughly 60% odds of another move in March.

Thoma Bravo founder Orlando Bravo says the Democratic victories were dramatic but his firm is nonpolitical and focused on building companies. He urges policymakers not to rush into regulating the model layer, arguing that competition should remain open because his 60 portfolio companies use frontier models, open-weight models, and proprietary models. He says cybersecurity deserves priority instead, particularly in production environments rather than laboratories, because the threat surface is expanding. Bravo notes that cybersecurity represents 40% of Thoma Bravo’s business, including the roughly $30 billion Proofpoint-Varonis combination, and says companies should ask vendors about their actual cybersecurity posture after breaches rather than prematurely blaming autonomous agents going rogue.

Bravo rejects the idea that AI will automatically destroy enterprise software. He says 60% of Thoma Bravo’s businesses are services companies whose value comes from collecting domain knowledge and returning it to 10,000 customers through network effects and economies of scale. Those companies must move quickly to own the agentic layer, or it could become a threat. He believes kill switches are possible through data protection, sensitive-data discovery, threat detection, and controls over what agents can see and touch. Model companies such as OpenAI, Anthropic, Google, and Microsoft will offer some cybersecurity products, but Bravo says they will not manage every multi-cloud, multi-model, legacy transactional environment or own specialized areas such as payroll, manufacturing, insurance, and retail.

Bravo acknowledges that Thoma Bravo paid a high price for Varonis—about 53 times cash flow and eight times revenue—but says the firm is pursuing a larger strategic company rather than simply buying cheaply. Combined with Proofpoint, Varonis creates what he calls the number-one player in data cybersecurity, a priority for chief security officers. Cost reductions and synergies should bring the deal to a more reasonable unlevered free-cash-flow multiple. Bravo hopes the combination accelerates Proofpoint’s public-market plans and creates a third major cybersecurity alternative alongside CrowdStrike and Palo Alto Networks, focused on data and AI.

Bravo says private equity has a liquidity problem: his portfolio may have strong operating results and promising AI strategies, but converting assets into cash is difficult. When Thoma Bravo presents a company to private-equity buyers, it may receive ten bids that look alike—typically a billion-dollar minority investment with a 15% guaranteed return or a 1.5-times return. He quotes partner Seth asking, “Does anybody buy a company anymore?” Bravo distinguishes firms buying financial paper from firms willing to own and improve an entire company, placing Thoma Bravo in the latter category. He says the firm increasingly must work with strategic corporations and has no immediate need to raise another fund after accumulating $30 billion across two vehicles, 90% of which remains available.

The hosts say the market initially treated the Democratic sweep as positive, but investors are focused on data centers and AI. Nearly 30% of planned U.S. data-center capacity is in Texas, where Democrat Gina Hinojosa defeated Republican Greg Abbott after Abbott had imposed a moratorium expected by investors to be lifted. Analysts interpret the result as potentially bringing stricter permitting, higher development costs, fewer tax incentives, and local opposition rather than an outright ban. Bank of America argues that slowing a front-loaded AI capital-spending wave could reduce overinvestment and the risk of a later hard landing. The hosts note that hyperscalers may benefit from slower competition because their deeper pockets can absorb regulation.

J.P. Morgan’s David Kelly attributes the rally to reduced uncertainty over Senate control and the avoidance of a close election’s potential political struggle. He expects divided government to restrain new fiscal stimulus, including President Trump’s campaign promise of $5,000 checks, because Democrats would likely demand higher taxes on wealthy people and corporations while Republicans would reject that financing. Kelly also expects pressure to reduce tariffs, which would be disinflationary and supportive of Treasuries. He says Democrats may pursue restored Obamacare subsidies, Medicaid and SNAP funding, and affordability measures, while Mike Santoli notes that the market had already beaten down the data-center trade and entered the election near the Nasdaq 100’s 200-day average.

AMD CEO Lisa Su says data-center demand is intense, with orders currently exceeding supply. AMD expects its data-center business to grow 50% sequentially into the fourth quarter and has delivered its first racks to Anthropic, OpenAI, Microsoft, Oracle, and Meta, whose customers are seeing strong performance from its newest products. Su says AMD expects the business to grow more than 80% next year—over twice its long-term model. The hosts note that AMD is much more exposed to data centers than Intel, with data-center revenue up 97%, while Su also argues that major technology companies must participate more actively in explaining the community and infrastructure consequences of data-center construction.

Oliver Rennick reports that the S&P recovered the prior Friday’s sell-off within hours and the VIX fell more than 3.5 points, nearly to four, its biggest one-day volatility drop since at least July. Crude oil and expectations about the Iran conflict are central: energy stocks are the weakest sector, XLE options volume is more than three times its 30-day average, and bearish puts dominate major buyer-initiated trades, including the January 15 $62.50 put. Solar is moving in the opposite direction: TAN ETF volume is on pace for 90 times average, with roughly 14,500 of 17,000 contracts being calls; First Solar, Enphase, and Sunrun are up sharply, led by the $48 TAN call betting on a 6% rise through November 20.

Raymond James policy analyst Ed Mills calls the Texas result a Category 5 threat to data centers and says the election is a starting gun for more regulation, not a clearing event. He expects Democrats to use debt-limit and government-funding negotiations to seek restoration of Medicaid and SNAP cuts, Obamacare subsidies, and green-energy provisions. Mills says executive action—not Congress—has generated most Washington volatility and may intensify during Trump’s final two years. He sees greater political risk for fintech and crypto than traditional credit cards. The hour ends with CVS’s plan to separate its Aetna health-insurance and Caremark pharmacy-benefits businesses from its retail pharmacy operations; management cites changing markets and regulation, but investors worry about lost synergies, unresolved debt allocation, and the 15-to-18-month execution period.