TOP STORY
🩸 Why the Midterms Just Caused the Stock Market's Worst Week of the Year

🩸 In case you were living under a rock this week, on Thursday, the S&P 500 fell -4.4% for its worst day since April 2025, and the Nasdaq fell -5.5%, with all 11 sectors closing in the red.

😰 Chip stocks had the hardest fall, with the semiconductor index (stocks like NVDA, AMD, and MU) falling more than -12% for its worst day since the COVID crash of March 2020… now down about 40% from its July peak.

🛢️ Energy and oil stocks were also hit hard as oil crashed to $98/barrel on hopes the new Congress pushes to wind down the war in Iran.

🎁 Luckily, Friday gave us a small bounce back, but the week still ended as the worst week so far in 2026.

🤔 So, as promised on Friday when I broke down what investors bought and sold on crash day, it’s time to get into the reasons behind this week’s crash… Here are the three main drivers:

🗳️ The Midterms Spark Fears the Data Center Buildout Will Slow

🏛️ The U.S. held its midterm elections this week, with Democrats winning both the House and the Senate, flipping 7 Senate seats and posting their biggest House majority since 2008…

📈 After the election, stocks actually jumped on Wednesday as the market celebrated the end to uncertainty, with the Dow posting its best day since April 2025.

😰 But Thursday fears started spiraling over what a Democrat House and Senate meant for the AI buildout, especially with many campaign promises to pause new data center projects.

🗺️ Texas (where the Democrats swept every statewide race) is home to ~27% of planned US data center capacity according to Wells Fargo, and comments from newly elected politicians helped add to the fears:

😬 Bernie Sanders went even further, saying:

🔌 Now, President Trump still has Veto power and controls federal agencies, so Goldman Sachs analysts see a national data center pause as unlikely.

🚧 But the real threat to data centers is at the state level, where UBS estimates pauses put about 30% of expected 2028 data center additions at risk, which is unsurprisingly bad news for the AI-fueled stock market.

💳 The Credit Risk Behind the Selloff

🏦 With so much of the AI buildout funded by borrowed money, a slowdown could become a credit problem, with risk concentrated among the weakest borrowers.

🚨 CoreWeave ($CRMV)’s bond yields sit well above 14% now, and the cost to insure its debt hit a record ~13% on Thursday, according to Deutsche Bank, topping its October peak.

🗣️ Analysts at JPMorgan say what happens at CoreWeave matters well beyond one company, warning that a “bifurcation of the AI credit cycle” is actively underway, and that:

🛡️ But luckily, the biggest names are nowhere near “we’re-all-going-to-die” level, with insurance on Nvidia’s ($NVDA) debt costing roughly 1.39% and Oracle’s ($ORCL) about 2.98%.

💬 TwentyFour Asset Management’s Johnathan Owen says the selloff “feels at this point largely manageable,” since a slower buildout could mean less debt piling up.

👷‍♀️ A Strong Jobs Report Didn’t Help

💼 To make matters worse, October payrolls beat expectations at +165,000, unemployment fell to 4.1%, and wage growth stayed hot at 3.1%

🏦 While this is good news for workers, it also makes an interest rate hike (which is bad for stocks) more likely, with traders now putting 78% odds on a Fed hike in December, up from 70%.

🌼 The Blossom Community Bought the Dip

💪 While most of the market panicked, the Blossom community stayed strong, with a record $154 million traded on crash day (more than double an average 2026 day) and 78% of investors net buying.

🧭 Which brings us to the big question of the week: is this crash a real buying opportunity (as many Blossomers seem to think), or the start of something worse? Before we break it down, a quick word from this week's sponsor, CIBC CDRs.

SPONSORED BY CIBC CDRs
🌟 Meet the 11 Newest CDRs: LUME, BE, RKLB & More!

🚀 The CDR universe expands once again with 11 new listings across AI infrastructure, aerospace and more!

• Bloom Energy CDR (CAD Hedged) - BE

• Bristol-Myers Squibb CDR (CAD Hedged) - BMY

• Cerebras Systems CDR (CAD Hedged) - CBRS

• Coherent CDR (CAD Hedged) - COHR

• Datadog CDR (CAD Hedged) - DDOG

• Dell Technologies CDR (CAD Hedged) - DELL

• Fortinet CDR (CAD Hedged) - FTNT

• Lumentum CDR (CAD Hedged) - LUME

• Rocket Lab CDR (CAD Hedged) - RKLB

• Snowflake CDR (CAD Hedged) - SNOW

• Valero Energy CDR (CAD Hedged) - VLO

🇨🇦 Now with over 140 CDRs to choose from, Canadians can access the world’s leading companies, all in Canadian dollars.

Why Choose CIBC’s CDRs?

💰 Affordable Access: Gain exposure to the world’s largest companies at a fraction of the cost.

📊 Currency Risk Mitigation: The built-in currency hedge is designed to protect your returns from exchange rate fluctuations.

💵 Liquidity You Can Rely On: CDRs pull liquidity from their underlying global stocks, just like ETFs. With market makers supporting fair pricing, you can trade with confidence.  

📈 Ease of Trading: Buy and sell CDRs just like any stock or ETF.

^{*See the CIBC CDRs disclaimer at the end of the newsletter}

TOP STORY
😅 So… Buy the Dip or Sell Everything?

⚖️ Last week we broke down the case that the AI bubble is popping vs. the case that it's a healthy reset…

🤑 But the question now is more practical: should you buy this dip, sell everything, or something in between?

🛒 The Case for Buying the Dip

📣 The loudest voice for buying is Dan Ives, who called this week's selloff a "golden buying opportunity" like March 2020 or the April 2025 tariff crash… arguing the market traded as if the election ends the AI buildout entirely:

💬 LPL's Adam Turnquist thinks the market has seen this story before:

🔌 Adam points to copper (a major ingredient in data centers), which is still holding above its long-term trend line, as a reality check: "If this is real demand destruction on AI, you'd think copper would start to roll over."

🗓️ And remember the stat we covered last week? Since 1950, the S&P 500 has risen from the October close of a midterm year through the following June all 19 times, with a median gain of about 15%.

⚠️ A Word of Caution

🚂 Before you rush in though, even the optimists come with asterisks with MAI Capital's Chris Grisanti saying:

🧐 Ives himself has trimmed his outlook, now assuming roughly 10% fewer data centres get built (and possibly 15-20% fewer)… while Nomura analysts say tighter rules could split the AI trade: rewarding giants like Microsoft ($MSFT) and Amazon ($AMZN) that fund buildouts from their own cash, while squeezing the smaller debt-funded players.

📊 Wednesday's trading showed exactly that split: Microsoft and Amazon each jumped more than 6% while CoreWeave ($CRWV) fell about 10%… the market already picking survivors rather than selling everything equally.

💡 So I think the fundamental lesson here is not to buy the dip blindly… different players will benefit in very different ways from here. A giant funding its buildout from its own cash and a neocloud borrowing at 14% can both be ‘down this week’ while facing completely different futures, so before you buy anything, ask how the midterm result actually hits that specific company, not just how far the stock fell!

👀 And speaking of Neoclouds, CoreWeave reports Tuesday after the close and Nebius ($NBIS) Thursday before the bell (the two biggest neoclouds, whose financing costs will show whether Thursday's scare was a one-day thing…

😎 Big picture aside, there’s one other big story for you: the one stock that soared 31% on crash day… right after a quick word from our other sponsor BetaPro by Global X!

SPONSORED BY BetaPro by Global X
🗳️ The Midterms Are Over. What’s Next for the Markets?

🔖 The votes are in, but the market reaction is still unfolding. From government spending and fiscal policy to bond yields and sector performance, the U.S. midterms could have implications for markets well beyond election day.

📈 History offers an interesting perspective. Across 14 U.S. midterm elections between 1970 and 2022, the S&P 500 gained an average of 15.5% in the following six months, finishing higher after every election in the sample. Canadian equities have shown a similar trend, with the S&P/TSX Composite averaging gains of approximately 11% over the six months following midterms across the 10 U.S. midterms from 1986 through 2022.

👀 So, what should traders watch now? Government spending, Treasury yields and potential policy changes could all influence market direction. Meanwhile, earnings, inflation and interest rates remain key market drivers.

💡 For active traders, shifting market sentiment and volatility can create opportunities in either direction. But having a trade idea is only half the equation. Position sizing, entry points and exit strategies are also important considerations when managing trading risk.

🌟 The ballots have been counted, but the next market-moving opportunity could be just around the corner.

^{*See the BetaPro by Global X disclaimer at the end of the newsletter}

SO WHA
🚀 AppLovin Soars 71% After Beating Its Own Guidance

📱 On the green side of things, while every other major tech stock was crashing on Thursday, AppLovin ($APP) surged 31% after reporting its third quarter results Wednesday after market close (ending the week up an insane 71%)

📊 By the numbers:

• ✅ Revenue hit $2.18 billion vs. $2.07 billion expected, up 55% year-over-year (and about $100 million above the top of the company’s own guidance)

• ✅ Earnings per share came in at $4.30 vs. $4.04 expected, up 76% year-over-year

• ✅ Free cash flow hit $1.4 billion, up 35% year-over-year

🔮 AppLovin now expects fourth quarter revenue of $2.365-2.395 billion vs. about $2.25 billion expected and it also raised its buyback plan from $3.2 billion to $3.6 billion.

🧠 AI Monetization Efficiencies

🤖 In case the name is new, AppLovin is a mobile advertising company powered by an AI engine called AXON, which decides which ad to show which person inside a phone app or game.

🏪 It works like any other ad company (think Google ($GOOG) or Meta ($META), running its own marketplace, called MAX, which holds the auction between advertisers and the app makers selling the ad space. AppLovin takes a cut of that ad spend, so better ad results mean more revenue.

🛠️ For the results this quarter, revenue grew 14% from the second quarter (vs. 4% last quarter), and gaming revenue grew nearly 50% year-over-year, driven by a new version of the AI model in its ad marketplace, which boosted monetization to help revenue per install rise 55% while installs rose just 2%.

🗣️ And even with this amazing monetization boost, CEO Adam Foroughi says only part of the new model has rolled out so far:

🔁 This got investors excited because better ads bring more advertiser spend, which feeds the new model more data to learn from, which makes the ads even better.

🛒 Also adding fuel to the fire, spending from consumer advertisers (brands selling directly to shoppers) grew triple digits year-over-year, which gives AppLovin a second growth engine on top of AI-driven efficiency.

🤔 But, what did Wall Street make of it?

💸 What Wall Street Thinks

🎯 Analysts broadly liked what they saw, with Morgan Stanley raising its price target and calling the new model “a major breakthrough” for the business.

🧵 The common thread among analysts is that the quarter calmed fears that AppLovin’s growth was slowing because of competition, and the new AI-powered monetization boost and a fast-growing e-commerce business have pushed markets bullish.

📉 However, some analysts are still cautious, with many saying the new AI models will need more computing (requiring more money). Management has said that the spending has to earn its keep, and that data center costs still fell as a share of revenue even as AI spending rose.

💸 Blossom Cashes Out

🤑 Despite the optimism, Blossom members took the massive jump as an opportunity to take profits, with 70% of investors selling compared to 28% on average!

👋 And the sellers weren’t trimming, they were exiting completely. Of the AppLovin sellers this week, 73% cashed out everything

💡 But these were mostly recent buyers, not long-term holders, with 70% first buying $APP within the last ~3 months (median holding period 73 days), so this was quick money catching the 71% pop, not OG believers giving up

✨ All right, before we cover the top discussions this week, a quick word about some exciting new ETFs that launched this week!

CBOE ETF ALERT
💸 Cboe Canada Welcomes BMO’s New Income ETFs: NVDA, PLTR, and TSLA

💡 Here’s a little bit about each of the new ETFs, shout out to CBOE for supporting the Buzz!

⚙ NVIA | BMO Autocallable Income NVIDIA (NVDA) ETF – Series 1

The objective of NVIA is to provide investors with the opportunity for income, for a limited period ending on a scheduled maturity date approximately three and a half years after the BMO ETF Listing Date or an earlier date, by obtaining investment exposure to NVIDIA Shares including through the use of derivatives transactions while mitigating some of the downside risk associated with an investment in NVIDIA Shares.

🌐 PLTA | BMO Autocallable Income Palantir (PLTR) ETF – Series 1

The objective of PLTA is to provide investors with the opportunity for income, for a limited period ending on a scheduled maturity date approximately three and a half years after the BMO ETF Listing Date or an earlier date, by obtaining investment exposure to Palantir Shares including through the use of derivatives transactions while mitigating some of the downside risk associated with an investment in Palantir Shares.

⚡️ TESA | BMO Autocallable Income Tesla (TSLA) ETF – Series 1

The objective of TESA is to provide investors with the opportunity for income, for a limited period ending on a scheduled maturity date approximately three and a half years after the BMO ETF Listing Date or an earlier date, by obtaining investment exposure to Tesla Shares including through the use of derivatives transactions while mitigating some of the downside risk associated with an investment in Tesla Shares.

FROM THE BLOSSOM COMMUNITY
⭐️ Featured Posts of the Week

👇 Click to see the full post!