Brian Pietrangelo [00:00:00]

Welcome to the Key Wealth Matters weekly podcast where we casually ramble on about important topics including the markets, the economy, human ingenuity, and almost anything under the sun, giving you the keys to open doors in the world of investing. Today is Friday, November 13, 2026. I'm Brian Pietrangelo and welcome to the podcast. And this morning I would like to introduce our panel of investing experts here to share their insights on this week's market activity and more. George Mateyo, Chief Investment Officer, Steve Hoedt, Head of Equities, and Rajeev Sharma, Head of Fixed Income. As a reminder, a lot of great content is available on key.com/wealthinsights, including updates from our Wealth Institute on many different subjects and especially our Key Questions article series addressing a relevant topic for investors. In addition, if you have any questions or need more information, please reach out to your financial advisor. Taking a look at the market and economic news, we've got two key economic releases for you and then certainly a lot going on in the stock market so we'll talk about that. But first up, we have the overall existing home sales report that came out from the National Association of Realtors. for the month of October 2026, where existing home sales decreased by 5.5% month over month, which was most difficult and probably the difficulty around mortgage rates significantly being their highest level since the year 2000. And so that is crimping overall existing home sales as we talked about that imbalance between supply and demand. And second up, we had the Consumer Price Index report for inflation for the month of October 2026. All items came in on a month-over-month basis at 0.4%. Core items excluding food and energy 0.3% continued to be hotter than expected and continued to be significantly persistent. The year-over-year numbers could not officially be calculated because of the government shutdown a year ago in October of 2025. However, using some calculations relative to where we think it would be, That number for all items is around a 4% increase year over year and core, excluding food and energy, about a 2.8% year over year increase. Again, these remain significantly high, well above the Fed's 2% goal. So it has implications for future Fed meetings coming up in December and then the first quarter of 2027. And the producer price index just this morning was also a bit hot, so we continue to see the same conundrum around the inflation challenge with regard to both producer price index reports and consumer. And of course, within the stock market, the big news of the week was with Nvidia, so we will certainly have a robust discussion around what's going on there and with semiconductors in the market. So I'll just lead off with George and see his opening remarks, and then we'll have Steve join us in terms of what's going on with Nvidia. But before we do that, we'll also have a commentary later on in the day with Rajeev on the Fed and inflation. So let's get right to George. George, what are your opening remarks?

George Mateyo [00:03:18]

So Brian, it's an interesting time. I'm not sure exactly where to start, to be honest with you, but we'll probably just kind of kick it off by talking about Nvidia, the stock that doesn't deserve this much attention, but it's getting a ton of attention. And it's a stock that we've talked a little bit about in the past. We often don't talk about individual companies that much on these conversations, but this is definitely an exception that's deserved. So of course, Innoviti is in the spotlight this week. It's been in the spotlight for the past few weeks, given a lot of the news that's been out about the company, around the founder, and now the former CEO that essentially has captivated a lot of attention. And I think it's fair to say that this is a story, in my view, that has a wide range of implications and ramifications, not only for the economy, for the market, but certainly perhaps around the notion around AI itself and kind of where we go from here. This is a large company. The company now is still some 6.5% or so of major market indices. It got above 8% not too long ago. So it's a really outsized position for many portfolios. And I think it probably deserves a lot of attention. It's hard to really kind of understate the magnitude here because the company was not only really at the epicenter of AI, but it really was at the epicenter of national security and geopolitical concerns as well, in the sense that chips and semiconductors have essentially become the new trade du jour. I mean, it's really been the trade It's been really kind of the overall arching theme around national security and the need to have chips made in our country versus somewhere else that's really thrusted this company into the spotlight. And along with that, this company has really been essentially banking other companies in the development of AI as well. So there's probably just so many unknowables, we just can't begin to think of all of them. But I do think it's going to provide probably a lot of volatility in the next few weeks or so. This is going to probably last a lot longer than people would like it to be, in my view. And I think this is nothing else to kind of reinforce the notion that you want to think about portfolio exposure and think about how you own certain stocks, how you actually weight those stocks in your portfolio, and to what extent you actually make sure you actively review your portfolio and think about taking steps to rebalance exposures when they become outsized. So I don't know exactly where to start, Steve. I mean, this is an extraordinary company and an extraordinary time. Love to get your thoughts on maybe where you think we're headed in terms of things we should think about, maybe as it relates to the market impact first, and then we can talk about the geopolitics second.

Steve Hoedt [00:05:42]

Yeah, George, you know, when you look at this, just from a practical perspective, NVIDIA peaked at a little over 8.9% of the S&P 500 back on May 14th. And as we sit here today, it's a little over 6.1% of the S&P 500. So, we've already seen 280 basis points of market cap shift to other stocks as this stock has come under significant pressure. That being said, it's still up more than 400% off of the lows that we saw coming out of the post-COVID boom, say so late 2022. So look, investors across the board have large embedded gains in this name. Most people who've been involved with it have typically been involved with it for a pretty long time. So, the question that a lot of people are asking is, is it over for this company? And I think that that is probably too big of a leap to make. But obviously the revelations of the last couple of weeks have been shocking to everyone involved. And really the question right now is, where do we go from here? When you look at the company itself, obviously it's been at the epicenter of the AI revolution for a whole host of reasons. Their chips have been what people have been using to put the revolution together to begin with. Their balance sheet has been used and extended to extend financing to people all across the AI ecosystem. And the question is, is that are all these things going to continue? Is this company going to continue to be a leader in this space? And when you look at the management depth, the fact is that Jensen Huang had 60 people plus reporting to him. It was not a typically structured organization. I don't want to call it a cult of personality because I don't think it extends to Elon Musk levels there. But I think that what we see there, though, is a company where clearly the founder and Jensen (Huang) founded the company in 1993. It's the typical Silicon Valley garage startup story, right? where he maintained a significant amount of control all the way through the development arc of this firm. And that control was never really relinquished in any significant way. And the board never stepped up and took any away from him. So when you look at it today, the company is going to have to kind of go through a period of catharsis where it restructures its management team into a more traditional management structure. And at the very least, from an investment perspective, the company is going to be in a penalty box phase while it goes through this because people don't know what to expect over the next three, six, 12 months. So like everything that people had talked about before is now kind of thrown up in the air. And it opens the door for competitors like AMD and others to potentially take significant market share, whether it's AMD or whether it's Alphabet/Google with their TPU chips or the Chinese companies with what they're doing. It just seems like the competitive dynamics now over the next 6 to 12 months are in a complete state of flux where I think two weeks ago prior to this coming, people still felt Nvidia was going to remain the epicenter of the AI revolution.

George Mateyo [00:09:51]

Do you think it derails the AI acceleration? In other words, you're right to point out that I think other competition or other competitors rather will probably look at this as a chance to try and gain share to some extent. And I don't know how deep or how wide Nvidia's moat is to actually defend that. So this may be one thing, but then again, more broadly, is there some potential issue that we should be thinking about, Steve, as it relates to just the fact that AI has been so dominant in terms of its impact on corporate earnings overall, it's been dominant on the overall build out of capital expenditures and GDP itself. So again, it's probably an unanswerable question. We just really can't get our head around it, but first of all, what do you think the competitive landscape looks like? And then maybe more broadly, what does this do to the AI theme and trade going forward?

Steve Hoedt [00:10:45]

So George, with the coming public offering of Anthropic and others, it's like it's created a, there's been a large conversation evolving in the market over the last couple of months. And I think that when you look at it, there's a real debate in the market about what's the path forward for AI, meaning is it going to be with these large closed source models like Anthropic or OpenAI? Or is the market going to trend toward open source solutions, not just the Chinese ones, but others, and see if if open source solutions are the true way to go with this. And that has really massive implications for the build out, number one, because if you go with open source solutions, what that means is that the companies that adopt AI, which are literally going to be pretty much everybody across the board, you're going to end up building your own small server location and handling it yourself as a company because it's cheaper to do that and more efficient to do that than it is to go and pay for tokens and basically rent cloud computing capacity from these hyperscalers. The reason why, I mean, it sounds like it's esoteric, right? But it's not because then if you go the open source path, the companies that are going to benefit are the Nvidia’s and the AMDs and the companies that make racks the boxes, Dell Technologies, other stuff. And we're not recommending any of these names that we're throwing out. I'm just using them as examples of people that are in places in the ecosystem. Okay. And, you know, if open source is the way that is going to be the stuff that benefits the most. Right now, what you see is you see a ton of stuff going into the data centers and it's the data center build out theme. So it's like giant air conditioning units and all this kind of stuff. Caterpillar for pushing dirt around, other things. And that stuff really will not be the way you want to reflect the AI thematic going forward. It would rotate back toward these boxes and racks and and semiconductor chips, right? So, I think there's an open debate in the market right now about which way this is going to go and if we rotate that way, then these things that maybe were AI 1.0 plays two years ago come back to being where people want to be. And I think that's what's been really shocking to people about what's happened with Nvidia is because Nvidia was viewed by many investors as being the primary way to play that potential rotation toward open source and now it's an open question whether or not that's going to be the way people want to go there or not. And I think that is really where it comes down to right now for investors. Are these guys going to have their act together enough to benefit from that or not?

George Mateyo [00:13:54]

So, it's interesting in the open source debate. I think there's probably a plausible argument that somebody could make that maybe the federal government, the US government gets involved to some extent, right? Because this is almost viewed as a national issue, national security issue.

Steve Hoedt [00:14:09]

Well, and Nvidia has been viewed as a national champion, George. I mean, if you want to think about it like in terms of geopolitics and nations picking winners or companies to to advance their views. It's been very clear that Nvidia and a national champion. But you know, something that I was thinking about the other the other night, like there's a reason and this is, you know, not to get into conspiracy theories, but there's a reason why the State Department did not allow Jensen Huang to get on that plane to fly to China in October last year. And it seems like there are people in the government that have known this for a while or at least have had their suspicions for a while. Maybe it didn't obviously reach the market for perception, but like the whole situation now, when you look back on it, hindsight, it's like there were, I guess, were signs there that there was something that was amiss.

George Mateyo [00:15:10]

Well, one other element, Rajeev, we should probably talk about has to do with credit in the sense that as Steve acknowledged, and we've talked about previously as well, is the concept that Nvidia has been financing or has financed a lot of its customers in the sense that they've kind of provided credit support of themselves, they've provided direct financing, they've actually provided some backups rather to certain companies that are building out this infrastructure. I'm curious to know from your seat, Rajeev, if you're seeing any issues in the credit markets that should be notable. Obviously the equity markets are taking this and digesting this and we're kind of seeing continued pressure this morning. Not only in Nvidia, but the broader tech sector overall. What type of things are you looking at in the credit market that maybe are either a cause for concern or maybe things that are probably less concerning from your scene?

Rajeev Sharma [00:15:58]

Well, that's a very good question, George, because Nvidia, this is one of those names, AA rated credit, a lot of demand for the name in the market. They did come with a jumbo deal this year. If you look at the credit default swaps for Nvidia, they surged from around 40 basis points in early 2026 to around 131 basis points right now this morning. And that's more than tripling since mid-year. This was not a function of the headlines that came out this week. Credit default swaps on the name have been largely driven by a sequence of events that have kind of repriced the company's credit risk. Nvidia had a $25 billion bond sale earlier this year, and then they announced a $500 billion AI financing plan. And that's what really took CDS wider. And then the news came out on the CEO resigning. So, there are a couple of factors in the mind of bond investors right now, especially if you're talking about Nvidia. A couple of questions that do come to mind. One, is there gonna be a balance sheet transformation? You have a company that was a near zero debt issuer that moved to one big solid jumbo deal of $25 billion in a single transaction. Is that gonna start to change? What is the scale of AI financing commitments that raises questions about off balance sheet financing for Nvidia? What's that exposure gonna look like? And then the big one about governance and governance risk, and the uncertainty surrounding potential regulatory scrutiny. So, these are weighing on the minds of bond investors. If you look at the 30-year Nvidia bonds out there, they're trading at a meaningful discount, almost 15 points discounted to par. And again, that reflects the rate sell off this week, but also credit spread widening tied to the headlines that we saw this week and the governance concerns. Now, if you look at the complex of Nvidia itself, there are short duration Nvidia bonds out there, and then there's the 30-year bonds out there. The short duration credit spreads have not really moved at all on the news, but the questions now come out. Does Nvidia slow down investments with its AI players? Would that be a systemic impact to the AI ecosystem? US export restrictions are another discussion that we talk about that could circumvent some of the US export limits. It's unlikely that an AI buildout will slow down, but there are some political risks here that I think everybody investor starts to hone in on. Even with the AA rating that it has, that's not guaranteed it's going to stay that way. We haven't heard rating agencies chime in yet on this, but I do think that this is something that could be something that could cause systemic risk in the credit markets, as I said. Credit spreads have not moved significantly on the news, but credit default swaps have. And I think that's very important to have that distinction.

George Mateyo [00:18:56]

I guess the other dimension too, Rajeev, to make this a bit of a wider conversation is what the Fed might be thinking about in response to this, if anything at all. I mean, I know they don't want to get involved in picking companies or picking stocks, at least not right now. But alongside the build out of AI and the excitement around it, we've seen inflation move up. And inflation is probably part and parcel due to a lot of other things. But the infrastructure with AI and the excitement around that has probably caused prices to come up as well. If we start to see some type of curtailment perhaps, or maybe some slowdown in the spending, maybe that bodes well for inflation. But are you seeing, again, this week has been kind of an interesting week because some of the inflation numbers that have come out have been a little bit hotter than expected. Have you seen any significant changes for Fed expectations as relates to rate hikes for next year?

Rajeev Sharma [00:19:48]

Absolutely, George. So you are right, the Feds are not going to probably come out and comment specifically on the company, but they have commented on the past about AI being the eventual, the benefits of AI and the AI build out is going to be a future where you'd have inflation coming down because of economic gains through AI. Right now, the Fed is squarely focused on the inflation data. It was a pretty rough week for fixed income markets. Treasury sold off across the curve. And again, the whole thing points back to the hotter than expected inflation data that we saw. And then you do have some Fed members that have come out this week. They haven't specifically spoke to AI or sector specific or any specific names, but they have pointed directly at the inflation data that we saw this week and you saw some of this hawkish comment come out of Fed members. The bond index itself this week lost over 1.25% and it had a lot to do with the inflation print that came out. So, you did see, you know, you did have the narrative being supported by Fed speak this week. We had Fed Governor (Christopher) Waller, New York Fed President (John) Williams. They both signaled for further rate hikes in their commentary. They reinforced a tightening bias in the market. You do have other factors here like added supply, treasury supply came to the market this week, keeps pressure on yields. And really what you're seeing here is a kind of a repricing of what the Fed does as far as rate hikes and their hiking path going forward. There's money markets right now adding bets on at least two additional rate hikes by mid-2027. They're even pricing in right now a very small probability, but a probably nonetheless of a 50-basis point rate hike at the December FOMC meeting in the coming few weeks. So that shows you how sensitive this market is to inflation data. Fed commentary definitely points towards inflation being the number one priority for the Fed to bring that down. So, you're going to start seeing some volatility around the FOMC dates that we're going to have. And I do think that with more Fed members speaking, that December FOMC figure 50 basis points is not out of the realm of reality.

Brian Pietrangelo [00:22:00]

Rajeev, we had 10 to two dissent last meeting in September, or in October, I should say. I think it's going to be even more in December.

Rajeev Sharma [00:22:08]

I do think it's going to be more there. I think that you'll see more dissents because as you hear more and more Fed speakers, some of them have voiced the opinion that 25 basis points wasn't enough the first go around. Some have also voiced their opinion that we should kept the foot on the pedal and had another 25 basis point rate hike at the last meeting. Pretty sure that we're going to see some more dissents at this next one. And as Fed Chair Warsh says, he encourages debate. So you'll see a few more voices in the market.

Brian Pietrangelo [00:22:40]

Well, thanks for the conversation today, George, Steve, and Rajeev. We appreciate your perspectives. And before we close the podcast, two program notes. First up, I want to give a shout out to the students at Miami University in Oxford, Ohio, at the Farmer School of Business. I'm joining them today to have a workshop on wealth management and really appreciate the engagement. So, thanks to the students for that. Second up, want to give you an advance notice of our upcoming national client call that will take place on December 2nd where we in the Chief Investment Office will be providing our 2027 market and economic outlook. So, look for further information from your client relationship manager if you're looking for an invite and we hope to see you there again on December 2nd for our client national call. So thanks to our listeners for joining us today. Be sure to subscribe to the Key Wealth Matters podcast through your favorite podcast app. As always, past performance is no guarantee of future results, and we know your financial situation is personal to you. So reach out to your relationship manager, portfolio strategist, or financial advisor for more information, and we'll catch up with you next week to see how the world and the markets have changed and provide those keys to help you navigate your financial journey.

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