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This is CNBC's Morning Squawk newsletter. Subscribe here to receive future editions in your inbox. Hello, this is Leonie Kidd with today's edition of Morning Squawk. Two shocks - one busy morning. The early election result in Brazil has sparked an overnight sell-off in the country's assets. While Elon Musk has stepped into the neocloud debate with a stark warning that these beaten-up stocks face a "guppy-level death." Futures are clinging on to small gains, but only just. Happening now: Dramatic Comeback Luiz Inácio Lula da Silva has won an unprecedented fourth term as Brazil's president, in a dramatic comeback from a first-round vote that saw him trailing rival Senator Flávio Bolsonaro. Bolsonaro has refused to concede defeat, saying he would seek the annulment of the outcome, Reuters reported. He also said a ruling by Supreme Court Justice Cristiano Zanin to extend voting for two hours was "unacceptable," according to the report. - Instant reaction: The iShares MSCI Brazil ETF (EWZ) fell over 20% overnight on the results, which could signal the biggest one-day drop in the ETF's history. Brazilian Real November futures fell 10% in Asian trading. - Stocks in freefall: U.S.-listed shares of Brazilian stocks also fell premarket, with Petrobras down over 20%, banking group Itaú Unibanco down almost 30% and brewer Ambev off 19%. - Analysis: Bolsonaro had been seen as a more market-friendly candidate, with expectations that he would push for fiscal austerity and deregulation. Lula will have to convince markets he can stabilize the debt trajectory. - Why it matters to Trump: The U.S. President had celebrated Bolsonaro's lead in the first round, hoping that a fellow right-wing leader could bring closer alignment with U.S. foreign policy. Also watch: Israel's election Voters in Israel head to the polls on Tuesday, in the first election since the October 7 attacks by Hamas in 2023. Polls suggest the election could be a tight race between Netanyahu's bloc of support and an opposition bloc with centrist former military chief Gadi Eisenkot as the leading challenger for the top job. - Analysis: The vote is being seen as a referendum on incumbent Prime Minister Benjamin Netanyahu, with defense and security as key campaign issues. - Inside view: The President of Israel, Isaac Herzog, told MSNow that President Trump's endorsement of Netanyahu would not influence Herzog's role in forming any coalition. Big movers: "Guppy-level death" The beleaguered neocloud stocks have been dealt another blow overnight. This time from Elon Musk on X.Com... His comments have sent shares of CoreWeave, Nebius, and IREN deep into the red in premarket trading. The stocks are already down over 30% each in October as credit investors blew their yields out to distressed levels, doubting their business model of using aggressive levels of debt to build data centers. - Pick your metaphor: Roundhill's Dave Mazza says, "what investors are doing is throwing every baby out with the bathwater" while Equity Armour's Brian Stutland asked, "can you drop a bowling ball in one part of the pool and not get any waves downstream?" Oil prices are also lower in early trading on Monday. The pullback follows a sharp rally on Friday after fresh Houthi attacks on Saudi Arabia stoked disruption fears. - Exclusive: IEA Executive Director Fatih Birol told CNBC the organization stands "ready to act again" and support markets following its recent release of oil stocks, while adding he does not expect energy markets to return to pre-war levels in 2027. Developing story: Cracks showing? Investors can start assessing the reception to Apple's new iPhone Duo after its first weekend on sale to customers. Analysts said lines were shorter on Friday than at previous launches, while supply issues have also been flagged as a concern. - Why it matters: Monday should bring the first useful Street reaction, third-party sell-through data, and channel checks now that the iPhone Duo is actually in customers' hands. - What next?: CNBC's MacKenzie Sigalos is across that today, amid reports of screen cracks and failures, while others online have complained about app compatibility with the wider screen. This week: Policy and earnings It's a massive week for monetary policy, with rate decisions due from the Federal Reserve, European Central Bank, and Bank of Japan. - The predictions: all are expected to hold interest rates this quarter. The Fed has already guided that it will be in wait-and-see mode, especially this close to the midterms. The ECB is also expected to hold until December. The BOJ is also seen holding out until the end of the year, after hiking rates last month. It's also another key week for the tech sector, with Alphabet and Microsoft reporting on Wednesday, and Amazon on Thursday. - Why it matters: Investors will watch for signs that Alphabet is catching up with its rivals when it comes to frontier AI, while some analysts are upgrading Microsoft on similar AI acceleration hopes, and Amazon is expected to show more cloud growth at AWS. And Finally... Audi defends plans for a $4 billion Georgia plant DETROIT — Audi's CEO defended the carmaker's plans for a new $4 billion plant in Georgia on Sunday, calling it a business decision aimed at growing sales and reducing exposure to U.S. tariffs. The plant, set to be Audi's first in the U.S., was announced Saturday by President Donald Trump during a rally in Georgia, near where the Volkswagen-owned luxury brand plans to build the new SUV-producing facility. "We have significantly greater ambitions for Audi in America," Audi CEO Gernot Dollner said during a media roundtable Sunday. "The United States is the second largest premium market in the world, and today we are not fully exploiting this potential. We are changing that." — CNBC's Caleigh Keating, Chloe Taylor, MacKenzie Sigalos, Isabel O'Brien and Michael Wayland contributed to this report. John Melloy edited this edition.
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