Stock price plummets due to Brazil shock, Neocloud suffers further blow

Hello, this is Leonie Kidd from today’s Morning Squawk.

Two shocks – one busy morning.

Brazil’s early election results triggered an overnight decline in the country’s assets.

Elon Musk, meanwhile, weighed in on the Neocloud debate and issued a stern warning that these battered stocks are facing “guppy-level death.”

Futures are clinging to small profits, but that’s just it.

Luiz Inacio Lula da Silva won an unprecedented fourth term as president of Brazil in a dramatic reversal after falling behind his rival, Sen. Flavio Bolsonaro, in the first round.

According to Reuters, President Bolsonaro will not accept defeat and has said he will seek an annulment of the results. He also called Supreme Court Justice Cristiano Zanin’s decision to extend voting by two hours “unacceptable,” the report said.

Instant reaction: iShares MSCI Brazil ETF (EWZ) The result sent shares down more than 20% overnight, potentially marking the biggest single-day decline in ETF history. Brazilian real November futures fell 10% in Asian trading. Freefall stocks: U.S.-listed Brazilian stocks also fell premarket, with Petrobras down more than 20%, banking group Itau Unibanco down about 30% and beer company Ambev down 19%. Analysis: Bolsonaro was seen as a more market-friendly candidate due to expectations that he would promote fiscal austerity and deregulation. Lula needs to convince the market that he can stabilize the debt trajectory. Why it matters to President Trump: The US president was celebrating Bolsonaro’s lead in the first round, hoping the same right-wing leader would bring closer alignment with US foreign policy.

Israeli voters head to the polls on Tuesday in the first election since Hamas’s Oct. 7 attack in 2023.

Opinion polls suggest the election could be a close battle between supporters of Prime Minister Benjamin Netanyahu and the opposition, where centrist former military chief Gadi Eisenkot is the leading challenger for the top spot.

Analysis: The vote is seen as a referendum on incumbent Prime Minister Benjamin Netanyahu, with defense and security being key campaign issues. Insider: Israeli President Isaac Herzog told MSNow that President Trump’s support for Netanyahu will not affect Herzog’s role in forming a coalition government.

Neocloud stock, which was in trouble, took another hit overnight.

This time from Elon Musk of X.Com…

His comments sent shares of CoreWeave, Nebius, and IREN into the red in pre-market trading. Their shares have already fallen more than 30% each in October as credit investors questioned the business model of using bullish levels of debt to build data centers, blowing yields to distressed levels.

Choose your metaphor. “What investors are doing is throwing out all the babies with the bath water,” said Dave Mazza of Round Hill, while Brian Statland of Equity Armor asked, “Can you drop a bowling ball in one part of the pool and not have waves downstream?”

Oil prices continued to fall in early trading on Monday. The decline follows a sharp rally on Friday after renewed Houthi attacks on Saudi Arabia stoked fears of chaos.

Exclusive: IEA Director-General Fatih Birol told CNBC that the agency is “ready to act again” and support the market following recent oil stock releases, but added that he does not expect the energy market to return to pre-war levels in 2027.

Investors can start assessing the reputation of Apple’s new iPhone Duo after the first weekend it goes on sale to customers.

Analysts said Friday’s lines were shorter than at previous launches, but supply issues were also a concern.

Why it matters: Now that the iPhone Duo is actually in customers’ hands, we should see first positive street reactions, third-party sales data, and channel checks on Monday. What’s next?: Amid reports of cracked and failing screens, CNBC’s Mackenzie Sigalos weighs in today. Meanwhile, other users online have complained about the app’s widescreen compatibility.

This week is an important week for monetary policy, with interest rate decisions expected by the Federal Reserve, the European Central Bank, and the Bank of Japan.

Prediction: All interest rates are expected to remain unchanged this quarter. The Fed has already signaled that it will be in wait-and-see mode, especially now so close to the midterm elections. The ECB is also expected to hold the stock until December. The Bank of Japan is expected to hold out until the end of the year even after last month’s interest rate hike.

It’s also another big week for the technology sector, with Alphabet and Microsoft reporting on Wednesday and Amazon releasing reports on Thursday.

Why it matters: Investors will be watching for signs that Alphabet is catching up to rivals on frontier AI. Meanwhile, some analysts have upgraded Microsoft expecting similar AI acceleration, and Amazon is expected to show further cloud growth with AWS.

Audi defends plan to build $4 billion Georgia plant

DETROIT — Audi’s CEO on Sunday defended the company’s plan to build a new $4 billion factory in Georgia, arguing it was a business decision aimed at boosting sales and reducing the impact of U.S. tariffs.

The plant, Audi’s first in the United States, was announced by President Donald Trump on Saturday during a rally in Georgia. It’s near where Volkswagen’s luxury brand plans to build a new SUV production facility.

“We have very big ambitions for Audi in the United States,” Audi CEO Gernot Dorner said during a media roundtable on Sunday. “The United States is the second largest premium market in the world, but today we are under-utilizing 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 Meloy edited this version.