Lula wins fourth term in Brazil as neocloud stocks fall on Musk warning

A political shock in Brazil and a fresh warning from Elon Musk hit two areas BlockWest readers follow: emerging-market assets and the debt-funded AI infrastructure trade. With central bank decisions and Big Tech earnings due this week, Monday’s premarket moves set the tone.

• Luiz Inácio Lula da Silva won an unprecedented fourth term in Brazil, and Flávio Bolsonaro says he will seek annulment.
• CoreWeave, Nebius and IREN fell deeper in premarket trading after Elon Musk warned of a “guppy-level death.”
• The Fed, ECB and Bank of Japan announce rate decisions this week, alongside Alphabet, Microsoft and Amazon earnings.

• 30%+ October decline for each of CoreWeave, Nebius and IREN before Monday’s premarket drop
• 4th term won by Lula, after he trailed Bolsonaro in the first round
• 2 hrs voting extension Bolsonaro called unacceptable, beyond the scheduled close
• $4B cost of Audi’s planned Georgia plant, its first in the U.S.

Brazilian assets sold off overnight after early results showed Luiz Inácio Lula da Silva winning an unprecedented fourth term as president, according to CNBC’s Morning Squawk newsletter. Neocloud stocks also fell in premarket trading on Monday (October 26) after Musk criticised the group on X. Futures were holding small gains, but only just.

Lula wins fourth term as Flávio Bolsonaro refuses to concede

Lula’s win was a dramatic comeback. He had trailed Senator Flávio Bolsonaro in the first-round vote.

Bolsonaro has refused to concede and said he would seek the annulment of the outcome, Reuters reported. He also called a ruling by Supreme Court Justice Cristiano Zanin to extend voting by two hours “unacceptable,” according to the same report.

Neither Lula’s camp nor Zanin is quoted in the newsletter’s account, so the annulment claim stands here without a response from the other side.

Musk’s “guppy-level death” warning pushes CoreWeave, Nebius and IREN lower

Musk issued a stark warning in a post on X that these beaten-up stocks face a “guppy-level death.” Shares of CoreWeave, Nebius and IREN slid deep into the red in premarket trading.

The three were already down more than 30% each in October, while broader futures were still edging higher. Credit investors had blown their yields out to distressed levels, doubting a business model that relies on aggressive debt to build data centers.

None of the three companies is quoted in the newsletter, and Musk’s reasoning beyond the warning is not detailed.

Fed, ECB and Bank of Japan decisions and Big Tech earnings headline the week

It is a heavy week for monetary policy, with rate decisions due from the Federal Reserve, the European Central Bank and the Bank of Japan. Alphabet and Microsoft report on Wednesday (October 28), and Amazon follows on Thursday (October 29).

Voters in Israel head to the polls on Tuesday (October 27), in the first election since the October 7, 2023 attacks by Hamas. Polls suggest a tight race between Netanyahu’s bloc and an opposition bloc, with centrist former military chief Gadi Eisenkot as the leading challenger for the top job.

Oil prices were lower in early trading on Monday, pulling back from a sharp rally on Friday (October 23) after fresh Houthi attacks on Saudi Arabia stoked disruption fears.

Investors can also start assessing Apple’s new iPhone Duo after its first weekend on sale. Analysts cited by CNBC said lines on Friday were shorter than at previous launches, and supply issues have been flagged as a concern.

Audi’s $4 billion Georgia plant would be its first in the U.S.

Audi CEO Gernot Dollner defended the carmaker’s plans for the $4 billion plant on Sunday (October 25), calling it a business decision aimed at growing sales and reducing exposure to U.S. tariffs. President Donald Trump announced the plant at a rally in Georgia on Saturday (October 24), near where the Volkswagen-owned luxury brand plans to build the SUV-producing facility. Dollner spoke at a media roundtable.

“We have significantly greater ambitions for Audi in America. 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.”

Gernot Dollner, CEO of Audi

The BlockWest read. We read Monday’s moves as a funding story more than a headline story. The neocloud group is priced by credit desks, so a Musk post lands hardest on stocks whose debt yields had already reached distressed levels. For allocators, the Brazil result and this week’s rate decisions add a second test of risk appetite before Big Tech earnings arrive.

Two questions remain open: whether Bolsonaro follows through on his promised annulment challenge, and whether CoreWeave, Nebius or IREN respond to Musk’s warning. The next scheduled tests are Israel’s vote on Tuesday (October 27), Alphabet and Microsoft earnings on Wednesday (October 28), and Amazon’s report on Thursday (October 29).

BlockWest is a news publication. Nothing here is investment advice. Read our disclaimer and editorial policy.