Andrew here. We’re getting ready for the DealBook Summit on Nov 18. Given all the news coming out of the U.S. midterm elections and the big questions about what it means for the country and the world, we’re looking forward to the interviews with newsmakers making headlines today. They include Vice President JD Vance, Elon Musk, Mayor Zohran Mamdani and Sam Altman.

You can find more information about the summit here, and let me know the pressing questions you’d like me to ask them.

Y’all Street no longer?

Over the past several years, Texas has worked hard to burnish its image as the new capital of capitalism in the U.S.

But a stunning sweep by Texas Democrats in the midterm election raises questions about whether the state will now re-examine some of the business-friendly policies that have attracted so many companies, Niko Gallogly reports.

The context: Texas has made a number of moves to woo big corporations. The legislature established a business court to expedite commercial litigation, and it passed a slew of laws reshaping corporate governance practices to favor executives.

Those efforts, in addition to a low corporate tax rate and employer-friendly labor laws, persuaded a raft of companies to decamp to the Lone Star State, including much of Elon Musk’s business empire.

Who are Texas’ new power players? The governor-elect is Gina Hinojosa, a Democrat, who upset the incumbent, Gov. Greg Abbott. Hinojosa will appoint judges to the business court and members of the commissions that oversee the state’s power grid, electrical utilities and environmental regulation.

The state attorney general-elect is Nathan Johnson, a Democrat who campaigned on investigating Musk.

“You could imagine much stronger enforcement of existing rules, and you could imagine some rollbacks of previous legislation,” Nathan Jensen, a government professor at the University of Texas at Austin, told DealBook. That, he added, could “chill some businesses.”

The business lobby wields a lot of clout. There are 57 companies in the Fortune 500 that have headquarters in Texas, the most of any state.

The state’s business-friendly tactics have been effective. Twenty-two companies from Delaware have reincorporated in Texas so far this year, according to a recent tally by the University of Nevada law professor Benjamin Edwards.

It will be worth watching whether the power shift in Texas returns some competitive advantage to Delaware. That state’s Court of Chancery, which oversees corporations, is required to have a bipartisan makeup.

Data centers became a point of contention. The state’s pro-business approach made it a prime destination for the data center build-out, but that could be reversed with Texas’ blue wave. (More on this below.)

The Musk factor: No individual better represents the business community’s embrace of Texas than the world’s richest person. He reincorporated Tesla and SpaceX there after a legal dispute with Delaware’s court over his pay.

Texas’s newly elected Democratic leaders have promised to act as a check on Musk. He spent almost half a billion dollars to support Republicans in the midterms, including $224 million in Texas alone.

“Dems are likely to signal” that tech companies “don’t have an unfettered license to operate, and continuing to build in Texas will require concessions to communities,” Josh Zoffer, a partner at the venture capital firm CIV, told DealBook.

HERE’S WHAT’S HAPPENING

Elon Musk’s cellphone ambitions take a step forward. SpaceX, the Musk company that runs his satellite network, announced a deal for the chip maker Qualcomm to help SpaceX build a land-based network for its Starlink Mobile service as soon as next year. The threat that SpaceX will enter the market has battered shares in Verizon, AT&T and other U.S. cellular carriers in recent weeks.

California’s billionaire tax opens the path for new attempts. Proposition 40, the ballot measure for a one-time 5 percent tax on the state’s billionaires, looks set to go down in defeat after tech moguls spent hundreds of millions of dollars to oppose it. A failure won’t necessarily stop similar bills, experts say.

Justice Samuel Alito plans to stay on the Supreme Court for now. Alito, a conservative, has told people close to him that he does not intend to retire immediately, The Times reports. With a Democratic majority in the Senate starting in January, Republicans may have missed the window for President Trump to appoint more justices to the court.

The Justice Department reportedly takes on a corporate espionage case. Lawyers representing Rippling, a start-up in human resources software, told The Information that it had received a subpoena from the department for documents related to a lawsuit it filed against a rival, Deel. Rippling had accused Deel’s top executives, including Alex and Philippe Bouaziz, the son-father C.E.O.-chairman pair, of hiring a mole in its Dublin office to steal trade secrets. Deel denies Rippling’s claims.

Market reverberations

The most expensive U.S. midterm election in history could give way to a seismic shift in markets.

Stocks and government bonds are rallying in much of the world today as oil prices continue to fall and investors cheer the prospect of divided government and new checks on presidential power. Tech stocks are the exception. (More on that below.)

Traders are growing optimistic that Tuesday’s blue wave will pressure Washington to address one of voters’ chief concerns — the high cost of living, bolstered by rising oil prices — and to find a diplomatic route to ending the war with Iran. In a social media post yesterday, Vice President JD Vance wrote that the war was why Republicans were trounced at the polls and lost control of Congress.

The latest:

• Brent crude, the international benchmark for oil, traded above $96 a barrel this morning. It’s down roughly 17 percent in the past two weeks.

• S&P 500 futures point to modest gains after the benchmark index notched its best one-day gain in three months yesterday.

• The yield on the 10-year Treasury note, which underpins mortgages and other loans, touched its lowest level since early September this morning.

Investors welcomed the Republican rout. Before Election Day, market watchers were concerned about the prospect of a disputed outcome. That appears to be off the table with President Trump signaling that he has accepted the results and is willing to work with Democrats.

A future of divided government is also easing concerns about the country’s “fiscal trajectory, given it’ll now be more difficult to pass tax cuts or spending packages,” Jim Reid, a strategist at Deutsche Bank, wrote to investors today.

The big question is how Democrats will leverage their power. Will they open investigations into the business dealings of Trump’s family and close allies — cryptocurrency, stock trading and more — and subpoena business leaders who have been embraced by the president?

Or will they be in a deal-making mood? Watch for talks on rewriting portions of the tax code to bolster Social Security benefits, a hot-button issue.

Democratic control of Congress will hamper Trump’s ability to stack agencies with loyalists. That’s especially true at the Fed, “reducing the tail risk to Fed credibility,” Ruchir Sharma, an economist at Nomura, wrote in a research note yesterday.

That could be driving some of the rally in Treasury notes and bonds since Tuesday.

And interest rates? The odds of at least two rate increases by March, an outcome likely to rile Trump, have ticked higher in recent days.

Quote of the day

“Bad policy, bad character make bad politics: erratic tariffs, impulsive Iran war, blanket pardons, apparent corruption, weaponized justice, ICE brutality, mountainous deficits, hiding Epstein, abandoning allies and coddling enemies.”

Mitt Romney, the former Republican presidential nominee and U.S. senator, in a social media post that assessed his party’s woes in elections yesterday without naming President Trump as the cause. “Hoping for a course correction, for the country and for my party,” he added.

A data center reckoning

The shine has already come off the post-election tech rally.

A day after technology stocks soared following the “blue tsunami,” Wall Street is rethinking the winners and losers of Washington’s new order, Sri Muppidi reports.

The latest:

• South Korea’s Kospi index dropped more than 5 percent as shares in the chipmakers Samsung and SK Hynix fell on worries of a slowdown in artificial intelligence infrastructure.

• Nasdaq futures were also in the red.

The A.I. infrastructure bet could unravel. Voters rejected data center development in 40 out of 41 ballot measures across the country. That could mean construction projects will be suspended or downsized.

“Expect moratoriums starting in January, and six to nine months of delays,” Matt Lohstroh of Giga Energy, a start-up that develops data centers for A.I. companies, told DealBook.

Neoclouds have been the biggest losers so far. Shares in these companies, which lease computing power to A.I. labs, were walloped yesterday.

Shares in the biggest one, CoreWeave, dropped by nearly 10 percent.

Construction slowdowns could increase the pain. CoreWeave, for example, reported last quarter that it had secured $104 billion in future business contracts. Delays in data center construction would make the timeline for realizing that revenue uncertain.

Investors were already concerned about the neoclouds’ bond binge. CoreWeave’s total debt was $35 billion as of last quarter. A surge in the cost of financing these companies’ flood of corporate paper has worried investors, too. Elon Musk recently warned of “guppy-level death” for neoclouds caught in this credit squeeze.

Could the Magnificent 7 make a comeback? Five of the largest technology companies, including Microsoft, Amazon, Apple and Meta, had a combined $750 billion rally. (The exceptions were Musk’s companies.)

What drove the surge? Some on Wall Street see the voters’ pushback as a welcome corrective to Silicon Valley’s breakneck spending. Analysts at JPMorgan Chase predicted that A.I. capital expenditure would hit $900 billion this year and $5.5 trillion through 2030.

With greater regulatory oversight expected, tech giants could cut those A.I. infrastructure investments and not be punished for it, some analysts say.

Watch for a first-mover-advantage effect. Companies that already have functioning data centers, like Amazon and Microsoft, just saw the value of that infrastructure rise drastically.

There is “a lot more value on the assets already in the ground or late-stage development process,” John Tough, a managing partner at Energize Capital, which invests in data center technology, told DealBook.

THE SPEED READ

Deals

• Shares in CVS Health, the health care and insurance conglomerate, plunged yesterday after it announced that it would spin off CVS Pharmacy after years of expansion brought government scrutiny. (NYT)

• Revolut, the British fintech company, completed a funding round that valued it at $115 billion, higher than European lenders such as Barclays and Deutsche Bank. (Reuters)

Politics, policy and regulation

Best of the rest

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