• Stocks: Indexes fell again after traders moved out of tech and AI, closing out a week that saw the worst day for stocks since July.
• Bonds: Treasury yields remained relatively stable as investors considered new comments on interest rates from the Federal Reserve’s Kevin Warsh.
• Commodities: Oil prices rose on supply uncertainty in the Middle East and a larger-than-expected draw from US ‌crude stockpiles.

Insurance

Illustration: Shannon May, Photos: Adobe Stock

If a restaurant burns down, property insurance may cover the damage. If a customer slips and falls, liability insurance may cover the lawsuit. But what happens when an OpenAI employee hides a recording device wrapped in toilet paper inside a conference room?

While it’s an unusual case of corporate espionage, the incident underlines a broader question the insurance industry is asking: Who pays when things go wrong in the AI business—and should insurers get in?

Chatbots can give dangerous medical advice, autonomous agents can leak confidential information, and AI-generated content can trigger copyright lawsuits, to start. And with risks still growing, traditional insurance policies aren’t designed to address them.

Enter silent AI risk: According to broker Aon, more than 90% of insured AI issues fall into this category, meaning existing policies don’t explicitly include or exclude them. In a week where major insurers reported earnings, executives had the chance to take a position.

A premium opportunity

Whether AI becomes an insuring gold mine or a financial disaster remains an open question. The uncertainty has already prompted major insurers like AIG, Berkshire Hathaway, and Great American to seek approval for excluding certain AI-related claims from their policies. But others are addressing the potential head-on.

The upside

As AI adoption expands, insurers could collect premiums from an entirely new market. Munich Re offers specialized AI insurance with coverage limits reaching $50 million, while specialty insurers affiliated with Lloyd’s of London are developing similar policies.

Marsh CEO John Doyle warned in Thursday’s earnings call that AI is already “embedded in most companies’ workflows,” making blanket exclusions a source of “real confusion and uncertainty.” The insurance broker argues that existing policies need to evolve alongside the technology rather than simply exclude it.

The downside

Nobody knows exactly how much these risks are worth. Unlike car accidents or house fires, AI failures have little historical precedent to help insurers predict their costs. Plus, when businesses rely on the same AI systems, a single malfunction could trigger claims across many policies, leaving insurers paying out far more than they collected in premiums.

That was the verdict of Travelers executives, who acknowledged that scope creep during Friday’s investor call. To rein the risk in, the company said it limits most of its cyber policy coverage at $1 million and relies heavily on reinsurance to limit potential losses.

Artificial liability

Yet in a week packed with industry earnings and investor calls, AI liability coverage received surprisingly little attention. The relative silence suggests that, for all its potential, insurers have yet to figure out how to turn AI’s growing risks into a meaningful source of profit. For investors looking for the next winner of the AI boom, insurance may not yet be a clear bet. But should the robots ever stage a rebellion, let’s hope someone remembered to purchase the optional apocalypse coverage.—SY

      

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Stocks

🟢 What’s up

• Alcoa climbed 2.55% after third-quarter earnings beat Wall Street expectations, helped by rising aluminum prices.
• Independent Bank gained 3.63% thanks to quarterly earnings and revenue that topped analysts’ estimates.
• ExxonMobil rose 2.46% after signaling that stronger refining margins could boost third-quarter profits by $4.5 billion from the previous quarter.
• Japanese fintech company Paypay popped 6.99% after a bearish options bet expired worthless, sparking a relief rally.

🔴 What’s down

• Tesla fell 2.13% despite unveiling its long-awaited Roadster sports car.
• CoreWeave extended its selloff, dropping 11.91% as soaring yields on its debt fueled concerns about the cost of financing its AI ambitions.
• Strategy sank 9.56% after MSCI approved new rules that could exclude the Bitcoin-heavy company from its global stock indexes starting November 30.
• Netflix slipped 2.86% following the surprise departure of longtime content chief Bela Bajaria, who will be replaced by former Disney executive Peter Rice.
• Palantir dropped 7.22% as its recent record-setting rally unraveled amid a broader selloff in software stocks.
• DraftKings fell 2.12% after the NBA and its betting partners agreed to ban certain types of wagers following a series of gambling scandals.

Stat of the day

AI agents add to cart

Illustration: Shannon May, Photos: Adobe Stock

Imagine a perfect Saturday powered by barely lifting a finger. You wake up to a matcha delivery at your door. The leather jacket you’ve been eyeing, now back in stock, has been ordered. Flights to Quebec City dropped below your price target, so your weekend trip is booked.

That’s the future promised by Meta’s Muse and OpenAI’s Dots: one where AI agents can browse retailers, track deals, and even complete purchases while you sleep. Now customers are buying in on the dream: New data from SEO platform BrightEdge finds that purchases made by AI agents are growing 43% month-on-month.

Let them in, or block the bots?

In contrast, though, just 3% of e-commerce companies the platform works with currently allow agents to complete transactions. It’s a question they’re grappling with: Let AI agents shop or not?

Retailers make money long before someone hits “buy,” thanks to browsing behavior that gives retailers data for recommendations, ads, loyalty programs, and more. An agent bypasses that process. The easier AI makes shopping for consumers, the harder it makes controlling consumer habits for retail.

Amazon has blocked Muse, while Walmart and Target are taking a more welcoming approach. DoorDash is building its own agent. Shopify, meanwhile, just opened its catalog of over a billion product listings to agents. If agents take hold, it can change retail spending in major ways.

For investors, the question is where e-commerce gains or loses value when shopping starts with an agent. Platforms that control discovery could capture more ad dollars and customer data, while retailers risk losing metrics and brand power.

In other words, if agents start controlling carts, retailers may have to win over two customers: you, and the bot with your credit card.—HC

Food

Illustration: Shannon May, Photos: Adobe Stock

Coke or Pepsi? Few questions spark bigger debates at barbecues—or in fast-food boardrooms. And Coke just scored a major win in the cola wars: After four decades on Team Pepsi, KFC is ditching the drink for Coke in its 3,700 US restaurants starting in January 2027.

The fried-chicken chain has served Pepsi since 1986, the year PepsiCo acquired KFC. Even after the soda-and-snack giant spun off KFC, Pizza Hut, and Taco Bell as Yum! Brands in 1997, KFC stayed loyal to its former parent company.

But KFC has been losing its own loyalty campaign as customers flock to Chick-fil-A and Popeyes. To turn things around, a menu makeover ensued this summer with a new suite of 20 sauces plus new drinks like Boba Refreshers and Krunch Shakes. A switch to Coke, which offers more flavors and flexibility, is the latest ingredient in what KFC US President Catherine Tan-Gillespie has called the “Kentucky Fried Comeback.”

The cola wars with a side of chicken

While big restaurants rarely switch soda providers, this game has seen its share of defections. In 2024, Pepsi poached the country’s largest restaurant chain, Subway, from Coke. Before scoring KFC, Coke lured away Arby’s, Culver’s, and Panda Express. These breakups don’t happen over lunch; restaurants typically sign exclusive supply contracts with beverage providers offering equipment, maintenance, and discounts as part of the deal.

Coke was already ahead in the restaurant soda game, appearing in 73% of the nation’s top fast-food establishments, according to one industry tally. Meanwhile, PepsiCo has been struggling to revive US demand, with organic revenue growth slowing to just 1% in the previous quarter. Losing KFC is another hit: Evercore ISI analyst Robert Ottenstein estimated that the switch could cost PepsiCo $50 million in revenue.

Still, Wall Street’s reaction felt surprisingly flat. PepsiCo shares fell just 0.7% on Thursday after the news broke, then were back up 2.42% on Friday. Coca-Cola shares bubbled up just slightly, closing 2.83% higher Friday, while KFC parent Yum! Brands rose about 2.8% on Thursday before falling a slight 0.21% on Friday.

Why didn’t the news deep-fry Pepsi’s stock? For one, restaurants are just a drop in the bucket compared to the grocery store market. And Pepsi hasn’t lost the Colonel completely: Its drinks will still be served at KFC locations internationally, spanning more than 29,000 restaurants in 150 countries.

Plus, PepsiCo has plenty of business beyond beverages. Unlike Coke, it has a sprawling snack empire that includes Doritos, Cheetos, and Lay’s. In other words, Pepsi may have lost some fizz, but it still has plenty of chips left to play.—JD

      

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News

• Fed Chair Kevin Warsh, speaking in Bangkok, offered few hints on whether the Fed will hike interest rates again this month, even after September inflation accelerated to 3.7%.
• Citi joined JPMorgan Chase and Bank of America in restricting outside AI agents from moving money in customers’ accounts.
• New data from Bloomberg finds that business school now costs more than $300,000, despite offering no better return on investment.
• New York may soon surpass California as the top state for movie and TV production, according to data from a Hollywood industry tracker.
• After running out of Ethereum funds to operate, an OpenAI agent accessed and took money from a wallet it didn’t own.
• More American workers are skipping medical and dental care because of money worries, with their sense of financial security at a seven-year low.
• Two Sigma halted fundraising and new investments at its real estate unit after raising less than half of a $2 billion target.

Calendar

Monday: We’ll get a read on homebuilder sentiment with the NAHB Housing Market Index. Fifth Third Bancorp, Steel Dynamics, Berkley Insurance, Crown Holdings, Summit Therapeutics, and more will report quarterly earnings.

Tuesday: Housing data continues as we check in on housing starts and pending home sales. SpaceX will drop its earnings report, along with Netflix, General Motors, United Airlines, Capital One, Synchrony, Northrop Grumman, Halliburton, 3M, Hasbro, GE Aerospace, RTX, Omnicom, Chubb Insurance, and more.

Wednesday: AI and Big Tech earnings start streaming in, with Meta, Tesla, IBM, and semiconductor-equipment maker Lam Research reporting. Philip Morris, AT&T, SAP, Texas Instruments, Thermo Fisher Scientific, Abbott Laboratories, and Moody’s also release quarterly numbers.

Thursday: Weekly initial jobless claims will give us another indicator on the economy at large. Plus, many more earnings roll in, with Procter & Gamble, Spotify, Comcast, Blackstone, Union Pacific, Lockheed Martin, Western Digital, Southern Copper, Newmont, and Honeywell all reporting.

Friday: Eyes will be on a slate of economic numbers, including flash manufacturing PMI, flash services PMI, and the final October consumer sentiment report from the University of Michigan. American Express, Eni, SLB, Infosys, First Citizens BancShares, Rogers Communications, and Booz Allen Hamilton close out one last earnings check for the week.

recs

🐻 With almost 40% of the S&P 500 in a bear market, some stocks have a lot to gain—and analysts say these 10 companies can gain up to 81%.

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🧘 You’re probably not maximizing your HSA. Try these strategies to get the best tax benefits and turn healthcare into an investment.

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