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Democrats Sweep Major Races as Voters Send Message to GOP; CNN Goes Deep Inside Gaza with Israel Defense Forces; Investor Michael Burry of "The Big Short" Warns of AI Bubble. Aired 2:30-3p ET

Aired November 05, 2025 - 14:30   ET

THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.

[14:30:00]

BRIANNA KEILAR, CNN HOST: Democrats are celebrating after sweeping election day wins in key races. Democrats outperformed their 2024 turnout. They delivered wins for governor of Virginia and New Jersey, for mayor of New York City.

And in California, voters approved a redistricting effort to boost Democrats' chances to control the House in 2026. But Republicans are downplaying these results. President Trump posting how his own name not being on the ballot and the ongoing government shutdown are reasons that his party lost those races.

House Speaker Mike Johnson said this.

(BEGIN VIDEO CLIP)

REP. MIKE JOHNSON (R-LA), HOUSE SPEAKER: There's no surprises. What happened last night was blue states and blue cities voted blue. We all saw that coming.

And no one should read too much into last night's election results.

[14:35:00]

Off-year elections are not indicative of what's to come. That's what history teaches us.

(END VIDEO CLIP)

KEILAR: We're joined now by pollster and communications strategist Frank Luntz, who had some pretty good predictions, I will say, going into these elections. But, Frank, you hear the speaker there kind of saying, yes, you know, it's not surprising Democrats won. The question, though, is by how much, right?

And we can look at that. That can matter. So what are you seeing?

FRANK LUNTZ, POLLSTER AND COMMUNICATIONS STRATEGIST: It does matter. Democrats voted and Republicans did not.

Let's start with turnout, motivation. When you've got the presidency, the House, the Senate, you're pretty happy, and so you don't see any reason to participate. When you don't have any of those and you feel like your voice doesn't matter, you are absolutely going to go to the polls.

So this is an indication that the Democrats are motivated and are going to get out and do something over the next 12 months.

Second is that California initiative, it's such a big deal. In fact, you have to say at this point, because that'll be 10 -- a swing of 10 seats, five that were Republican that will become Democrat, that could well make the difference in the majority one year from now. And it completely blunts everything that Texas did to redraw the lines.

And third, it is very clear, and it's not inflation, it's affordability. It is very clear that the public's challenge that affordability in housing, healthcare, food and fuel is essential in this election, in this environment.

And the public is voting for candidates that they think will make life more affordable.

KEILAR: I think that's so interesting that you bring that up because these candidates in these big three races were very different, right? They were different in their personal ideology between New York City, a Democratic Socialist, and what you're seeing in Jersey and Virginia, more moderate Democrats with national security, military profiles. And yet they focused on that affordability message.

What does that tell Democrats and Republicans going into the midterms?

LUNTZ: Well, let's look back for one second. It explains why Trump was able to come back and do exceedingly well back in 2024, because the Democrats did not address affordability. And now the President made promises, now he has to keep them.

And so the prices of bread, the prices of milk, the price of an automobile and a home, and finally, the price of healthcare really does matter to the average voter. And the Democrats have started to discover that, that their silence a year ago hurt them. And now they're boasting of what they're going to do to make everything more affordable, particularly in New York City.

Those are pretty big promises to make. They're going to have a challenge to keep them. But make no mistake, how much you pay at the cash register is going to determine who you vote for in these elections.

KEILAR: The President is -- he's not happy. That's what's clear. But he's saying out loud what his takeaways are about this election, that it wasn't good for Republicans.

He's blaming them for losses because, you know, he wasn't on the ballot. He's saying that his absence from the ballot was a cause here. And he's blaming the shutdown, which certainly he has a part in, right?

He has a clear driving force in that. And he's making the case for getting rid of the filibuster. That argument is he is now going to be discussing with Republican lawmakers about a political way forward. Are his takeaways sound? Are they based, do you think, in a fact for how they should be moving the Republicans towards the midterms?

LUNTZ: To some degree, yes. He wasn't on the ballot. His people did not find a reason, a need, to come take the time to vote, to invest that time and effort.

But that said, both sides are being hurt by the shutdown. And we've talked about it on the show before. The public doesn't care who's responsible.

Just open up the gosh darn government. And I'm using really controlled language right now, and they don't use controlled language in the focus groups. I can repeat to you what the American people say and we cannot air this on CNN.

But the people in Washington who watch this program need to understand that the public is fed up with this. And the idea that people will not get food stamps, that our men and women in uniform will not get paid, that the civilians who work for the Defense Department haven't been paid for weeks, air traffic controllers, and the list goes on and on.

The public has had enough of this. Get your act together, do your job, come together, compromise, and move everything forward. And no make the mistake they will punish both sides if they don't get their act together over the coming days.

KEILAR: So far, the military has been paid. And I hear you on that. I've reported on the stress it is causing them as they get these kind of last-minute reprieves.

[14:40:00]

But so far, at this point, they have been paid. We'll see if that continues to be the fact. But so many of these other workers going without pay and people going without their benefits, and those are very, very real pressures on these folks. It's incredible.

Frank Luntz, thank you so much. Always great to be with you.

LUNTZ: Thank you.

KEILAR: So I had a rare look at the devastation inside of Gaza. The IDF gives CNN access to the so-called yellow line for the first time since Israel and Hamas reached a ceasefire. We'll have that next.

(COMMERCIAL BREAK)

[14:45:00]

KEILAR: As recent strikes test the limits of the ceasefire in Gaza, CNN is getting a rare look deep inside the devastated territory.

BORIS SANCHEZ, CNN HOST: The Israeli government continues to bar foreign journalists from independently entering Gaza, so it was under a Israeli military escort that our crew was granted access to the so- called Yellow Line, that heavily restricted boundary dividing Israeli- occupied Gaza from the rest of the territory. CNN's Jeremy Diamond has a report.

(BEGIN VIDEOTAPE)

JEREMY DIAMOND, CNN JERUSALEM CORRESPONDENT: So we've just arrived at this Israeli military position along the Yellow Line inside the Gaza Strip, and you can see all around me, the first thing that catches your eye, obviously, is the enormous extent of destruction here. We are in Gaza City's Shuja'iyya neighborhood, or at least what's left of the Shuja'iyya neighborhood, because you can see that there is almost not a single building that is still standing in this area. This is about as far as we foreign journalists can get into Gaza right now.

The Israeli military, the Israeli government, has only allowed us in in limited circumstances on these types of military embeds. For more than two years now, Israel has barred foreign journalists from freely entering the Gaza Strip. We would, of course, like to go further down, where there are actually Palestinian civilians, to be able to talk to them directly and cover their experiences.

But you can see in this area, there are no Palestinian civilians, just an established Israeli military position and so, so much destruction beyond.

You've taken us on this military embed today, but we, as foreign journalists, cannot independently access Gaza. We can't cross that Yellow Line and go and speak with Palestinian civilians.

Why not? The war is over.

LT. COL. NADAV SHOSHANI, INTERNATIONAL SPOKESPERSON, ISRAELI DEFENSE FORCES: Well, that's a question I think that you should ask people above my pay grade. And I'm in charge of embeds. I'm an IDF spokesperson.

I'm in charge to bring reporters to see what IDF is doing, I'll do my best.

DIAMOND: We asked where exactly that Yellow Line is, and I was just told that it's slightly beyond some of those few remaining buildings that are still standing there. But it's almost impossible for us to distinguish exactly where that Yellow Line is. And we know that it's also the case for the Palestinians on the ground, who have been shot at.

Some of them have been killed as they have approached or accidentally crossed that invisible Yellow Line. How are Palestinians on the ground supposed to know where that line is?

SHOSHANI: Well, the line was also published publicly, social media, leaflets and so on. But also, our troops are extremely careful. There's warnings in real time.

One does not get lost into IDF fire. In most cases, the people crossing the Yellow Line are Hamas. It's not an accident. And when it is civilians, in most cases, they are able to move back.

DIAMOND: But the Israeli military has killed civilians who crossed the Yellow Line accidentally. There was a family that was traveling in a vehicle. They were fired upon by an Israeli military tank shell.

Do you need to revise those policies?

SHOSHANI: Well, it's a work in progress, as I said.

DIAMOND: The Israeli military has begun to deploy these yellow concrete blocks in order to distinguish where exactly that Yellow Line stands. But it's still not covering the entirety of that yellow demarcation line. We have heard talk, of course, of establishing this international stabilization force.

There are efforts now at the United Nations Security Council to actually establish a resolution that would send that force into Gaza. But for now, all of that has yet to actually be implemented on the ground. And you can see behind me the enormity of the challenge that remains.

(END VIDEOTAPE)

SANCHEZ: Our thanks to Jeremy Dimon for that report.

Ahead, the famous investor who predicted the market crash in 2008 has a wild new prediction. Though some would say it's really not that wild.

He's betting against the hottest tech companies in the world. We'll discuss next.

[14:50:00]

(COMMERCIAL BREAK)

SANCHEZ: The famed investor portrayed in the film "The Big Short" says that artificial intelligence is more of a bubble than a revolution.

Michael Burry, known for his prophetic call that the U.S. housing market would collapse in 2008, is now betting against the hottest AI stocks in the market at a time when concerns are mounting about a potential bubble. Burry's fund, Scion Asset Management, disclosed that it bought puts, bets that share prices will fall. On Palantir and Nvidia, two stars of the AI wave.

KEILAR: This came a few days after Burry returned to the social media platform X for the first time since 2003, posting a cryptic message alongside a picture of Christian Bale portraying him in the movie "The Big Short." Saying quote, "Sometimes we see bubbles and sometimes the only winning move is not to play."

We have business journalist Roben Farzad with us now. All right, Roben, I wonder what you think about this projection, but also, like, can't something be a bubble and then a revolution? ROBEN FARZAD, BUSINESS JOURNALIST AND HOST, FULL DISCLOSURE: You know, they say in investing -- I think it was an investor who said that broken clocks can even be right twice a day. And I see that pattern with these prognosticators who made a big name for themselves. In the case of Dr. B, it was in the 07-08 crashes, you know, immortalized in "The Big Short." There are other people who called the crash of 87. There are people who've done various things with subprime and other bubblets we've had or the savings and loan crisis. And they're out there blowing hard because they kind of want to revisit that glory, but very rarely do two bubbles. I don't know of any two bubbles that exactly resemble one another.

[14:55:00]

I mean, it rhymes in certain respects, but we don't know how long this can go. We don't know how revolutionary it is, just as we didn't know how revolutionary Netscape was. That thing went on for six or seven years.

And at least four years after Alan Greenspan hinted that the bubble had maybe peaked. So, you know, be very careful about even listening to the doomsdayers.

SANCHEZ: I've never heard of a bubblet before, but I guess they do exist. Roben, I wonder what you make of the criticism that so much of the U.S. economy right now, what's being described as a growing economy, the enthusiasm on Wall Street is predicated on these four or five AI-led companies and on the proposition that AI is going to revolutionize everything.

In some respect, if it falls short of those expectations, it could be a tough time for the economy. But also, if it succeeds, it's disruptive and half the country is potentially out of work. So, I mean, isn't there some concern overall for the economy ahead?

FARZAD: Yes, there is. And there are investors out there who I talk to who say they're really underpricing the risk of people being put out to work and not chipping into their 401ks or maybe having to liquidate their retirement accounts. There's a lot that we don't know right now.

Certainly, we've seen lots of stress in Wall Street and professional services in the ad industry. We know that some AI firms are getting Wall Street analysts, junior bankers to hire their generative AI platforms. It's kind of dog-eat-dog out there.

But I think in the meantime, there's so much enthusiasm for companies like Nvidia and Palantir. Indeed, these big tech companies now represent, I think, 40 -- almost 35 percent of the Standard & Poor's 500 index. So if you're just buying the broad U.S. market, you're buying, by default, a tech fund. We saw the last time that happened at the turn of the century. You then had a lost decade for investors.

But this has gone on for quite some time. Look, you could have called the bubble two years ago. We had a meme stock craze during the pandemic. It's really, really hard to call the top. KEILAR: And this circular financing of AI deals, that's something that's raised eyebrows on Wall Street, Roben. Explain what that is. Explain why that's creating so much concern.

FARZAD: Yes, great point. Kind of the razzle-dazzle. If a company like Oracle comes out and says, we just want to get on a press release with OpenAI, you know, let's theoretically build a power plant and promise each other this many terabits of OpenAI exchange.

And, you know, this will happen by year 2029, theoretically, notionally. And then the stocks pop massively. And when you talk about near trillion dollar player companies, even 10 percent gains in market value, you know, tens and tens of billions of dollars.

You see that happen in speculative periods, where people just want some of that magic to kind of dust off onto them. But you're creating more heat than light, really. Nothing is being accomplished.

I mean, in Wall Street terms, these are called round-trip trades. There's no value added. It's just razzle-dazzle.

And indeed, many people calling for a top in a bubble right now are pointing to exactly that as a sign of peak speculation.

SANCHEZ: Roben, we only have about 10 seconds. So if you wanted to be cautious, where are you putting your money?

FARZAD: You know, there's only so much you could do. Bonds are supposed to move inverse to this. There are things that have not done as well over the last 15 years.

International or small or value. But people have been, it's like crying wolf after a certain period of time. You don't want to be missing out.

And it's FOMO versus true fear of losses.

KEILAR: Roben, always great to have you. Thank you so much.

FARZAD: Thank you.

KEILAR: Now to some of the other headlines we're watching this hour. The U.S. economy added 42,000 private sector jobs in October, according to ADP, the payroll processing company. And while it marks a return in job growth after months of losses, ADP's chief economist notes, the pace of hiring is still slower than it was earlier this year.

The largest job gains were spread across industries, including trade, transportation and utilities, as well as education and health services. Some of the biggest losses were for information related jobs and professional and business services.

SANCHEZ: Also, three Chinese astronauts have been forced to stay in space over concerns their return spacecraft may have been hit by space debris. The astronauts were supposed to return to Earth today after a six-month stay. The China National Space Administration says an impact analysis and risk assessment of the spacecraft are underway, but no word on how long that might take or any new dates for the return of the trio.

They wanted to recreate what we saw last year.

KEILAR: That's right.

SANCHEZ: Yes.

KEILAR: Some advice for them.

SANCHEZ: Yes, it's true. And people living in Paris now have the rare opportunity to be buried next to famous French residents like Jim Morrison and Oscar Wilde. It's all thanks to a new lottery system with a twist.

It lets winners buy and restore one of 30 tombs in three historic cemeteries. The graveyards have been nearly full since the beginning of the 20th century, but folks who meet certain criteria can now lease the plots for around $4,600. Winners then are on the hook for restoration costs.

Would you do that?

SANCHEZ: No, I'd have my ...

END