Morning Call 7/1/26

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 Good Wednesday morning, we're kicking off the first day of the second half of the year.
 Can you believe it?
 A new quarter, a new month right now with a check on US stock futures, which are lower
 right now, taking a bit of a breather after the S&P, the NASDAQ, the NASDAQ 100 and the
 Russell 2000 posted their best quarters since the second quarter of 2022.
 You've got the Russell 2000 record high as well to start the quarter, but you could see
 right now on your screen, S&P 500, points to be down 25 points at the open, the Dow,
 about 28 points, but basically flat, the NASDAQ, 126.
 For the major averages, the Dow coming off its best quarter since Q4 of 2022, and as I
 just mentioned, best first half since 2021 for the Dow, for the S&P 500 Q2 was its best
 since 2020, same for the NASDAQ, which is coming off more than 21% gain for the quarter,
 but that is nothing compared to the so-called Buy America trade.
 The Russell 2000, the Small Caps riding a three-month win streak of 21% for the quarter.
 It was the best since 2020, fifth positive quarter in a row, and for the first half, nearly
 22%.
 It's the best first six months of the year for the Small Caps since 1991.
 Similar story for the transports, the Dow transports, coming off a 25% pop in the first half
 of the year.
 It was the best since 1991 when it gained 26.5%.
 And in energy, oil, we're going to get a check there coming off its worst quarter in
 six years with WTI down 31%, Brent's down 38%, as we've seen this ceasefire in the Middle
 East, continue to hold albeit tenuously.
 You could see crude prices are lower again pre-market right now, with WTI down about 1.7% trading
 around $68 a barrel.
 And Brent also down a similar percentage trading just below $72 a barrel are above gasoline
 and fractionally higher this morning, not gas actually taking a breather to despite the
 heat wave, which we're going to talk about a bit later this hour.
 Let's get a quick check on Treasure yields 2, which are in focus given economic data,
 given Fed Chair Kevin Warsch at Central and Portugal speaking later today.
 You could see yields are higher across the curve, perhaps pressuring equity's pre-market
 here.
 Heal us ten year treasury yielding 4.459% right now, Fed sensitive to your treasury yielding
 4.16%.
 Let's take a look at crypto, which has been in the dog house to start the second half.
 And it's actually higher this morning, Bitcoin is about half a percent trading around $58,886.
 But we've seen that take breather in the last quarter, and certainly in focus here is
 the announcement yesterday from strategy that it would sell some Bitcoin for shareholder
 returns.
 We got a number of major market headlines that we're keeping an eye on today too, starting
 with shares of Nike under pressure, despite a top and bottom line beat for its most recent
 quarter.
 Keep in mind though, those expectations had come down ahead of that print.
 Company says it sees, quote, sequential deceleration in the coming quarter.
 CEO Elliot Hill adding on the call last night, that despite a sales slowdown in the region,
 Nike is fully committed to winning China.
 You can see those shares are down about 3.5% right now, pre-market.
 Let's get a check on another company that reported results, Constellation Brands.
 It's moving the other way.
 It's of about 2% right now, despite caution for management that higher gas prices and economic
 uncertainty hit sales in its latest quarter.
 It did reiterate full year EPS guidance and some of its beer brands did much better
 than expected.
 Microsoft on the move, business insider reporting that the company plans to cut 2.5% of its
 global workforce in the next round of layoffs.
 That's expected as soon as next week.
 Microsoft had roughly 228,000 full-time employees as of June 2025.
 You can see those shares are popping pre-market up about 1.5%.
 The U.S. is also poised to blow past today's deadline to renew the U.S.-Mexico-Canada trade
 agreement, U.S.M.C.A. without signing off in approval.
 The move is expected to set the stage for a tense renegotiations this year, while simultaneously
 starting the countdown clock on 10 years before that pact fully goes away if a new deal
 is not struck.
 All three countries will meet virtually today to begin some of those review discussions.
 Now around the world, let's see how Europe and Asia are faring.
 To kick off the second half, Elaine Yu is in Hong Kong, Ben Bulos is in London.
 Ben, let's kick it off with you and early trading in Europe on a big day for central bank
 speak.
 Indeed, that meeting in Central happening, meanwhile European equities kicking off
 the second half of the year in the red this morning for the most part, after notching
 their best second quarter in over half a decade.
 Right now, it's only Germany's zetrodax that is trading in the green, about 5% higher,
 the FTSE 100 down by a similar amount, though the cat car on the biggest fall or 4% of a
 percent and the Italian market off by almost 2% of a percent as well.
 In the first quarter of the year, it was actually the Italian market that had been the strongest
 of the benchmarks in terms of how it ended the second three months of the year.
 A sector by sector autos are trading near the top of the stock, 600 after the sector
 came in second worst among its peers for the second quarter.
 Industrial goods leading the leader board at the moment, a third of a percent higher autos
 and parts, recovering some of the lost ground chemicals as well, rounding off the board
 of gainers.
 Meanwhile, it's media stocks that are among the biggest laggards this morning, along
 with travel and leisure names as well.
 They've just come off the board of biggest losers, household goods, basic resources and
 utilities all off this morning, dragging the stock 600 below the flatline.
 Morgan.
 All right, Ben Boulos.
 Thank you.
 Let's get to the action in Asia and our Elaine you for more.
 Elaine.
 Hey, Morgan.
 A cautious move took over Asian stocks after a record rally in the first half.
 This has asked talks between the U.S. and Iran hit fresh obstacles and also as investors
 are on edge over a possible Yen intervention after the currency hit a 40 year low breaking
 past 162.6 against the strengthening dollar.
 Now, the NK225 closed up for a third consecutive session is up 0.59% supported by AI related
 names and also after surging 37% last quarter while the cost be tumbled more than 2% due to
 profit taking by foreign investors.
 After an eye-watering 68% jump in the second quarter and Wednesday's fall came even after
 South Korea's exports in June beat forecasts and posted the strongest year on U-girls since
 October 1978, thanks to a surge in chip sales.
 And the TIEX is up nearly 2% on the back of TSMC gaining more than 3.9%.
 And China's blue chip CSI 300 edged 0.4% lower.
 This is reflecting concerns about the country's uneven or case-shaped economy and the U.N.,
 which has been appreciating modestly this year set at 6.79 against the dollar.
 And against this backdrop, the Shanghai Composite Index still closed up 0.4%, hitting a
 one-week high.
 And this is as investors are encouraged by China's factory activity, finishing its strongest
 quarter since late 2020, according to a private survey.
 And also as President Xi Jinping has reiterated his pledge for quality and innovation-driven
 growth in a speech today.
 Back to you.
 Elaine, you.
 Thank you.
 Asia currency weakness.
 Certainly, a big story driving a lot of the action in that part of the world right now
 and questions about the effectiveness of any intervention we could potentially see.
 So we'll continue to monitor that, appreciate it.
 Deal news to kick off July trading.
 Alcoa is buying a portfolio of assets from Australia based south at 32 for $5.6 billion
 in cash and stock to bolster its box site, Illumina and Illuminum operations across Australia,
 Brazil and South Africa.
 The news coming as Alcoa looks to regain lost ground to China, which has come to dominate
 global aluminum production in the face of rising energy costs.
 Chairs of Alcoa coming off for rough month, down 34%, but for the year, up nearly 70%.
 Joining me now on a CNBC exclusive is Alcoa, CEO William Oplinger.
 Bill, it's great to have you on the show.
 Welcome to you.
 We've got to start with this deal.
 What does it mean for Alcoa and your global footprint?
 Thanks for having me on, Morgan.
 It's good to join you here.
 You can see in the background, I'm joining you from Canberra, Australia.
 This deal, first and foremost, strengthens our leadership position as a pure play upstream
 aluminum company.
 It's also a natural strategic fit.
 It's in box site mining, refining, smelting and casting.
 This is what we do every day.
 In addition to that, the proximity of these assets are very close to our assets.
 For instance, in Western Australia, the mind leases are right next door adjoining to each
 other.
 In addition to that, the deal offers compelling financial results.
 It's expected to be a creative in year one, both from an EPS and a cash low basis.
 On top of all that, we've identified already $900 million worth of synergies.
 We think this is a great deal for our shareholders.
 How does this speak to your expectations for long-term demand for aluminum?
 We think long-term demand for aluminum is going to be strong.
 When we look out, there are some key drivers for long-term demand.
 One is the energy transition.
 Electric vehicles around the world as they get more penetration in different markets increases
 the amount of aluminum usage.
 As the grid builds out around the world, you need more aluminum for electrical distribution.
 Packaging has really started to focus on the aluminum can as the package of choice.
 Those are the drivers that show that we think that demand will be strong in the future.
 As you and I have talked about in the past, the issue in the aluminum market hasn't always
 been demand.
 Demands been good.
 It's been supply.
 On the supply side, the Chinese have committed to cap their aluminum production at 45 million
 metric tons.
 They've kept that cap over the last few years.
 Our view is that over the long-term, there is a very good supply demand dynamics in the
 industry.
 In the near term, how does this deal, perhaps, speak to this trend we're seeing, this fundamental
 trend towards supply chain resiliency, and specifically what we've seen with both aluminum
 and alumina pricing and supply demand dynamics tied to Middle East?
 You hit on a key issue in the supply demand dynamics in the near term because smelting capacity
 has been curtailed in the Middle East.
 Aluminum prices have been very strong.
 That's great for our aluminum business.
 We also sell aluminum and that aluminum typically goes into the Middle East.
 The aluminum market has been a little bit weaker because of that and we've seen aluminum
 prices come off.
 Overall, this deal diversifies our geography.
 We're going to be now and have an asset in South Africa and it solidifies, makes more
 resilient our supply chains into both Europe and into North America.
 Do you expect that we're going to see more of that smelting capacity come online here
 amid a ceasefire and possible piece deal?
 So remember the last time we talked, 20% of the smelting capacity outside of China
 sits within the straight-of-four moves.
 Some of that capacity was directly impacted by the Iran conflict.
 There's around seven million metric tons of capacity within the straight.
 Two and a half to three million metric tons has come offline.
 Hence why aluminum prices are as strong as they are.
 We think at best some of that capacity comes back online in the three to six month timeframe.
 For a large share of that, it'll take up to a year to get it back online.
 After to home, USMCA, we're expecting some news around that today as well, reports that
 aluminum has already been part of early stage talks for any potential new trade pact we
 get.
 How are you navigating it?
 So first and foremost, we believe in a strong manufacturing environment in the US.
 So we're very supportive of any policy that provides for a strong manufacturing environment.
 Today, there's tariffs on aluminum coming into the US.
 Those tariffs are about over a billion dollars of tariff expense that largely gets passed
 on to our consumers.
 So any new legislation or deal that involves Canada that supports the manufacturing environment
 in the US, we're in favor of.
 And then just finally, something else we've talked about in the past and that is AI infrastructure
 build out.
 How that is driving demand for aluminum, but also on the flip side, what it has meant
 for power prices?
 Well, there's really three components to that, the two that you alluded to.
 But then there's a third that's very specific to Alcoa.
 In the first instance, the AI transition definitely drives incremental aluminum demand for
 every gigawatt that's installed.
 We need about 2,000 tons of aluminum for every gigawatt installed.
 Secondly, power prices are being driven higher in places like the US.
 That makes it very difficult to build smelting capacity.
 And then back to Alcoa specifically, we have 10 sites around the world that are closed
 and curtailed sites.
 They are basically liabilities to us today.
 We are looking at repurposing, redeveloping those sites to be suitable for AI data centers.
 And that should generate between $500 million and $1 billion of net proceeds over the next
 five years.
 Okay.
 Bill Applinger, CEO of Alcoa, it's great to have you on the show.
 Thanks for joining me.
 Thanks, Morgan.
 Appreciate it.
 All right.
 And Alcoa buying South 32's assets in a $5 billion plus deal.
 We've got a lot more to come here on morning call, including much more on what's been
 a wild first half, breaking out one sector in particular.
 Plus, we're fresh off a massive stock move higher.
 The CEO of Rocket Lab is here on his company's $8 billion deal to buy satellite communications
 provider, O'Ridium.
 And later, meta and prediction markets, well, it may be more real than you think, want
 a place to wage a very busy hour, still ahead when morning call returns.
 Thursday, July 16th, CNBC Sport and Boardroom joined Fanatics Fest for Game Plan, groundbreaking
 ideas shaping the future of sports and entertainment.
 Request your invite at CNBCEvents.com slash game plan.
 We're watching shares of Micron Intel and AMD after chip stocks added massive value in
 the second quarter to the tune of a combined $2 trillion added in market cap overall between
 those three names.
 The AI trade is no longer just about Nvidia, investors are now buying into the companies
 that power the rest of the AI build out, including memory, CPUs and advanced chips.
 Look at those stock moves on your screen.
 All up triple digits.
 Micron has been one of the biggest winners.
 And CEO Sanjay Marotra says memory has become a critical part of every AI system.
 We said that on mad money last night.
 Every AI system regardless of the device it is in requires more memory at higher performance
 in order to really bring out the full potential of AI capabilities.
 So of course, memory has always been valuable in the past.
 But the value of memory is not like it ever was, it's continuing to increase.
 Memory today has really become essential.
 Its role in the AI's ecosystem is elevated.
 Adding that this is not your grandfather's memory also worth noting we talk about memory
 shortages and impact on hardware OEMs and hyperscalers.
 But defense contractors and other types of manufacturers are also filling the pinch here.
 I was at the CSIS Global Security Forum yesterday where defense CEOs and Pentagon officials
 and lawmakers were all flagging it as a bottleneck within supply chains in this ramp of production
 of certain types of critical weapons systems.
 Well straight ahead, bracing for record breaking heat across the country, we're going
 to speak with Wall Street's weatherman on what he's been telling clients and opportunities
 for your portfolio.
 He's been right and early.
 But first, a check on shares of Eli Lilly and Novo Nordesk.
 Both of those are up pre-market right now.
 And today, millions of Medicare recipients will be able to access the company's GLP1 drugs.
 For the first time through a new government program designed to make those drugs more affordable
 for weight loss, capping costs set around $50 a month, more in call, be right back.
 Thursday, July 16th, CNBC Sport and Boardroom joined Fanatics Fest for Game Plan.
 Groundbreaking ideas shaping the future of sports and entertainment.
 At your invite at CNBCEvents.com, slash game plan.
 Welcome back to Morning Call NASA announcing more contract awards as part of its moon-based
 program, nearly half a billion dollars to three companies to land four new missions
 on the moon in late 2028.
 Three recipients in two out of machines, Firefly Aerospace and Astrobotic, which is going
 to do two of those missions and is being acquired by Voyager Technologies.
 You could see right there on your screen pre-market here, all three of those names are popping
 on the news right now and two out of machines up more than 8%.
 I sat down with NASA Administrator Jared Isaacman and moon-based program manager, Carlos
 Garcia-Galan at the agency's headquarters yesterday.
 And Administrator Isaacman saying expect these awards and updates to happen regularly now
 when it comes to these lunar ambitions, calling this one in a nod to Star Wars episode
 two.
 Right now, yes, it's a lot of contract awards.
 This is the vendor we're going to use for our landers, our rovers and such.
 And soon it'll start rolling in scientific instruments or tech demonstrations.
 We're talking about surface improvements.
 We want to build landing pads on the surface of the moon.
 But eventually you're going to start seeing behind the scenes as people are building
 the hardware, integrating on launch vehicles.
 And then I don't know.
 Let's say like somewhere around episode 10 or 11, you're going to start seeing landings,
 and you're going to start seeing hardware on the surface of the moon again.
 Now, I also asked how, as Blue Origin moves to rebuild its launch pad at unprecedented speed,
 that rocket explosion has impacted timelines for NASA's lunar ambitions, including for
 Artemis III.
 And we said, look, we got to decouple some of these things.
 We will do everything we can at NASA to help you recover the rock.
 You know, recover the launch pad and get your root cause on the anomaly.
 But we must keep making progress on the lander.
 We can't slow down even a day on it, and they haven't.
 They're moving incredibly quickly on that, obviously SpaceX is doing that on their end.
 So you think about our timeframes.
 We need a test article available for the Artemis III mission, you know, by, you know, call it,
 you know, summer 20, 20, 27.
 They said they need six months.
 We've given them a year.
 So, and we're going to do everything we can to drive that timeline.
 And then the year after in 2028 for potential landing, they will certainly have recovered
 their new blend and pad operations by then.
 Well, the administrator adding that he expects SpaceX, the other lunar lander contractor,
 to continue accelerating the launch cadence for Starship as well.
 And on the SpaceX IPO specifically, Isaac been telling me that he quote, has no issue
 with important partners to NASA being well capitalized, especially since realizing
 a sustainable lunar economy, or space economy overall, is going to take not only government
 but private sector to see it happen.
 You could see that entire conversation with the NASA administrator and moon based program
 director, a program manager, excuse me, over at CNBC.com.
 Well sticking with space, Rocket Lab announcing this week an $8 billion deal to buy satellite
 communications provider, a radio communications stock is up about 20% so far on the back
 of that news.
 And for more, let's bring in Rocket Lab founder and CEO, Sir Peter Beck.
 Peter, it's great to have you on the show.
 Let's start right there.
 Talked about space applications and services for years.
 Why are you ready?
 Why now?
 Yeah, thanks very much.
 It was great to see you.
 Yeah.
 Well, I mean, I think as you pointed out, I've always believed that there are truly large
 space companies in the future.
 Again, I look a little bit blurry, you know, are they a space company, are they a communications
 company, or something else?
 And, you know, when you realize the power of having your own ability to launch and your
 own ability to build spacecraft, then, you know, the big goal for
 failure, you know, in the space industry of trying to get applications on all, but sort
 of disappears.
 So for us, you know, as you point out, we've been alluding to the fact that we're going
 to join the applications market in space at some point, the Aridium deal was really a
 great entry point for us.
 Yeah.
 And how do you think about that in terms of building out this vertically integrated
 space company for Rocket Lab now?
 You just touched on it.
 You've got launch.
 You've got the hardware manufacturing.
 And now you're going to add the communications and space applications layer to it as well.
 How do you think about the whole versus the sum of the parts?
 Yeah, well, I think it's one of those scenarios where one plus one doesn't equal to it,
 actually equals three.
 So, you know, you essentially build a self-launching constellation and company.
 And it's a very typical Rocket Lab deal.
 I mean, we don't, you know, pin things in hopes and dreams.
 You know, Aridium has a constellation that's very fresh and the, you know, the company
 itself is generating, you know, plenty of cash and is very profitable.
 And it really gives us the opportunity to, you know, take out a very, very valuable spectrum
 being Alband and, you know, apply it with all of the capabilities that we have and really,
 really supercharge the ability to put new services and new applications on all of it.
 When you think about space-based communications and everything that Aridium is going to bring
 to the table for Rocket Lab.
 I mean, analysts are coming out and saying this is going to make Rocket Lab a more
 formidable competitor to SpaceX.
 But in general, we are seeing Telecom stocks sell off, perhaps in part, because of Starlink.
 Overall, I wonder how you see disruption or change coming to the communication space
 and what bringing Aridium online means for that.
 Do you complement Telecom that currently exists or do you disrupt it?
 Well, no, I think we complement, because you can do things that you just simply can't
 do through normal Telecom and, you know, space being the ultimate high ground.
 If you look at the, you know, the market that Aridium has been very successful in,
 I mean, they are providing life-critical services, whether it's, you know, marine
 pilots or defence, you know, these are life-critical services.
 So, you know, that doesn't displace any Telecom companies in that respect.
 But I think your point is fair also that, you know, space is an ideal high ground for doing
 this kind of thing. And, you know, the opportunities are very, very large. And whether you want to
 read a bank as report or you look at some of SpaceX's own internal kind of judgments on how big
 the market could be, it's, you know, it generally starts with a T. So, you know, being in that market
 and having that ability to participate, I think, is really valuable.
 It also gives you more valuable spectrum here. So, how do you think about that and how do you think
 about the role connectivity is going to play in this convergence of space and AI?
 Yeah, absolutely. I mean, spectrum is incredibly important and very, very rare. You know,
 you can build all the satellites you want and have all the rockets and the hangar that you want.
 But if you don't have the spectrum to be able to actively, you know, use, then it's all for nothing.
 So, you know, if you look at the holders of valuable spectrum right now, it's, you know, Amazon
 bought global star, SpaceX bought Echo Star and Rocket Lake bought a Rhythm. So, you can see the
 the importance of actually owning that spectrum and being able to light it up with services. So,
 you know, it was a very logical next step for us.
 As we do come off of the history that was made with the SpaceX IPO, how do you see the sector
 evolving from here? Yeah, it's quite interesting. I mean, you know, obviously, it's bringing a lot
 of attention to the space sector. It felt like a bit of a lonely woods there for a while, but now,
 you know, there's tremendous amount of people looking at it and understanding it better. And I
 think it's fair to say that, you know, the SpaceX IPO is sort of consumed a tremendous amount of
 capital that was floating around the space sector and sort of moved things around a bit. But, you know,
 we think and hope at least in the long term, more kind of visibility and education in the space
 sector will be a winner for everybody. Yeah, Peter Beck, it's great to have you on. Thank you.
 Thanks Morgan. CEO and founder of Rocket Lab. We'll still on deck tracking President Trump's massive
 wealth ad from crypto gains to Bible sales. Morning call continues.
 I'm Morgan Brennan. Welcome back to morning call kicking off the first day of trading for the
 second half of the year, a new quarter, a new month. US stock futures right now are in the red.
 Uh, S&P is poised to open down 24 points. The Dow fractionally lower 23 down 23 points. The
 Nasdaq right now taking a breather down 129 points pre market. The Dow though is coming off as best
 first half since 2021. The Russell 2000, which closed at a new record yesterday. It was the best
 first six months of the year since 1991. Uh, and you could see right now a higher pre market as well.
 Let's get a check on energy to because crude oil prices are lower to WTIs than about one and a half
 percent trading around 68 50. A barrel and Brent crude is down a similar amount trading just below
 72 dollars. A barrel coming off of a big month of losses for crude as well in the month of June.
 Let's take a look at the dollar index as well because dollar strength versus other currencies has
 been in focus and that continues this morning. Uh, you have South Korean one falling to
 lowest since early 2009 and the yen hitting a fresh 40 year low against the dollar in overnight
 trading to you could see the dollar index. So 101 38 is the level there. Let's get a check on
 some of the morning's latest headlines shares of Nike are under pressure despite a top and bottom
 line beat for its most recent quarter company says it sees quote sequential deceleration
 in the coming quarter. Uh, and those shares are down about 4% right now. Keep in mind though,
 expectations had been lowered. The bar was low coming into this print. So we'll see how it
 trades today. Anthropics says the US government is removing export controls on the most advanced
 versions of its fable and mythos models after the implementation of safeguards and shares of
 lime are set to begin trading on the Nasdaq today after raising $167 million for its IPO.
 The Uber backed eScooter company selling just under $6.7 million at $6.7 million shares at $25
 a piece in the middle of the expected range and that actually comes after Vedanta pulled the
 listing for its copper units IPO citing volatility to yesterday it was supposed to go public today.
 Meantime Michael Burry revealing he's shorting caterpillar for the first time,
 writing in a sub-stack post that he thinks the construction equipment maker has become one of
 the market's most overvalued beneficiaries of the artificial intelligence investment boom.
 Burry also adding new bearish positions in Nvidia applied materials, Tesla and the iShare's
 semiconductor ETF you can see shares a cat are down about 1% right now. And President Trump's
 annual financial disclosures showing that he made more than $580 million in crypto-related
 income last year. The bulk of that income coming from the sale of tokens by the Trump
 linked crypto company world liberty financial as well as the sale of equity and world liberties
 holding company. The president also made more than $290 million in income from his golf and club
 properties and 4.7 million tied to royalties from Trump watches green woodbibles,
 Trump sneakers and fragrances and more. Well now to a developing story and the extreme heat
 that sets impact a massive section of the United States from today through America's 250th
 birthday the July 4th weekend more than 230 million people or about two thirds of the population in
 more than 30 states in the east and midwest will be covered by a heat dome more than 70 million
 could experience temperatures in the triple digits with the feels like heat between 100 and 110
 degrees natural gas futures spiked 3% in yesterday's sessions although they're on a bit of pressure
 this morning but that was on forecast record power demand as homes and businesses crank up the AC
 to escape this heat wave. Let's bring in Dan Leonard director forecasting for the US at Met Desk
 which provides specialized forecasts and analysis for weather sensitive businesses. Dan it's great
 to have you on the show. I think let's start with your expectations for this week both for Main
 Street and for Wall Street when we talk about a heat wave such as this. Main Street is going to be
 baking this is a really impressive event we haven't seen heat like this since 2012 so we've got to
 go back a ways when basically the entire eastern half of the country and that's really what's most
 impressive about this is that essentially every major city in the eastern US will be very hot for
 the next couple of days don't usually see that somewhere you get some kind of cool weather but no
 not this time around everybody sizzling and really when you factor in the humidity as well there's
 going to be areas that are at least 110 150 degrees on the feels like temperatures a heat index
 during the afternoons especially on Friday afternoon the area we're really targeting for the most
 focused sort of the center of the heat dome if you will is the mid-Atlantic states these are the
 areas where you know I was just checking the latest numbers here and I almost have to expect to come
 in and see these numbers sort of come down because we're still forecasting all-time record highs
 in DC Philadelphia will be really close for cities like Newark probably not so much Newark Newark
 City but we're talking all-time record high temps here this is serious stuff the peak heat is really
 Friday that's the day everybody should be concerned about okay yeah I was in Washington
 yesterday and the chatter was around feels like a hundred thirteen degrees trying to watch fireworks
 on July 4th so we'll see you've been very early including for calling this heat wave I mean that
 goes back weeks that you said that this was coming so what are your expectations now as we move
 through the rest of the summer expectations are that I don't see any more at least not in the in the
 next like foreseeable future a couple of weeks this is good news I think once we get past Saturday
 we get an upper-level trough that kind of comes back in from the Atlantic unusual to have retrogressions
 like this but here it is and once that trough comes in it's not deep it's not we're not talking about
 cool Canadian air anything like that but it will be enough to sort of well the heat a little bit bring
 temps down more to traditional summertime levels get a little more shower and thunderstorm activity
 in there as well so yes once we get by that July 5th period I think we're good probably through
 make the long range call here right through the end of July I don't see any more extreme heat
 like we had for the mid-Atlantic this could be the hottest period of the summer yeah um and finally
 you touched on it briefly but what this is going to mean for power demand power prices and PJM
 this the nation's largest electric grid it covers parts of thirteen states here is expecting
 record demand is net gas or power prices are these the only things we need to be worrying about here
 are investors need to be focused on you know net gas is really most traders are concerned about
 net gas in the winter because you're not only using gas to fire power plants you're using it to
 heat your home as well so you got a double whammy when you get a big cold shot in the winter
 in the summertime it's just for firing the power plants which helps a little bit but it's not as
 big as in the winter really what you want to look at here is the electricity power place
 because there's pools like PJM which are forecasting record load a little bit I think the previous
 record in PJM is like 161 gigs we're forecasting a 166 on Friday which would be the old record by
 five gigs so yeah there's a little bit of concern here that the pressure on the grid is going to be
 intense yet we've added a lot of wind and solar over the years but we've also added a lot more load
 with these with these new farms coming in and with population increase and data centers as well
 so yeah it's like a trade-off you're you're increasing the the generation but you're also increasing
 the load and we'll see how PJM can handle it this will be a record event coming up on Friday
 okay down Leonard it's great to have you on thank you
 stay cool folks a lot more to come here on morning call including new details on
 meta's apparent moves to get a piece of the action and the prediction markets morning call we're
 right back
 welcome back we got a marketplace on meta new report from NPR saying the company weighed
 buying CalShi the report says meta CEO Mark Zuckerberg met with CalShi CEO Torek Mansor
 about a possible takeover last year as CalShi's popularity surged but the negotiations never
 advanced Zuckerberg later directed meta employees to build a standalone prediction market app
 we should note CBC and CalShi have a commercial relationship that includes customer acquisition
 and a minority investment well straight ahead the morning call crew to end up the trading day ahead
 why one member says investors may want to temper expectations as we kick off the second half
 it's time for your call sheet where we look at the topics driving at the trading day ahead
 the crew members today Jay Woods of Freedom Capital markets he's also CBC contributor
 Stephanie Gild of Robinhood markets and Ava Ados of ER shares great to have you all here
 I think Jay we're going to start with the markets going into the second half of 2026 here
 as we do come off of all of these sort of multi year high markers when you look across
 the different averages yeah the market's been able to shrug off a lot of headwinds with the geo
 political backdrop you know the tariff conundrum that started the year and now we go into the midterms
 and you know seasonally July is done well but then we hit August September I'm not going to
 try to predict what the president's going to say or do but as far as the market goes I think we're
 going to have a little bit of a sputter out of the you know gates in quarter three and once we
 get through that seasonally week August September bottom in October we'll be knocking on the door
 of new highs and probably finish the year very strong yeah and somebody who's just in Washington
 yesterday with a number of lawmakers I mean their plans are jam packed in terms of what they're
 trying to get done from a policy standpoint ahead of those midterm elections so something else to
 watch that convergence of Washington the markets to policy and the markets Ava want to get your
 thoughts here especially since Russell 2000 the small calves have been the big outperformer this
 year despite everything else we've been talking about like tech tech software we see a lot of
 interest again in the private markets there's a lot we are cautious optimistic obviously everything
 hinges on the war oil prices stabilizing coming back to prior levels that's what we're watching
 we're cautious optimistic if we see inflation stabilizing coming back to prior
 prior levels with oil prices with thing will have a strong year end and potentially even a
 rate cut but again it all depends on the war but we've seen in the past quarter in Q2 amazing
 numbers when it comes to AI and record profits all because of AI um Stephanie want to get your
 thoughts on the markets as we do go into the second half July tends to be seasonally strong
 but we do also have a lot of uncertainty out there and then of course in about two weeks we start
 getting earnings yeah we do I mean we have uncertainty I think we've created or there's more
 uncertainty from the Fed because they don't want to provide as much guidance or forced doesn't
 want to provide as much guidance and I think that can create some volatility I think we have to
 watch inflation closely because I actually think at the very worst the Fed will probably
 just stay still and I think at the you know I'm sorry at the least they'll stay still at the
 worst they will probably hike and I you know some a little bit more aligned with what the market
 is pricing in today earnings obviously have been amazing I think the one thing I worry about is
 just expectations are everything and expectations you know they they have risen and they have been met
 or beat but you know at some point that starts to dissipate and so that could create some volatility
 I don't know if it will actually happen so much this summer but you could end up
 having it perhaps in October which is is different than you know seasonally historically yeah
 I'm going to bounce around a little bit here um because you just mentioned war sure obviously
 going to hear from him and a number of other central bankers today in Portugal what are you going
 to be watching for especially given the economic backdrop you know I would love to hear more about
 the task force and what they're working on and how we're going to look at the data going forward um
 I don't think we're going to get too much out of this speech uh we we learned he doesn't give us
 too much information uh you know that the statement was basically a tweet when they released it um
 I I think and I agree with Stephanie's line here um I think the dot plot was very telling when you have
 nine of eighteen federal officials that left their dot uh that want at least one hike five said two
 once and three um I don't think we're going to be uh as family friendly as he like to put it we
 were family fighting last time when they meet the next time uh we're going to start to see uh
 little dissension among the ranks but uh from this meeting in Portugal I don't expect we're going
 to see anything that's going to move the markets and then knowing that uh we're going in fourth of July
 weekend there's not going to be much volume there either yeah it's a good point um
 Eva want to get your thoughts in this convergence of the economic picture and AI because I mean
 yesterday Cleveland fed president hammock so that AI could fuel inflation um and are you
 doing that rate hikes could be necessary well um AI is deflationary and one key metric that we're
 watching people are asking where's the ROI in AI one key metric that we're watching is productivity
 when it comes to revenue per employee and it's a very telling statistic because the benchmark for
 the S&P 500 is 600 thousand per employee now if you look at other companies for example in VD
 that's six million it's 10x what we the S&P 500 average is then we have another uh uh uh
 SpaceX for example that you like is 1.1 million per employee so this is a key telling statistic and
 it helps you to look at the numbers because AI is not showing in an index it's not that every AI
 company um is performing well but if you look at this statistic I believe it's a very telling statistic
 hmm okay you just mentioned SpaceX Stephanie I mean let's talk a little bit about deals too um
 and I know we have a graphic I think it's PWC that's estimating four trillion dollars worth of
 deals M&A that's expected to get done this year globally uh in 2026 a lot of that is going to be
 mega deals we have already seen SpaceX newly newly public uh strike some of these deals out of the
 gate just earlier today on this show we had alcoa CEO to talk about their new acquisition rocket labs
 to talk about their new acquisition how much is this fueling movement and uh uh of capital in the
 markets as well I mean it's it's huge I think it's like the biggest we've seen uh you know in 2020
 when we had a lot of this but before that you know it's it's been x that it's been like the biggest
 in a decade um and it's you know I do think it's come down to some of the regulatory changes
 that happened in the OBBA last year um and the ability to you know depreciation expensing and I
 think it has fueled um you know just a uh a river of of deals and and also a river of equity
 issuance and I think that's what creates um some volatility uh in the marketplace because you look
 at a company like alcoa which there is huge demand for aluminum and boxite which this acquisition
 gives them more of uh in in you know in the growth of AI and in construction and chip making but um
 you know you're going to get also equity you possibly could get equity issues with this I know
 that's not alcoa's plan but um you're seeing that like Google issuing stock um lots of potential
 IPOs coming although some of them have been put uh on pause for a moment but I I do think like we
 the market is not used to create ingesting this much equity uh because typically over the
 last you know a few years it's been a lot of stock buybacks so I think that's going to be a shift
 for a lot of investors yeah and I think alcoa is actually a good example this double edge sort on
 the one hand more demand for aluminum for AI infrastructure build out on the other higher power
 prices for smelting we also got another IPO today with Lyme we've seen some spin-offs announced
 Honeywell Aerospace just started trading Comcast spinning off the rest of its media businesses as well
 as it speak to the picture no I think this is good and this is what the bulls are looking for as we
 go into the second half of the year I think M&A activity will continue to heat up especially as we go
 into the second half of the year because if there's a turnover in Washington regulation may not be
 as easy going forward uh look for deals in the biotech sector and regional banks we've seen a few
 may see a couple more before the end of the year goes look at that we just went round trip
 back to midterm elections uh at the end of the summer okay great to have you all on thank you
 to our morning call crew also ISM manufacturing today jobs tomorrow squawk box starts now
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