Morning Call 6/29/26

 I'm Morgan Brennan, and this is your morning call.
 Good Monday morning.
 Let's get a check on U.S. stock futures,
 which are pointing to a rebound this morning.
 You could see right there on your screen,
 the S&P poised to open up 45 points,
 the Dow, 215 points in the NASDAQ,
 up 319 points as of trading right now this morning.
 This after a down day on Friday for the major averages
 and a down week, keep in mind, though,
 as we come to the end of the month,
 the end of the quarter and the end of the first half
 of the year, we're still looking at gains for the quarter
 and for the year for the major averages,
 we're actually down for the NASDAQ, though, for the month.
 If you take a look at Treasuries right now
 with bond market and focus,
 given all the economic data,
 we're gonna get this week also central bank talk
 at a Portugal, including from Fed Chair Warsh.
 You can see that yields are higher across the curve right now.
 U.S. senior treasury yielding 4.38% Fed sensitive,
 two-year treasury yielding 4.10%.
 Key stocks to watch today, Alphabet,
 joining the Dow Jones industrial average,
 once trading begins at 9.30 a.m. Eastern today,
 with that ringing of the opening bell,
 and Honeywell International,
 completing its spin-off of Honeywell Aerospace.
 The parent company, now known as Honeywell Technologies,
 will remain in the Dow,
 so we'll be watching the trading
 in both of those coming into the market open today as well.
 Also, let's get a check on Apple.
 Lower again this morning,
 after falling more than 5%.
 Last week, reports this morning that the company
 is now lobbying the White House
 to buy memory chips from a blacklisted Chinese company.
 You can see those shares are down fractionally right now.
 And energy, as Middle East tensions take center stage,
 once again, after a week of back and forth strikes
 between the U.S. and Iran,
 in the Middle East, you could see energy prices moving higher.
 WTI crude is up a little over 1%,
 still trading right around 70 bucks a barrel.
 That's after the lowest close since the war began on Friday.
 And Brent is also up 8.10% of 1%,
 trading around $72.50 a barrel,
 our buck gas lean higher,
 heating oil higher as well.
 We're gonna have more on all of that in just a moment.
 Let's see how Europe and Asia are shaping up though.
 Elaine Wu is in Hong Kong and Steve Sedgwick is in London.
 So Steve, let's kick it off with you
 and then really trading in Europe.
 Yeah, Morgan, it's one of those rare beasts
 actually at the start of European trading.
 It is very calm, of course,
 we've seen such extreme volatility as of late,
 but European equity markets opening the new trading week
 pretty much around the flat line with the Kakaron in Paris,
 actually a little bit worse, down 0.45 of 1%.
 Investors taking the news of a reported halt in hostilities
 with caution after the U.S. and Iran,
 of course, exchange those blows over the weekend.
 Trade is also watching the ECB's annual forum
 closely and how central banks are assessing
 the impact from the war in Iran.
 That is something you've alluded to
 with Kevin Warsh speaking as well,
 but that will be later this evening kicking off in Syntra
 and our very own Sarah Eisen is a amazing panel
 with Andrew Bailey on there,
 with Christine Lagarde and the aforementioned
 Kevin Warsh as well.
 So everybody will be hanging on to his every word there.
 But at the moment, pretty calm European trading, back to you.
 Steve Cedric, thank you.
 Let's get to the overnight action in Asia,
 Elaine Wu standing by in Hong Kong.
 Hi, Elaine.
 Good morning, Morgan.
 So agents' dogs were mixed as investors
 rotate out of AI names.
 South Korea's cost be edge to 0.2% lower
 as chip makers track this lump in U.S. peers
 in the previous session.
 And memory leaders, Samsung and SK Hina XJET
 are more than 4.8% and 1.6% respectively.
 And this is as investors are focused on
 ambitious investment plan being announced
 by the South Korean government,
 which includes the construction of a new chip cluster.
 Now over in Japan, soft bank shed more than 5%,
 and memory maker Kyosya is down 4%.
 This is as there are concerns in the markets
 about memory prices being too high.
 Meanwhile, Hong Kong tech stocks are in the green
 by due jumped more than 5% as its AI chip arm
 is reportedly targeting a $50 billion Hong Kong IPO.
 And Chinese chip companies SMIC and Huahong
 also gained 6% and 7.7% respectively.
 And this is as you were saying earlier,
 Apple was reportedly seeking approval
 from the U.S. government to buy chips
 from the Pentagon,
 blacklisted Chinese memory maker at the CXMT,
 which is pursuing a listing in Shanghai,
 amid a memory crunch.
 And that's it for now.
 All right, Elaine Wu, thank you.
 That's worth noting.
 We talked about the IPO pipeline firing back up here
 in the U.S., it's happening in Asia as well.
 But let's get to the Middle East.
 To meantime, U.S. officials are now telling CNBC
 both sides have agreed to pause hostilities,
 allow commercial vessels to move through the state
 of Formus freely and resume technical talks
 on a pending peace deal.
 Now, this following renewed attacks over the weekend
 that saw the U.S. strike a number of Iranian military targets
 in response to attacks from Tehran
 on a commercial tanker in the strait
 that was Singapore flagged on Thursday,
 as well as a reported missile strikes
 across Kuwait and Bahrain.
 Again, energy traders monitoring the situation
 with crude once again hovering your $70 barrel,
 at least U.S. WTI crude.
 Joining me now is Helima Croft,
 head of global commodity strategy at RBC capital markets
 and a CNBC contributor.
 She's at the International Energy Forms
 Industry Advisory Council meeting in Romania.
 Joins us now, Helima, it's great to have you on.
 And I think that's exactly where I need to start with you here.
 And that is the moves we have seen in the crude market
 and the read through in terms of the straighter Formus,
 given the fact that we have had this back and forth
 and it does still seem to be very risky business.
 I think it's fairly muted the market response,
 given the fact that we continue to have
 these sort of weekend flare ups during non-market hours.
 And while the administration is signaling
 that talks are back on and it's safe to go through the strait,
 you still see essentially western shipping companies
 Japanese shipping companies essentially saying
 that they are not comfortable with the current status quo
 on the security side.
 So I don't think we're anywhere close
 to normalization of shipping flows.
 I think some ships are looking to get out.
 The real test will be whether companies feel comfortable
 going back the other way through the strait.
 Do you think we're actually going to get back to pre-war
 normals for the strait when I think
 about how much supply has been diverted elsewhere
 and how much investment is now going to things
 like additional pipeline capacity?
 Is it safe to say that we've seen a peak in terms
 of the amount of ships and the amount of volumes
 that move through the strait moving forward?
 I think February 27th will be peak war moose.
 The question is how much will be consistently diverted
 through alternative routes?
 I expect that the Saudis will continue
 to use the east-west pipeline which was really
 a saving grace for the market allowing
 around 5 million barrels of exports
 to go out of the Yambu port.
 UAE is working very quickly to complete
 a second bypass pipeline to Fujera.
 But the question is how quickly can other alternative routes
 be shovel ready?
 What is going to be the US security guarantee
 for that infrastructure?
 And certain kinds of campaigns sort of landlocked.
 So the question is how quickly, if you are queried,
 if you are Iraq, how quickly is this going to be forgetting ships
 back to the strait with a two-way traffic?
 There's a lot of debate right now about whether the market
 is, at least from an oil standpoint,
 is oversupplied higher OPEC quotas.
 UAE's exit from OPEC, Iraq's threats
 to do the same full removal of Iranian sanctions,
 increased Venezuelan output, also US output.
 How do you see this market moving forward?
 What does it mean for not only crude prices,
 but also for refined prices?
 When we have our Bob Gasoline futures,
 still trading 40% higher than before the war?
 I mean, we certainly still have problems
 with the products market.
 When it comes to crude, we have seen
 a significant uptake in Iranian crude exports
 because the lifting of a double blockade
 with the general license for waivers for 60 days.
 Again, the key question is going to be,
 what happens after those 60 days expired?
 Do we get some type of final agreement?
 What is a path for Iranian exports?
 And again, if we don't get normalization
 of shipping through the strait,
 it's one thing for tankers that were fully loaded
 on the water for 100 plus days, looking to exit.
 What is going to be the appetite for?
 Again, I would look at the Western shipping companies,
 Japanese shipping companies, to go back the other way.
 Do we get enough tankers back in?
 What does the picture going to look like come August?
 And then finally, Halima, especially because you are
 in Romania at this conference,
 is the biggest geopolitical wild card here,
 not Iran, but instead Russia.
 Should we be paying more attention
 to what's going on with this Ukraine war?
 I certainly think we cannot take our eye off of Russia
 for the energy markets, given the number of attacks
 on Russian energy infrastructure, pipelines, refineries.
 I also think for energy markets,
 the big wild card is China.
 China really bailed out the global economy
 by sharply scaling back their imports of crude
 by millions of barrels a day.
 I think one of the key questions going forward
 is when does China return to the market as a buyer?
 All right, Halima Kroft, great to have you on.
 Start the hour, appreciate it.
 Thank you.
 Well, we're getting another check on you
 with stock futures, which are pointing to a higher start
 to this birthday week for America.
 You can see right there, our major averages
 pointed to a higher open, triple digit open
 for Nasek and the Dow here.
 Let's bring in Sima Shaw, chief global strategist
 at principal asset management.
 Sima, it's great to have you on.
 There's a lot to get to here.
 Stocks are very much climbing a wall of worry
 or trying to right now.
 I actually want to start with AI with you,
 especially given the fact that we did get this report
 over the weekend from BIS warning of global risks,
 tied to AI build out, rising public debt,
 financial fragilities, sustainability of the AI boom
 and concerns that this could be a bigger bus
 than we've seen before, your thoughts.
 Good morning.
 Well, I think it makes sense, of course,
 that it's going to be a worry when you have something
 which is so intrinsic to the entire financial system,
 to the entire market outlook, of course,
 is going to be risks associated with that,
 particularly when you consider the run-up
 that we've had over the last couple of years.
 And so, even in the last two months,
 our view is still very constructive.
 We do think that these companies are going to continue
 to earn that the AI infrastructure build out is sustained.
 But certainly, there is the potential for wobbles
 and with valuations as they are right now.
 If there are any other, I guess, errors
 or disappointments within the market,
 you could probably see their play out in the AI trade
 in the near term, but we think it's still a constructive story
 when you're looking further out over six, 12 months
 and beyond horizon.
 Yeah, I mean, it's interesting.
 I've heard it referred to as the Great Rotation.
 I don't know if we're ready to call it that yet or not,
 but just even the fact that in recent trading sessions,
 you've seen the equal weighted S&P trade better
 than cap weighted S&P here as folks have taken profit
 in AI and move to other parts of the market
 is this sustainable?
 Well, so we do.
 I mean, I think that's a really positive story
 that as well as the AI story continuing
 from our perspective quite positively,
 you have seen that earnings growth
 broaden out to beyond just tech.
 And it's not just in the last quarter,
 it's actually been building up over a number of quarters.
 And when you have that on these very strong macro foundations
 to our minds, that can continue.
 And on the positive side,
 additionally, you have got investors
 taking more of an interest in other parts of the market.
 So we do think that can be sustained,
 but it really depends.
 Or at least it's very much based on the assumption
 that earnings growth across the economy
 is going to stay very, very positive
 over the coming quarters.
 Yeah, I mean, to that point, Russell 2000,
 a record close on Friday and health care
 having its best weeks in June of 2022.
 You know, the other piece of this, of course,
 is central bank and Fed uncertainty,
 especially given the fact that inflation has been so sticky.
 So how do factor that in?
 No, we've known historically the look,
 equities do not like it when the Fed starts to hike.
 At least as a near term response.
 Now, when you look further out, though,
 as the market starts to digest the fact
 that this is driven by a strong growth backdrop,
 and that's why earnings growth is,
 sorry, inflation can send a building,
 then typically equities do tend to move on
 and continue in a positive mode.
 I think the thing that the market
 is really grappling with at the moment, though,
 is also just not really fully understanding
 exactly what chairwashes reaction function is
 and how policy is going to be responding
 beyond the next six months.
 So that does mean that you do have volatility,
 but we do think that as long as you still
 have the inflation concerns growing
 because of a strong labor market and strong economic growth,
 that is something that equities should be able to move past.
 As you said, climbing that wall of worry is really key.
 Yeah, and just to pick up on what you just said there,
 then, is the expectation, SEMA,
 that inflation continues to be sticky
 even if we get an end to this war.
 That is our assumption.
 So, you know, we are expecting
 that parts of the inflation picture do improve
 as you continue to see end-uprices fading,
 but there are still other structural factors,
 specifically with the AI CapEx build out,
 you have seen certain segments of the PPI basket
 and even the consumer basket also picking up
 to us as more structural story.
 So, you are likely to see inflation staying above target
 over the foreseeable future.
 It's really about whether the Fed can stay comfortable without
 or if they feel that they need to raise interest rate
 right now in order to compress some of those concerns.
 So, from our perspective,
 we do think that the Fed is going to stand hold,
 but there are elevated risks that they do hike
 at some point this year.
 Okay, see Masha, great to have you on.
 Thank you.
 We got a lot more to come here.
 I'm warning call, including Buyers and Morse.
 Trouble around Elon Musk's latest war reign
 to the debt markets.
 The millions in paper losses
 that are already on the books, what it means.
 Plus, much more on the big tech roller coaster ride.
 Dan Ives is here on the next big market event
 that matters to the sector.
 And later, the moment GLP-1 weight loss drug makers
 have been waiting for the potential bottom line boost
 just around the corner.
 We got a very busy hour still ahead
 when morning call returns.
 Welcome back to morning call,
 watching Shares of SpaceX.
 NASA confirming Friday night that the stock will be added
 to the NASA 100 index that starts Tuesday, July 7th,
 opening the door for a huge wave of passive investments.
 You can see shares are about one and a half percent
 pre-market here.
 Reports this morning, though,
 the company has also held executive-level talks
 about a partnership with charter communications
 over consumer cellular.
 And the moves in SpaceX, though coming as the stock
 continues to trade well above its intraday all time,
 well below, excuse me, it's intraday all time high
 back to just days after its IPO.
 But while the stock has been,
 we'll say struggling to regain ground
 or maybe we'll say stabilizing here.
 It seems between 150, 155, apparently.
 It has not been any easier for SpaceX's bonds.
 So joining me now is Joanna Gallegos,
 co-founder at Bond Block's investment management here
 on set, great to have you, welcome.
 Thank you.
 Okay, $25 billion debt raise.
 And it's been a little messy since that happened.
 Yeah.
 Well, I think there's several factors that are going on.
 One thing that was observed right after it issued
 was that it spread widened quite a bit.
 And when new issues come to market, obviously,
 the debt hasn't been issued before.
 So people take sort of a view.
 They look at the ratings.
 But sometimes the spreads are wider
 than other more established ongoing bonds.
 And it widened all the way out to 203 basis points
 on the long end of the bonds.
 We're five tranches up to 30 years.
 And it just tells you the investors
 are taking this considerably.
 They're thinking about what this means for the long view
 because you really have to take a long view
 with this issuance.
 There was also some concern that it was rated triple B,
 which is the lowest credit rating in investment grade.
 It does one step away from high yield.
 But its rating was 40 basis points further away
 than other triple Bs.
 So there's just some sense that this has a little bit more
 hair on it.
 And then finally, the deterioration in the equity markets.
 There's some related downfall from that as well.
 Yeah.
 And of course, credit default swaps tied to SpaceX bonds
 began trading actively last week as well.
 I guess the question is how much can we look at SpaceX
 as a one-off situation?
 Because it's a very specific type of company that's very big.
 It's not profitable because they're spending so much money
 and hence raising debt here versus a signal
 that perhaps we have hit frothy levels here
 with so many companies raising so much capital.
 Well, I don't think we're there yet,
 but it's something to watch.
 Because also over the SpaceX going public in general,
 there's more to come on the equity side too.
 There's more equity to your release to the markets.
 We're going to have to see how everybody absorbs
 and where those prices land.
 But when it comes to bonds and credit deterioration
 and bond markets, in past cycles,
 you would see some exuberance and issuance maybe in one sector.
 And so sometimes that can cause contagion to other sectors.
 But you can have deterioration in one sector like technology
 or energy, and it not affect the rest of the economy.
 I think what's so interesting about this space
 is that AI and some of these longer term views
 about the companies and why they're raising money
 is so ingrained in the future of the economy.
 And so if these things are going to bleed over
 into other sectors, you'd want to look at that.
 And so when you see one particular sector issuing
 a lot of debt to raise capital for expenditures,
 that has been in the past early signs
 of credit deterioration.
 Okay.
 I mean, just, and I guess just to sort of put the year
 in focus as well, US high grades apply 175 billion dollars.
 US as a Tuesday last week said a new June record
 surpassed 2020s, $169 billion haul.
 I mean, overall, in general,
 we've seen a lot of money reased this year,
 and so far, investors have been pretty open to doing it.
 Yeah.
 So I guess what would you be looking for
 in terms of signs that maybe there's fatigue here?
 So we want to watch,
 we want to see how the rest of those IPOs
 come out, how other people are issuing debt.
 But debt has been really robust over the last five years,
 and the economy is still very resilient.
 The underlying fundamentals of American companies past some of the concentration we're looking
 at in the tech firms is very, very good.
 In fact, in high yield, which is sort of the lower rated side of corporate debt, the fundamentals
 and their ability to have refinanced through pandemic, they have really strong balance sheets,
 they're paying their debt.
 And since rates have risen, you're taking the advantage of having historically high rates
 in a space where post-GFC, we were getting, you know, three, four percent in the space.
 Now you're getting six to 12 percent.
 So this is a great place for investors.
 And it's funny because on the bond side, as things are deteriorating, you know, a lot
 of investors like to come in at that moment when spreads get widened.
 So either way, right now, you can be clipping a coupon as for watching the space and things
 start to deteriorate.
 It might be a good entry point as well from price appreciation.
 Okay.
 Bottom line.
 Continue to watch the space, including SpaceX.
 Joanna Gallego, it's great to have you here on set.
 Thanks for joining me.
 Thank you.
 All right.
 Straight ahead.
 Matt, Arrow Vierman, ahead of its results after the bell today.
 My exclusive one-on-one with a company CEO talking the shifting landscape of war and growing
 demand for his company's drones and counter-drone technologies, we went inside.
 But first, a check on shares of Williams.
 Bloomberg reports the pipeline operators in advance talks by rival momentum midstream
 from its private equity owner for about five and a half billion dollars.
 A deal which could be announced in about a week would give Williams more capacity to move
 more natural gas from the Haynesville shale field that spans parts of Texas, Louisiana and
 Arkansas to export terminals on the Gulf Coast.
 Williams and momentum have been commented, perhaps unsurprisingly.
 But obviously, natural gas export, huge area of focus and opportunity shares of Williams
 are up fractionally.
 We're back after this.
 Welcome back to morning call.
 Later today, after the bell, Arrow Vierman will report earnings.
 The stock is down this month after a recently restating result due to an incorrectly calculated
 impairment charge.
 But when it comes to defense tech and autonomous weapons, Arrow Vierman has been on the forefront
 for decades.
 Thanks to programs like Switchblade and Puma.
 Last month, I went inside Arrow Vierman's semi-valley facility for an exclusive tour with
 CEO and chairman, Waheed Nawabi, who says drones have changed the battlefield.
 We knew that this inflection point is going to happen sooner or later.
 And these last couple of conflicts that have become globally well known has essentially brought
 this thing to the forefront.
 So we're very proud of that.
 We produce these today in this building and four or five other facilities in this area.
 And we've got the largest footprint and we do about two billion dollars in revenue here
 as you've seen from our financials.
 So we believe we're the largest producer and our systems are not prototypes.
 We have most of the products you see here, if not 90% of them, are in full rate production.
 Startups are learning, developing the tech as one thing, scaling production is another.
 With a growing cadre of drone startups competing for contracts, going public, and now in some
 cases, striking debt and equity deals directly with the Pentagon, Nawabi says Arrow Vierman
 is well positioned to compete for a U.S. defense budget that for drones alone could next year
 top 75 billion dollars.
 We are in a different position because we're profitable, a established business that actually
 is already viable and produce these things by tens of thousands.
 So we don't really meet that criteria and we don't really have that need.
 However, we're open to it.
 If the U.S. government needs us to scale even further in a particular new area that we
 have several of those also, then maybe we would be interested in.
 But right now, mostly that is for startup companies, we don't have the capital, don't
 have the expertise, they don't have the investments to be able to actually scale or even produce
 things in volume.
 That's not us.
 Well, Joan Warfare is also a spring demand for counter drone defenses.
 Arrow Vierman made a four billion dollar acquisition last year to build this out with products
 that include Titan jamming system, a new low cost freedom eagle interceptor, and perhaps
 most promisingly, a laser system called Locust.
 This is a technology that I consider to be the holy grail.
 Long term, this is going to be probably the most predominant way that militaries around
 the world are going to defeat and fight against drones.
 It's a laser weapon system and essentially that has the ability to detect and track a drone,
 group one, two or three, so a small, medium or large, and then essentially administer
 three to eight seconds of laser energy to that drone to its specific spots on the drone
 and essentially zap it from there.
 Cost per kill, using a laser, less than ten dollars.
 Compare that to the millions that are spent using more traditional kinetic missiles, and
 I do mean a million dollars per missile.
 As has been used in Iran, we've seen that even just this weekend, and experts raising
 concerns about depleted munitions, stockpiles, counter drone technologies, the opportunity
 there, not just on the battlefield either.
 It also exists for critical infrastructure and for civilian and domestic applications as
 well.
 All of this will be in focus when air environment reports tonight, after the bell, and
 as you can see right there on your screen, shares of AVAV are up about 4 percent pre-market.
 By the way, full interview and that inside look at their different products is available
 on CMBC.com later today.
 Still on deck.
 Wedbush's Dan Ives is here, breaking down Big Text Wall of worry, and the next big moment
 for the sector.
 Morning Call.
 We'll be right back.
 Hi, I'm Morgan Brennan.
 Welcome back to Morning Call.
 Let's get a check on you with stock futures, which are pointing towards a rebound with
 the Nasdaq and S&P 500, both coming off of a five-day losing streak that saw both averages
 finish last week lower.
 You can see on your screen, S&P is poised, open up 50 points, the Dow, about 266 points
 in the Nasdaq, the big out performer here, pre-market poised to open up 327 points.
 This as we see, losses for the Nasdaq for the month, but we're still on pace for gains
 for the quarter, for all the major averages, and for the year up double digit percentages.
 We're also watching the Russell 2000, though the small caps after closing at a fresh record
 on Friday.
 Now, up 21%, your date best first half for the small caps since 1991, and this of course
 as we've seen a rotation out of things like tech stocks into other parts of the market.
 Something we're talking about more in just a moment here.
 You could see right there, a Russell 2000 pre-market, up about 310 to 1%.
 Treasuries, meantime, with the bond market in focus, given all the data we're going to get
 this week, including that jobs report on Thursday instead of Friday.
 If you take a look here, you got Treasurer yields higher across the curve.
 It was 10-year Treasurer yielding 4.38%, so we're still down from where we were a week
 ago.
 Fed sensitive, 2-year Treasurer, 4.11%.
 It's key stocks to watch today.
 Alphabet joining the Dow Jones industrial average, once trading begins with the opening
 bell at 9.30 a.m. Eastern, you could see shares are up a little more than 1% pre-market
 ahead of that.
 We're also tracking Apple.
 It's lower again this morning after falling more than 5% last week.
 Reports this morning that the company is now lobbying the White House to buy memory chips
 from a Pentagon blacklisted Chinese company, and well, lower might be an overstatement.
 It's basically flat right now in pre-market, but we'll keep an eye there.
 An energy as Middle East tensions take center stage once again, too.
 You could see crude prices climbing higher, albeit still well below the levels we've seen
 just in the last couple of weeks.
 WTI crude is up about 1.8% still trading around $70 a barrel.
 Brent crude up more than 1% trading just below $73 a barrel, our Bob Gasoline higher as
 well.
 And Nat Gas is taking a breather here, but it had a strong week last week.
 We're checking global markets to a mixed session in Asia to kick off the week, similar story
 in Europe in early trading as well.
 And we're watching SK High Necks and Samsung Electronics, which are a big part of the
 cost-be.
 If you take a look at those shares, both are lower.
 Samsung down about 5% or closing down about 5% with the overnight action, SK High Necks
 down almost 2% South Korea revealing that the pair will build two new semiconductor fabrication
 plants as part of the country's newly announced $518 billion AI and semi-investment plan.
 Well if we stick with the markets, and we stick with AI, let's take a look at the NASDAQ.
 It's looking to bounce back after leading losses last week.
 It's said more than 4.5% June proving to be a tough month for tech with a Mag 7 losing
 nearly $3 trillion in market cap this month, growing skepticism about AI investments, driving
 that also arguably some profit taking here with some rebalancing of foot.
 For more, let's bring in Dan Ives, Global Head of Technology Research at Wedbush Securities.
 Dan, you're doing double duty for us here.
 It's great to have you on.
 And that's exactly where we're going to start.
 This down draft we have seen in tech, particularly in hyperscalers and things that aren't memory
 chips, your thoughts.
 Okay, I think it's a buy for kid market.
 It ultimately, it's those that are spending the catbacks, the Microsofts, the Metas, you
 know, we've seen with Alfa as well, I mean, those are essentially in the penalty box right
 now.
 I mean, I didn't say to somebody, getting treated almost like bear market stocks when you
 look at Microsoft and others, memory, the golden childs, they're the ones sort of running
 to the bank relative to what they continue to raise prices.
 But I think this does start to reverse over the next six to nine months because as you
 see monetization, I think July, when we see earnings, in terms of 2Q, that's actually going to
 be a pretty big catalyst for the hyperscalers and big tech.
 Yeah, memory, at some point here with memory with the shortages, with the prices we're
 seeing, spot market prices for memory chips, for example, I mean, at what point do we
 tip over into demand destruction?
 Or do we not?
 Because it's so necessary in terms of this AI infrastructure build out.
 Look, I mean, you ever, it's a select group of companies and you're not going to all
 of a sudden find another one that's going to be building memory, that's why the cost
 being caught up, 99, 95% this year.
 But you're not going to have equilibrium for another 18, 24 months.
 And that's what we saw with Apple and those are necessary price increases.
 But we just...
 Those are big price increases.
 Look, they're big price increases, but I think when you look at iPhone, you'll probably
 have caught $152,000 price increases, depending on the different tiers, I think maybe
 that could be scaled down.
 But they're not going to eat those price increases.
 I mean, they need to ultimately make sure that their margins hold up.
 You see with Microsoft as well.
 But demand destruction, we think it's pretty diminimous.
 I mean, in terms of for Apple, for my...
 I think some of the reactions we've seen probably may be a bit of overreaction.
 But this is a fourth and thus revolution.
 Trillions of dollars are going to be spent.
 You will have a normalization.
 I think the reaction we've seen on the hyperscalers max7 way, I think, overdone has created
 the opportunities.
 So you would be investing in hyperscalers right now?
 I mean, to me, that's, I think some of these, like I've said, these are way oversold
 names.
 Microsoft, Oracle, if I look at Alphabet relative to losing a few engineers to anthropic
 and porn, but I think that's an overreaction, and I think meta, it's approved me period
 for Zuck to show that the monetization is now going to start.
 I think we're going to see this reverse over the next six, nine months.
 That would probably be the...
 My view is second half of the year, max7's probably a significant outperformer relative
 to what we've seen this year.
 Interesting.
 Just to go back to memory, we know it's been a boom bus cycle.
 We'll say it's very cyclical for a very long time.
 The arguments out there, and Micron CEO has made it, for example, that we've shifted
 into this secular growth period.
 But when you hear about SK Hynex and Samsung putting more money to work to build out more
 fab and more memory capacity, and we know micron and others are doing the same, does
 that actually trigger another cycle here over the longer term?
 Look, it's a memory super cycle, and that's the...
 I mean, we're talking about something that's going to be for the next few years.
 That's why we've been bullish on memory because of our view.
 This is not something that's all of a sudden a boom in bus cycle.
 I spend so much time in Korea, and I think you've seen in the Cosmic, that is the centerpiece,
 the foundation of memory, and right now it's their world, everyone else is paying rent,
 and that's going to continue to play out, it's bullish from memory.
 But it speaks to...
 You're seeing the data centers, more data centers being built today than are active.
 That just speaks to what we're going to see on the hyperscores, on enterprise, on consumer
 AI.
 We're still third-inning one out, relative to this AI, again, despite the barriers you're
 on fire in a crowd theater.
 Okay, Dan Eibes.
 Great to be here.
 Let's talk to you about it.
 Thank you.
 We're going to see you in just a little bit for our call, Kuro.
 I'll be here.
 In the meantime, we've got a lot more to come here on Morning Call, including more on
 the AI arms race, including Google pumping the brakes on one-tech rivals access to its
 models.
 And as we had to break, let's get a check on shares of Eli Lilly and Novo Nordisk.
 Why?
 Millions of Americans on Medicare will get access to prescription weight loss drugs for
 the first time starting Wednesday with a very minimal copay.
 A new federal government program will cap the monthly cost at $50.
 Previously, Medicare has largely been prohibited from covering GLP-1 drugs when they were prescribed
 solely for weight loss.
 So it could be a major moment there in healthcare later this week, Morning Calls Right Back.
 Welcome back.
 Let's get a check on some of the Morning's latest headlines.
 Federal regulators are cracking down.
 On the use of Chinese made electronics, the FCC says it's expanding its ban, dating
 back to 2022.
 On new and old telecom equipment made by Huawei and others, setting national security
 risks.
 The expanded ban is set to take effect in early July.
 Well, it's a very busy morning for AI, like it does every morning.
 Google is reportedly putting limits on Meta's use of its Gemini AI models after the Facebook
 and Instagram parent requested more compute capacity than Google could provide.
 According to the FT, the shortfall is disrupting and delaying some of Meta's internal AI projects.
 The report adds several other Google clients have also been affected.
 On to Anthropic, company late Friday said the U.S. government is partially reversing
 its ban on the Mythos 5 AI model, giving Anthropic the green light to release it to more
 than 100 trusted companies and institutions, including many Fortune 500 companies.
 Separately, Axios reports that access restoration of Anthropic's Fable 5 AI model may be next.
 Both were abruptly disabled, following the government's June 12th Export Control Order.
 And all this as China's ZAI claims that it can match Mythos in certain cybersecurity
 scenarios, despite lagging in other, more general, AI applications.
 Well, Adobe Analytics says U.S. online shoppers spent more than $26.4 billion during Amazon's
 latest Prime Day event between June 23rd and June 26th.
 Figure is a 9.3% year-over-year increase, though discounts matched most of last year's
 deals.
 It says the average Prime Day order size fell to $47.66 from $53.34.
 Well GameStop says that it is holding firm on plans to buy eBay for $56 billion, despite
 an outright rejection.
 In a short regulatory filing late Friday, GameStop said, quote, additional materials regarding
 the proposed transaction are forthcoming.
 GameStop adding that expects adjusted earnings this year to grow more than 73% compared
 to last year, because he shares a GameStop up 1.5%.
 Straight ahead, though, the morning call crew, taking up the trading day ahead, and the
 factors that one member says may keep the markets going.
 As we turn, can you believe it for the second half of 2026?
 Stay with us.
 Welcome back.
 Here's what to watch in this holiday shortened trading week, which is actually a lot.
 We get a flurry of jobs data leading up to the jobs report, which will be a Friday report,
 but excuse me, a Thursday report instead of Friday due to America's 250th birthday.
 We're going to hear from Fed Chairman Kevin Warsh at the ECB's Forum in Portugal, Alphabet
 joins the Dow today.
 There's the deadline for the U.S. of Mexico and Canada trade talks, and to renew that trade
 agreement, U.S. MCA, we're also awaiting potential Supreme Court decisions on President Trump's
 push to oust at least a cook from the Fed and roll back automatic birthright citizenship.
 We actually have eight cases we're watching for the Supreme Court this week, and earnings
 this week from Nike, Constellation Brands, General Mills, Air Overnment, which we talked
 to you about earlier, and FACSET.
 Well, it's time for your call sheet, where we look at the topics driving the trading
 day and week ahead.
 Crew members today, Dan Ives, a webbush security, still with us, Stephen Whiteing of CIO
 Group and Barbara Durand of VD8 Capital Partners.
 Great to have you all here.
 A lot to get to, Stephen, I'm going to kick this off with you, because I called it this
 earlier in the show, and I'm going to go back to it, and this idea of wall of worry.
 That stocks are attempting to climb right now.
 How do you see it?
 It is wall of worry.
 Current fundamentals are strong.
 They, one of the things I was listening earlier to Dan, 105% EPS growth for semi-conductors
 is the expectation for this year.
 The really important thing is the 41% for next year.
 Now and beyond.
 So the question really is, is we know this has risen to this monstrous share of overall
 market cap.
 The expectation of profits for semis within the overall economy is dramatically higher,
 and nothing rises 10 times faster than the whole economy forever.
 So we've got that part.
 But the immediate fundamentals, the market is still going to have to grapple with that.
 It's going to have to grapple with such a big, powerful sector, 50% of the US equity
 market is effectively technology.
 And that's a problem for folks who are risk managers, but the reality of current fundamentals
 is still going to bear very much to performance this year.
 Yeah, there's a lot there I want to get into.
 Barbara, I want to get your reaction to that, especially because at least near term,
 I mean, we always talk about a June swoon seasonally, June doesn't tend to be a very good
 month for the S&P July tends to be a little bit better here, but we're also dealing with
 rebalancing this week, coming into the end of the first half, too.
 How much is all of that factoring in?
 Well, I think, I think, Steven's right.
 We look ahead at the earnings for this year and the predictions for next year, and you
 look at what happened in the first quarter, where the numbers were more than double.
 The S&P came, S&P 500 ultimately was up 29%, more than expectations.
 But in the near term, I think some volatility would be expected.
 I mean, you've finished, we don't have the catalyst for the next earnings seasons, even
 though you've had the Iranian situation seems to be settled down, but you still have a little
 bit of worry about the fed hiking, although I think the best can be patient to wait to see
 how inflation comes down as we get through oil prices below 70.
 But in the near term, with the market at 22 times, there is going to be volatility and
 some profit taking rotation out as Dan Ives was talking earlier.
 These hyperscalers, I agree with him, are oversold, but we have seen this last few years.
 We will continue to see it when any sector, but its technology is always in the bullseye
 when it gets rushes ahead, there's going to be profit taking.
 I think the Russell 2000, as a case in point, Morgan, you mentioned earlier, since
 91, it's been the highest and best performance since then, and that's not unexpected as
 you look for laggers.
 But I think the rotation will come back, but it does mean a lot of short-term volatility.
 Yeah, Russell 2000 had a record high right now, Dan, and I also mentioned this early
 in the show, but health care had its best week last week, since June of 2022, equal weighted
 S&P has been outperforming, cap weighted recently, as well, that being said, not just
 hyperscalers, are there other parts of the tech trade that are unloved and maybe worth
 a look right now?
 I think it's unsilverscured, I mean, you look at crowd-strike, pow out, I think Z-scalers
 are oversold.
 Look, that's a derivative of the AI revolution, just more scam, and we think it's ultimately
 budgets are going to double over the next two to three years.
 This is all about the road to NASDAQ 30,000, with the bears, they'll continue being
 hibernation mood, but they can see AI in the spreadsheets, and I think streets on the
 rest of the meeting numbers by 15 to 20%, and that's why I just view these white knuckle
 moments, their opportunities, you know, to what I've used, the AI winners.
 I mean, me and time, Adam Christopher Lee, friend of the show, made this point over the weekend,
 Steven.
 He said, perhaps we're shifting away from pick and shovel stocks, it kind of goes back
 to when both Dan and Barbara just noted, when it comes to AI specifically, and that prevailing
 narrative is starting to evolve, he said there's two things that are signaling a shift
 in this market right now.
 He argues it's Oracle's fiscal 27 guidance, that's greater than 100% CapEx revenue ratio,
 and he said it's Micron's fiscal third quarter margins, 85% gross, 81.2% operating, and
 that sort of speaks to this moment of fraud, and that perhaps we do shift to other parts.
 Well, look, if we think about where the whole economy's position, dead growth has not
 been dramatic, it's been powerfully strong, and a few companies that are building out
 the AI infrastructure.
 I agree with Dan, the remarkable opportunity in cyber, for example, we've just seen software
 underperform semi-conductors by the most since year 2000, so that underperformance, and
 what are we supposed to run on semi-conductors?
 It's software that we run, and all of these AI services, again, some of this is going
 to come from non-public companies that will compete, there's going to be a greater degree
 of turbulence over competition than we've seen over the pre-AI period for some of these
 companies.
 But the idea that we're just going to build all this stuff, and that's the end of AI,
 is not really the way this is going to work.
 Barbara, want to get your thoughts on that, especially as we do look to another week
 with economic data that, in addition to the jobs report, is going to include ISM manufacturing,
 and we know this whole infrastructure bill that has helped to fuel some of those numbers.
 Well, the ISM manufacturing number, it's been strong, it's been good the last three or
 a month.
 In fact, all the numbers that we're expecting this week, and you had to line up all the
 jobs data, the non-farm, you're going to have the challenger report, Jules, ADP, all measuring
 different aspects, of course, the unemployment number, but I think that's, the expectation
 is that they have recently all been positive in terms of a stable, growing economy.
 I think that's going to reinforce that, and so that is going to be what happens with
 the tech.
 And there's a lot of noise.
 Last week, this is this many deep-seat moment about when the Chinese talk about, they have
 cheaper, faster, better, although let's not forget it's Chinese, and there's security
 issues, and enterprise typically is saying what's not the cheapest, but what's the best
 most secure, so I think you're going to continue if you're a lot of noise and worries, which
 I think typically happens again when stocks have run far ahead, and you always find a reason
 to be nervous about that.
 And then you can wait and buy, pick your buying opportunities, and I think there's going
 to be plenty coming up.
 Okay.
 Dan, want to get your thoughts first?
 We do go into jobs report.
 The other thing we haven't talked about is World Cup impact on the economic picture and
 jobs report too.
 Look, I mean, I just think right now, we're going into just jitters in the market, and
 you got wars and fed and others, but the reality is, it's going to create opportunities
 because it's about earnings season, earnings season is going to be a huge bullish catalyst,
 and that's why this is just get the popcorn out to the next leg of the bull market.
 All right, we've got 15 seconds, final thought.
 Look, we have seen stronger data across the U.S., every jobs indicator for the last three
 months has improved.
 So normally, I throw the stuff off, but the breath of it, the whole world economy has
 performed better during this oil shock than expected, right?
 It's all held up a lot better.
 Okay.
 We still have a 10% drop in gasoline to come.
 All right, we'll see.
 Thank you to our morning call crew.
 I hope we do, by the way.