Morning Call 6/26/26

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 Market rotation and full effect. I'm working Brennan and this is your morning call.
 Good Friday morning. Let's get a check on US stock futures with the S&P 500 and the Nasdaq both riding four days of losing streets also on pace for losses for the week.
 It's a very similar picture this morning in the futures market to what we saw at the close yesterday for the major averages.
 The Dow is up about 75 points right now. The S&P down fractionally about 25 points and the Nasdaq is down almost 300 points here pre-market.
 Investor attention remains squarely focused on Apple after its worst one day sell off in more than a year. Also Microsoft now tracking for its worst month in 26 years.
 Both of those stocks hit hard yesterday on product price hikes due to surging memory prices. You can see right now pre-market apples basically flat and Microsoft is attempting a rebound here up about 1% pre-market.
 Apple raising prices by anywhere from 17 to 50 plus percent on average across its product line, whether it's laptops, iPads, etc.
 And Microsoft following suit boosting prices for its Xbox game console by an average of 25, 26 percent.
 You can see that right there on the screen. That's following this and then micron which had blow out results Wednesday night and you saw that in trading yesterday.
 You can see microns on a bit of pressure this morning. It's down about 4.5 percent as our other memory chip names.
 And if we look at the chip complex overall, a lot of red on the screen in video is down about 1.5 percent pre-market and Intel which has been the high flyer here over the last couple of months is down about 3.5 percent.
 If we had to check on hyper scalers as well which were under pressure yesterday and have been under pressure in general this month.
 You can see it's a mixed picture this morning on the screen and Oracle actually with the names that are on your screen right now is the one that's down about 1.5 percent elsewhere.
 We're watching treasuries ahead of today's consumer sentiment report that final University of Michigan report.
 And you can see right there it's a mixed picture as well with the US 10 year treasury yielding 4.378 percent now.
 We are down on the week and the fed sensitive to your treasury yielding 4.09 percent.
 Let's turn to the energy complex as well because it is resuming its move lower after the first update in 5 for WTI yesterday.
 We're down about 3.5 percent right now. WTI crude trading at $69 a barrel and Brent down 3.5 percent trading below $73 a barrel are Bob Gasleon and heating oil contracts also lower.
 What has been higher though is natural gas which I believe is the case again this morning is actually turned positive on the month.
 Finally take a look at metals because we've just seen huge moves in the metal complex here.
 You can see gold is basically flat silver right around 4,000 and ounce silver is down about 1.25 percent.
 Cuppers also lower but gold is pacing for the worst month since 2013 and silver is pacing for the seventh weekly loss.
 For the first time we've seen that for silver since 2018.
 Let's get back to Apple's price hikes though sparking an Asia tech sell-off on memory cost concerns.
 Let's check in with our JP Yong in Singapore, JP.
 Yeah good morning to you guys out there Morgan but not a good Friday for markets out here in Asia.
 It's really felt the brunt of that rotation out of tech and you can see here the only one really keeping its head above water.
 The mining heavy ASX200 out in Australia.
 And while we see notable losses actually today across greater Chinese and Taiwanese stocks perhaps no one felt the brunt of it more than Japanese and Korean markets.
 And you can see it out here with how the Nikkei 225 fell considerably at the Friday close.
 And the winner of the wooden spoon out in Tokyo today happened to be soft-packed which plunged by 12.5 percent.
 Those reports that open AI which soft-pack was building a sizable stake in might delay their planned IPO to later on.
 They take a lot of wind out of their sales and really prompted that sell-off on soft-packed stock today.
 Kyosei are the memory chip maker out in Japan also one of the biggest losers falling by double digits.
 It's a similar story when you look at South Korea with the memory giant kings like Samsung and SK Heinix leading the plunge and pulling the cost be down which enacted them to hold a momentary trading halt because of how heavy the selling was.
 Now usually on a day when Samsung when a company like Samsung announces almost $650 billion in CapEx to sustain AI chip expansion that would usually be rewarded by the markets.
 That was not the case today and we saw Samsung see heavy losses diddo for SK Heinix which branched to pull down the cost be as we mentioned.
 It's a similar story when you look at greater Chinese stocks whether you're in Shanghai or in Hong Kong the Hansen tech index.
 And also the AI semiconductor the AI index attracts CSI shares listed out in China all suffering notable losses.
 Lingyi tech which is an Apple supply that listed today on Hong Kong felt considerably below its own IPO price.
 And of course we can't we can't not mention Ali Baba one of the leading Lager's day.
 It seems like Ali Baba has beef or growing beef with anthropic with the latter accusing them of using distillation tactics to support their own quen AI model.
 They deny this but you can see Ali Baba really also feeling the threat of the sell off.
 Overall a very forgettable Friday for tech stocks out here in Asia we'll see if things get better next week.
 Morgan it's back to you and I hope it's a better morning for you folks out on Wall Street.
 You know I hope so too it might be a forgettable Friday in Asia but but not when you report it.
 I just want to go back to to Korea's cost be for a minute the fact that we saw a circuit breaker trigger and the fact that you saw a halt in trading.
 How unusual is that for a major as average such as the cost be.
 Yeah I think it's what's more unusual actually Morgan is how many times we've actually seen a side card triggered for South Korea this year.
 In fact only in the last couple of months it's almost you don't go a week without seeing a side guard actually triggered because of all these moves.
 And a lot of it also because of what they're saying is building concentration risk.
 Okay Hynac and Samsung are among the biggest weighted stocks actually in the cost be and whichever way they move it drags the cost be up or down alongside it.
 It's also not helped by the fact that we've seen a lot of big moves and volatile moves with these stocks when you see them surge by double digits or also plunge in a similar fashion that we've seen so far today.
 And it seems the cost be while in the best performing indices year year today in Asia or even in the world they are at the back end call of what happens in the memory chip space.
 And specifically the memory chip giant Samsung and SK Hynacs.
 GP young great to have you on have a wonderful weekend. Thank you.
 Let's get to the early action in Europe as well Karen show is in London with that trade. Hi Karen.
 Hi Morgan while we were a little bit tame at the start we fell into the red as expected on the back of those falls in Asia but now European actually is firmly on the back foot in the morning trade here on Friday that global tech route of course deepening.
 We're seeing losses across all major regional indices with the foot team even Italy leading losses don't forget that's been one of the better performers here in Europe up about 16% for the quarter.
 So that risk off move I think just triggering a little bit of profit taking as we come up to the end of the quarter and the half.
 So you're seeing it across the board but the acceleration and losses certainly mounting as we move throughout the session.
 European chip plays have not been spared as you'd expect from that tech route we're seeing widespread pressure here this morning following those steep declines in the Asian session all again trigger this time by Apple and Microsoft announcing price hikes as the A.I.
 race squeezes chip supplies reigniting inflation concerns so we're down 3% on some of these names of this hour another story we're tracking today is Volkswagen which could reportedly lay off as many as a hundred thousand people in the next few years.
 That's according to manager magazine which says the CEO and CFO are looking to completely restructure the company spinning off the namesake Volkswagen brand and its parts manufacturing plants.
 Volkswagen has declined to comment on the report Morgan if we look to next week Karen the big events for markets not just in Europe but but here in the US as well as going to be the centric conference which is basically the ECB's version of Jackson whole what do investors need to know or understand going into that.
 Or keep in mind this is a window location in central over the years you can see that very strong forces of play but perhaps that's a metaphor what we've seen on global markets to the angst that is now coming into the mix around any inflation returning whether this could be triggered short term by A.I.
 But other factors of play and that's been a real talking point especially with the chip flation story coming to the mix thanks to apple and some of its its cohort I think one of the issues is that who's the most hawkish in the room now
 We thought it would be the ECB they've already had one rate hike potentially looking at more and some of the governing council members are suggesting they will try and suggest that maybe July is still an active meeting.
 They've been on the front foot around credibility but now we've been hearing from Bank of America and we just interviewed the economists this morning the four front of this suggesting that three rate hikes are on the cards potentially for the US Federal Reserve this week so who's the most hawkish in the room that'll be the take away I think next week.
 Wow three rate hikes I hadn't heard that one that's a that's pretty striking I want to go back to something else that's been powering Europe markets higher and and in general has been focused in Europe for the last couple of years really and that is the defense sector because we saw a lot of movement there to the downside this week.
 Indeed there was a report earlier around German ordering of certain equipment and I think that just put some cell orders into the market because there was a view that look Europe needs its own defense it needs to have enough defense capabilities on the ground in case the US isn't a reliable partner.
 And don't forget we've had some pushback in recent times from the US president around NATO so there'd been a lot of positivity around this sector even with some bumpy ride around whether the Middle East peace processes on track.
 So I think it was a couple of stocks and the likes of Leonardo Rheinmetel that the market was looking at very closely so some of those names have sold off and of course they are in the industrial basket so you have seen it at that level.
 So industrial's defense stocks have been on the back foot but I think any analyst any fund manager you talk to think there's a long term commitment here in Europe and even what we're hearing that some of the auto companies I mentioned the story around Volkswagen that eventually you may see some repurposing in your auto space heavily geared and I heavily underpinning the manufacturing story in Germany some of that could be repurposed still around defense in future.
 So we're seeing that here in the US as well with General Motors and Ford Karen have a wonderful weekend I hope you're able to go sit by a pool I hear you're having a heat wave out there.
 So stay cool and thank you so much.
 It's great to see you.
 Karen, so thank you.
 All right we are going to Sarah Coons to talk a little bit more about what we're seeing in terms of the market action here to wrap up the weekend.
 So as we come to not only the end of the month of June next week but also the end of the first half of the year so Sarah it's great to have you on and that is where I'm going to start with you because if you look under the hood S&P 500 is down on the week but equal weighted S&P is actually
 very much better here and sectors that have been a little less loved like health care and industrials and financials are catching a bid your thoughts.
 I think that that might reflect the fact that people are wondering if putting all of their eggs into the AI sort of high gross hyper-scaler basket was maybe not the best idea over the past couple of years and if that we should sort of even that out and remember that there are other things that
 that we need as humans like health care like industrial and so I think that this rotation is probably a good thing.
 Okay so what does it mean for this tech trade overall which obviously has had a huge run this year but we're arguably starting to see this bifurcation you saw it in trading yesterday.
 Micron and other memory chips continuing to surge here but the hardware OEMs and the hyper scalers and everybody who's affected by those higher memory costs taking a leg lower.
 I think that it really depends on the company and taking a look under the hood right you look at a name like Apple and you see that there's been a bit of a dip there which I don't necessarily think is a bad thing in terms of the price high because they're probably long overdue.
 It kind of makes sense that they are being impacted and finally are passing it on to the consumer even with their huge cash pile.
 And so different companies are going to react to this differently if you are selling chips is not in memory it is it is a good time if you have them if you're a net buyer of them.
 Then yeah it can get expensive and I think that we want to see a market that is reflecting that reality we want to see a market that is in touch with reality.
 So with the NASDAQ 100 down 3% on the week as of right now and poised for a 3% loss for the month what would you be buying across the sector if you would.
 I would look really closely you know I saw that also that has you know not had had the best little like recent run and I think that it's on the verge of being undervalued I think that if Apple continues to dip there might be buying opportunities there.
 I don't think that SpaceX you know get being and being down a bit is going to make it a buying opportunity given its IPO price versus sort of revenue and everything but I do think that there will be names in this you're not buying the sector I don't think I think you're buying into individual names.
 That have been a little bit undervalued to begin with and now are dipping even lower in names that can recover and that have a great sort of business even if the AI trade doesn't stay as hot so.
 Taiwan time I you know micron SK high next a lot of those companies have been doing incredibly well for decades I think they'll continue to do well you just want to make sure that they're sort of right price for where you're buying and at.
 All right Sarah Coons to Cleo Capitol great to have you on the phone on the news line appreciate it.
 Thank you.
 We got a lot more to come here on morning call including two weeks in a look at just heard about it SpaceX it what with the street has to say about SpaceX.
 And reports that it is about to make a big starling push plus he still on the rocks new strikes in the straight of for moves putting tanker traffic on alert and later affordability revival reports that the president may be signing that housing bill after all we got a very busy hour so ahead one morning call return.
 Welcome back to morning call we got a market alert on shares of SpaceX you can see down about 1.6% right now pre market trading rate around $150 a share which is essentially where it opened up.
 Two weeks ago when it began trading on the Nasdaq that was up from the $135 IPO price but SpaceX reportedly telling investors it plans to launch a starling mobile service in the US to directly take on Verizon AT&T and T mobile on their home turf and the news echoing what SpaceX president Gwen shot well told me ahead of the IPO.
 I never really think about topping out it's just not in the in the mind frame.
 We will so the early satellites we still have some very early satellites up in orbit they're not as good as the latest ones we will continually refresh this old satellites that we have and we'll add a lot more capability.
 We are actually constrained by capacity in many markets it's really important markets so scaling is actually really quite important to the revenue story for us.
 So that was in regards to Starlink and how large that constellation ultimately has to become but she also talked quite a bit in that conversation which you can find the full interview on CNBC.com about the fact that Starlink mobile is an even bigger opportunity than Starlink broadband.
 Well the possible Starlink expansion coming as the stock marks it's not possible it is happening works two weeks since it's $135 a share IPO and we just gave you a check on shares right now trading around 150 bucks and that's after trading as high as 225 a share.
 So far fax that says eight analysts cover the stock with by buys two holds in one cell that cell comes from Morningstar with a $62 price target compared to the 242 street average.
 So in other words analysts are pretty bullish here from price target standpoint all this as we expect the Nasdaq to announce the stock's inclusion into the Nasdaq 100 index as soon as this evening.
 And as wild the space X has been take a look at the other high flyers into the space sector over the past two weeks gains for the most part across the board.
 This is just a few of the names on your screen and two to machines and rocket lab of double digits AST space mobile as well.
 Firefly Echo star is actually the one that is down Echo star has a big stake in space X so perhaps not surprising to see that and take a look at what we've seen in space stocks so far this year.
 That is this year OK so gains joining me now Chad Anderson longtime space X investor and founder and CEO of space capital self described as the world's largest space focused venture fund with more than $1 billion in assets under management across 59 portfolio companies.
 Chad's been doing this a long time I've been speaking to you for a long time it's great to have you back here you also have a big space investing summit at the Nasdaq later today and I do want to get into that but first as a decade long investor in space X your reaction to what we've seen two weeks after the IPO.
 Yeah I mean it's been incredibly exciting couple of weeks right I don't think that it's any surprise that there's a bit of volatility here but the opportunity in space X and the space economy overall is long term.
 This is we are in in the midst of a massive infrastructure build out cycle we've talked about that many times here on the show.
 The space economy has been underpriced to this point right I think people take for granted the fact that most of the global economy already runs through orbit.
 So you know it's kind of interesting that we are having this conversation two weeks ago of 1.8 trillion dollar valuation that's ridiculous who's going to pay for this and now it's sort of settled that two trillion right two weeks later so.
 It's pretty wild how things have changed I do expect to see you know it's some more volatility in the short term but long term this is a huge growth cycle that we're in in the space economy.
 Yeah and if we just brought in this out I know some of your portfolio companies are publicly traded some of them have actually gone public ahead of space X two or a recent entrance to the market here when I look at names like well they've been around for a couple years but rocket lab planet.
 Hawkeye 360 is a newer entrance to the public markets York space systems as well is your expectation that given the re-rating we've seen across the sector here that we're going to see more names go public.
 Absolutely yeah we've got I think six names and our fund that have gone public which is for a specialist especially in a category like this that I think a lot of people were not paying much attention to it might be a surprise to people but yeah absolutely.
 This is to my point earlier the space economy has been underpriced and now we have a liquid benchmark to benchmark this category against space X the largest IPO in history clearly a space company building orbital infrastructure to power terrestrial markets those are the companies that are best positioned.
 You know space X made this an investable category 15 years ago those companies that are building on the back of that access to orbit are now at a point where they've grown there you know they're hitting revenue benchmarks and getting ready to go public we're starting to see that I think we're going to see a lot more.
 Especially now that we've got you know north start a point to yeah and I think it's worth noting that you have other companies within the tech space that under the hood have sizable and growing space businesses as well whether it's alphabet whether it's Amazon.
 We're seeing we're seeing these investments happen in terms of what you're seeing on the private side especially as you do tee up for this space capital summit later this morning you just talked about the investment opportunities and infrastructure for example what are some examples of that.
 It infrastructure specifically sure or across the space sector well so for nearly investors standpoint so our summit this is our 13th annual summit space capital summit we're hosting with our good friends at the Nasdaq and for me it's incredibly exciting to be doing it there at the Nasdaq market site in time square because the Nasdaq is where all of the companies across the space economy all the technology layers are listed right so and the ones that you might not fully appreciate as space companies so trimble the company
 that brought GPS to the world is listed on the Nasdaq Google the company that put a map of the earth in your pocket is listed on the Nasdaq and now SpaceX the world's leading space infrastructure company is public on the Nasdaq so the Nasdaq has it in spades across all three technology layers and I think that's what makes this category so interesting it's the orbital infrastructure that is powering terrestrial markets here on earth all of the world's largest industries run on orbital infrastructure
 and we're in the early innings of a massive infrastructure cycle hundreds of billions of of legacy systems that are being replaced and an entirely new layer AI being built out yeah I mean the other piece of this is the drive and a lot of this is being spearheaded by nasa but it's towards building out a lunar economy as well so how does that factor in yeah I mean if you think about 90% of the opportunity is in orbital infrastructure and terrestrial markets there's also a lot of option value in these new markets
 nasa spearheading this moon base is one is a really fun one of those markets so you're going to be leading a conversation with nasa leadership later today talking about exactly that how is nasa renegotiating its relationship with legacy contractors and working more with commercial partners to build out this moon base develop a permanent presence on the moon and we have a big surprise for the summit with regards to that
 so lunar outpost one of the companies that just want a 220 million dollar nasa contract for the lunar train vehicle to transport the Artemis astronauts in the cargo for their moon base in the south pole they're bringing their rover two times square so it will be there will be an actual moon rover in times square right out in front of the Nasdaq so I mean everyone should come and check that out
 yeah of course another one of those startups for investors to watch that's still private but growing chat Anderson great to have you here on set and I'll see you over at the Nasdaq for the summit a little bit later this morning
 yeah wait me too well as we had to break we're watching the transports it's a quiet rally going on the indexes up more than 1% on the week 1.5% actually it's without performer and it's up nearly 18% for the quarter for the year of nearly 27%
 now in case for its best first half since 1987 and a lot of this is driven by the airlines we've seen big gains on the year for the airlines
 you can see that right there in the screen double digit moves and by the way big moves this week as well amid everything we're seeing in the middle east and the drop and crew of course we're back after this
 welcome back to morning call we're turning to the latest on those deadly two earthquakes in Venezuela the death toll now stands at nearly 190 with roughly 1500 hurt but officials say that death toll could jump dramatically with thousands still missing
 interim president delsea Rodriguez telling rescue crews from other countries would arrive soon and thanked leaders including president trump for the US's support
 we're checking some of the morning's latest headlines cmbc confirming house speaker mike johnson has delivered the approved bipartisan housing bill to president trump for a possible rescheduled signing session following a face to face
 late yesterday now according to reports johnson and trump not only touched on housing in their talks yesterday but also a pathway related to the voter ID save America act
 when you're at times reports that open a i is considering holding off on a u s i p o until at least next year if it intends to go public with a one trillion dollar valuation sources tell the paper a lower valuation could possibly fast track a deal for this year
 a suggestion sam multman reportedly calls a non starter now this following multiple reports the white house is asking open a i to stagger its new model releases over national security concerns
 on semi meantime is acquiring synaptics in an all stock deal worth about seven billion dollars as a chipmaker looks to expand its footprint in the physical a i realm on semi c o says synaptics connected computing platform compliments his company's strengths and automotive power and industrial markets you can see shares of on semi are down about 12 and a half percent premarkets synapsics up about five percent you're going to hear more about this deal
 when he joins squawk on the street later this morning that is the CEO of on semi will be joining and following it's been off from parent company FedEx we're also watching shares of FedEx freight forecasting up to six percent sales growth for the rest of the year targeting new business
 opportunities across data centers grocery and health care FedEx freight is now North America's largest less than truckload operator this was the first standalone results since that's been off happened on June 1st and came just two days after
 now former parent company FedEx also reported results the noise in the quarter which was not surprising because he shares of FedEx are about five percent about half a percent premarket
 while coming up Carlisle groups Jeff Curry is standing by talking the ongoing pullback and oil also the moves that we're seeing in the metals market morning call we're right back
 I'm Morgan Brennan welcome back to morning call let's get a check on US stock futures with the S&P 500 the Nasdaq riding four days of losses and you can see poised for more losses as of right now on your screen so it's a very similar situation here premarkets what we saw at the close yesterday for the major averages
 S&P is currently poised to open down about 25 points the Dow fractionally higher up about 58 points and the Nasdaq is the big loser premarket here
 poised for losses of 300 points at the open as of right now we're on pace for losses for the week for the Nasdaq and S&P as well and losses for the month for the Nasdaq
 investor attention remains squarely focused on Apple after its worst one day sell off in more than a year and Microsoft now tracking for its worst month in 26 years both of those stocks
 hit hard yesterday on product price hikes due to surging memory prices you can see right now premarket Apple is flat Microsoft is up 1% global markets though they're under pressure
 steep selling in Japan and South Korea in particular Japan finishing down more than 4% South Korea down 5.8% actually triggering a trading halt in trading with all of the volatility and all of the selling and those red arrows have translated to Europe and early trading as well as you can see right there on your screen
 the DAX is down about 1.2% turning to energy WTI and Brent are down again this morning headed for steep losses for this week as supply concerns ease even though U.S. officials told MSNOW that Iran was behind an attack yesterday on a cargo ship near Oman in the
 Strait of Hormuz that was Singapore flagged the U.N.'s international maritime organization saying today that it's pausing efforts to evacuate ships and sailors stranded in the street nonetheless WTI crew is down about 3.5% right now trading around $69 a barrel Brent also down 3.6% trading under $73 a barrel
 also down about 20% for the month data from LSEG though shows that Saudi and Ramco has resumed loading of oil at the rods to Nura terminal in the Gulf after a nearly 4-month halt LSEG says to very large crewed carriers were seen at the terminal with another waiting nearby each is capable of holding 2 million barrels of oil
 so joining me now is Jeff Curry senior advisor at the Carlisle group recently named executive co-chairman of Abacks markets he's also the former global head of commodities research at Goldman Sachs and Jeff it is great to have you on the show a lot to get to across the commodity complex but certainly we need to start with energy have you been surprised to see the down draft that we've seen especially given the fact that you're still seeing these flare ups case in point yesterday in the region
 the the drop in price I'm not surprised we have a surplus today because remember they were squeezing out that trapped oil in the streets going back three or four weeks ago and so that's hitting the market right now
 and put downward pressure on prices and surprise we've gone all the way on a Brent basis to 73 85 would have seemed more appropriate but it's not I like to say it's not a stupid price it may be a little silly because it's over shot but the market is in surplus but that tells us nothing about tomorrow
 tomorrow we still are dealing with what you just said we have hostilities going on in the or in the straight which is going to make other shippers or insurance companies leery to bring ships back in but also let's not forget there's only two little shipping lanes that are open one that hugs the Omani coast and one that hugs the Iranian coast you still can't get much more than a trickle out until you open up that middle part which requires you know making sure
 all the mines are out but nonetheless given the fact you have you know high likelihood of something happening in you know Lebanon you have you know warning shots to ships trying to go across they were in the Omani side not in the Iranian side the ones that were were shot at yesterday which is telling the shippers hey you're doing this on Iranian terms so you put that all together it means physics tell you we're at a deficit and also we're all focused on oil dropping so much
 refining margins on a percentage basis or at all time highs so we have surplus crew that's hitting the market but we have a shortage in products so that shortage in the products is ultimately going to have refineries kick up their runs chasing the good margin so I would view that it says be in temporary I you just took my next question out of my mouth and that was what is it going to take to see refined products start to come back down to earth here to because they're refining capacity piece of it
 and we know that refiner's you know run you know at at tight rates to begin with so even the littlest bit coming off line has outsized impact so what does it take to see that come back to dare I say a more normal place
 well I think for one you know I part of the reason was why the margins remain so strong is you have a lot of refinery outages you know Russia is taking out refinery or Ukraine is taking Russian refineries out we still have the refineries that are in the Gulf
 offline so refining capacity is tight but given where the margins are every refinery in the world given the surplus of crude that's temporarily out there is going to be gunning for those incredible margins
 I mean yesterday I think the 321 crack closed at nearly $50 a barrel almost the same as the crude price which is an indication to you that you know we still have very serious shortages on the product side and these refineries are going to chase it
 I want to go back to this idea of surplus with more oil hitting the market I mean we also know that inventories are depleted so how to balance that into I guess the broader equation here in terms of the supply demand picture
 well I think when when you think about the market with depleted inventories volatility will be extraordinarily high to both the upside and the downside you know I've been doing this for three decades and I tell you every time you get low inventories
 you get price swings that are just unbelievable because the system can adjust it just goes from a hand to mouth and as a result you get a small surplus
 like this where you squeezed out all that trapped you know I like to call it like a pimple all that trapped oil that was sitting in this behind the straights got out over the last three to four weeks and it's hitting the market and putting downward pressure on
 but it doesn't tell you that that's enough to replenish inventories which means when we start to move to the upside it will be equally volatile because you're sitting there on a nice adge equilibrium which creates an enormous amount of volatility
 and so I mean you look at the 2022 European energy crisis just look at the volatility that that periods where it's over with and then boom explodes back up then comes back down
 so high levels of volatility are consistent with the low levels of inventory.
 Okay Jeff Curry great to have you on the show please come back great thanks for having me.
 We got a lot more to come here on morning call including we're getting a look at the state of the consumer following that latest hot inflation
 read hot but in line the CEO of Tanger outlets is here with that we've got morning call back after this.
 Welcome back to morning call we get a fresh read on the consumer later this morning with sentiment figures those are expected to show a slight uptick
 from last month when we get those final University of Michigan report.
 This after the Fed's preferred inflation gauge PCE yesterday showed that prices were rising to the highest level in three years topping 4%
 that was the top line to be clear but also in line with expectations for more let's bring in Steven Yelof CEO of Tanger.
 It's great to have you here and that's really where I want to start because we know inflation has been on the rise last couple of months.
 It's been sticky has it affected consumer behavior.
 The consumer has been coming back to our shopping center since the beginning of the year.
 We had anticipated some headwind yet we see traffic up sales up great strong indicators that are businesses in really good shape
 and we're poised for a really good summer.
 So from your vantage point economy is humming domestically.
 Well you know for the products that we're selling at the price point that we're selling for the consumer that we're bringing into our centers.
 I think that consumer is looking for more than just a shopping experience or looking for entertainment and that's what we've been providing them with.
 Yeah I mean I think about Tanger I think about outlets but you also have full price and that footprint is growing as well.
 So have you seen any divergence or difference in terms of behaviors.
 You know what we like about the full price business.
 It's a far more rounded experience than you get in outlet and outlet is really a power shopping experience.
 And we've done a really good job of adding better food and better entertainment and reasons for people to come.
 We're learning a lot from our full price business that the consumer might come for food but stay for shopping.
 And because of that we're sort of changing the dynamic in the outlet portfolio as well.
 When we break this down across demographics what I think is really interesting.
 I look at these notes Gen Z. You say it's one of the most interesting retail stories right now. Why?
 That young consumer wants to come and shop in a physical environment.
 They want to touch the product. They want to see the product. They want to shop in groups.
 I think they're finding shopping is entertainment again and they want to get out there with their friends.
 They want to go to the new like la la coffee. They want to go to coach believe it or not.
 Coach is now bringing a much younger consumer Ralph Lauren's important again.
 And these are brands that are pretty predominant across our portfolio.
 It's funny. I was going to ask you what brands are seeing the most traction right now.
 So I will ask that question. You just mentioned too.
 But also how is all of this driving the investments that you are continuing to make as you do build out your footprint right now?
 Well sales and traffic are key indicators of our ability to not only charge rent but also bring in retailers that are interested in getting into some of these markets
 where we have shopping centers. You know we're not in the major markets on the coast.
 We're primarily in that southeast region. We're in Alabama. We're in South Carolina, North Carolina.
 And we're finding that these mid-tier markets are places where not only consumers want to shop but also where brands want to position their stores.
 Yeah and of course it's where you're seeing population growth as well.
 An economic growth when you break it down by states and locations too.
 Stephen Yelloff of Tanger. It's great to have you on. Thank you so much.
 Appreciate it.
 Well straight ahead, team up the trading day.
 The company that won member of our call crews says we'll pay the price when it comes to the AI arms race.
 Welcome back. It's time for your call sheet where we look at the topics driving the trading day ahead.
 Crew members today. Sylvia Jablonski from Defiance ETFs and Jessica and Skip from stockbrokers.com.
 Great to have you guys here.
 I got to start with Jessica, what I will call the tech divide, what we've seen.
 Especially as memory chips have skyrocketed and hyper scalers and hardware OEMs.
 We saw this yesterday in trading have fallen because of those higher prices.
 By the way, we're all starting to see it in PCE. Yeah, we absolutely are.
 There is a shift but what I've noticed is it's the cost of AI that is finally coming through within fundamentals and what we're seeing come across.
 But I really think the focus we have to have is on the two year yield.
 So I'm looking at the run up and pulling a lot of technicals and what's interesting when I focus on that.
 It's not necessarily if something is reaching resistance.
 It's too far too fast, meaning every time the two year yield hits a new high, that's when we start falling.
 It doesn't matter that we're elevated, it just matters that it's too high.
 But I think that does have a lot to do with the cost because now we're moving into this.
 What the cat-back cycle that's happening with the hyper scalers are starting to issue equity now instead of debt.
 And so that's going into free cash flow.
 Then the fundamentals are flowing through.
 So it's just an interesting story how the technicals are really now showing up with the cost.
 And it's something to be of concern.
 But I do think it's still a really robust setup right now, Morgan.
 It's incredibly robust.
 Yeah, and to your point, by the way, hyper scalers coming back on things like buybacks too, which also has an outside impact on the market.
 So it's still going to be, when I think about some of the ETFs, some of the funds that you manage,
 you're like the mother of momentum to me.
 And so I just want to get your thoughts on what we are seeing across some of these momentum trades,
 whether it's tech, whether it's what we've seen in semis or whether it's some of the other parts of the market,
 where maybe there's been some risk taking off the table.
 Good morning, Morgan. And I'll take that. I like that a lot actually.
 So we've, we've seen just outsized inflows into some of these disruptive tech themes,
 you know, quantum computing being the biggest one after that Chatchee PT moment and investors,
 you know, really pouring into the AI trade, they started looking at what's next.
 And I think that really came into quantum computing.
 But a lot of the topics that you've talked about this morning with with with your guests have been around AI
 and how this trade is splitting up.
 But I actually think that in the next six months,
 we're going to see different things.
 We're going to see the AI economic mode trade start to pay off.
 So the companies, you know, within the Nasdaq that are going to benefit from AI versus being displaced from AI.
 We're seeing interest in the Nasdaq 100 minus all the software names like an XIGV type of play,
 where investors are really starting to feel for the companies again that are,
 you know, going to benefit from AI.
 And I think that regardless of what we're seeing this week, the demand is there.
 The total adjustable market is there for AI, AI infrastructure, energy, all of the inputs into this.
 And this is just a blip in the road and a potential pullback here on some of the news that we saw out of Korea.
 But the technology continues.
 Yeah.
 And certainly what we saw in the Cosby overnight was pretty dramatic to your point and the week here.
 Jessica, we're having this conversation.
 Geopolitics is still in the background looking further than, you know, Iran striking a cargo ship in the straight yesterday.
 We're going into a weekend how to think about that, how to position around that.
 I mean, is the expectation here that we're just going to get these blips or these flare-ups along the way on the path to peace?
 It certainly happens, but it matters how the market is really perceiving it.
 So the fact that oil is still remaining down means to me that the market's looking through that and expecting a peace deal.
 If we see something move too far too fast, then that's going to be of concern.
 But again, I'm going to point back to the two-year note. I know I keep doing that.
 But as soon as Kevin Worsh started speaking, we were hitting new 52-week highs, which just tells me the short-term inflation expectations,
 which is what I'm looking for from this elevated oil.
 And that is still being priced in from the bond market.
 And that's what really concerns me. But to Sylvia's point over the weekend, it is robust.
 We have to think about the run-up that happened with the S&P 500.
 It was up over 8.8% from pre-Iran conflict, once we finally hit new highs up into June,
 where the equal weight was much less, which means there is, and technology was leading that.
 So there is room for a downfall. It's healthy. It's healthy to do that.
 We've got about 30 seconds left. Sylvia, I want to get your thoughts on the fact that we're coming to the end of the first half of the year,
 which blows my mind to say here, how much are we seeing in terms of rebalancing and coming into the end of the year?
 And what does that mean when you start to factor in things like leverage?
 Yes. Well, Jessica just made a lot of really great points there about the outlook and the constructive setup there.
 But, you know, we're going into Q2 expectations, 22% earnings year over years expected, second quarter in a row of that,
 the seventh quarter in a row of double digits. And so, you know, we have a constructive setup here for year-end,
 regardless of this June's rebalance.
 Okay, thank you to both of you for our morning call crew. I appreciate it.