AI pullback, SpaceX risks and earnings take center stage 6/23/26

 Global market seeing heavy selling pressure as big tech shares sink. I'm Dominic Chouin for Morgan
 Brennan and this is your morning call.
 Good morning and welcome. We're going to kick off your Tuesday morning with a global
 tech stock meltdown. Right now US equity futures are deeply in the red as you can see here.
 The Dow is implied lower by a modest 240 some points. The S&P down by 95 but the tech heavier
 NASDAQ 100 implied lower by roughly 740 points after steep losses for the NASDAQ 100 in yesterday's
 session. Big tech is under heavy selling pressure this morning. The biggest slaggers on the index
 pre-market are names like micron. Marvel technology applied materials Western digital C gate so
 that semiconductor trade seeing some relative pressure so far this morning. Two stocks to watch
 though. Alphabet coming off its biggest one-day slide since May of 2025. 225 billion dollars in market
 value lost in yesterday's session alone. And then SpaceX shares resuming its post IPO slide
 on track for four straight down days after closing down 16 percent yesterday.
 $400 billion in market value gone on Monday. $600 billion gone since hitting its peak post IPO.
 That stock is now trading below its closing price on its IPO day. You can see there's shares right
 now at $149 and change down three and a half percent in the pre-market trade so keep it on
 SpaceX and alphabet. Quick check on yields right now given what we're seeing in terms of selling
 pressure. You might suspect we're seeing a bid to government bonds in the US treasury side of
 things a drop in yields. The benchmark 10 year note yield at 4.48 percent. The two year note yield
 currently at 4.19 percent. And then energy prices also in the red given some of the selling
 pressure here. You can see here US benchmark West Texas intermediate at $73.34. That's off about
 three quarters of 1 percent. Ice print crude futures the world gauge $77.28 off about three quarters of
 1 percent as well. It's pretty much red arrows around the world. So let's go. Lisa Kim is standing
 by in Singapore and Karen show has the trade out in London and Karen we are going to start with you.
 Good morning to you, Dom. Yeah, rock concentration on chip stocks today even though they were
 trading firmer across stateside yesterday and also in the Asian market on Monday. We're really
 seeing a concentration around those chip names today. Now, European equity is more broadly a
 firmly on the back forten early Tuesday trade picking up on that negative sentiment we've seen
 across in the Asian session, but also bleeding into US futures early hours. Germany's DAX and the
 Italian stock market, the FTSE Mib are heading leading those losses. We're also seeing some downward
 pressure here in London and across in Paris. The ranges on the DAX down 1.4 percent similar
 territory for the Italian stock market. Now just zoning in on those tech stocks. They are accounting
 for much of that wider pressure. We're seeing shares of Dutch chip maker ASMR along with ST micro
 and Infinian trade shop lower. You can see the ranges here. 5 or percent on ASMR and even stronger
 selling in other quarters of the market, ST micro, but just to point out, Dom, we have seen some
 bit up action just over the past week. Very strong around the chip makers and that is coming off
 slightly. So a lot of these names still banking gains even for the month of June. So does
 feel as though some froth is coming out of the market, more of a normalization of the trade just
 for this trading month. The question is whether this gains from some traction from here and there is
 no doubt that some of the commentary from Microsoft about the CapEx intensity here has less some
 questions from VS as to whether the large language models are the only way to conduct this trade
 or whether cheaper models less compute is going to be part of the equation from here and that is causing
 some selling at this point back to you. All right, Karen show and London with the latest there on the
 European tech route on that side of the Atlantic. Now let's head over across the Pacific to the
 action in Asia sharp losses, by the way, in South Korea, forcing a 20-minute trading halt
 and the worst day of trading since March. Our Lisa Kim is in Singapore with the update there, Lisa.
 Hey, Dominic. So a tech sell-off painted most Asian stock markets red. South Korea's cost
 be plunged around 10% as global investors took profit from a blistering AI rally index heavyweight,
 Samsung Electronics and SK Heinex each lost some more than 12%. But even with today's drop,
 Korea's benchmark cost be index is up around 90% this year. Let's move over to Japan. Stocks
 they're retreated as investors there too took profit, memory chipmaker, and the most valuable Japanese
 company, Kiocia, dropped 15%. Japanese tech investment giant, South Bank Group, shed 10%.
 And the yen is largely unchanged from when we last spoke yesterday. This means investors remain
 cautious about a potential currency intervention. Japanese finance minister Tatsuki Katayama said she
 held an online meeting with Treasury Secretary Scott Bessent, where they reaffirmed a mutual
 understanding that decisive action in the currency market will be taken if necessary back to you.
 All right, Lisa Kim in Singapore, the latest there on the update and out of Asia.
 Now back to the US markets and another check on what's happening with futures. The Nasdaq is
 leading losses with the renewed tech sell-off wing on that tech heavier index. For more on this story,
 let's bring in Janet Moui, head of market analysis over at RBC, Brew and Dolphin. Janet,
 thank you very much for joining us this morning. If we talk about the way that things are shaping
 up right now, we can see it in the US equity futures, but we saw it play out wholeheartedly
 in places like South Korea. Is this sell-off something that was to be expected, given the massive
 runs we've seen in some of these hot stocks in key AI trades around the world?
 Hi, good morning. Thanks for having me. Yes, I think so. I think our retreat is somewhat
 expected, given the blistering run, basically in South Korean markets, because there has been a lot
 of retail participation is mainly driven by retail actually and there has been a lot of leverage
 being used. So there is bound to be retreat at some point. However, I don't think that the fundamentals
 of the cheap makers or the memory players have changed and also I believe that there's a small
 profit taking and reversal of the very hot and overboss conditions. If these are overbought conditions
 and this is a profit-taking situation, there is a school of thought that this could be relatively
 healthy for the market overall. The pause that refreshes, so to speak, is there a feeling that
 dip buyers will emerge once again as they have literally over the past two or three years,
 especially when it comes to the AI trade and the semiconductor stocks that go along with it?
 Yeah, I think so. If you think about the growth area we have now is obviously AI particularly
 the build-up of the AI infrastructure is going to the heart where semiconductors and memory providers
 and we all heard from industry leaders that there's plenty of evidence that the bottleneck
 is there and would be until at least 20, 28 or beyond. So I do believe that when there's a correction,
 there's still a lot of institutions or retail investors that would like to participate and view
 this as a great opportunity to buy in. We are seeing layers of incremental headlines from some of
 the hyperscaler type companies, some of the bigger tech firms with regard to commentary about AI
 spend, capital expenditures, that sort of thing. Has anything fundamentally changed about this tech
 AI narrative to make you feel as though the dip buyers would not re-emerge after this kind of a
 tech sell-off? So I think the core story is a change that fundamentals are in change as in
 the hyperscaler all businesses around the world have to spend billions of dollars to build out their
 AI infrastructure, which is completely new. And there will be, there will be factories that produce
 output just like human labor. So it is an investment that is likely to be very long term in nature
 and there is no sign of that stopping yet, right? And until maybe the next quarterly
 season, earning season that we may, I don't know if there are news that this is slowing down,
 that could be more detrimental, but so far there is none. But I will say that the risk is that there
 is indeed a lot of capital raising activity from hyperscalers and businesses in terms of debt and
 equity. And these will have to be absorbed somewhat by investors. So their increase in supply
 of this capital is somewhat, that is a bit of a border. All right, we'll see if investors change
 their tune at all. They've been dip buyers over the course of the last few years on this.
 Genetmwy, RBC Brew & Dolphin, thank you very much. We appreciate it.
 All right, to a developing story now as we continue to track the sharp sell-off in oil prices,
 Cruz coming off its biggest drop in almost a week on signs US and Iran peace talks are making
 serious progress. Our Dan Murphy joins us now from Abu Dhabi with the latest on the state of play
 there. Dan. Dom, good morning. Well, some pushback from Tehran this morning on two of the biggest
 issues in these talks, Dom. And that is nuclear inspections and the money. Iran's foreign
 ministry spokesperson Esmeral Barge saying Iran's delegation in Switzerland did not meet with
 the IAEA chief Raphael Grossi during the latest round of negotiations. He also said there's no
 real clear timeline yet for international inspectors to visit Iran's nuclear facilities. And
 that's worth watching because just yesterday Vice President Jedi Vance said that Iran had agreed
 to allow those inspectors back inside the country. It's a key part of the White House's case that
 the diplomatic track is making real progress. And that diplomacy moves to the Gulf today. The
 Secretary of State Marco Rubio arriving in the region tonight for an official visit to the UAE,
 to Kuwait and Bahrain with the Iran MOU, the Strait of Hormuz, and of course regional stability
 really at the top of the agenda. His visit coming after the Treasury Secretary Scott Besson
 issued sanctions waivers letting Iran sell its oil and authorized Iranian crude and refined
 products into the US through at least August. Now it's not clear how much oil Iran could sell
 or how much the US might be interested in buying. But this decision is of course already making waves
 not just in the markets where we see oil prices coming down today, but also in the politics as well.
 President Trump saying Iran's oil money and its unfrozen funds would be spent exclusively
 on American farm goods, including corn and soybeans. But within hours we also heard from Iran's
 central bank governor who contradicted him there, Abdul Nasr Hamati telling Iranian state media
 there's no obligation to buy US agricultural goods and that Iran will buy from whoever offers
 the best price and quality. The president was also asked directly if he could guarantee that Iran
 won't use this oil money and its new oil profits to rebuild its military. Trump saying
 we'll see. He also named no mechanism to stop it and that is also prompting some concern.
 Don, it's back over to you. All right, Dan Murphy with Liz there on the Middle East
 situation. Thank you very much for that. Turning our attention now to London and what's next for
 outgoing Prime Minister Kier Starmer announcing his resignation just less than 24 hours ago.
 Our Rithika Gupta is outside 10 Downing in London with more on that story. Good morning, Rithika.
 Good morning to you, Dan. Well, the mood here on Downing Street much calmer after yesterday's
 dramatic turn of events where we saw Kier Starmer announcing his plans to resign and we know that
 Andy Burnham is now on course to be the seventh Prime Minister in about a decade in the UK. He's
 overwhelmingly the favourite candidate from the Labour Party for the role he's been seen as the man
 to take on Nigel Farage and the reform party. In fact, he could be the only candidate because even
 the former Health Secretary Westreating who previously said he would stand in any leadership
 contest is now saying that he will put his full backing behind Andy Burnham. Of course, we could
 get someone else throwing their hat into the ring, but that is looking more and more unlikely.
 Now, if Andy Burnham remains uncontested, we could see a type of coronation style transfer
 of power and he could be in number 10 Downing Street behind me in the matter of weeks by the 17th
 of July. In fact, the next question would then become how he would plan to govern the UK.
 Would he be able to make the changes that Kier Starmer could not? Because he will certainly inherit
 the same problems and whilst he has the Labour MPs on his side, it may be much tougher with getting
 the bond markets on side. We've seen yields on guilt rising in the run-up with all of this UK
 political drama taking place. Of course, a big part of the move in yields is down to the US
 around war as well. But markets will keenly be watching for the announcement of who the next
 chancellor is going to be to get an indication of what the economic policies could be coming down the line.
 Done? All right, Rithika Goupon, outside 10 Downing with the ladies there on Kier Starmer's
 resignation. Thank you very much for that. We've got a lot more to come here on morning call
 including the Bull Kings for FedEx ahead of its next quarterly report later on today. Plus,
 why the tech world has its eyes on a critical New York City election and what it could mean for
 an industry playbook in November. And then later on, much more on the SpaceX sell off and what
 the options markets are saying about its next move from here. We've got a very busy hour still
 ahead when morning call returns after this commercial break. All right, welcome back. We had a
 market flash for you on Pfizer. The company's revealing an experimental drug failed to improve
 survival in patients with an advanced form of lung cancer that could not be treated with surgery.
 Pfizer requiring that drug as part of its $43 billion deal for Siegen back in 2023.
 Pfizer shares off right now just about one half of 1% in the pre-market trade.
 Part of the bigger sell-off story that we've been reporting on so far. Now FedEx reports fourth
 quarter results after the closing bell today. That stock has up 14% over the past three months.
 The company's results come just a few weeks after it completed the spin-off of its freight
 division on June 1st. So let's talk more about the FedEx story with David Vernon, senior research
 analyst over at Bernstein. He has an outperform rating on FedEx shares. So maybe the key point is
 what exactly you are looking for out of FedEx's earnings report coming out later on today.
 These are the the spin-off of FedEx freight. And what it can now do after that division is now no
 longer part of that company. Yeah, so we're looking for greater clarity into what the earnings
 power of the basic stress businesses is now that FedEx freight has been spun off. There's
 probably going to be some lagging separation costs that may be under weighing on the business.
 But really what we like about the story here is that you have an industrial leverage
 cyclical at the start of what seems like a broadening industrial recovery that has a lot
 of operating leverage when B2B volume starts to pick up. That standalone express business that
 earnings power is really what we're attracted to at this price point. When we take away the known
 value of the cash they should have on the balance sheet plus the retained stake in FedEx freight,
 this stock looks like it's trading around 10-11 times. You just can't find that
 cyclical leverage at that kind of price point which is what we think investors are going to be
 attracted to as we get more clarity and more visibility into what the standalone earnings power
 of FedEx expresses. So the the valuation right now is one that looks more attractive especially
 given what we've seen now with the spin off and everything else balance sheet wise is this
 a company that can pull on some of those levers within that balance sheet is it healthy enough
 for it to be able to kind of leverage some of that into growth prospects down the line.
 It's probably the strongest I've seen it in in in 15 years of of of covering the companies
 in equity analysts and and probably 25 years of being around transportation and industry.
 They have a huge amount of cash on the balance sheet. They should be sitting at about 15
 billion dollars and so on free cash. They've also got the potential to additionally do you
 ever right? They retain 20% of FedEx freight. That's within the FedEx Express company and they can
 either dividend that out to shareholders or exchange that for debt on a tax free basis which
 gives them an even better opposition on the balance sheet side. So I think the idea to spin off
 FedEx freight has given them a little bit of extra cash. The business has been improving on its own
 and if we start to see a broad new typical recovery you're going to see a business that has
 a lot of leverage to that and is in a very unique position. We're estimating the company is guided
 to free cash earnings per share above net income. That's a very different situation than you've
 had with FedEx in the last 20 some ideas. So that business cyclicality that you just referred to
 as you keep an eye on the global macro that's developing here. Obviously we still have a war
 raging in Iran that has some issues with global supply chains. Is there anything that you can see
 from a macro perspective from your perspective that could derail the FedEx story or even the broader
 transportation logistics story for everybody in the industry? Well I think the broadening industrial
 economy now is really levered around data center and data center build out. So that's the real long
 tent, long pool in the tent right now. Housing store means we auto store in May's week and you
 can look at those as glass staff full glass at empty. We're not building housing at a rate that's
 sustainable for the population. Auto sales are down average car ages are getting longer and longer
 and longer and longer. So there should be some recovery in those parts of the business as we get
 further away from some of the geopolitical tensions that you mentioned. Obviously the war in Iran
 doesn't necessarily screen. Hey we've got a clean shot on cyclical recovery but I do think that
 the underlying drivers in the U.S. economy are very very strong. For the first time in a long time we
 have the industrial activity actually leading that. So when we think about the hyperscale or build out
 one of the things we're seeing as we look across broader transports is there's just no air freight
 capacity to be had. At Hall out of Asia Pacific and the U.S. is just just just chocolate block full
 of demand for semiconductors and what you need to build out data centers going forward. So right now
 you have that really being the leader and then if that can follow through to the broader economy
 I think you're going to be in a very good position but stock are an interesting story the FedEx
 there outperform there. Thank you very much David Vernon over Bernstein. We appreciate
 a good luck with the earnings report later on this afternoon. Great thanks for having me.
 All right well straight ahead on the show here Black Friday in June that's kind of what it is right
 this is Amazon's Prime Day it's delivering a big boost to the entire retail sector but some
 stand to gain more than others on a relative basis we're going to break down the names to watch but
 first a check on shares of caterpillar which have top $1,000 for the first time joining Goldman Sachs
 as the only Dow components trading above that vaulted mark. The stock is up 80% this year and is
 the top performer in the overall Dow. Thanks in part to what else a strong AI narrative and demand
 in the industrial sector caterpillar is also on track for its best first half performance
 on record. Wells Fargo this morning raising its target price on that stock from $1,050 to $1150
 morning call is back after this. All right welcome back we got another marketplace for you this time
 on IBM shares bucking the broader tech trend so far today and sell off mode those shares are actually
 higher on a double dose of upgrades one from JP Morgan going from neutral to overweight
 news price target there of 291 bucks and then Morgan Stanley moving its price target from
 225 up to $267 they remain equal win on the shares but IBM in a sea of red for tech this morning
 is actually up 3% in the pre-market trade. Well voters in several states are heading to the polls
 today casting their ballots in primary contests including one New York City district where the AI
 industry is spending very heavily on a single race seen as a key battleground for the technology's
 future Emily Wilkins joins us now with more on that NY12 story Emily. Hey Tom well yeah look right
 here in Manhattan it's become ground zero for the fight over how much the federal government should
 be regulating AI now the voters here have been bombarded with more than 20 million ads and spending
 from AI super PACs going head to head to what degree this regulation should be why because
 this is the only race where the two largest AI PACs are really debating over one candidate is
 assemblyman Alex Boris and he was a key player in passing one of the first major state level AI
 regulatory bills and if he wins the primary today he's basically all but guaranteed to be sworn
 into congress next year where he wants to do the same thing on the federal level now opposing
 Boris is this pack called leading the future it's backed by executives from open AI and recent
 horror wits, palantir and perplexity and they've spent at least 8 million per the federal election
 commission on this race and while they do support regulation that benefits the workforce keeps kids
 safe they oppose rules that could delay models and lead to the US falling behind China now compare
 that to the other major pack in this race public first action it's backed by anthropic in part
 and it's spent 11 million to support Alex Boris now they want to see models be regulated not just
 on the outcomes but on their design something that Boris tells me he agrees with regulation is not
 going to be the reason we win or lose this race for us China we can invest in AI that's meant to help
 doctors diagnose disease without encouraging the AI that's helping health care deny plans we can
 get the best of both worlds on Capitol Hill lawmakers are making progress on bills addressing kids
 safety online with AI but only a handful legislative weeks left it is likely this issue is going
 to be the responsibility of the next congress don't all right so so Emily turning back to that
 New York congressional primary I just want to cut a note that we we have some data from Kalshi
 they're putting out odds of Micah Lashir winning the democratic nomination at 74% with Alex Boris
 at 29% an interesting move here given the odds in these prediction markets for this highly contested
 race and the narrative that's being spun around AI being the focal point of it how exactly do maybe
 voters reconcile some of the issues between Lashir and Boris given the AI story and everything else
 that New Yorkers want to deal with at this point as well well Tommy no actually got to speak with a
 couple voters yesterday and what they told me is that yes AI has become a bigger issue to them
 than it was in previous elections but that doesn't mean that things like affordability housing
 these key kitchen table issues that Americans often decide elections on those are still weighing
 heavily on voters minds and of course as these AI packs have been bringing a lot of ads and looking
 to play in races across the country sometimes the ads that they run don't even mention AI and that kind
 of I think tells you where it stands as an issue also should note for from from from Micah Lashir
 it's not that he's anti regulation or anti AI he actually voted for the bill that Alex Boris brought
 to the New York State legislature to try to regulate AI a bit in the state and he said on his
 website that big tech companies need to be held accountable so it seems like he might be closer
 to where Alex Boris stands so even if he is elected that doesn't necessarily mean a huge shift
 in terms of what we're going to see from AI policy. All right AI takes on Manhattan and vice versa
 Emily Wilkins in Times Square New York City thank you very much. All right still on deck for the show
 Apollo's private credit crunch resumes Oracle takes an axe to its head count and drivers in
 California take AI powered gasoline stations to court. Morning call continues next.
 All right welcome back I'm Dominic Chiuin from Morgan Brennan welcome back to morning call we're
 going to kick off your Tuesday morning yes with that graphic it means global sell off it's a global
 tech stock meltdown right now and US equity futures are deeply in the red especially for the tech
 heavier NASDAQ the NASDAQ 100 trades implied lower by nearly 700 points at the opening bell right
 now the down not as much it's down but by about 212 points so it's notable but not nearly as bad as
 the NASDAQ and the S&P 500 implied lower by roughly 85 to 90 points steep though selling in Japan
 and Korea already the cost being Korea down 10% with a trading halt triggered at one point so
 circuit breakers were in effect given the sell off in South Korea European markets are also
 offered now in early trading as well now pretty much lower across the board back here in the US two
 tech stocks to watch our alphabet coming off its biggest one-day slides since May of 2025 in terms
 of market value 225 billion dollars was erased in yesterday's session alone and then SpaceX shares
 resuming its post IPO slide on track for four down days in a row after closing down 16% yesterday
 that equates to 400 billion dollars in market value gone on Monday 600 billion dollars gone total
 since it hit its peak post IPO that stock by the way is now trading below its closing price on its
 IPO day right now those shares are trading at just about a hundred and fifty dollars on the number
 down about three percent also a quick check on yields to kind of complete the story here for you
 we are seeing a bid to us government bond prices and the safety trade there forcing yields lower
 down somewhat the 10-year note yield 4.48 percent the two-year note yield 4.19 percent checking
 some of this morning's latest headlines Oracle says it's cut its global workforce by 21,000
 employees in the past year much larger than previously reported Oracle citing AI as a key driver
 there but says the reductions lead to about 1.8 billion dollars worth of restructuring costs
 Qualcomm is reportedly in advanced talks to buy AI infrastructure software company modular
 for around four billion dollars with a deal coming in the coming weeks and then the
 Senate just passed a bipartisan bill aiming to boost the availability of affordable single-family
 homes the measure now heads to the house for final passage before hitting President Trump's desk
 and a group of California drivers are filing a lawsuit against gas station owners including
 Wal-Mart, Marathon, BP and 7-Eleven for using AI to illegally collude and manipulate gasoline
 prices across their more than 1,700 filling stations those allegations are pretty serious California
 has already had some of the highest gasoline prices in the state so we'll keep an eye on those
 and then Apollo global is once again putting limits on withdrawals from its largest non-traded
 private credit fund for retail investors camping them at just 5 percent of outstanding shares
 after investors asked to redeem nearly 17 percent of those shares speaking earlier on CNBC
 Apollo global president Jim Zelter brushing off concerns of any renewed private credit crunch
 certainly I think that the noise in private credit ironically the actual performance of the
 vehicle's year to date is quite strong not only in our vehicle but some several of our peers so
 the actual performance in 2026 does not match the concern about redemptions because that really is
 a issue that will be identified over the next two or three years all right now from private credit
 to the consumer and Amazon's four-day prime day event kicking off today and what's turned into
 pretty much a black Friday in June Amazon's not the only big winner here Adobe expects consumers to
 spend north of get this $26 billion across all online retail during this event more than they
 spent on black Friday and some cyber Monday combined last year joining me now to break this down
 as M squared capital founder Matt McClintock formerly Raymond James and Barkley's retail equity
 research analyst covers many of these names including Amazon and the consumer so take us through
 what the expectations are from a fundamental analyst standpoint when it comes to Amazon's prime day
 and what impact it could have on the retail spending picture yeah good morning Tom so essentially
 we expect this to be a very strong year there's there's several reasons why the consumer faces a
 lot of incremental pressure versus last year the big ones that we can talk about are the tariffs
 tariff pricing and then this year it's been gasoline inflation right so a lot of that's made
 things unaffordable and so what we've seen with consumers are shopping more around holidays where
 there's normally deals that you can see right and so those those holidays Easter are very strong
 for the retail industry Memorial Day very strong what we're hearing this as you just highlighted this
 Amazon prime day is now bigger it's by far bigger than both Easter and Memorial Day and it's approaching
 what we see with black Friday so the black Friday the summer which is what you just talked about
 it says that the consumer it's it's kind of like a continuation of this hay-shaped economy where
 the consumer finds things unaffordable they shop around the deals then there's a wall in activity
 until we have another deal right and so we expect that to show because the consumers pent up demand
 is driving they're waiting to buy these things we expect the sales growth to be better than last year
 and we're looking for something like seven percent for Amazon growth which is probably on a
 like for like basis that's a little bit better than maybe the mid-single digits that we saw last year
 the consumer stresses are no doubt there I mean I see them every day I go to the gas station and
 fill up and how much more it costs now versus what it did at some points over the course of the
 past year are these calls to action right these these special event days big enough to a point where
 consumers have altered their behavior to wait for that kind of spending to do it just on days like
 prime days like cyber monday like black friday and some of the other catalyst type sale days throughout
 the course of the year is that something we can expect to continue or as we get better balance
 sheets as consumers do we not think about that as much anymore I mean a hundred percent I think
 you're spot on here Dom so if you go back to when consumers change their behavior they really
 don't on a regular basis they do it kind of a little bit on the margin until there's a big shock
 right so if you go back to the global the global find the GFC the global financial recession
 the the the off price with tj max Ross they were growing a little bit they were nice little
 growth stories and then the global the global financial crisis hit and then people were forced to
 look for deals and so that's when you had this massive acceleration in off price shopping right
 and so what we've seen over the last couple of years honestly this whole decade is you've
 seen a lot of inflation the consumers have been hit with the shock and now they're trying to
 adjust their behavior so they can still buy the things that they need like dyson vacuum cleaners
 and things like that but they they're not doing it whenever they feel like they do it they know
 they can only they have to wait for these specific days and so I think that's going to be a
 continuation it's almost a continuation of what we saw with holiday shopping so holiday shopping
 used to be on the book and so normally consumers would shop increasingly consumers would shop
 black Friday and then there would be a wall and then they would shop the week before Christmas right
 now we're just seeing that with all holidays throughout the year so maybe not dyson but trading down
 to shark for me sometimes you can think about it one final question really quickly before to let
 you go which retailer in your mind is best positioned in this current economic environment these
 are the consumers they serve well the best position is most likely Walmart right they're seeing a lot
 of trading down into their demographic from higher incomes coming down they're buying product
 from Walmart their Walmart plus has really helped expand their accessibility to people who didn't
 really want to shop in the store now they don't have to shop in the store but Walmart's price
 for perfection so in terms of a stock pick we think targets a little bit more interesting at this
 point target had its best for the first time in five years target outcomp to Walmart last quarter
 a little bit of that's because of tax refunds so we're not really sure if that's just a one-time
 thing but some of that's because of newness that they're dropping into the store and they're expecting
 to expand that newness and normally the timely by target is when they're increasing newness right the
 time to get out of target is when the newness the product has become stale we think we're in the
 beginning stages of that newness acceleration all right that McLean talk m squared thank you very
 much target Walmart some of the key picks that we appreciate it awesome thanks all right a lot
 more to come here on morning call including a fresh test for the tech trade on tap after the
 bell the key numbers investors need to watch from cerebrus and its first earnings as a public company
 morning call is back after this cerebrus shares down 4% in the pre-market trade today
 all right welcome back we are watching shares of cerebrus set to report earnings after the
 closing bell today its first quarterly report since going public just over a month ago that stock
 is up over 20% during that span our Christina parts and evelis joins us more with what to watch this
 afternoon for cerebrus it's been a hot stock but it's down 3.5% today it's a broader tech sell
 off I get it but there's a big story here for cerebrus yeah and the reason it's a hot stock is it
 popped what 68% on its debut just in May so at IPO last month it's down roughly 28% from that
 first day closed as of yesterday's closed the market is still working on how much to pay for
 the story and that's why you're seeing this sell off most AI chips though if you want to know
 about the company keep memory separate from the processor so data has to travel back and forth
 while cerebrus actually builds the memory directly onto the chip so it's one slab of silicon
 the FT says the dinner play one of our colleagues calls it a frisbee regardless it's very very large
 which is why I can respond to AI queries so much faster than smaller chips demand isn't necessarily
 a question right now open AI has already agreed to pay for a set of amount of capacity used or not
 which is great news and then Amazon is building cerebrus chips directly into AWS pairing them with
 its own trainium chips launching in the coming months although we do need some details on that
 so this report is really about execution and delivery of those chips so we're going to watch
 three things revenue Wall Street wants just roughly around 180 million dollars more than double
 last year margins cerebrus is definitely ramping up data center capacity to deploy its chips
 and those costs are definitely dragging across gross margins until 2027 and then supply so listen
 for any updates on how fast that open AI capacity is coming online and whether TSMC that would be
 Taiwan semi can actually scale chip output nearly tenfold to meet demand already signed up for
 there is a delay there is a bigger red flag than a revenue miss or delay from TSMC and we know
 SpaceX is riding the same scarce infrastructure premium right now post its IPO that shares down as
 well but cerebrus is really the live test of whether that premium holds once real numbers are on
 the table this afternoon so cerebrus in that story if you put it vis-a-vis some of the other hot
 tech IPOs that have come out over the past couple of years especially those that have had AI
 stories tied to them you call this a litmus test how exactly do investors play out a story with
 regard to what they see as a bullish outcome for this earnings report as opposed to one they say
 maybe we should take profits in this trade because it's been hot so far since the IPO
 it's really about whether they can say that they're ramping up the production of their chips so
 that's the issue they do rely on one customer and that's open AI that's the vast majority of their
 backlogs so we're not going to get any announcements about new customers in this earnings report so
 I'm sure a lot of our investors that follow this company will know that but I think the key is
 can they execute on delivering those chips in a near-term time frame if they cat if they talk
 about any delays if the if there's TSMC's capacity is that the max and there's not enough room
 for cerebrus trips then I think that is a worrying sign for cerebrus investors because they're like
 this is going to take too long oh and the stock's already down maybe I need to get out.
 All right Christina Parts and Lambelus on the cerebrus trade here and the earnings after the bell
 thank you very much for the story there we'll see you later on today. Now straight ahead on this
 show the morning call crew assembles team up the trading day ahead and another tech sell-off
 that's taking shape around the globe we're back after this. All right welcome back it's time now
 for your call sheet when we look at the topic striving the trading day ahead today's pretty straight
 forward the crew members are Matt Powers of Powers Advisory Group Tony Zhang of options play and Jay
 Woods of Freedom Capital Markets Tony and Jay by the way also CNBC contributors we should put
 that disclosure out there. Now the first topic is the global tech sell-off we saw South
 Korean Cosby drop about 10 percent we triggered circuit breakers at one point there that's how bad it
 got in South Korea it's only one market Jay but it's one we have to pay attention to because it
 has become the poster child if you will for that red hot semiconductor slash memory chip trade.
 Oh it is the memory chip trade when you look at a chart of the Cosby and that's what we're referring
 to that is really selling off so much this morning it was parabolic and it got and we've been
 talking about our stocks here in the US got a little too far out over its skis and we're getting a
 pullback what was interesting the technician and me looking at that chart the momentum was starting
 to lose itself that RSI was making lower highs every time the index was going higher so now what
 we're seeing is more of a reversion to the mean it's not that all of a sudden this trade has changed
 it's over but we're getting back to levels where someone that's been watching this on the sidelines
 can step in and we're going to see that with micron when that comes on full display
 Wednesday after. Matt this sell-off has been interesting as well because it is one that has played
 out in the past over the near and medium term a number of times tech stocks AI stocks chip stocks they
 sell off they do it relatively dramatically but at some point people just step right in and buy
 him up again is that going to happen this time around yeah good morning you know I think it's just
 maybe some froth being taken out I think it's a good way saying it normalization I don't you
 don't think it's surprising at all and you know the mag seven they're being punished for spending it's
 in they're hate to say it but maybe blindly throwing around you know what 650 billion into AI and
 we pray it's not a trap that they can't get out of and you know that's become a major part of it so
 the market's maybe woken up here just a little and it's finally paying attention you know mag seven
 collectively off 2% this year the kicker is that that spending has done nothing other than maybe
 benefit chip makers and regardless of what we're seeing here overnight chip makers and in this
 parabolic move in semis you know up a hundred percent versus down to in mag seven names so
 so in my view semis you know they make up a record almost 20% of the S&P 500 so it proves that the cash
 and now some of the debt bleed from mega caps is feeding these hardware names you know they're
 walking away with not only all the profits but also like endless demand you could say so it's a
 huge shift that's happened quickly and we'll see all this plays out here today all right speaking
 of endless demand for the first couple of days out there SpaceX looked like it had endless
 demand for those shares and it went up it went off like a rocket I mean no pun intended here
 Tony a lot of the options market out there was richly valued in SpaceX going into these last few
 days here and we've seen some of the downside play out how exactly is the options market viewing
 what's going to happen for the next few months in SpaceX yeah so you know we have two timelines
 that I think are important you have the September timeline which is when the lockout period ends and
 you have potentially up to close to 40% of the float that in that insiders could potentially sell
 and what we're seeing is some really large contracts traded in that September expiry buying 9,000
 contracts of the 120 puts so we're talking well below where we're currently trading right now well
 below the IPO price paying about seven and a half million dollars in premium to bet that by September
 will be meaningfully below you know 120 so that you know aligns with when the lockout period
 comes into play and then we also see some hedging going out to December 2027 so really
 looking for protection all the way out through the end of next year 10,000 contracts traded you
 know buying those 135 puts out to December so a lot of concerns from institutions of some further
 downside in this particular stock and it's not surprising given the fact that we're trading at close
 to a hundred times revenue in this particular stock everyone was watching that 150 level right now
 pretty closely here Jay we've got a lot of earnings reports coming out this week we're still
 in earning season right now when it comes to maybe micron FedEx after the bell today KB home which
 one are you looking at the most closely well I think we all have to look at micron I mean that
 that is representation of what we've seen in this rally and I think people are going to get that
 blowout quarter that they expect but I don't expect the stock to continue this rise it's fallen
 six of its last eight reports even though it's destroyed on earnings a pullback to the 20-day
 moving average brings it just to about 988 so if we get a 10% pullback it's going to make headlines
 just like South Korea is making headlines today but I think the quarter they're going to blow out
 it will give people an opportunity to possibly buy this stock it's done it two of the last three
 quarters FedEx watch 345 technically and watch darkened restaurants we don't talk about that
 get an idea of how the consumer spending 220 major resistance there let's see if it can break
 above it all right thanks for our morning call crew Jay Woods Tony Zhang Matt Powers we appreciate
 the conversation