AI Momentum Outweighs Geopolitical Risk? 6/22/26

 Starmer resigns as futures fight for gains.
 I'm Morgan Brennan, and this is your morning call.
 Well, we're kicking off your Monday morning with some breaking news.
 Just moments ago, UK Prime Minister Kieres Starmer announcing his resignation.
 Starmer speaking at 10 downing just moments ago, you can see that on your screen.
 Let's have a listen to what he had to say.
 I will resign as leader of the Labour Party.
 I have spoken to his Majesty the King this morning to inform him of my decision.
 I will ask the National Executive Committee of the Labour Party
 to set out a timetable with nominations opening on the 9th of July and completed by the summer recess.
 In the case of a contest, this will ensure a new leader is in place
 before Parliament returns in September.
 I will remain in post as Prime Minister until the contest is complete.
 Well, joining me now with Reaction Steve Sedgwick in London.
 Also, Fedwatch Adviser's Ben Emmons right here in studio with me,
 but Steve, I want to start this conversation with you, especially as we do see markets in Europe react
 to this news here.
 We're now poised to potentially, with the election of Andy Burnham last week,
 assumption that he now makes a run for this, that we could be poised for what would be the 7th
 Prime Minister in a decade.
 Yeah, actually, I want all of our viewers now to try and remember all 7 Prime Ministers since Brexit.
 No? Okay, well, I'll do it for them then.
 So we had David Cameron, it was 10 years ago, 10 years ago, I think tomorrow, the day after,
 but we had the 2016 Brexit vote and Cameron, but you know, he looked action and he resigned,
 and then he handed over to Theresa May, and she lasted, well, the best part of three years,
 and then I was there in Downing Street when she got up in front of the rostrum,
 and did the same thing as Keir Starmer.
 And then Boris Johnson, who can forget Boris Johnson?
 He lasted another three years, then Liz Truss last another three weeks, all there they're about.
 It wasn't very good because he had this disastrous budget,
 where she was going to promise all kinds of spending, but not enough revenue coming in.
 And then Rishi Sunak, he limped on till 2024, and that was the last of the Conservative Ministers,
 and then there was this landslide, honestly Morgan.
 It was a landslide with the Labour winning, a huge majority in Parliament,
 albeit on a small share of the vote, and that's quite important as well.
 So he had this big majority, 174 seats in 2024, new broom, new country, new economy, new everything,
 and he just did his greatest hits there in the five minutes of his speech there.
 But the problem was the policies weren't enacted with enough confidence for the economy
 and the population to get behind him.
 And what's happened in the meantime over the last couple of years
 is that his support has eroded and by-election after by-election,
 Labour have lost, and reform has come up the rails to the right with Nigel Farage's post-Brexit party.
 And the Greens have come up to the left with perhaps a more socialist vision of the future.
 So the actual support for Labour is dwindling and dwindling until
 until this last by-election were Andy Burnham last week.
 He's not even MP yet, he's got to go to Parliament today to become an MP,
 had a stonking great win, a really big win in a place called Greater Manchester,
 a place called Macafield, and he has been in the meantime in last seven years, nine years,
 at the mayor of that area, and he's got the trains working, he's got the buses working,
 so people are thinking, oh, in the Labour party, has this guy got that electoral magic
 that's going to get us re-elected?
 Now look, I'm most hastened to add, we don't know that Burnham's going to be the next UK Prime Minister.
 We think he probably will be, but is he going to face a challenge from
 likes of West Straitian others? We don't know, but the odds are that there will be a
 procession rather than a contest.
 Yeah, great, great layout of what we should be watching here, Steve.
 Just to follow up on it, though, how much of this, and by the way, I say this sitting in the US,
 where we have a very similarly distressed fiscal picture, if you will, how much of this is
 being driven by the state of the economy and the fiscal picture?
 Do you know, the fiscal picture is not great.
 Look, let us be brutally honest about it, whether you're in DC, whether you're in Brussels,
 whether you're in Paris, or in London, the fiscal position isn't great, but it's not particularly
 much worse than anyone else out there. Our debt to GDP is very similar to what you have in the United
 States. It's very similar to what we see as the mean around Europe, albeit with the Germans,
 are having a lot lower debt to GDP, although they're under free, do you mean it's
 they're spending a lot more? So, actually, the UK economic fundamentals are not particularly bad.
 In fact, he said during his speech that you're looking at pictures of now, he said, actually,
 we're growing faster than the rest of the G7, which is kind of true on one kind of level as well.
 Unemployment remains low as well, but the fact of the matter is the MPs themselves who don't get paid
 vast amounts of money, they get paid roughly $130, $135,000 a year. They're very worried about their
 jobs. I mean, they're human beings, believe it or not, just like you and I, even though they're
 politicians, and they're worried that they're going to lose their job in a couple of years,
 and they want someone who has electoral magic to perhaps elongate their position and their jobs
 that don't have to go and look for new jobs. We don't have to have, by the way, a new general
 election, which is when the whole country goes to vote on parties until the middle of 2029. So,
 yes, don't get me wrong, and you're looking at the guild yields now, which trade at a premium
 to where they're trading on 10-year bonds in the States or premium to what we're seeing over in
 Europe as well, but part of that premium, it's not just about politics, it's also about the fact
 that we have higher inflation. Yeah, Steve Sedgwick, thank you. Great to start the hour with you.
 I'm going to turn this now to Ben Amman's, to the action, well, to what this means more broadly
 from us. I just used the word distress, you know, it probably was not the right word. I will say
 stretched, unsustainable, fiscal picture, spending issues that have certainly been in focus,
 including with the administration here in the US. So, when we talk about the UK, why should
 global investors be paying such close attention? I think Morgan and what happened in 2022 was the
 sudden wake-up of like how bond vigilantes came to the surface and looked at the UK saying like,
 you're just timing, you're spending the wrong way, like you're throwing all those gas on the
 fire, and these economies are not ready for that. And suddenly they had this eruption. And that was
 quite unique at that moment in time. Now, let's face it that the UK bond market is really different
 than ours, because it's just very fragmented and controlled, I think, mostly by the pensions. And
 there's a lot of underlying derivatives there at work that cost that explosion. But nonetheless,
 the market reacted in this physical, it's called fissure like this, this tension that suddenly appeared
 that markets wanted to have an risk premium. And that's in place there is Steve just said, like UK
 yields have never converged back towards European yields or US yields, because people realize that
 whom ever is going to be the next prime minister is going to face the same promises, let's trust,
 you're going to have to do something about this physical spending against labor market performance,
 basically the issue. And it seems to be a real tension against this really illiquid bond market
 that gets quickly fired for that matter. Yeah. But you know, Steve just mentioned inflation too.
 Inflation is obviously an issue globally right now. We're dealing with it here in the US,
 and I do want to get your thoughts on what we heard from the Fed Chair, the new Fed Chair
 Warsh last week certainly ushering in an era here. You can make arguments around this in Japan
 right now too. We can just go around the world and have these conversations.
 Totally. So it looks like because of the pandemic, that is such an incredible physical spending,
 now we're going to deal with the bill. And that bill is the same everywhere. It's the same credit card.
 And the issue is that investors don't have a lot of patience. They're going to continue the
 price in risk premium until there's enough yield on these bonds that they say I get truly compensated
 for this fiscal risk that could at some point lose control. In our own case, we're dealing with
 a real significant problem. And the only reason we haven't had a higher premium towards out of
 bond markets is because we have so much liquidity in our markets still fortunately. But if the
 Fed gets out of the game, which it really depends to do, I think things can change.
 Yeah. Well, we know and there was a lot of back and forth and maybe some hiccups along the way
 over the weekend. But we do seem to be trending towards a possible peace deal with Iran here,
 the U.S. and Iran. And if you look at oil prices this morning, it looks like it was a mixed
 picture of whether you're looking at WTI or Brent, but we're still well under $80 a barrel.
 So how does that factor into all of this? Well, that's an important point. We are potentially
 going a little lower on oil. And oil prices, gas prices have a huge effect on headline CPIs.
 I do think that we're going to get a little bit lower inflation as the starting out of July.
 If that sets a bit of a trend, that would actually change the picture because we've priced in this
 rate hike towards Iran, really based upon inflation, just that, not nothing else. So I've come
 built to conclusion that this rate hike might be misprice, so to speak, just purely because
 the market took the guidance from Waller first in this speech and then the Doppler last week.
 And now we know that they want to change that whole sort of messaging. So I wonder like if the
 inflation data comes out softer than July, not this PC data this week, but in July,
 that you're going to get a different market reaction. I think that the rate hike will potentially be
 somewhat priced out because we're maybe going on a path of lower inflation. Okay, Ben Amin's,
 great to start the hour with you. Thank you. Thank you. Well, let's turn to the action in Asia as
 well. Another milestone for one major chip maker, Lisa Kim joins me now from Singapore. Hi, Lisa.
 Hi, Morgan. Most Asian stocks finished the session in the green. And as you mentioned, South
 Korea's memory chip giant, SK Hynex rose nearly 6% hugely outperforming the benchmark index.
 This on the back of local media reports, the US SEC is expected to soon announce this decision
 on whether to approve the company's ADR listing. SK Hynex has now become the most valuable
 South Korean companies surpassing its rivals, Hamsung Electronics. It's really a stunning turn
 around for SK Hynex because in the early 2000s, it was almost sold to micron and it shares were
 viewed as a penny stock. Let's drift over to Japan. The stocks there rose for the eighth consecutive
 session. Physical AI stocks led the gains after Japanese media reports that the government plans
 to invest more than two trillion US across a number of sectors, including AI by 2040. But that is
 also what reason that push Japanese government bond yields earlier in the day. Back to you, Morgan.
 All right, Lisa Kim. Good to see you. Thank you. We got a lot more to come here on morning call,
 including President Trump changing his tune on Enthrophic Plus. Coke gets its day in court against
 the IRS with some $20 billion at stake. And later, the Google Gemini brain drain continues with
 another key executive exit. We got a very busy hour still ahead. We haven't even brought you
 US stock futures. Those are higher right now. We're back after this.
 Take a look at your screen right now. You got US futures are poised for a higher open fractionally
 right now. The S&P, about one tenth of 1% now. A poised to open up fractionally now as
 stock as well. This after gains both for Thursday in the shortened holiday, shortened trading week
 last week and gains for the week. If you take a look at Treasury yields right now, you can see
 higher across the curve. US 10 year Treasury 4.48% and Fed sensitive to your Treasury yielding 4.21%.
 Let's get to a developing story in Switzerland. The US and Iran making quote encouraging progress
 in peace talks with both sides agreeing to a roadmap for a final deal within 60 days. Even as
 President Trump keeps military pressure on the table with new threats, both sides set to remain
 at the negotiating table throughout the week. So we're watching energy prices. You can see
 a bit of a mixed picture on your screen right there. WTI is about half a percent for trading right
 around $77 barrel and Brent is down about 1.6% trading just under $80 a barrel. Let's get to
 our Dan Murphy and I'll be with the latest Dan. Hey there Morgan, good morning. The story out
 of Switzerland is positive. At least on paper, we may have just seen the first tangible signs
 of de-escalation between Washington and Tehran and these direct talks have yielded some results
 at least so far. According to a joint statement from the mediators Qatar and Pakistan,
 the atmosphere at this meeting was described as positive and constructive. The two sides now coming
 up with what's being called a roadmap of sorts for further talks and crucially an agreement
 in principle to safeguard commercial shipping through the strait of hormones. Now the details on
 that remain scarce but market certainly taking it in their stride. Oil prices continuing to
 pull lower on the prospect of more oil flows. Although it's still not clear exactly what this
 mechanism is or how it might work. Either way, attention now turning to the technical talks continuing
 through the course of this week. Negotiators have now set a 60 day target for a broader agreement
 with working groups set up now focused on sanctions on nuclear issues and on implementation.
 For markets though, the strait really remains the key story here. Any indication that
 shipping flows are normalizing could ease pressure on cruise prices even further and reduce
 concerns about supply disruptions from the Gulf. The big wild card, at least according to sources
 on the ground here, is going to be Israel and Lebanon. President Trump, of course, warning of
 possible military action if Iran fails to curb Hezbollah. Iranian officials also say the durability
 of a ceasefire in Lebanon will be an early test of whether this diplomatic track can survive. Morgan.
 Okay, Dan Murphy, thank you. It's a perfect tie up for our next guest. We've got one major proxy
 for peace talk progress. Remains traffic through the critical strait of hormones. Dan just
 mentioned it that the strait is the key story for investors. It remained effectively closed since
 the start of Operation Fury. But now early indications that tanker traffic is starting to make a
 comeback albeit nowhere near pre-war levels. But we're getting there, trending in the right direction.
 Latest numbers from U.S. Central Command showed 55 merchant ships passing through on Saturday despite
 Iran threatening another closure. On Sunday, U.S. Energy Secretary Chris Wright claiming as
 many 67 ships had passed through between Saturday and Sunday. Joining me now on the CMBC newsline is
 Ami Daniel, co-founder and CEO at Maritime Intelligence Provider Windward. Ami, it's great to have you
 on the show. What is your real-time data showing? Good morning, things for having me. I think it's a bit
 more complicated that. I was listening carefully to every word that you guys have been saying. First
 of all, it's hard to get the exact number because as opposed to any other time in history, my bed is
 50 to 60 percent of the traffic is completely dark. These are ships not transmitting anything. By the
 way, also not using their radar in the fear that Iran will attack them or any comms. So this is
 full on operational Navy modes for ordinary tankers. That's why it's really hard to get the exact
 number and I'm sure sense calm though what they're talking about. Having said that, I'm not sure
 that's a question. I think the question is what's the confidence in shipping lines and traders
 to be able to trade normally in the straits. And that is absolutely without a doubt not there yet.
 What will it take to get there? I think certainty, if you remember, if you kind of go back in the
 last 60 days or 70 days, I think it has been announced 12, 13, 14 times that the straits are open
 and now they're closed. They're open now they're closed. They're open now they're closed. So I
 think it doesn't really work that way. You don't want to risk your sellers. You don't want to risk
 an oil spill. You don't want to risk something very bad happening unless you have certainty.
 At the end of the day, this is a commercial matter. So for people like Abu Dhabi National Oil
 Company, which at least in the media has said that they've been transporting oil darks for the
 last month or so, that is a national security issue. Their ability to export oil. For any other
 commercial ship shipping company, is it a national security issue? No, it's money, right? Okay, so
 money will wait another month. Remember because the straits are closed, freight rates are a big time
 so they're making that much more money in other places around the world. So from a business perspective,
 the markets, like always, need certainty. And I realized that we're seeing this with a lot of
 dark vessels transiting potentially here. So the data picture is perhaps incomplete. But how much
 of this is crude tankers versus other types of commercial vessels? I mean, there's been a lot of
 focus on some of the other things that have not been able to move that would be transporting things
 like helium, for example, and other types of commodities. Absolutely. First of all, I can tell you
 as of this morning, we are seeing great LNG exports, both by a Qatar-related ship as well as
 a French-related ship, I believe. They are called Wadi al-Sahil in McCain's. So I think that
 is interesting, I think, because that indicates a reopening of the Rosalovan LNG terminal in Qatar.
 And Qatar has announced that there was some kind of explosion there overnight. So I think LNG,
 when you helium, as you mentioned, is actually a byproduct of LNG production. So I think Qatar
 coming to start or starting to start off with the LNG production is a good indicator because
 remember they're one of the brokers of the deal and they're out there in Switzerland. So they know
 probably more than us. So that, I think, is a good indication that these discussions are going
 somewhere. Tankers obviously are part of it. We have seen Chinese vessels actually go out yesterday,
 and the encentcom has been allowing bulk vessels, i.e. grain imports from Brazil and so forth,
 to come into the Gulf. Having said that, we're still at a trickle versus the 130-140
 giggly ships going in and out. And I think, remember, the Iran has pulled out the Persian Gulf
 straight authority card. It says, you need to have our insurance to go in or out. And I think the
 real danger here is not really, if just the straights open tomorrow, is what happens when Iran doesn't
 like something again in a month or two, or three, or four, or six. The US took out Soleimani five,
 six years ago. You do know that the next time somebody wants to take out a guy like Soleimani,
 the Iranians will just close the straits, right? So that has a very, very big deterrent in their
 hands right now, and that is a strategic achievement to them. One of the West should consider what
 they do about. All right. Ami Daniel, great to have you on. Come back soon. Keep us updated.
 Thank you for having us. Bye. Straight ahead, Charles Schwab reportedly looks to make up some
 lost ground in the prediction market battle. But first, we're watching shares of Abbey reportedly
 nearing a deal to acquire apogee therapeutics to develop her drugs to treat inflammatory diseases.
 For about $11 billion in cash, the financial times reports the deal could come as soon as today
 and represents a roughly 60% premium to apogee's closing price on Thursday. You can see
 those shares of apogee spiking almost 55% pre-market morning call. We'll be right back.
 We're checking on some of the morning's latest headlines. China's escalating its trade fight with
 Washington. Kind of. It's adding MP materials, USA Rare Earth, and eight other US firms to its
 export control list. It's a national security related list. Do you use technology related
 lists? The moves come after the Pentagon earlier this month, added several Chinese tech
 companies to a list of entities that it believes to have aided China's military. This back and forth
 has continued for some time. President Trump, meantime, is softening his stance on
 anthropics, speaking with Axios. The president says he may have viewed the company, the AI
 company as a national security threat last week, but no longer does.
 Well, not now, but a week ago, maybe I was with him yesterday. He made a speech. I made a little
 speech. We're in the room on the G7. And it seems like a nice guy, smart guy, but he responded
 to us very quickly because you know, it's tremendous liability. People get put in prison
 immediately for that. You know, you can't play games with that. And he responded very responsibly.
 I thought so far. I think he will. Well, in a statement, anthropics says we are grateful to
 the administration for their ongoing partnership, quote-unquote. Prediction market, CalShi is
 reportedly generating more than $2 billion in annualized revenue. That's roughly triple its level
 from November, according to the information the surge is being driven by sports betting volume
 with executives now holding early talks with banks about a possible IPO in 2027 or 2028.
 Just a note here, CMBC and CalShi have a commercial relationship that includes customer acquisition
 and a minority investment. And we're watching shares of Coca-Cola heading to a federal appeals court
 in Miami this week to take on the IRS over claims that it reports too much profit abroad and too
 little in the US. The IRS won the first round in US tax court back in 2020. And it's a complete
 loss that could cost Coke $14 billion or more in back taxes, multinationals in general have been
 watching this closely. It's been going on literally for decades. And Disney and Pixar have a
 major box office when Toy Story 5 opened this past weekend with $160 million in the US and Canadian
 ticket sales. It's the biggest debut of 2026, the strongest opening in franchise history and Pixar's
 second best launch ever. And if you get a check on Disney shares, they're down for actually
 pre-market. We'll still on deck another down day on tap for SpaceX and what may be a root awakening
 for the average SpaceX retail investor. Plus, from possible cuts to likely hikes,
 what last week's bed call may mean for mortgage rates and housing. We've got the CEO of EXP
 here to weigh in. I'm Morgan Brennan. Welcome back to morning call. Let's get a check on US stock
 futures, which are higher this Monday morning. You can see the Dow poised to open up 113 points,
 the S&P fractionally higher, up 7 and the Nasdaq poised to open about 88 points higher this after
 gains for Thursday in the holiday, short and trading week last week and gains for the week overall
 last week. Let's take a look at Treasury yields because those are higher across the curve as well.
 You can see the Fed sensitive to your Treasury yielding 4.21 percent and the 10-year Treasury yield
 4.48 percent. We'll get a check on Energy 2 as we watch the latest on those peace talks between the US
 and Iran, which are supposed to restart again today. You could see a bit of a mixed picture this
 morning, but WTI crude, despite being up about half a percent, is trading around $77 a barrel and
 Brent's down 1.5 percent is trading under $80 a barrel. Around the world, it's a mixed day in Asia
 that saw the knee case surge more than 1.5 percent. We've got breaking news out of Europe with UK
 Prime Minister Kierstarm announcing his resignation. You can see markets there are mixed in early trading.
 The footsie is now fractionally higher, basically flat right now. DAX is flat to the downside.
 And also watching SpaceX shares. More reports over the weekend that the company is preparing to
 launch a $20 billion bond offering and official announcement could arrive in coming days. According
 to Reuters, reports say the money would help refinance a $20 billion bridge loan that SpaceX took out
 earlier this year. And of course, SpaceX, like others in this AI race, is looking to
 raise lots of capital here to spend lots of money in the AI infrastructure deployment,
 including in the case of SpaceX for space. Well, the stock is up 37 percent for my IPO day.
 It fell Thursday and is down in the pre-market this morning. Last I checked,
 a big part of the story is trading volume. In its first five days of trading, SpaceX has
 amassed almost $300 billion in trading volume, outpacing the popular SPY and QQQ ETFs.
 The IPO price, you recall, was $135 to take it or leave it. It has gone as high as $225 in
 trading, but data shows that the stock's volume weighted average price, which measures the average
 price the stock was purchased at, is $181 per share, suggesting that the average retail buyer
 now could potentially be underwater. But for anyone hoping for cheaper financing,
 this is a new story. For anyone hoping for cheaper financing on mortgages and other financing,
 may have to keep waiting, with a Fed signaling a potential interest rate hike
 some time this year, as inflation remains stubbornly high. So during his first news conference
 as Fed Chair last week, Kevin Warsh, indicating that higher rates are weighing on the housing market,
 calling the impact of current monetary policy, quote, uneven.
 If I look at the housing markets as one example,
 Fed policy isn't the single determinant of the state of the housing market,
 but broadly, I would say there, Fed policy appears to be somewhat restrictive.
 I would have a hard time managing to say those words if I were to see what's happening in
 financial markets, so I'd say it's uneven. Well joining me now is Leo Pereja, CEO of EXP
 Realty. It's a global cloud-based real estate broker. One of the largest in the country,
 in the world. Leo, it's great to have you back on the show. It's interesting because the Fed
 chair basically signaling that perhaps markets are frothy, but not when it comes to housing,
 what are you seeing? Morgan, thanks for having me back. That's exactly correct.
 I think what Kevin said very clearly is he's focused on inflation and having price
 stability first with housing second. This week we have the new housing numbers coming out on Wednesday,
 and I'm a little optimistic. I'm hoping we meet consensus, but really it's how the new home
 builders will be able to use the word the inventory. For first-time home buyers, I think there's a
 decades-first opportunity with new construction. In cities like Austin, San Antonio, Houston, Phoenix,
 you can actually buy a home or less than resale prices. That hasn't happened in many decades,
 and that's because home builders are motivated sellers right now. They're able to give incentives
 and buy down a rate to as low as 5%. We're in an interesting market that's hyper-localized at the
 moment. That is interesting. I mean, you just talked about it. Hyper-localized location location location.
 If we go around the country right now, what are you seeing in terms of strength and weakness in
 across the different major markets? Yeah, very local. New York City, Boston,
 Chicago, Detroit, even Cleveland and Pittsburgh are experiencing strong seller markets,
 where the sellers are in complete control. Buyers are still experiencing multiple contracts with
 weeks of inventory, four to six weeks. At the same time, in parts of Austin, San Antonio, Houston,
 Phoenix, Dallas, Atlanta, Raleigh, Charlotte, what were the premier boom markets during COVID?
 It's a complete opposite experience. Some of those markets are experiencing as high
 inventories of six to eight months, where buyers are having the most leverage they've had in years.
 So, if you're in the buying process, especially if you're a first-time home buyer and you're getting
 advice from a loved one, a friend or a colleague in a different market, you could be getting
 bad data. This is a market where you have to become a local expert and see what's going on in
 your immediate market. When we look at mortgage rates, you know, 30-year fixed mortgage at what,
 depending on the day and the week, anywhere from six and a half to just under a seven percent
 here, I mean, is this, is this been normalized? Are buyers now used to paying rates like this,
 which pre-15 years ago was actually the norm? I think what we experienced during the COVID
 era with the supply of capital into the market was the aberration. Over 50-year period,
 that's completely correct. And Morgan, even in January, we were pretty optimistic,
 hoping you see rates in the fives. I made a couple of predictions in Q1 that I was more bullish
 on seeing a seven in front of a rate before a five. And unfortunately, that's happening.
 I would predict that for the remaining balance of 20-26, rates will probably bounce around 25-50
 basis points up or down, but no big movement and more trending towards a seven than a five.
 Okay, Leo Perea of EXP, appreciate it. Thank you for joining me.
 Thank you for having me. Well, a lot more to come here on morning call,
 including the next step in a new relationship between the financial markets and prediction markets.
 Before the break, a check on alphabet, another high profile departure is a top research scientist,
 John Jumper, says he's jumping ship at Google Deep Mind to join Anthropic.
 He won a Nobel Prize in 2024, best known as the co-creator of Alpha Fold. This is a breakthrough
 AI model that's helped to cut years off of biological and medical research. Morning call,
 we back after this shares of alphabet down one and a half percent.
 Welcome back, Charles Schwab, is reportedly working with the CBOE to get into the prediction
 markets. Wall Street Journal says they're looking to launch all or nothing options contracts,
 allowing customers to place yes or no wagers on the performance of the S&P 500.
 And this comes as Congress is moving to regulate the space. The House is advancing bills to
 ban lawmakers, their families and staff from making political and policy-related bets.
 And the House Oversight Committee has opened an investigation into prediction markets to crack
 down a potential insider trading. Well, joining me now to talk about this and so much more
 Congressman Dan Muser, Republican from Pennsylvania, who is a member of the House Financial Services
 Committee and Chair of the Subcommittee on Oversight and Investigations. Congressman,
 it's great to have you on the show. Welcome to you. Let's start right there, prediction markets.
 Being categorized as the Wild West does seem like we're starting to get some shootouts though.
 Where does Congress fit in?
 We have rules and Congress. First of all, nice to be with you Morgan. Good morning.
 We have rules and Congress. They need to be enforced. They need to be followed by 100% of members,
 not most members on occasion. I know what the rules are. They're followed. Related to these
 prediction markets, we do have a bill coming up. I plan on supporting to limit and keep us from
 being engaged in the prediction markets, but no different than the other types of stocks and
 rules that exist. So look, we got to build trust with the American people. Anybody who's
 using insider trading within the Capitol, that's a member of Congress, is frankly infringing
 upon the law. Yeah, I mean, in prediction markets are growing so quickly right now and you have
 just a flurry, it seems on a weekly basis of new products are being launched even just last week,
 more with perpetual futures at Coinbase, for example. I know you're very supportive of Trump accounts
 and seeing more Americans have more skin in the game and be able to manage their money and
 participate in Capitol markets. So how do you see Capitol markets overall evolving here with more
 of these types of products coming in? Well, you know, there's something that's called participatory
 economy. I think the Trump administration embraces that. The idea that 60% of America is in the
 markets, those who can invest, and this creates a whole new opportunity for those between the ages
 right now with the Trump accounts between 25 and 28 born between then, but it engages their families,
 it gives them the opportunity. I think it's an absolutely fantastic idea. As you've seen many
 the big banks and big companies have picked up on it as well, extending that out to their employees.
 When you have a sake of ownership or a stake in ownership and feel a participation in economy,
 it makes you understand it better, hopefully appreciate it better and realize that
 the free market, capitalist economy, is the one that grows and delivers the best returns,
 hopefully for all, not just 60%. Yeah, you have markets digesting right now still.
 What is a new era at the Fed, which airwashed and bailing task forces and other moves to
 reform the bank's analysis process, data collection process, communication process,
 want to get your response? Well, I'll tell you what, I think Kevin Worsh is outstanding.
 I really do for a lot of reasons. Number one, the plan that he laid out, I think his five point
 or four point plan, particularly when he says rethinking what drives inflation, I think his
 approach towards limiting the size of the Fed balance sheet and putting the stake and stock back
 in banks, big banks, small banks, community banks, one of our managers on financial services,
 our chairman, French Hill, make community banks great again. You know, from a housing standpoint,
 you were just talking about community banks are delivering half the number of loans that they did
 just 10 years ago. That needs to change. The whole Basel III, IA reserves, some big banks,
 were doing away with that, Worsh is doing away with that. He's putting the onus back into the private
 sector. He's going to be pro growth at the same time, be hawkish on inflation. I think it's the right
 plan at the right time. And by the way, it's completely different than what was taking place in
 the UK. And you saw what happened there as well as during a Biden administration and the previous
 such chairman. So we've got some, I think really, really strong things coming. Anything's got the
 right plan. And you know, it's not about controlling the economy. It is about controlling the mandates
 in a time deployment and fighting inflation. And I think he's got the right team to do it.
 Speaking of things coming, this long awaited housing bill said to pass this week. What does that
 do to the home affordability scenario here in the US? Well, hopefully it improves it. I mean,
 that's the whole intent behind it. You know, we came together with the Senate. It's a good bill,
 deals with regulations, deals with permits, deals with helping again, community banks,
 take some of the onus burdens off of them that have existed in that crazy bureaucratic
 previous administration. So we really believe it'll make a difference, not all the difference because
 interest rates just truly matter as well. So we'll get there, but I think housing will take a turn
 for the better once this bill is passed. We're voting on on Wednesday, we think. Okay, reconciliation,
 3.0 package gonna happen. Well, well, we're gonna fight for it. And I think it will. I think the
 American people need to see us delivering on more. We've delivered on a lot. We really have.
 And for the economy, for our national security in so many other ways. But once we,
 we're gonna deal with insurance rates. We're gonna be dealing with sending the money directly
 to people's HSAs. We're gonna be dealing with a bill I have most favored patient working off
 of the president's most favored nation initiative to lower drug costs. We're gonna be dealing with energy
 from a permitting standpoint and perhaps look to make social security tax reduction permanent.
 So we have four or five ideas and that we just got to make sure we get things. And let's not forget
 our Save America Act, certain portions of that. We hope we can either get done there.
 Okay. Well, we got another plan there too. So we hopefully have a busy summer.
 I was gonna say it sounds like a very busy summer with a house back in session this week.
 Congressman Muser, it's great to have you on. Thanks so much.
 Thank you Morgan very much. A big chance at the top in the US,
 the straight-up or moves, SpaceX, big earnings ahead this week.
 Morning, call, crew, then tackle it all. Welcome back. We got a market flash where you're
 Bernstein reiterating outperforming a micron, raising the price target to $1,300 per share
 for a micron. And you can see those shares are popping 3% pre-market this morning.
 Key bank meantime initiating SpaceX at a hold of $185 a share. SpaceX currently trading around
 177 here pre-market down about 4%. It's time for your call sheet where we're gonna look at the
 topics driving the trading day ahead. Crew members today, Stephanie Roth, Chief Economist at Wolf
 Research, Gina Sanchez, Lido Advisors, Chief Market Strategist, and Michelle Cruz Acabera,
 MCC Global Enterprises CEO, both CMBC contributors. What a great panel. I love this. Okay, I
 gotta start with these initiations or reiterations in the case of micron. And Gina, I'm gonna
 kick this off with you. micron has obviously been a monster in large part because of what we've
 seen with memory costs and shortages. Your expectations for what this could do for the broader
 market when we get earnings this week? We're having some technical difficulties. So, Michelle,
 I'm gonna put that question in front of you. So, this has been such a dominant trade for so long.
 It's every week I wonder how long is it gonna last? And what's going to, if ever pull this thing back,
 of course, there's gonna be a pullback after such dramatic runs, but just never know when it's
 going to happen. And, you know, the need for capital is really large on the part of Elon Musk and
 what he needs to get done. So, this is gonna be an incredibly active space. Yeah. And we're seeing
 this shift in the market, Stephanie, towards, we've been in two to three decades of companies buying
 back shares, fewer companies going public, or companies moving back to transitioning to private.
 And now, all of a sudden, it's a reversal. That seems to be taking place. And SpaceX has arguably
 opened the floodgates on this, where many of these companies looking to raise more capital,
 rather than buy back their shares. How does it speak to what we're seeing more broadly across the
 market? Yeah, this is just an environment where there is a lot of exuberance, there's a lot of
 capital that wants to find the trades that are gonna be setting the tone for the next decade and
 decades to come. This is something that is transformative, and you're just seeing it play out across
 various parts of the market. And our expectation is that AI trade can continue for a while longer.
 There are no signs right now that it's entered any sort of bubble at some point it could,
 but we're not there yet. So, this could be a story for many more years to come.
 Okay. Gina, I think we have you back in technical difficulties or fixed.
 Micron versus Iran talks. What matters more to the market this week?
 I think this week, Micron matters more. The reality of the Iran talks is even if they do go anywhere,
 and that's not the expectation, it will still be weeks before insurers are going to
 continue to are going to reinstate insurance weeks possibly months. So, micron is way more important.
 Micron makes high bandwidth memory chips, and those are extremely important, not only for AI training,
 but also for inferencing, which is really where AI has gone, and I think everyone's gonna be,
 all eyes will be on micron because they have a great track record of beating earnings,
 but they are also right in the crosshairs of the AI CapEx story.
 Okay. Speaking of Iran, and we'll say geopolitics,
 Spritlarge, Michelle, those talks seem to be moving in the right direction.
 You know, we had a guest on earlier in the show who's talking about, you know,
 vessel movement through the street. We're still not anywhere near pre-war levels,
 but it seems to be trending in the right direction as well. Meantime, elections in Colombia,
 and this other foreign policy shift that we haven't been talking about as much,
 closer to home that is arguably countering what we're seeing in the Middle East.
 Yeah, I'm gonna be watching the Colombian ETF, the country of Colombia ETF today because
 there was an election yesterday where Espadilla, the pro-business candidate won.
 This is a runoff election, so this market had started to rally into this election,
 but it is key. He is definitely part of a trend that we have seen happening in Latin America now,
 ever since Javier Millet was elected in 2023, of more pro-business candidates,
 and with the Trump administration being extremely focused on the Western Hemisphere,
 there are dramatic changes happening down there to our south when it comes to economic
 and politics, which should lead to much better outcomes economically for a lot of those,
 you know, countries. Yeah, and in terms of Iran and Middle East, how do you see that?
 Well, you know, what's so interesting is that Iran never turned into much of an equity market
 event. We had a slight sell-off, but even with the major disruption and oil that we saw,
 you know, the market ended up shrugging it off, so as long as these talks make some progress,
 I think that's going to be good enough for the equity market. Yeah, Stephanie,
 meantime, we get economic data here in the US this week that speaks to what is now perhaps a
 backward-looking inflation picture when you think about what's happening in the crude market,
 for example, in real-time here with WTI trading around 77 bucks a barrel, but whether it's PCE,
 whether it's flash PMIs, whether it is digestion of Kevin Worsh and his first press conference
 as Fed Chair last week, what matters in terms of the economic picture and how it funnels into
 the inflation picture given the rate height picture that's currently priced in the market?
 Yeah, I mean, I think there's going to be focus on the core PCE data this week. We're looking for
 0.38 percent on core, which is roughly double what the Fed would really like it to see.
 Now, to your point, this is slightly background-looking in the sense that it doesn't
 incorporate some Iran war stuff. There's also some impact from the World Cup impacting travel
 demand, so all of these factors should move through the data throughout the course of the
 summer. So our expectation is that the Fed will not ultimately hike interest rates,
 although they will certainly be talking about it very much in the July meeting and also potentially
 September, but our expectation is that the data will cool as these one-off factors,
 including the Iran war and some other things holding up the consumer in the near term will start to
 fade and therefore the Fed won't necessarily see that pressure. And Worsh made it very clear,
 they're going to be taking a meeting by meeting and the data as it comes. He certainly didn't give
 us any sort of forward guidance in terms of what the Fed is going to do in the future, but if the data
 comes in a little bit softer than where it's been, then the Fed won't necessarily see the same type
 of pressure to hike interest rates that perhaps many of the members saw in the most recent meeting.
 All right. Sub-twenty seconds, Gina. Final thoughts.
 So I agree. I think we will actually continue to see some cooling, not only in the economic
 indicators, advanced economic indicators, but one of the things that has kept the Iran from being
 a major impact in terms of markets. Okay. Thank you to our morning call crew.