FIFA World Cup Ticket Probe, Investors Boost Space Exposure 5/28/26

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 This strikes in Iran's spike oil.
 Futures drop, inflation data awaits, I'm Dominic Chou, and this is your morning call.
 Good morning, I'm Dominic Chou, and for Morgan Brennan today, checking US equity futures
 right now.
 We are slightly lower here.
 After the Dow, the S&P 500 NASDAQ all close at new record highs in yesterday's session,
 the first time we've seen that, by the way, this year, futures again, just modestly lower
 the Dow's implied down by about 27 points.
 The S&P is just about flat, and the NASDAQ is down by about 52 implied at the opening
 bell.
 Three stocks to watch following earnings.
 Snowflake, Salesforce, and Marvel technology.
 Snowflake, the standout on strong earnings and guidance.
 We got more on that coming up here.
 DataDog and MongoDB is getting a boost on the back of that Snowflake result.
 So you can see here some interesting moves.
 Snowflake shares up 35% of the pre-market trade.
 On the treasury side of things, ahead of today's critical PCE inflation report, yields
 are moving to the upside currently.
 So bond prices falling.
 The benchmark 10-year note yield, just a hair below 4.5%.
 The two-year note yield, 4.05%, and the 30-year long bond 5.02%.
 Economists are expecting inflation to tick up slightly to 3.8% year-over-year.
 Core prices, X-food and energy, also expected to come in hotter.
 Those numbers come out at 8.30 AM Eastern time.
 We're continuing to watch the entire chip sector overall, and Micron's meteoric rise
 past the $1 trillion market valuation level.
 Currently, those shares are giving back some of those gains off about 1% of the pre-market
 trade.
 But again, over the past week, up about 21%.
 Now, more broadly speaking, the chip sector is currently riding its best start to a year
 ever.
 On record, adding a collective $5.7 trillion in market value, that's according to data
 from Dow Jones.
 All thanks to runs by Sandisk, SK Heinix, Micron, Samsung, so the memory side of things,
 and then Intel as well, all of those names a big year-to-date.
 You can see their Sandisk in particular, up about 560% just so far in that time span.
 Turning now to a developing story, and oil popping once again this morning, traders
 are monitoring a significant escalation in tensions between the US and Iran after American
 forces launched fresh strikes in Iran against a military site believed to threaten US troops
 and commercial shipping through the Strait of Hormuz.
 We're also intercepting several Iranian one-way drone attacks, so those particular moves are
 driving some of the action here in oil, US military officials say that the attacks
 were limited and do not represent a resumption of major combat operations against Iran.
 In response, the sent-com team described defensive strikes as what they were, meanwhile, Iran
 says it has targeted a US air base.
 This as Kuwait says has activated its own air defenses in response to, quote, hostile
 missile and drone threats.
 So now let's see how Europe and Asia are responding to all of this.
 Iran show is in London with the latest trade in Europe.
 Lisa Kim has the action out of Asia and Karen, we are going to start with you.
 Dom, thank you.
 Good morning.
 We are watching very similar themes here on the geopolitics and chips.
 A European equity markets are weaker today following decline to Asia.
 As those hostilities and the Gulf heat up yet again, traders are also watching that all
 important US inflation print.
 What you're seeing on the FTSE 100 despite the higher oil price offering a bit of a pop
 in some of those oil and gas stocks elsewhere, the broader sweep is lower.
 This market has also been up for about seven straight sessions before today.
 So coming off the boil today, the Zetra DAX, one of the better performing stock markets
 here in Europe for the past month, also on the flat line, that is thanks to the heavy
 lifting from some of the big defense stocks actually trading high between three to six
 or percent usual suspects like Rank and Short Rhymer Tell.
 They are higher today elsewhere than you are seeing losses on French stocks.
 Now some of the sector gain is very few of them in fact declining, the more we travel
 throughout the morning session, it's mostly just been technology stocks that have been trading
 higher.
 Again, the chip story that you were talking about the state side, it's been reflected
 in the supply chain here in Europe.
 We're up close to 9.10s over the percent on that tech basket and else draws two things
 to the defense names that I mentioned elsewhere.
 It is mostly read across at a sector handle.
 Right at the bottom this morning has been media stocks that were down roughly two odd
 percent and tracking down in that vein as you see that sell off, take some of the shine
 off some of the cyclical areas of the market.
 But ramping up now in terms of the selling food and beverage that is down 1.7 percent.
 In fact, there's been a lot of soggy action in some of the retail stocks this morning in
 that basket.
 Now healthcare down 1.5 percent, media is down similar tune and insurance stocks also reversing
 so it is risk off what we're watching thanks to the geopolitics don't.
 All right, Karen, Joe, live in London with the latest action over on that side of the
 Atlantic.
 Thank you very much for that.
 Let's get across the Pacific right now to Asia and the latest from our Lisa Kim in
 Singapore.
 Lisa.
 Hey, Dominic.
 So, Asian stocks were in the red across the board today due to renewed concerns over
 the Iran conflict.
 Taiwan's benchmark index lit the losses off by around 1.5 percent a day after that
 index reached a record high in Hong Kong's Henseng index was also off by 1.3 percent.
 A stronger dollar pushed Asian currencies weaker with the Japanese yen trading in the
 159 handle to the dollar slightly weaker than the last time we spoke.
 The Korean one is really struggling to appreciate even after the Bank of Korea delivered a hawkish
 hold today.
 But the biggest laggers today over in this part of the world are South East Asian currencies,
 the Philippine peso and the Malaysian ring it are off by around four tenths of a percent
 back to you.
 All right, Lisa Kim in Singapore, the latest there.
 Thank you very much for that.
 Now to two of the big stock stories of the day so far shares of snowflake are soaring.
 I mean soaring after the company reported better than expected first quarter results
 and raised its product revenue guidance for the full year as customers spend more on
 AI applications and shift more data to its cloud platform.
 Because also signing a $6 billion deal with Amazon Web Services as well, those shares
 again up 35 percent.
 Meanwhile sales forces moving lower a not lower sales forces moving lower as the company
 forecast second quarter revenue below estimates offsetting some first quarter results that actually
 beat expectations.
 That stock is down now 33 percent this year on concerns that AI platforms will disrupt
 traditional software providers, something that CEO Mark Benioff pushed back on last night
 on mad money with our own Jim Kramer.
 A lot of the predictions that are happening in regards to the SESPOC lips just hasn't
 happened.
 I mean, you think about half, you look at Slack and the incredible growth rate of Slack.
 It's been really driven by the AI wave and the ability now for these companies to do things
 that they have not been able to do before.
 All right.
 Let me know, Sarah Kuhn's managing director of a Cleo Capital.
 Now Sarah, I mean Sasquatches, Saspocalypse, there's all kinds of sasses and concerns going
 on here.
 What exactly did the results last night tell you?
 Let's start with snowflake here, good news first, a massive move higher, and it seems
 like at least some investors are catching a little bit more optimism in a revaluation
 of some of these AI trades.
 I don't know if the snowflake move is good news.
 When you look at where the stock price is versus their revenue, that's a big gap.
 And I think that one of the things that we're grappling with is, hey, the AI trade is a
 little bit overheated.
 And at the same time, a handful of AI names are powering basically all world economic growth.
 So how do we let the air out of the tires without sort of exploding the whole car?
 And so I think that snowflake is a good company.
 And I think that right now the stock price is a little bit untethered to reality.
 If it's untethered to reality, what exactly is maybe the potential catalyst for becoming
 more grounded towards relative reality?
 What exactly do investors need to see or not see in order for that AI trade to get to
 what you think is a more reasonable level given their expectations?
 There's a phrase that we were using a lot a couple years ago, right, soft landing.
 It's really hard to pull off.
 And the reality is that it's probably more likely that things keep going straight up
 into the right until they don't.
 And then head straight down and that's not ideal.
 And I think that the thing to keep in mind is that it is okay if data centers are built
 more slowly.
 It's okay if AI adoption takes longer in enterprise because it's just really not quite there yet
 as we're hearing from people like Uber's COO and seen from a lot of data.
 It's okay for change to be a bit slower and more marginal than Sam Altman and Jensen
 Wong have been promising us.
 There's been this halo effect, even today so far.
 Forget about the AI complex writ large, but you look at MongoDB, I mean, that's catching
 a bid because of what's going on right now.
 We are seeing some of these effects happen because of some of these key reports coming out.
 If that is the case, what exactly does that say to you about how investors continue
 to view this and what exactly needs to happen for this to keep going the way that it is?
 I think the question is where else do you put your money?
 It is really hard to find other things, right?
 You're not going to put your money necessarily into the travel trade right now.
 The consumer is, its sentiment is at an all time low.
 So do you really want to put your money into consumer facing things?
 Their prize is a little bit scary like the sales forces of the world because so much
 of the revenue and SaaS has become on a per seat basis.
 So if they are laying people off because of a soft economy or because of AI, it doesn't
 matter if there are less seats to then sell.
 And so a lot of the AI trade, I think, is a reflection of the fact that there are very few
 places to keep your money, except on the sideline earning a little bit in sweet.
 All right.
 There's the story there from Sarah Coons.
 Thank you very much.
 We appreciate it.
 We'll see you soon.
 We've got a lot more to come here on morning call, including a critical mineral price
 shop.
 Now look at what's behind the surging cost of tungsten and what it means for key corners
 of the U.S. economy plus prediction market crackdown while Google Insider is finding
 himself in the regulatory crosshairs.
 And later on, the James Dolan turnaround story and why a next run for the NBA championship
 is just the latest win for a man some have described as one of the worst owners in professional
 sports.
 We'll see what happens here.
 A very busy hour still ahead when morning call returns after this commercial break.
 This message comes from Viking committed to exploring the world in comfort, journey
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 focused dining and cultural enrichment on board and on shore.
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 at Viking dot com.
 All right.
 Welcome back to the show getting a check on some of the metal prices right now.
 As you can see there, comics gold is off by about 1.5 percent, $4,386 silver prices
 just around $73.5 down about 2 percent right now and platinum down a similar percentage
 amount, $1,896.
 We're also watching the critical minerals space specifically for tungsten and they
 we don't talk about very often.
 Those prices surging this year up more than 200% so far hitting fresh record highs.
 This is all fueled by China's tightening export controls as well as stretch supplies tungsten
 which is also used in defense applications and equipment as also seeing a boom due to
 growing military demand maybe no shock there.
 The world is bringing Lewis Black the chairman and CEO of El Monte industries which mines
 that aforementioned tungsten Lewis thank you very much for joining us here.
 Can we talk about why tungsten is so much more in the conversation right now I mentioned
 the price action some of the supply issues but tungsten is a materially don't talk about
 it is used in a lot of critical applications well good morning and yes you are correct tungsten
 is not talked about enormously but it's in fact as a critical medal in everything all the way
 from industrial all the way through to technology so defense is one very serious component but also
 for semiconductors for car manufacturing aerospace and it's always had a sort of tungsten diplomacy
 because ultimately it's scarce it's scarce in the west it's scarce in the east and and
 governments are happy to have a handbag fights over lithium or rare because they're not rare
 but tungsten was always very sensitive because how do you even advertise you have a problem
 without telling your adversaries that you don't have enough so yes what happens is there's
 been export restrictions on dual use for tungsten by China the issue being is that how do you establish
 whether for instance a breaking components that you manufacture doesn't end up in an armored vehicle
 it's almost an impossible bar to meet to show China you don't eat the tungsten doesn't end up
 in a military application but yes it now has been brought to the extension of the market earlier
 last year you know Lewis you mentioned diplomacy that was one of the words you just mentioned there
 the diplomacy always seems for these critical minerals to drift towards what you just said China
 why is China become such a critical hotbed for these critical minerals and what exactly
 the kinds of supply chains do around the world to lessen the reliance on China if China has become
 one of these kind of choke points for many of these not just you know your critical minerals but
 rare earths and everything else as well well I think you have to look over the last 30 years I mean
 the tungsten prices moved as it has because it's the first time in 30 years it's traded in the
 free market China only let their hands off the wheel last year and and what China has really set
 about doing over the last generation is to develop downstream the upstream which is where we sit
 which is the raw material was really part of the journey you bring in low prices you essentially
 deny your competitors or your future competitors access the material outside of China whilst you
 develop your downstream and so I we we fervently believe in our sector that you'll never see Chinese
 raw materials return to the market what you're going to see next in the phase two of the program
 because this is not ideology this is just business is they're now going to offer finished components
 their downstream has been developed significantly over the last 30 years and so this hasn't been
 a nefarious attempt to destroy Western industry this has been a way of capturing market share
 and they've been extremely efficient but then it's been a long time in the making and Lewis a
 final point here before we let you go we know that there are a lot of critical applications that
 use this we mentioned military what is the primary driver that that grow story will circle around
 in the coming months and years is it going to be related to things like the AI data center buildout
 trade is it going to be mostly driven by a build out or rearmament trade that's going to come up
 because of a focus on military applications what do you think is going to be that kind of thing
 that provides the bigger tailwind for tungsten in the coming months oh defense and semiconductors
 because because tungsten is a key ingredient for both of them and so it's a it's a double it's
 just a perfect scenario of growth for the tungsten space you need it for all munitions and alarm
 and you also need it for an innocuous thing called a tungsten gas which is an essential component
 to manufacture the semiconductor which in fact launched the AI generation because that
 enabled the semiconductor to perform at a much higher level so those are the two key growth areas
 for our space you know it's interesting Lewis I'm a golfer as many people know and I've been
 familiar with tungsten for a long time because they are the weights that go into many of these golf clubs
 so I've always got a particular focus on tungsten as well Lewis thank you very much we appreciate
 the time sir thank you thank you very much all right well mining again straight ahead on the show
 winkelboss relief as regulators look to ease up on what was supposed to be a multimillion dollar fine
 but first checking shares of HP after topping sales and profit estimates for its most recent quarter
 but the company is cutting its full-year outlook signing the memory chip shortage that is driven
 of costs across the entire tech industry HP shares down about two and a half percent in the extended
 trade morning call is back after this this message comes from Viking committed to exploring
 the world and comfort journey through the heart of Europe on an elegant Viking long ship with
 thoughtful service destination focused dining and cultural enrichment on board and onshore
 and every Viking voyage is all inclusive with no children and no casinos discover more at Viking
 dot com
 welcome back to morning call the road to the NBA finals continues tonight as the thunder and the
 spurs face off in game six of the western conference finals with the thunder holding a one game
 lead so far the winner of that series will go up against the new york nicks starting next week
 and new yorks return to the finals for the first time in more than twenty five years
 is marking a big redemption arc for owner James Dolan Alex Sherman joins us now with more on that
 story and of course it is the talk of the town Alex because we are of course a new york centric
 network out here and they are just across the river from us here in New Jersey but just how big of a
 story is this for Madison Square Garden and the Dolans yeah look I mean it's no surprise
 Dom that Jim Dolan it has not had a good reputation as a sports team owner and that is a story
 that goes well beyond New York really any NBA fan knows this over the past twenty years I mean I
 write a newsletter it's coming out in about oh 40 minutes or so if you're not already a subscriber
 the CNBC sport newsletter it's free go sign up because it'll be in your inbox in 40 minutes
 in the lead story of the newsletter today is how ESPN would would do this poll somewhat and
 somewhat frequently where they would basically say look here are all of the NBA owners ranked
 and they would ask 200 plus people for their suggestion about who the best owner was who the
 worst owner was and they would do this in the mid you know between 2010 and 2020 and Jim Dolan
 would show up dead last and it's interesting now that he's going through a bit of a redemption arc
 and frankly it goes even beyond the next success you can point to the performance from a business
 standpoint of what he has done with sphere this sort of global entertainment company based around this
 giant dome-like building that's in Las Vegas sphere shares are up 250% over the past year
 it's been a big success now they're even expanding the business building another sphere in Abu Dhabi
 even a mini one is coming to the Washington DC area he's also been sort of vindicated by when he
 sold cable vision his big cable company that his dad made his fortune on about a decade ago
 the cable business has really struggled in recent years Jim Dolan kind of looks like a genius
 for selling when he did and you know what when you ask nix fans what their feeling is about Jim Dolan
 today even the nix fans have a more tempered answer to in fact we did this at CNBC we asked a handful
 of people our intern Haley went out to the streets of New York City right outside the New York
 Stock Exchange yesterday and asked a handful of fans what do you think about Jim Dolan now take a
 listen to what they said you know the nix current performance I feel like he's doing a really good
 job as the owner of the nix I have spent 20 years in my life wanting to kill him and now he is
 finally out of the dog house in our house I've never been a fan of him so ever even if they've
 got success now he's not the guy that should be running the nix I don't like facial recognition
 but winning is good so as long as we're winning I think the fans are happy if you could give Jim
 Dolan a rating a b or c what would you give him right now I'd give it an a for good hiring which
 you know is the most important job if the next one everything would you forgive Jim Dolan for his
 history I look forward to having that conflict so you know not universally love still but at least a
 nix bag and that's a lot better than I think any NBA fan would think would any Nick fans say
 let's say even five years ago Alex you're only as good as your last trade in this industry right now
 right in many industries so we'll leave that conversation there so interesting for the nix as
 well I also want to turn your attention to FIFA facing a new probe right now over the world cup
 ticket prices and and the scheme that's been developed there what can you tell us about
 what's happening there with FIFA and ticket prices yeah you know the attorney generals at for
 both New Jersey and New York are investigating how FIFA sold tickets based on the
 exorbitant cost of World Cup tickets in the New York New Jersey area of course those games will
 be held at MetLife Stadium the prices are much higher this time around for the World Cup
 than they've ever been and they're sort of taking a look at this new dynamic pricing system
 that FIFA has used for the first time this year not only by the way for the actual price
 but even the location of the seats to take a look if everything there that FIFA did with selling
 tickets was legal but you know this ticket price issue is probably even an issue beyond FIFA
 you're seeing it now nix tickets for the playoffs in the New York area the even the nose bleed
 seats for the playoffs start at $3,500 US open tickets are now out for New York they're way higher
 than they've ever been before so it may be that there's an issue here even beyond just the FIFA
 issue in terms of how tickets are being sold in the New York area both on the primary and second
 dairy markets. You know it's interesting my son asked me he wanted to go watch a World Cup game
 this summer and I said son that's a little bit too pricey for us right now so we're not going
 to do it. Alex Sherman thank you. I'm going to watch it from my couch and 4K UHD if I can.
 Alex Sherman thank you very much for the nix and FIFA right there still on deck for the show here
 space talks are surging around SpaceX's IPO excitement plus the massive amounts of cash pouring
 in from the US government and private investors what the CEO of one small satellite maker
 thinks SpaceX's NASDAQ debut could mean for the entire space industry. Morning call continues after this
 All right that live shot of watching the DC in the White House and of course the UFC facility
 going up over there a lot of progress made in just the last 24 hours it looks like so we'll keep
 an eye on the beltway there. I'm Dominic Schoen from Morgan Brennan and welcome back to morning
 US equity futures right now are slightly lower this is all after the Dow the S&P and the NASDAQ
 closed at new all-time highs in yesterday's session that's the first time by the way we've seen
 that so far this year and futures again the Dow implied lower by 28 points the S&P down by just
 a three point margin and then the tech heavier NASDAQ 100 implied lower by roughly 70 points three
 stocks to watch following yesterday's earnings snowflake sales force and Marvel technology snowflake
 is the stand outies you can see here on strong earnings and guidance also on that six billion dollar
 Amazon Web Services deal those snowflakes shares up 36% in the pre-market trade sales forces down
 one and a half percent and then Marvel technology down 3% several stocks are getting a boost on the
 back of the snowflake results including mango DB also data dog and service now many of those software
 companies that have been a huge focus for investors and traders on the treasury side of things we
 are seeing some moves ahead of today's critical pce inflation report that's the feds preferred
 gauge the bench bar 10-year note yield just a hair below four and a half percent the two-year note
 yield 4.05 percent and the 30-year long bond 5.02 percent also keeping an eye on energy prices oil
 popping this morning on escalating tensions between the US and Iran American forces launching
 fresh strikes in Iran against a military site believed to threaten US troops and commercial
 traffic through the state of Hormuz US military officials say the attacks were limited and do not
 represent a resumption of major combat operations against Iran meanwhile Iran says it is targeted a
 US airbase and again those oil prices US benchmark crude $90.68 up about 2% world benchmark ice
 print crude futures $96.23 a similar percentage move there global markets plenty of red in the
 Asian trade in Europe as well as you can see the knee-k down fractionally same move for the
 Caspi in the FTSE 100 the German Dax is off about two-tenths of one percent one-third of one
 percent declines for the Kacken France checking some of this morning's latest headlines
 federal prosecutors alleged a Google employee fraudulently made more than one million
 dollars by using inside information to place bets on polymarket on what users were searching for
 according to a complaint filed in the southern district of New York the 36-year-old Google
 Information Security Engineer is charged with money laundering commodities fraud and wire
 fraud as well Google says it's working with law enforcement and has placed that employee on leave
 the CFTC is asking a judge to vacate its $5 million penalty against Gemini the cryptocurrency
 exchange founded by the Winkle Voss twins the agency says regulators should have never accused
 Tyler and Cameron Winkle Voss Gemini's trust company of making false statements in connection
 with its Bitcoin futures business the firm ended up settling with regulators back in 2025
 agreeing to pay that fine reports note the brothers donated to President Trump's re-election
 campaign of 2024 meanwhile the Department of Defense's or awarding Dell a five-year $9.7
 billion deal to provide a suite of software to the US military the award comes after Michael
 Dell the founder and CEO of Dell Technologies pledged over six billion dollars last year to fund
 investment accounts for children known as Trump accounts Dell reports earnings after the
 closing bell today and the Trump administration is reportedly pursuing funding deals potentially
 including equity stakes with drone companies to boost domestic production the Pentagon's office
 of strategic capital with $210 billion in lending authority is vetting companies like performance
 drone works nero's technologies and unusual machines a drone component supplier that counts
 Donald Trump junior as a shareholder and advisory board member the journal ads deal talks are still
 in a negotiation phase and inflation is the name of the game in a flurry of recent comments from
 several federal reserve officials speaking in Japan overnight federal reserve vice chair Philip
 Jefferson says policy is quote well position despite price risks this is after fed governor Lisa
 Cook says she sees elevated risks to both sides of the feds mandate and is prepared to hike rates
 and in comments to CNBC Asia Minneapolis fed president and voting member Neil Kashkari says inflation
 concerns remain front and center inflation has now been elevated for more than five years
 and we all the longer it goes on the more we run the risk of inflation expectations on anchoring
 and starting the drift higher which we cannot let happen if that were to happen that we'd have
 to respond even more aggressively so we're much better off doing what we need to do to keep inflation
 expectations anchored that means for me I am focusing heavily on inflation I'm not ignoring it all
 the labor market we need to pay attention to both sides but the labor market is in decent shape right
 now while inflation is simply much too high are a lot of fed speak they're driving things back to the
 markets the major US averages the Dow the S&P 500 NASDAQ are all sitting at record highs entering
 the session with the S&P notching its 20th record close of the year yesterday and the Wall Street
 bulls think that there are more record highs to come golden sacks is the latest bank to raise its
 year end S&P 500 target bumping its forecast this week up to the 8000 level joining Deutsche Bank
 and Morgan Stanley earlier this month HSBC raised its target price to 7,650 citing earnings
 growth and says the S&P could top 8,000 if stronger tech valuations coincide with the recovery
 in lagging sectors and a favorable economic backdrop for more on that let's bring in Jose
 Rascal the chief investment officer for the Americas at HSBC wealth management and private banking
 Jose the bullishness is maybe not surprising given the fact that momentum is in the market and there
 doesn't seem to be anything that can stop it not even a war in the Middle East so take us through
 what exactly is going to be the reason why that momentum continues or is it just what goes in motion
 stays in motion. Good morning Dominic good to see you and as a Nick fan I think there's a redemption
 story for the markets if James Dolan can have on the markets can too so I think there you go.
 But he really needs to get the rangers lined up that's the most important piece for me but you know
 we're talking about the markets I think it's important to remember that we're about to see three
 big IPOs and if you look at just the potential value the assets under management there and the
 market cap of those stocks could be the seventh largest sector in the market if this works out right
 so well I think we're due for a bit of a recalibration in US markets here as we absorb these very
 large IPOs and we hit the summer doldrums but I think no question about it the earnings momentum
 is what's driving the market and we remain heavily focused on that and the other thing which we
 talked about in Q1 was the thought that we were going to have to recalibrate markets for the
 multiples that we saw going forward which got a little too high relative to history and especially
 that tech premium which we felt had to come down which it has so we think there's actually room
 for further multiple expansion here Dominic once we get and we absorb these new IPOs I think you
 could see an environment where earnings remain gangbusters right the grown 22% this year I think 15
 16% next year and we see a broadening out of earnings as we go forward here from the mag 7
 to what we call the forgotten 493 what's what's interesting about that those the the S&P 500 story
 is seen by many as being mostly driven by the fundamental aspect of earnings growth more
 earnings per share and S&P 500 companies even if you apply the same multiple gets you a higher S&P 500
 number rising multiples though don't really happen when you have interest rates on the rise right
 and and those particular stories keep getting reinforced by what's happening in the Middle East
 and elsewhere in our economy so how does multiple expansion happen on top of earnings expansion
 if it were to happen at all if inflation and rates are still a part of the story well look we take
 solace in the fact that that hate you the hate to use the t word but we do think that this the war
 hopefully will end soon sometime mid-summer we get an end to the war and we like the fed you know
 we're very vigilant on inflation and we don't want it to become more pervasive even though it has
 in the market it has provided some further margin expansion don't forget in q1 earnings we saw
 that margins hit an all time high for the S&P so that was pretty impressive work there but the bottom
 line is the consumer has to feel healthier the consumer while it is stretched and higher interest
 rates and inflation are having a double whammy effect on the consumer market and and we don't
 think long term that's good if the war ends don't forget we have that secular deflation that's
 going to come from tech especially artificial intelligence and we think that is just beginning so
 we're hopeful that the war ends soon and that that secular deflation will kick in which can help
 the fed stay on hold which is what our view is. Alright Jose go nicks first of all and I will say
 the word transitory just so that you don't have to thank you very much Jose Rasko we'll see you
 soon sir. Thank you. That's your time. A lot more to come here on morning call including
 capitalizing on the booming business of space we're going to talk to one CEO of a satellite maker
 looking to do just that morning call is back after this.
 Welcome back to morning call investors have been pouring cash into the space sector ahead of
 SpaceX's hotly anticipated IPO next month hoping that a rising tide of musk and company will
 lift all boats. One such name that just went public earlier this year is small satellite maker
 York space systems ticker YSS getting a lot of love from the street with analyst communities
 overwhelmingly bullish on the stock with some 78% maintaining a by rating or equivalent there are
 currently zero cells on the stock. Joining me now is York space system CEO Dirk Wallinger Dirk
 an interesting story because the entire space industry is contingent seemingly on just one name
 overall that's currently privately held but is soon to be public just how much is York going to be
 affected by the SpaceX IPO. Yeah I mean I think generally that SpaceX yeah entering the IPO is
 bringing a lot of excitement to space I think most of that excitement is really around the
 potential for growth so in SpaceX's case obviously they're they're aiming to become an AI
 company right and I think that growth from space into an AI company is bringing excitement
 which is really helpful for companies like York where for us we're moving from space expertise
 and domain awareness into really supporting unmanned systems and emerging markets there so
 I think a lot of the excitement is about how space companies like York who have the experience
 there could move into emerging markets. How exactly does York fit into that kind of ecosystem
 overall within space and communications satellite and military applications what exactly does York
 do that can help enable many of these future storylines in the coming months and years.
 Yeah so York has a wide variety of contracts you know we have eight different kinds of
 capabilities most of them applicable to things like golden dome but there's other things that
 like tactical communications and assured communications which are becoming more and more important
 right when we look at conflicts in Iran, Ukraine etc a shared communications is how you're going to be
 able to coordinate fleets of things going into the future and so leveraging a shared communications
 is how you're going to be able to coordinate things for unmanned systems and future battles and wars
 and that applies for tactical communication but then also also golden dome and things like that as well
 speaking of assured communications had a little bit of a technical glitch there but let me follow
 up with one more question for you before we let you go here if you take a look at the reasons why
 people focus on space there are fundamental stories one of the concerns about York has happened
 over the past few weeks with regard to some of the revenues that you get from the government and
 a short seller report on you guys how exactly do you counter some of those claims and what exactly
 is the growth case for you ex some of those government revenue sources yeah absolutely I mean
 the reality is that when the government is going to kind of move to new architectures and integrate
 capabilities like like coupling assured communications with big pipe kind of data there's going to be
 some confusion on the market on how that's happening luckily the government is doing a much better
 job now in clarifying that assured communications is really an enduring need the need to support the
 warfighter on the ground is not going anywhere it's never going to go anywhere but when there's a
 re-jiggering of the architecture and how that's going to work it causes some confusion but we're
 seeing now that the plan for how the space data network is going to work is right basically to
 combine needs so that's been really positive for us you know the beauty for you are because that
 we have a wide variety of capabilities beyond just assured com so remote proximity operations
 advanced moving targets things like that so the wide base of capabilities plus the assured
 networks being an enduring need is what's really going to drive some of the growth for York going
 forward all right York space shares up about four and a half percent since the IPO Dirk Wallinger thank
 you very much please come back and see us again soon with updates thank you all right straight ahead
 on the show the morning call crews team up the trading day ahead and a tale of two software
 stocks earning swings plus inflation back in the spotlight we're back after this
 the crew members today are Jay Woods of Freedom Capital Markets he's also a CMBC contributor
 I mean the momentum is there on the earnings front no question I think when we look at the tech
 sector and we look at AI in particular we really have to break it into its component parts
 we have the bottleneck areas the memory the the semi area we have areas like software and we have
 areas like hyperscaler and they're all kind of feeling their own dynamics there I think when we
 think about software that's a real value play in our in our book if you can pick your spots obviously
 there's winners and losers there and there's still valuation opportunity I still think there's
 valuation opportunity the hyperscalers with earnings momentum I think it's some of these bottleneck
 areas that's where I wonder if there's a bit of frost does valuation still matter right now Mike
 I'm looking at you from a strategist standpoint because we are seeing relatively reasonable forward
 multiples for many of these tech companies despite the runs that they've had but the tech trade is
 now back in favor after it being somewhat out of favor for the past year for sure evaluation as
 but the issue I have is probably the top 20 names in the S&P 500 are more than half the market at
 cap at this point and they're probably trading about 35 to 40 times earnings so yes the forward
 multiples are there but you're also seeing multiple expansion of those forward multiples
 where names like these memory names that are usually single digit PEs are trading 20 times forward
 earnings so I think there is you know it's a very expensive environment and it's very top heavy
 you know it's crazy Jay because micron even with the parabolic run is trading at 10 times Mike
 took him up to my point 10 times forward earnings what exactly are the charts telling you about
 whether this tech trade really can continue when you look up at these charts you're starting to
 get a nosebleed you're going a little too parabolic and at some point we're going to see a pullback
 and it's going to make headlines oh micron down 20% over the last week but when it pulls back it's
 going to pull back to normal levels they're too extended over their moving averages do you look at
 traders look at the 10 the 20 day moving average is what I look at the 50 the 200 we don't usually see
 moves like this continue that much higher so I think they're getting tired but what it'll do is
 consolidate over time and the averages make keep up I don't think they're going to come back to earth
 and this is just a boom and a bust no they're here to stay but they make consolidate for a long period
 of time Mike how do you counter what could be a frothy market right now and do you consider it frothy
 and how do you risk manage around that I absolutely consider it frothy I mean the interesting thing is
 with the semiconductor index yesterday right 12 of the 30 names made new highs but only three closed
 and positive territories so that points to the tired action that Jay was mentioned was was talking
 about there for me I look for more value names what I've seen is the markets got a more top heavy
 you've seen valuations of the the other 480 names in the index get pushed down so you're seeing
 a lot of stocks so I say I hate the market there's a lot of stocks out there that I could find
 that I would love because valuations are attractive now marta one of the issues we have coming up
 right now is whether or not this inflation story is you know Jose Rascal at HSBC wanted to
 use the word transitory he didn't he called it the t-word I filled in the blanks for him but the
 inflation story is front and center given the feds preferred gauge coming out today PCE how much
 can inflation be a headwind to the overall market well I think I mean it comes a headwind from
 a few different directions right there's the consumer bench that we that we anticipate but it
 doesn't look like it's all that painful and then we also have to worry about what rates are
 doing and of course that is a valuation story for equities as well so I do think there are some
 headwinds out there what we're seeing though is that AI momentum you know paper covers rack AI
 momentum covers inflation at the moment so this is something that I think we have to be aware of
 but I'm not sure it's enough to disrupt what we're seeing on the equity side of things
 Jay is there a level at which people will find what's happening attractive because we're looking
 at kalshi odds right now about whether or not the PCE comes in above two tenths of a percent 87
 percent think it so the consensus kind of is right now it's going to be hot yeah I don't think
 it's going to surprise us one way or another we've watched the tenure the tenure is the tell
 when it was spiked up the 4.6 just last week I believe it was that's when equities felt like oh
 no we're we're going to cool off so if we see another spike the 4.6 you know god forbid above it
 and then maybe we talk five equities are going to get hit and a 5 percent pullback is what
 going to bring us to 72 50 not much of a pullback in the grand scheme of things all right martha
 thank you so much for being here mike as well and jay woods we appreciate the morning call crew
 that does it for us here futures are slightly lower squat box starts right now