Oil Prices Move Higher, Retail Sector's Earnings Season 5/22/26

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 The S&P tries to push its weekly win streak to eight.
 Futures right now are in the green. I'm Dominic Chiu. And this is your morning call.
 And good morning. I'm Dominic Chiu in from Morgan Brennan on this Friday,
 right before Memorial Day weekend. US stock futures right now are moving to the upside.
 The Dow is up by about 140 points. I'm glad it's the opening bell, the S&P at by about 20.
 And the tech heavier Nasdaq 100 up by about 109. We are tracking treasuries as well. Check out
 what's happening with rates because we are seeing a little bit of a bid to that treasury complex,
 which means lower yields. The benchmark 10-year note yield 4.56% the two-year note yield 4.08%
 and the 30-year long bond just to hair above 5.08% itself. Let's check on energy prices as well
 as the US and Iran signal some signs of progress despite being at odds on certain key issues,
 but right now oil prices are moving to the upside. US benchmark West Texas Intermediate $98.82
 up to 1.5%. 3% gains for ice-brink crude through international benchmark $105.83 there.
 We're also tracking key names in the quantum computing space. IBM, D-Wave,
 Rigetti and others all up between 12.5 and 33% in yesterday's action. After the Trump
 administration announced they would award $2 billion in grants to nine companies operating
 in that space. If you're looking at how things are moving right now as well,
 we are seeing extensions of those gains. You can see they're generally speaking,
 those stocks are up again pretty much across the board extending yesterday's big gains in quantum.
 We're also taking a look at again some of these moves around at least quantum in this context.
 Let's see now how Europe and Asia are closing things out. With their training weeks,
 we'll turn to Karen, show who's live in London with the latest on the market action there.
 Karen, good morning.
 A dom, good morning to you. Well, Asian equities jumped this morning. Japanese stocks in particular,
 while oil prices remained volatile as investors. Can Teja Ho for a breakthrough in the US
 around peace talks. Meanwhile, Japanese core inflation slowed to a four-year low in April,
 complicating the outlook for the bank in Japan's rate-hiking path. Switching over here to Europe,
 stocks are lining up a day in the green in particular. Semiconductor technology names out in front.
 This is Bond, yields pull back after a rollercoaster week. We're now banking gains across for
 the training week, but stronger markets are the $1,100 up at third of a percent in the Zedra
 DAX, tracking around the highs that you've seen posted the Middle East conflict.
 Now, we're also watching Luxury stocks close through this morning.
 Cartier owner Rishmont beat on Q4 revenue expectations with stronger sales in the US and Asia
 offsetting weakness in the Middle East. This has been one of the best performing Luxury stocks in
 Europe, although still down for the training year. And Poo shares wonder watch. They're in decline
 right towards the bottom of the stock 600 after the company ended talks with Estee Lauder,
 over a merger that could have created a $40 billion group bringing together some of the
 beauty industry's biggest brands. And Dom, the word on the street, is that demands from
 Charlotte Tullbury, the founder, got in the way and made some of the complexity too difficult
 for the transaction to proceed back to you. All right, Karen, show and learn with the latest
 on the market action there. Have a nice weekend. Thank you very much for that.
 Let's get a quick look at some of the earnings movers taking shape this morning.
 Take two shares are higher after a revenue beat, but also saying that the latest installment of
 its blockbuster Grand Theft Auto Game franchise is still on track for a November release.
 The CEO of take two will have more on those results coming up in Squawk Box in the 8 AM hour,
 so keep an eye for that Strauss Zellnick interview. Shares of work day meanwhile also
 higher this morning after the HR software provider posted stronger than expected results and raised
 its full year margin guidance. Those shares are up about 11.5% and shares of Zoom are zooming higher
 after the company topped earnings and revenue estimates on strong enterprise sales. Zoom also
 opted stock buyback program by a billion dollars. Zoom shares of 7% pre-market. Now back to the
 broader side of things and the Dow coming off a fresh record on pace for its third positive week
 out of the last four and even better streak by the way for the S&P 500. Set to notch its eighth
 straight week of gains, that's the longest winning streak since 2023. Joining us now is Alan McKnight,
 Chief Investment Officer at Regions' Wealth Management. Alan, this has been an amazing market
 despite every single macro and geopolitical headwind that's been out there. What exactly has been
 going on that's been keeping this market afloat not just to the tune of maybe record highs but to
 the tune of Mag 7 stocks reasserting their dominance yet again. For us it's all about the earnings
 and when you see what's occurred over the last month and a half with earnings calls and you talk
 to CEOs, you talk to CFOs, there is still a strength foundationally to the economy and it's flowing
 through into the earnings. Now, big question Mark, will we see that in Q2 and Q3 as we start to see
 and receive some of the downside from what's happening in the Middle East but right now things are
 pretty well set up and it's now being or benefiting the markets. Overall, what's curious now is we
 seen this kind of safe haven approach towards these mega cap tech stocks. The case was made years ago
 that they are relatively immune to what's happening with the broader economy even with what's
 happening with geopolitical events like Iran. Is that going to be the case for all the other parts
 of the market or do we have to bank on those same ten or so stocks that are going to carry everything
 in the S&P 500? We think we're going to see a broadening effect. We saw a little bit at the
 beginning of the year and then we got put on pause during the conflict and now we're coming through
 this and I think the big question for us will be can we actually start to see a broadening across
 other industries that have a little bit more sensitivity if you will to the economy. So the consumer
 consumer discretionary you've heard from Home Depot and Lowe's and Walmart and the consumer's been
 bending quite a bit of late but we have to bank on the fact they're not going to break.
 Now, the rate story is interesting as well. These are the all of this because as interest rates go
 higher because the threat of inflation may be there, maybe be the longer term, it's ultimately going
 to have an effect on consumer confidence and that may be the driver of what we could see in terms of
 downside. Just how much should we worry about rates and how they're moving it's not just here in
 the U.S. it's all over the world at this point and what exactly can get us off of those particular
 highs? Well, first and foremost, it's a global story and you nailed it which is it's not just what
 the Fed is going to do it's other global central banks and right now we've moved from this we're
 going to see two cuts this year to now we might have to see you know we might have to hike a little
 bit just to get this inflation in check and the reality is it's not just the energy complex we're
 seeing prices across the board move higher and that's problematic for the consumer. I mean,
 and historically the consumer may say they're not very happy about it but then it's almost this
 Jerry McGuire showed me the money and they still spend and the U.S. consumer has never been put
 in the corner they're going to still spend and so what we want to see over the summer months
 with gas prices higher with some concerns about the tensions in the Middle East do they actually
 start to pull back a little bit. All right and then one place people are spending or want to
 spend on apparently is in hot IPOs. We are seeing a lot of activity on that front there.
 Cerebrus was just the latest example but now we have SpaceX's filings coming out and
 Thropic and open AI are anticipated at some point down the line as well. What exactly does this hot
 IPO market tell you about where things could go from here and are we going to keep spending
 given the fact that we have this demand for these IPOs. It's been a big debate for our
 investment team because what we tried to look back over history and thinking this idea of history
 doesn't repeat itself but it rhymes and when you look back to the 99 time period and I'm old
 enough to say that I was a part of that when you see just this excitement and this rush to own
 these names without any profits and yes those companies eventually came to profits but our question
 about SpaceX open AI and Thropic will they be able to actually deliver the returns on the
 investments that are being made. We do think it's going to be a completely different dynamic because
 of how large they are and that impact on the index because they're going to get conceivably
 introduced into the markets and so much money is going to flow into those names pulling from some
 of the other hot names in the last really a couple of weeks and months. All right really quickly
 before we let you go for the long weekend. Is this 1999? We don't think it is. We think that
 things are much better than they were in 99. It's not across the board. There are a few names
 that are really getting a little bit frothy but it's not everywhere. All right, Alamak night,
 CIO at Regionswell. Thank you very much. We appreciate it. Have a nice Memorial Day weekend.
 You as well, Tom. Thanks. All right. A lot more to come here on morning call including
 signaling some of the signs of caution out there. The headwinds facing retail giants amid mounting
 questions again about the consumer to Alance Point plus that consumer facing gas prices at four
 year highs heading into Memorial Day weekend what it could all mean for the summer travel season
 and then later on pulling the plug with just seconds to go when SpaceX may try to carry out
 its critical rocket launch as it prepares to go public a very busy hour still ahead when morning
 call returns after this commercial break. Thursday July 16th CNBC Sport and boardroom joined
 Finatics Fest for Game Plan. Groundbreaking ideas shaping the future of sports and entertainment.
 Request your invite at CNBCEvents.com slash Game Plan.
 Welcome back to morning call. Market flash now and shares of raw stores that stock is jumping
 to the tune of five and a half percent on the back of earnings after yesterday's close.
 First quarter profits and revenue topping estimates the retailer also raised its full-year annual
 comparable store sales and profit forecast as well. Discount retailer catching a big bid
 we'll see if that's a good thing for the overall economy and the consumer. Sticking with that retail
 trade the sector's busy week of earnings wraps up this morning will get results from BJs before
 the bell and then that stock is down about two percent since its last report. Those results follow
 earnings from the likes of Home Depot, Lowe's, Wal-Mart, Target and others helping kick off the
 wave of quarterly reports from that retail sector. That parade continues next week with the likes of
 Costco, Best Buy, Gap Stores and Dollar Tree all reporting their results. For more let's bring in
 Jerome Martis the Director of Consumer Research over at LSEG Group. Jerome this is an interesting
 dynamic that's developing because the consumer is obviously facing stress right now with higher fuel
 costs and higher inflation across the board but they remain surprisingly resilient in the face of
 all of it. Can we keep expecting that from the consumer? So Dom thank you so much for having me
 this morning. That's very interesting because the hot topic this earnings season has went out of
 the higher fuel cost. In fact 50% of retailers that have reported earnings have mentioned that
 in their earnings call. And as a result what we're seeing is that analysts pulled by LSEG have been
 lowering their earnings guidance for the upcoming quarters. Take for example the second quarter.
 At the beginning of this year LSEG was looking at a 8% earnings growth rate for retailers.
 However that has now been cut in half to 4% because of these higher gasoline prices.
 And if retailers actually come in at 4% earnings growth rate this would mark a significant slowdown
 from Q1 where we're expected to see an estimated growth rate of 26%.
 Now this is also an interesting dynamic developing because we are seeing kind of like this
 I guess bifurcation in certain parts of the market you know across the income spectrum and the
 kind of retailer price point spectrum. But it's now starting to hit some of the higher end
 companies as well. We've seen that commentary from some of the European luxury houses
 but I mentioned raw stores before surging on its earnings report. How exactly are things
 shaping up right now? It seems as though that lower end consumer might be helped out by some of
 the discounting that's happening in elsewhere in the market. So the divide in consumer income
 cohorts is definitely very evident. We saw that the high end consumer is firing at all cylinders.
 We saw that they are shopping for home goods at William Sunoma and at Royal Florent and what's
 very interesting about the high end consumer is that they're willing and able to pay full price
 in a time when the middle class consumer is actually being value conscience and is being driven by
 promotions in order to shop to come into the stores. We're seeing that they still want high end
 designer clothing but they wanted at a discount that's why they're gravitating towards Ross and
 TJ Maxx and they're thinking twice about making those high expensive DIY projects at home people
 and lows and Walmart was very clear yesterday that the low end consumer is the one being squeezed the
 most because of these higher gas fuel prices and the macro economic conditions. So what companies
 stand to relatively benefit more in this kind of environment from a stock performance perspective
 where are the fundamentals more justified in certain types of companies? So value right now the value
 proposition is key. In fact in a collaboration with centric market intelligent outsell discover
 that what brought the consumers into the stores in the month of March and April was the fact that
 amount of merchandise on sale actually reached a six-year high and the markdowns offered on these
 products actually hit an all-time low since we started collecting this data in 2019. So what this
 is telling us is that retailers are being very strategic, very disciplined in protecting their margins
 while giving the consumer their perception that they're getting a value for their money.
 All right an interesting kind of shifting of perceptions there as well. Jerome Martis thank you
 very much. Have a nice holiday weekend. Thank you too. All right well straight ahead on the show
 andthropics looking to bolster its ties with one tech giant as it looks to further cement
 it's AI dominance but first more on the retail sector and a check on shares of Decker's
 outdoor shares of the parent company of shoe brands like Ugg and Hoka brands under pressure
 after initially rising after reporting record revenue for its worth quarter and full year
 citing robust sales guidance for the current quarters coming in relatively mixed those shares
 are down about 1% right now in the pre-market trade morning call is back after this.
 Welcome back to morning call checking some of the morning's latest headlines House Republican
 leaders abruptly canceling a vote on a resolution directing President Trump to withdraw U.S.
 forces from Iran or get approval from Congress to continue those operations leaders doing so
 after it became clear they did not have the votes to defeat the war powers resolution they'll likely
 bring the measure back up when the house returns from its week-long memorial day recess.
 CNBC's confirming reports that Microsoft is in talks to supply its custom AI chips to anthropic
 sources adding the two companies have not signed off on a deal involving Microsoft's myad chips
 back in November Microsoft said it would invest $5 billion in anthropic while anthropic committed
 to spending $30 billion on Azure. SpaceX will attempt to carry out a critical test of its
 massive Starship rocket later on today after scrapping the launch with just seconds to go yesterday.
 CEO Elon Musk revealing the hydraulic pin holding the tower arm in place did not retract properly.
 The scrub launch coming a day after SpaceX filed a prospectus for its highly anticipated
 initial public offering. And Apple is asking the Supreme Court to review a lower courts ruling that
 forced major changes to its app store payments rules as part of its ongoing legal fight with
 epic games on that matter. In its petition, Apple argues that the lower courts improperly relied
 on the spirit of the injunction rather than the actual wording of the order when finding the
 company in contempt. And finally, Texas is suing WhatsApp and its parent company Meta platforms.
 The state claims they misled consumers about the strength and scope of WhatsApp's encryption
 measures. Met is denying the claim in a comment to Reuters.
 Well, turning back to the markets with the Dow hovering at a fresh record high up over
 one and a half percent for the week. The S&P and NASDAQ also in the green as well for the week.
 The S&P, by the way, is set to notch its eighth positive week in a row. For a closer look at what's
 driving the action. Let's bring in Frank Capillary, founder and president of Cap Thesis. He's also a
 CNBC contributor. Frank, thank you very much for being here with us right now. And I know you've
 got the illustrator in play. We would expect that for a chartist like yourself. So let's talk a
 little bit about what you're seeing in the market overall and what's caught your attention in the charts.
 Dom, thanks for having me. Well, as we know, it's a tech-led market. So for this to continue,
 which I'm bullish on, we need to see rotation. And one area we can look towards right here is the
 equal weight RSP, S&P 500 ETF. So it looks different than the S&P 500 because it's already extended.
 So this, to me, is a classic inverse hand shoulders pattern, right? And so if you get a brick out,
 of course, we can go much higher. So what I'm curious about is sometimes you hear the root rotation.
 Think about going into the areas that are more downside, right? They already had fallen. But these are
 the ones I look for that have foundations built already. They're ready to accept the capital that comes
 in there. Alright, so equal weight, not as much focus on tech and comm services in this particular ETF
 because it tracks them across a more equally weighted basket about the 500 stocks. What exactly then,
 if it's not tech, that's driving some of the outperformance there, what part of the market are you seeing?
 Well, technology is still hovering near the top. It's about 14 percent, but financials 15 percent,
 industrial is right around there as well. And those are important, of course, to the economy.
 And they have the most stocks within the index itself. Alright, so let's clear that and see what we can
 talk about with regard to the financial sector overall. Because we are seeing some movements there that
 may indicate that there is a broadening out that could play out or not, depending what the charts say.
 What do you see? Correct, so here we go again. Here is the financial XLFN. It looks pretty similar to
 the RSP, but has a quite gone to that breakout zone yet. But I think it can, because you can see
 over the last few weeks here, it's been selling off, but holding near that now flat 50-day moving
 average. Sometimes it's not always acting like support, but now it is. So we can see that if we could
 finally get up there, finally get a breakout and have a clear path to highs that we saw from a few
 months ago. So with the XLF, of course, very important. And noticing that, looking for chart ideas
 for our clients, XLF has been hanging in there even with the rates screaming higher. So I think
 it's very important to note as well. Alright, so the financials are part of that kind of broadening
 out trade. But let's get back to some of the epicenter of the moves that we've seen over the
 course of the last few weeks since the war lows back at the end of March. And you got to think
 tech and comm services are a big factor of that. So what are you seeing on that front?
 Right. So XLC, we're about to look at next, of course, looks very similar, right? You can see this
 is an inverse standard shoulders pattern too. Now remember, rotation doesn't have to be out of a
 growth and can be within growth. And so if you go all the way back here, though, XLC has been
 net flat for eight months. Right. So we're just ready. And again, at the very end of this,
 we have this bullish pattern formation. So this, of course, alphabetically doing better, but there's
 some other areas that have not like meta and Netflix have been underperforming. I think those
 could be ready. And if they do break out, then of course, we can see your break out into all time
 highs for the XLC as well. Alright. And then let's kind of put a point on it. When you take a look at
 your entire universe, do you have like a best few ideas or a best idea that kind of comes to mind?
 Sure, we're about to look at it. And one of them being Goldman Sachs, yes. And so we start talking
 about Goldman to our clients at the beginning of the month right around here, because we noticed
 that there was also, there's a theme here and other inverse and shoulders pattern, right?
 Finally, breaking out over the last few days, and this would have a target up to about 1100. So
 obviously, very recognizable name, but it's not just Goldman that looks like this. Again,
 looking at financial stocks for bullish patterns, you can track, and of course,
 you know, we're going to see the upside targets within, take it higher from there. And again,
 if we're going to see some capital flow out, the highest flying names, this would be a good spot.
 Put your money into it. All right, a focus there on the equal weight S&P,
 communication services, financials, and the call on Goldman Sachs. Frank, thank you very much.
 And by the way, you're going to stick around. So don't go too far. You're going to be with us
 for the morning call crew coming up. Thank you very much for that. Thanks a lot.
 All right, still in deck for the show, oil climbing higher. Once again, with the US Benchmark
 number, I'm $100. Pippa Stevens is here to lay out whether elevated energy prices may be sticking
 around longer term. And as we head out to break a look at the real estate sector, up 3% so far,
 this week, just off a high hit two weeks ago and outperforming the broader market as well,
 a look at some of the stocks leading that charge. You've got American Tower of 10% plus.
 So far, this week, Alexandria real estate and crown castle both up about 6%. Morning call continues
 after this.
 I'm Dominic Chewin from Morgan Brennan. Welcome back to morning call. Let's kick things off with
 US equity futures in this half hour. The Dow is sitting at a record high, by the way,
 and set to open about another 135 points to the upside. The S&P is implied higher by 12 points
 in the tech heavier NASDAQ 100 up by a modest 50 points. On the treasury side of things,
 we are seeing a bid for government bonds, which is leading to lower interest rates or yields,
 the Benchmark 10-year note yield here above 4.55%. The two-year note yield 4.08% and the 30-year
 long bond 5.08%. We're tracking key names in the quantum computing space with shares of IBM,
 DeWave, Brigetti, and others surging between 12.5% to 33% yesterday after the Trump administration
 announced it would award $2 billion worth of grants to nine companies operating in the industry.
 Taking a look at how those stocks are moving ahead of the opening bell today,
 they are generally extending those gains from yesterday. You can see they're pretty much
 up across the board for those quantum names. Checking out how global markets are closing out
 the week in Asia, Japan's Nikkei leading gains as core inflation there hit a four-year
 low and the early trade in Europe, you can see they're generally positive is around just about
 fractional gains for those global markets. Watching energy prices as the US and Iran report
 signs of progress on efforts to reach a peace deal despite key issues remaining, including
 Iran's ability to keep enriched uranium in the country. Oil prices right now are up roughly
 two and a half to three percent. US Benchmark prices, $98.65, US Benchmark prices translate into
 international markets prices up three percent, $105.61 for Brent. But as traffic through the
 straight-of-four moves remains muted, oil inventories are declining at a more rapid rate.
 Our Pipa Stevens is actually joining us now as a look at what that could mean for oil prices going
 forward, short medium and maybe even longer term. Yeah, Dom, so we're increasingly hearing this
 narrative that it's really those inventory draws that's acting as a buffer for the market.
 And if it weren't for that, those oil barrels coming out of storage, prices would actually be
 a much at a much higher level. But the issue of course is that this is a finite buffer. So take a
 look at this chart from JP Morgan, which really puts some numbers behind it. Starting the year,
 we had about a really healthy inventories of about 8.4 billion barrels. You see there on a global
 scale. Now, it might sound like a lot, but the firms said that only about 800 million of those
 are actually available to draw. So through May, we've decreased those stockpiles by about 400 million,
 meaning we only have about 400 million barrels and inventory left. Now, the firm said that on
 that trajectory, we should reach the operational stress levels for the system by June. Now,
 if we look here in the US, inventories are still at a very healthy level, but they are drawing rapidly.
 You see that big drawdown. Last week, new data showed that they were down by about 17.78
 million barrels, including a record 9.9 million barrel draw from the SPR. Now, that might sound a
 little bit counterintuitive given that these barrels are coming out of storage and going abroad.
 But rabbit and energy's Bob McNally told me that that's actually exactly what the SPR is designed for,
 because it's not as if the US doesn't have access to oil right now. We are, of course, the world's
 largest producer. And so what the SPR is doing is it's mitigating that price shock that would be
 happening globally and then impacts US consumers more. And so, US production hasn't increased
 meaningfully, meaning that drawdown in inventories. Those barrels are coming out of storage and
 hitting global markets, Tom. All right. So, I guess, let's put a point on this. Given the trajectory
 that we are seeing for some of these drawdowns, what exactly are we seeing in the oil markets?
 The crude curve to suggest whether prices are going to be affected on that kind of more medium
 to long-term basis. Yeah. So, you see right here that WTI is trading below 198, 60,
 Brent at 105, 57. Now, we have come down a little bit from where we were at the highs,
 post-conflict, but you've got to look at where we started the year. So, before the end,
 before the war began, WTI was about $63 or so. So, we're still more than $30 above where we
 traded prior to the war. And then you talk about the curve. It has come up. The curve is nowhere near
 where the front month is right now, but it has meaningfully lifted. It's now about 75 looking
 out towards the end of the year. And one thing to note about that SPR drawdown is that the swap
 mechanism means that it has to be refilled at 120%. And so, what that means is that it lifts the
 back end for demand. And so, that theory will lift the curve. And so, everyone focuses on the front
 month we always do, but it is important, as you know, to look how traders are viewing the curve
 looking forward and the price signals they're seeing there. Yeah, you take the barrels now, but
 you've got to pay them back down the line with a big on top of that. So, all right, Pipa Stevens,
 thank you very much for that check on the oil prices right now. Let's now dig a little further
 into what's happening with the overall markets and energy side of things. With Denton Sincuagrana,
 he's a chief oil analyst over at Dow Jones Energy. You'll forgive me because I always want to say
 OPIS. But, you know, Denton, great to have you here with us for this. You just heard Pipa's
 report. It's interesting because if you take a look at the crude curve overall, she mentioned it
 and she hit it on the nail on the head. We are still in backwardation. Front month contracts are
 still much more expensive than they are, say, six, nine, 12 months down the line. But the entire
 curve is elevated in price. So, even if it's lower out there, it's higher than that month was
 just about three or five months ago. Is that something we can expect structurally higher energy
 prices, given what's happening with Iran? Yeah, no, and like said, to the head right on the head,
 and go also good morning. But yeah, absolutely, the back end of the curve is definitely coming up
 because you need those higher prices because obviously the SPR needs to be refilled.
 And also other countries and the US has run down commercial inventories as well or in the process
 of running down commercial inventories. So, those need to be refilled as well. So, yeah, we expect
 prices stay, you know, I know the phrase being thrown out there, I'll look quite a bit these days,
 but higher for longer. And do expect that to happen through the end of this year. And probably,
 you know, into it well into 2027 as well. What exactly could then reset those markets to back
 to where they were? I don't want to be nostalgic, but I will be a little bit here. What does it take
 to get markets to go back to where they were pre-war? Can we ever get back there? Or, and if so,
 how long does it take? Absolutely, can certainly get back there. You never say never with these oil
 markets, but obviously the street would have to reopen. That's kind of first and foremost of normal
 flow of traffic and return of production levels in the Middle East. That's going to take some time.
 You know, even if we ended, say, tomorrow, still going to take, you know, the better part of,
 you know, three, four, five months to kind of return to normal. You know, remember, some of the
 ships that had been moved basically to the Western hemisphere to kind of service this area,
 those ships move at like 13, 14 miles an hour. So, it's really like riding a bicycle on water.
 They move really slow to get them positioned back into the Persian Gulf, would take just a couple
 weeks alone. We've also focused a lot in that last report from PEPA about what's happening with oil
 prices, oil stockpiles, drawdowns, the strategic petroleum reserve. Let's talk a little bit about the
 derivatives of that. And I'm thinking specifically gasoline prices because it's a thing that we
 see the most. I filled up this morning on my way into work. It's a little bit better than it has been,
 but it's still way up there. What exactly can consumers expect from fuel costs and what dynamics
 are shaping that kind of refinery to pump dynamic? Yeah, so absolutely, gasoline prices are at the
 retail level are higher, about 455 this morning. We did see the market come off the last couple days,
 so there might be a little bit of relief for the weekend. I wouldn't, you know,
 pick it up much more than a couple pennies, but relief nonetheless. But, you know, we talk about
 crude oil inventories. Gasoline inventories are starting to get a little bit concerning
 considering the fact that after we've been drawing down for 14 straight weeks,
 now some of that in February and March was terminals kicking out winter-grade gasoline to make
 room for summer-grade gasoline. But we're running some 10 to 12 million barrels below the
 seasonal norm for this time of year. And the numbers that came out from the energy
 information administration earlier this week pointed to inventories that are the kind of the lowest
 levels since 2014 for this time of year. All right, Denton, simply run out. We're going to
 leave the conversation there. Thank you very much. Have a great memorial day. We can hope that you
 get some golf in. We'll see you soon. Yes. Do my best. Thanks, Tom. All right. A lot more to come
 here. A morning call, including more on the impact of those high energy prices at the summer
 travel season kicks off to Denton's point. And the shifts consumers may be making to find some
 relief at the pump. As we head out to break, though, a check on iMac shares jumping after report
 that it's exploring a potential sale. Sources telling CNBC that the company has held preliminary
 talks. No official pitches have been made, but iMac shares are up fractionally in the pre-market
 trade morning call is back after this.
 Welcome back to morning call. Gasoline prices continue to grind higher. Triple A says
 the average price for a gallon of regular unleaded is $4.55 right now. Triple A is also saying that
 that's the highest level in four years. And predictions markets are not that optimistic that we're
 anywhere near the top. On CalChi right now, there is a 76% probability that will hit $4.80
 a gallon later on this year. 59% odds in probabilities at five bucks a gallon. And a solid coin toss
 near 48% above five dollars and 20 cents a gallon. So how much is this weighing on the travel
 plans for this Memorial Day weekend? Kintessa Brewer joins us now with that story. Again, Kintessa,
 I filled up this morning so I know it like everybody else does out there. The prices are high.
 Is it going to affect my travel and others? You know, because it hits you in the wallet when
 you're paying $50 instead of $30 to fill up. This is Kingston, New York. Right off the New York
 state through way, gateway to the cat skills. And it can be a stopover for those who need gasoline
 or for those who need a charge. If you're heading to the Adirondacks or Vermont or the Finger Lakes,
 maybe these destinations get a boost because this is a drive market country, the kind of place
 that families still come when they want to get away. But you know, maybe not the airfoil or the
 big hotel bill, the whole production of a longer trip. Triple A expects more than 45 million
 Americans to travel this Memorial Day. That would be a holiday record, even with gas prices at
 nearly a buck 50, more than $1.48 more than last year. You kind of got a sigh of relief there for
 a second, didn't you? Clearly people want a break, but what are they willing to pay?
 Sojourn, the travel intelligence company says Memorial Day hotel bookings are showing some softness.
 Domestic bookings are down nearly 8% year over year international bookings down more than 10%.
 But the data shows that travelers are not necessarily swapping the big trip for a shorter one.
 57% of bookings now are still within 500 miles of home and that long haul share has not
 meaningfully shifted. So instead of downsizing, it looks like some travelers are just opting to
 sit out altogether. Still, you've got these big events that are big draws. For instance, BTS,
 the Korean superstar boy band is playing in Las Vegas. MGM told me they're fully booked this weekend.
 And on MGM's earnings call, the CFO said the company's not seeing a summer slowdown even with
 price pressure from airfare gas and other costs. He says it's hard to predict, though, what's to come
 this summer because now the booking windows are so short. Dom, so Contessa, how does all of this
 factor into this kind of conversation around this bifurcation in the economy? Were some of the
 people who are more well off on the income spectrum are doing better in a higher fuel environment
 than those that are lower or in the middle class in America right now?
 You know what's so fascinating is that if you look at trip advisors top destinations for
 Memorial Day weekend, you have Rome, Italy on one hand and you have Reno, Nevada on the other hand.
 Expedia put out their top destinations. Prescott, Arizona makes the top five. It's just not a
 place that you would normally think of as your let's get away Memorial Day weekend kind of thing.
 So it really does show there are people who are willing to spend on international destinations and
 those who say no, I'm going to go closer to home. Bank of America put out a summer travel note and
 it said that lower income households are much more likely to have no travel plans, almost 40 percent.
 And they're showing that their card spending is down significantly year over year
 in this for travel related purchases. By contrast, if you look at middle and higher income
 households, they are seeing stronger spending. Interesting. Well, for our family, we're staying
 close to home and I'm happy about the fuel bill on that front. Contessa Brewer, it may be the work.
 Yeah, it may be. Contessa, live in Kingston, New York, off of Thruway. Thank you very much. Have a nice
 weekend. Still straight ahead in the show. The morning call crews a jug convening right now,
 digging to the drivers for the trading day ahead, including the buying opportunity, one crew member
 sees in one key part of the market. We're back with that after this.
 Welcome back to morning call. Here's what to watch today. We'll get the latest looks at the
 consumer sentiment and leading economic indicators. Kevin Worsh will be sworn in as the new chairman of
 the Federal Reserve Bank. We'll also hear from the feds Christopher Waller and earnings reports
 coming from BJs and booze Alan Hamilton. Well, it's time for your call sheet. We'll
 relook at the topic, striving the trading day ahead. The crew members today are Frank Capillary
 of Cap Thesis back with us. Also with us now is Megan Xu of Wilmington Trust. Both are CNBC
 contributors. We've also got Drew Pettit from City as well. Thank you all for being here with us.
 Let's get to our first topic, which is this market's arguably quiet rally towards these record high
 levels. And Megan, I will start with you here. Has it been surprising at all that the markets can do
 this reach record high levels given everything that's going on? I think so. I mean, Geopolitics
 remains very headline driven and oil is the primary risk to the consumer up until now tax refunds
 for the consumer, which have been about 17% higher than last year have been providing a lot of
 cushion against higher oil prices. So if we stay here through the summer, I would expect the
 pressure on the consumer, particularly the lower end consumer, but you've been discussing this
 morning to build. But I think the market's keying off of earnings there. We've obviously seen
 a very strong picture again, a little caution because all of the upside, surprise to earnings
 has come from tech and energy. The rest of the market doing fine, but not delivering the same
 degree of robust earnings growth. All right. So Megan's got the kind of macro picture. The
 consumer is a big focus and Drew, I'll go to you for this next one. Do the fundamentals support
 these kinds of valuations in the market? And are there certain places in the market that you
 would be overweight or underweight given what you're seeing? I would say half of the market, yes.
 So when you look at the S&P, Megan kind of alluded to it, right? Half the market is really AI
 enabled and it's not just technology. There's even the infrastructure built in the industrial side
 there. Look, so that makes sense. Earnings momentum to us in general looks good. The market has a
 lot of price momentum, but we'd be fading price momentum where you don't have earnings
 followed through. So we still like tech, we think you tactically fade energy and you look for any
 companies that can continue to expand margins and improve operating efficiency. So lots of those
 opportunities still in the market to us. All right. And Frank, we had talked earlier about your kind
 of possible breakouts brewing for financials and communication services. Are there parts of
 the market that you would stay away from right now? Well, I think we have to focus on growth in those
 areas. So the defensive ones right now, I don't think you're going to play out as well. But you
 want to see, of course, is rotation and eventually those will work. But the most driving the market
 are going to be the ones that are, of course, have them more stocks than them and, of course,
 have the highest market cap as well. They tend to be momentum at two. And do you feel as though
 some of those momentum names could be due for a fall and if so, just how deep could it be? It hasn't
 really been deep at all for the past few years. Yes. And that's what we're talking about with
 the rotation call. And so if you look at specifically semiconductors, right, just hitting a 20 day
 moving average for the first time in a number of weeks, we could go back to what happened in 2025.
 When that occurred, it led to some consolidation first and a continuation of the uptrend. So if the
 pullback does come, I think we have the ability to then track it and see if another bullish pattern
 can form from that point. If not, of course, there's a lot of light support underneath there to take
 advantage of. All right. So the market narrative these days is very much about those corporate
 fundamentals, but it's also about this massive rush that we are expecting in very high profile.
 They used to be unicorn, but now they're unicorns on steroids, right? These are massive companies
 coming to market. These giant IPOs drew, I'll go to you for this one first, the anticipation of
 what's coming down the pike. What's it going to do to the markets and to invest or demand
 and to sentiment? It's going to remain high. Look, I think people are really bullish and excited
 for these things. We get it. Really, the market's been starved for interesting growth names.
 We've talked about this for years. Small cap has had a serious problem because these IPOs don't come
 into small cap, become mid cap, and then eventually become large. They skipped that whole value chain.
 So I think a lot of investors and public equities really haven't had the interesting growth stories.
 They want thematic exposure to a lot of these giant IPOs, and look, they haven't been building
 the small cap and kind of growth satellite positions as aggressively. So I think it'll fill
 a hole in people's portfolios. I get it, supplies really large, but we think fundamentals,
 strong momentum, support these IPOs. Megan, are you excited about all of these companies coming
 to market as a buyer or investor, or are you a little bit more cautious or skeptical given some
 of the valuations that you're seeing? I do think the valuations give caution at least in the short
 term and the enthusiasm and the momentum for some of these names. The price action that we saw
 from St. Louis last week, I think is evident that there is a lot of momentum and the companies coming
 to market will also probably make it into the ETF indices quicker. So that means that active managers
 need to build up positions relatively quickly just to keep some resemblance to the index. So that
 helps capital flowing into these companies. But I think you could be more exposed to some short-term
 volatility in these names just because of the rapid flows into these stocks and the short-term price
 movement. But longer term, I think they make some very interesting stories and these companies
 are obviously changing the world. So if you have a long investment horizon, they are potentially
 interesting. All right, so let's talk about our third topic because we officially have a new
 Fed Chair now. It's been sworn in. Kevin Warsh, he's going to be the guy and that is going to have
 an impact perhaps on rates. Frank, I will start with you here. Is the 10 year at 4.5 to 4.6%
 on the charts something that is attractive or can we see even higher upside in yields?
 I think long-term just began. Have you seen some inflationary pressures already? Of course,
 not just crude oil, other commodities as well. But if you look at the 10 year, I would caution that
 this could be a very long-term event to actually get there because it's really net flat since the
 beginning or the middle of 2022. They hit 5% a little bit later or in the beginning of 2023,
 but if you look at that, there's been many months up and down where people got overly excited
 about both sides of it. So I think right now, in terms of what the market looks like or feels about,
 worse coming in, we've reduced the hearing about Powell and understanding what he's staying for
 the last eight years. So I think between now and then, probably have to withstand some volatility
 before we see the next path of rates going higher. All right, Drew, we got a few moments left here.
 How much are those rates going to factor into valuations in the back half of the year?
 Long-term, if you stay above 4.5 and you start threatening 5%, it's hard to put a
 multiple of 25 acts on the S&P. So medium-term earnings, fine for multiples, longer-term,
 the macro, especially rates inflation, a little bit more difficult to send up.
 All right. Thank you guys very much. Megan Schew drew,
 Pettit and Frank Capillary for the morning call crew today. We appreciate it.
 Have a great Memorial Day weekend. Hope you enjoy the holiday.
 Well, let's check on futures right now. We are heading and closing out the week and possibly
 eight straight weeks worth of gains. The Dow Jones implied at higher by 180 points. The S&P
 up by 19 points in the NASDAQ up by 80 points. We hope you have a great Memorial Day weekend,
 Swachbox starts right now.