AI, rates and affordability pressures drive market debate 5/20/26

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 Good Wednesday morning, let's get a check on U.S. stock futures, which are firmer this morning, with stocks riding a three-session losing streak, specifically the S&P and the NASDAQ.
 As you can see, we got some green on the screen this morning with a major average, which is poised for a higher open.
 If we turn now to the treasury market and keep in mind, stocks have been taking their cue from bonds over these last few trading sessions,
 you could see a little bit of a breather here across the curve for Treasury yields. The U.S. 10-year treasury is yielding 4.639%, and the 2-year treasury yields 4.091%, the 30-year treasury, 5.165%.
 That, of course, after the 30-year treasury yield touched its highest level since before the financial crisis, July of 2007 levels.
 Just to give you an idea, even though you see some red on the screen right there, just how big the move in yields has been over the past week and even over the past month.
 Take a look at the U.S. 10-year treasury yields. We started a month ago, we were trading around 4.3%, and as I mentioned, we're at about 4.6% right now, just about a 20-basis point move in the past week alone.
 Turning to energy as well, where you see some more red on the screen here taking a bit of a breather here.
 WTI crude is down a little over 2%, still trading near 102 dollars per barrel, though, so still at these elevated levels versus a week ago.
 And Brent crude is also down about 2%, 108 dollars per barrel. Global rate crunch continues to squeeze stock markets around the world. It is a global phenomenon, and Karen Cho is in London with that trade there. Karen.
 Thank you very much for that Morgan. Yes, well, European stocks are posting. But in the next picture this morning, the UK inflation numbers are widely watched.
 They came in less than expected in April, with the headline figure at 2.8% on the year that was lower than forecast.
 We have seen some women on UK guilds after the data and some changing expectations around what the Bank of England might do next.
 JP Morgan pushed out its forecast of a hike from the B.O.E.
 Now I'm July instead of June for a 25 basis point rate increase. You can see the FTSE perched us a fraction lower today.
 Elsewhere we are marching higher across the border. We've also had some numbers just crossing for the Eurozone.
 We've seen inflation move higher by 1% over the month, now running at 3% year over year.
 So the market just digesting that as well. And don't forget that, of course, is still higher than the 2% target too.
 When we take a look at some of the sectors and what we are seeing playing out across Europe this morning.
 We've had a little bit of movement and technology, of course, and video day to day. The supply chain and technology closely watched so that is where some of the appetite is.
 Now the top performing sector racing ahead over basic resources up 1% oil and gas despite some of the movement week around the oil price is still supported this morning.
 And industrials trading stronger to 6.10% of a percent. So Morgan, I close the eye on that inflation data.
 A bit of a win here in the UK after the regulator imposed an energy cap, but else where you can still see the heat coming through.
 Thanks to the war in the Middle East back to you.
 Okay, Karen Cho, thank you. Let's stick with the action out of Asia as well.
 News alert on Samsung after its 47,000 member worker union says it will strike starting tomorrow after 11th hour talks with management's apparently broke down.
 Let's get to Lisa Kim. She's in Singapore with the latest. She's been covering all of this as it's been playing out here for weeks now and Lisa bring us the latest.
 Hey Morgan, so Samsung electronics and its labor unit in fact resume talks about two hours ago to narrow their differences on bonus pay.
 This is their really their last ditch effort to avoid a walk walk walk out. And as you mentioned, the union had said earlier that it would go on an 18 day strike after negotiations with management collapsed.
 Samsung is a major player in the global memory chip market counting and video MD Google as its customers so a strike would exacerbate the global chip shortage.
 And so if the two sides failed to reach an agreement around 4 in 10 of Samsung's Korean workforce are set to walk out starting Thursday local time and it would be the largest ever industrial action at the company.
 Samsung and its rival SK high nicks are driving the rally in South Korean stocks and the country's economy.
 So the Korea's central bank reportedly estimates that a strike would shave half a percent off the country's economic growth this year.
 Samsung shares slid more than 4% before closing the session largely flat Morgan.
 Lisa, I want to shift gears here and I also want to ask you about Japan, which is in focus for investors globally right now.
 You had US Secretary Treasury Secretary Scott Besson yesterday at the Paris G7 meeting.
 Not he didn't name names, but he was very pointed in terms of his critique here of Prime Minister Takaishi.
 And basically said that it was politics that was not enabling the BOJ to begin to height race.
 I think the takeaway here from some strategist and some analyst is that you could see a live meeting now for the BOJ to hike those rates come June here.
 After that move by Treasury Secretary, obviously, inflation is in focus.
 The run up we've seen in rates there is in focus as well and everything with the yen too.
 So just want to get your insights on that too since you covered Japan so closely.
 Yeah Morgan, so Treasury Secretary posted in fact on social media that had met with BOJ governor,
 because what would on the sidelines of that G7 meeting saying that he's quote confident that government would quote successfully guide Japan's monetary policy.
 So his comments are seen as hinting that the BOJ should continue with its policy normalization and go ahead and hike rates in June.
 But despite his comments and despite the suspected rounds of currency intervention by the Japanese financial authorities earlier this month,
 the yen as you can see is trading in the $159 handle to the dollar again once again closer to that line in the sand of 160.
 And what you want to pay attention to is finance minister Katayama,
 Japan's finance minister told reporters earlier this week that Japan stands ready to act against excessive volatility in the foreign exchange market.
 In a way that she said would not drive U.S. Treasury yields higher. Of course Morgan, a bulk of Japan's foreign exchange reserves are hailed in U.S. Treasury.
 So in theory another round of currency intervention could to boost the yen could potentially involve selling U.S. Treasuries at a tie when they're already elevated.
 Yeah, okay Lisa Kim, thank you just extraordinary developments that we've seen here in the last call at 48 hours.
 Keep us updated on Samsung as well. Well the other major market story we're tracking this morning is Nvidia.
 It's out with earnings after the close today. The U.S. closed as traders price in a post earnings move at least 6% in either direction.
 A market cap swing equal to the entire market weight of a Goldman Sachs, Merck or Novartis.
 Joining me now is late stone wealth chief equity strategist Aaron Gibbs and Cleo Capital managing director Sarah Kunst.
 It's great to have you both here Aaron. I'm going to kick this off with you. It's great to have you on set.
 Before we get into Nvidia specifically just your take on what we're seeing across markets right now because it does seem like different asset classes are taking their cue from the bond market.
 Yeah, you can't ignore the bond market right now and with these kind of shifts that we've been seeing just like you mentioned just coming off of those peak yields.
 That sets the tone for everything particularly these growth stocks because obviously now what you earn in five years is discounted more.
 Particularly if you can earn 5% off a 30 year treasury that's a big deal.
 And there've been a lot of studies about whether it's 40 bips change or two standard deviations whatever metrics you want to use in order to interpret what's happening in the equity markets.
 It ultimately means that equities are going to go their evaluations need to go down because those dollars in the future are worth less with these elevated rates.
 And so that's something that we we can't simply ignore particularly when we're already at peak valuations for a lot of these industries right now.
 Yeah, particularly semis and we've just seen semiconductors surge.
 So Sarah, I do want to get your thoughts on what we should expect from Nvidia because we know as Nvidia as Nvidia goes.
 So goes at the market and we've heard a company that added almost a trillion dollars in market cap over the course of a couple days.
 We've pulled back a little bit on that some but really outsized impact potentially.
 Absolutely.
 I don't think we're going to see many surprises.
 We tend to know Nvidia better than almost any country on the stir company on the street.
 We know what Johnson wears. We know, you know, when you look at at over the past handful of earnings, they they tend to be almost exactly where the prediction is and that's not by accident.
 So I would be shocked if there were any big surprises here.
 That being said, no matter what Nvidia does, it's increasingly feeling like we're just used to it.
 We expect them to pull off miracles and the market sort of has a reaction to that.
 Aaron, is Nvidia a wild card here?
 Well, I think it's more that I view Nvidia as Atlas carrying the weight of the world on his shoulders.
 And it's really, they're the ones that are guiding this entire, you know, fourth industrial revolution.
 And so I wouldn't so much say a wild card.
 It's really about just reading those tea leaves, reading if there's any weaknesses.
 But I think they have a great track record of beating.
 I don't think that's really an question.
 It's just more about guidance, how China's going to impact, how the Rubenship is going to do, those type of very nuanced reactions and how Wall Street's going to take that.
 But I expect it ultimately to be an update.
 Yeah. I mean, Atlas is a $5.4 trillion market cap right now just to put that in perspective.
 And that's after a little bit of a pullback.
 Sarah, AI trade overall, especially as we come off of that Google IO event yesterday.
 And we are starting to see more competition in the marketplace for homegrown chips.
 Or I should say whole housegrown chips by some of these companies.
 Absolutely. And the reality is that Nvidia was never going to keep that head start forever.
 I've been saying that for a while. And I do think it's narrowing.
 I think that that's part of the discussion that we're seeing with China.
 Does anyone really believe that China has 0% of Nvidia chips anymore? No.
 But at the same time, the fact that they're not willing to buy them outright because they are focused on making them in Huawei.
 They are focused on doing that internally.
 As is increasingly Amazon and Google, you know, meta's in that game.
 There are just a lot of people who have really smart engineers who are working on interesting chip designs.
 And Nvidia is certainly a huge player, a great player, but it is far from the only player.
 And I think the street is starting to realize that.
 Aaron, we had a sunny best loss on yesterday.
 And one of the points she made was how much liquidity is out in the market, both public and private markets.
 But how much of that has actually been driven by the Middle East and Gulf countries?
 Given what we're seeing play out there right now, what does that look like going forward?
 And how does that contribute to something like Nvidia where sovereign AI is one of those future growth levers?
 I think that Wall Street is still viewing this as temporary, that it's going to be resolved relatively quickly.
 We're not talking into 2022.
 So for now, I still see it as all the systems go.
 Obviously the markets are still holding up very well.
 Like I said, valuations are stretched.
 And so I don't see any big cracks on that side.
 I think there's more internal worries even within the U.S.
 that are more concerning for me about where we're going to go with this play versus the Middle East.
 Okay.
 We're going to have to leave the conversation there and get to those worries on another day.
 It's great to have you on set, Aaron Gibbs, and Sarah Kuhn start thanks to you as well.
 Well, we're going to turn to China.
 And a developing story where Russia, President Vladimir Putin and China's Xi Jinping are meeting this morning,
 less than a week after President Trump's two-day summit with Xi.
 Our UNICE UN is monitoring the latest from Beijing.
 UNICE.
 Thanks, Morgan.
 Well, four days after President Trump left Beijing, a Russia's president Vladimir Putin,
 showed up here in China for meetings with President Xi Jinping.
 Even though the two sides announced about 40 agreements and signed 20 today,
 it looks as though Putin, like President Trump, didn't get what he wanted out of China either.
 Today, Putin was hoping to finally move forward on a gas pipeline, which is called the power of Siberia 2,
 that has been under negotiations for years.
 But President Putin didn't even mention it during the press conference today with President Xi.
 Later, a Kremlin official had said that the two reached an understanding of what he described as the main parameters.
 But this Kremlin official said that the nuance needs to be ironed out on that pipeline.
 Putin has been pushing for this arrangement in order to sell more energy to China,
 which of course would be good for his economy, which has been isolated from the West.
 A lot of analysts have said that the two haven't been able to agree on the price of the gas that comes through that pipeline.
 Now, that is just another indicator that even though the two countries profess to have close ties
 what Russian President Vladimir Putin has said are unprecedented level relationship,
 that is similar to the U.S. China at the end of the day is most concerned about its own political,
 as well as economic interests.
 Now, the conversation about the Iran war did come up.
 The state media said that the President Xi said a comprehensive ceasefire is imperative.
 Restarting war is even more unacceptable and adhering to negotiations is particularly important.
 The two leaders, though Morgan, still diverge on the issue of the Iran war.
 For the Chinese side, they are looking to have the straight-of-war moves open,
 because they get a lot of their energy from there.
 But for the Russians, they actually benefit with the straight-of-war moves closed.
 All right, Unis Yun, thank you.
 A lot to watch there as well.
 Well, we've got a lot more to come here on morning call, too.
 It's a defection in the Senate.
 As the Chamber passes a critical measure taking on President Trump's power to wage war in Iran,
 where does it go from here?
 Plus, first it was Home Depot, now Lowe's target TJX,
 and we're going to get a few others after the bell, too, set to report earnings.
 We're taking up for a big day for the consumer ahead, and later, count down to IPO.
 What's next for SpaceX?
 And the Big Bang expected to lead its public market charge.
 Oh, we have a busy hour still ahead.
 You don't want to miss it.
 Morning call, be right back.
 Well, CNBC officially unveiling the 2026 Disruptor 50 list,
 yep, it's that time of year.
 And the Big Bang this year, no surprise, all things AI with 43 of the 50 companies on this year's list,
 saying the technology is essential to their business models.
 That includes our next guest, Gary Steel, is the CEO of Shield AI.
 And we are also joined live and on set by our own Julia Borstin,
 who is behind all of this data that leads to this great Disruptors list each year.
 And Gary, it's great to have you on, Julia, kick it off.
 Thanks so much, Morgan, for having us here.
 And Gary, thank you for joining us on the heels of your big news yesterday that Shield AI is partnering with the Pentagon.
 Tell us about this new partnership, what to expect from it, and what it means for your growth.
 Thank you, and it's great to be here today.
 Our partnership really just continues to emphasize the work that we've been doing with the Department of War.
 There's just a tremendous opportunity to put better technology in the hands of the war fighter.
 We're focused on autonomy and helping keep individuals and war fighters out of harm's way.
 And it's really the focus on autonomy that has driven our differentiation and the opportunity for us.
 No, you're working with the government in the war in Ukraine.
 What have you learned there that you're able to apply now to this next leg of your growth?
 Yeah, I know it's a great point.
 So for us, the experience that we've had in Ukraine has continued, has a lot has to continue to perfect product to ensure that we deliver the effects on the battlefield.
 And specifically where we have differentiated ourselves is our ability to operate in an environment where you have no GPS and no communications, and still deliver the effects that you need.
 And so it's that experience that we've had that we've been able to take to other conflicts around the globe and really to support
 the U.S. military as well as our allied militaries.
 Gary, it's good to have you back on the program. Welcome. This is Morgan.
 Thank you.
 We were just talking about it. You know, you've got Russia's president meeting with China Xi today.
 Ukraine decidedly has the upper hand here where that war with Russia is concerned.
 We've obviously seen the deployment of things like these Lucas drones that you're now going to have a more meaningful significant stake in as well in Operation Epic Fury.
 This war in Iran too. How is autonomy and AI changing the battlefield? And what does that mean for the future of warfare overall and the U.S. being able to have this upper hand?
 Yeah, I know it's a great point.
 So what we see is this move from unmanned systems to move for to more less expensive systems and to be able to drive the effects without impacting human life.
 And so this world of autonomy that we're living in is one where we think that we can have a material impact on the battlefield.
 And that's what we're seeing every day.
 And it's the combination of the aircraft that we deliver with the advanced AI software that allows us to fly autonomously.
 Do mission autonomy, meaning swarming, teaming, all those kinds of capabilities that are absolutely critical to the war fighter?
 Is there a scenario in which we see this become more dual use, the technology that you're building in house and more commercial applications in the future?
 Yeah, it's our intent to move to commercial at some point.
 We have so much opportunity today helping militaries but there's nothing that prevents us from going commercial.
 For now, we've successfully grown focused on the military application and we will continue to do that for the time being.
 But we see the potential over time to move to commercial.
 Yeah, I'll be fascinating to see what those air fighters look like when they're adapted for commercial use.
 Thinking about the role that you play with the Department of War now and the fact that you are challenging the traditional defense companies.
 How do you think about doing things differently and better to set up your company and for more opportunities than maybe the traditional defense companies have now?
 Yeah, the thing that's been really exciting is because of the capital markets, we've been using private capital to drive innovation and to build the capability that we think war fighters need.
 We're not subject to waiting for requirements coming out of Department of War.
 We're working in close in collaboration but it's that private capital allows us to innovate that allows us to have the freedom of decision making to ensure that we're putting the absolute best capabilities in front of the war fighter.
 And a good example is we announced in October our next generation autonomous fighter jet fully autonomous flies long distance carries the same kinetics that you would see in NF 35.
 These are amazing capabilities that we think are critical for the U.S. government and our allies.
 Gary Steele of Shield AI or thanks to you.
 Great to have you here congratulations on another incredible disruptor 50 list.
 We're going to have coverage from you throughout the day and more here on morning call tomorrow as well so we look forward to that.
 Thanks for having me Morgan.
 Well and to see the full disruptor 50 list just scan the QR code on your screen or go to CNBC dot com slash disruptor 50.
 As we had to break watching shares of Kava reported double digit sales growth for its most recent quarter also boosting its fiscal full year outlook.
 This says it opened 20 net new restaurants in the last quarter and you can see those shares are about 7% right now pre market.
 But before today's move shares were down nearly 20% from their most recent 52 week high catch Kava's CEO and squawk box that's coming up later this morning.
 It's been a restaurant resurgence or we'll just say a little bit of a rebound here for a lot of these names and Kava certainly on the forefront morning call be right back.
 Welcome back to morning call we're going to get a check on some of the morning's latest headlines Ali Baba unveiling its latest AI chip.
 As Beijing pushes for domestic alternatives to Nvidia and AMD Baba says its new chip is set is three times faster than the previous generation.
 And the company also laying out a multi year road map through 2028 she those shares down 1% 1% 1% depending on on where they're trading right now.
 SpaceX has reportedly picked Goldman Sachs to lead not reportedly CNBC confirms this to lead its IPO followed by Morgan Stanley Bank of America city and JP Morgan.
 This as the company is expected to disclose its IPO prospectus as soon as today also as it has pushed back its latest starship test flight from tonight to Thursday night.
 So we'll continue to monitor all of that in the meantime the CFTC is reportedly investigating a surge in oil futures trading time stamped moments before President Trump postponed strikes on Iran back in March.
 According to the Wall Street Journal the regulator is looking into at least three trading outfits.
 In Europe EU lawmakers are striking a provisional agreement to finalize the trade deal with the US including removing key import duties on US goods.
 This as China says it's still working to extend its one year trade truce with Washington.
 And the wildfire in Southern California's semi valley has now grown to more than 1300 acres with many residents still under evacuation orders.
 The semi valley is about 40 miles from Los Angeles. It's also the home to the Reagan Ronald Reagan presidential library.
 We'll still on deck another primary win for President Trump as he looks to push his political rivals out of office.
 We've got those details one morning call returns.
 I'm working.
 Welcome back to morning call US stock futures are right now higher.
 You can see all the major averages are poised to open in the green a bit later this morning that's as of right now that of course after a down day for the major averages with the S&P and Nasdaq both finishing lower for the third straight day in a row.
 We're watching video shares ahead of earnings after the bell here in the US today.
 You can see those shares are popping about one and a half percent pre market and just to give you a sense since the last time we saw an earnings report from a video up 18%.
 Treasuries as well because the bond market in particular has been in great focus.
 You could see taking a little bit of breather here with yields lower across the curve but keep in mind still very elevated levels in recent days.
 So the US 10 year treasury yielding 4.64% right now the fed sensitive two year treasury yielding 4.09% and the third year treasury 5.167% that's after touching a high that we haven't seen for 30 year yields since 2007.
 And by the way global phenomenon you're seeing multi year and multi decade hides in other bond markets too including JGBs and GILTS and even the German 10 year hitting its highest level since 2011.
 We'll check out the 10 year here specifically over the past months to give you a sense of the velocity of the move of the selling we've seen in bonds 10 year treasury is started the month about a month ago at about 4.3%.
 As I mentioned we're now about 4.6% so it's just a very big move there tracking energy to which is taking a bit of a breather here pre markets but still also at elevated levels WTI crude is down a little under 2% 102 dollars a barrel and Brent is also down just under 2% at $109.
 Checking global markets negative session in Asia really crossed the board the knee can't cost be among the biggest lager in part in Korea.
 Thanks to the possibility of a strike at Samsung as soon as tomorrow we also see losses for the most part in Europe as well in really trading although it looks like perhaps as a stare at the screen in real time.
 Reversing some of that with the DAX and the French CAC both slightly higher now let's dig further into the market so let's bring in Lynn Alden founder of Lynn Alden investment strategy and Lynn it is great to have you back on the show a lot to get to right now but first I do have to start with this run up in global rates bond vigilantes back in action.
 I think the time being I mean obviously the straight up for moves closure continue to provide a stack stationary force on the global economy and in prior cycles you know the reduction in economic activity could drive bond yields down but the combination of very large physical deficits and kind of just you know global stimulus from a number of different places.
 We get this more stack stationary result with stock market doing better than many people would expect including me to some extent and bond yields while not soaring I've had a very quick move here back up to kind of you know kind of recent highs and as you point out much much longer term highs on the 30 year and so I think that's to be expected given that the Fed is not buying the long long end of the curve and investors are pricing out rate hikes.
 I mean rate cuts and you know just pricing and you just kind of more average inflation in the years ahead is Japan potentially a powder keg here we've had a few folks on our air in the last couple of days that have suggested that that could be the case.
 So I do think that the rising Japanese bond yields are kind of raising the floor for other bond yields globally I tend to be a little bit more relaxed about Japan just because they have such high reserves.
 So they have options where whenever it gets too disorderly they're able to for example sell reserves and back up the young and if they go back to balance sheet expansion some sort of like soft yield curve control when the yield gets too high for them that would normally be very bad for their currency if they're doing it in a period of above average inflation and just kind of overall we currency but using their reserve they have that third lever that they can pull so while I do think that the Japan has major major issues going forward they've never been able to do that.
 The major issues going forward they've demographics issues the import almost all of their their oil and gas and if they've noticed other challenges I think they're able to draw this out very long and that the effects you know while meaningful if anything just raise the floor for for yield globally.
 We've been talking so much about developing markets.
 What about developed I mean developed markets what about developing markets which I know you're watching closely.
 So for some many of the major developing markets I'm pretty constructive on them you know that the Brazil's in the India's of the world and you know China and many others the ones I have more concerns about are basically the frontier markets or the lower end of the developing markets when we talk about ongoing closure of the straight basically the richer nations they're able to out bid the poor nations for the marginal barrel of oil the marginal shipment of LNG.
 And so the most severe shortages the longer this goes on and as kind of reserves levels to pleat they're the ones that face you know potential acute shortages and they're the ones that you know the you know 50% increase in fuel costs or 100% increase in fuel costs.
 This hurts them a lot more on average both consumers and businesses than they do for people in the developed world so I do have concerns around some of the weaker ones that have for example less reserves less diversified economies and kind of the low end of per capita GDP among the developing world.
 And if we take it back here to the US I mean you talk about this two speed economy that remains full enough in full effect what do you mean by that.
 So I'm not the first point out but I continue to monitor this trend which is that any industry or kind of set a demographics that are on the right side of either receiving fiscal deficits or on the right side of AI cap expended generally doing pretty good so that's for deficits that's you know on average older members of the population that those receiving so security Medicare those working health care industry that are able to then spend their salaries into the economy those who work in defense and again are able to spend their their salaries into the economy.
 Those are the areas that are kind of propped up in this environment whereas you know younger people that are looking to buy a home with rates as high as they are kind of prices still elevated.
 They're not generally doing well those who don't have a lot of assets that that you know that that work significantly interfacing kind of the brunt of higher fuel costs record beef prices these sort of things.
 They're generally on the on the weaker side of the economy and so a lot of people tend to be kind of caught off guard by the aggregate statistics where we have for example you know all time high stock markets and yet roughly record low consumer sentiment and it's really because there's really just two almost separate worlds in the economy those with assets and those on the receiving side of all that where that money's going and those who don't own assets and are not on the bulk of the receiving side of where that money is or I don't know if anything are on the tighter end of the market.
 Yeah so so in light of that it almost feels like I've been saying this for a couple of days now it's it's AI versus affordability in the market right now so so what matters more.
 Especially when you do have some of this bubble talk that's been swirling arguably for months now around AI what matters more is it the AI and tech trade or is it the state of the consumer as we see it through retail and other consumer facing company earnings lenses.
 So I think both can be true at the same time I think that's why you see kind of unusually large differences between different stock indices I do think that the AI trends can be driven primarily by earnings and sales which is why we see chip stocks continue to levitate.
 You know the max seven stocks hyper scalars doing a lot of catbacks I think that'll on average be some pressure against them but I think those are going to largely trade on on the backs of their results and they're going to generally look through these broader macro concerns at least you know for the foreseeable future wise as you have been you have industries that are on the receiving side of the higher cost or the you know the weaker consumer I think the results will be lackluster and so just like how you have two speed economy you can have a two speed stock market.
 You know some of the areas there are value areas that I think are interesting I think financials can can do well in this sort of mixed environment but a number of others I think will continue to be challenged and you know what the overall kind of tech stocks AI stocks they do occasionally get ahead of themselves when you have like you know 15 update in a row where you have kind of a you know over bought status in a vertical price.
 That tends to cool off for a period of time but you know after a period of months it just continues to follow earnings which so far have been up I think that the if anything that the larger bubble is in just the the overall currency in bond market but then when you're into the stock market it's in those really big mega cap blue chip stocks that that aren't really tech things like Costco or Walmart trading in the ballpark of 50 times earnings yeah if anything that's that's more concerning to me than you know chip stock doing well after it had really good earnings.
 When it's always great to get your insights appreciate it when all done thank you thank you.
 We got a lot more to come here on morning call including the house set to take up a major bill on housing affordability details on why Wall Street may be a big winner if it does get approved and as we head to break a check on toll brothers shares speaking of housing up 2% right now pre market on the back of earnings beating estimates on the strength of luxury homes.
 Companies average home sale price breaking above $1 million for the first time since mid 2024 toll brothers also lifting its full your forecast to at least $10,400 homes sold morning call be right back.
 Welcome back to morning call we have a news alert congressman Thomas Massey of Kentucky losing to Trump back challenger Ed Gaul Gaul rain in the Republican primary for the state's fourth congressional district Massey who has served in Congress since 2012 has faced political scorn from the president over his opposition to the war in Iran and the president signature tax bill last year as well as his call to release files related to the Epstein investigation.
 Gaul Ryan's victory marks the latest win for president Trump and his push to eliminate political rivals this was the most money spent ever in the history of a house primary primary well if we stick with Congress the Senate late yesterday advancing a resolution to end military action in Iran after a surprise defection from Republican senator Bill Cassidy following his primary loss over the weekend with three Republican lawmakers absent the 50 to 47 vote saw Cassidy Rand Paul
 Susan Collins Lisa Murkowski joined almost all Democrats voting in favor of the war powers resolution though it still needs to pass a final Senate vote and the House before hitting the president's desk where it's most likely to be vetoed lawmakers have made seven previous attempts to limit the president's powers including three since the start of the Iran war.
 Well turning to the House lawmakers there are set to take up a bill today addressing housing affordability but the legislation likely giving Wall Street a win when it comes to investors purchasing some properties Emily Wilkins joins us now Emily I mean we just ran through a whole list of stories that I'm sure you've been covering but let's start with housing affordability and get your take there.
 Let's start with housing Morgan yeah you know major investors the housing industry look they're much happier with this updated version of the affordable housing bill that is set to pass the U.S. House with bipartisan support strong bipartisan support this afternoon newest version of the bill.
 It gets rid of this requirement that would have forced major investors to sell housing that they build after seven years groups representing the housing industry so that that provision would have led to less housing supply higher housing costs would done the opposite of what they wanted.
 Now the bill does have the backing of the White House we learned that last night but the bigger question is whether it will have enough support from senators and they will need to vote on the changes to the bill that the House made and not everyone's on board talked last night to Senator Bernie Moreno who told me that the seven year forced divestment of homes that is needed in the bill to ensure home ownership for more Americans.
 What we're trying to do is make certain that single family homes are made for families not for Wall Street. Well we don't want these companies coming to communities buying out prime land buying every new house there and and turning people into perpetual renters.
 This housing affordability bill it's one of the few that actually stands a real chance of getting passed through Congress and signed into law before the midterm elections.
 Several senators told me yesterday that while they are still reviewing the changes it was very important for them to be able to pass legislation focused on affordability as that's going to be a key topic for both parties in the upcoming elections Morgan.
 Super fascinating obviously housing affordability very much in focus as we see mortgage rates climb higher here and start flirting with seven percent again I want to go back to some of these other stories with you though.
 This loss that we saw this defeat we saw for Massey and Kentucky yesterday also we're seeing with war powers act I know you're covering all of it I guess just how does it speak to this moment we're in for lawmakers in a midterm election year.
 I mean the fact of the matter Morgan is that Republicans in both chambers both the House and the Senate are really going to have to fight in the midterms to keep their majorities in the chambers.
 It's going to be really tough in the House but don't count out the Senate either and the fact of the matter is that Trump is not making it easier for these Republican leaders.
 I mean he's going with some of these candidates take a look at what happened in Texas yesterday with him endorsing Ken Paxton over John Corden you know John Corden someone he's he's won numerous races in Texas he knows kind of how to appeal a little bit more to the middle as well as the more conservative Republicans.
 Ken Paxton is going to have a more difficult time with his background and his record of getting independent voters on his side which makes it much more likely that Democrats could have a chance of winning Texas this November.
 I mean that is that is not a state that's usually in play for Democrats there and I think some of the other things are going to be seen I mean you talked about war powers but Trump is also asking for a billion dollars in security for his fall room.
 He has other provisions that he wants to pass and increasingly if he has senators who Trump has not backed and has endorsed their opponents those senators are less likely to go along with things that Trump wants that those senators themselves might disagree with.
 And so it's going to be very difficult to hold the Republican coalitions together in Congress over the next several months and it could mean that you see Democrats take not only the House but potentially the Senate after the November midterms.
 Okay Emily Wilkins thank you great to have you on as always.
 Well straight ahead the morning call crew team and up an absolutely critical trading ahead from rate shocks to the markets next big test fresh reads on health of the consumer.
 Things we've been touching on all hour going to dive even deeper into these topics and if you didn't stay up late last night you missed a wild one in the NBA.
 The next came back from 22 points down to beat the Cleveland Cavaliers in overtime in game one of the Eastern conference finals game two is set for tomorrow morning call coming right back.
 Welcome back here's what to watch today we're going to get weekly mortgage applications before the open we get minutes from the Fed latest meeting this afternoon those expected to tilt a little hawkish here.
 We're going to hear from the central banks Michael bar as well as a busy week of fed speak continues it's also busy day of earnings on tap including the markets big event in video results after the bell.
 We're also going to get target lows analog devices TJX among others and be sure to catch a CNBC exclusive interview with Jeff Bezos live from the Blue Origin rocket factory that's coming up 8 a.m. Eastern time is an incredible factory to go to and I'm sure he's going to have a lot to say as we await that space X IPO.
 Well it's time for your call sheet now the crew members today Steve Grasso of Grasso Global Peter Shear of Academy securities and Tony Zang of options play Steve and Tony are CNBC contributors and gentlemen it is great to have you Steve Grasso.
 I'm going to kick this off with you the run up and rates we've seen your thoughts.
 Yeah so everyone worries about the run up and rates but they're comparing it to the financial crisis.
 This is a supply shock Morgan and when you look at a supply shock differs from what we're in them.
 We have systemic issue we had banks failing we had hidden damage within the financial system we don't have any of that right now and when the war subsides and it will.
 Rates come back down and they will inflation comes back down and it will and I think the consumer will feel a lot better.
 This is not financial crisis worries I don't know why the market is reacting.
 Yeah Peter want to get your thoughts on this because obviously we're seeing fiscal impact in the long end of the curb not just here in the U.S.
 but you look at JGBs you look at guilds you look at you know global bond market overall Ben Emmens who's a friend of this show has also pointed out
 that maybe perhaps particularly here in the U.S. you have this worse effect taking effect in the market too in terms of this yield curve steepening.
 Yeah so one I don't think the market is actually paying very close attention at all right there might be chat about GFC but we're at all time highs or close to all time highs we both off a little bit.
 I think there's more to come on the yield pressure it's global as you mentioned right so all of a sudden every country can look at their own domestic currency bonds by them get a decent yield.
 That was not the case two years ago so I think you're going to see pressure there is going to be defense spending no matter whether the war ends tomorrow next week or next month.
 That is real that's global so again there's going to be the supply to yields and there has been the supportability shock and you start looking out the curve right.
 Oil is now priced above 80 out to December January of next year. I think the realization that's hit that there's been enough damage done to the oil gas diesel supply chain fertilizer supply chain chemical supply chain that we're going to have some persistent inflation.
 And I just feel that every single day we have more and more people kind of getting sucked into the affordability crisis.
 People who thought they were safe people who thought they had money at the end of each month are getting sucked into that abyss where they don't have that.
 And the flip side of this and we'll see a lot of this hopefully today is we got lows and some of the you know like we had home people yesterday.
 There's an increased angst if you have a job how long you will have that job how safe your job is with everything going on AI.
 So I think this affordability and spending is just starting and to be honest if it wasn't for the AI spending right now we'd probably be talking about the potential for a recession.
 I think that's off the table but that I think is how weak the rest of the economy is.
 Yeah I mean we're bumping up against the end of the hour here so apologize that we're going to have to cut this a little short.
 But Tony I want to get your thoughts on this I mean calcium for example is pricing in the possibility of rate hikes.
 Before the end of the year now 37% 63% before July of next year we're seeing that the Fed funds futures as well meantime in video.
 Going to be the star of the show after the bell and then we're juggling consumer related earnings to what is the options market reflecting.
 Yeah what's interesting is that over the last call a month and a half we consistently saw a longer dated put sales across the tech industry the semiconductor industry but that was merged with very short dated put buying.
 That was largely I think because of how far the tech and semiconductor industry have ran in the last six weeks that more likely some protection over the next couple of weeks going into earnings season especially within video.
 But what's interesting is that over the last week or so that has shifted we have not seen so much of the short dated put buying that shifted into more short dated put sales yesterday we saw two specific trades and Nvidia selling.
 Explorations that expired next week looking at selling the 225 to 222 and a half puts collecting nearly 30 million dollars in income for that.
 All right guys we have to cut it short today come back we'll do it again thank you to our morning call crew squat box starts now.