The Tech Boom, SpaceX Governance Concerns 5/15/26

 Stocks pulled back from milestones,
 Trump and Xi part ways and SpaceX
 ready its IPO engines for takeoff.
 I'm Dominic Chiu and this is your morning call.
 Good Friday morning, I'm Dominic Chiu
 and for Morgan Brennan today,
 checking US equity futures right now
 and we are at least on the offer and markedly so.
 The Dow's implied lower by 305 points,
 the S&P 500 implied lower by 75 points
 and the tech heavier NASDAQ down by a whopping 425 points.
 This is after yesterday's broad-based rally
 that saw the S&P 500 close above the 7500 mark
 for the first time ever and the Dow regained its February highs.
 Again, right now we are giving back some of those gains
 that we saw over the course of yesterday's session.
 All three indices are higher on the week though so far
 with the Russell 2000 small cap index
 about to cap off its eighth winning week in a row.
 So some massive moves here on a weekly basis
 and some notable streaks.
 Big moves also in bond yields
 as inflation fears looms still.
 The two-year near February 2025 highs,
 the 10-year note yield at a one-year high
 and the 30-year yield at the highest since 2025,
 what are those yields right now,
 at least for the benchmark 10-year rising to 4.54%,
 the two-year note yield, 4.065%,
 and the 30-year long bond, 5.093%.
 Well, from cuts to hikes,
 probabilities on Calci of a hike before the end of the year
 are now surging.
 Now at 39%, it was at 23% at the start of the month.
 Sharp moves again in energy prices as well,
 watch what's happening with oil.
 If you take a look at some of those moves in oil prices,
 we are seeing at least US benchmark West Texas Intermediate
 just a hair below $105 up three and three quarters percent.
 The ice-brent crude futures, $109.12,
 up about three and a quarter percent there as well.
 On the metal side of things,
 they're moving the other direction.
 Gold prices now lower by almost three percent
 to $4,556,
 and then silver prices, $78.45,
 they're down 8%,
 and then copper prices down 4% as well,
 $6.33 there.
 Well, now let's see how markets around the world are shaping up.
 Joining us from London, you can see here, Karen Show.
 She's got the latest market action there.
 Good Friday morning, Karen.
 Don, happy Friday to you as well.
 Well, European stocks are declining today.
 It does follow weakness in the Asian markets as well.
 We are ramping up the selling over the two hours of trade so far.
 Chip stocks are bearing some of the sell-off trade deals
 between the US and China,
 really failing to excite investors
 despite President Trump tarting progress in talks
 with these Chinese counterpart President Xi Jinping
 following that two-day visit to Beijing.
 But I want to show you another sector that is under heavy pressure
 in Europe this morning.
 That is basic resources.
 We're seeing some ramped up selling now in silver and also gold.
 Silver prices down roughly more than 7%,
 which has been reflected in that resources basket
 with the selling now down to the tune of more than 4%.
 So that is accelerating throughout the morning.
 Technology done 2.5%.
 But we're also closely watching Giltiers here in the UK
 this afternoon, Greater Manchester Mayor Adibon
 and cleared the first hurdle on a path
 that could end with him holding the keys to Downing Street.
 He still has a long and uncertain way to go,
 but boring costs are in focus amid speculation.
 He may favor loser fiscal policy
 if he succeeds.
 So right across the curve in the UK,
 we've been watching those Giltiers the 30-year
 now up 2.5% in the trade to 5.79%.
 But as you know, globally,
 we've been watching those yields much higher in bond markets,
 reflecting some of those inflation fears back to you.
 All right, Karen.
 Thank you very much for the global wrap up there for markets.
 We appreciate that.
 Now to China and President Trump wrapping up his two-day summit
 with Chinese President Xi Jinping,
 boarding Air Force 1 earlier this morning
 after touting the two have signed, quote,
 much bigger deals than we saw during his last visit in 2017.
 The President speaking with reporters following
 a second day of those talks.
 This has been an incredible visit.
 I think a lot of good has come up with.
 We've made some fantastic trade deals,
 great for both countries.
 We did discuss Iran.
 We feel very similar in Iran.
 We want that to end.
 And we don't want them to have a nuclear weapon.
 We want the streets open.
 All right, we heard from the President.
 With that in mind,
 let's get out to our Amin Javers
 and Unissune both still live in Beijing for us.
 Now, Amin, we'll start with you first.
 I mean, as they say in our business,
 that's a wrap.
 So what's the wrap up here on your end?
 Yeah.
 It is a wrap down.
 The President was wheels up out of Beijing at about 241 AM,
 East Coast time, 241 in the afternoon, here in Beijing.
 The President wrapped up his trip with a visit
 to a Communist Party compound and garden area.
 That is the seat of political power here in Beijing.
 It's a very secure area.
 Traditionally, this was the headquarters of the emperors
 and a sort of imperial palace, a pleasure palace, if you will,
 taken over by the Communist Party in 1949
 and now used by Xi Jinping and his government as sort of their seat of power.
 The President had a lunch and a tea with Xi Jinping
 before departing the country.
 The President, as you heard there,
 he said they've achieved many trade deals.
 And he also said that they see more or less eye to eye on Iran.
 Here's what he said there.
 We didn't discuss Iran.
 We feel very similar in Iran.
 We want that to end.
 And we don't want them to have a nuclear weapon.
 We want the streets open.
 We're closing it down.
 They closed it and we close it on top of them.
 But we want the streets open.
 And we want them to get it ended because it's a crazy thing.
 They're a little bit crazy.
 And that's no good.
 It can't happen.
 They cannot have a nuclear weapon.
 So, Dom, the President said that there have been many trade deals agreed to on this trip.
 We haven't seen any indication of that.
 No official readout on any trade deals at all.
 We saw the President on Fox News saying that the Chinese have agreed to purchase 200 Boeing jets.
 We haven't seen any confirmation of that from the Chinese side
 or confirmation of any other trade deals.
 So maybe this is something we're waiting for for Air Force One to land back in Washington
 or we'll see a Chinese readout at some point today.
 But no confirmation at all of any deals of any kind here in Beijing, Dom.
 All right, Amin.
 So let's talk about what we are hearing from the Chinese side of things
 and what that point of view is shaping up to be.
 So let's go to Eunice Yoon.
 What is the response on the Chinese side of things, Eunice?
 Well, Dom, the Chinese readout was glowing about President Trump's praise of President Xi.
 The state media cited President Xi as saying that while President Trump wants to make America great,
 again, that President Xi is pursuing Chinese rejuvenation.
 So really putting the two on equal footing.
 The readout also cites President Trump as saying that the two sign deals that they resolved issues.
 And it also added that the two discussed hot regional issues.
 Now, underpinning this newfound friendship is what the state media is attributing to President Xi as saying that the two have now agreed on a new vision
 of constructive China-US ties based on strategic stability.
 So as Amin said, there wasn't a whole lot of detail.
 And the foreign ministry today was pressed on a lot of the comments that President Trump had made on Iran or on the Boeing deal,
 or on the possibility that the Chinese would purchase more energy.
 And the foreign ministry was not forthcoming about that.
 And it was also asked about President Xi's potential travel to the United States last night at the state dinner.
 President Trump had invited President Xi to the White House on September 24th.
 He said, but that September 4th date, Dom, isn't mentioned anywhere in the state press.
 All right, Eunice Amin, thank you both for that.
 I want you to stay right there because we want to bring another voice into this conversation as well.
 Let's welcome De Wardrick McNeil, managing director and senior policy analyst over at Longview Global.
 He is also a CNBC contributor as well.
 De Wardrick, thank you very much as oftentimes we turn to you for.
 It is around the context, around just what kind of these talks can ultimately lead to strategically, diplomatically.
 What exactly were your key takeaways from this Trump Xi summit?
 You know, Dom, this was a summit that was not long on policy specifics or deliverables.
 But to Eunice's point, stability seems to be what the deliverable was here.
 And with respect to stability, Dom, what that tells me sitting here in Washington is that both sides recognize that they do not have relative to the other.
 Enough comprehensive national power to force their will on the other side.
 And so therefore it is responsible, and I do think it's responsible for both sides to take a pause here.
 But what's key, Dom, and what's key for companies to realize is that the pause is not a reset, meaning competition is no longer the goal.
 Competition is still the goal, but what they are looking to do in this pause is reduce those vulnerabilities, those dependencies and increase their comprehensive national power vis-a-vis the other.
 So who uses this time that they just bought well is likely going to be the one to shake competition and perhaps win competition.
 So the key is, what do you do with this time that you just bought? That's the key, Dom.
 A lot has been made about the optics around the Trump entourage, if you will, because it was about every high profile CEO that you can possibly have on our side of the Pacific.
 This was very much viewed as a business trip, so to speak, by many people observing it.
 In your mind, was it a business trip that was productive, and if so, how much does Iran and then Taiwan play into that success narrative?
 Well, let's talk about the productivity of the business delegation.
 What we got here, Dom, you know, always say that the Chinese government are masters at regifting.
 So we got pledges to open the Chinese economy.
 We've been receiving those pledges since 2001 when China joined the WTO.
 So the real question here is, when, under what conditions will you open in for what sectors?
 But when that opens, if it happens, Dom, this is a very different China.
 This is a very well developed market as units can attest with Chinese competition as good if not better in some sectors than the American companies that would be quote unquote welcomed into this market.
 So I'm not sure that these delegations, the business delegation is going to get much over the long term out of this, but the rhetoric was good.
 And quickly on Taiwan, because I think this is extremely important here, what we heard from she is not surprising.
 She is going to always come in heavy, and in many cases, Bellicose on Taiwan.
 So that was to be expected.
 What I did not hear, Dom, and what concerns me is what our response was to that statement.
 We have a very well established framework for Taiwan, a very well established policy, and the Chinese knows this.
 And so I would hope that Trump responded in a way that spoke clearly and concisely about what US policy towards Taiwan is.
 And if that did not happen, Dom, that in and of itself is a problematic signal to me.
 All right, let's, Eunice, I see you nodding this entire time as well.
 What exactly was your view from your sources about the Taiwan aspect of this meeting?
 Well, I completely agree with what George had said.
 I think that what we do know about the conversations on Taiwan is that the Secretary of State, Marco Rubio, had given an interview with NBC.
 And in that, he did say that the Taiwan issue came up, and he said that the US policy has not changed.
 And from a Chinese perspective, the perspective of what I thought was interesting is that in the state readout, in the government readout here, there was no mention of Taiwan.
 There was no mention of President Trump's view on Taiwan, which is a signal that President Trump and the US, you know, the delegation didn't, said, didn't really, or at least what they said was not received well on the Chinese end, which suggests that the US policy has not changed so far.
 All right, and Aiman, I'll give you the last word here.
 What is next for President Trump now that he's heading back stateside?
 Well, look, I mean, he's going to have another meeting with Xi Jinping in September.
 But that one is going to be controversial, particularly among Republicans who are not very interested in having the leader of their party entertaining the leader of the Chinese Communist Party in Washington, just before the midterm elections.
 I think a lot of them would rather have him focused on campaigning out on the campaign trail to preserve their majorities up on Capitol Hill.
 We'll see how the election unfolds, but this is a president who returns to Washington facing a very challenging midterm election picture, also facing a very challenging situation in Iran, having as far as we can tell, been unable to reach a deal here to resolve the log jam in the state of war moves.
 So that's going to continue to dominate his presidency for the coming weeks, and then we shift into midterm mode over the summer.
 All right, moving forward. Thank you very much to Aiman Javers, Eunice Yoon, and DeWorgic McNeil for the conversation. We appreciate it.
 We got a lot more to here to come. A morning call, including SpaceX, writing its IPO road show as investors soundly alarm over what they call extreme governance rules, plus the case for caution.
 What Goldman Sachs is recommending cash over stocks right now.
 And then later on, insatiable investor appetite and what our Jim Kramer calls, quote, perfectly timed IPO for cerebrus, cerebrus, a very busy hour still ahead when morning call returns after this break.
 Honestly, this valuation, you're basically expecting rather than be several multiples of what it is right now in a fairly short period of time.
 Maybe that's possible given the company's impressive technology, but that seems like a real leap of faith to me.
 I don't like it. Not their fault. It's the fault of non rigorous investors and traders and flippers.
 Really, I think that what's happening here is that cerebrus has a sexy story and a perfectly timed IPO.
 All right, welcome back to morning call, checking shares of cerebrus right now, which are higher again today following a wild debut, the AI chipmaker opening at $350 yesterday, roughly 90% above its IPO price.
 It then peaked at $386 a share, then gave back some closing with a 68% gain, giving the company a market cap of just under $67 billion, but a massive gain there overall and extending that today a little bit.
 Now to what could be the biggest IPO ever, a news alert on SpaceX sources tell CNBC the company plans to disclose its perspective as soon as next week with the aim to kick off its road show on June 8th.
 Listing is estimated to be somewhere between 70 to 75 billion dollars raised that would be more than twice the previous record set by Saudi Aramco back in 2019.
 Now ahead of the offering, public pension funds with combined assets north of $1 trillion are sounding the alarm over SpaceX's quote, extreme ownership controls and governance structures, empowering CEO Elon Musk while minimizing shareholder protections.
 They are requesting a meeting with SpaceX to discuss possible reforms. So joining me now in a CNBC exclusive interview is New York City Comptroller, Mark Levine, a cosigner of the letter and custodian of more than $306 billion in assets across five New York City pension funds.
 Mark, thank you very much for joining us here on morning call. You were a signatory for this and you are concerned about what investor protections there are and how you can have a small group of people controlling so much of this company.
 What exactly is the crux of your argument for why you need reforms or want them?
 Well, thank you so much. Yes, I'm joining with the New York State pension funds and the largest pension system in California collectively, we have over $1 trillion in assets.
 We all have exposure to pay SpaceX and we are very concerned about the concentration of power not just in a small group of people, but in one person in the person of Elon Musk.
 Now, we understand that founders want to exert control and this is an increasing trend in tech companies, but this really takes it to a whole new level.
 The CEO himself will have the ability to veto the removal of the CEO. They'll be no independent board or audit or compensation committees, very limited ability of shareholders to take legal action.
 And all this will be in perpetuity. This really tips the scales against democratic governance in a way that we think is not in the interest of shareholders.
 Interesting, Mark, because to your point, this has been a trend in tech investing specifically over the course of the last couple of decades at this point now.
 But at the same time, Wall Street, and I say we, I don't mean we, me particular, but we as an investing community have basically given the green light for these companies to continue doing this kind of thing.
 There could be arguably a point where this kind of governance or lack thereof, whatever your opinion is, could lead to investors maybe not wanting to participate in investing in these companies, that has not been the case.
 So what exactly do you end up to accomplish, I guess, in this story knowing that even with the power that you guys wield, Wall Street seems to want every bit of this IPO.
 Look, this is an important company to the American economy and it's achieved numerous technological triumphs.
 But I think that this company will be stronger with democratic governance for shareholders.
 I think that the capital markets are stronger when we have these kinds of protections in place checks and balances in place.
 Yes, this is a trend that's been building for decades.
 It's quite common in Silicon Valley. We see it with meta and Google, etc.
 And I understand that tech founders want to exert control.
 But what we're seeing here is at another level, essentially without precedent, Mr. Mosque will be able to exert control over this company that is nearly absolute.
 There'll be no mechanism to remove him. There'll be no independence on the board.
 And I do think that over time there could be a price to pay in the markets.
 But either way, it's quite clear to us that this is not in the interest of shareholders.
 And we represent millions of public sector workers and retirees.
 And I think we're also speaking out on behalf of the broader public who, through indexing, increasingly is going to own these shares.
 There'll be millions of Americans who do indexing will own shares in this company.
 And we're also speaking out on behalf of them.
 You know, Mark, it's almost like we're on the same page because I have these same concerns as well, which is why I'd like you to please stay with us right now because we want to talk about that governance and the indexing aspect and concentration risks.
 Let's now bring in another voice to this conversation. That is Peter Haynes, the head of index and market structure research at TD Securities.
 Mark Levine continues with us as well. Peter, you know, Mark just made the perfect segue.
 I didn't have to do it because he's concerned about the concentration risks because everybody who owns an S&P 500 or NASDAQ 100 or any other massive index fund.
 At some point in the weeks following this IPO are going to own a piece of this and have a significant amount of exposure, just how significant will that exposure be for SpaceX and the major indices?
 Well, thank you very much, Tom, for having me.
 There are two aspects to this IPO with respect to the indices that are important.
 The first is including it in the benchmarks that you referred to earlier.
 And it is, as you guys mentioned, an unprecedented IPO in terms of its size being more than two times or expected to be more than two times as big as the previous largest IPO study.
 That caught the index providers off guard in the sense that the rules were really not fit for purpose.
 And so what we've seen over the last couple of months is each of the major index providers looking to amend their rules to ensure they're fit for purpose to, as your previous guests mentioned, ensure that one of the largest and most important companies expected to be in the US market is able to join those benchmarks at an appropriate period of time.
 That's not on the IPO as has been discussed in the past, but it will be somewhere between five and 15 days after the IPO.
 However, the really significant event in terms of SpaceX's potential size in the benchmarks is actually when shares that are held by investors that will be locked up post the IPO reach the market.
 So, dates, those dates will be obviously made available once the S1 becomes public and at that point in time, the $75 billion IPO that's added to the index if that's the number will become a company that's 10 or 15 times as big as the IPO.
 And that event is the one I think that we need to watch very closely.
 Has there ever been a time in your career, I see Mark nodding with you right now, has there ever been a time in your career tracking indices where a company like this is going to exert as much influence right out of the gate pretty much as it does right now.
 By the way, in the context of possibly even massive or type companies coming to market as well in the future, I mean not as big, but I think inthropic, I think of open AI coming to market at some point soon.
 These are the same kinds of issues and we're going to have a small cadre of companies basically coming to market that are going to have a massive impact on these indices.
 That's correct. We're referring to them. I think the industry is referring to them as mega cap IPOs and you mentioned there are several in the pipeline with SpaceX expected to be the first one.
 Yes, combined each of these four companies will represent trillions of dollars of exposure in the market and will obviously be very significant in terms of their potential impact on various benchmarks.
 And again, I think one of the things that people need to understand here is that one of stock gets added to a benchmark like the S&P 500.
 It is also included in various sectors that are represented within the 500 so perhaps even more significantly once SpaceX is eventually added to the S&P 500, it will become a very significant portion of the communications group.
 That's the group that it's expected to represent and that is again because it's primary revenue source is Starlink and that's how the index providers will determine its classification.
 So the sectors will have a major impact, but in terms of my career, the obvious precedent to this is Tesla.
 When Tesla was added to the S&P 500 in December of 2020, the month leading up to Tesla's inclusion saw a parabolic rise in the share price.
 That also gave pause to index providers to recognize that when you have these mega sized IPOs, you need to think about potentially alternative methods for adding stocks to indices, perhaps not doing it entirely in one fell swoop and and trashing these events.
 I think this is something that maybe not on the IPO, but down the road when we see the shares released from escrow or lock up for SpaceX that the index providers will need to consider with their rules.
 So that is potentially adding SpaceX over a period of segments, not all on one day.
 Mark, I see you nodding as well to some of this. I'd like to go back to you with this because SpaceX, we are talking about the governance issues that you think are at play as well.
 But I had mentioned anthropic open AI, these mega cap IPOs that are coming down the pike.
 As a pension fund, you kind of get exposure to these companies already to begin with and by extension your participants do as well.
 What exactly is the concern now about being a public company in that environment when many of these pension funds and institutional investors have already had this private market exposure to this
 and not felt quite as I guess maybe adamant about some of these governance issues?
 Well, it's pretty clear they are trying to recreate the governance structure of a private company in the public markets.
 And that's just not in the interest of free transparent democratic markets.
 I think it's a very worrisome trend what SpaceX is doing would take it to an unprecedented level.
 And I want to focus on the fact that this is not just a space company.
 This is one of the three or four companies that is leading in development of world transforming artificial intelligence.
 And I and many others are extremely concerned about what it would mean to have how we're concentrated in one man over this world changing technology.
 I think people who are thinking seriously about transformative AI understand we need some sort of democratic control over these systems.
 But I don't think we're paying enough attention to the corporate governance that is behind these systems and to have what could be potentially a candidate to win the race to AGI in the hands of Elon Musk, a company where he can't be removed as CEO where there's no sunset to his dominant control of shares where there's no transparency, no right of action for shareholders.
 That takes our concern to a whole new level. So I think in that context, I think we need to pause now and steer this in a better direction for the interest of shareholders in SpaceX of capital markets more broadly.
 And frankly of society as we enter this unprecedented unprecedented error of technological change.
 All right, Mark Levine, New York City Comptroller, will you please come back and update us if you do have that substantive conversation with SpaceX about governance and give us an update there.
 We appreciate that and Peter Haynes, thank you for the index inside as well. We appreciate that as well. Thank you.
 Thank you.
 All right, straight ahead on the show, a very busy first quarter for President Trump's personal portfolio, his biggest buys and sells after this.
 But first, watching shares of applied materials, which are moving right now down by about two and three quarters percent, raising its outlook on booming AI chip demand.
 And the CEO says he expects the company's semiconductor equipment business to grow more than 30% this calendar year, those shares again down nearly 3% in the pre-market trade.
 Welcome back to morning, call the market flash for you right now.
 Take a look at shares of Microsoft higher by just about maybe one tenth of one percent slightly.
 But if you look closely, they started moving higher after Bill Ackman posted on X that later on today in a 13F filing, his Pershing Square hedge fund will be disclosing a new position in Microsoft shares.
 Ackman says Microsoft has now offered at a highly compelling valuation, so keep in mind those MSFT shares we are back after this.
 Welcome back to morning call. Let's get you caught up on US equity futures, which are right now in the red.
 The Dow is implied lower by roughly 320 points at this stage.
 The S&P down by about 79 points in the tech heavier NASDAQ 100 down by about 465 points.
 On the treasury side of things, we are seeing bond prices move lower and yields move higher.
 You can see that the benchmark 10 year note yield 4.54% the two year note yield at 4.065% in the 30 year long bond 5.096%.
 On yields from cuts to hikes, probabilities on calcium of a hike before the end of this year are now surging up at 36%.
 It was at around 23% at the start of the month.
 Joining me now for this conversation is Christian Muller-Glisman head of asset allocation research over at Goldman Sachs.
 Christian, thank you very much for joining us here today.
 Let's talk a little bit about just how staggering the momentum has been, especially in the US markets.
 And whether or not there is a concern that it might now tail off, I would note that concern has been there for quite some time without any real meaningful pullback.
 Yeah, no, I think just the fact that you had a strong performance on its own is not necessarily a good reason to kind of now expect that to reverse.
 I think what we actually found is often that these momentum rallies, they're very much linked to like a macro cluster that can linger unless there's a major shock.
 So I think we are kind of seeing an acceleration of the tech boom.
 And I think a lot of the drivers behind it, which are feeding into earnings, they're somewhat lingering.
 They're not going away. I mean, if anything, we actually have the micro-earning season kind of come to an end very soon.
 So I think like you're not going to get new information, the macro, however, is going to take over in terms of new information.
 And I think we're having this fight between innovation on the one hand, driving the market higher, and possibly as you mentioned just now, inflation, creating a bit of a speed limit by the bond market.
 So that's what we are watching right now.
 If you're watching all of those things right now, you work on asset allocation.
 It exactly has that done to shift those allocations around from your model portfolio.
 Yeah, I think the big discussion that we are currently having is equities are getting bigger and bigger in the portfolio.
 And I think that wasn't really the case just a few kind of quarters ago, but equities are getting bigger due to the strength of the performance.
 So you have to consider what you were discussing earlier. There's IPOs coming.
 So you have to consider that the private markets, if you add them on top to kind of the global world portfolio, if you add the private equity, they're also meaning that the equity market is larger.
 And if you look at all the assets in the world right now and look at the weight of equities in that, we are nearing the tech bubble levels.
 And that is not necessarily telling us that we need to be bearish because of that and significantly go underweight equities.
 But it does highlight you need to to some extent manage the equity risk much more because the tech boom accelerating brings risks with it.
 So that's currently what we're discussing and we're much more focused on protecting equities and managing potentially style biases.
 As you were mentioning, momentum had a very strong run. There's a lot of areas in the market that have lagged.
 So maybe the better approaches to create a bit more balance kind of within the styles.
 Bond yields across the world have been markedly higher, moving higher, and they have been now for weeks at this point.
 What exactly does it suggest to you when you see a 10-year note yield here in the US of north of four and a half percent, 10-year yield is moving up to the way that they have even Japanese government bonds, JGBs and yields moving higher as well.
 At what point do bonds become attractive for investors?
 Yeah, now it's a great question. I think this is essentially the debate with equities getting bigger in the portfolio.
 Is there a case to kind of go towards the bond market a bit to create more balance?
 And I would say that if you look at the 300-year average, the 300-year average of the 10-year yield, it's roughly four and a half percent.
 So we are not kind of extremely out of kind of sync with long-run history, but we do obviously have a few things macro wise that look a bit out of sync with history.
 We have very high fiscal kind of risks and debt and spending, and we have on a cyclical basis rising inflation.
 So I think the challenge is right now that the bond market looks kind of normal in terms of its long-run comparison in terms of yields, but you have a few things that could argue for slightly higher yields.
 And I think from that perspective, it's very difficult to say that the repricing we're currently going through is done.
 And I think our team would probably argue that it depends a lot on the straight-up almost.
 And if that reopens anytime soon, if it doesn't, it's possible that the upward pressure on bond yields extends a bit further.
 And the challenge for more portfolio construction point of view is that this might spill over to equities.
 Because we've seen this before, there's a level, the speed, and the source of the bond yield increases that matters for equities.
 And if they go up too fast driven by the wrong reasons, i.e. inflation and fiscal, and they go to certain levels, eventually equities have indigestion.
 So that's what we're watching currently.
 All right, those risk-free rates do have an effect on multiples for sure.
 Christian Muller-Glissman at Goldman Sachs, head of their research on sector allocations.
 Thank you very much for that. We appreciate it, sir.
 We've got a lot more to come here on morning call, including why Biopharma is looking to China for faster and cheaper results for their next big breakthrough.
 Morning call is back with that story after this.
 All right, welcome back to morning call. I've been a rough year for biotech stocks, roughly flat since January, but a multi-billion-dollar deal with China could reverse those fortunes.
 Our own Angelica Peoples joins us now with that big story Angelica. Good morning.
 Morning, Dom. Well, everyone is talking about China.
 And this week, Kristalmeyer-Swib signing potentially multi-billion-dollar deal with China's Hungary pharma to develop drugs together.
 So this is not the first time that we've seen an American pharmaceutical company partnered with the Chinese one.
 Amgen Eli Lilly are among the names that already have relationships there.
 And we've seen huge surge in large biopharma companies licensing drugs from China.
 So a little more than 50% of Big Pharma's licensing deals so far this year have come from China.
 That's up from 39% for all of last year and 5% in 2022.
 Now, these deals are essentially taking drugs out of China.
 And what's unique about Bristol's deal is that it's not only will Bristol take some of Hungary's experimental drugs,
 Bristol will actually send some of its early stage medicines to China and the two companies will work together to discover new ones.
 And so several of my industry sources say that this deal is unique and one investor says that this deal is more reciprocal versus the one way deals that we've seen in the past.
 And another investor who started doing China deals years before this current wave, Chen Yu of TCGX,
 he predicts that by the end of the decade the notion of conducting early stage drug discovery in the US may seem as realistic as making the iPhone in the US.
 That's a big gleam and whether this trend is a good or a bad one, that's up for debate.
 But really everyone I talked to says that this is a trend that's not going away dumb.
 All right, Angelica Peoples, big story there developing in biopharma.
 Thank you very much for that. We'll see you later on today.
 Now straight ahead on the show, the morning call crews team things up for the trading day ahead.
 Keep it right here. We'll see you after this commercial break.
 All right, welcome back. It's time for your call sheet where we look at the topic, striding the driving the trading day ahead.
 The crew members today all on set, Peter Bookfarer of one point BFG wealth partners, J Woods of Freedom Capital Markets both are CNBC contributors and Henry and Trays of Veda partners as well.
 All of us on set today, a rare occurrence. So thank you very much for the move here.
 Let's talk a little bit about the markets as we see things developing.
 We hit these record high levels and Jay, I'm going to start with you for the traders perspective.
 How much can we buy into this and will it keep going?
 I would not be chasing this rally. The momentum is just off the charts.
 This AI trade is what the whole rally has become but we are seeing cracks under the surface.
 That new low list is 9% of the S&P 500 making new 52 week lows.
 Well, 4% are making new highs. There's a bifurcation in this market.
 And those names at the top, those top heavy names, the Intel's that have been on a phenomenal run, the Sandisk, the microns.
 It's time for them to take a little bit of a break.
 All eyes will be on Nvidia next week. That had a major breakout.
 But it may be a seldom news event when we see that.
 And those heavy market cap weighty names are going to take a little bit of a break.
 And there are some reasons that we're going to talk about in a second.
 Yeah, as to why?
 For Henrietta, I mean, it's not necessarily that I'm saying that you have a specific expertise in AI.
 But we are seeing the macro effect on the markets overall.
 Not just here but globally.
 Cerebrus, I mean for goodness sake, the IPO just yesterday just gives you an indication
 not a crack under the surface completely the opposite.
 What does it say to you about the AI trade in the broader context of the macro environment?
 Well, I think it's not just Cerebrus, but it's also this whole entire China trip that the president is on right now.
 The people on the plane with him, the people in the room, they're there for AI.
 And I'm sure you guys see it as much as I do.
 Whether it's, you know, meta and the entire banking industry, everybody is focused on AI.
 And it's amazing to watch underneath the surface the consumer in the US and all the trickle down effects
 that we're going to get from continued tariff data out of the PPI and the wholesale data that came out this week.
 The continued closure of the straight of four moves.
 There's nothing that can keep the AI down.
 But on the actual street, you're looking at the data for wholesale prices.
 That's got a bleed date of 60 to 90 days from where we are right now.
 There's a lot of pain to come to Jay's point that we haven't seen still.
 Even though we've seen gas prices so high, the AI boom just keeps the market rolling.
 Peter, we've talked about the AI trade for a long time now on a relative basis.
 It's been months, if not maybe a couple of years, that we've seen the momentum bill to where we are right now.
 Is there a way that you from an economic standpoint can try to qualify whether or not a market is overexposed,
 maybe a little overextended because of one specific part of the market
 and whether or not that translates into maybe a slowdown at some point down the line.
 Well, in 2025, we had GDP growth of about 2%, almost half of that was related to data center construction.
 We have this two-lane economic and market highway.
 You have the fast lane, the obvious AI and upper income spend, both in terms of the beneficiaries economically and market-wise,
 and then you have everything else where the rest of the economy is almost in a recession,
 housing, load of middle income spending, manufacturing that's just trying to perk its head up,
 but that's to me more of a pull forward and then also the two-lane stock market.
 You know, Jay talked about 9% 52-week lows with the stock market hitting a record high that's never happened before, ever.
 So it is this really bifurcated, strange situation both economically and market-wise
 and to me, now, we have to pay attention to what Henrietta said,
 interest rates are finally now perking their head up.
 There's been this slow-rolling bond bear market,
 and today, finally, someone cares about that because the 10-year yield's about 4.5%.
 Oh, let's stay on that rates picture.
 Henrietta, I'll go to you for this one.
 Fed share Jay Powell, last day at the helm of the Fed.
 I mean, what exactly are we going to think about rates going forward?
 It's such an exciting opportunity.
 There were so much optimism building for rate cuts,
 and we were finally going to get it.
 I talked to real estate guys all the time. They were so stoked.
 And it's out the window.
 You know, I mean, if you look at the markets and they're pricing in rate hikes from here,
 I think Kevin Morch has a tough row to hoe.
 And that is just the formation of his first couple of days and the first get out the gate,
 you know, how the new chairman is going to respond.
 The market needs that calm and we're so anticipatory of all the things that the Fed says.
 I think it's going to be really difficult to see any kind of rate cuts.
 Peter, what does Morch have to do right out of the gate for him to set the tone for this Fed?
 He needs to tame this rise in the long end of the yield curve.
 And I think he's going to do that by saying that the short end,
 we're going to just keep it as is until we see how this plays out with the straight.
 To be able to react to higher commodity and energy prices because it can supply constraints,
 I think that's a difficult thing to do.
 He needs to say, I'm not cutting.
 Now, the bond market's already priced that in.
 In fact, the bond market's now pricing in hikes,
 but they need to control this rise in the long end of the yield curve.
 All right. And one more point I want to make.
 And I'm going to turn to you for this one, Jay.
 We've talked a lot about SpaceX and what the potential impact could be.
 We heard from the Comptroller of New York City.
 We've talked about governance. We've talked about the index impact.
 From a trader's perspective, just how big of a deal is going to be SpaceX?
 Well, it's going to be a huge deal.
 From a trading point of view, you saw what happened yesterday with the cerebers IPO.
 You fork.
 And you're probably going to see people sell other positions to get into this name.
 So there's going to be a lot of hype about this.
 There are a lot of IPOs in the pipeline.
 That's a little frothy sign to me.
 But this one, it's got a lot of bells and whistles.
 Let's see how that road shall go.
 But it's going to be well received right out of the gates.
 I'm sure.
 All right.
 Jay Woods, Henry de Trees and Peter Bookfar.
 Thank you very much for being part of the morning call crew.
 I hope you guys have a nice weekend.
 Thank you.
 All right.
 Futures right now are lower.
 The Dow's implied lower by roughly about 320 points at this point here.
 Keep it right here. Have a nice weekend.
 And Swachbox starts right now.