AI, China and market risks drive the global outlook 5/14/26

 Optimism on trade progress, but tough talk on Taiwan futures are in the green. I'm Dominic
 Chiu and this is your morning call.
 We've had a fantastic relationship. We've gotten along when there were difficulties we
 worked it out. I would call you when you would call me and whenever we had a problem, people
 don't know. Whenever we had a problem, we worked it out very quickly. We're going to have
 a fantastic future together.
 The world has reached a new crossroads, where the China and the United States can move
 beyond the so-called Tsucidides trap and set a new example in bilateral relations between
 major powers, whether we can work together to address global challenges, injecting stability
 to the world, and whether we can improve the well-being of our people and the shared
 future of humanity.
 All right, you heard it. Optimistic overtones as President Trump and Chinese President
 Xi Jinping meet face-to-face in Beijing, the first such meeting, going back to 2017.
 Hailing progress to start their two-day summit with Xi Jinping, calling discussions so far
 quote, balanced and positive, but a warning as well over the situation around Taiwan.
 She warning if this handled the US and China situation could enter into a quote, highly
 dangerous situation.
 Investors are feeling optimistic, though, as well as the S&P 500 and the NASDAQ boat trading
 at record highs in yesterday's session. They close there, and right now they're up again
 in the pre-market trade, the Dow's implied higher by 250, 400, 245 points, the S&P up by
 22 points, and the NASDAQ up by about 110.
 The NASDAQ is getting a bigger bump from Cisco shares, announcing a massive AI pivot and
 job cuts as well. We'll have more on that Cisco story in just a moment, but those shares
 are about 17.5% in the extended trade. We're watching bond yields as well. Two economic
 reports are coming out today. Initial jobless claims and April retail sales, and right now,
 the benchmark 10-year note yield sits just a little above 4.46%, the two-year note yield
 3.97%, and the 30-year long bond 5.03%.
 So let's get back to China, as leaders look to wrap up day one of their summit.
 Our Amon Javers and Eunice Yoon are both live on the ground in Beijing following the very
 latest developments, and Amon, we will start with you.
 Yeah, good morning to you, Dom. It is afternoon here in Beijing, and this summit has been
 underway for several hours now. Take a look at the big moment for the history books.
 This was the handshake between President Donald Trump and Xi Jinping at the great hall
 of the people earlier today. This was the moment that the President flew halfway around
 the world for is that warm greeting and hand pat in addition to the handshake there between
 the two leaders. They underwent a series of meetings, a bilateral meeting, also the
 President accompanied on this trip by a robust delegation of CEOs, some real American corporate
 firepower on this trip as well. The President in that bilateral meeting, reaching for
 some superlatives to describe how important he sees this summit as. Here's what he said
 earlier today.
 For those who say this is maybe the biggest summit ever, they can never remember anything
 like it. It's like I can say in the United States, it's people aren't talking about anything
 else. But it's an honor to be with you. It's an honor to be your friend and the relationship
 between China and the USA is going to be better than ever before. Thank you very much.
 So a very upbeat tone from President Trump there at the opening of this session. Now they
 had meetings earlier today. They've gone into sort of a hold for the afternoon and we're
 going to expect to see in about an hour's time now, we're going to expect to see a state
 banquet featuring a lot of the CEOs who have traveled here with the President as well
 and we'll get that underway at about 10 minutes before the top of the next hour and we'll
 see some of the arrivals and that will conclude today's events for the summit. For his part,
 Dom Xi Jinping with some potentially stern language for the President warning him on the issue
 of Taiwan saying that if the issue is not handled properly by the United States, it could
 risk confrontation and conflict between the United States and China. So that was an interesting
 warning. And then that warning about the stupidity's trap which I think is an interesting
 one. The idea that a rising power and an established power always in history end up
 in conflict and can the United States and China avoid that dynamic. That was an interesting
 comment by Xi Jinping as well saying that is one of the great questions of history that
 hangs over this summit today, Dom. Back over to you.
 Interesting because there are of course historical precedents that underlie things like references
 to the Thucydides trap and everything else. Amin stick around for just one second. Speaking
 of Taiwan, Yunus Yun, you're also with us now. Can you take us through what you're hearing
 from China's side with regard to how things are developing in Beijing?
 Well, exactly what Amin was talking about. Those two issues are very important to also
 according to the readout of the Chinese President had said that he believes that President
 Trump and he see eye to eye when it comes to the need to inject stability into the relationship.
 The readout says that he had laid out a new vision that over the next three years or so,
 the two would have a new guiding framework that would be promoting a constructive, he
 said, strategic stability. He also is being cited as praising the economic and trade teams
 including those who are in South Korea, the negotiators saying that they'd struck overall
 balanced and positive outcomes. And then he reiterated a pledge that we've heard many times
 out of China. But that China's door, he said, is going to be opened wider and of course
 directing that type of language to the business community. We've seen a lot of CEOs, a company
 and President Trump. So those CEOs would probably very much welcome any more opening to their
 businesses and any easing of regulations when it comes to their hopes to expand here.
 Finally on Taiwan, that is, as Amin said, where the President really reserved his sharpest
 language. On Taiwan, President Xi said, if handled well, the relationship can remain
 overall stable, if handled badly. The two countries risk collision or conflict pushing
 the whole relationship into a very dangerous situation. Taiwan independence is incompatible
 with peace in the Taiwan Strait, like fire is to water. So again, Dom raising questions
 as to whether or not a President Xi is going to be pressing President Trump about Taiwan
 and the US's current stance towards Taiwan. That's very supportive in the Chinese perspective
 and clear. Right now we have no indication though, either way, of what President Trump
 might do. Let me follow up with you first on that point. Has there been anything that
 has developed within that relationship between China and Taiwan, something from a contextual
 point of view that has put Taiwan back again front and center in front of this relationship
 between the two biggest economies and powers arguably in the world right now? Why is Taiwan
 now becoming such an issue and is there any indication of what that trajectory for diplomacy
 could look like in the coming months and maybe year or so?
 Well, in terms of whether or not or why Taiwan would be such a priority to the Chinese,
 as many analysts that I talk to here, Taiwan is always a priority when it comes to the
 U.S.-China relationship and these types of discussions. So that hasn't really changed.
 But there has been a feeling, especially among those who are China watchers, that China
 has been feeling much more confident over the past year or so, that they've been feeling
 like they might be able to get a little bit more just because of so many different reasons
 of why they feel more confident from an economic standpoint or whether or not they feel like
 they're doing quite well when it comes to the trade war and the tariffs and other protectionist
 measures. So for the Chinese, that's the reason why a lot of people believe that the Chinese
 have been looking to try to push the envelope a little bit more on the U.S. Like I said
 before, to possibly change some of the language that the U.S. has when it comes to Taiwan
 or maybe to scale back the arms sales, this large anywhere between 11 to 14 billion dollar
 package of arms that are supposed to be sold to Taiwan that have not yet been approved.
 So that could very well be the reason. In fact, earlier this year, President Xi had drilled
 that home when he, in a conversation with President Trump, said that that arms sales
 should be approached with prudence.
 And Amin speaking of, I think one of the main reasons why a lot of folks feel as though
 this Taiwan situation is becoming much more of a flashpoint now is because there's arguably
 the next frontier in global supremacy that's developing with regard to technology and artificial
 intelligence. And obviously Taiwan with its semiconductor fabs is a huge part of that story,
 which is the reason why it's so front and center. Business leaders, including Nvidia
 CEO Jensen Huang, are here in, they're in Beijing with you right now and the President.
 This is very much a business trip as well. I use that kind of a little tongue and cheek,
 but you know what I'm trying to say.
 What exactly is the feeling right now about whether or not the business aspect of this
 summit will lead to more deals? And by the way, we're seeing all these headlines this morning
 about Nvidia being given an export license for its H200 AI chips to China, just how much
 of a catalyst was this trip for that particular headline?
 Yeah, so I would say, just be cautious on that headline. There is a Reuters report out
 this morning and we've read it carefully and what Reuters is doing there is uncovering
 some new details about approvals that happen some time in the past, right? No new announcements
 have been made here, no new approvals have been made here so far according to all of the
 government information that we can see where I'm standing. What Reuters did in that piece
 is details some new specifics about approvals that happened months ago. The dynamic with
 Jensen Wong is that he is here trying to encourage the Chinese to actually purchase chips
 that have been approved for sale. Remember, the US approved these chips back in December
 January timeframe, but the Chinese have not actually gone through with purchases. The
 reason for that is they're concerned about a number of things. One is the possibility
 that the US government might have tampered with those chips. The other one is they want
 to encourage the development of their own chip manufacturers like Huawei as competitors
 to Nvidia. So the Chinese have not purchased large amounts of chips despite the approvals
 from the US. One of the things if you're Jensen Wong you want to do on this trip is break
 that log jam. You'd like them to make those purchases now that they're allowed. They haven't
 been allowed but that Reuters headline this morning I think has got a lot of people thinking
 oh something new happened here. It hasn't. Nothing new has happened here yet. There could
 be announcements. There could be deliverables at the end of this. We haven't seen any of
 that yet. All right and some of the prediction markets especially Kalshi not showing any
 real signs that there is a massive amount of kind of business dealings that will be done
 although we are seeing right now as you can see the question of what will Trump announce
 as part of his China trip. We are seeing a little bit more in terms of activity and anticipation
 on the Boeing front, the rare earth's front but not maybe as much on the AI front. So thank
 you to both Aiman, Javers and Yunus Yun in Beijing with the latest there on the Trump
 and Xi summit. Well checking now the market reaction around the world and a near record
 breaking milestone for one stock in Asia. Steve Sedgwick has the early action out of London
 J.P. Ong has the trade over in Asia and Steve we're going to start with you. Yeah good
 to see you don't fascinating listen to your units and they're Aiman there absolutely
 well it's dictating events here of course in Europe as well. European stocks pushing higher
 investors watching out for those developments from the president's high stakes visit to China.
 The US leader as you've been saying has hailed a new chapter for the world's two largest economies
 but its technology stocks which have been leading US markets also leading in Europe
 the gains across Europe AI driven optimism offsetting some of the lingering concerns about
 the deadlock in US and Iranian peace talks. Techman's also enjoying a bit of a boost
 amid those reports about those Nvidia H-200 chips to a number of Chinese companies as well
 but by and large we're seeing broad base gains but obviously some of the bigger factors like
 concerns about that treasurer auction yesterday concerns about straight of homos still weighing
 on the market back to you. All right Steve Sedgwick with the action out of Europe over here
 now to the overnight action in Asia J.P. Ong has live in Singapore with the recap there good
 evening J.P. Yeah good morning to you guys Dom and while Europe look quite confident this Thursday
 Asian markets spent most of the session trying to find their footing you'll see here the NK25
 which also breached it a record high before promptly coming back down to earth in the sign of
 profit taking receiving profit taking similar signs of profit taking also hitting the tepid session
 for stocks in Hong Kong and Shanghai and the tie-ex looking fairly resilient despite
 figuring in those talks between President Trump and President Xi at the summit in Beijing.
 We want to take a look at this one set of stocks in China because these four tech stocks
 listed in Hong Kong happen to be among the 10 firms that were listed by Reuters is getting a
 gold signal to buy those H-200 chips from China and they also sell a pretty good decent rally
 with the exception of Tencent. Now we do want to talk also about the Red Hot South Korean
 Cosby market and that one stock that hit almost hit that near MiloSode SK Hynek's the King of DRAM
 seems to be closing in on that trillion dollar market cap cap level now to be fair it did pull back
 a little bit it sits about 940 billion dollars now but if the momentum we've seen over the last
 couple of days continues we could easily see them test that level in the coming sessions one
 other stock to watch out for in South Korea LG electronics take a look at how well they're
 stock to surge in this Thursday session because they're hiring even more engineers that are
 are making a hiring push for engineers to support this mega push towards AI and robotics so keep
 an eye out for LG products they might be the next stock to look out for and to watch on that
 Red Hot Cosby. Tom good morning it's back to you all right thank you very much JP on in Singapore
 we got a lot more to come here on morning call including a split down the middle Wall Street
 searching for consensus ahead of today's big critical retail sales read and if surging prices
 at the pump were enough to dent consumer spending and confidence plus prepping for the biggest
 IPO of the year and a true test for investor appetite on artificial intelligence and then
 later on red flags over Elon Musk's one and a half million dollar deal with the SEC why a judge
 is not ready to sign off on it just yet a very busy hour still ahead when morning call returns
 after this commercial break welcome back to morning call the latest read on consumer spending
 is out before the opening belt today economists are expecting April retail sales grew half a percent
 last month down from the 1.7 percent print back in March which was mostly due to surging gasoline
 prices but economists at Goldman Sachs and JP Morgan are painting a darker picture calling for
 growth of just two tenths of a percent again month on month so a little bit more pessimism there
 joining me now is Stacy Widlitz president and of SW retail advisors up Stacy the consumer story
 is very much one that we care about because as we have said famously for years now
 the U.S. economy is two thirds driven by consumer spending so just how much strain is the consumer
 feeling right now because of things like higher fuel costs so you you guys on retail and consumer
 is is the engine of our economy and right now the consumer is getting it from all directions
 the gas price is up 50 percent you know memorial days around the corner tapping hot dogs hamburgers
 up double digit percent at the grocery store certainly we're seeing some pressure in wage growth
 I guess the good news offset is that some of the tax refunds have been a bit higher to cushion here
 but you're hearing out from companies whether it's restaurants or other traffic
 focused companies that there there's been definitely some caution here and just as we got through
 tariffs which costs were passed on now we're going to get another leg up whether it's food or
 discretionary and the consumer is going to have to pay up once again and that's going to be sticker
 shock all right so if it emits that backdrop what we want to know Stacy is if you segment out the
 kind of consumer population we talk about kind of lower end middle end higher end consumers
 we talk about the companies that cater to those consumers whether they're across the spectrum
 or specializing in a certain area which companies are actually benefiting from this right now
 on a relative basis versus which ones are falling behind I think that's a great way to frame it
 and you want to think about who are the companies that can win in this environment and obviously
 that's Walmart right because they have the ability to go to their vendors and push back and get
 the ultimate best prices in the market whether that's food or whether that's discretionary and
 that is largely why Walmart's been gaining so much share over the past year certainly you want to
 look at the value guys at TJX they will get all the the inventory that's not sold from other retailers
 at the best prices and those value hunters will absolutely out there and I would say also if you
 think about Costco if you're really looking for the best deal on gas prices that's where you're going
 to find it and of course then the consumer walks in and buys their discretionary there.
 All right now let's talk about the places that we are seeing the pinch we've heard some commentary
 especially out of the massive European luxury houses about some of the strains that they could
 be seeing in the marketplace right now is that going to translate over to what we're seeing with
 the American consumer as well. You know we've heard we've heard from Burberry overnight talking about
 in Europe of course that tourism pressure from the Middle East is significant in addition to
 the Middle East being high single digits part of their business. The American luxury
 business has held up much better and you you heard Burberry summer stay which were very positive
 also in China. So I think you know you need the conflict settlement here to get that tourism
 flow back and if you think about the math wealth creation that we've had in the US you know I think
 that that is what certainly we need to get the whole picture moving but if you look at the most
 recent tapestry numbers coach incredible double digit growth there the business is holding up well
 but I would also caution that you know we have this Gen Z consumer that was spending five percent
 of their wallet on gas prices now they're spending about 10 percent of their wallet so you've
 got to watch that sector that really appeals to Gen Z and see where their spending goes.
 All right Stacey Whitlett's SW Retail Advisors thank you very much we'll see you soon.
 It's be done. All right straight ahead on the show banks on alert details on a groundbreaking crypto
 bill making its way through the Senate and what it could mean for a possible Bitcoin bounce back but first
 checking on shares of Kraft Heinz and SEC filing showing that Stee Yo's CEO Steve Kalein really
 recently bought five million share or five million dollars in stock this week increasing his holdings
 by 50 percent Kalein who took over in January shelved a previous plan to break up Kraft Heinz
 and focused instead on investing in marketing R&D and pricing to win back its consumers
 warning call is back after this.
 Welcome back to morning call the latest read on consumer spending is out before the opening
 belt today economists are expecting April retail sales grew half a percent last month down from
 the 1.7 percent print back in March which was mostly due to surging gasoline prices but economists
 at Goldman Sachs and JP Morgan are painting a darker picture calling for growth of just two
 tenths of a percent again month on month so a little bit more pessimism there joining me now
 is Stacey Widlitz president and of SW retail advisors up Stacey the consumer story is very much
 one that we care about because as we have said famously for years now the US economy is two-thirds
 driven by consumer spending so just how much strain is the consumer feeling right now because of
 things like higher fuel costs.
 So you got it done retail and consumer is the engine of our economy and right now the consumer
 is getting it from all directions with gas prices up 50 percent you know memorial days around
 the corner talking hot dogs hamburgers up double digit percent the grocery store certainly
 we're seeing some pressure in wage growth I guess the good news ause is that some of the tax
 refunds have been a bit higher to cushion here but you're hearing out from companies whether it's
 restaurants or other traffic focused companies that there there's been definitely some caution here
 and just as we got through tariffs which costs were passed on now we're going to get another leg up
 whether it's food or discretionary and the consumer is going to have to pay up once again and
 that's going to be sticker shock. All right so if it emits that backdrop what we want to know
 Stacey is if you segment out the kind of consumer population we talk about kind of lower end
 middle end higher end consumers we talk about the companies that cater to those consumers whether
 they're across the spectrum or specializing in a certain area which companies are actually
 benefiting from this right now on a relative basis versus which ones are falling behind.
 I think that's a great way to frame it and you want to think about who are the companies that
 can win in this environment and obviously that's Walmart right because they have the ability to go
 to their vendors and push back and get the ultimate best prices in the market whether that's food
 or whether that's discretionary and that is largely why Walmart's been gaining so much share
 over the past year certainly you want to look at the value guys at TJX they will get all the
 inventory that's not sold from other retailers at the best prices and those value hunters will
 absolutely out there and I would say also if you think about Costco if you're really looking for the
 best deal on gas prices that's where you're going to find it and of course then the consumer walks in
 and buys their discretionary there. All right now let's talk about the places that we are seeing
 the pinch we've heard some commentary especially out of the massive European luxury houses about some
 of the strains that they could be seeing in the marketplace right now. Is that going to translate
 over to what we're seeing with the American consumer as well? You know we've heard from Burberry
 overnight talking about in Europe of course that tourism pressure from the Middle East is significant
 in addition to the Middle East being high single digits part of their business. The American
 luxury business has held up much better and you heard Burberry Summer stay which were
 very positive also in China so I think you know you need the conflict settlement here to get that
 tourism flow back and if you think about the math wealth creation that we've had in the US
 you know I think that that is what certainly we need to get the whole picture moving but if you look
 at the most recent tapestry numbers coach incredible double digit growth there the business is
 holding up well but I would also caution that you know we have this Gen Z consumer that was spending
 5% of their wallet on gas prices now they're spending about 10% of their wallet so you've got to
 watch that sector that really appeals to Gen Z and see where their spending goes. All right Stacey
 Widlett's SW Retail Advisors thank you very much we'll see you soon. All right straight ahead
 on the show banks on alert details on a groundbreaking crypto bill making its way through the Senate
 and what it could mean for a possible Bitcoin bounce back but first checking on shares of craft
 hines and SEC filing showing that Steehyo CEO Steve Cattleaine really recently bought 5 million
 share or 5 million dollars in stock this week increasing his holdings by 50% Kaelene who took
 over in January shelled a previous plan to break up craft hines and focus instead on investing in
 marketing R&D in pricing to win back its consumers morning call is back after this
 welcome back to morning call turning out a cryptocurrency a big day on Capitol Hill
 the Senate banking committee is scheduled to hold a vote on whether to send a landmark piece of
 legislation creating a regulatory framework for crypto and other digital assets to a full Senate
 vote but head of that committee members have filed more than 100 proposed amendments that will
 need to be addressed before that vote even happens for more let's bring in Katherine Kirkpatrick
 boss she's the general counsel at Starkware a blockchain company that focuses on zero knowledge
 proof technology built on the ethereum platform a Katherine thank you for joining us this morning
 there's been a lot of focus within the cryptocurrency world about whether or not a regulatory
 legislative construct can help provide that next leg of development for cryptocurrency and blockchain
 is that legislation here in front of the Senate right now fingers crossed you know we hope to see
 progress on this bill it's been long awaited and debated it's obviously it needs to get out of
 the Senate banking committee by Memorial Day to have a chance but this bill is pro innovation crypto
 wants this bill and holy supports it even if it's not seen as perfect it gets crypto to the next
 stage of credibility and scale what exactly then do we have to expect from the so-called clarity act
 that could provide that bigger tailwind and what exactly can traders and investors maybe look
 forward to hypothetically if this bill actually becomes law this bill is a great starting point for
 much longer term rulemaking you know this is akin to crypto's Dodd Frank except it wasn't spurred
 by a crisis and many of the provisions of the bill will go a really long way to regulate and provide
 oversight to this industry so there are a lot of industry groups that are non crypto that
 recognize that and support this because it actually works to regulate centralized crypto
 institution it extends the law to certain crypto market participants where before it was unclear
 and again it should give a lot of traditional financial services and retail some peace of mind
 and engaging with this asset class as it continues to mature and grow what exactly do you think will be
 the maybe one or two industry groups you mentioned financial services what are a couple of the
 industry groups that could see more of their kind of crypto blockchain currency you know ecosystem
 grow because of this because the clarity act actually could become law well definitely financial
 services and that obviously creates some attention there are still headwinds of this bill the
 democrats want an ethics provision track a track by as crypto calls it traditional financial services
 they're not a huge fan of this bill despite some compromises that were made recently
 with respect to stablecoin yield and other provisions but what a lot of people forget about crypto
 is it's not just about financial crypto the underlying technology of crypto it affects a
 multitude of other industries it affects privacy it affects artificial intelligence so
 supporting this kind of technology supports innovation and creates an environment for american
 companies and the US economy to grow along with this technology all right Catherine Kirkpatrick
 boss general council over at stark worth thank you very much please come back and update us when
 we get more on that clarity act definitely will do all right still on deck for the show cisco cuts
 jobs and shares are surging right now a judge takes issue with Elon musks one and a half million
 dollar SEC settlement and big pension funds are crying foul ahead of space x's IPO your latest
 headlines are coming up next but first we're watching shares of South Korea's largest kpop
 agency soaring overnight on news that popular boy band BTS will headline the first ever half time
 show at the 2026 FIFA World Cup final performing alongside Madonna and Shakira the band is currently on
 a comeback tour now that all of its members have completed their mandatory military service in South
 Korea kpop FIFA driving stocks morning call continues next
 I'm Dominic Chewin for Morgan Brennan today and welcome back to morning call futures right now
 are showing signs of life with the Dow implied higher by 220 points the S&PF by 17 and the tech
 heavier Nasdaq up by roughly 65 points to global markets we have been seeing again general positivity
 the nek did fall after briefly touching some higher levels the South Korean cost be up about 2%
 in the German DAX right now in current trading up about 1%. Chechen is checking some of this
 morning's latest headlines shares of cerebris figuring trains day later on after pricing its IPO above
 the expected range in the largest public offering so far this year the company pricing shares at 185
 bucks a piece raising more than five and a half billion dollars giving it a market value of more than
 56 billion dollars shares of Cisco are surging and I mean surging on the back of earnings and
 guidance that beat Wall Street expectations the companies also announcing it's cutting around 4,000
 jobs are roughly 5% of its workforce as part of a restructuring aimed at shifting investments
 towards artificial intelligence Cisco shares are up 16 and a half percent in the pre market trade
 Cisco CEO will have much more on all of this when he speaks to CNBC exclusively in the 9 a.m.
 eastern time hour during squawk on the street Reuters is reporting officials from New York state
 New York City and California's pension funds are flagging major concerns over the proposed
 governance structure for SpaceX's upcoming IPO calling it quote unquote extreme urging
 Musk to remove provisions that would curb shareholder protections and sticking with Musk a federal
 judge is highlighting quote unquote red flags in the proposed one and a half million dollar deal
 between Musk and the SEC to end the agency's lawsuit over his 2022 takeover of Twitter
 and questioning whether Musk is getting special treatment.
 Well now to some of the latest news from the Trump Xi Summit in China President Xi telling the
 group of US CEOs who've accompanied President Trump on the visit that China's door
 will only open wider according to state-run news agency she's meeting with the delegation today
 which includes Tesla's CEO Elon Musk Apple CEO Tim Cook and Nvidia's Jensen Huang
 who joined the group at the last minute as he seeks to unlock stalled efforts to sell more AI
 chips from Nvidia in China and speaking of AI the US and China are locked in a technology arms race
 as they seek to integrate AI into robots, drones, military operations and even autonomous
 weapons. AI and potential safety measures to prevent a military miscalculation are expected to be
 discussed at this big summit. Well joining me now is Jason Rathji the public sector president
 at Web AI and former director of the Office of Strategic Capital in the US Department of Defense
 the juxtaposition Jason is very very important here president Trump and president Xi China AI
 and the military aspects of it just how concerned should the world be about what we can get done
 on regulating AI for things like the use of the military applications.
 Well first on thanks for having me here I think they um you know it's really a historic summit
 that's happening today and while it's impossible for us to truly understand what's happening behind
 closed doors but I hope the administration walks away with is a deep appreciation of the challenges
 our current AI architecture faces in our global competition with China and you know at Web AI
 we're constantly thinking about the long-term here you know we're 100% focused on building
 architectures that are actively engaging in overcoming those challenges that the current arms race
 between our two countries presents. I mean the first Cold War the big one between the Soviet Union
 and the United States focused on military capabilities around nuclear now this is the kind of new I
 wouldn't call it a Cold War because president Trump and Xi said they both like each other and they
 both respect each other but this is the new frontier it's technology it's artificial intelligence
 what exactly do you want to see coming out of this particular summit.
 Well when you look at what the your current leading AI companies in the ULS are pursuing they're
 pursuing a centralization game you know it's really a competition not only over the AI models
 that they're producing at these frontier labs but it's also the resources that are required to
 produce those models everything from rare earths to the processing to the chips to build these
 data centers that require a significant amount of energy and data to be able to produce these models
 and that's where a lot of pundits believe the U.S. is ahead the problem with that centralization
 game is it's one that China often wins in the long run I mean China owns rare earth mining they
 own midstream processing it's only a matter of time before they catch up in compute and certainly in
 China they can force data policies that we don't believe in in in the U.S. so the concern that I
 really have with our current approach is one where we're going to continue to go down this route
 that China is going to win in the long run what I'm hoping comes out of this conversation is that
 there's a new appreciation for looking for different alternative approaches different architectures
 that rely on more of a distributed AI capability that's one that we're producing at web AI well
 we're trying to drive AI to the tablets and the phones in every American's house they can use
 this capability without relying on a centralized cloud architecture and certainly on the military side
 it's making sure that our soldiers sailors Airman Marine Marines have access to AI capabilities
 at the front line at the edge the not rely on the cloud did you do the jobs they need to do to defend
 this country all right Jason Ratchet over at web AI high stakes for sure here thank you very much
 please come back and see us again soon sir thank you all right a lot more to come here on
 morning call including much more on that Trump she summit our own Joe Kernan speaking exclusively
 with Treasury Secretary Scott Besson from the sidelines of that big sit-down in Beijing where he
 says DC in Beijing stand on critical trade talks update is coming up on morning call right after this
 welcome back to morning call and turning back now to the news of the moment the high profile summit
 between President Trump and China's Xi Jinping our own Joe Kernan joins us now after speaking
 exclusively with Treasury Secretary Scott Besson earlier this morning amid those talks I guess it
 was the afternoon back in Beijing at this point now but Joe I mean there's a lot to talk about
 what exactly was the kind of focal point maybe if one or two of your conversation with the Treasury
 Secretary it's a blur no I'm gonna have to think about that I'm gonna have to you said this morning
 we did that it is this morning so what do you I guess it was afternoon in China though was it yeah it
 was early and I did I see you in a different place in a different you did and then this just
 shows how hard you work because I saw you in Englewood Cliffs where I am right now back because you
 had done on morning yes exactly and now you are back at the Nasdaq where your show is gonna start
 in about 15 minutes it's a beautiful Englewood it's just beautiful and at that time it was great
 to be there I ask Secretary thanks I ask Secretary Besson if he's expecting any breakthroughs on
 tariffs do we still talk about those during the summit there have been reports the President Trump
 and President Xi may consider cuts on $30 billion in imports and what would kind of look like a
 managed trade push here's what Secretary Besson said we're going to form a order of trade and the
 idea will be for the for for non-critical non-strategic areas things that the U.S. the doesn't want to
 make that we're never going to reshore so something like fireworks are very low in consumer goods
 that are going to keep coming from China no matter what so we can interrupt those and then there
 are many things that they want to buy from us you know there was talk today about the Chinese buying
 more U.S. energy and the U.S. is exporting a record amount of crude and LNG now the only binding
 constraint is our expert facilities we're going to be building more expert facilities we're going to
 be ramping up in Alaska which is a natural for China and given what's going on in the mid east
 we think that not only China but countries all around the world are going to look to diversify
 away from the Middle East for more stable source of energy and what better place in the U.S. but
 the idea of starting with 30 billion by 30 billion that both sides can designate again for non-critical
 areas and areas that we're not trying to reshore and there's we didn't know which one to show at
 this point down there's so many other things I think it was over about 20 23 minutes or something
 so there's a lot of different to what what trying to think of what we didn't I mean Taiwan is
 mentioned at one point the straits they're not straits there's only one is they're straight
 of four moves a lot of people still say straits do you hear that dumb well I mean there is a
 straight of Taiwan that is that is also a point of contention right now so there are multiple
 straits right now what time would your alarm clock yeah you get to sleep in don't you what time
 was yours yeah I did sleep in to a whopping two o'clock feet all right that is luxury that is
 luxury you get to roll over and sort of you know go back to sleep check that you got to go I think
 we do but I think the only reason why is because you got to get ready for show was starting about
 10 minutes and 40 seconds we're going to play we're going to play it in total right right after six
 all right which is coming up to all right Joe Kern and we'll see you in about maybe just 10 minutes
 and 30 seconds at this point so we'll see you on squawk box in just a bit thanks Joe okay all right
 straight ahead on the show here the morning call crews back and we're back in a moment
 welcome back it's time for your call sheet where we look at the topics driving the trading day
 ahead the crew members today are catteriness simonetti of Morgan Stanley Claire Paladell Poverie
 of lion trust asset management and Steve Grasso of Grasso Global he's also a CNBC
 contributor thank you all for being here with us right now let's start with our first topic which
 is obviously the news of the day so far trump she the summit in Beijing and what we think is going
 to come out of it catterina I'll talk to you first about the setup what exactly are you looking for
 out of this well of course any positive development when it comes to China is is good you know
 Chinese an essential trade partner we've hit a major roadblock when it came to tariffs and
 having major global leaders of our commerce over there in China negotiating the deals as positive
 but the biggest overarching concerns for the market right now are oil prices and
 straight of her moves and we're hoping that the positive development on the China front
 is going to help push along the the positive resolution in that part of the world you know so
 the traffic and the straight can resume and the oil prices can come down and not affect the economy
 in in a negative way we are not pricing in the oil recession at the moment but it's certainly
 something that on the forefront of a lot of investors minds Claire what's got your eye with
 regard to how the global market is is being impacted by some of the developments out of Beijing
 absolutely it's on and I think the energy as catterina mentioned is the one of the key important
 messages coming out of Beijing right now the other is this negotiation around the physical
 inputs into the AI economy and there's really only been one newsworthy item that's come out of
 talk so far and that is the allowing of each 200s and videos chips to be sold to about 10 customers
 in China and this is a bit of a drop in the ocean compared to in videos opportunities globally
 but it's moving in the right direction it doesn't fundamentally alter our view that two separate
 technology stats are going to be built worldwide one in the US one in China but if we can move towards
 a situation where the supply chain inputs are not being constrained then this supports the AI
 infrastructure build out which is really popping out the earnings growth of the US economy right now
 and Claire I just want to call your attention right now we are seeing live shots out of Beijing as we
 speak I believe we're seeing Secretary of State Marco Rubio right now we also just saw Apple CEO Tim
 Cook we saw Nvidia CEO Jensen Huang we saw Tesla's Elon Musk as well in there I mean we already
 knew they were going to be there but now they're at the dinner the banquet hall they're all seating
 themselves down they're mingling about that brings me Steve to you for this conversation this
 is a business meeting as well right what companies what stocks are going to feel the most impact from
 what comes out of this summit well the natural one is Boeing right so Boeing they stopped it China
 stopped accepting Boeing jets back in 2025 and it was April if they start accepting those again
 or or get an order from China that's a 46 billion dollar backlog for Boeing I think they have
 the most to gain but if you look at Qualcomm 46 46 percent of revenues come from come from China
 so they have to maintain that relationship microns had an incredible year down but 25 percent of
 their revenues off the table they were banned from China so China can can ban a micron because
 they can go to a Samsung or SK hindex they can't ban a Qualcomm they can't ban an Nvidia
 and Boeing they could play games with so Boeing has the most to gain all right by the way we also saw
 Secretary of Defense Pete Hegg sit there alongside city group CEO Jane Fraser also in that shot as
 well as they kind of pan through here and David Solomon from Goldman Sachs let's talk about our
 second topic which is the massive surge in Cisco shares old world tech that is now becoming
 invoke again Claire I'm going to start with you here is Cisco's rise justified
 and we probably think it is today given the fact that Cisco's really been written off as a legacy
 and tech talk that doesn't really participate in the AI trade a little bit similar to how the
 Margaret wrote off Intel and 12 18 months ago the key for us is that what we're saying is that as
 these customers of chips in the data center expand and as data centers are connected together
 and this actually moves value capture away from just sort of raw compute power towards these
 networking providers which becomes a fundamental layer the AI infrastructure stack
 not everyone is capturing the demand because they don't have the scale and the capacity
 and Cisco scale it's very very impressive and we're looking at it 4x AI revenues and now
 4x for this year so we would and we would say it's justified okay all right so Steve put the
 fast money trader hat on are you buying Cisco with this pop well you know anything that has AI
 revenues growing at a strategic rate you want to be a buyer of I'm most excited about the IPO
 of cerebrus it was over subscribed you know got price last night down at $185 a share I really want
 to see what the market does with an inference chip this company is pretty amazing all right so
 let's move on to our last topic which is the overall economy vis-a-vis the confirmation of Kevin
 Worsh as the new Fed chair Katarina I'll go to you with this one is this a good development for the
 US and by extension global economy well the market is starting to price in the fact that we probably
 are not going to see anymore rate cuts this year and that is okay because this is a fundamentally
 an earnings driven economy we see a lot of a momentum we see a lot of positive developments when
 you look at the average stock of S&P showing a 6% surprise which is the highest in four years you
 know this is something that cannot be ignored with that you know he has a a big task of really
 evaluating whether inflation is going to be a real concern and with that as long as we are not
 going to see rate hikes we should be good to go and economies on track to continue to grow but this
 is going to be you know in evolving development as the prices of oil are affecting global economies
 and Claire last word just a few moments here are you optimistic about Worsh's Fed chair
 yes I think the market like certainty and from everything we've seen the economy isn't it good shape
 and Worsh is going to be able to balance both sides of the mandate without rocking too many boats
 all right Katarina Claire and Steve grass oh thank you very much that's your morning call
 crews walk box starts right now