AI, inflation and China trade talks drive market focus 5/13/26

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 Nasak futures lead the way as Wall Street Redis for Trump She and yet another big inflation report. I'm Wurgen Brennan, and this is your morning call.
 Good Wednesday morning, let's get a check on you as stock futures after a modestly lower day for stocks yesterday, really a mixed picture yesterday with a doubt eating out of gain, but the S&P and the Nasak both finishing in the red, you could see it is the reverse on your screen this morning, with doubt futures under some pressure S&P and Nasak both.
 Both poised for a pop at the open just a bit later today. Let's turn to treasuries now ahead of today's next key inflation report, April PPI, which we're also expecting later this morning, and you can see yields are a bit lower across the curve, but keep in mind we've seen significant run ups in yields since the start of this week.
 So US 10 year treasury yielding 4.463% right now. Let's take a look at Fed sensitive two year to that is yielding 3.985% and the third year treasury is trading above 5% right now CPI yesterday coming in its highest level in three years. We're watching right now, energy, the IEA morning this morning of further price spikes is global oil inventories fall at a record pace, and you can see crude futures are down fractionally right now.
 But it's a BTI still trading about $101 per barrel and Brent while down fractionally still trading around $107 per barrel natural gas basically at the flatline are above slightly lower as well.
 We're keeping an eye on Honeywell shares are out more than 2% so far this week outpacing the broader markets this year in general and coming up we're going to be speaking with I'll be speaking with CEO of Imal Kapoor.
 This is a first on CNBC interview and we have a lot we're going to cover today you do not want to miss that.
 But let's get to this morning's top story as the world awaits President Trump's arrival in China later this morning for a high stakes face to face with Xi Jinping.
 This as Trump adds one more high profile CEO to the a list delegation that's already en route complete coverage live from Beijing with our own Amin Javers and Eunice Yun.
 Amin let's kick this off with you first.
 Yeah good morning to you Morgan we are expecting the president here in Beijing in about two hours and 45 minutes time he's in the air.
 We saw the departure yesterday from Washington and then in Alaska the president added a surprise extra visitor to the Air Force one delegation picking up Jensen Wong of NVIDIA.
 There have been some question about whether Wong was going to be on this trip or not it was not on an initial list of guests.
 But he made the appearance of the tarmac picked up a ride on Air Force one and we do expect him to be landing here along with a number of other CEOs.
 We're told Elon Musk is on the aircraft as well and other CEOs will be using their own airplanes not Air Force one to arrive here a whole list of high-powered American CEOs coming here to Beijing.
 And this Morgan very much is going to be a story of change right this is a change from the last meeting of these two leaders in Busan South Korea where this was expected to be mostly about trade.
 Now we have the Iran war that's happened since then and this is much very much going to be about trying to come up with some way to have a path forward in Iran as well as trade.
 So trying to solve two wars at once and think about all the change that's happened since the last time these two leaders met in Beijing back in 2017 in the president's first term in office we've had COVID since then.
 We've had the trade war since then we've had the Iran war since then a lot of tension in this relationship has developed since the last sort of grand welcoming that Beijing gave for president Trump in his first term.
 He was deemed a state visit plus because of all of the hoop loss surrounding that visit.
 This one is expected to be somewhat scaled down and we'll watch to see all the protocol over the next 24 hours or so to see who greets the president, how much of a red carpet, how much of a welcome is extended to the president given that amount of tension that we've seen in this relationship.
 Let's stay here over the next 24 hours more back of you.
 We'll say right there, Eamon, it's kind of incredible to realize it's been almost a decade since these two leaders last met.
 Let's send it over to Eunice Yun, Eunice US and China delegations have already been in meeting this week on trade ahead of the Trump she sit down.
 What is the China take and rhetoric and messaging that we're getting ahead of this?
 Well, Morgan, as fixated as president Trump is on trade, a president she is equally focused on Taiwan.
 The Chinese today reiterated their priority in this summit in a lengthy report in the people's daily, the official paper.
 The Taiwan issue is the most important and sensitive core issue in China, US relations clearly defining the bottom line is precisely a responsible commitment to prevent serious risks.
 Now, in the run up to the summit, there has been an expectation that Beijing was going to push Washington to change the language around the island which Beijing claims as its own.
 The expectation is that they would ask for a shift from does not support Taiwan independence to oppose Taiwan independence.
 And today, the state media was much more direct about that.
 To the global time said opposing Taiwan independence should rightfully be a shared responsibility by both China and the United States today.
 And indeed, it must be a critical consensus that both sides strive to forge.
 President Xi had earlier this year also flagged that he was unhappy with the arms sales to Taiwan saying that these arms sales to Taiwan must be handled with prudence.
 Now, we don't know what President Trump's intention is going to be, but so far Morgan sources and analysts have said that President Trump doesn't look as though he is willing to make those type of measures.
 You must stay right there. I want to go back to you on this. I mean, with so many American CEOs and C-suite executives traveling with the President right now and Trump downplaying the likelihood of Iran being a focal point, what would be seen as success from the US side? Is it going to be the announcement of more deals?
 Yeah, you know, Morgan, I think, honestly, if you talk to CEOs and I talked to a lot of CEOs in the US before we left for this trip, the expectation level here is very, very low.
 There's not a big expectation in corporate America that there's going to be some sort of trade breakthrough here.
 What they're hoping for, I think, if you talk to a lot of executives, is just a continuation of the sort of trade truths that was reached in Busan back in October.
 They're hoping for maybe some announcement of sales, Boeing aircraft, soybeans, that sort of thing, and maybe no big diplomatic faux pas between the two leaders or flashpoint of any kind.
 You heard Eunice talking about Taiwan, which of course is always a sensitive subject. So if they can avoid the sensitive stuff, get some products sold and maybe have a continuation of the trade truths, I think a lot of CEOs would look at that as a win.
 But the expectations when you talk to CEOs are really on the floor for this. They don't see a major breakthrough because both sides have an incentive to continue to push for global market share.
 Yeah, Eunice, I mean, you've seen a big push by the Trump administration to forge closer alliances in large part through trade, energy deals, the like, even critical minerals with some of our other allies in Asia-Pacific, even Treasury, Secretary Besen in Japan as well.
 I mean, you have some flaring tensions between some of these countries, most notably Japan and China too. How does that factor in here?
 Well, I think it factors in that China is messaging that it really wants to see stability in this relationship.
 On their reasons why both sides would want that stability. But from the Chinese perspective, they want to see a closer relationship with the US because it does benefit them in their longer run.
 They have their own political as well as economic agenda, especially when it comes to getting their technology and their advanced manufacturing up to par.
 So the less pressure that they have from the Americans, the better for them and their longer-term goals.
 All right. Eunice Yoon, Aiman Javers, great to have you both here to set up what is going to be a very busy next few days to be sure.
 Thank you from Beijing.
 Well, joining me now, Brendan Ahern, Chief Investment Officer at Crane Shares in Cassodian of that highly-watched China Tech Kweb ETF, which is down more than 13% on the year heading into today's talks.
 But Brendan, we just talked about the talks themselves, but Tech and AI are also on the table here too. How to think about that and what the stakes of these talks mean for investors.
 Yeah, good morning, Morgan. Yeah, we think that we're a little bit more constructive on the potential outcomes between President Trump's trip to China.
 We think, like in poker, he's telling you that he wants to do deals. That's why he's bringing these CEOs with him.
 Certainly, we do believe that picking up Jensen Huang, that's very unexpected. That's a very strong positive sign because you know, the video really wants to sell more chips in China.
 Chips, Boeing airplanes, soybeans, we think that's on the table. That's very easy to do.
 Potentially lowering the fentanyl tariff that the US and China on drug enforcement seem to be working quite well with one another, as well as Morgan.
 It's interesting that Scott percent was in South Korea today, meeting with Vice Premier Liu Ha, who's the main trade negotiator for China.
 So potentially teeing up some more deals for the two presidents to announce over the next several days.
 So what does this mean for the tech piece of the equation? As we have seen this decoupling, if you will, of those tech supply chains and tech stacks over the last couple of years.
 It does seem to be a flashpoint in these geopolitical tensions.
 I mean, AI is viewed as this race between the two sides, which I don't, we'll see how that all plays out. Maybe some of that's a bit self-serving for some of the companies that are looking to raise money.
 At the same time, we've seen Chinese semiconductors, companies really benefit from companies like Nvidia being limited on what they can sell.
 That ultimately is potentially a headwind to US companies bottom line, if there's someone restricted on China.
 Obviously, it's not just a large consumer base, but it really is the fat world's factory.
 And so that limits the ability of US companies to reach clients, not just in China, but in broader Asian and really globally.
 So I think that's where President Trump's business background is really the key. We know he wants to announce deals.
 And I think that's why you're seeing so many CEOs on the plane with them.
 Yeah, I mean, we spend so much time on CNBC, at least domestically focused on the huge amounts of capital and CapEx spending and IPO pipeline around this AI revolution from a US standpoint, but a similar thing is happening in China too.
 So just break that down, especially as we do look to earnings from Alibaba and Tencent and other Chinese tech players.
 Yeah, 100 percent. I think in the short one, you're seeing really investors favor the AI picks and shovels.
 These are kind of the semiconductor plays, predominantly TSMC in Taiwan, SK Hynek, Samsung in South Korea.
 But we're seeing that in China as well, we're seeing the tech hardware, as well as some of the semiconductor companies in mainland China recognized as AI plays.
 And in the Hong Kong market, I think what we're really looking for earnings, particularly today from Alibaba is, are they going to spin off their semiconductor unit called teahead, how much is cloud computing, revenue growth, potentially up to 40 percent year over year in cloud, which is really where Chinese companies are looking to monetize AI.
 And Tencent just reported, looks like a little bit of a top line revenue came in a little bit light Morgan, but it was a beat on the bottom line.
 So kind of an interesting, no word on Alibaba quite yet, momentarily.
 Yeah, we'll be watching for it here this hour and beyond. Brendan Ahern, great to have you on. Thank you.
 Well, we're turning to the UK and a developing story is Prime Minister Kier Starmer defies calls to step down amid growing political pressure.
 Markets they're reacting this morning again, they have been this week in general and moving global bond markets in general.
 Steve Cedric joins us now from London with more high Steve.
 Hey, Morgan, great to see you. Look, the mood in European equity markets is actually more optimistic today, but the focus remains very firmly on the geopolitical situation in Iran, the US still struggling to make any progress when that war was investors also looking out as we were just hearing from developments from Trump's visit to China.
 Now back to UK guilds as well. UK Prime Minister Kier Starmer appearing at the moment to put the rebellion against him on hold on Tuesday, essentially telling the MPs to put up or shut up.
 Now the uncertainty set to continue into another day. Now crunch talks between the health secretary and potential leadership challenger Wes Streeting and the Prime Minister have concluded just over 30 minutes ago.
 We haven't heard any word on how that went, but UK guilds which were touching the levels we haven't seen since the great financial crisis back to 2008.
 Well, they've just come off their highs and you can see there around about 5.08% is where the pivotal 10 year is currently trading, but the melodrama set to continue.
 But what we have got today is the king's speech and there will be lots of pageantry where Kier Starmer will attempt to get the king to say what he intends to do going forward, but whatever he gets to in that, that remains to be seen back to you.
 Steve Sedgwick, thank you. We got a lot more to come here on morning call, including a rally on the back of Open AI, why SoftBank CEO Sam has Sam Altman to thank for a massive Q4 profit.
 Plus President Trump's plan to ease the pain at the pump.
 Already running on fumes, we're live in Washington with those details and later a first on CNBC with the CEO of Honeywell.
 We're talking China Summit, Aerospace and Defense.
 Industrial and physical AI and this big company reimagining. We have a very busy hour still ahead, you don't want to miss it, we're in call to your back.
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 destination focused dining and cultural enrichment on board and on shore and every Viking voyage is all inclusive with no children and no casinos.
 Discover more at Viking.com
 Welcome back to morning call, we got a marketplace on micron, those shares are jumping almost 6% pre market right now on the back of a big price target increase from Bank of America going from 500 to $950 per share.
 Be a vague saying it expects memory demand will continue to outgrow supply driven by AI.
 Micron is among the biggest gainers in both the S&P and NASDAQ pre market in general this year. Take a look at some of the other chip names too, everything as you can see right there on your screen is trading higher this morning.
 Well, soft bank out with results this morning as well showing massive gains for its vision fund as the rest of the Japanese telecom and tech giants businesses struggle to keep pace CNBC senior technology correspondent Arjun Kapal has been covering all of this this morning and brings us the latest.
 Hi Arjun.
 Was driven by soft banks big bet and open AI which the company said saw a gain of $45 billion so far soft bank has invested more than $30 billion in open AI.
 First getting into that company in 2024 before adding a $30 billion commitment in March 2025 at a $260 billion valuation.
 The key here is that valuation has ballooned to over $800 billion which is really supporting the vision fund here.
 Soft bank is eventually targeting a total investment in open AI of $60 billion which would give it a 13% ownership stake.
 Founder Masayoshi Sun has attempted ready to position the Japanese giant at the center of this AI boom with investments across various AI and chip companies such as ARM.
 However, there is increasing investor concern at this point about the concentration of open AI in soft banks broader investment portfolio and the debt load it currently has as well.
 Today, really trying to assure investors by highlighting companies that are waiting in the wings to go public such as Tik Toko and a bite dance and revealing soft bank has $3.5 trillion yen in cash enough to cover more than two years of bond redemption.
 Still, investors have rewarded that vision so far around AI from Masayoshi Sun with the stock up over 200% over the last year Morgan.
 Not too shabby, urgent carpal. Great to have you. Thank you.
 Well, straight ahead, support for a gas tax holiday is running on empty in Washington. We've got a live report from the capital on when or if it becomes a reality, at least from a federal level.
 But first, check out shares of Samsung. We're just doing a lot of age to tech this morning, but that's because it's moving.
 It's recovery from a sharp decline early in today's session on South Korea that initially wiped out more than $60 billion in market cap.
 The drop coming after the company failed to reach a new wage deal with its workers union who threatened in an 18-day strike which could start as soon as next Thursday.
 So keep an eye there because you see shares are about 1.5% right now morning call be right back.
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 and all inclusive fares discover more at Viking.com.
 Well, welcome back to morning call. We've got two funding or funding potential rounds report.
 First of all, the FT says Blue Origin is weighing its first outside funding round, CEO Dave Limp, reportedly telling employees that in all hands meeting that it's going to take a lot of capitals to significantly increase the number of rocket launches per year.
 Keep in mind, their sole shareholder at Blue Origin is Jeff Bezos, but in the midst of the SpaceX IPO, perhaps getting a lot of attention and a lot of outside investor interest.
 So, one to continue to track here. Also, Andrewl hitting a new $61 billion valuation in a $5 billion funding round led by Thrive and Andreessen Horowitz.
 Andrewl CEO says the company will use the cash to invest, quote, aggressively in manufacturing capacity research and development and infrastructure.
 Well, let's turn to the latest figures from AAA showing the price of regular gas is holding steady above $4.50 a gallon.
 This is slightly lower from a week ago, but still up more than $1.35 from a year ago.
 President Trump's plan to offer some relief at the pump, getting lukewarm reception so far from lawmakers on Capitol Hill. Emily Wilkins joins us now with more Emily.
 Good morning, Morgan. Well, yeah, look, Trump's pitch to get rid of that federal gas tax. It's really getting that lukewarm reception on Capitol Hill.
 And it's partly because that if you revoke this tax that could impact infrastructure, the gas tax it funds things like highways, roads, bridges and suspending it for six months is estimated to cost as much as $21 billion that's according to an analysis by the committee for a responsible federal budget.
 Now, Trump would likely need to get Congress's approval to suspend the tax. That's, of course, about $0.18 per gallon. Senate Majority Leader John Thune said yesterday that he's open to Trump making his case for getting rid of this tax.
 But he wants to hear a plan to ensure that the savings would go to consumers as well as make sure that infrastructure is still supported.
 We've had some of our colleagues who've come out in support of, you know, repealing or at least temporarily repealing the gas tax, but obviously that is implications for the highway trust fund.
 And so those are things you have to take into consideration as well.
 Democrats are also cool to the idea. Senator Cory Booker told us that while raising gas prices, rising gas prices are an issue, so are needed fixes for infrastructure.
 It's really robbing Peter to pay Paul, because remember, the gas tax comes out of our transportation trust fund that has a big debt.
 It should be repairing our roads and bridges.
 Several Republicans, senators, as well as Speaker Mike Johnson, told me and other reporters that to really get the price of gas down the straight of hormones just needs to be reopened.
 But we'll have to wait and see if the White House wants to prioritize pushing for a repeal of the gas tax.
 Otherwise, likely doesn't have the momentum that it's going to need to move on Capitol Hill. Morgan?
 All right. Emily Wilkins, thank you.
 We'll still on deck. The CEO FedEx pushes back on Amazon's impending freight threat and, throughout the way, is a massive new funding round.
 And we've got details on what could be the biggest US chip IPO in years.
 Plus, Wall Street rate chock and why yesterday's inflation print could mean higher for longer.
 Just ask Greenlight's David Einhorn. More to call. We'll see you next.
 I think it's going to be hard for the Fed to lower interest rates while inflation is 4% or something very close to 4%.
 I do think that over time Kevin Wars is going to have more of a double issue than Powell has had.
 And when he has the opportunity, if we get a piece out of Humber, we get lower oil prices and stuff like that, I think those kind of cuts will be yet to come.
 I'm Morgan Brennan. Welcome back to morning call. Let's get a check on US stock futures after a mixed session yesterday for stocks with the Dow finishing in the green.
 The S&P and NASDAQ both closing lower yesterday. You can see it's the reverse on your screen this morning with Dow futures under some pressure and the S&P and NASDAQ both poised for a higher open.
 Well, Treasuries, let's get a look there ahead of today's next key inflation report, April PPI.
 You can see treasure yields are a bit lower across the curve, but keep in mind, we've still seen this big run up in yields in the last couple trading sessions from where we were just late last week.
 So the US 10 year treasury yielding 4.463% right now and the third year treasury yielding more than 5% right now as well.
 CPI yesterday coming in its highest level in three years. So that has added to what we've seen in the bond market.
 We're also watching energy, which was a big contributor to CPI yesterday, the IEA warning this morning of further price spikes as global oil inventories fall at a record pace.
 You can see a bit of pressure on the screen right now for energy futures, but WTI crude still trading around $101 per barrel. Brent is trading around $107 per barrel.
 Also, quick check on copper, which has been trading at record highs, CME futures, intraday high, closing record high and LME closing at a new record yesterday too.
 You can see right there on your screen copper up another 1% to this morning, doctor copper. What does it mean for the global economy?
 What does it mean for the AI infrastructure build out? Interesting to see that we've seen this catch a bid. It's now a double digit percentage since the start of the year.
 A check on global markets South Korea's Cosby closing up over 2.5%. We continue to see volatility in that market that of course after losses yesterday.
 We're checking some of this morning's latest headlines as well. President Trump confirming Nvidia CEO Jensen Huang will be joining him on his trip to China after all.
 Air Force One picking up Huang during a stop overnight in Alaska and Huang will join the likes of Elon Musk, Tim Cook, Larry Fink, Jane Frazier, Kelly Orpurg, and a number of others.
 Anthropic meantime is reportedly in early talks to raise at least $30 billion in new funding at a $900 billion valuation could be its largest round to date.
 Bloomberg reports the round is likely to close by the end of this month. Anthropic also continues to release all of these new products to the marketplace this week focused on legal.
 After raising its price range twice, Sarah Brass systems is telling prospective investors that it expects to price its IPO after the close today at the top of its expected range, which is between $150 and $160 per share.
 That was already raised. Reportedly 20 times over subscribed, the AI chip maker could be looking at a valuation of $49 billion on 510 million in revenue.
 Those numbers would make it this year's largest offering and the biggest chip listing in the US since arm.
 Well Sam Altman on the stand in Oakland, California is as of yesterday rejecting Elon Musk's allegation that he betrayed OpenAI's founding mission to serve the public good and that it was a musk who wanted to seize control of OpenAI and make money from it.
 On claims he tried to quote steal a charity, Altman said quote, it feels difficult to even wrap my head around that framing.
 And FedEx CEO Raj Supermanium downplaying the new threat from Amazon and its recent supply chain services announcement telling Jim Kramer on mad money last night that what FedEx operates is quote completely different from Amazon.
 The true network is something you can pick up in any one part of the world and get it to any other part of the world in a couple of days.
 And for that you need a system like what we have here and the networks in around the world. That's not what was announced at all.
 Keep in mind FedEx disentangled with its business with Amazon a number of years ago it's gone back and done some new contracts in the last couple last year or so we'll call.
 But certainly a dynamic to watch. Well guess what else are watching? We're watching shares of Honeywell those are up nearly 13% this year outpacing the broader markets.
 The company is just weeks away from the next stage of its multi-restructuring plan to carve out the conglomerate into three publicly traded companies.
 Up next we get the spin off of the aerospace business which is set to happen at the end of next month.
 For more I'm joined in a first on CNBC interview by Vimal Kapoor chairman and CEO of Honeywell and it's great to have you here on set. Welcome.
 Great to be there Morgan with your show.
 There's so much to talk about but first let's start with updates as you do move to this aerospace spin next month.
 So we announced this last year February and we talked about the separation luck or sometime in the second half of this year and the good news is we are able to do the work of separating aerospace business in five or six weeks from now so 29 June.
 It's the first day of quarter three and that's a day aerospace will become a separate standalone company which will leave Honeywell to be a pure play automation and the good news is that we have created three large independent company through this process.
 The first spin of advanced materials solstice advanced material doing extremely well as a standalone company I'm very confident aerospace and automation business are going to be leaders in their category both for the customer and also in the market so looking forward exciting times ahead.
 Yeah you also announced deals to sell the warehouse and workflow solutions business also the productivity solutions and services business as well looking ahead to this aerospace spin do you feel like the remaining portfolio is right size or you're going to be looking at it differently in terms of other types of acquisitions or growth opportunities.
 So what we did Morgan was a bit unique that while we did the spin we also did major work on a portfolio transformation because we wanted that when we kind of come out of the spin specifically automation business.
 The business is future ready it is addressing the future needs like LNG demand we made two acquisitions than that or what is spending more money on cyber security and we did some divest shares like you mentioned on productivity solutions business and we are our automation business.
 So essentially on other side of the separation in couple of weeks from now each business is positioned so well for the market itself.
 Now you're never perfect it means do we need to do more portfolio work I think active portfolio management is a big part of opportunity.
 So we'll stay always active look at what will happen in terms of opportunity but do it very responsibly for our customers.
 So what is industrial automation in tail especially in this age of emerging physical AI.
 So automation is so central to our life and it's something like oxygen we breathe and we don't feel it it's like all around us automation systems automate.
 The segment we serve buildings offices airports refineries pharmaceutical plants semiconductor facilities.
 So it's a heart and center of everything so it naturally is a high growth vector a segment.
 The AI provides a totally unique opportunity because automation systems creates data that data was used so far to automate a facility.
 That's what it was used for and it was not used to learn how the equipment is performing how the asset is performing and make it even better.
 So where we are pivoting from is from automation to autonomy it means we are learning from our performance of our own system and giving customer additional set of insight.
 What can do incrementally to run better asset performance better perform operational excellence make the people smarter.
 And that's a future opportunity for us that not only we benefit from automation being a secular trend adding physical AI on to it is more of a intelligence layer which is going to make us give additional business opportunity.
 And that's why the spin or separation is such a perfect time while on a standalone basis we are a compelling company.
 The whole AI utilization is going to create additional opportunity for Honeywell and our customers.
 Yeah, you know, there's so much focus on disruption and displacement from AI to different parts of the market.
 I think about software for example.
 What does that actually mean when you're talking about factory floors we're talking about energy and for me transformation of physical AI.
 In our case the problem solving are unique for each sector.
 So when you think of use of AI in industrial sector which we serve the data is not in the public domain.
 You can't go to internet and train the data of a hospital that how to run it better or a pharmaceutical facility or a refinery the data is in our systems.
 So there's a friction of data we need to remove it means we need to do something about it and then you need to have a domain knowledge on what problem to solve because problems change by each sector.
 Therefore by default it just makes our proposition very different than a generic AI use cases where there's a fear that it's going to impact the business model of software.
 We are solving the customer problems which are known and they were not able to solve it so far.
 So the knowledge capture the learning systems is creating additional opportunity for them because think about it if you're learning if you're running a plant or operation.
 The people who are running it becomes very knowledgeable when they walk off the door due to retirement or other opportunities the knowledge goes away with them.
 So new people have to learn all over again.
 What the physical AI system do is that intelligence is kept within our system so that the next set of cohort comes in they're not learning all over again.
 And that is incremental opportunity it is creating for our customer they're not have to teach all over again these are complex systems to run complex assets to run.
 So knowledge and operational knowledge maintenance knowledge is a lot.
 And it also gets complicated by shrinking population in the word as the word gets smaller even harder to get people who can do this kind of work.
 So I think it's coming right at the right inflection point where we are able to create more opportunity for our customers.
 All right, you're touching on a lot of stuff that I want to dig deeper into.
 First we're going to take a break so then we'll stay right here because we do have much more to talk about and more in call be right back.
 Welcome back to morning call let's continue with our first on CBC conversation with the milk of poor chairman and CEO of Honeywell.
 There's a lot to get to let's see what we can get to here but you just touched on something that I think is really key and that is the role that AI is going to play in upskilling and re-skilling workers to I mean you are
 seeing this re-emergence at least here in the U.S. and the manufacturing data as well.
 I guess just more broadly how are you thinking about both the U.S. economy from your vantage point and the global economy as we do see this AI revolution take root?
 I think the AI in context of industrial world is a very good news because it's going to compound the economic or value creation within the sector by more operational excellence in the operation, better asset uptime, making people more skilled.
 And the risk which people which our customers carry of not having skilled people to run the operation gets mostly mitigated by better capabilities which we create on intelligence layer on top of our system.
 So think about physical AI system more like Google maps for our customer when you're able to drive effectively with Google maps so intelligence layer on top of being a good driver.
 So you need to know how to run a machine or equipment or our automation system in different end markets.
 But the skill shortage issue or the skill deficiency get addressed by this intelligence layer and it's coming very fast in terms of new capabilities which we are rolling for our customers.
 They are changing every month literally every week and that is going to be a great set of opportunity for what I say economic value creation for our customers.
 We have President Trump on route to Beijing right now.
 Your expectations for this Trump she summit and what could come out of it for American business?
 I'm optimistic that last one year of more stable trade relationship is good for businesses. It allows us to operate with a lot more certainty.
 So I'm optimistic that on the trade side there's more good news and it just allows us to progress our business both in the US and we also have reasonably strong business in China.
 So looking forward to what comes out of this very important summit.
 Now I realize you touched on this in earnings not that long ago but impact from what we're seeing in the Middle East right now on Honeywell and how does it factor into this bigger conversation, this bigger dynamic around supply chain resilience.
 So we have today's Honeywell little over $40 billion high single digit revenue come from it leads.
 So clearly when we are not able to shape our product or provide our services because some sites are closed have a near term transitionary impact on our revenue.
 We signal that during our call earnings call at this point but on the other end of it what I believe is that both our customers in Middle East and the customers which are receiving energy partly in Asia,
 from Middle Eastern countries are looking for resiliency as a primary what are my strategic options.
 So if I'm a customer in Middle East they're likely are investing more to make their infrastructure more robust.
 They're also looking at more ways to ship the products differently so there's a conversation going on but if I'm the receiving side of energy countries in
 Asia and Japan, Korea, India they're looking for alternative options to improve their resiliency can I store more product or what are my alternative options look at alternative sources US being one of them right they can buy more gas and more oil from there or they can look for alternative countries where they will look options for.
 So all being said this is going to change the way energy markets operate.
 Good example is after Ukraine war how Europe operates energy sector has changed and evolved.
 So I think we have to wait and see how the Asian markets which are primarily impacted will evolve on the other end of the war.
 But I think it's a good news for no war is a good news at the end of the day because people who are in the middle of it.
 They are suffering but from a business perspective and a longer term and the things are settled it's a positive news for the businesses like Honeywell which participate big in energy sector.
 Okay we have to leave the conversation there we don't even get to quantum which you and I talk about every time we sit down together I know there was a filing IPO filing not really three businesses that you're creating here before.
 Absolutely so please come back so we can have that conversation as well.
 Thank you very much for having me.
 Thank you for being here.
 I'm a couple of Honeywell.
 All right we'll be back after this break.
 We got earnings from Ali Baba earnings and revenue coming in below Wall Street expectations the company's cloud intelligence group continued to accelerate with AI related product revenue posting triple digit growth for the 11th straight quarter.
 But Baba says it will continue investing in AI and cloud infrastructure to strengthen its competitive position.
 See those shares are down about 1% right now it's time for your call sheet where we look at the topics driving the trading day ahead.
 Remember today Craig Johnson Chief Market Technician at Piper Sandler Ross Mayfield Chief Investment Strategist at Baird and Courtney Gellman Washington Research Analysts Estrategous and lead portfolio manager of the firm's policy opportunities portfolio.
 Okay we got a lot to get through Craig I'm going to kick this off with you given we just heard from Baba and the conversation we've been having around the AI and tech trade.
 In general here in the US how does this set us up for a Trump she meeting.
 Well I think the Trump she meeting is going to be probably not a not a massive event from my perspective because I think the expectations are pretty subdued coming into this.
 I think there's going to be deals that are going to get done I think Trump is going to be wanting to make a deal whether it's on airplanes whether it's on.
 Agricultural products those kind of things are going to be pointing toward and I think as long as we don't see some sort of escalation in terms of tariffs and as long as we don't hear any sort of.
 Saber rattling about Taiwan I suspect this this somebody's going to go fairly smoothly in markets will will be just fine coming through this okay Courtney your thoughts.
 Yeah so you know something that's interesting to us and we don't expect anything groundbreaking at this meeting both sides have an interest in maintaining the status flow when we looked at the historical performance coming into and out of Trump she meetings.
 It seems like there's a lot of exuberance going into the meetings a lot is priced in and then we see weakness coming out for both China levered equities and the S&P 500 overall.
 Russ the other thing that the markets are watching this morning is inflation we got a hotter than expected CPI print yesterday PPI is on tap this morning and.
 You're seeing you're seeing this play out you've been seeing this play out in the bond market your thoughts.
 Yeah I mean it's obviously you know expected that the print was going to be hotter given what we know about oil and gas prices but.
 There's pressures even outside of the energy sector in food in airfare in rents and housing and so I think.
 What it does is really complicate the picture for a Kevin Worsh Fed.
 Who wanted to come in and cut rates on the back of you know an AI productivity argument but we've already seen some more hawkish speakers on the FMC and I think it's you basically have to.
 Remove all rate cuts from the 26 and 27 outlook at this point and really start to consider whether a hike is on the horizon if that's the case you know I think that's something to be on the lookout for.
 Yeah I mean hot CPI reading yesterday Courtney fueling talk of the possibility of not just a fed that's on hold but maybe.
 The rate hike when you couple that with some of the labor data we've been seeing recently as well I mean this is the calcium odds those are climbing in terms of the possibility of a rate hike here on the screen thoughts.
 Yeah I mean our point of view is that first you have to see the Fed move off of its eating bias into a neutral bias before you can really see that hiking bias.
 So so our base cases that we want to be seeing hikes until Q4 at the absolute earliest of this year got it Craig your thoughts on all of this.
 As well as. This AI and tech trade I'm going to bring it back full circle here we got Cisco after the bell and when we talk about inflation yes Iran wars had having an impact but you could argue to.
 Some of the pressure we're seeing on components that go into things like compute build out may also be playing a role.
 Yeah so bring it back full circle if we talk about inflation and other bonus of this I got to tell you just look at a chart of the CRB index is breaking out the multi your highs you're not seeing 10 year bond yields coming in.
 Just looking at price looking at the charts it does not seem like any sort of expectation for rate cuts are coming anytime soon and it's fascinating how investors have gone back and forth between cuts hikes and at this point time this still remains really unclear.
 But putting this all back together you know one of the things that we've done here today for us is we've put out a report title it the bull market that you trust.
 There's no question that we're climbing the wall of worry with investors whether it's Iran at this point time or whether it's the surge we've seen in the technology sector.
 But one of the things we've been watching very carefully is the fact that the technology sector is now 41% of the investable assets here in the US.
 Semiconductors are 50% of that total technology sector.
 We haven't seen levels like this since Y2K in the year 2000.
 I think that's a risk that investors do need a monitor and we do think that AI is going to be a very powerful tool going forward.
 But it's probably to broaden out into other parts of the market honey well that we heard from earlier industrial companies financial companies they're going to start the benefit.
 But the cap by cap X build out is just massive in technology and is not likely sustainable.
 Yeah along those lines Craig quickly you're slashing paper slashing tech exposure because of this.
 Yeah this is the second time this year we slash our technology exposure.
 We're not comfortable we don't think it's prudent to be sort of looking about other people's money and 50% of your money sitting in one sector.
 We've heard of the 25% that's the second time we've lowered it we've had great returns the portfolios up over 20% year to date.
 But we think there's other opportunities in energy industrials financials and we're just not willing to be that highly concentrated.
 When you're seeing a lot of these technology stocks going straight vertical again it's not sustainable we've.
 Okay we're going to have to leave the conversation there thank you so much to our morning call crew.
 You got a mixed picture for US stock futures this morning with so much on tap today including that PPI report.
 It's clock box starts now.