Morning Call 5/4/26

 Game stop won't stop. I'm Morgan Brennan and this is your morning call.
 Good Monday morning. Let's get a check on you with stock futures with the S&P 500 and the Nasdaq
 both at all-time highs also coming off five straight positive weeks of games in a row.
 As you can see right there, it's a mixed picture on your screen for futures with the
 Dow poised open lower the S&P and Nasdaq higher as of right now. We got two stocks on a
 radar this morning. Game stop that's pulling out the stops for eBay. I can't help myself.
 This is going to be all-hour. Brace yourselves. Game stop sound about half a percent right now.
 Pre-market eBay is spiking 9% this after a game stop offering $125 to share for eBay. $56
 billion in total. It's a 20% premium to eBay's closing price on Friday. We got reports
 GameStop CEO Ryan Cohen may pursue a proxy fight if eBay rejects his advance. They published a
 whole bunch of materials on all of this making the case late last night. But we are going to hear
 more from Ryan Cohen when he joins the Squawk Box crew in the 7am Eastern hour this morning. You
 don't want to miss that. In the meantime, if we take a look at the bond market as we do get treasure
 you funding announcements this week, you can see yield tire across the curve. I'll be it,
 mostly US 10-year treasury yielding 4.4% exactly right now. Let's take a look at the two-year
 given what we saw from the Fed last week and some of the Fed speak over the week in 3.913%.
 Turning now to the dollar index as well. The dollar is a bit stronger against other major
 currencies this morning. You can see right there 98.25 is the level for the dollar index. Do not
 rest on the yen as well as we saw intervention there last week too. That's where it continues to
 unfold. And finally, let's get a check on energy with crude coming off of back-to-back,
 winning weeks. We're off the highs that we traded at at one point last week. We can see right now
 higher this morning. WTI is up about $103 per barrel and Brent crude is up 1% as well, but $109 per barrel.
 If we stick with energy new developments in the Middle East this morning as President Trump
 kicks off what he's calling project freedom. This is in the straight-of-form news. It starts
 today working to escort stranded ships back to their home ports calling it a humanitarian
 gesture rather than a military one. This is on behalf of the U.S., Middle East countries,
 as well as Iran, according to the President. And this as open plus now the UAE
 agrees to OPEC. Okay, there's a typo there. Agrees to a modest oil output boost. We got that
 yesterday as well. Let's get to Dan Murphy and Abu Dhabi with latest Dan.
 Now the details on this are thin but the focus is reportedly on civilian ships flagged in countries
 not affiliated with this conflict. U.S. Central Command is backing the effort with guided missile
 destroyers, over 100 aircraft and some 15,000 service members. But take a look at the price of oil
 right now and you'll see markets are pretty skeptical. Traders not necessarily convinced that
 this ultimately changes the fundamental picture on the ground. Just this morning as well,
 a tanker was hit by a projectile's north of Fajera. That's just off the coast, the northern
 coast of the UEE. And the UK Maritime Trade Operation Center says or moves remains on critical
 alert right now. And then to add fuel to the fire as well, Iran's military also warning today
 that any foreign armed force will be attacked if they attempt to enter the strait. So without more
 clarity on what this ultimately means, how it works or the possibility of naval escorts down the
 pike, it's not likely ship owners are going to take the risk, even under this new U.S. security
 umbrella. Meantime as you mentioned Morgan, OPEC Plus also meeting on Sunday for the first time
 since the UEE's shock departure. They confirmed a modest increase of 188,000 barrels a day for June.
 Let of course, by Saudi Arabia and Russia. The message from the group was interesting. It was
 unity. It was business as usual. No mention of the UEE interestingly. And this output increase
 is largely symbolic as well, right? Because the straight-of-hall moose is still close. Middle East
 producers basically can't get those additional barrels to market at the moment. So this was a
 statement of intent, not necessarily a supply event, which is also why we've seen oil prices rise
 today. The UEE's exit, which took effect on May 1st, cost the group about 13% of total production
 capacity. The question now hanging over this alliance is whether others are ultimately going to
 follow. Yeah. I know Venezuela, for example, is in focus right now as well on the other side of
 the world. Dan Murphy, thank you. Also keep an eye on this idea that the White House could be poised
 to fast track about $8.5 billion worth of arms sales to allies in the Middle East too. So we'll
 continue to track that. Let's get the market reaction around the world now. With Europe just
 getting its day underway, Ben Boulos is in London with a trade and new details on a major summit
 that is kicking off today in Armenia as we do have talk of higher car tariffs and troops,
 US troops being pulled out of Germany as well. Yeah. Here in London itself, you could hear a
 pin drop in the city today. It's deserted because the London market is closed for public holiday,
 but we are keeping an eye on what's happening elsewhere in Europe because European stocks elsewhere
 mostly lower in today's trade investors, watching for signs of progress in those Middle East
 talks. FTSE 100 not on the board because it's a public holiday bank holiday in the UK,
 but you can see the moves there on the other European market. It's the German debt more resilient
 than it's peers, but EU leaders are in Armenia for the latest European political community summit.
 The UK Prime Minister, Kirstama, is expected to outline plans to join the EU's 90 billion euro
 loan scheme for Ukraine. In a set to specific development, European auto stocks, well, those
 are under pressure today after President Trump threatened to increase tariffs on imported vehicles
 from 15 to 25 percent effective this week. Now, the news came during trading hours on Friday,
 but the European markets were closed for their public holiday, meaning that today is the first
 reaction in shares of the leading automakers. You can see the downward pressure it's having on some
 the big names in that space, Morgan. Big Ben, Mr. Ben Boulos. Thanks for joining us. Appreciate it.
 With the S&P 500 and Nasdaq at record highs, investors are looking ahead to a raft of economic
 data highlighted by the jobs report on Friday. We've got forecast coming from our modest rise in
 payrolls following the outsized gain and march. The pace of earnings, though, we'll say earnings
 releases, that is slowing down earnings themselves have been coming in better than expected,
 but there are still some big names reporting this week, including Palantir after the bell today.
 AMD tomorrow got Disney and McDonald's. Nearly two-thirds of companies in the S&P have already
 posted their Q1 results. Earnings growth is up 28 percent from a year ago. Revenue up about 10 percent.
 Joining me now is Jimmy Lee, CEO of the Wealth Consulting Group. Great to have you here on set.
 Welcome. Great to be with you. I mean, earnings this season have been blockbuster despite this
 Warren Iran, and despite the fact that the oil price is more than 50 percent higher than two-and-a-half
 months ago. Investors have been extremely resilient. I mean, imagine now we're trading more on
 fundamentals with earnings surprises that you're saying up so much higher than predicted,
 and kind of ignoring the geopolitical news as we've heard that you just talked about with oil
 still over a hundred, the straight closed still, but I think investors are looking past all that
 and focused on earnings. It's incredible that tech has bounced back, and I think a lot of investors
 a month ago would have wished that they would have bought that dip if they didn't. Yeah, I mean,
 tech has absolutely led the charge here. Is that where you need to be invested? Do you start to look
 elsewhere? No, I think we're in a situation where hopefully rates will be lower, and I think
 that will prove to be good for other areas such as small cap stocks that are actually upperforming
 large cap stocks this year. International markets are up. You've got South Korea, Japan,
 and soaring this year so far, so I think that trade could continue to play out. I think investors
 are going to also look to take some of that cash, the record trillions of dollars in money markets
 invested to other areas like bonds too. Did you say you think rates are going lower?
 I hope so. I do think rates are going to go lower. I think the job market's a little bit softer.
 We're going to get some news this week, but again, I think companies have done an amazing job
 of navigating this geopolitical risk with margins expanding. That's really been the story so far
 this year. What would it take for investors to look at bonds? What would make the bond market more
 compelling right now? Well, of course, it's interesting coming down, but also I think you might have
 a tailwind from the risk of the private credit worries that people have had with maybe software
 not being as bad as what people were thinking about a month ago, right? So maybe get a tailwind from
 that and interest rates float a little bit lower towards the end of the year. I think fixed income
 is another area that people are going to be looking at. Is it US first the rest or do you
 need to diversify globally here too? Given just the fact that we've seen these huge rallies,
 you just mentioned it. I mean, cost me, I think up what 5% today? Yeah, I think that you can look
 around the globe. We've had a diversified fixed income portfolios ourselves and so I don't think
 you have to just stay in the US, but I think that investors looking for value outside of the big mega
 cap tech trade that we've seen, you know, pushed the market up so far this year and you got a couple
 of names in that Mag 7 that hasn't been performing. So people are looking to be very active.
 All right, Jimmy Lee, it's great to have you here on set. Thanks for joining me. Thank you.
 We've got a number of other stocks that we're keeping our eye on, including once again,
 we're watching eBay and GameStop shares popping on a $56 billion unsolicited bid on behalf of Ryan
 Cohen and company offering to buy eBay for $125 to share reportedly threatening to go hostile
 if eBay refuses. Those shares are up 9% right now. Catch GameStop, CEO Ryan Cohen on SquatBox with
 more in just a few hours. We're also keeping an eye on, we just touched on this essentially,
 but keeping an eye on SK high necks rallying in South Korea overnight. On the back of big tech
 results here at home, and you could see those shares are about 12.5% right now. Those
 led the cost be higher. And we're also watching shares of United Airlines. This after a flight
 bound for Newark International Airport hit a light post on a nearby runway Sunday afternoon
 and attract your trailer apparently before landing safely on its own runway just after 2 p.m.
 Eastern. You can see shares though of United are actually fractionally higher right now. That's
 some of the video right there. Images captured from the truck drivers dash cam the moment before
 and during the impact. That's what's on your screen right now. Port Authority police say the driver
 was taken to the hospital with minor injuries has already been released. The FAA and NTSB
 added they are investigating the incident and that none of the 221 passengers in 10 crew on the
 Boeing 768 jet were hurt nonetheless. Wow. Okay, we got a lot more to come here on warning call
 including after fiery testimony from Elon Musk and his lawsuit against OpenAI and its co-founders.
 Now it is Greg Brockman's turn to take the stand. Plus, Danine Piro leaving the door open for more
 investigations into Fed Chairman Jake Powell ahead of a critical legal deadline today. This speaks
 to perhaps why he decided to stay on and make that announcement last week. We've been talking
 about it ahead of that too. And later live from Omaha, we're checking in with the Berkshire Hathaway
 faithful after Greg Abel's first ever annual meeting as CEO. Wow. Do we have a full hour for you?
 Stay with us. Warning call will be right back.
 Welcome back to morning call. We got a news alert out of Washington, US Attorney for the District
 of Columbia, Janine Piro is now appearing to abandon a plan to appeal a judges rule in
 ruling stopping her grand jury subpoenas into Fed Chairman Jake Powell. Piro speaking on CNN
 state of the union yesterday. We're going to make a motion to vacate the order of Judge
 Roseburg because we think it's extremely important for us as prosecutors, the precedent that it sets
 to prevent us from going into a grand jury. Well, Piro who faced a deadline of today to
 file an appeal says her office could pursue the case again if a continuing internal audit found
 any indication of misconduct by Powell. We'll turning to the fallout over spirit airlines after
 it's decision to cease operations after last minute efforts to rescue the airline fell apart.
 Spirit saying it had nearly completed refunding passengers and returning crew to their home
 bases. Multiple US carriers have stepped in offering discounted fares to spirit passengers left
 stranded by the collapse. But for more, let's bring in Jonathan Cantor, former assistant attorney
 general for anti-trust under the Biden administration. Also a distinguished law professor at Washington
 University in St. Louis and a CNBC contributor. He led the DOJ lawsuit to block the spirit
 at Blue Merger a few years ago. And Jonathan, it's great to have you on the show welcome. We
 actually brought you on to talk about this open AI case and I am going to get to that with you in
 just a moment. But first, I do want to get your thoughts on what we've just seen here with this
 weekend collapse of spirit after it could not come to a deal with the US government.
 Yeah, this is really on the management. This rests on the shoulders of spirit management,
 my view, for the third time now. Initially, spirit had the opportunity to merge with Frontier.
 Spirit's management said back in 2022 that it should take a Frontier deal instead of a
 Jeppe Blue deal. Why? Because a Jeppe Blue deal would carry too much anti-trust risk and would be
 illegal. Spirit shareholders nonetheless persuaded management to take the more, the better deal in
 terms of price, but the worst deal in terms of risk. And then as predicted, the deal got challenged.
 But let's not forget spirit had another lifeline again from Frontier just in 2025. In January
 2025, Frontier went back to spirit, offered to buy it again. Spirit said, no, we want to go
 it alone after coming out of chapter 11. Frontier then revises bit again in February. And once again,
 spirit management said, no, we want to go it alone after coming out of chapter 11 bankruptcy.
 So this is a story of management and spirit getting it wrong. And as a result, we lost a competitive
 airline. In addition, I would point out that what pushed spirit over the edge were the high jet
 fuel prices. And but for the high jet fuel prices, it's probably the case that spirit would still be
 going concern today. So just to put a fine point on it, the fact that you and your office challenged
 and struck down that merger between jet blue and spirit, you think is not to blame here for
 the fact that spirit has actually ultimately seen a demise. You don't think it would be different
 if they had actually been able to merge? Well, if they merge, spirit wouldn't exist. So either way,
 spirit's gone, but let's be very clear. Spirit management said that the deal with jet blue is
 illegal. Spirit management said that the deal with jet blue would harm competition. In fact, at the
 time, spirit CEO came on CNBC, this channel and said shareholders should reject the jet blue deal
 because it would violate the antitrust laws. Nonetheless, they took the deal. And it didn't get blocked.
 It got blocked because there was evidence at the time. One, that spirit could be a going concern
 because of potential mergers with frontier alliances with others. Two, frontier came back
 again to spirit. So it is had multiple opportunities to find a path forward. It chose the wrong path.
 And that's unfortunate. So what do you think this does to the competitive landscape now?
 Specifically, the low cost carrier landscape at a time where you do have spiking jet fuel prices that
 are causing airline tickets to spike as well. I think it's a much bigger problem that as a country,
 we need to address. In many respects, Europeans, let's say, travel by train, Americans travel by plane.
 Air travel is critical infrastructure in this country. It's necessary for economy. It's
 necessary for people for leisure, for business, for everything in terms of travel. And so it's very
 important that we have vibrant robust competition, not just for business travels, but for leisure
 travelers and particularly folks who are looking or cost conscious who have fewer options today.
 I think after deregulation, we found ourselves in a situation where it's very difficult for
 low cost carriers and smaller airlines to survive. And I think that is a bigger structural problem
 of which spirit might be the tip of the spear, but is a larger concern with the smaller airlines.
 And if we just shift gears here, I do want to get your thoughts on this ongoing case of Elon Musk
 versus OpenAI, Sam Altman, Greg Brockman. We expect Brockman to take the stand this week. Your
 thoughts on what we've seen and heard so far. And perhaps just as importantly, your thoughts on how
 the judges receiving this, since I know there's a jury involved, but they're an advisory role.
 Correct. So this is very, feels very much like the Silicon Valley equivalent of Hollywood
 divorce trial. There have been a lot of fireworks. What the issue in this case is really whether
 effectively OpenAI defrauded Elon Musk. The evidence came out in the first week of trial,
 made it pretty clear that the intention, the launch of OpenAI was to have a non-profit
 that would benefit humanity. What happens then though is more murky. OpenAI put out evidence
 on the stand that it informed Musk that it was planning to pursue a for-profit strategy and
 that Musk even suggested such a path to the point where they confronted Musk on the stand with
 a document telling him as much, but Musk said he had not read the fine print to which the OpenAI
 lawyer responded to four-page document. But this case is far from this trial is far from over.
 The judge is a tough judge. She's a good judge. I think while theoretically possible, the judge
 could order something really drastic here, like OpenAI going to be non-profit. That is highly unlikely.
 Okay, Jonathan Cantor. Thank you for joining me. Great to have you on the show.
 All right. Well, straight ahead, the dirty fuel making a comeback.
 You want to call it that. As the price of crude continues to surge.
 But first, we're watching Shares of Disney. Reports this morning, the company is discussing
 creating a quote super app to combine all of its services under one icon for streaming, cruising
 and theme park tickets. This after its devil wears product sequel won the weekend box office
 with an estimated $77 million domestic take home. It's hard to get tickets. They were sold out.
 And then a lot of places here in the New York metro area morning call right back.
 Welcome back to morning call. Let's turn out to the Iran War.
 Chinese state media reporting this weekend, the Commerce Ministry issued an injunction
 to block U.S. sanctions imposed on five Chinese refiners accused of buying Iranian oil.
 So called teapots. The development is the latest around one of Iran's most critical financial
 lifelines. It's secretive oil trade with China and these refiners that are known as teapots.
 The war isn't just disrupting the global oil and natural gas markets, though. It's also prompted
 many countries in Europe and Asia to shift back to coal power to offset lost LNG supplies. New
 castle coal futures. This is the global benchmark holding around $130 per ton. This is below a
 17 month high that was reached in mid to late March in the midst of the war, but still up about 10%
 since the war began. Let's talk more about this now with Tony Knutson, Global Head of Thermal
 Coal Research at Wood McKenzie. Tony, it's great to have you on the show and let's start right there
 because I thought coal was dead. Yeah, it's far from dead right now. You know, it's it's it's
 death is is premature. So what we're seeing right now with the disruption is the LNG supply is
 a clear shift in coal policy and behavior amongst a number of countries that still burn coal.
 And then we're still burning coal right now. So we're not just seeing a market driven switching.
 We're actually seeing actual policy reversals, coal plant delays and emergency measures kicking in
 to help alleviate these LNG shortages. So in light of that, I mean, we're seeing US oil and gas
 exports surge amid this reshaping, if you will, with a closed trade of corn mousse is the same
 thing happening with US coal, thermal coal. We expect US thermal coal to be, you know, they're
 going to play an important but smaller role. It's, yeah, it's a bit of a domestic tug of war
 imports around, you know, the surging energy demand in the US and the desire to push out
 exports into the, the wider markets and to, to quote Pete body CEO Jim Gretch for more recent
 news article producers can simply not turn on the spigot to immediately reduce coal supply
 during these and global supply countries. It almost reminds me of when the war in Ukraine started
 at the time, there was this ESG push not just here in the US, but in Europe where you had institutional
 investors were saying, I'm not buying into defense contractors and weapons makers because they
 make products that kill people. And then you have this war start and there's a shift. And the
 shift is to this idea of deterrence and companies that are making the products that defend democracy.
 Can we see something similar here in terms of investment thesis and capital flows around some of
 these carbon based products like coal? Well, we're seeing the switch to where coal is being seen
 as a security tool and to hedge against these yield political economic risks, which, which have
 been wealthy. So even in Europe, we're seeing that we saw recently where Italy postponed
 this coal plant shut down from 2025 to 2038. Jeremy is reconsidering, you know, he's starting
 a high idle hard coal plants. Where are these, where are these units will be able to backstop,
 where were the gas markets, markets fail. So very quickly here, the relationship between coal
 and natural gas prices, is that something to continue to watch?
 It is. They typically ride each other up and down right now. So there is still room to run
 up. We're not going to, we don't expect to see the prices rise up during the Russian war, but
 there is room to run up higher if the war does continue on under a base case. We have the
 straight opening next, next month, which could be challenging, but we expect coal prices
 to normalize by 2027. Okay. You got to remember we're still, you know, burning one billion,
 we're still shipping one billion tons through the decade on the sea market. Tony Knutson, great
 to have you on. Thank you. Thank you. Well, still on deck. One voting spread head speaks out.
 Why you may be leaning towards rate hikes, over rate cuts, and how that is shifting
 some of the narrative, some of the communication around the Fed here. Morning call, be right back.
 I'm Morgan Brennan. Welcome back to morning call. Let's get a check on US stock futures this morning
 with the S&P and the Nasdaq, both closing at record highs on Friday and closing out five
 straight weeks of weekly gains. You could see it's a mixed picture on your screen, the
 Dallas boys for lower open, the S&P and Nasdaq poised to open higher. Well, let's get a check on
 some of the morning's latest headlines. President Donald Trump says the US will attempt to
 quote free stranded ships in the Persian Gulf starting today and what he's calling project freedom.
 Trump says the effort is focused solely on getting civilian ships flagged in countries not
 affiliated with the content conflict out of the contested water. We keep in mind you've got tens of
 thousands of sailors and sea men who have been stuck there for over two months in the Persian Gulf.
 Well, GameStop is pulling out the stops for eBay offering $125 a share for the company.
 This is $56 billion in total to 20% premium to eBay's closing price on Friday and reports that GameStop
 CEO Ryan Cohen may pursue a proxy fight if eBay rejects his advances. You could see shares of eBay
 are spiking 9% this morning. We're going to hear more from Cohen directly when he joins
 co-op box in the 7 a.m. Eastern hour this morning. You don't want to miss that. Well,
 Spirit Airlines says it's almost completed refunding passengers. I know one passenger who's not
 been refunded yet returning crew to their home basis following its decision to cease operations
 over the weekend. Spirit abruptly canceled flights early on Saturday morning, stranded passengers
 and staff across the US and Latin America. Spirit had more than 4,000 domestic flights scheduled
 through May 15th before this shutdown. A moment ago, we spoke with Jonathan Cantor, a former
 assistant attorney general for antitrust under the abide in administration. He led the DOJ lawsuit
 to block the Spirit Jet Blue merger a few years ago. Cantor says management is to blame for
 Spirit's feet. This is a story of management and spirit getting it wrong. And as a result,
 we lost a competitive airline. Well, Minneapolis, Fed President and FOMC
 voting member Neil Keshe-Karri, raising the potential of an interest rate hike sooner rather
 than later, speaking on CBS yesterday, he said the longer the Iran war goes on, the greater the
 risks of higher inflation and economic damage. There's so much uncertainty about the outlook
 in the Middle East right now. I don't feel comfortable signaling that a rate cut is in the cards.
 You know, we might in the in worse scenarios, we might have to go the other direction.
 This is one of three Fed officials last week to issue a dissent tied not to the rate decision
 that we got from FOMC last Wednesday, but to the communication, the signaling of the future
 path around it. Well, Anthropic is reportedly finalizing a one and a half billion dollar joint
 venture with Blackstone Goldman Sachs and other banks to sell AI tools to private equity
 backed companies with Blackstone and Goldman each pitching in $350 million respectively
 towards that deal. And turning back to the Middle East, supply crunch shares of global
 petrol chemical giant Lionel Basel climbing more than 30 percent since the breakout of the war
 in Iran, 5 percent last week alone. As the conflict chokes supplies, pushes prices higher,
 boosting margins and bottom lines for Lionel Basel and its peers, the company also just reported
 first quarter results on Friday. So joining me now in a first on CNBC interview is Lionel Basel
 CFO, Augustine Iskierdo, Augustine, it's great to have you on the show, welcome. And I just want
 to step back and ask a really basic question here. And that is, what has the closure of the
 street of Hormous done to the global petrol chemical industry? Morgana, thank you very much for
 having me this morning. Yeah, the what we have experienced lately is a huge supply this
 reduction for the polymer industry. If you think roughly 30 percent of the polymer that flows
 throughout the world is a trap or affected by this conflict, probably think of it half that is
 produced in the Middle East and some of the facilities have been damaged. And the other half is
 because there's a lot of raw material and a feedstock that normally would flow from the Middle
 East to China to Asia in general. And now they cannot get this material. So this is what's making
 such a supply shock and supply disruption to the markets. And on our end, what we're doing is
 taking advantage of the local production that we have in North America, the very advantage feedstocks,
 a maximum vaccine rates as much as possible to try to cover this supply gap that is in the market.
 So in light of that, how quickly and how meaningfully can you ramp that production and that output
 here in North America? So in North America, we're running as full as we can, you know, rates of 95
 percent plus, you know, as I said, we have very strong advantage in terms of raw materials.
 We'll continue to do this for the foreseeable future and also just to be reminded and some other
 subset already on your show. But even once the straight opens, it'll take months and months for
 the situation to recover. We're talking quarters. Think of it not only the damage that has to be
 repaired at some of the facilities themselves, all the ships that are throughout the world that
 have to be repositioned inside the straight. And then once you have the ships there, you obviously
 load them, send them to their destinations. This is a long lasting effect. And as I said, quarters
 and quarters for the situation to normalize that disruption is here to stay for the foreseeable future.
 So when you think about those global supply chains, when you think about end users,
 where could some of those shortages or some of those pain points, even if the straight were to
 reopen tomorrow? Where would those materialize? There's a lot of focus, for example, on fertilizer
 even starting to hear the word famine rise up and in reports when you look to future months and
 even next year with the planting season. Yeah, I agree. And I think this is part of what will
 provide support to this supply shutdown. I'm especially for polymer. So you're absolutely right.
 Once the straight opens, priority will be given and should be given to crude to think of
 propane that you need this for heating for cooking, then fertilizers will be the next one to
 start flowing and polymers. So our products will be probably low in the priority list,
 which will again continue to benefit all North American producers. But yes, essential products
 will and should show flow first out of the straight once it reopens.
 I mean, I've spoken to more people than I can count on two hands about this notion of higher
 for longer, even when the straight reopens when you talk about commodity prices, specifically
 energy and oil prices. What does all of this mean for Lionel Basel when it comes to margins,
 when it comes to prices and when it comes to how to think about a market like chemicals like
 polymers longer term? Sure. So North America continues and will continue to be a region that
 is advantage in terms of raw materials and feedstock. Our main raw material is ethane, which comes from
 natural gas and as you know, it's plentiful in North America. And on the other hand, if you think
 of Europe and Asia, China in particular, they're very naps-based, which is a byproduct of oil.
 So to the extent that there's a premium on oil that prices remain consistently higher,
 pre-conflict, it will just continue to make North America more and more competitive. So what we
 see is just as a steepening of the cost curve that will continue to favor North American producers.
 And as I said, this will take quarters and quarters to normalize.
 Augustine is Kirito. Thank you for joining me. It's good to have you. Thank you so much.
 Thank you. Got a lot more to come here on morning call, including Greg Able in the spotlight
 for the first time is Berkshire Hathaway CEO. Our own Becky Quick was at Berkshire's annual
 shareholder meeting. She is in Omaha. She talked to Able, other leaders. She's going to join us
 from there next. And a big weekend for Golden Tempo and its trainer,
 Cheri Devo at the Kentucky Derby Tempo, which had 23 to 1 odds of winning. That's right.
 Finding itself in last place, entering the final turns before a dramatic sprint to victory.
 For her part, Devo became the first woman to train the winning horse at the Derby ever 152 years
 of morning call the right back. Welcome back to morning call. We're watching Berkshire Hathaway
 shares in the back of earnings and the annual shareholder meeting that took place this past weekend.
 First quarter results showing operating profits rose 18% with Berkshire revealing its cash pile
 has jumped to a new high. The events marked Greg Able's first since taking over from Warren
 Buffett as CEO of the start of the year. Our Becky Quick was there and is still in Omaha and
 joins us now with more Becky. It's great to see you. Great to see you to Morgan. As you mentioned
 that cash hoard, yeah, it was the largest we've ever seen. Actually crossed $397 billion and I
 remember when it crossed $100 billion that was only in 2017. So you're talking about a lot of
 cash that's piling up and it was definitely a little different just in terms of the meeting
 this year. The new Berkshire Hathaway CEO Greg Able leading the Saturday meeting. The first
 time in 60 years it hasn't been Warren Buffett on stage. Able tweaked the format a little bit,
 mixing some old and new to add his own style to this. He addressed the question of breaking up
 Berkshire. That was a question that came from a shareholder. Able saying that the way it is set up
 right now is an efficient conglomerate that operates effectively and says that it does not divest. He
 also said that the firm stockpote portfolio of which he says a very significant portion is
 concentrated in a limited number of companies that are constantly evaluating. But when it comes time
 Berkshire, he said, will prioritize operations. Able says he sees a huge opportunity to improve and
 close gaps to create operational excellence and that can pay off in some really big operating
 profit improvements. Morgan shareholders were curious about how the Warren is in Iran as
 impacting Berkshire's operations as well. Able and the insurance vice chair Ajit Jain took this
 question. The question is how and when can you offer insurance to ships crossing the straight
 up form of those? I mean the short answer is depends on the price.
 Ajit, I like your Charlie answer. Obviously some thought has gone into that because there's a lot
 of dynamics there. There's a lot of chatter. There's a lot of need. Fortunately there's enough
 capacity in the initial world today that would like to write that risk for no other reason but
 people are sitting on excess capital and they'd like to find a way to deploy that excess gap.
 We ourselves have taken a small participation in a program that's being put in place. So it's
 to write insurance for the ships in the in the state of homo's. We haven't written any deals as
 yet. It's still being fine tuned but if we can get our terms in terms of the underwriting decisions
 and the fact that the US Navy will escort these ships, we have put a price on which we will be
 comfortable underwriting that risk but nothing's happened as yet. Morgan, we also had a chance to
 speak to Warren Buffett. We'll have more of that conversation coming up in the next hour on
 Squawk Box. I can't wait to watch that. In the meantime, our little hats have to Adam
 Christopher Lee, Becky who mentioned with that cash hoard that it's now larger than the market
 caps of all the 24 companies in the S&P 500. I mean, you've been covering this event for so many
 years. Obviously, Greg Able, new CEO at the helm. I'm just curious in general what the color was
 and what the energy was across the weekend at the meeting. There were thousands of shareholders
 there but it was definitely down in terms of attendance. It wasn't as jam-packed as it's been
 the last many years that I've been there. Very big convention hall. Very big convention hall for
 a lot of the exhibits that were set up on the floor and for the places where shareholders
 can buy a lot of those companies' products. It was definitely down from what we've seen in years
 past but again, thousands of people so far bigger than just about any other shareholder meeting that
 you're going to see out there. But yeah, it's a different CEO. Greg Able was not trying to be
 Warren Buffett in this. He was very straightforward. Gave a lot of details about the company but you
 didn't get the types of questions that you would have gotten in years past for Warren Buffett and for
 Charlie and Munger questions like, who should I marry? What's the best way? What should I be doing
 with my life? Do you believe in God? What books are you reading? That's not the type of questions
 you were getting. Also, not a lot of questions about the stock market in general because Greg Able's
 an operator. He's not somebody who is a stock picker so a very different feel to it. But I think it
 was pretty clear for a lot of the shareholders walking away that Greg Able has a very deep and
 extensive knowledge of all of the operating companies, all of the companies that Berkshire owns.
 Great stuff. As always, Becky. Becky Quick. We'll be tuning in for more of that commentary on Squawk Box.
 We'll straight ahead, right here on Morning Call. We've got the call crew. Tying up the
 trading day ahead. Don't want to miss that. I'm now for your call. See, we're going to look at
 the topics that are driving the trading day ahead. Crew members today, Frank Capillary, founder,
 president of cap thesis, also CBC, pro contributor, micro work, chief market strategist and Jones
 trading, which is launching its JT20 index today and Jose Torres, senior economist at interactive
 brokers. We don't have a lot of time, but we have a lot of topics to get to. So I'm just going to
 run through this with all of you. And Mike, I'm going to start with you. Straight up Hormuz,
 Operation Freedom, what do we think? It doesn't seem like anything new here. So it seems like
 there have already been attacks. So I think we're still just waiting for some real developments
 out of the Middle East. Yeah. Frank, markets looking through this continue to look through
 war and conflict, even though we do have all these ships stuck there.
 Yes. I think we have headlines and we have the reaction to the headlines, right?
 Senior with the S&P 500, Ripon, of course, and one of the biggest ones we've had on record.
 Well, crude oil wise, right? It's come back and look at the sectors.
 Excellally energy TF has actually been one of two of the best performing ETFs over the last two
 weeks. So it shows that maybe, you know, there's still investors a little concerned about what's
 going on overseas. And again, I'm focused on price action itself. So I'm going to see if we
 see any fall through the XLE this week would give us a big tell.
 Yeah. And Jose, we're going to get some more data this week, including jobs report on Friday.
 Tim Dewey from SGH last night said at some point, market participants are going to stop
 trading oil headlines and start trading the economy. What's the economy at least here in the US
 signaling so far? Well, Morgan, employment data has been really strong. We got that initial
 unemployment claim print last week, lowest in over 50 years yields looking to potentially break out
 into zones that could spark some volatility in markets, namely the 30 year, near five percent,
 twos near four percent, and the 10 year and near four and a half percent. So I think the focus
 is going to increasingly turn over to the macro. We saw some dissent at the Fed. This morning
 probabilities of a hike were just as high as probabilities of a cut. So I think interest rates
 here are pivotal to watch. Interest rates are pivotal. Certainly big tech has led the charge,
 which takes us to the fact that you are launching Mike, this Jones trading JT 20 index.
 Want to get your thoughts on that as we do look to another week of bigger earnings?
 So that's the interesting aspect here. So the JT 20, which is the 20 largest market capitalization
 names in the United States, they actually comprise 50 percent of the S&P 500 market capitalization.
 So these 20 names drive the index every day. But the PE multiple on these 20 names as a group as
 an index is 34 versus 26 for the S&P 500. And what that means is the other 480 names are trading
 about 20 times earnings. And it's the way index, you know, PEs are calculated is the compression
 of the PEs of the other 480 names is making it more attractive where people feel more comfortable
 paying up for these mega cap names. And it's just something you don't see at the index level when
 you look at the S&P 500 alone. So I think there's a little more risk in their evaluation.
 Yeah, Jose, I'm going to come back to you earnings versus economic data. What matters more here?
 I think with the most of the mag seven earnings behind this, I think the economic data
 data here in Morgan is going to be pivotal, especially when you have a wars fed that's setting up.
 We have the new fed chair likely going to be confirmed next week. So we do know that usually when
 you have a new fed chair, during a midterm year, you could have some volatility in markets. And I
 think that some of the speculative enthusiasm could cool off here. All right. Frank, I don't know if
 I want to call it a merger Monday. That doesn't seem right. But we've got what we've got to take
 over offer by GameStop and Ryan Cohen of eBay, which is more than four times larger in terms of
 market cap. How does it speak to this market environment? And thoughts on this deal potentially as
 well. What a way to start a Monday, right? Well, I don't focus on deals, but I think the reaction
 again is going to be huge, right? What are people things going to happen to look at GME mostly
 bold? They don't are gamers. What do they think of? Right. We're on kitty. We're on kitty's buying eBay.
 Potentially. So again, I just by think that, you know, it's a consumer discretionary deal.
 Right now, the reaction isn't quite at the merger price for everyone 25. So I think
 Ryan Cohen has some convincing to do to get investors on board. Yeah. We got 20 seconds left. Mike,
 I know you got thoughts. Well, it's funny. Just as far as what Frank just said, Ryan Cohen,
 GameStop, they raised about eight to $10 billion in at the money market offerings during the
 meme era. So this is only enabled. This deal is only possible or even to occur because of the
 meme frenzy in 2021. I just think that's an incredible dynamic. Yeah. A lot to look at there.
 Thank you to our morning call crew. Great to have you here. We're going to send it over