Markets balance AI optimism with war risks and Fed uncertainty 4/29/26

 I'm Dominic Chouin for Morgan
 Brennan, and this is your morning call.
 Good morning and welcome to the show.
 US Dock Futures right now are,
 at least moving modestly so with the
 Dow writing a four session losing streak
 and the Nasek coming off its worst day
 and roughly a month.
 Now futures are again modestly bid.
 The Dow Jones implied higher by 13 points.
 The S&P higher by just about three points.
 And the tech heavier Nasek got by about 70 points.
 This is ahead of the Fed's big interest rate decision
 later on today.
 And so for that, let's check on the treasury complex.
 We can see yields ticking higher.
 Bond price is moving lower.
 The benchmark 10-year note yield 4.36%.
 The two-year note yield which some traders use
 as a proxy for future Fed policy.
 3.848% right now.
 In the 30-year long bond,
 4.948%.
 And then looking at energy prices
 with Brent Crude the international benchmark
 at its highest level and roughly a month
 coming off of that surprise OPEC exit announcement
 by the UAE.
 We've got more on that story coming up.
 Oil right now again moving to the upside.
 3.5% gains for US benchmark West Texas Intermediate
 $103.55.
 3% gain for international benchmark.
 Brent Crude $114.64.
 That moves over to translating
 into national gasoline prices.
 AAA says that a average gallon of regular unleaded
 now sits at $4.23 a gallon.
 That's up more than 20 cents in just the past week alone.
 Now to our top story.
 And Big Text Big Day.
 With four of the magnificent seven members
 reporting earnings throughout the course of the day.
 Microsoft, Alphabet, Amazon,
 Meta-platforms all out after the closing bell today.
 And one of the big ones focuses for the investors here will be
 whether the massive AI spending plans
 are showing any signs of really paying off.
 Right now stock reactions are bound to have a major
 ramification on the broader markets over on.
 If you tack on Apple which reports tomorrow,
 the five companies are worth roughly $16 trillion
 in combined market value or roughly a quarter
 of the S&P 500's total market cap.
 Shares of Microsoft, Alphabet, Amazon, and Meta-platforms
 are all up between 20 and 30 percent since the S&P
 bottomed back at the end of March,
 helping to fuel the index's recent rally.
 And of course, in the tech heavy NASDAQ as well,
 some massive gains for Mag 7 stocks.
 For more on that story, let's bring in Sarah Coons,
 the managing director over at Cleo Capital.
 Sarah, this is a big week.
 What exactly is going to be in your mind the biggest
 of those four coming out today?
 You know, I think that they're all going to be interesting,
 but I am really, really curious to see how the market
 kind of digest Meta.
 I think that that's been a name that is trying so hard to say,
 look, we are doing AI.
 We are cutting, we are cutting, you know, headcount.
 You should reward us for that.
 And the market doesn't seem super interested in it.
 Meta platforms, I think, will get a lot more interest
 because traders have already identified it as possibly
 being the more volatile of those.
 At the beginning of this week, Sarah,
 Meta platforms, options traders had priced in a move
 that was probably higher than any other Mag 7 stock
 so far this week.
 What exactly does Meta in your mind need to show you
 in order for this story for Meta to play out positively
 in the coming quarters?
 So I actually don't think that their AI story is really the core
 of the business.
 Similar to Amazon, these are companies that the vast, vast majority
 of their revenue for a very long time is going to come
 from the core business.
 For Meta, that means that it's going to be about their ad sales.
 We have a weakening consumer.
 We have, you know, a global economy that is getting incredibly
 nervous because of the straight of hormones.
 And I'm not sure that we're going to see the amount of ad sales
 that we would want to be seen in a normal environment.
 One of the other companies we want to focus on today is
 for obvious reasons, the parent company of Google, Alphabet,
 a story that is very rooted in AI as of late.
 What exactly is going to be front of mind for you on that
 Alphabet earnings report?
 So Alphabet is an AI company.
 They just have a hard time getting people to understand that.
 They have long been my pick as the sort of last man standing
 when it comes to which big tech company actually
 can make a lot of money in AI.
 So I think that we're going to see them just sort of continue on
 with business as usual.
 I am incredibly bullish and curious to see what happens
 with their workplace tools.
 They are rolling out kind of clawed code style competitors.
 And the reason that's so interesting isn't necessarily
 that they'll be much better.
 They might not be better at all, but because they already
 have a built-in base of people who pay them,
 and corporations who pay them for those workplace tools.
 And we know that AI hasn't struggled with innovation.
 It's struggled with getting people to actually write a check
 to access that innovation.
 And so I think that Google is a front runner there.
 And I'm also interested to hear if they share anything
 about that anthropic deal, because I think we're increasingly
 going to see them sort of look at the buy versus build
 and decide that while they stayed far away from open AI,
 and on the investment side that some of these other companies,
 some of these sort of Neo AI labs,
 are going to be interesting for them from anthropic
 all the way down to smaller ones,
 often started by people who were originally at deep mind,
 right, who were originally on Google's payroll.
 All right, and then one last point here.
 One of the laggards has been Microsoft,
 one of the biggest companies out there.
 What needs to happen from Microsoft
 to get things going in the right direction?
 I am so curious to hear how that goes.
 The scary part for Microsoft is that so much of their rise
 over the last few years wasn't really driven by azure
 or the things that they are doing at Microsoft.
 It was driven by open AI.
 And open AI's headlines have gone from only up
 and to the right to stuff of PR nightmares
 in the past few weeks.
 And so I do think that if they're asked about that,
 that's going to be tough.
 All right, Sarah Coons at Cleo Capital.
 Thank you very much.
 Big day for you.
 We'll see you soon.
 All right, outside of Big Tech,
 a major morning for earnings movers
 starting with shares of Robinhood.
 Those shares right now are falling precipitously.
 As you can see here,
 the move lowers to the tune of 10 and a half percent.
 This after reporting first quarter results
 that came in below expectations.
 This was the company's first EPS miss since October of 2024.
 And it's first back-to-back sales miss
 going back to 2022.
 So again, a 10 percent decline for Robinhood
 in the pre-market trade.
 We're also watching Starbucks right now.
 Those shares are up by nearly 6 percent.
 The coffee chain is raising.
 It's full year outlook for earnings and same-store sales growth.
 This after reporting its second straight quarter of traffic growth.
 The company says same-store sales are now expected to hit
 at least 5 percent.
 That's up from an earlier 3 percent projection.
 So bullishness in Starbucks.
 CEO Brian Nickel, by the way,
 will have more on the quarter when he joins the squawk box crew
 or squawk on the street crew later on this morning
 in the 9 a.m. Eastern time hour.
 And a triple dose of chip stocks
 as we await Qualcomm after the closing bell today.
 That stock is up about 17 percent this month,
 but still more than 20 percent below its recent high.
 Qualcomm is expected to see an 8 percent move
 in either direction once it reports results per
 options markets prices right now.
 A head of that watching memory chip maker,
 Seagate Technology, surge ahead of the open bell
 on a supercharged outlook and a third quarter earnings beat.
 NXP semiconductor also higher on an upbeat outlook
 and a second quarter beat as well.
 Seagate shares are by the way up 17
 and a half percent pre-market NXP semiconductors
 up nearly 15 percent in the pre-market trade.
 We've got a lot more here to come on morning call,
 including decision day for the Federal Reserve,
 former Fed Vice Chair and former National Economic Council Director
 Lail Brainer is here with what to watch.
 Plus earnings kick into high gear overseas,
 a check on what's moving markets across the pond,
 and then later on a critical blow for OPEX influence
 as the UAE says goodbye to the global oil cartel,
 we lay out what it means for prices at the pump.
 A very busy hour still ahead when morning call returns
 after this commercial break.
 Music
 All right, welcome back to morning call checking
 the trading action around the world right now.
 You can see the FTSE 100 in the UK is off
 about one half of 1 percent.
 Modest declines for the German DAX.
 The Hang Seng in Hong Kong closed up 1.5 percent
 in the Nikkei 225 in Japan, down about a percent,
 mixed trading overall on the global side of things.
 Let's turn now to Lisa Kim.
 She's got the live action from Asia, from Singapore.
 Ben Boulos is in London with the early movers in Europe
 and Ben, we will start with you.
 Yes, good morning to you.
 And the Pan European stock 600 is about four tenths
 of a percent off this morning.
 And we can show you the breakdown of the regional benchmarks.
 It is the French market, the Kakarol,
 that is leading the losses on the continent down six tenths
 of a percent here in London.
 The FTSE 100 down a similar amount,
 the Italian market and the German DAX also giving up
 territory this morning.
 Plenty of earnings news for investors to digest.
 UBS moving higher after an 80 percent annual jump
 in first quarter net profit coming in at $3 billion
 driven by its cost reduction plans.
 The Swiss lender said it's seen revenue growth across its core
 franchises against a highly volatile backdrop.
 One key bank moving to the downside though,
 Deutsche Bank beat earnings and revenue and expectations
 for the quarter.
 But that's been overshadowed by larger than expected
 loss provisions with the bank flagging a key single-name exposure
 in its investment banking division.
 Away from the banks, Airbus leading the French stock market
 this morning after the plainmaker confirmed its full-year targets,
 including its all-important delivery goal despite a hit
 from engine shortages in the first quarter by two.
 All right, Ben Boulos and London with the latest
 era for the European trade.
 Thank you very much for that.
 Let's now send it over to Lisa Kim in Singapore
 with the trade out of Asia.
 Good evening, Lisa.
 Good evening, good morning, Dominick.
 It was a mixed picture for Asian stocks today as investors
 weigh the impact of the UAE's exit from OPEC
 and also looked ahead to the Fed meeting.
 But a comment thread was a relative outperformance of tech
 and AI stocks in general.
 South Korea's benchmark cost be gained 8-10s of a percent,
 closing at a record high for the third day in a row.
 Index heavyweight Samsung electronics did a lot of the heavy lifting.
 The chipmaker is due to report first quarter earnings Thursday.
 Local time it released blockbuster earnings guidance
 earlier this month, and that stock rose to a record close today.
 Over in Hong Kong, the Hangseung tech index,
 which tracks the 30 largest tech companies there,
 climbed around 1.5 percent.
 Chinese EV makers were among the winners with B-Y-D and Lee Auto
 closing in the green while Japan markets were close for a holiday.
 Back to you.
 All right, Lisa Kim.
 Thank you very much for the Asia trade over there.
 Another check on US equity futures, which are modestly on the green side of things.
 The NASDAQs recovering some of yesterday's losses, which were sparked in part
 by worries about the AI trade and the momentum that could be fading there.
 Corporate America has shown resilience in the face of those concerns
 and the Iran war as well.
 With about a third of the S&P 500 companies already reporting results,
 81 percent, 81, 4 out of 5, have beaten estimates.
 The blended rate, which combines the actual earnings that have happened
 with estimates of companies that have yet to report, is up 15 percent.
 That signals the potential for a sixth straight quarter of double-digit earnings growth.
 Joining me now is Nicholas Seats CEO of the Seats Group,
 an independent Swiss private bank with more than $35 billion in assets under management.
 Nicholas, thank you very much for joining us here.
 What do you make of this notion that the markets could be dealing with everything
 that they're dealing with right now on the macro and the microfront
 and still hovering right around near record highs?
 Thank you very much, Dominic.
 It's a pleasure to be with you.
 You just talked about the earnings.
 Obviously, they're up because they're supported by the consumer data.
 The resilient US consumers, there's also supportive liquidity right now.
 Physical stimulus, this outweighs the geopolitical and risks and as well the inflation.
 A risk that we're seeing.
 There's a shift now that we're seeing from efficiency to resilience.
 I think this is giving great opportunities for energy defense,
 semiconductors and infrastructures.
 How this is pushing the markets higher?
 This is interesting because Nicholas, then right now what we've seen over the past few weeks,
 is a return to what has been the primary driver of US and global markets,
 which has been mega cap technology ever since the lows during the war that we've seen so far.
 What exactly are your clients doing from their positioning standpoint?
 Are they going all back into those tech names?
 Are they trying to diversify a little bit more?
 Are other asset classes in play?
 What exactly does that Swiss private banking client on your side look like?
 Well, thanks in very interesting question because there's no sense and meaning for panic from our clients.
 They are repositioning and so you need to always come back to being focused on fundamentals and not on emotions.
 So they're looking at also a broadening around not just the MAX7,
 which have been big contributors for the growth in 2025.
 But we're seeing a broadening of this bull run,
 and that is going to influence and has already influenced positively these mid and small caps.
 And that's also due because of the AI trend that it's building a lot of efficiency and profitability,
 margin gains for smaller players.
 So this is also the diversification play that's moving along.
 And so diversification and staying invested is right now the key play.
 You had mentioned a couple of those places that you might be seeing a little bit more activity.
 Where are in your mind kind of the favorite parts of that diversification trade outside of big tech,
 that are starting to resonate a little bit more with those customers.
 I know you mentioned small and mid cap companies,
 but what industries in particular are you focusing on?
 So there's clearly energy, but the defense semiconductors and your infrastructure.
 And this is coming back to this resilience play where countries and geopolitics are having this trend of reshoring.
 And so you want to look for this quality picks for diversification.
 Hedge funds is a way to hedge your portfolios against those volatility.
 And we're very much in favor of commodities.
 You've seen gold as well, trending back higher.
 This has been playing the diversification role it has in the past,
 and it will continue to do so.
 And what types, just one final point here about the diversification and the alternative trade that you mentioned?
 Where exactly within that kind of alternative space are you seeing some of the most pickup?
 Is it within things like managed future strategies?
 Is it straight up commodity and real estate investing?
 What exactly are you incrementally seeing in terms of more interest developing on Alts?
 Right now it's been very much in the commodity space, both because it has been very resilient
 and has proven to not correct and not be correlated to market volatility
 and has built a very solid baseline for the portfolios.
 So not just gold, but commodities across sectors.
 All right. Nicholas Seats at Seats Bank, thank you very much.
 We appreciate it. We'll see you soon, sir.
 Thank you very much.
 All right, straight ahead on the show, the Trump administration is putting Disney's feet to the fire once again,
 why its latest pressure efforts may be putting Disney's new CEO between Iraq and a late-night host.
 Plus Elon Musk takes the stand in his legal fight against Sam Altman and OpenAI,
 but first checking shares of booking holdings.
 The travel platform's first quarter results beating forecast,
 but it's cutting earnings growth targets for the year to the quote-unquote low-to-mid teens,
 booking citing the impact of the Iran War is having on demand going into the all-important summer travel season,
 booking holdings shares of 4.5% pre-market morning call is back after this.
 All right, welcome back to morning call, checking some of this morning's latest headlines.
 President Trump reportedly telling his Aids to prepare for an extended U.S. blockage of Iranian ports.
 The Wall Street Journal adding the president considered the blockade extension the least risky option compared to a new bombing campaign
 or complete exit from the conflict.
 The FCC is telling eight Disney-owned TV stations to file early for their broadcast license renewals.
 The move is tied to a year-long investigation into Disney's DEI practices.
 What sources tell NBC News uproar over a joke made by late-night host Jimmy Kimmel on ABC did accelerate that process.
 Kimmel is refusing to apologize for those comments.
 Elon Musk is taking the stand in opening testimony during day two of his legal fight with OpenAI
 and its co-founders Sam Altman and Greg Brockman.
 Musk telling a jury in Oakland, California, OpenAI shift from nonprofit to for-profit amounts to quote stealing a charity.
 Musk adding he was the one who came up with the idea name and recruitment plan in OpenAI's early days.
 Spirit's Giants Brown Foreman and Perno Ricard say they are ending talks about a potential merger leaving Fireball,
 Svetka Vodka, Buffalo Trace Parent Sazarak opened to a potential deal with Brown.
 And the European Union is accusing meta-platforms of failing to keep young children off its services claiming the company's apps, quote,
 have no effective controls in place to check the correctness of the self-declared date of birth.
 The move could result in new fines for the company.
 We'll still on deck for the show here.
 Former Fed Vice Chair and former NEC Director, Lail Brainerd is here with what to expect ahead of the Fed's big interest rate decision,
 warning call continues right after this.
 I'm Dominic Chouin from Morgan Brennan. Welcome back to Morning Call.
 US equity futures right now are modestly higher.
 With the Dow writing a four session losing streak entering today,
 you can see the Dow is implied higher by a modus 14 points, the SMP is up by about five,
 and the tech heavier Nasdaq up by about 87 points.
 On the treasury side of things, a big focus today with a Fed interest rate decision looming this afternoon,
 the benchmark 10-year note yield 4.36%, the two-year note yield 3.85%,
 and the 30-year long bond is shade below 4.95%.
 Cryptocurrencies with now Bitcoin at near a 12-week high,
 those prices currently up by about a percent to 77,0125,
 ETHR prices, $2,328, up about one and three quarter or one and two-thirds percent as well,
 and an energy with Brent near its highest levels in roughly a month year,
 up about a 3% or so, to $114.75 per barrel of 3% gain there,
 US benchmark West Texas Intermediate, $103.46, up about 3.5%.
 Plus, big movers ahead of the open include Starbucks,
 raising its full-year outlook for earnings and same-store sales growth,
 this after reporting its second straight quarter of traffic growth.
 You can see there those shares up,
 meanwhile chip testing from Teradine sinking despite a better than expected first quarter result,
 the current quarter outlook while optimistic did fall in the mid-range of Wall Street estimates,
 and then memory chipmaker Seagate Technologies surging ahead of the opening bell
 on a supercharged outlook and third quarter earnings beat those Seagate shares
 up nearly 18% in the pre-market trade.
 Now from earnings to the Fed,
 we're just hours away from releasing its latest interest rate decision
 and what's expected to be Fed Chair Jay Powell's final press conference
 as Federal Reserve Chairman.
 According to the CME Fed Watch tool, market participants are pricing in a 100% certainty.
 The Fed will keep rates unchanged today,
 and then watching CalShi probabilities on the number of rate cuts later on this year,
 exactly zero now standing at 43%, up 10% in the last month.
 So things are shifting around with expectations.
 Joining me now is Leo Brainerd,
 former Federal Reserve Vice Chair and former Director of the U.S. National Economic Council under President Biden.
 Leo, good morning to you.
 This is an interesting situation that the Fed and the administration find themselves in
 with the conflict in the Middle East still raging.
 What exactly do policy makers deliberate about during these types of situations
 when it comes to interest rate policy?
 Well, good morning.
 I think that they came into the year expecting the economy to be pretty resilient
 inflation to come down later in the second quarter, probably,
 and to be on the path to cutting a few more times over the course of this year.
 The war has changed that dramatically.
 Obviously, gas prices are up by more than $1 diesel prices by $1.75.
 That's flowing through to food prices and other prices later in the year.
 And so now they have to talk about what they should be signaling to the market.
 So far, they have signaled that instead of cutting,
 we're likely to see an extended pause, no cut in rates.
 But as we know from the last meeting, some policy makers wanted to introduce the idea
 that there could actually be two sided risks to interest rates.
 That interest rates could go up as well as down,
 depending on how inflationary pressures from the war persist.
 What's interesting about this is this is a huge debate that's playing out not just among policy makers, right?
 But also traders and investors everywhere else around the world.
 One of the big reasons is because those inflationary pressures,
 while they could trigger some kind of an interest rate move higher to stem those issues,
 there's also a worry that there is an effect of slowing down the economy.
 I remember speaking to a gas station attendant who said that tractor trailer traffic
 for diesel is not exactly what it was just about two or three months ago,
 how much is the slow down worry going to possibly outweigh the inflationary worry
 and is stagnation a real possibility?
 So that's very much what policy makers will be talking about.
 Will this show through in particular to consumer demand
 and as a result to softer hiring?
 And previously when the Fed cut interest rates three times at the end of last year,
 they were quite worried about the softening labor market.
 Since then the data has been better.
 The labor market seems to be in better balance,
 and they have acknowledged that the big changes in immigration policy mean
 that unemployment is actually likely to remain low,
 even though hiring is much, much lower.
 The other thing we've seen is that consumers have been pretty resilient so far,
 you're right, diesel traffic is down, airfares are way up,
 and so they'll have to weigh that.
 I mean the one thing I think that's important here,
 and I don't think we'll see any of that show up today,
 today I think we're going to see the statement state very similar to what we saw before.
 I don't think they're going to tip their hand one way or the other.
 I think they'll probably leave that to the incoming chair
 likely to be in seat before the next meeting.
 But I think what you'll see is some conversation about how much those
 tariff price shocks which are still working their way through the system,
 now being joined by oil price shocks could actually change consumers' expectations
 and leave inflation higher for longer.
 Interesting as well.
 Having seen both sides of the dynamic,
 from the independent central bank side of things,
 and from the more biased administration standpoint,
 whether it be the Biden administration or the current Trump administration,
 how exactly do the conversations behind closed doors differ
 in terms of how the central bank is viewing some of the current state of affairs right now,
 versus how the White House would be having some of those same data points
 filtered through those conversations.
 The Fed has a very simple task.
 It's just straightforward, keep inflation low,
 or in this case, bring it back down.
 It's above 3%, it has been above 2% for five years now.
 Bring it back to 2%, and keep the labor market strong.
 Those are very straightforward.
 The White House has a much more complicated set of considerations.
 They have to worry about national security.
 Of course, that is why they made decisions about the Iran war,
 but they also are political in terms of their timing
 and so they're looking at the upcoming midterms.
 White houses tend to be very sensitive to prices at the pump,
 because consumers are very sensitive at prices at the pump.
 And you can see that in the lowest consumer sentiment readings we've seen
 since the beginning of the Michigan survey,
 that the gas price increase of over a dollar at the pump,
 that was the one bright spot on prices.
 That is now really weighing on consumer sentiment.
 And so if you're over in the White House and any administration,
 concern about high gas prices is likely to be top of mind.
 Of course, the consumer drives the bulk of the U.S. economy.
 Leo Brainer, thank you so much for taking the time.
 We appreciate your thoughts.
 Thank you.
 All right, we've got a lot more to come here on morning call,
 including the latest on the UAE's surprise exit from global oil cartel OPEC.
 We are live in the Middle East with regional reaction
 and what it could all mean for already elevated energy prices.
 And as we head out to break, a check on visa shares.
 Right now, you can see those shares moving to the upside to the tune of 5%.
 Earnings topping estimates as did revenue,
 which saw its biggest increase since 2022.
 Visa CEO saying consumer spending remains resilient during the quarter
 to Leo's point here about the consumer,
 despite customers facing increasing price pressures from the war in Iran.
 It's all connecting, morning call is back after this.
 Welcome back to morning call.
 A check on some of the stocks on the move on the heels of earnings reports
 and two clean energy stocks in two very different reactions.
 End phase energy shares are sinking right now to the tune of 11%.
 Q1 results just topping estimates with revenue declining from a year ago,
 raising some demand concerns.
 Meanwhile, bloom energy shares are jumping to the tune of 16.5%
 after earnings and revenue beat the street.
 The company is also offering full-year revenue and earnings guidance
 ahead of Wall Street expectations.
 We're turning now to a developing story in the Middle East
 and fall out from the UAE's decision to exit OPEC.
 Checking now oil prices, benchmark prices for US prices and international ones
 are up roughly three to three and a half percent.
 WTI American crude, $103.40 and ice-brink crude,
 the world gauge, $114.56.
 The UAE, one of OPEC's biggest oil producers,
 says he will officially pull out on Friday,
 with officials saying the decision stems from a review of production policies.
 The surprise announcement comes after the UAE was targeted by Iran
 a fellow OPEC member with dip missiles and drone attacks.
 It's also seeing its ability to export oil constrained due to the conflict.
 Our Dan Murphy is in Abu Dhabi in the UAE,
 with more on the fall out there.
 Don Good Morning Wall, this is a major shift for the UAE
 and it will shape regional energy policy and politics for decades to come.
 Abu Dhabi effectively walking away from OPEC
 after nearly six decades of membership.
 The UAE has had long held reservations about its own output quotas,
 but the Iran War has also really forced the Emirates
 to rethink the status of their regional relationships.
 I spoke with the UAE Energy Minister Sahel Al-Mazrui on this
 and I asked the question that everyone is asking,
 is this a break with Saudi Arabia?
 Here's how he responded.
 This has nothing to do with any of our brothers or friends within the group.
 We've been working together for years and years.
 We have the highest respect for the Saudis.
 It's a pure policy change, but the timing, as I said,
 was taking into consideration.
 Sahel Al-Mazrui there.
 Of course, the bigger question is the institutional damage that this does to OPEC.
 It's relevance and its market power moving forward.
 Saudi Arabia is still holding court as the de facto leader there,
 but the UAE is looking to a post-oil future
 and perhaps betting that being an independent supplier
 makes the more valuable to global partners like the U.S.
 rather than a quote-unquote cartel that includes Iran and Russia.
 Now, in terms of how the market has responded here,
 we saw prices initially dipping on the headline.
 The conventional thinking is that when the straight eventually reopens,
 the UAE is going to be a free agent of sorts ready to flood the market.
 But interestingly, prices have been moving higher
 because the bigger focus right now remains on the straight-up almost.
 The Wall Street Journal reporting today that President Trump
 has instructed A to prepare for an extended blockade,
 and he wrote on Truth Social that the blockade is pushing Iran
 towards a state of collapse.
 The White House basically believing that this economic fury strategy is working,
 but no diplomatic off-ramp emerging as of yet.
 All right, Dan Murphy in Abu Dhabi with the latest there on the UAE.
 Thank you very much for that.
 For more on this, let's bring in Amrita Sen, founder and director
 of Market Intelligence over at Energy Aspects.
 Amrita, thank you very much for joining us here.
 Following up on Dan's report, I guess the question that many of our viewers
 and listeners have is, what exactly does this mean medium to longer term
 for oil and gas prices?
 Great question, Dom.
 I think the main thing, of course, the market is going to sold the back end of the curve,
 assuming that UAE is going to flood the market.
 But I really would exercise caution.
 We've been in meetings in the region and I think it's very clear.
 And you heard UAE's minister say this as well,
 but they will be cautious about it.
 They will only add barrels responsibly.
 And I think that is very important to keep in mind.
 Also, and I said this to Dan this morning as well,
 we've had the same traders talk about the lack of compliance from UAE in the past.
 And now they're saying they're going to flood the market.
 You can't have it both ways, right?
 So I think the market or the traders kind of need to get their head around
 what they believe these production numbers were to begin with.
 Yes, UAE and Saudi Arabia mainly are the holders of spare capacity right now.
 But right here right now, the almost destruction is making us lose millions of barrels per day.
 Every single day the straight remains sharp.
 And we do think in having been in the region right now,
 the assessment of damage that we are not appreciating, particularly in the West,
 the timeline for production recovery could actually be a lot longer
 than we are all assuming at this point.
 All right, I'm Rita, one other question before we let you go.
 There's been some conversation now about whether or not this is the first step
 in the kind of long-term dismantling of OPEC.
 Is it that dramatic?
 No, I mean, of course, UAE is an extremely important producer,
 one of the biggest ones, but OPEC has had other countries leave.
 You've had Qatar, Malaysia.
 There's been a few, right?
 In the past Angola, the latest one.
 We've also had new countries join.
 OPEC, I firmly believe, will continue to maintain stability in the market.
 It always has.
 There's been countries at war with each other as well.
 It survived decades and I don't see any change whatsoever in its ability
 to provide stability to the market.
 All right, Rita Sen, energy aspects.
 Thank you very much.
 Always great to get your thoughts.
 I appreciate it.
 All right, straight ahead on the show, the morning call crew is up,
 team up an absolute monster training day ahead,
 and why one member says hopes for one potential market catalyst
 are moving to the back burner, that the conversation's coming up.
 Welcome back to morning call.
 It's time now for your call, Sheet, where we look at the topics
 driving the training day ahead.
 The crew members today, Bill Lee, chief economist at Global Economic
 Advisors, Blake Gwynn, here in studio, head of rate strategy
 over at RBC Capital Markets, and Patrick Frazzetti, partner
 and managing partner at Rose Advisors at High Tower.
 Gentlemen, thank you all for being here right now.
 Let's start off with our first topic, which is the earning season,
 visa V, what's happening with these Mag 7 stocks.
 Four of them reporting today, one more tomorrow,
 and I'll start perhaps with you, Patrick,
 about this whole situation developing in tech,
 is the massive bid that we've seen to these Mag 7 stocks
 justified as we head into earnings?
 Well, I think the expectations are pretty high,
 but yes, I mean, the expectations around AI demand trends
 are still there, and I think it's going to remain a key theme.
 And more broadly, frankly, I mean, earnings growth,
 for the first quarter is expected to be close to 16%,
 and that would be the sixth consecutive quarter
 with earnings growth and the double digits.
 So yes, I think there's still some tailwinds,
 but the hurdles are higher, clearly.
 Bill, the economic story from a big picture
 of macro standpoint is being driven by this AI trade,
 whether it be productivity, just the sheer amount of money
 that's earmarked or pledged to be spent.
 How exactly do these things play out in your mind
 with regard to the ultimate economic impact
 that we should be expecting from these hyper-scale AI-type spends?
 Well, the Fed is going to be worrying very much about them,
 and Kevin Worsh has already given us a preview.
 He told us that high productivity is great
 because it produces much more income for people
 who are more productive, but unfortunately,
 it also means that there are fewer jobs being created
 because the same workforce can do a lot more than they did before.
 So we have a tension there between higher output,
 which could lead to higher prices, a higher GDP,
 but unfortunately, job growth is not there,
 and the mandate for maximum employment is being threatened.
 At the same time, we have the energy situation
 where we have a disinflationary downward trend
 because of the high productivity,
 but we have energy and tariff price spikes
 that are being rolled through at least temporarily.
 So the question about what to do about policy
 gets made much more complicated
 by this massive AI technology productivity boost.
 You know what's interesting?
 Bill brings up a good point, Blake.
 There are a lot of factors that everyone
 are trying to people are dealing with
 with regard to how they kind of see these machinations working.
 Is there a bigger picture backdrop, economic wise,
 that says that this AI boom can be sustainable
 and can have a tailwind in effect from capital markets?
 Do we feel as though the environment is good
 for this kind of spending to progress
 the way it's being pledged to progress?
 Yeah, obviously not being an equity strategist.
 I mean, I focus more on race.
 I think about things through the Wealth Effect channel.
 I think about kind of bond equity weightings and portfolios.
 And there, you know, it's certainly something that we consider,
 but everything's been kind of sideline now by this Iran War
 and the duration of that is really going to be what's driving policy,
 what's going to be driving economic data.
 And I think that's what really the Fed and bond markets
 are more focused on right now.
 The bond markets just to follow up, Blake,
 are they supportive right now or will they be supportive enough
 to help finance this big boom that we are going to see?
 Well, it's funny.
 We're actually entering into a bit of a range-bound environment right now.
 I think the Fed's going to be on hold for a while.
 You know, I think when Kevin Worsh comes in,
 there's some thought that he could cut rates, lower rates,
 get those financing rates down.
 I think that's probably not the case.
 I think it's going to be very difficult for him to achieve
 that kind of outcome.
 He does have an entire committee to deal with.
 And I think so far what we've seen,
 the committee doesn't really believe in this kind of AI productivity boom
 that's going to allow the Fed to cut rates
 out of ignore some of the sticky inflation problem that they've had.
 All right.
 Now, turning from this kind of Mag 7 earning centric story
 to more of the broader earning story, Bill,
 I'll start with you on this one.
 Has the earning season, first of all,
 has been a propellant for the markets overall.
 We're going to possibly see double-digit earnings growth again.
 Is it at all surprising to you that this economy
 with all the headwinds we are facing remains as resilient
 as it has been vis-a-vis the earning season so far?
 That role, in fact, the earning season
 and the stock market response to it
 has been one of profit margin expansion
 and strong profits in general.
 And I think that's the sign that says that the productivity boom
 is not only in play,
 it's been in play for the last couple of years
 and is likely to continue to be in play.
 And that really means the changes in the way income is growing.
 Rewarding capital,
 but now the question is,
 will labor be getting part of that?
 Will labor be able to get some of the benefits of the high productivity
 in terms of higher wages?
 Now, if AI is implemented and technology is implemented in a way
 that makes labor more productive, absolutely.
 But if labor becomes a substitute,
 if machines are replacing people,
 then you find that the rewards are going to go to capital,
 the stock market gains are still there,
 but the owners of the capital,
 which is about 10% and 20% of the population,
 is going to be getting to gains.
 And that kind of skew,
 it income growth is going to cause not just economic problems
 but also social problems.
 Patrick, as we talk about how much earnings do matter
 to a fundamental portfolio manager like yourself,
 is that more important or is the macro-big picture more important?
 The macro-big picture I think right now is still more important.
 I mean, the longer the war remains,
 I think the question around inflation still remains.
 And yes, productivity gains can be had,
 but as inflation can get sticky,
 I think you could see the longer this goes on,
 it bleed into clearly second quarter earnings,
 could bleed into second quarter margins and even third quarter margins.
 So I think still a lot remains to be seen as the world
 comes to some resolution.
 But if it doesn't, I think you could see some potential headwinds
 coming out of the second quarter and into the third.
 All right, a little bit of caution there.
 Let's turn now to our final topic, which is the big Fed meeting today.
 I say big because it is a catalyst,
 but no one's expecting anything to happen right now.
 Rates are going to be on hold.
 Blake, I'm going to turn to the rate strategist amongst us here.
 What exactly are the expectations that you have?
 You mentioned range-bound trade,
 but what are you going to be listening for
 and what could be Fed share Jerome Powell's last press conference as chair?
 Yeah, I mean, this was a very easy call to make.
 They're not changing rates today.
 I think there will be some focus on what they do with the statement.
 We've seen in some of the minutes that have come out
 from the past meetings and just some of the comments from other Fed speakers
 about this potential of adding in two-sided risks.
 Some people wanted an acknowledgement that there is a risk of a hike
 if inflation doesn't perform the way that they've wanted.
 So, you know, I think markets will be looking for any sign
 that that shows up in the statement or that Powell mentions that.
 I don't think they're going to change the statement,
 but that would be one of the risks going into this.
 And I think from Powell, you know, this is kind of a swan song.
 I wonder if he's going to be a bit introspective
 if he's going to get some questions about his time there,
 asked about, you know, advice for Worsh.
 That's not particularly market moving.
 It's very interesting for people who follow the Fed and for us to hear.
 But I'm not expecting him to really make waves.
 They're just stuck by this Iran war, not really knowing how long it's going to last
 and how it's going to impact the data.
 So, they're kind of frozen now in this wait and see mode.
 All right, Patrick, a few moments left here.
 What are you going to be your takeaways from the Fed today?
 No, I think, you know, as he suggested,
 I don't think there's going to be a lot of fireworks today.
 And I think it's going to be, it will be interesting to see what Powell says
 and maybe he is a little introspective.
 But frankly, I don't think it moves the market very much.
 All right.
 Gentlemen, thank you very much for the conversation.
 We appreciate it. That's our morning call crew there
 with a wide-ranging swap to topics there.
 We appreciate it now joining us here.
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