Morning Call 7/13/26

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 Royal Spikes ship slide. I'm Morgan Brennan and this is your morning call.
 Good Monday morning. Let's get a check on US stock futures with a Nasdaq facing heavy selling pressure this morning.
 You can see that right there on your screen. It's a mixed picture with the S&P poised to open down 28 points. The Dow though poised to open higher about 77 points.
 And as I just mentioned, the big underperformer here pre-market is the Nasdaq down poised to open down about 280 points as of right now.
 This stocks are coming off a mixed week with the Dow saying it's worst one week move since late March. Keep in mind it was a fractional loss weekly loss for the Dow but the S&P and the Nasdaq both ending last week with gains.
 Treasuries ahead of a big week for bank earnings inflation fed chairman Warsh testifying on the hill for the first time ever in that chairman position.
 You can see yields are higher for the most part across the curve here that of course is we're seeing crude climb will get to that in just a second here.
 But taking a look at the US 10 year treasury it's yielding 4.57% right now fed sensitive to your treasury also higher this morning.
 We're watching US and Asia listed shares of SK high next after double digit debut on the Nasdaq on Friday for SK high next.
 You can say some big moves lower here this morning in Korea finishing down 15% and pre-market here in the US now those ADR trading down about 9.5% we're going to have much more on that trade coming up.
 But if we do turn to the energy markets the Middle East crude and gas prices are both surging across the board amid new back and forth strikes.
 Between the US and Iran and a statement on Sunday US central command saying it's latest round of quote offensive strikes hit multiple locations including military air defense systems coastal radar sites missile and drone capabilities and small boats that are using.
 It did so using US fighter aircraft naval vessels one way attack aerial drones and for the first time.
 One way attack seed drones something we've been tracking here with some of the startups that are in the mix on all of that.
 We're showing you the video right there on your screen sent com adding the strikes were to degrade Iran's ability to continue attacking international shipping flowing through the street of Hormuz.
 For its part Iran's revolutionary guard says it targeted US military facilities in Bahrain and destroyed radar systems in Oman in its latest retaliatory attacks.
 We've not got any commentary from the Trump administration or from sent common terms of possible damages there.
 As for the straight itself president Trump yesterday told NBC News that the waterway was open to commercial traffic disputing comments from Tehran on Saturday that the straight was closed quote until further notice.
 Freight monitoring from windward notes nine ships passed through the straight between Saturday night and Sunday morning including for Iranian flagged vessels.
 So we continue to track that but let's get more reaction to what we are seeing with energy prices today as you do see crude climb higher and refine products move higher as well joining me now is Ole Hansen head of commodity strategy at saxo bank and Ole it's it's good to have you on the show.
 That's exactly where I want to start with you because when you look at the world crude benchmark.
 It keeps bouncing out of off of $80 a barrel and it's certainly higher right now but has not really broken through in a meaningful way what is that signal.
 Well hello Morgan it signals definitely that the market doesn't really believe that this will translate into another major escalation completely shutting transportation through the street of Hormuz.
 So the market is fairly relaxed at this point about a similar because we have had so many different sound bites coming from either side now from months that the market is starting to try to just trying to filter all the all the noise you can say the coming from from either side and watching the traffic
 At the same time we are now trading crude all into the autumn months we're trading for September and one in August and the other so we have passed the peak period in terms of demand and that was really here during the June July August period where demand was going to peak due to the summer travel season so we are now already trading into the autumn and that potentially also just reducing some of the risk.
 At the same time we had learned to get through this previous crisis really reached me on skate a lot of pipeline infrastructure is pumping at full capacity to circumvent the straits so all in all the stress is not in the crude oil market the stress is really still in the fuel product market where diesel prices are still corresponding to brand prices well above $100 the same in gasoline and that that that tightness will persist in the coming weeks and months.
 Yeah I mean and you touch on a key point here how does what we're seeing in Russia factor into the global energy market here to when they've got you know bands on diesel exports.
 Well the that's most certainly a key point because the the we see quite a substantial part of the global refinery capacity being impacted there right now some minutes the major up towards 10% of refinery capacity offline both from the Middle East but also from the recent attacks in Russia Russia is a major export of refined products especially diesel and that really has throughout this crisis been one of the the products together with jet fuel that has been trading at the highest prices.
 So yes the the renewed tension there in the Gulf the risk to refinery export from the Gulf and the the attacks in Russia basically means that the refined product area is the key and that's really also key for the wider market because that's we're not buying crude to fill it into our cars we're buying gasoline and diesel.
 So as long as these refined product prices remains these levels the inflationary impact of this this this situation will continue to play its role and that's obviously key as we move into the week.
 So we'll continue to track those refined product prices ever more closely here and what that's going to mean for other asset classes as well which do seem to be taking their cue from the energy markets overall I just want to go back to one thing away and that is given the back and forth we are seeing between the U.S. and Iran everything that is playing out in the region what you called I think the word you use was noise what are the key data points or inputs that you're watching that would signal that it's more than just noise.
 Well I think at this point in time it really just has to continue to be the traffic of the shipping going through the straight whether we can continue to see that as some kind of flow and that will obviously help.
 And also just simply whether the U.S. is successful in keeping the southern parts the the Amani lane open and that's really where the whole contingent is right now Iran is trying to keep it keep it keep traffic to a minimum because they want to control the flow if the U.S. are successful in keeping that lane open then then the mind will be fairly relaxed about what's happening here in the coming days and weeks.
 Okay. All right Hansen it's great to have you on to start the hour. Thank you appreciate your insights.
 Thank you.
 Well we're checking U.S. stock futures once again under pressure after a very rough session overnight in Asia Europe starting its day with a mixed picture as well.
 You can see the Dow is poised to open higher this morning but the S&P and in particular the Nasdaq on pace to start the week with losses.
 J.P. Young has the latest from Singapore Steve Sedgwick is standing by in London. Steve let's kick it off with you.
 Hey Morgan it's absolutely fascinating looking at these European equities behind me. I mean it looks glacial on the surface like a swan.
 Tiny tiny move for the upside point one six of one percent for the German market similar on the FTSE and the CAC as well.
 Underneath there is these two Maustrums that you have brilliantly typified already in the first seven minutes of the show.
 You've got the technology story with the oscillating memory chip plus you've got what's going on in the war as well and regarding oil prices.
 So European equities net net off to a muted start to the new trading week traders digesting both those issues flaring tensions in the Middle East rising crew prices.
 Now we've got travel and leisure stocks that's leisure to our stateside audience under performing as a result of the latest escalation was oil majors as you'd expect seeing the early gains.
 And again we're watching the European chip players those stocks under pressure in early trade after SK high next posted its biggest ever one day drop.
 And I know JP will talk about that about the Asian session that negative sentiment creeping into the European trade with losses across the board in the chip sector back to you.
 Steve only you can make menial market moves sound so exciting. Love it Steve Sedgwick. Thank you to the action in Asia.
 Steve sell off spent in the opposite there across the region led by South Korea's cost BSK high next in particular seeing its worst day on record J.P. Young has more on all of it for us. Hi JP.
 Yeah, hi, good morning Morgan and again, a perfect cocktail really leading to the sell off out here in Asia. You've got the issues with regards to re escalating tensions between the United States and Iran.
 You've got those inching treasury yields also a stronger dollar and of course that unwinding of the chip trade really hitting some of these markets hard.
 But not harder as you as you can imagine then the South Korean cost you can see you're plunging by a whopping 9% or nearly 9% down at the close extending their descent into bear market territory for an index that mind you was the best performing index in the world at one point earlier this year.
 It got so bad actually they had to trigger a circuit breaker which means they had to suspend trading for about 20 minutes just to calm down nerves.
 But it did little of that actually and the sell off continued seeing the close almost 9% higher and no prizes to guess why they actually got pulled down because the cost be right or dies now by where the memory kings actually trade.
 Samsung, SK Heinix both plunging by more than double digits and really also pointing perhaps to a broader unwind in the memory chip trade because there's not the only ones that got hit hard today.
 If you look in Japan, Kyosya the Japanese memory chip maker also fell by a whopping 12% in today's session so there's a broader unwind and investors starting to lose favor at least in Asia or starting to sour that is on the memory chip play that really saw a lot of energy earlier on this year.
 There is one chip player though that managed to withstand the onslaught and it's mainly because they're not in the memory chip space and that is Taiwan semiconductor the world's biggest contract chip maker and foundry and foundry operator.
 They actually reported a 36% jump in second quarter revenue above what markets were expecting and also surprise surprise also announcing that they were going to open two new advanced packaging assembly plants actually in the southwest part of Taiwan to meet this insatiable AI demand.
 And maybe right now it's good to be in TSMC because right now we're seeing a lot of bloodletting for lack of a better term in the memory chip space.
 We'll see if that continues at least here in Asia we're seeing the likes of Samsung and SK Heinix really really getting pummeled hard in sharp contrast house.
 SK Heinix is 80 hours did on their first day out in the Nasdaq Morgan.
 Jay Piong thank you appreciate it yeah we're seeing some of the semis stocks here pre market in the US fall and sympathy this morning as well so continue to track that let's stay on tech wild action that we're seeing an SK Heinix in Asia in the pre market here on Wall Street after that blockbuster debut for SK's 80 hours on Friday joining me now is tech strategist Dan Ives great to have you here on set great to be here.
 What do we see in memory right now what's happening look that's the those are the golden child's really the say I revolution and I just think there's a view was it a top with SK going public in terms of you know what we saw on Friday I disagree.
 I mean the reality is you're not going to be able to bring in terms of demand spot at least till 2028 but but I think you're going to continue to see a spreading of the say I revolution trade and then look where stocks like Nvidia and others of trade.
 I think that's that's really what you're seeing I think it's more of a you know a speed bump rather than anything more.
 Yeah I mean you just mentioned Nvidia Nvidia we were talking about it last week falling to its lowest valuation since 2019 here I mean why has it been such an underperformer is it the competition story or is it just a rotation into other high flyers that seem to be growing fast.
 I think it's the shiny new towards a new object in terms of memory you've seen so many of these names where the ones that are actually the center whether it's the hyperscalers or Nvidia those are actually ones.
 To some extent missing the penalty box and I think that's the dislocation the market because the reality is there's one chip in the world fuel in the AI revolution that's led by Godfather of agents in the video.
 And when you look at memory where is memory without Nvidia where is memory without the hyperscalers so I think as we see that look there's all plays into what's going to mean just a crucial tech earnings season for 2Q to show monetization and we continue to think demand the supply 15 to 1 in terms of the chips.
 CSMC actually finishing higher as JPM just just noted today in Asia overnight 68% surge in June revenue I realize we're going to get actual earnings from them later this week but when you do see SK high next coming to the US markets to raise more capital and and and and leverage the most liquid market in the world do you think we are going to see others do something similar.
 I think this is just the start because first up the reality is for the first time in 30 years the US is ahead to China when it comes to tech and I think that's important because AI I think what you saw with SK you're going to see more and more companies tap the US market likely because not just from a liquidity perspective but that's the center of the AI trade and I think many are taking note of what SK did on Friday.
 Okay I got shift gears here speaking of AI trades Apple filing a lawsuit against open AI after the close on Friday accusing open AI of a quote systemic effort to steal trade secrets as part of an initiative to build consumer focused hardware devices.
 I mean this to me seemed pretty meaningful for Apple to be doing that.
 I think this is the build up right me and started candlelight dinner at one point to open AI and Apple and then ultimately you know if you look at Johnny Ivey in terms of that deal that really started open AI getting more and more into hardware and look for Apple it's a shot across the bow they're basically saying like no math I mean this needs to stop I think it's important to what they're doing because now Apple defending their turf as well as also when it comes to Google and Gemini they finally have an AI strategy and I think they're really looking at this.
 They're really looking at this and saying look competitive wise trade secret wise we need to put a line the sand and I think it's important I think others in the valley are going to look at what Apple is doing here.
 Yeah okay and we'll be tracking it too Dan Ix great to have you on set thanks for kicking off the hour.
 All right well outside of the markets reaction pouring in following at the sudden death of Senator Lindsey Graham over the weekend in a post on X Ukraine president of
 Vladimir Zelensky calling the South Carolina Republican quote a true defender of freedom and the values that make our world safer.
 Graham had just wrapped up a visit to Ukraine right before his passing it was his 10th since the start of Russia's invasion.
 Israeli Prime Minister Benjamin Netanyahu also out with a statement calling Graham quote great friend of Israel and speaking with NBCU news and president Trump calling the political
 foe turned friend quote like a member of the family.
 I got a message about one o'clock in the morning from one of the people at his office that he had passed away.
 I said you got it. I just can't believe it.
 He was like a member of the family to miss very tough actually.
 Well Senator Lindsey Graham was 71 and was up for reelection this November.
 We got a lot more to come here on morning call including the quantum fueled spec come back and why it may be the preferred choice for the sector over traditional IPOs plus
 Disney's live action dilemma as Moana fails to draw in the summer weekend crowds and later a deal for diller why shares of MGM resorts are popping ahead of the open.
 Better very busy hours still ahead one morning called returns.
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 Welcome back to morning call the IPO market is booming this year driven by mega deals such as SpaceX and
 even just SK high next which we were talking about as well but sparks are also back in fashion.
 Making up a large part of the action as companies are choosing them for a faster route to going public.
 They're also emerging as a preferred path for quantum computing companies with five already going public so far this year through
 SPAC mergers and several more in the pipeline IQM is the latest with the company going public on the Nasak through
 SPAC earlier this month they started trading on July 2nd and joining me now is IQM co founder and CEO Yon Getz.
 Yon it's great to have you back on the show. Let's start right there publicly traded company now.
 What is that enable that being private didn't.
 Yeah well thanks for having me and of course we are very excited of being now part of the publicly traded companies.
 It trades a lot of visibility for us as a company both in the US but of course also in Europe where we did the dual listing.
 And of course it provides flexibility going forward when it comes to financing the business when it comes to incentive packages.
 It also creates a quality stamp if you wish for the company because of the due diligence and all the financial checks that you need to undergo when you go through this process.
 So overall we are very excited about what's coming next and for us this is of course just one step in the journey of the company and we are very much looking forward of what comes next.
 Okay what does come next. What are you focused on here especially when you do talk about something like quality checks and I know ahead of going public you started engaging for example here in the US with the government more as well.
 Yeah so of course we are really driving the business forward we just announced a big deal where we sell a quantum computer into AI factory so it's the combination of quantum and AI which is really exciting for us.
 And we are going to connect the quantum computer physically in the data center to the AI machines.
 So we will push forward the commercial adoption and then of course delivering on the road map.
 We have a very ambitious tech road map on the way to developing quantum computers that are really commercially viable.
 And I think that's the big step for the whole industry as such is to creating quantum advantage which is when quantum computers really outperform big computing centers on the commercial scale.
 When you talk about installation and data centers how big is that opportunity and how does that change the data center economics moving forward.
 Yeah we are just getting started we are the company that has sold most quantum computers into data centers so far with the recent deal the number should be 24 systems that we have sold.
 But of course globally there are many many more data centers in the world so we see this actually as a very strong opportunity for us to drive the business.
 On top of this of course there is also a opportunity in the cloud which is something that we also offer with partners for example like AWS.
 And then on the application space we see additional opportunities there really bringing the use cases up to life.
 So we see the data center business as one part and a crucial part of the business but we see additional opportunities on top of that.
 Okay what are some of the other opportunities?
 Well I mentioned so on the cloud state we are just getting started and this will be a big part also in the US if you think about these business models selling into data centers selling through the cloud.
 This is clearly something where we have strong ambitions also in the US and we have products actually that can deliver so we can bring our computers right into the data centers deployed physically there and then work on the integration with the graphic processing units for example from Nvidia and others.
 So we see lots of opportunities then also on the application space there so I just mentioned the latest deal that we did with the AI factory.
 So this is really unlocking use cases in the AI space when you think about quantum machine learning or creating synthetic data for model training for example.
 How does all of this speak to the competitive landscape? I know some folks have suggested that D wave and regetti in a few of these other US players are your most direct competitors but how do you see all of this evolving?
 Yeah overall of course competition is a good thing and especially if you have big names there, watching for the quality of the technology and the potential of the technology that we are building.
 Overall the compute space we don't see it as a winner takes it all scenario but there are going to be a few dominant players and of course this is our goal here to be one of the globally leading players and having sold more quantum computers on premise in today.
 I think we have a very good standing there at the moment.
 Given all the quantum initiatives that are being rolled out by the Trump administration, are you engaged with the government? Are you talking with them about some of those opportunities?
 Yeah we welcome this very much and of course this is something that happens globally. We see governments around the world actually engaging big government programs also in Europe and the UK and in Asia.
 But in the US in particular of course we welcome the programs there.
 We have sold for example to Oak Ridge National Labs which is funded by the Department of Energy and we do see these programs also very attractive for companies like ours going forward.
 Okay Jan Getz it's great to have you back on the show. Thanks for joining me of IQM.
 Thanks for having us.
 Well first the Super Bowl then a Super Sale for the Seattle Seahawks. A new $9.6 billion price tag.
 This is something we touched on with Super Bowl Champ Marcus Colston just last week when it comes to these soaring sports evaluations.
 We're back after this.
 A lot of the obviously the valuations are catalyst. The media has been the biggest catalyst for a lot of these valuations.
 And I think the prediction markets and sports betting kind of pulled into that landscape.
 So the more that media continues to be, you know, continues to drive sports into more of the 365 year.
 365 day a year business.
 I think we'll continue to see different ways for fans to engage. We'll continue to see different ways for brands and sponsors to engage.
 We'll just continue to drive the drive the valuations and a lot of these teams and leagues.
 Which are America's top states for business? Get all the data and complete state by state analysis.
 See how your state measures are.
 America's top states for business. See the full list now at topstates.cnbc.com.
 Welcome back to morning call. Let's get a market flash and shares and meta platforms under pressure this morning.
 Not really basically flat, flat to the downside after closing up nearly 15% last week for the best one week gain since February of 2024.
 Stock now positive on the year meta writing away of a fresh investor enthusiasm following the string of AI developments last week including the launch of the company's new Muse Spark 1.1 model.
 And suspension of its Muse image AI feature over the weekend where it said that it quote misses the mark on user privacy.
 We're going to track that because they only just released that particular product earlier last week.
 But still on deck, the chip stock drop our morning call crew weighs in on Friday's SK Heinix debut today's sector sell off.
 And the big week we have ahead morning call is next.
 I'm Morgan Brennan. Welcome back to morning call. Let's get a check on US stock futures. The Nasdaq facing heavy selling pressure in the early going.
 The Dow is poised to open down 257 points as of pre-market action right now. The Dow is poised to pop this morning up 100 points.
 The S&P 500 though down at 23 points. That's the indicated open there. This of course after a mixed picture last week with the S&P and Nasdaq both posting weekly gains but the Dow following fractionally chip and memory stocks are leading the Nasdaq lower this morning.
 It's really bloodletting across the board as you can see right there on the screen. Anything that's tied to the AI infrastructure build out is in the red this morning.
 Including names like Micron, Western Digital, Sandisk, which has been very volatile as of late down 6.5% pre-market too.
 This on the back of SK Heinix, which was sharply lower in pre-market still is.
 You could see down about 8.5% right now and after steep losses in South Korea trading on the Cosby after that blockbuster Friday debut here in the US but on the Cosby this morning finishing down at 15% and dragging the broader index lower with it.
 One bright spot though could be Taiwan semi reporting a 36% pop in second quarter sales hitting nearly 40 billion dollars topping street estimates those sales numbers were up something like 68% year on year and Taiwan semi finished up 1% in trading in Asia.
 Treasuries as we watch the critical two year yield. You can see treasuries are higher across the curve and the US 10 year treasurer yielding 4.57%.
 Right now Fed sensitive to your treasurer yielding 4.21% of course we've got a lot of economic data including inflation data on tap this week and Fed share wash on the hill for two days of testimony the first time he's doing that.
 Well energy also in focus as oil spikes once again on renewed US Iran tensions and certainty about commercial ship traffic through the straight of Hormous.
 You could see WTI is of about 2% this morning trading just below $73 barrel and similar move for Brent which is trading around $77.50 a barrel.
 It's tested that $80 per barrel technical key technical level a few times but is bounced lower off of that are about gasoline also higher this morning around the world.
 Mostly red arrows across Asia after a steep sell off in South Korea that we just talked about Europe still a mixed picture here the taxes up fractionally and the French cat is trading about flat right now.
 We're checking some of the morning latest headlines Apple is doing open AI and federal court alleging trade a secret theft saying the chat GPT parent took Apple's intellectual property in order to develop its own consumer hardware.
 And from the filing Apple claims quote at every level from members of its technical staff to its chief hardware officer and in coordination with business partners open AI has been stealing Apple's trade secrets and confidential information.
 Well in a statement to CNBC open AI saying quote we have no interest in other companies trade secrets we remain focused on building innovative technology that empowers people everywhere.
 So we continue to track that MGM resorts meantime those shares are higher pre market to the tune about 3%.
 This after the Wall Street Journal reported that MGM resorts is moving forward with evaluating buried dealers June 1st offered to buy the company $12.4 billion valuation.
 According to the journal though MGM has set up a special board committee.
 Line of advisors to help evaluate the proposal also since suggestion that maybe that initial proposal is still too low.
 So we continue to track that Department of Justice is reportedly probing allegations that United auto workers president Sean Fain made moves to improperly benefit his fiance and retaliated against another senior union member who objected to those actions.
 Fain calls the allegations quote false and is accusing UAW vice president Richard Boyer of trying to influence the upcoming UAW election.
 Well the Seattle Seahawks say they're being sold to the Kosoa family in accordance with the wishes of late team owner Paul Allen according to the AP the deal values the defending Super Bowl champions at just over $9.6 billion.
 And Disney's live action remake of Moana flopping at the box office grossing an estimated $95 million globally against a $250 million production cost the film's $43 million domestic debut tying last year's snow white for the lowest opening of any Disney live action remake.
 And if we turn back to Washington the sudden passing of South Carolina Senator Lindsey Graham over the weekend coming out of critical time for his party and the causes that he has championed including Ukraine Emily Wilkins joins us now with more Emily.
 Good morning Morgan Washington and South Carolina both grappling with the death of Senator Lindsey Graham who died from a brief and sudden illness on Saturday night seems like that is related to his heart.
 He leaves behind the legacy in Washington as a foreign policy hawk he was able to work with president Trump even on issues where the two disagreed and he was also able to forge bonds across the aisle Trump told me the press that he spoke with Graham on Saturday evening and praise the lawmaker who once ran against him.
 I got a message about one o'clock in the morning from one of the people at his office that he had passed away. I said you got it. I just can't believe it. He was like a member of the family to miss very tough actually.
 Graham's passing means that South Carolina will be holding a special election on August 11th to replace Graham on the ballot for the Republican Senate nominee in South Carolina.
 I'm told Congresswoman Nancy Mace is seriously considering a run although she just finished fifth in a recent GOP primary for governor of South Carolina.
 Other potential candidates include Lieutenant Governor Pamela Avet and Congressman Ralph Norman.
 In the meantime South Carolina governor Henry McMaster will appoint someone to temporarily fill Graham's seat on Capitol Hill.
 Graham's passing has led to calls from Democrats to pass the package of Russia sanctions that Graham was influential in shaping.
 Graham is also a key senator on the judiciary committee which is set to begin considering Todd Blanch to become attorney general this week.
 We also got an update over the weekend from Senator Mitch McConnell who said he was initially hospitalized back in June for a fall and then got pneumonia.
 Now McConnell said he won't return to DC just yet but will still be able to fulfill other parts of his job and will not be vacating his seat.
 At least of course before the end of this year which at that point his term is up and he is set to retire. Morgan?
 Emily, a lot going on here in the Senate and certainly for Senator Graham may you rest in peace here.
 A lot of notes coming from strategists out of Washington in the wake of all of this.
 Roman Schweitzer from TD Cowan saying we're going to avoid comment on the larger political implications but we'll suggest that the already unclear pass for both reconciliation 3.0
 Fiscal year 27 appropriations have become completely unclear to us between what we've seen with Graham what we're hearing from McConnell.
 Similar commentary from Henrietta Trays who's a friend of the show as well including what this is going to mean for this Russia sanctions package that Graham was championing as well.
 Should we just expect more gridlock in the Senate moving forward here.
 I mean Morgan things were already difficult to get through the Senate because of narrow margins that only becomes more so here given of course Graham passing as well as McConnell's now temporary absence from Washington DC.
 Look I think reconciliation 3.0 that was always going to be reached it was always going to be a stretch you've heard senators like Susan Collins come out and just say publicly that that is not going to happen.
 Now of course the appropriations the funding the government part there is more momentum to do that I think there is still momentum to try to figure out a way to get a potential military supplemental done to get more funding to the troops.
 But the fact of the matter is is that while lawmakers finally come back to DC today after a recess for the July 4th holiday they only have a handful of weeks left.
 They need to pass the defense authorization bill which you and I know is incredibly important they have to start making work on funding the government for the fall.
 That loan is going to take up a lot of time and once that's done there's really not a lot of space and oxygen left for some of these larger battles on things like Russia sanctions.
 Okay Emily Wilkins thanks for joining me and breaking all this down for our viewers appreciate it.
 A lot more to come here on morning call including the wild moves that we've seen across the commodity sector from coffee coffee sugar cocoa you know what I'm saying you know what I'm saying it's all about the weather we're going to speak with Wall Street weatherman next about that morning called right back.
 Welcome back let's take a look at the three soft commodities that have been on a wild ride coffee sugar cocoa we're going to start with cocoa coming off a more than 20% pop last week best weekly gain since May of last year it's now sitting its highest level since January.
 I mean look at this chart it's been wild we're basically flat on the year now we've gone right back to where we were at the highs at the beginning of the year that's despite falling more than 6% Friday and as you can see we're under pressure again today.
 But cocoa has rallied sharply over the past three weeks as heavy rains have restricted access to farm supports also increasing the risk of crop disease.
 Traders are watching the potential development of El Nino as well which could bring hotter drier conditions later this year create another threat to global supplies.
 See a massive move in coffee prices as well this is when I watch very closely as your anchor of morning call bright early here in the US it's up more than 30% in the past month.
 It's now at a five and a half month high you can see that chart right there another wild one heavy rains continue to delay Brazil's harvest while El Nino could put could eventually bring damaging heat and dryness to other key suppliers like Vietnam Indonesia and Brazil.
 And let's take a look at sugar as well because that hit a nearly two month high to India's monsoon rains are running below normal while Brazilian mills are diverting working into ethanol.
 Once again El Nino could further reduce rainfall in India and Thailand and keeping weather risk front center across all three of these charts and more.
 We've got Dan Leonard he's director of forecasting at Matt desk the so called Wall Street weather man Dan it's great to have you back on the show let's start right there what are you tracking in the weather forecast and how does that now translate to the agricultural ones.
 Is there any more important commodities Morgan and coffee and cocoa I mean I don't think I could live without those and we are definitely going to see some impacts coming up we're already starting to see it especially across Indonesia and parts of the maritime continent these areas tend to be very dry during strong El Nino years and it looks like we're already starting to see that happen.
 Drought will likely be a major impact here and you know it's interesting another commodity that a lot of people on think about but I actually spoke at a conference a couple of weeks ago is palm oil.
 This area of Indonesia and maritime continent is a really big producer palm oil and of course this goes in almost every sort of prepackaged thing that we eat and that is probably going to be heavily affected by likely drought through the winter months there as well.
 So it's not just the major inputs it's also the secondary ones like palm oil they're going to make things more expensive for us likely by the time we get to early next year.
 Yeah I know they use the palm oil in Nutella which is a big product in our house as well so in light of all this we just take a step back what tends to be the impacts of El Nino's how should investors understand how that plays out and weather and thus prop yields in historically.
 Yeah well obviously El Nino simply a measure of sea surface temperatures in the Pacific and what we're really concerned about is meteorologists is the feedback cycle does the sea surface temperature in the Pacific actually get into the atmosphere and create patterns which can cause problems worldwide and the answer normally is yes.
 This time around we have super El Nino I don't think there's any way around it all the data I look at suggests this is going to compete or perhaps it eclipse some of the all time grades like 82 97 2015 these were all very intense El Nino years and remember we had one a couple of years ago that kind of it looked like it could be really good 2023 but it kind of fizzled at the last second but it doesn't matter you still get big impacts if you get a moderate to strong El Nino.
 And now we have a super El Nino so you're going to see major impacts with this now for the US it's actually slightly different because a lot of the people I talk to energy traders they're not concerned at all this is likely going to be a mile winter for the US and for energy purposes they it's a collective shrug it's like well looks like we're going to have a warm winter for the US so nothing to worry about.
 So you know it's a give and take some commodities get hit hard and prices go up other ones like the actual gas for example likely to come down okay.
 Dan Leonard it's great to have you on always great to get your insights on all of this appreciate it.
 No problem Morgan straight ahead morning call crew seeing up the trading day ahead including the wild card one crew member has circled for the second half.
 It's time for your call sheet crew members today Gina Martin Adams of HB well Keith Buchanan of global investments in James Pathakukas of the American Enterprise Institute also CNBC contributor lot to get to for what's going to be a very busy week potentially.
 Gina I'm going to kick this off with you geopolitics what we saw between the US and Iran over the weekend what's doing to energy prices.
 Yeah I think it's really interesting because when we look at the broad market energy prices have definitely bounced back a little bit commodity prices at large have bounced off of a pretty critical low a few weeks ago.
 But it's not materially impacting the dynamic of the equity market on other than the fact that over the last week we saw a little bit of rotation into large caps higher quality safety names.
 It doesn't look like it's going to be a predominant impact or in particular with the earnings season coming up.
 Okay Jimmy want to get your thoughts especially since we saw the passing of Lindsey Graham unexpectedly this weekend we got a health update on a senator McConnell as well.
 What does all of this mean with Congress back in session when you talk about increased strikes and questions about the state of the MOU.
 Yeah listen Lindsey Graham was an important player both on domestic policy and foreign policy both Iran and the Ukraine.
 So to accept that you have like a strong voice gone not to mention an empty sentencing that adds I think a lot more uncertainty.
 I think you know looking forward to the elections I think it probably makes it you know marginally less likely that the Republicans hold the Senate only marginally.
 If you look at the betting markets they really haven't changed a whole lot.
 So I think for now it's a really a policy oriented sort of a event which makes getting lots of things through Congress I think a little bit a little bit more difficult.
 Good luck in Congress we've never seen that before.
 It happens down again.
 Keith it does seem like various markets asset classes continue to take their cue from oil and energy prices here.
 So what does that mean particularly when you talk about something like the bond market and we could we do have all of this economic data including inflation readings on tap.
 Sure we feel like that fees into a road tenuous time for markets as we're coming to an earnings season as well.
 They have to either confirm or perhaps even rebut the expectations that the market is priced in a mid 20% earnings growth year over year which is a very high clip we're not coming out of some type of crisis.
 So we're looking at all those factors kind of coming to an head right now of next couple of weeks as we price all this into everyone.
 It's pricing this into their models and expectations for the second half of this year.
 Yeah I mean CPI tomorrow yet PPI retail sales NFIB because I keep an eye on that because small business is a very different dynamic.
 I think that some of the bigger names that will report earnings and that can navigate some of these things a little bit easier arguably here.
 And then you got washed on the hill. Yeah. What do you think it's going to matter here for markets this week.
 I think this week will be mostly about the tee up of the earnings season but it is early in the earnings season.
 So this week you've got financials reporting that's incredibly important because financials have actually been the market leader.
 We haven't talked about it enough because we're also captivated by what's happening in the Middle East and what's happening with technology.
 The financials have been on a slow comeback over the course of the last month.
 Will they be able to sustain that is going to be critical. I think Worsh's second to that.
 We still can't drop the ball on the Fed because we are at this moment in time in which inflation pressures have been rising.
 The Fed is at a critical moment of change with Worsh at the helm.
 What is going to happen with the Fed in the second half this year is still critical but in any earnings season that is always the predominant driver of stocks.
 Jimmy, I see you nodding your head there and we'll talk about Humphrey Lacken's testimony. Is this consequential for a new Fed chair?
 I think it's consequential. I think it's historical. I think it's comparable to a Greenspan in the mid-90s.
 Try to figure out what to do about productivity growth and raising rates with the Internet.
 I don't think Congress is going to care, at least it shouldn't, much about the Kevin Worsh task forces.
 What do you think the inflation picture looks like, especially with Iran seeming to slightly reignite, but really with AI?
 The Worsh theory has been that AI is going to boost productivity growth and it could be actually a distant inflationary.
 That's not the way it looks at the moment. It looks like a demand story. It does not seem to see a productivity story yet.
 I think there will be a lot of conversation. Congress is already interested about AI, but there will be a lot of conversation about Worsh thinks about how AI is going to affect his job going forward.
 We've got 30 seconds, Keith. I want to get your thoughts on how it's going to funnel into earnings here.
 Sure. We're looking at it from a banks perspective. I think one stage really gets into the expectation for a second half of this year.
 It'll give us a little more color rest to the net interest margins of how they're pricing in the interest rate picture going forward.
 I think they're kind of boots on the ground as to how this plays out.
 Of course, as the political and monetary policy kind of funnels in over the third quarter, we have a clear picture for the end of the year.
 A lot of that's in flux right now. We don't know how many hikes, perhaps if they're all going to meet in hikes for the rest of the year.
 Inflation is also a wild card as well.
 Okay. Thank you to our morning call crew. Great to have all of you here.