Morning Call 7/10/26

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 Wall Street welcomes another Black Buster debut.
 I'm Morgan Brennan and this is your morning call.
 Good Friday morning and welcome everyone.
 We're glad that you're with us as today's show embodies what we're all about.
 It's an extra special hour today, access.
 How investors can gain access to new ideas, new companies, new markets.
 That is the theme throughout this hour but let's get right to the markets
 and get a check on where we are with futures.
 On this final trading day of the week, see it's a mixed picture right now.
 Dow poised to open up 86 points.
 S&P down 18, Nasdaq poised to open down 146 points.
 This is after all the major averages finished higher yesterday
 and we are poised for a mixed picture for the week with the Dow fractionally lower.
 This of course after touching record highs multiple times earlier in the week.
 And the Nasdaq and the S&P 500 as of right now holding onto gains for the week.
 The big focus on global chip stocks ahead of SK Heinix's first US trades later today.
 We're going to have much more on that in just a moment.
 But you can see shares of SK Heinix right now down a fractionally in South Korea.
 Treasuries ahead of a very busy week for bank earnings and the Fed.
 That's what's going to be on tap next week.
 We're going to be digging to all of that with our morning call crew ahead.
 You can see yields on the screen right now taking a bit of a breather
 for the most part across the curve.
 US 10-year treasurer yielding 4.53%.
 Keep in mind we're still higher than where we started the week.
 And US 2-year treasury, that Fed sensitive 2-year treasury yielding 4.16% right now.
 Energy, let's get a check there as we see crude prices move a bit lower here this morning.
 And as the US says it remains committed to talks with Iran.
 And even just a short while ago the IEA saying that demand global oil demand is set for its first decline since the pandemic 2020.
 You can see WTIs down fractionally trading just below $72 barrel.
 Brent basically flat trading on $76 barrel are about gasoline down 1% right now.
 A tour top story, US investors bracing for the US public market debut of South Korean memory chip giant SK Heinix.
 This will be on the NASDAQ today.
 What's to become the largest ADR listing ever?
 Ahead of the first trades SK Heinix says it raised $26.5 billion selling $177.9 million American depository receipts ADRs at $149 each.
 Each of those is equivalent to 1-10th of a South Korea traded common share.
 Now at $26.5 billion the offering surpasses Alibaba's 2014 US IPO to become the third biggest listing globally in history that's behind SpaceX and Aramco.
 It's said to be seven times over subscribed coming into this.
 SK Heinix ADRs are priced at a premium over the average share price that is trading in Seoul.
 But the company hopes to close the valuation gap by accessing the hugely liquid US markets.
 American memory chip player micron trades at a 12 months forward price to earnings ratio of 6.6 times versus SK Heinix's 5.5 times.
 Now this despite the fact that SK Heinix is leading supplier of high bandwidth memory chips globally.
 This is a critical component for advanced processors that are powering global AI systems.
 And it is the biggest memory partner to Nvidia.
 Speaking of Nvidia, even as memory stocks have surged this year and they certainly have even with a recent breather.
 The AI chip leaders fell to or Nvidia, the AI chip leader known as Nvidia fell to its cheapest valuation since early 2019 before breakthroughs in Gen AI were realized.
 And after shedding a trillion dollars of market value in less than two months, you could see shares are lower here pre-market again.
 shares are now down more than 14% from the may record high.
 And trading on par with the S&P 500 at 22 times forward earnings and below the NASDAQ 100's overall valuation as well.
 Let's see how Europe and Asia are shaping up ahead of all of this.
 Karen Cho is in London and Lisa Kim is in Singapore.
 Lisa, let's kick it off with you.
 Hey Morgan.
 So agent stock markets wrapped up the week in the green as the AI trade state intact at SK Heinix's US debut was top of mind for investors.
 It was a choppy session for the chip maker was closed down three tens of a percent.
 Still, SK Heinix's massive US debut is a remarkable milestone because in the early 2000s, that company was almost sold to micron and it shares were viewed largely as a penny stock.
 So going forward investors will be monitoring if the company will be able to narrow the valuation gap with its American rival micron.
 And let's go over to Hong Kong and China stocks there advanced things to improved investor appetite around Chinese AI and tech.
 Driving much of that sentiment was Chinese chip makers CXMT's filing for a sizable IPO in Shanghai.
 This is a company that's been blacklisted by the Pentagon and the same one that Apple has reportedly asked the US government for access.
 Lisa Kim, thank you. I hope you have a great weekend.
 Let's get to the early action in Europe and our very own Karen Cho who's also had a very busy week this week.
 Good morning Morgan. I think everybody has moved on to the football.
 We've got a really muted trade here in Europe this morning after all that action.
 Front end of the week.
 Traders are closely watching the latest developments out of Middle East with chip stocks also in focus.
 The pan-European in stock 600 is on pace to snap a four week winning streak.
 So we are in the red even before this session.
 Roughly done about 1.8% versus 3.4% in the red for the Dow.
 And actually gains on the Nasdaq.
 So we have seen slippage here.
 We're not recovering much territory.
 And in fact, we've drifted off the highs of the session with a little bit of red now creeping into German and French names.
 A couple of big corporate news stories we're watching though today.
 EasyJet has agreed in principle to a five pound and 15 pence per share.
 Take over offer from the US asset manager Apollo Global, valuing the low cost airline at 5.7 billion pounds.
 At Beatsay, rival offer from US firm Casterleg, which valued the company at 5.5 billion pounds.
 A big lift and easyJet stock.
 And on the political front, Annie Burnham is all but certain to be the UK's next prime minister.
 After winning the support of 322 of the Labour Party's 403 MPs.
 If just one more lawmaker lends Burnham their support,
 it would be mathematically impossible for any rival challenger to throw their hat into the ring.
 Assuming he secures another nomination, Burnham is expected to be crowned Labour leader next Friday,
 before becoming prime minister on the 20th of July.
 Morgan, back to you.
 All right, we'll keep an eye there. Karen, shall have a wonderful weekend.
 The SK high next US listing speaks to the growing demand for retail investors.
 Buy retail investors were expanded access to global markets 24-7 trading.
 Major exchanges like the New York Stock Exchange and Nasek have filed with regulators to offer
 near around the clock trading on weekdays and platforms such as Robinhood allow overnight trades.
 Joining me now is Armani Ferante, co-founder and CEO of Backpack,
 which is launching the first 24-7 trading of US equities for international investors.
 Armani, it's great to have you on the show and it's interesting.
 I feel like we opened up the hour talking about giving international companies greater access to US markets.
 But now you and I are going to talk about giving international investors greater access to US markets as well.
 So what does that mean for Backpack?
 Yeah, thank you so much, Morgan. I'm super excited to be here.
 Good morning. Maybe I should say good evening, given I'm calling in from Tokyo.
 I just real quick, you know, Backpack is a modern brokerage, but we're not just a brokerage.
 The product looks and feels a bit like a neo bank, but it's not correct to call it a bank.
 You know, we're a crypto exchange, but not just crypto exchange.
 Backpack is a globally regulated financial institution for the future of money.
 And right now we are in the early endings of this incredible transformation of global finance all around the world.
 And this is being built on the back of tokenization.
 It's being built on the back of blockchain technology.
 And this is really what the crypto industry, which, you know, admittedly,
 and might feel a bit mysterious sometimes, this is what the crypto industry is all about.
 And so we're super excited to be going live with 24-7 trading of real US equities through the brokerage for the first time going live today.
 I'm going to be more excited about it.
 Yeah. And to your point, I mean, we've heard a lot about tokenized securities and sort of,
 and the role that blockchain is playing and enabling this financial infrastructure,
 financial services infrastructure of the future.
 But how is what you're offering when we talk about specifically the stocks themselves?
 How is this different than what else is out there?
 Yeah, it's a great question. Really boils down to what is the asset you're trading?
 Right? Are you trading a genuine stock, a genuine security entitlement,
 or are you trading something else? You know, maybe taking a step back for a moment.
 24-7 trading has been around for a while in crypto.
 This was really the core innovation that tokenization initially brought to the world.
 And if you take a look at what the tokenized stock issuers are doing today,
 what they're really doing is they're taking, you know, a traditional brokerage,
 they put stocks into it, then they wrap it into a completely separate security,
 a completely separate instrument that has, well, has different properties than what you would expect from a traditional brokerage.
 You know, these properties might be different legal rights. They might be cash settled.
 And so they might be more akin to something like a CFD rather than an actual security entitlement.
 And so when you're going back and forth between these different representations of different assets,
 even though it might be the same symbol, at least at the surface,
 really what we're talking about most of the time is we're talking about these derivatives
 for synthetic assets that are these approximations for giving price exposure to an actual stock.
 And so what we're doing is really for the first time,
 opening up 24-7 trading for a genuine, bona fide security entitlements.
 You know, markets will close on Friday in the U.S.
 And over the weekend, Saturday and Sunday,
 people through the backpack brokerage will continue to trade
 and they'll get the exact same asset that you would expect from your neighborhood brokerage account.
 Yeah. Okay. And you're starting with three names that have been pretty heavily traded this year.
 Micron, Sandisk, and I realize it's only been trading for less than a month here, but SpaceX as well.
 What does 24-7 international access for what does that mean for the global capital that's flowing into the U.S. stock market,
 especially at a time where really over the last I'd call it year and a half,
 we've actually seen some of those international investor flows flow out of things like the U.S. bond market.
 So Jetson Huang from Nvidia, he loves to say that the world needs to build on the American tech stack.
 But we don't talk enough about the world building on the U.S. capital market.
 And that's really the thing that's happening with crypto right now.
 And there's no better example of this than what's been happening with stablecoins
 as they exploded over the past couple of years.
 Where, you know, what's a stablecoin, right?
 It's, you know, you've cashed in a bank account, you tokenize it, you put it on blockchain.
 Maybe from a domestic point of view, a stablecoin is a story about efficiency,
 a story about upgrading the existing financial system.
 But when you look internationally, it's a very different story, right?
 It's a story about access.
 It's a story about the entire world wanting access to U.S. dollars,
 even if they don't have access to local U.S. banking rails.
 And the consequence of this has been pretty clear over the past couple of years,
 where you have circle, you have tether, grow to be, you know, some of the largest holders
 of U.S. treasuries all around the world.
 And so in the exact same way that U.S. dollars have really been exported to the entire world
 and proliferated through kind of the form factor of a stablecoin,
 you know, we fully expect tokenization of U.S. equities to have the exact same effect,
 but for publicly traded companies in the U.S., all around the world.
 Super interesting.
 A trend will continue to track here.
 Armani Ferranti of Backpack, great to have you on.
 Thank you.
 Yeah, thank you so much, Morgan.
 Well, and speaking of SK Heinex, be sure to catch SK Group Chairman on CMBC
 at 10 a.m. Eastern before that stock opens,
 that's going to be a conversation you don't want to miss.
 A lot more to come here on morning call, though, including Sam Opens,
 number two stepping down as the AI competition heats up.
 But first, taking on the Titans, the under the radar and private defense sector plays
 that are taking on the likes of Lockheed, Ray Pion and Moore.
 We've been talking about access, right?
 We're going to share more in that sector, specifically,
 how you can get a piece of the early action.
 And later, the cable playbook, why Netflix is reportedly weighing
 as it looks to challenge YouTube for screen time.
 We have a very busy hour still ahead with morning call returns.
 Which are America's top states for business?
 Get all the data and complete state-by-state analysis.
 See how your state measures up.
 America's top states for business see the full list now
 at topstates.cnbc.com.
 Welcome back.
 Let's get to the Middle East, a developing story,
 officials confirming to MS now that the U.S.
 will continue to engage in, quote, technical talks with Iran.
 It remains committed to finding a solution to the conflict.
 This despite recent back and forth strikes in recent days,
 President Trump on Air Force One reiterating Tehran still wants
 to make a deal.
 And they want to make a deal so badly.
 They called a little while ago.
 They want to make a deal so badly.
 I just don't know if they're worthy of making a deal.
 I don't know if they're going to honor the deal.
 The President's comments coming at the tail end of this week's
 NATO summit that saw the Alliance recommit to bold defense
 spending targets with Russia and the Middle East both in focus,
 joining me now with a new way.
 Investors should be looking at all of this.
 Is Andrew King, General Partner at Bestial Capital
 and Future Union President.
 Andrew, it's great to have you on.
 I just had this conversation on the show 24 hours ago.
 And that was the fact that since the start of Operation Epic Fury
 at the end of February, all of the biggest defense contractors
 that are publicly traded are actually lower.
 Most of them by double digit percentages,
 despite the fact that we're hearing about these partnerships,
 these deals, and record defense dollars going to the sector.
 How does it speak to this rotation that we're seeing into
 a bigger, more robust, private defense ecosystem?
 Yeah, good morning, Morgan.
 I'm very much appreciated.
 You're right.
 I mean, you know, we got very frothy in the defense market.
 And there's other ways to play other than just the public markets.
 What you're seeing is a rotation into other public companies.
 I'm in Sweden today and saw a viso big player.
 There's a lot of other options.
 And as we diversified that base outside the US,
 it becomes a much more of an allied international play.
 And we are coming out with the allied defense league,
 which specifically focuses on the 300 companies
 that are the most important to compete against adversarial countries,
 many of which, one third of the list, is international,
 which we've never seen before.
 Okay. And you just touched on it.
 But what is the allied defense league?
 And what makes it different than other indexes
 that we see in the marketplace?
 Well, what we decided to create was basically the outcomes.
 So we focused much more on what the performance is
 and the contract revenues that are coming from the government.
 A lot of the other lists that are out there
 tend to focus on the venture capitalists, which I have won.
 But that being said, I think it's much more important
 than what are the goals that we're accomplishing?
 Again, in the consumer segment, we think of this as
 what's the job to be done, what does the consumer want?
 And the defense area that just happens to be nation-states.
 And the critical question is, what are we actually delivering?
 And if you look at other international allies like Ukraine,
 Israel, even Turkey, they're delivering very high quality
 performance-based outcomes instead of marketing.
 Yeah. So in light of that, what does that mean
 in terms of where the demand signals are,
 the types of technologies, the capabilities,
 the trends that are emerging around all of this,
 especially as we do come out of this charged NATO summit?
 Yeah. Well, our all-world 300 defense 300 list
 lists the top 300 companies across the world.
 And like I said, 92 of the 300 area national master was 84.
 And if you look at that, you realize that the US still owns
 the AI that compute the strategic resources,
 but increasingly the allies own the strike verticals,
 the iterative, iterable drone type things that are outside of the core.
 And that's been a trend that's persisting over the last six months,
 nine months, year, as the US does partnerships to bring Ukraine
 and other countries into the defense ecosystem.
 So I think instead of thinking US hegemony,
 now we're thinking this is an allied play,
 that's how we win in the future.
 And you see that from even the Patriot missile decision
 with partnering with Ukraine.
 Yeah. I'm going to throw a curveball at you perhaps here.
 And that is the fact that Blue Origin, Jeff Bezos,
 Blue Origin is raising $10 billion.
 First time that that company's ever taken outside capital here,
 $130 billion valuation.
 But how does space, especially when you have some very big players,
 like Blue Origin now, emerging with more access in the private markets?
 How does that factor in?
 Well, if we look at it, space is its entire own category.
 We listed across our allied defense league.
 There's eight different verticals and 300 companies.
 Space is one of those eight.
 Space is dominated by the US, as you might imagine.
 But there's other players that are coming out like I saw
 and others that do some very interesting things
 and are really critical to the allied play.
 As I look at the amount of money that's going to be raised in the space,
 it's not just the US, but it's international.
 And all of the allied international countries,
 such as Luxembourg and some of the other space players,
 are really getting into the act.
 And you're going to see a lot more IPOs,
 but it's an arms race too.
 And like AI, space is the next frontier
 where we're looking at how much can you raise and how fast can you grow.
 And I think if we look at Blue Origin as an example,
 they're competing just as much.
 And frankly, in the last few years, they've had some mishaps.
 So I think it's not surprising to see that change.
 Okay, Andrew King, great to have you on.
 Thank you, Morgan.
 We'll start ahead.
 It's not just sports fans, wine investors.
 Our starting to take a closer look at the red hot sector.
 We're going to speak with former NFL wide receiver,
 Super Bowl champion, Marcus Coleson.
 He's going to be here on set on how you can get a piece of the action.
 See, we're continuing with this access theme today.
 But first, we're watching Shares of Volkswagen.
 After the company says it plans to cut its model line up by as much as half,
 as part of a cost savings push.
 VW currently offers roughly 150 model lines across its brands,
 like Porsche Audi and commercial vehicles.
 You can see those shares are down 1% in European trading,
 warning call, if you're right back.
 Which are America's top states for business?
 Get all the data and complete state-by-state analysis.
 See how your state measures up.
 America's top states for business.
 See the full list now at topstates.cmbc.com.
 Welcome back to morning call.
 Let's get a check on some of the morning's latest headlines.
 OpenAI's number two executive, Fiji Simo,
 says she plans to step down from her full-time role after an extended medical leave
 and pivot to a part-time advisory position at the company.
 Simo previously was chief executive at Instacart and head of the Facebook app Meta.
 She was among the three directors that joined OpenAI's board in March of 2024
 after Sam Altman returned as CEO.
 Well Netflix is reportedly exploring live TV and bundles
 as it looks for a leg up on rivals like Google's YouTube
 after including adding live channels and packages
 with other subscription-based streaming services,
 including NBC Universal's Peacock.
 Sources tell CNBC plans are still in the early days
 and that it remains too early to say exactly how or whether
 Netflix will build this approach out any further.
 This, as businesses had reports at Disney,
 is adding a free tier to Disney+.
 You could see shares of all three of those companies,
 Netflix, Kongpask, and Walt Disney are up this morning pre-market.
 Netflix, the big mover, up 1%.
 Federal Reserve Chairman Kevin Warsh meantime releasing names of the export experts
 who the Central Bank says will comprise five task forces
 to examine the Fed's operations.
 Now among those involved venture capitalist Mark Andreessen,
 former Bank of England governor, Mervin King,
 former Walmart CEO Doug McMillan.
 It's actually an all-star list of folks
 in the econ and business world as well as the tech world.
 Commerce secretary Howard Lutnik, though,
 calling on Samsung, SK Heinecks,
 and others to expand memory chip production in the U.S.
 to help address the global shortage,
 adding that he's already engaged
 with both South Korean chip giants.
 And this coming after Micron yesterday
 said that it plans to increase its spending on new plants
 in the U.S. to $250 billion plus,
 creating more than 90,000 new jobs in the process
 that was an upping by to the tune of $50 billion
 with that news yesterday.
 Shares of EasyJet taking off in Europe
 amid a new bidding war for the budget carrier.
 The company now says that it is weighing a new $7.7 billion
 takeover bid from Apollo.
 That's after earlier this week agreeing,
 in principle, to a $7.3 billion takeover offer
 from private equity firm Castle Lake.
 You can see Shares of EasyJet are up 14% right now.
 Still on deck though, speaking of airlines,
 we're going to be getting results for Delta.
 Reporting in just under an hour from now,
 about 30 minutes from now,
 we're going to lay out what you need to watch ahead of the tape
 and which airline Jeffries likes more than the rest.
 Morning call continues next.
 I'm Morgan Brennan.
 Welcome back to Morning Call.
 Let's get a check on U.S. stock futures,
 which are mixed this Friday morning.
 The Dow is poised open of 111 points.
 The S&P down 12 and the NASDAQ down 110, 111 points.
 This after all the major averages surged yesterday
 and brought the S&P and the NASDAQ to gains on the week
 for the Dow though, fractionally lower as of right now
 for the week.
 That, of course, after it hit record highs
 in several trading sessions earlier in the week.
 We have the big focus on global chip stocks ahead of SK Heinex's
 is a first U.S. trades today.
 Pricing 80R shares at 149 apiece,
 raising more than 26, raising about 26.5 billion dollars,
 which makes it the third largest listing globally in history.
 And those shares in South Korea finished down fractionally
 ahead of that treasuries though.
 Let's take a look there ahead of what is going to be next week,
 a very busy week for bank earnings and the Fed.
 You could see right now we're taking a bit of a breather
 across the curve here in terms of yields.
 Other than the two year treasury, which is up a bit here,
 4.16%, but the 10 year treasury yielding 4.52%.
 Keep in mind, we're still higher than we were in yields
 at the beginning of the week.
 We're going to be digging into that with our morning call crew
 straight ahead.
 Everything we just touched on actually.
 But energy, we're also going to get a check there
 as the U.S. says that it reans committed to talks with Iran.
 And as the IEA says, the demand is set for the first time
 since 2020 to decline this year annually for oil.
 You could see WTI is down 6.10% trading around $71 a barrel
 and Brent is down about 6.10% the 1% as well trading around $75 a barrel.
 Around the world, green arrows across Asia was Japan jumping
 more than 1%.
 Europe is lower to mixed in early trade as well.
 And we're going to give you a market flash on shares of Boeing.
 Because federal regulators reportedly set to certify the company's
 next iteration of its hugely popular 737 jet later this month.
 This after years of delays, the 737 max 7 is the smallest version
 of the single aisle max models.
 Those shares are up fractionally this morning.
 Let's get to earnings though.
 Delta airlines, set to report its latest results in about half hour.
 Shares are up some 30% since its last report with a stock
 sitting just 7% from its July second all-time high.
 It's unchanged right now.
 But today's report comes just days after the carrier unveiled
 a new basic business class.
 Seat assignments near the front of the airplane but without perks
 like receipt selection or airport lounge access.
 Delta and others have been relying on growth in premium seating
 to offset lost rising costs, tied to surging jet fuel prices
 and capacity cuts.
 So joining me now in CBC Newsline with more is Sheila Kailu,
 equity analyst at Jeffries covering airlines and so much more
 when it comes to aerospace and defense.
 And Sheila, it's great to have you on the show.
 What are you watching for Delta this morning?
 Thank you so much more Morgan.
 We think the positive trends for Delta and the rest of the
 airlines existed to the print.
 So for Delta, what we're watching is what Q2 revenues look like
 and what they're going to guide for Q3.
 So Q2 revenues, we think unit revenue prices are up 13%.
 Don't forget April incorporated lower ticket prices.
 So we think the exit is about high mid teens in terms of ticket prices
 and that's what we expect for Q3 as well.
 Another thing we're watching and a slight negative on Delta is cost.
 The company is seeing some additional costs when it comes to their pilots.
 And so we're watching those two updates as this is a bell weather
 airline for how we think about what's going on in the airline industry.
 And Delta above all, has been able to continue to take premium demand to different levels.
 Yeah, I mean, you just touched on it, but I want to dig a little deeper here.
 And that is the fact that they have been able to engage with unlock,
 lean into that premium and high end traveler here and help offset
 things like rising fuel costs and perhaps some of the other costs
 and capacity constraints that we've been seeing for the airlines.
 But overall, how does it indicate what we could see from airline
 earnings overall this season, especially given the fact that we've had such a turbulent
 first six months of the year?
 Yeah, sure. I mean, you know, overall, we think all the major carriers
 are going to see fairs of 15 to 20 percent for Q2 and heading into Q3.
 Ticket prices have been essentially deflationary and airlines are finally getting their day.
 At least in the US, we're not seeing that same trend in Canada,
 but US carriers, I think, are going to be able to hold on to these ticket prices.
 And so it matters what happens in 2027, although airline investors don't think that long-term sometimes,
 but can we see these 15 to 20 percent ticket prices hold?
 I think so, for sure, at least through the rest of the year.
 So that's a trend, and then airlines are looking into the premium race.
 How could we add more seats? How could we segment more,
 whether it's in the premium cabin or whether it's in the main cabin?
 How could we inch out every additional dollar to contribute to the bottom line?
 I mean, there's been a lot of focus on the pressure that we've seen in budget carriers here in the US.
 I mean, you had the Spirit Airlines bankruptcy on the one hand.
 On the other, just this morning, shares of easy jet in Europe taking off
 as we see a bidding war emerge there.
 So how to think about that end of the air market?
 Sure. In terms of the US carriers, the three network carriers,
 United Delta American, comprised about 60 percent of the market,
 then Southwest is a fourth runner up.
 It's been great for them that there's been capacity coming out of the market,
 given higher jet fuel.
 We've now seen, you know, about 5 percent capacity cuts,
 but capacity year over year is about flatish, which is fine.
 It's a good set up in that it creates an environment for pricing creases,
 or for the big carriers in the US across the board,
 not only in the premium cabin, but obviously more in the main cabin,
 which has been troublesome for them.
 Main cabin pricing ticket figures there have been down year over year in 25.
 So that's what's happening with the lower cost carriers going out of business
 and exiting the market.
 It's allowed for better pricing in the main cabin for the major network carriers.
 And even Southwest is looking to change its game by resegmenting,
 adding extra leg room, adding the sign seats.
 The European market is a little different.
 You could go on where there for $30 for less than an Uber ride to your office.
 So that is a different game I would not want to be involved in,
 because it's hard to compete in that premium regional European network game.
 Got it.
 Sheila Cuyola, great to have you on.
 Thank you for joining me.
 Thank you.
 Be sure to catch Delta CEO Ed Bastion live on Squawk Box in the 70th
 Eastern hour following those results.
 We've got a lot more to come here on-boarding,
 calling, including a former NFL wide receiver and Super Bowl champion.
 Marcus Colston is here live on set all about investor access
 to an investing world once only reserved for the world's wealthiest.
 But first, we're watching the price of cocoa.
 Hitting its highest levels in January on West African weather risks.
 Super El Nino.
 So affecting a lot of the agricultural commodities right now.
 Cocoa prices have rallied sharply over the past three weeks
 as heavy rains in the Ivory Coast and Ghana have flooded roads
 cutting off farmers' access to farms and ports, threatening global supplies.
 I can see futures taking a bit of a breather here this morning.
 But something to watch when we get all those packaged goods,
 companies, and candy makers reporting earnings in the next couple of weeks too.
 Stay with us.
 Welcome back.
 It's been a hot summer for sports with all the excitement surrounding the World Cup,
 the New York Knicks, winning their first NBA title in more than 50 years.
 But outside of a few franchises that are publicly traded,
 such as Manchester United,
 investing in teams and sports-related assets has largely been limited
 to those with deep pockets until very recently.
 So joining me now is Marcus Colston,
 managing partner of Champion Capital, co-founder of the Champion Fund.
 He's also a former wide receiver in the NFL for the New Orleans Saints,
 winning the Super Bowl in 2010.
 And joining me here on set is great to have you.
 Appreciate you having me this morning.
 All right, so we're talking about access to more people and more fans
 when it comes to sports and sports investing.
 What does this look like, and what are you bringing to market here?
 So we have brought what we call a Champion Fund to market.
 And what it is, is it's an interval fund that creates access
 for both accredited and non-accredited investors to invest inside the sports ecosystem.
 So traditionally, like you mentioned, it's been a world that's been pretty inaccessible
 to most investors.
 And most of the conversation has been around what I call the big four leagues
 to NFL, NBA and NHL and MLB.
 And what we're doing with Champion Fund is it's an interval fund
 which allows us to take all of sports as an asset class,
 kind of dump it into a managed portfolio and then give access to both accredited
 and non-accredited investors as a platform.
 Yeah, and for as little, you combine for as little as $500.
 I see here.
 Where are you going to go?
 Where are you targeting investments?
 Like, would you go after those big four leagues or are you focused elsewhere?
 No, we're really focused elsewhere.
 We call it the value chain.
 So what we've done is we've taken the sports asset class as a whole
 and we've broken it into five sub asset classes.
 The first is sports assets, which are going to be the teams and leagues themselves.
 For us, it's typically going to be emerging leagues like a kin to the PLL or Unrival.
 The second sub asset class is sports venture.
 It's going to be growth stage, tech enabled assets,
 could be fan engagement, ticketing, sports performance.
 The third bucket is media and services.
 So that could be anything from a service based company,
 could be a player agency, player development company.
 Real estate and hospitality is a bucket.
 And then we have a fifth bucket around fund co-investments.
 So investing in other sports related funds with established managers.
 And again, taking all five of those asset classes, sub asset classes
 and dropping them into one managed portfolio.
 Yeah, I mean, we're seeing surging, absolutely surging franchise valuations.
 When you do talk about some of these sports leagues and the teams themselves,
 so is the idea here to capture some of that earlier on for some of these
 more emerging sports and everything that's associated with it from an ecosystem standpoint?
 That's absolutely the approach.
 What we know is that a lot of the valuations that you see are driven through
 some of the media rights deals at the leagues have secured.
 So as the media rights cycle continues to heat up
 and more and more players continue to enter the space,
 what we feel like is going to happen is there's going to be this displacement of media
 which is going to make those emerging leagues and those teams and emerging leagues
 prime opportunities for that valuation bump that we've seen in the big four.
 Maybe hopefully not too much displacement.
 I got to ask especially somebody who had such a successful tenure in the NFL
 what you do think of some of these valuations we are seeing.
 And perhaps just as importantly, whether there's an opportunity here as well
 from an investing standpoint when you think about prediction markets,
 sports gambling, sports betting, and what that's doing to propel interest in general.
 Yeah, I think a lot of the, obviously the valuations are catalysts.
 The media has been the biggest catalyst for a lot of these valuations.
 And I think the prediction markets and sports betting kind of fold into that landscape.
 So the more that media continues to be, you know,
 continues to drive sports into more of a 365 a year, 365 a day a year of business.
 You know, 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
 which will just continue to drive the drive the valuations in a lot of these teams and leagues.
 Okay, Mark has Colson. Come back. Keep us updated.
 We'll definitely will.
 All right. Appreciate it. Thank you.
 Thank you for having me.
 Well, straight ahead.
 Morning call crew.
 TN up the trading day ahead.
 Those big SK high next trades that we're going to be watching.
 I also want to get their thoughts on investing in sports.
 The wide world of sports. Say with us.
 Time for your call sheet where we look at the topics driving the trading day ahead.
 Crew members today. Such a good crew.
 I was a tour as of Interactive Brokers.
 Ryan Dietrich of Carson Group, Peter Bogfar of one point VFG wealth partners.
 Ryan and Peter are also CMC contributors.
 We got everybody in that house today.
 All right.
 I got to start with SK high next because major listing here offering coming to market at a time
 where chip trade this week has buoyed everything else.
 So Ryan, I'll kick it off with you.
 Well, first off, thanks for having us.
 This is a great crew.
 This is fun this morning so far.
 So obviously lots of excitement, new IPO coming out.
 We know all that.
 I think what's fascinating about the market's sentiment right here.
 Morgan to us is, yes, there's excitement about these IPO's.
 But then you look what happened last week.
 The stock market was down a little bit.
 Well, two weeks ago down the June swoon.
 And a lot of the sentiment polls showed a little big drops in bowls.
 We saw more kind of worry coming.
 So that June swoon to us was maybe a bullish sign to kind of refresh some of the fears.
 And now on the other side of it, maybe we'll get some good news with some IPOs coming out here.
 All right.
 What do you think?
 SK Heinex, Peter.
 And what it says about 70s in general right now?
 Well, investors are still desperate for growth and they're paying up for it.
 And there's no better growth right now than in semis.
 On the flip side, look what they're doing in the hyperscalers.
 They continue to dramatically underperform because they are the ones who are seeing the deteriorating cash flows.
 So the market is rewarding the recipients of all that spend and punishing the spenders.
 You look at other parts of the market that aren't really growing
 and they have a lower multiple than, of course, the semis.
 The question though is the sustainability.
 And it's not just SK Heinex that we need to pay attention to.
 I would highly pay attention to the upcoming Chinese DRAM and NAND IPOs.
 Because microns 85% gross margin, the Chinese are coming after it.
 Yeah, it's such a good point.
 I don't think we spend enough time talking about globally what we're seeing with the IPO pipeline.
 It's not just a US story to your point.
 Jose, I had this conversation with Jamie Diamond from JP Morgan about a month and a half
 of the one of the things he was talking about was the fact that the US market,
 there's nothing like it.
 They're the most liquid.
 Everybody wants to be engaged here.
 This is really like where the opportunity lies in terms of capital and raising capital.
 So perhaps not surprising to see SK Heinex coming here with an ADR in light of that.
 Absolutely, Morgan.
 And right now, like Peter was saying, investors are choosing the winners and losers in AI.
 And right now it's obvious that memory chip makers are doing terrific with their profits,
 with their margins, and they want to be positioned there.
 As far as the hyperscalers and the Mag 7, folks are nervous.
 They're burning a lot of cash, looking for a cash in the balance sheet,
 taking out debt deals, secondary equity offerings, folks are nervous that some of those firms
 may not really realize those buoyant profit returns.
 You know who potentially benefits from all this, the big banks, right?
 When you talk about a robust IPO pipeline, all the M&A and the deal making that we're seeing,
 how is this going to line us up for earnings next week with the biggest names kicking us off?
 Probably pretty positive.
 You know, think about banks you're going on.
 Look under the surface, right?
 Community banks are leading, breaking out.
 Regional banks are breaking out.
 The large ones haven't yet, but I think it's just a matter of time we're going to use.
 Look at the consumer.
 Like we just released a Carson Group, our mid-year outlook, literally yesterday.
 One of our big themes second half of the year is the labor markets probably going to improve
 more than people think.
 We created 120,000 jobs all the last year.
 We've been averaging well over 100 to the last couple of months.
 We think that'll continue.
 If the consumer's strong, bank lending, all those things should play in.
 And is that rotation that everybody's been talking about?
 We still like financials, industrials, health care to continue to do well the second half of this year.
 Yeah, how close are you watching banks, Peter?
 And how much of it is going to be an indicator of what we get with this earnings season at a time
 where strategists have loft estimates out their double-digit percentage increases in earnings.
 Again.
 Well, the interesting thing about banks, it's actually global.
 Look at European banks, they've broken out.
 Japanese banks are trading really well.
 Chinese banks are actually doing the same.
 Because the yield curve in a lot of these countries are beginning to steepen again.
 Because central banks, while the BOJ raised rates, the ECB raised rates,
 long-end rates are still very high.
 And I think that is one of the more interesting things.
 It's this very elevated level of long-term interest rates.
 And with the Fed, I think Scott Besson's desire to front-load bond issuance
 is keeping Kevin Wars from hiking short-term interest rates this year.
 Which means that the yield curve can steepen, which can benefit some of the banks.
 Yeah, which of course brings us this perfect segue, Jose.
 Because we got the new Fed Chairman on the hill for two days next week.
 We're getting CPI, PPI reports, so key inflation readings.
 And then yes, all of this does funnel back to the banks too.
 Well, I think it's a great time to buy bonds.
 Like Peter said, yields are really high at the long end.
 CPI peaked at 4.2% in May.
 July were tech looking at 3.5%.
 That's likely to be low through use by end of the year, 3.13%.
 Now, the 20-year bond yield in the 30-year is trading north of 5%.
 So a 200 basis point spread there doesn't make sense to me.
 I think you want to be in bonds now for several paths to victory.
 Inflation coming down.
 Geopolitical alleviation.
 If President Trump takes it easy on Iran.
 And I think that labor gains are actually going to be a little slower in the second half.
 We're going to see a little bit of a surprise.
 The first half has been unbelievable, Ryan.
 I do want to get your thoughts on the task force names that got released yesterday.
 Yeah, no, I think it's a broad committee.
 I think it's going to be very interesting to see.
 Whenever Morgan, the Fed tries to pair back the QE elements of what's happened in the past
 with quantitative tightening.
 You could have some volatility in rates markets.
 We saw that in 2018 and 2019.
 We saw that last year when Chair Powell reinstituted a growing Fed balance sheet.
 So it's going to be very interesting to see what happens with credit lending, inflation, the money supply.
 Yeah, Peter, I'm sure you have thoughts on all of this.
 And this idea of what it looks like to potentially rethink some of the methodology that's playing out of the Fed.
 I think it's refreshing.
 I think to what Jose said, what they do with the balance sheets can be very interesting
 because the balance sheet's real transmission mechanism is through the markets.
 And while I agree with Kevin that it's nice to have a smaller Fed presence,
 that could have a negative effect on the markets.
 So I'm not sure how they're going to balance that.
 But to my point earlier, I don't think the Fed is raising interest rates.
 And I think that's for a variety of reasons.
 But I think long-term interest rates, I believe we're still going to go higher
 because I think debts and deficits now around the world actually matter in investors' eyes.
 Yeah, and it's even practiced head up this week with a NATO summit
 and some of the defense spending numbers that we're getting in partnerships
 and everybody seems to be getting a little more creative around that too.
 Ryan, want to get your thoughts on all of this as we wrap it up?
 No, let's wrap it up with this.
 We agree. Hope we don't jinx this, by the way.
 We don't think the Fed's going too high, either.
 You don't have to start of the year.
 Everyone said, how many times of the Fed are going to cut?
 We said, no, this is an inflationary growth environment.
 The Fed's probably not going to cut this year.
 And now that we're 180, everyone said, how many times are going to hike?
 We don't think so.
 Now, I will say to push back a little bit since you push back on my stronger labor market
 the second half of the year.
 We think inflation is going to stay sticky, right?
 Yes, the headlines coming back because energy prices are coming back.
 We get that.
 But look at services, look at goods prices.
 There are reasons to think that inflation stays.
 Price stubbornly high, but the Fed's part on pause.
 How we see it?
 All right, 20 seconds left.
 What would you buy right now, Ryan?
 All right, now, we would...
 I would say growth.
 I mean, growth's pulled back.
 We get it.
 We talked about, but I think growth is going to a lot of earnings coming out.
 The Mag 7, everybody hates it now, the Mag 7.
 We like that area probably second half this year.
 Okay.
 Energy stocks.
 Okay.
 I think it's a gift here.
 All right, five seconds left.
 Treasury is high yield.
 I love this.
 It's so great having you all here on set.
 Thank you to our morning call crew.
 Happy Friday and weekend to our viewers.
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