Trump on Iran-U.S. Ceasefire 7/8/26

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 I think it's over. I don't want to deal with them anymore. They're scum.
 You know what scum is? They're scum. They're sick people. They're led by sick people.
 And they're vicious, violent people. And if they had a nuclear weapon that used it, as far as I'm concerned, it's over.
 That was President Trump last hour in Ankara, meeting with NATO Head Mark Rutte.
 And we saw oil spike on that rates rise, futures drop. Good morning everyone.
 I'm Morgan Brennan, and this is Morning Call as we do lean into this breaking news.
 Markets were cautious this morning until about an hour ago, 45 minutes ago.
 And as you can see, we've gone distinctively risk off here.
 S&P 500 poised to open down 74 points right now, down 614 points.
 The NASDAQ pre-market here, down 365 points.
 Let's get a look at what we're seeing in the energy complex right now too, as we do see crude climb higher here.
 Up about 5, almost 6%. You can see session highs this morning right now, WTI up more than 6%.
 $74, $87 per barrel right now, 6% move for Brent as well, which is trading just below $79 a barrel.
 Our Bob Gasoline futures, heating oil, gas oil, all moving higher here too.
 Keep in mind, we're still well below the levels we saw with this Iran war back in April, the highs of $112 per barrel for WTI.
 But trading back to levels that we haven't seen in the last couple of weeks when it does come to energy prices right now.
 This of course, as President Trump did say that he believes that the MOU with Iran is over.
 If we get a check on treasuries and the bond market here as well as oil has moved higher, treasure yields have moved higher as well.
 You can see that move across the curve right now, US 10-year treasure yielding 4.57% US 2-year treasury yielding 4.21%.
 Big spike in the VIX as well, but let's get over to Steve Sedgwick, who is in Turkey right now, in an car right now, and has the latest for us from this NATO summit, Steve.
 Hey Morgan, I've been to a lot of these.
 I've been in DC, I've been in Vilnius, I've been in the Hague last year as well.
 And this one is turning into one of the absolutely most contentious meetings and the comments from the President just now encapsulated everything.
 And the real headache, the Mark Rutter and the rest of the European leaders plus Mark Carney have.
 I spoke to 10 world leaders this morning.
 I didn't get a word with President Trump, he didn't come through the rivals as well.
 But absolutely extraordinary, they thought they'd done a really good job of heading off the President on spending as well.
 But three other curve balls have come up, the most significant of course, being the Iran.
 Number one, the President talking about Greenland, about the US control yet again of Greenland.
 We thought this one had been put to bed in Davos when he made his speech at the World Economic Forum about actually having a negotiated solution to that as well.
 And Mark Rutter has said here, alongside President Trump, that he will work on that one.
 The second curve ball is Spain, they've had enough Spain, they don't want to have any trade with Spain anymore.
 The President was saying as well, that's $47 billion of bilateral trade as well.
 So absolutely fascinating there.
 But the third curve ball is the big one that you're talking about.
 And it's the one that sent Brent Crude up to $78 a barrel and oil to around about $74.50 at the moment as well.
 It's worth pointing out though, that the market is actually despite jumping 5% and the futures on the equities coming down.
 And European equity futures trading much lower.
 The fact is we are nowhere near the levels that we've spent most of the war.
 The epic fury saw on Iran.
 We're not near those levels at the moment.
 They were between $95 and $110 a barrel as well.
 So the market is taking the President at his word to a degree.
 But one thing he did say as well is that the negotiators are welcome to carry on trying.
 But as you quite rightly pointed out, him saying the MOU is dead has sent all kinds of people really concerned.
 Not only what it means for oil markets, but what it means for interest rates, what it means for inflation.
 And of course he's going to make Kevin Walsh's job just that bit more difficult going forward.
 If you're watching WTI move to $75 a barrel here, Brent move higher as well.
 Steve, reaction, and I realize that everyone is still digesting.
 The world is digesting these comments we just got.
 But reaction initially here from members of NATO and others that are on the ground where you are.
 Yeah, absolutely.
 Look, I spoke to the high representative for foreign affairs.
 This is a lady called Kaya Kalash.
 She's a foreign policy former Prime Minister of Estonia.
 I spoke to you yesterday before the Trump comments about, look, the President is really irked about the lack of perceived support from NATO members for Operation Epic Fury.
 The fact that they didn't overtly support and getting involved in the military action.
 And in some cases refused American base usage for offensive actions against Iran.
 For defensive actions, that was allowed from some of these nations as well.
 And she said, look, it is not for NATO to get involved in this one.
 But NATO, of course, wasn't consulted ahead of Operation Epic Fury as well.
 And NATO nations would play a part in the clearing of the waterways, in the keeping the areas demined, in escorting ships as well.
 But that would have to come at the end of the conflict.
 And very interesting, I haven't spoken to one leader here yet, who is willing to acquiesce to Donald Trump's demands,
 and actually, or hopes previously, that they get more actively involved.
 And he says, look, I'm done with NATO.
 I'm fed up with it. They weren't there when we needed them.
 NATO would probably argue that the only time that Article 5 has been enacted this mutual defense pact was obviously after 9-11,
 when the call from George W. Bush was listened to by NATO.
 So, of course, in this case as well, the gray areas, is this a NATO issue, or is it a US, Israel, Iran issue as well?
 Of course, the President thinks NATO should be getting involved in supporting those nations say it is not our issue as well.
 The President also, in the sound that we've been listening to this morning, talked about the trillion dollars that the US has spent on NATO.
 I think, perhaps, maybe that's a conflagration of two different issues, as we all know, and our viewers know,
 the Pentagon budget for defense is circa $1 trillion.
 I think the last figure I saw was $980 billion, but the US hasn't spent a trillion dollars on NATO per se.
 In fact, it's Jews for the NATO infrastructure is in the low single-digit billions as well, although, as we all know,
 and it is unequivocally the case that the US has been the major supplier of the burden supporting European nations in the post-World War-Way,
 and of course, his great problem was that Europe wasn't doing enough.
 You're listened. It's spending a lot more money. It is getting towards that 5% target, but it's trying to get there by 2035.
 But the problem is, the Pentagon is conducting a review, which will be for six months from June 18th onwards,
 and actually some nations who don't seem to be spending enough money may lose some support from the United States.
 Yeah. Case in point. The comments we got. Overspain. Steve Sedgwick, thank you.
 We got a major market reaction across Europe as well. Let's get to Karen Cho with the trade we are seeing there, Karen.
 Morgan, good morning to you. I've been closely watching these markets while that press conference was taking place with the President
 and Mark Rutte over at NATO, and you've seen an aggressive sell-off that has been sell the markets and asked questions later on the back of these headlines around the MOU being dead,
 but also around trade with Spain also being axed. So the President has remarked, you can see, just landing on these markets very quickly.
 We've got the 4,100 down 1.5%, the DAX sliding 2.3%, the French market and the red, along with the IBEX in particular.
 So the stock 600 on track for its biggest one-day fall since mid-March, the IBEX in Spain extending those declines after Trump said he wants to cut off all trade with Madrid, so 2.6% drop there.
 I want to show you the sectors. It is dramatic. So the oil and gas sector, one of the few areas we're seeing gains, is boosted by that higher crude price.
 And don't forget to we're up about 2-3% roughly this morning amid the live-exchange of fire, now up more than 6%.
 So Shell and BP among the biggest gain is on the 4,100 total to hovering near the top of the CAC 40.
 But if you think Morgan we've been at in recent days, you've had the breadth coming back into market.
 You've had the real diversification trade that has taken place. Everybody's talking about health care, whether it's US health care or European health care,
 and selling some of the crowded positions in technology. Technology has been the diversifier during this Middle East conflict.
 So it's a back. I mean we had a big sell off yesterday, but this morning it is down, but is it going to come back if we think that there's now duration again around the conflict.
 Some of the areas where the breadth was starting to carry a higher, namely construction.
 You've seen all of the gains from June and July just simply wiped out in one session alone this morning.
 So some violent action taking place under the hood in some of these sectors, I think that loses possibly more interesting at this point on the markets today.
 Banks too have lost some territory again, concerns around what central banks may do if we're talking about this conflict, extending much longer from here.
 And some of the other areas of the market where you've seen a little bit of picking up from some of the selling action, autism part, down aggressively this morning to Morgan.
 Karen Cho, thank you. Let's get to Greg Fuller, CEO of Freight Waves, which provides real-time data and analytics to the trucking maritime and air freight sectors, monitoring impacts across the straight of Hormus.
 And what we're seeing in real time here, geopolitical landscape, how that's shifting and what that does mean for these freight flows. Craig, that's exactly where we're going to start with you.
 What we were seeing in the wake of an MOU, what the end of an MOU could mean for trade.
 Yeah, look, I mean, this is obviously a developing story we've had overnight, but I think there's a lot going on.
 You've got Iran doesn't seem to want to end the conflict without sort of the last word.
 And that's really the problem. This is very unpredictable.
 What we've seen in the last couple of weeks is we've seen, you know, if you look at container freight, it hasn't been that impactful.
 We've seen increase in container rates. Rates have gone up from $1,800 a container from China to the U.S. West Coast to $7,100.
 But a lot of that's capacity-related. If you think about trade in terms of global energy, this has obviously been disruptive, but mostly disruptive in the product side of it.
 The refined product side, not in the crude side of it, where there has been plenty supply.
 And this is the reason we didn't get higher than, you know, $110, $150,000 a barrel.
 Yeah. Of course, as you're talking, we're showing video on our screen real time here from Ankara, Turkey, the president participating in the official welcome for NATO, with all of the members and what is called the so-called NATO family photo on the screen right there.
 We continue to monitor that, especially in the wake of the comments we did get from President Trump last hour.
 Craig, overall, the fact that you do see this uncertainty in the Strait of Hormuz, the big question mark here, is what it means, and I know the U.S. has said basically, this is not going to happen, but obviously Iran's striking vessels signal something different.
 This idea of paying a fee or paying your way through waterways. Are we on the cusp of something we haven't really seen before in terms of no longer unfettered use of maritime lanes?
 Yeah, it's got to be figured out. I mean, it looks like Iran knows that this is a cold day. They're using it to maximize leverage to remind us of what happened in North Korea, where every now and then when North Korea would get desperate, they would shoot off a missile and get some concessions.
 It feels like Iran is doing the same thing with Hormuz, and using this as a way to really extract concessions. And I think that's going to be a question is how do you resolve that?
 This is a much bigger risk for Europe and much bigger issue for the rest of the world than in the United States, frankly, because the United States has so much energy and refined products in the U.S.
 That it's something that, frankly, the Europeans need to sort out more so than the U.S. does, and I think the question will be, is this going to be escorted? Are we going to have some type of toll system?
 It does feel like we're headed that way because I think Iran knows it's the only way they can get any kind of concessions as to continue to create havoc in that region.
 And the only way to really solve that is to put some type of military presence, permanent military presence there to actually ensure that things get passage and of course it's a cost to that.
 So in light of that, in light of the relative insulation that the U.S. enjoys versus other parts of the world despite the geopolitical landscape here, what does it mean for the re-through to the U.S. economy when you do look at some of this freight data, especially as we do come into peak container shipping season and other things?
 Morgan, we've talked about it. The industrial economy is doing quite well and has been doing quite well all the way through the original, when this started back in March.
 We've seen an acceleration in freight demand, and the industrial is the most interesting because it's the most exposed to energy inputs.
 But what I think is really reassuring is that the United States has so much energy and natural gas prices tend to sell off when you have higher oil prices simply because it's a derivative gas.
 And the fact that we produce so much domestic energy and petroleum in the United States gives us an enormous advantage, it gives frankly our industry advantage.
 So what we saw in March was as the conflict heated up is that you would actually see an acceleration in a firmening freight demand and that has not slowed all year.
 And so I would say that I'm continuing to be bullish on the industrial segment and continuing to be bullish on the U.S. economy despite this.
 And I think ultimately the market is going to resolve it at some point. And as a resolve it, I think the United States and really all of America is well positioned because of our plentiful amount of energy supplies which really provides our ability for our industry survive and thrive.
 Okay, quickly Craig. And I want to throw up some charts here of what we're seeing with airline stocks pre-market because this oil spikes airline stocks are falling here as you'd expect that inverse correlation to be playing out this, of course.
 This, of course, as airline stocks were touching record highs last week, we had dealt a later this week just in terms of the impact of energy prices airlines tend to absorb those higher energy costs but the freight carriers push them out to end users and ultimately to customers too.
 So when you talk about what this means for sticky inflation, your thoughts.
 Yeah, look, we've seen freight rates go up because of fuel search charges. We've seen the airlines charge higher, but they did not reduce it. I mean, fuel prices have come down quite substantially from the sort of peak of it.
 And yet there's been very little reduction in overall transportation costs or prices to consumers. And I suspect that the transportation providers enjoy higher margins as long as they can, but this is ultimately consumers are going to have to pay it.
 Okay, Craig Fuller, appreciate it. Thanks for joining me. Thanks, Morgan.
 All right, well, we're heading to break, but let's get a check on US stock futures, which have taken a leg low here, lower here in the wake of these comments from President Trump.
 You can see the S&P, the Dow, and the Nasdaq all poised to open down more than 1% this morning. The Nasdaq, the biggest loser here with futures with points indicated to open down 479 points.
 We're back after this. Also, we're going to continue to follow this story, all of the reaction in real time that you need to know as we get you started for the trading day ahead here in the US.
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 Welcome back to morning call. Let's get a check on US stock futures in the wake of those comments from President Trump last hour where he said he believes that the MOU with Iran is dead even as his negotiators are free and willing to continue talks moving forward.
 We saw crude oil spike we saw treasure yields spike and as you can see there on your screen we saw stocks sink even lower they had been down fractionally pre market this of course after losses for the major averages yesterday but have taken a steep move lower from there as you can see on your screen.
 So S&P 500 futures poised open down 1% right now down 77 points at the open if these losses hold someone moves for the Dow and the Nasdaq Nasdaq particular the underperform this morning pre market with the high flying semiconductor stocks and other AI infrastructure picks and shovel stocks taking it on the chin.
 That said as I mentioned you're seeing crude climb here WTI is up 6.5% 74 98 dollars per barrel so just below 75 dollars a barrel there. World benchmark Brent crude up about 6.5% as well trading just below 79 dollars a barrel just to put these moves in context this puts us back towards the middle of June in terms of levels for crude oil futures right around the time that that ceasefire agreement was signed between the US and Iran but also keep in mind we're still way off the highs that we saw back in April
 when WTI was trading around 112 dollars per barrel in light of this you're seeing energy stocks climb higher pre market as you might expect as well so we keep an eye there meantime let's take a look at the bond market where treasure yields are higher across the curve pretty notably so as you to expect again with crude moving higher this has been part of this Iran war trade that we have seen in recent months as crude oil moves higher energy complex moves higher treasure yields move higher as well in its dissipation of stickier inflation US 10 year treasure
 yielding 4.57% right now fed sensitive to your treasury yielding 4.21% right now and 30 year treasury firmly above 5% 5.07% let's bring in Jerry McGinn director at the Center for Strategic and International Studies for more as we do keep our eye on Turkey and NATO members including President Trump and including NATO's Secretary General Mark Ruta in Ankara right now Jerry it's great to have you
 on the show ahead of the comments we did get in the past hour we have gotten so far a flurry of deals tied to defense spending from the Europeans here some of them notably with US defense manufacturers as well how does it speak to the picture that we are seeing globally for defense spending as we do see many members of NATO start to step up their dollar pledges
 yeah well it's great to be with you Morgan yes the summit really really kind of brings home the last year the NATO committed to a 5% goal for GDP a percent of GDP by 2030 and you start to see that action come into place I mean there were 50 billion dollars of announcements last couple days of deals and these are like between Canada Germany and Norway between US companies like Northrop rummeng with NATO by the way
 that the Triton between SOB and NATO buying their one of their ISR systems so there's lots of deals happening but as to your point this is a global defense market for US companies principally primes and a lot of European countries and they are kind of starting to step up in terms of budgets and now you're starting to see those turn into business transactions
 yeah I mean the other notable headlines they came out of the president's commentary last hour involved Spain he said Spain is a terrible partner in NATO they don't participate they don't pay quote I don't want anything to do with Spain cut off all trade with Spain please including visits how to digest that one here and the role of Spain within the broader NATO partnership moving forward
 yeah well NATO's the only country I believe that that's still the case that didn't commit to that 2030 goal and they sort of had a lower kind of defense
 bending and that means that we know we have US troops in Spain and US air base there so it's a delicate balance and we'll see how this translates into actions from the
 administration but the this is not a new criticism from the president yeah meantime we're also expecting the president meet with
 Ukraine Zelensky as well there's focus on what we're seeing with the Ukraine Russia war I'd also just note that some of the defense
 stocks US defense stocks most notably Lockheed Martin are trading higher right now pre-market as well as we have this
 conversation as you might expect giving a ratcheting up a geopolitical tensions here but how much
 do investors need to focus on that conflict moving forward right now and what all of this means in terms
 of that defense spending that national security picture overall well I think what investors
 can be looking at is like well how does this translate into actual kind of a real business contracts
 right and and that is if the country's NATO countries pass bills and spending bills meeting their
 commitments and you you're you're starting to see that in terms of all the NATO countries pretty much
 are over 2% in GDP now and you're starting to see and the US has got a 1.5 trillion dollar budget
 requests which would put us at 4.5% in GDP so so investors you see does that translate you know
 does Congress pass the President's budget request do houses of parliament in Europe kind of did
 that translate into actual funding and then they have to then get that on contract and so that's
 when you know it the money starts flowing and you see this also with some of the the deals looking
 to establish like the the defense bank that Prime Minister Karni announced the US focusing on
 loan authority you're seeing other ways of getting private capital in the marketplace and that's
 what investors need to be looking for yeah and I think right now what markets are trying to parse
 through is whether President Trump's comments about this MOU of being dead are are more rhetoric are
 more negotiation tactics playing out here or whether that really is in fact the case you know you
 just mentioned lawmakers we do have some lawmakers on the ground in Turkey for the summit as well
 right now assuming the ceasefire collapses what is next well I mean for for for the for US the US
 government for you know the and they have to be able to you know move forward and and you know
 the fact is we depleted a lot of stockpiles in urgency or in midnight hammer those those
 are challenges that need to be in that Congress needs to deal with now right so regardless of the MOU
 now so if the MOU has collapsed and then you know then we have to look at what are the contingency plans
 what stockpiles are available to meet the the the national security meets for the US
 and Israel in this case okay Jeremy again great to have you on from CSIS as we do make our way
 through this breaking news appreciate it great great to be here thanks Morgan we got much more
 market reaction one more in call returns this message comes from Viking committed to exploring
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 states dot cnbc dot com well let's get a check on the moves that we're seeing here in markets
 across asset classes right now starting with us stock futures which were fractionally lower
 before we got those comments in the past hour from president trump from the NATO summit saying that
 regarding the ceasefire with a round quote for me i think it's over taking a leg lower here we've
 gone from cautious in markets to decidedly risk off you have that's in peak points to open down
 at 80 points the Dow 631 points the Nasdaq which is the big loser this morning as semi-stocks
 and other AI stocks fall the farthest poised open down 410 points these would all be losses of
 more than 1% here at the open if they hold let's take a look at energy stocks as we see crude
 climb in the wake of this back to levels we haven't seen since we'll say mid-June right around the
 time that that mo you with iran was signed you could see energy stocks moving higher exx on
 chevron shell bp also accidental trillium is actually one of the biggest movers here pre-market
 this morning let's also get a check on airline stocks because as energy prices move higher
 airlines are moving lower delta which reports earnings later this week down about 3.5%
 American airlines united airlines others all falling here pre-market similar situation for
 the cruise lines which will have to theoretically absorb these higher energy prices if they hold here
 Norwegian cruise down 3% similar moves for carnival and others we're going to take a quick break
 and we'll be back with more in the wake of this breaking news from turkey stay with us
 i think it's over i don't want to deal with them anymore this scum you know what scum is this
 scum this sick people they're led by sick people and the vicious violent people and if they
 had a nuclear weapon they'd use it as far as i'm concerned it's over welcome back to morning
 call i'm working brand and breaking news as president trump last hour says he thinks the us
 Iran ceasefire deal is over speaking alongside native secretary general mark rutta in encara turkey
 in the last hour trump's comments hitting us stock futures which take it have taken a leg
 lower here pre-market with the dow poise open down about 600 points s and p down 75 and the
 nasdaq the big loser down to 383 points part of the reason we're seeing this is because we're
 seeing oil prices and the energy complex climb higher as well so take a look at what you're seeing
 with crude futures right now wti up about five and a half six percent trading at about 74
 dollars fifty cents of barrel Brent crude up about five and a half to six percent trading around
 seventy eight dollars fifty cents per barrel are about gasoline futures higher natural gas is also
 up about two percent right now keep in mind though this puts us back at levels for crude that we saw
 about mid june right around the time that that us Iran ceasefire deal that mo you was actually
 signed let's get a check on treasuries because we do see yield higher along the curve here
 for the us bond market fed sensitive us to your treasury yielding four point two one percent
 ten year treasury yielding four point five seven percent let's get a check on the vix two because
 we've seen a spike in volatility here up about fifteen percent the level here for the vix is eighteen
 fifty one so we're still below that key twenty level that traders watch so closely as a sign of
 accelerating volatility in the market let's dig further into energy's reaction to the president's
 comments on Iran though let's bring in and read a send on the cnbc newsline she's the founder and
 director of market intelligence at energy aspects in rita it's great to have you on i mean of course
 we're getting these comments from president trump because we did see or we had reports that a number
 of vessels were struck and attacked by iran industry yesterday with the u.s.
 countering with strikes on that country yesterday evening so in terms of the prices that we are
 the moves that we are seeing in crude oil right now your expectations yeah look i think the escalation
 even prior to president trump's comments really began like you said with the ships being attacked
 and iran's counter attack but the other thing that happened is the us treasury has revoked
 the waivers the u.s. has given for iran to sell its oil that's a big deal right we'd calculated about
 hundred and thirty to hundred and fifteen million barrels of iranian oil between all the storage
 and all the ships being available to the market quickly if the market kind of wanted to we hadn't
 seen that move as much because there was still sanctions and banking kind of insurance
 issues around kind of transacting but that was definitely available now you just know that
 the only country that can take it is china and within that it's going to be the teapot so
 that's a big blow to the balances and i think overall i would say this market has been so quick
 to price in the worst case the most bearish fundamentals and it didn't price in the record
 lost stock so that's why what we are seeing now is a short covering rally on our model CTAs and our
 buyers and eighty dollar Brent is a very very critical level to watch out for because that's where
 the concentration of sport positions are if we pass through that we're going to get a pretty
 significant leg higher okay so we will continue to watch that into your point with Brent right now
 we're trading around seventy eight dollars and change per barrel so not that far away i want to go
 back to sanctions for a moment because it's such a key point it's very unusual to see when sanctions
 are implemented it's very unusual to see those sanctions lifted and now to your point you have a
 reversal to put them back in place how quickly when we talk about that on something like a barrel
 of crude oil how quickly does that change the supply dynamics one way or the other
 but don't think it changes it materially because we didn't see all of the refinements just go
 and suddenly buy Iranian oil right if we had seen that that would have been a bigger blow this was
 still kind of more that Iran was going into Japan and India and saying look you can buy the
 crude waivers have been lifted but i think what is material about this is that Iran was starting to
 ramp up their production because waivers had been lifted now they're going to have to be
 cautious and i'd say most people in the market were expecting Iran to not just ramp back up to what
 they had shut in but go back to maybe previous highs and unfettered being able to sorry i've got a
 bit of a social being able to raise production and that won't happen anymore so i do think you're
 taking out a good few hundred thousand barrels per day from the market over the kind of next six months
 also yeah whether whether you have a ceasefire that holds and and maybe even potentially at some
 point a path to peace or whether it collapses here and is in fact as president trump used this word
 over what does it mean in terms of the possibility of a fee system or a towing system in the
 shade of four moves which certainly seems to be at least right now sticking point with Iran
 we absolutely and this is why we believe that initial attacks even occurred because that was
 their warning short to say stop using the old money corridor they wanted to get more ships
 into their corridor that they can control the challenge i think we have with this whole situation
 is that you don't have clarity on either side right you like you said they had given waivers
 they pulled it now what if suddenly next week talks are progressing again we don't think they know
 you have collapsed yet by the way for what it's worth we still think it's at risk but it can continue
 what if waivers come back again so i think that becomes the issue where Iran is basically using
 this as leverage to say we want certain things shipping corridor is one of those big issues
 if they did get that we could again get the waivers come back as well
 what you said is really really important i think for our viewers why don't you think that the
 mo you has collapsed what would you be watching to know whether it has or hasn't so i would say
 Iran in particular is really pushing the boundaries to test you know how far they can go
 to be fair even president trump's comments yes he did say it's over but he said he's going to talk
 to Kushner and Whitkopf he didn't say we are not going to continue the talks i think every side
 is leaving the room or negotiation simply because neither side still wants to go back
 to full kinetic action i think that's probably worth keeping in mind yeah the power of words
 and the words are not spoken and read a send it's great to have you on thank you appreciate it
 all right as we keep an eye on crude oil prices and that key $80 level for Brents that
 and we're going to just point it out a lot more to come here on morning call including
 much more on the market fallout from the president's comments earlier this morning
 we're going to continue to track all of the action for you here pre-market get you set up for the
 trading day ahead morning calls right back morning call let's get a check on you with stock futures
 which are markedly lower here this morning um even as we see energy stocks catch a bit
 consume more stable stocks like coke which we just showed on your screen uh wall mart others
 catch a bid too we see the smp is poised to open down 78 points down 627 points nasdaq as we
 see semis stocks another AI stock sell off down 408 points this morning uh let's get a check on the
 bond market because part of the reason we're seeing equities fall here pre-market is because we're
 seeing treasury yields move higher in the wake of crude oil moving higher uh so you could see
 higher yields across the curve uh fed sensitive us to your treasury yielding 4.21 percent
 and the ten-year treasury yielding 4.57 percent so let's bring in roger Ferguson from a
 federal reserve based chairman cmbc contributor roger you know i i brought you on the show to talk
 about fed minutes because ahead of what we heard from president trump last hour that was expected
 to be sort of you know the big economic uh milestone of the day here um and certainly i do want
 to get your thoughts on all of that since they are the first minutes that we're getting from
 new fed share kevin wash uh at the helm but first the geopolitical impacts on
 um the economic picture here if in fact we do see a ceasefire that's collapsing
 well the two or three thoughts come to mind immediately for a first good morning um
 the first thought is again the situation in the middle east and globally is very very unstable
 unpredictable um and we've just seen yet another unexpected turn um secondly i think
 also clearly throws into question you know or forced to fit the thing about the inflation picture
 anyone who is hoping that there is some move towards lower inflation probably will find this
 news certainly very unwelcome as you point out uh treasury has shown an increase uh invades across
 the yield curve um and we have chair horse who uh at the last press conference was very
 fat about his focus on the inflation mandate as opposed to uh the unemployment side of the mandate
 so we'll have to see you know whether or not in fact you know the market starts to price in
 an increase at the next meeting uh and how stable that is um and so we're sure this cannot be
 your welcome news in the world of policy making because it it undercuts some of the more
 positive news and we enforces a general sense of uncertainty yeah i mean i mean fed share
 horses also talked about uh essentially a return to the green span era of less communication um and
 so i do wonder as someone who served on the board during that era uh what that could potentially
 look like here and whether that is a positive or a challenge uh if you are facing a situation where
 the data picture is changing in real time in part because of the geopolitical landscape so
 what might change in terms of less communication we've seen some of it so a clear removal of any
 forwarding language in the statements released after um the emergency meetings um i think they're
 probably gonna reconsider the whole question of the so-called dot plots which i think have been
 to some degree of source of confusion uh so i think there are a couple of things already that we've
 seen we're waiting to see if the minister would like to see if they're pretty far down and if they
 provide any more color context for sure um and so you know those are some of the things that
 obviously will change to the to the you know bigger picture um of less communication what is it
 mean for the market i think it means the market is going to be on its own um to react to incoming data
 without you know the calming direction of bed itself so as an example you know today we saw
 treasuries reacting you know pretty strongly to uh this news we've seen the futures come off
 suggesting you know some concern about growth and at the same time you know we
 research it's a concern about inflation and now you know all of that is input for the for the fed
 is that something yet we the market expect the fed to respond to directly because the chair said
 he wants to listen to the market not sort of uh and feed the market information or thoughts on the
 market to be update information okay Roger Ferguson it's great to have you on appreciate it
 straight ahead morning call crew teen up the critical trading day ahead as we get to check on stock
 futures which are lower here free market chip stocks leading the losses as well morning call
 it's back in a few time for your call shoot crew members today Kevin Gordon of Charles Schwab J. Woods
 of freedom capital markets and Stephanie link of high tower James Stephanie are also CMBC
 contributors i mean we've got one thing to talk about here today so i'm going to kick it off
 with you guys jail start with you what we're seeing come out of turkey with the president trump's
 comments about the possibility that the ceasefire with the run is over yeah here we go again let's see
 how long this lasts the knee jerk reaction is always down uh we were seeing some constructive action
 in some of these energy names the xLE was bouncing back to life um i think we're going to
 see a continuation of the rally in those names but uh with the president uh you never know what's
 going to happen i still think the defensive names the health care stocks are a good play in this
 environment regardless of what happens throughout the day and uh you know some of these airlines
 maybe on sale uh this uh delta earnings on friday it can be interesting technically it's getting
 back to a level where i would want to you know take a shot here yeah and of course Kevin we're
 talking about oil moving higher this morning and from a percentage standpoint pretty sizable but
 it still only brings us back to levels that we saw the middle of junior yeah yeah i think that's
 the key i mean for the world it's going to depend on the availability of oil so how much does
 this restrict traffic if at all you know through the straight of hormones but for the us that's more
 of a pricing issue because we don't necessarily suffer as much from you know running out of you
 know physical stocks of of crude so um i think the the key as you mentioned is really the level of oil
 prices from here of course rate of change is going to dictate some of the more extreme moves that
 you see in in the us equity market but uh from here if you see a more sustained move higher that's
 when you reintroduce some of those broader inflation fears um and i think it's probably siloed still
 to just that as we learn with the episode earlier this year starting from February this really
 wasn't as much of a hit to growth at least in the united states so i think that dynamic would still
 play out where you've got the u.s. benefiting at the expense of the rest of the world um but again
 to your point you have to see a much longer runway i think for higher oil prices in order to price in
 a lot of the more deleterious effects from higher inflation okay Stephanie i want to get your thoughts
 on this especially since emrita send joined us a little while ago and she made the point that she
 doesn't think that the mou is over in part because president trump signals that um you know his team
 is still going to be talking to or still looking to talk to the iranians here
 yeah i mean i think we have to wait it out see what happens i i understand the knee jerk reaction
 in the markets but uh we could also see a very quick reversal so i don't think you want a panic
 what i think is remarkable morgan is in the past five months through this war the u.s economy has
 been able to grow above trend two and a half three percent earnings have actually been much better
 than expected i think they're going to be we get earnings starting next week um what's going to
 be the most interesting to see is this momentum unwind which we've been we've started to see
 and a rotation into other sectors the spy is down 1.5 percent from all time highs the q's are down
 5 percent the smh is down 15 percent and the cosp is down 23 percent yet the doubt jones
 yesterday hit an all time high so what we've seen is a rotation into health care into financials
 into cyber security and i think that is likely to continue in the short run but i think we have to
 watch earnings because we're going to follow where profits are rising and that's going to dictate
 what the leading groups are going to be and i think it's going to be continuation of industrials
 financials and some health care yeah i mean the other thing's been catching a bit and you see it here
 even pre-market jay has been some of the consumer staple stocks which are trading at record highs
 well that's the safety play i mean when there's a fear people go to what's safe we're going to see
 Pepsi report earnings later today Coca-Cola looks good to me as well but i i want to go back to
 some of these stocks that have been beaten down these high momentum names we're talking micron
 sand disk broadcom and in video are giving us opportunities to get in for you know valuation wise
 i think it's time to get into these names but momentum wise we've been waiting for the pullback
 and when you get the pullback sometimes get a little fearful but from a technical point of view from
 a fundamental point of view i look at micron and sand disk people waiting for those opportunities
 now maybe the time to dip the toe into the water staples fine but i think from a trading point of
 view you may be able to buy some of these dips and profit quickly yeah Kevin i want to get your
 thoughts on this especially as i look at your notes you talk about the muses versus the ammo yeah well
 it's really a way to kind of go through and parse out some of the mega caps into these different
 groups i mean the magnificent seven for so long has been kind of that catch all four for the mega
 cap trade in the u-s but actually i think this is pertinent on a day like today when you start
 to separate you know memory from hyperscalers as an example memory names of course have you know
 taken it on the chin as Stephanie was highlighting you've got pretty significant drawdowns especially
 with korea being the poster child for that but to the extent that you start to see investors
 treat the hyperscalers again as a defensive category in group which they have been doing at times
 over the past several years i think that's actually a dynamic to watch for in the market if this
 becomes more prolonged if you start to see a lot of prices rise you know faster and and for longer
 that's at times what we've seen over the past couple of years is whenever there is that cyclical
 stress investors have moved into the mega caps they've flocked into big tech so to me that would
 sort of give the illusion that the market looks okay because the weighting of those companies
 pushes the indexes higher but maybe you don't have as good of a breadth story under the surface
 not to say that that's going to happen in perpetuity but i would keep an eye on that momentum.
 Okay we're going to have to leave the conversation there thank you to our panel i'm warning
 call crew it's great to have you all here on a day with a lot of breaking news as we do set up
 trading here in the u-s and futures are lower.
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