Morning Call 8/13/26

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 I'm Morgan Brennan, this is your morning call.
 Good Thursday morning, let's get a check on U.S. stock futures with the Dow riding
 a three day losing streak, the S&P, and the NASDAQ coming off their first positive sessions.
 In for and you can see attempting a similar move here, pre-market right now.
 With all the major averages poised to open higher, I'll be it fractionally, the S&P up
 six points, the Dow poised to open up 105 points, the NASDAQ 28 points, so basically at the
 flat line.
 Russell 2000, though, that's back at record highs, and you can see poised for slight gains
 here, pre-market as well.
 Big earnings movers today, Cisco and Saribras, we're going to have much more on both of
 those stocks in just a moment, and this after massive moves in the Neal Cloud giant Nebius,
 and Core Weave yesterday, you can see both of those companies popping to the tune of
 double digits and trading yesterday, Nebius closing up 34%, Core Weave up 19%, and if we
 take a look at those stocks, pre-market again this morning, under a bit of pressure, perhaps
 not surprising after the parabolic moves, we saw Nebius down 4%, and Core Weave is down
 about two and a half percent.
 This has really been the story of the week, has been AI compute and renting it out, and
 the pricing associated with it, and what it says about the value of Nvidia chips.
 Well, look at treasuries ahead of today's July PPI reading.
 You could see treasuries yields are a bit lower across the curve, 10-year treasuries yielding
 4.67%, Fed sensitive to your treasuries yielding 4.17%, and the 30 or 5.23%.
 Let's get a check on energy as Washington and Tehran each claim control over the straight
 of four moves, and a deadlock seems to be the norm.
 Now, you can see energy prices are under a little bit of pressure this morning, WTI is
 down 2%, trading around $81.69 a barrel, Brent also down about 1.8% trading around $87 per
 barrel.
 Let's turn back to our top stock stories, let's start with Cisco.
 Shares are under pressure despite topping earnings expectations and issuing sales guidance
 that was well ahead of street estimates.
 AI demand continues as much as $18.2 billion for the current quarter compared to the $16.8
 billion analyst forecast, and on the build out, Cisco CEO Chuck Robbins says hyperscalers
 made $4 billion in infrastructure orders in the past three months, bringing the total
 for the fiscal year to more than $9 billion.
 Still, you can see shares are lower right now pre-market to the tune of 6%, but keep in
 mind, shares of Cisco are up more than 60% this year, and up 8% this month alone, expectations
 were high coming into the print, we're going to have more from Chuck Robbins on squawk
 on the streets when they speak with him at 9 AM Eastern today.
 Well, let's also get a check on chip makers to re-brace, big moves there pre-market, second
 earnings report, since going public.
 Shares are down about 17.5% right now, sinking despite raising sales guidance for the
 year CEO Andrew Feldman, noting AI demand is, quote, through the roof, and the company
 says revenue in its cloud division quadrupled from a year ago, even as overall sales, missed
 street estimates.
 I think the word they used was lumpy.
 So here more from Feldman, when he joins at CNBC at 11 AM Eastern today.
 Let's get to the action overseas.
 We'll start with Europe and Asia and how they're shaping up, Ben Boulos is in London,
 Lisa Kim is in Singapore, Ben, we're going to start with you.
 Yes, good morning to you Morgan, European markets, edging higher in early trade investors
 digesting a whole slew of corporate earnings and look ahead to today's PPI data stateside.
 London's FTSE 100, underperforming its regional peers, pulled lower by losses in the basic
 resources sector, that sector, the biggest loser on the pan-European stock 600.
 Not enough to drag the Europe wide index below the flatline, the pan-European index currently
 about 0.2 percent higher.
 But one of the companies we are following closely is MESC, which raised its full-year
 guidance after the shipping giant reported a beat on second quarter earnings.
 The shipping and logistics firm said Q2 results benefited significantly from higher freight
 rates and improved volumes and said that elevated costs from the Middle East conflict
 had been recovered through commercial measures.
 Elsewhere, Hapag Lloyd has backed its full-year guidance after reporting a rise in second
 quarter revenues driven by higher volumes and spot rates.
 The German shipping firm said strong exports out of Asia and improved U.S. demand helped
 to lift its results, while cost headwinds from the Middle East conflict had weighed on earnings.
 With that, Morgan, it's back to you.
 All right, Ben Boulos, thank you, let's get to the Asia trade wild comeback for South
 Korea.
 Lisa Kim has more.
 And by the way, the moves haven't just been volatile in equities in South Korea, but in
 the bond market, too.
 Yeah, that's right, Morgan.
 So as for Korea, after a brutal drop due to leverage single stock ETFs, Korean stocks
 are staging a rebound up more than 20 percent from their July low over a leverage in that
 market has dropped after Korean authorities implemented stricter rules for retail investors
 to be able to trade these risky bets.
 Let's go over to China.
 The world's largest PC maker, Lenovo's shares popped 20 percent at close.
 The company reported earnings for the April to June quarter hours ago, and its revenue
 jumped 43 percent from a year ago, beating analysts estimates.
 Lenovo is increasingly being seen as an AI infrastructure company due to demand for its
 servers from all the data center build out that's happening.
 Lenovo's U.S. competitors include Adele and Supermicro.
 And on the flip side, though, Chinese tech giant Tencent was one of the worst performers
 after it reported a drop in quarterly profit while a surge in a lot of AI spending back
 to you, Morgan.
 All right, Lisa Kim.
 Thank you.
 Let's talk more about the markets.
 Yesterday's mild inflation data is reinforcing the argument that Fed will more than likely
 hold rates at next month's meeting.
 Joining me now is Ross Mayfield, investment strategist at Beard.
 Ross, it's great to have you back on the show.
 Yeah, I mean, we had much softer than expected labor report on Friday.
 Now, we have basically in line inflation.
 We're going to get PPI this morning too, but how does it factor into a market where volumes
 are low right now or in summer slowdown, but certainly things seem to be pretty orderly,
 unless you're an AI in which case, there's been just a reigniting of that trade.
 Yeah, absolutely.
 I mean, some great momentum out of the AI chip names.
 You love to see the rebound there after a kind of a week summer, but yeah, I think things
 are buoyed by that inflation report.
 And to me, the more important thing for the Fed is the non-front payrolls report last
 Friday, particularly that average hourly earnings, right?
 You know, the main thing the Fed tends to worry about are the more structural inflation
 forces, right?
 And wage pressure tends to be a big one.
 They watch that core services inflation really closely.
 Wage growth is at its lowest.
 It's been really post-COVID.
 It's below where we were in 2019.
 So there's clearly not pressure from the labor market.
 And then the headline job loss number, even though a lot of it was government, I think kind
 of puts a hold back into focus.
 So I think Kevin Worsch will have an easier time convincing hawkishepho, I'm seeing numbers
 to hold in September.
 And then it's up to the data from there.
 Yeah.
 I mean, if we just, if we dig in on the AI trade, the tech trade more specifically here.
 I mean, you look at, with the moves we saw in court, we even nebias yesterday.
 Both of those stocks are up 75% from where they closed two weeks ago.
 If you look at Nvidia and the Rally, we've seen it in that stock in the last two weeks.
 It's now a trillion dollars higher in market cap than Apple.
 It's up 18%.
 Apple's fallen about 10%.
 That was after Apple took the market cap crown a couple of weeks ago too.
 What are we seeing?
 Where do you put your money to work right now when these moves are so fierce?
 Yeah, it's tough.
 I mean, the thing is not, is there demand for AI infrastructure for compute?
 The question is just, what's in the price of these stocks?
 And a lot of them got really beat up over the summer as the market kind of churned.
 And clearly some, quote unquote, value investors saw value there because they knew these earnings
 were going to be so robust guidance was going to be so robust.
 So it's clear it's not a demand issue.
 It's just a what's in the price issue.
 I think if you're looking to play the AI trade, the next place to go is what is going
 to solve these bottlenecks, right?
 Maybe it's software, maybe it's specialized hardware, you know, I think you're seeing
 a lot of that with Sarah Bros.
 But there are so many winners here.
 I think the next leg of winners is going to be, how do we solve this compute problem?
 You know, my, my stance is these hyperscalers are not going to be pure price takers into
 perpetuity.
 And the more painful this bottleneck is, the more resources go to solving it.
 They have plenty of resources as we've seen from CapEx guidance numbers.
 So the question is, who are the companies at the forefront of solving this problem and
 allowing inference and training to really ramp up in the way a lot of these companies want?
 Yeah, I mean, I just touched on it before, but we've seen and I realized we've got yields
 taken a little bit of a breather here this morning in part because of the data that we just
 touched on.
 But the global, the run up in yields has been a global story.
 But case in points, South Korea is 30 year government bond yields climbing to a record
 high earlier this week as well.
 And a lot of the same themes that we're talking about in equities here in the US are playing
 out in other parts of the world, too.
 So how do you think about this domestic versus international and exposure and positioning
 as well?
 Yeah, I think international diversification is important.
 I mean, one of our kind of core themes here is you want to own a lot of AI and then you
 want to diversify with things that are as unrelated to AI as possible.
 So many of the kind of classic diversifiers have been turned into AI trades, right?
 Utilities because of power, industrials because of the construction and data center build
 out and all that goes into that.
 So in Europe, in particular, you have a lot of banks, you have energy and staples, some
 sleepier names, you have exposure to the luxury consumer via some of the high end retailers.
 So I think Europe is an interesting place to add and to get some value, but also to
 diversify, Asia in particular has really just become another arm of the AI trade.
 So if you look at the emerging market indexes, Taiwan, Korea, some of the big names in
 China, I mean, that's basically AI as well as the big US market.
 So I like Europe as a diversifier at home.
 I like financials and healthcare, but I do think that diversification here is important
 because that concentration risk is coming back with a vengeance.
 It's not a risk that markets go down, but it's a risk that you're overexposed to one
 feet.
 OK, Ross Mayfield, great to have you on to kick off the hour, appreciate it.
 Thank you.
 We got a lot more to come here on morning call, including how Ford and Apple are becoming
 part of the buy America trade, plus an anthropic mega deal ahead of its potential fall IPO.
 And later, why young adults are souring on the US economy and growing numbers, if a very
 busy hour is still ahead, morning call will be right back.
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 fares, discover more at Viking.com.
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 What made you confident that you could do something that hadn't been done before?
 I have no fear of failure, trailblazing women, changing the game.
 One of my favorite pieces of advice, think about what your boss's boss needs.
 Leadership can look in many, many different forms.
 It really does come down to just trusting yourself, like the short, and you just got
 to think big to accomplish big things.
 Julie Aborston hosts CNBC Changemakers and Powerplayers.
 New episodes every Tuesday, wherever you get your podcasts.
 Welcome back to Morning Call, Commerce Secretary Howard Letnick is set to join Senior Apple
 Leadership in Houston today, as the company opens a new manufacturing site.
 There as part of its $600 billion US investment push, Letnick and the company are expected
 to announce that the site will begin producing Mac minis later this year, bringing production
 of the device to the US for the first time.
 You can see shares of Apple are up fractionally this morning, meanwhile.
 Ford announcing plans to remove production of some Lincoln models from China to the US beginning
 in 2030, the company also saying that it is phasing out imports of the vehicles from
 China for the US market, and those developments marking the latest instances of US companies
 pivoting.
 As the Trump administration continues, it's reshoring push.
 So for more, let's bring in Tony Chirino, head of US Commercial Bank at BMO.
 It's great to have you here on set.
 Welcome, welcome.
 Thank you so much.
 We should mention with the Ford news, part of the reason that's happening is because
 of the steep, steep tariffs on imported vehicles from a place like China right now, and
 it speaks to the tariff and trade policy piece of this, coupled with things like tax incentives
 to get people to do more investment and more reshoring here.
 How do you see it?
 You know, I spend time, I travel every week, visiting with companies across the US, and
 these CEOs, we have CEO round tables, and talking to CEOs, one of the things, we go around
 and say, hey, what are you optimistic about, and what are you concerned about?
 What they're optimistic about is growth, and what they're concerned about is all the uncertainty
 in the marketplace, what's happening with tariffs, what's happening geopolitically,
 et cetera, and they're concerned about AI adoption and how they're going to do that in
 their business.
 So the way I see it to go back to your question is these CEOs are navigating this, because
 they have to, right?
 The new normal today is that there's a lot of going on in the marketplace, so you've got
 to navigate and make decisions.
 Not making a decision is a decision.
 So they're looking at things a little bit differently than they have historically, profitable
 growth, not just growing for growth sex.
 So we're talking about something like supply chain resilience, which I argue was a dynamic
 that really started to take root in a much more meaningful way in the pandemic, and obviously
 we've had a number of things that have contributed to its acceleration.
 What does that look like?
 What does that mean, especially when it comes to investment in the US versus, so like reassuring
 versus say, near-shoring, for example?
 You know, the complexity of that depends upon the company in the industry, right?
 You're in the medical industry.
 I was with a company in Minneapolis yesterday.
 They're in the medical industry.
 Their facilities are in India and in Colombia to reassure those facilities, not knowing
 what's going to be happening with the rules, if you would, and lots of different things.
 It's very difficult to make that capital expenditure here now.
 Other companies are investing.
 This growth is just amazing to me.
 When I'm with CEOs, they're always optimistic people, right?
 They're saying, hey, we can grow and we can grow organically.
 M&A has also picked up extraordinarily amount.
 Our M&A business right now, we had more M&A in the first two quarters at BMO this year
 than we did all of last year.
 Our pipelines that are all time highs right now.
 So there's a lot of activity going on in the marketplace.
 Before you seeing the M&A activity, is it across sectors, across industries?
 It's across sectors, but what's really interesting about it, just given sort of what's going on
 in the AI, it's in industrials.
 That's where you've seen it a lot.
 The diligence process.
 So typically, when we get an M&A mandate and right now all time highs, it takes around
 six to eight months for those mandates to close.
 Now those mandates are taking a year to close.
 There's this new sort of interesting AI, they're looking at how are they getting disrupted
 by AI, right?
 They're looking at the resiliency.
 Do they have the cyber, et cetera, of what they're doing?
 And then they're looking at, where's their data lake?
 Can they look at that company sort of differently?
 So the diligence process and the M&A process is taking much longer than it has historically.
 That's super interesting.
 Okay, let's talk a little bit about what you're seeing in terms of that AI adoption, because
 there does seem to be this brewing debate, some of it public, some of it perhaps private,
 with Incorporate America right now on, you know, return on investments, the cost of adoption.
 I had one CEO say to me earlier this week, he said, he said, token maxing is the new
 GLP1.
 In the sense that it's like hidden fees and costs that they're showing up when it comes
 time to crunch the numbers for earnings.
 Yeah.
 So the journey that our clients are on around the adoption of AI is sort of interesting.
 I put it in three different buckets.
 The first one is the cyber bucket.
 Like are you spending enough to protect yourself against sort of attacks?
 And that has really increased for most companies.
 The next side of it is on productivity.
 And what I'm seeing is that people are looking at, like let's just take an example, we'll
 do a banker example if you would.
 If you look at AI adoption, if we're looking at our credit process, we might take one
 part of that and say, hey, let's look at how we look at credit policies, et cetera.
 But the end to end process and how you measure those KPIs, a lot of companies are struggling
 with that right now.
 They're saying, hey, we're getting inefficiency.
 I just, I think we are, but I can't really measure it yet.
 And what you need to do is you obviously need to measure that, have KPIs, inspect that
 as a manager, and companies aren't there yet.
 They're saying, hey, we're getting gains, but I'm not sure where to invest it.
 And the last part of this is that, are they actually generating incremental new revenue
 from AI adoption?
 And that's the hardest part of it, and to be candid, most companies that I talk to are
 not there yet, right?
 They're there that just pull costs out, not end-to-end process, but they're looking at,
 how do they generate incremental revenue?
 And that's something that they haven't totally figured out.
 Yeah, super interesting, especially when you think about the earnings season we're coming
 off of here with more double digit earnings growth.
 And if AI is not translating there yet into that earnings growth, you can make the argument
 from a bull case that if it's coming, it continues it.
 Absolutely.
 Yeah, absolutely.
 All right, Tony Sharino, Vimo, it's great to have you here on set.
 Thank you.
 Appreciate it.
 Come back.
 I will.
 I definitely will.
 Thank you so much.
 Straight ahead, an exclusive look inside SK Heinex's $720 billion mission to build the world's
 largest network of memory factories, but first, check out Shares of StubHub.
 Those are dropping as the secondary marketplace reported a second quarter loss.
 Shares of Sturgeon revenue will come from the World Cup, but that was offset by higher
 costs.
 StubHub is raising its outlook for Gross Merchandise sales this year, and nonetheless,
 it's about 17% right now.
 We'll be right back.
 Viking committed to exploring the world in comfort, journey through the heart of Europe
 on an elegant Viking longship with thoughtful service, cultural enrichment, and all inclusive
 fares, discover more at Viking.com.
 Not every game's an all-timer.
 Sometimes you get a dud, but at Bet365, boredom is a thing of the past.
 Thanks to their early payout, there's always a reason to watch, and while they can't make
 games exciting, they can help fans get excited.
 Bet365, download the app and see what early payouts all about.
 Must be 19-year-old or Ontario-only, please play responsibly.
 If you or someone you know has concerns about gambling, visit connectsontario.ca, terms
 of conditions apply.
 What made you confident that you could do something that hadn't been done before?
 I have no fear of failure.
 Trailblazing women, changing the game.
 One of my favorite pieces of advice.
 Think about what your boss's boss needs.
 Leadership can look in many, many different forms.
 It really does come down to just trusting yourself, like the short, and you just gotta think
 big to accomplish big things.
 Julia Bourston hosts CMBC Changemakers and Powerplayers.
 New episodes every Tuesday, wherever you get your podcasts.
 Welcome back.
 I'm Shreedon Inflation today with PPI on the back of yesterday's inline CPI report.
 A new survey for MCNBC and Generation Lab is providing exclusive insights into how young
 adults view the economy.
 It's not so rosy.
 Pippa Stevens joins us now with more.
 Hi, Pippa.
 Good morning, Morgan.
 So young adults are feeling pessimistic about the economy and pinched from higher costs
 from everything, from groceries to airfares.
 That's according to our survey with Generation Lab of young adults aged 18 to 34.
 More than 75 percent of the 1000-plus respondents said the economy looks bad, really bad, or
 couldn't be worse.
 And only one-fifth believe the economy will improve over the next 12 months.
 28 percent said things will stay the same, while half said, the economy will get worse.
 Wednesday's inflation reading showed prices are moderating across a range of goods and
 services, but consumers, including young adults, are still feeling the strain and it's impacting
 spending habits.
 Key financial stresses include housing with 45 percent ranking it as their first of three
 pressure points, followed by finding a secure and decent paying job at 39 percent.
 Student loans and credit card debt each highlighted by more than 30 percent as their top concern.
 Taken together, more than a fifth of respondents said once they pay rent and bills, they've got
 no money left over for other things.
 And that is having an impact on young adults' lifestyle and the economy more broadly
 as they delay both small purchases like taking a vacation, as well as large ones, including
 buying a home or getting married.
 19 percent even said financial reasons are delaying their choice to have children and
 28 percent Morgan said they've delayed health care.
 You know, it's interesting because we look at the broad-based data here, PIPA, and where
 it's not breaking down across demographic profiles in different generations.
 It would seem the economy is doing pretty well.
 I know we talk a lot about K-shape economy, but when you see data like this from younger
 voters, how does it speak to perhaps the opportunity set for this younger generation, especially
 as we go into a midterm election where we know on both sides of the aisle, there's a lot
 of fresh blood coming in with a lot of different policies and different approaches to policy
 than we've seen from the boomers and generations before them.
 I think Morgan, it really speaks to what you noted, which is the K-shape economy and
 the sense that there are many people who are doing very well, but then there are also
 many people who are really feeling the strain and feeling like there is no place for them
 to grow economically.
 Of course, one key issue has been the housing and the property market and the sense that
 it was much easier for prior generations to get in on the property ladder and purchase
 their first home, maybe even in their 20s.
 But now, it really feels like younger consumers are saying that option is not available
 to us, and that dovetails with what we've seen in the rise of democratic socialism, of
 course, with the election of Mayor Mamdani here in New York.
 And our data did confirm that it is younger voters who are more interested in democratic
 socialism as they feel that they have been left out of the conversation and not able
 to start the type of lifestyle that their parents may be once were.
 And I think it was pretty shocking to learn that people are even delaying things like
 getting married or having children because they are worried about those economic strains.
 All right.
 I've been Steven.
 Thank you.
 Still on deck.
 The state of the AI build out and if Chitmaker's hyperscaler's big banks and more are betting
 too big too soon.
 But first, we're speaking of big tech.
 Remember when Apple surpassed Nvidia to become the world's most valuable company?
 Well, that was 10 trading sessions ago, two weeks ago.
 Since then, Nvidia has retaken the top spot to the tune of a trillion dollars more than
 Apple.
 Now, Apple shares are down more than 8% in the past two weeks or so, and Nvidia is up 8%.
 We'll be right back.
 I'm Morgan Brennan.
 Welcome back to Morning Call.
 Let's get a check on U.S. stock futures with the Dow riding a three day losing streak
 the Nasek and the S&P 500 coming off their first positive days.
 And for though, you can see a rebound being attempted by all of the major averages this
 morning with the Dow poised to open up 132 points.
 The S&P fractionally higher up five points ends the Nasek up basically at the flat line.
 Poised to open higher to the tune of six points.
 The Russell 2000 though, that is back at record highs.
 That's where it closed yesterday, and you can see a bid continues there, albeit fractionally
 here this morning, pre-market.
 Big earnings movers today, Cisco and Cerebris.
 We got much more on those coming up this after massive moves in Neoclouds, Nebius and
 Core Weave yesterday.
 If you take a look at those stocks, they surged 34% in the case of Nebius in regular
 trading hours yesterday.
 Core Weave up 19%, but under a bid of pressure here this morning, as you can see right there,
 Nebius down 4.5%, Core Weave down almost 3%.
 If you look at Treasuries ahead today's July PPI reading as well, a bid of pressure when
 it comes to the curve to 10-year Treasury yielding 4.67%, Fed sensitive 2-year Treasury
 yielding 4.17%, and let's get a check on the 30-year Treasury, 4.23%.
 If we check energy as well as Washington and Tehran each, claim control over the straight
 of four moves, although what really seems to be rhetorical gridlock, at least in terms
 of headlines here right now as well.
 You can see crude taking a bit of a breather, WTI is down about 2% right now, trading
 below $82 a barrel, Brent is also down almost 2% trading around $87 per barrel, our
 Bob Gasoline also lower.
 A look at global markets, though, it's a mixed session in Asia with an EK and Cosby
 leading the gains, up 1 and 3.5% respectively, a mostly positive session so far in early
 European trading, as well container shipping really, and focus there with some very strong
 results from the likes of Merisk and Hapag Lloyd.
 If we turn back to the latest look at the AI buildout, though, and one of our top stories,
 stock stories, Cisco, those shares are under pressure despite topping earnings expectations
 and issuing sales guidance well ahead of street estimates, as much as $18.2 billion for
 the current quarter compared to $16.8 billion that analysts were forecasting.
 On the buildout, Cisco CEO Chuck Robbins is saying hyperscalers made $4 billion in
 infrastructure orders in the past three months, bringing the total for the fiscal year to
 more than $9 billion, so here's what Robbins had to say on the call about this last night.
 I think this super cycle is really, it's enabled because we uniquely have our systems,
 our silicon, our optics, security, observability, and really being able to integrate that into
 a stack for our customers.
 I think it's clear what's happening in the hyperscalers with AI.
 We did an excess of nine, we did 9.3 billion in orders last quarter.
 We've now given you a revenue number of 7.5 billion, that's revenue and not orders just
 to be clear in FY27, so we got the hyperscalers moving forward.
 Well, even though they are lower today, Cisco shares are up more than 60% this year, nearly
 8% this month alone, joining me now with Morris, Katherine Thompson, partner in CEO at the
 Thompson Research Group. Katherine, it's great to have you on the show.
 I mean, very strong commentary and results from Cisco shares are under pressure this morning,
 but in general, this week, we've been hearing about where we are in this AI infrastructure
 build at, and specifically the huge demand and what that's meant for pricing when it comes to
 compute your thoughts.
 Yeah, so I think that there's so much focus on the AI spend.
 The magnificent spend from the hyperscalers, but partially what's
 pressuring are two big trends, reindustrialization and the AI spend.
 And so if you're just going to put this in a perspective, Morgan, just the projected spend
 over the next five years, five plus trillion dollars, that is more than the combined spend
 for interstate, the build of the unit, interstate system, the electrification of the US,
 and the build out of the US rail systems. So where we are today, there's three big pressures,
 water, power, and financing. The financing side is of one that's catching up today,
 and so when you see companies like Cisco trade down, there's pressure on gross margins,
 but you also saw this on the hyperscalers, feeding the free cash, it was really pressured
 to leave the quarters. So this is a big concern with the whole build out, and that's the trillion
 dollar question right now. Okay, so in light of that, where do you see the bottleneck,
 or the most pressure in terms of being able to push this build out out, realize it,
 and realize it at what are already lofty prices, but it would seem every quarter prices that,
 or I guess there's a numbers that get higher. Yeah, yeah, so going back to the three categories,
 we talked about water, we think is solvable. We've been to data center construction sites,
 we're talking to the biggest GCs and the builders of these. Power is the big bottleneck right now.
 It will be solvable, but it's going to take time. Financing is a big question mark.
 There's been a lot of spend. That's the one that we could see some pressure, I think,
 so we're late to say now. But in my opinion, that's the biggest question mark from the AI
 specific data spend. Okay, I do want to get your thoughts, especially since we started the week with
 this Nvidia financing platform news that involves quite a few of Wall Street's biggest firms as well.
 When I see commentary, this was Nebius's CEO on the call yesterday. I mean, talking about Nvidia's
 Blackwell generation of chips that they're seeing 15% above the highest price we ever charged before
 and saying that they're selling capacity closer to the time consumers need it to take advantage
 of those higher prices. We have some very similar commentary from CoreWeave CEO as well. And that
 it's not just higher pricing for the newest chips, which is being realized through greater margins.
 But even the older chips are seeing higher prices too. So, is this still where the action is right
 now? Is it the so-called picks and shovels? Should we be thinking about whether it's Nvidia or
 other semiconductor? Should we be thinking about this as essentially a new asset class? Given the
 news flow, we've had just the last couple days. Morgan, you listed off a lot of tight focus names,
 but my argument is you might want to shift and look at really more old school tight names.
 Even if there's an AI slowdown, I guess this has been overlooked by the market,
 we've been in a 3-plus year residential construction downturn.
 Kind of the same for commercial construction. If we see even a modest pickup and demand for those,
 there are going to be other type of household names that might be important. A bit of both
 front-tack and from the broad re-industrialization. It looks at some big deals that have
 were done recently. Martin, Marietta, and Materials, for instance, just into agreement to acquire
 Lawson with America. Lawson is the largest producer of life. You know, the biggest industry that
 it produces supports the steel industry. And the steel industry is going to be hit all across
 that value chain. That's a stock that hasn't really run in the same way some of the textile names
 have. Same goes for CRH, another great name that has made a big acquisition in Arcosa,
 playing on that same team. So on the water side, another name to think about is Ferguson.
 That's another one that is going as you see your increasing water demand needs,
 not just for commercial side, but also on the resident. I mean, the resident is a significant portion
 of their earnings. And yet they've seen really no significant growth from that, or at least
 three years. Wow, super interesting. And certainly builds on the conversation we had with the
 guest earlier in the show about what we're seeing with M&A activity and the fact that it is
 showing up in places like industrials and materials right now. So in light of all of this,
 if we connect all the dots here, we talk about AI infrastructure build out. We also talk about
 re-industrialization. How are the two interconnected? So, well, re-industrialization and AI build
 about two separate things. But they are very much tied together. We would argue that re-industrialization
 was already moving along, even pre-coded. But what AI has put re-industrialization and hyper-drive.
 So it might be okay to have a little bit of tap in the brakes in the AI build out just to catch
 our breath, because you'll see even more significant, you're talking about inflation numbers,
 but even more significant inflation, if you have any type of recovery in those other key markets
 that I mentioned earlier. All right, Katherine Thompson. It's great to have you on. I appreciate it.
 Thanks Morgan. Well, it's not just hyper-scalers that have been the biggest winners of the AI boom.
 We just touched on it. We're going to dig a little deeper here. Memorymakers soaring as well,
 leading the pack. SK high next, the world's top maker of the kind of memory AI needs the most.
 The Korean giant is spending a whopping $720 billion to build the world's largest network of memory
 factories. And CNBC's Katie To Resuv visited two of their factories in South Korea for an
 exclusive look inside. Now, she sat down with the parent company's chairman to talk about his
 huge bet that the demand is here to stay.
 It's like a war. Everybody wants that for their memory chip. Probably next year is the worst
 year for the memory shortage. The process went up too fast. I'm really sorry about this.
 But, well, if everybody wants that all the chips, then I cannot just provide the
 the automatically so well, but I'm trying to my best.
 You can read the full story. See more of Katie's exclusive reporting at CNBC.com. Check it out.
 A lot more to come here. I'm warning call, though, including anthropic,
 apparently in acquisition mode, new details about that and its potential sky high valuation.
 A head of a highly anticipated IPO, for which we've been getting some headlines regarding that
 this morning, too. As we had to break, a check on shares of Jack in the Box, the fast food chains,
 third quarter earnings, be it estimates, but revenue in same store sales missed the company
 is sticking to its outlook for a low single-digit decline in sales for the year,
 as it continues to close some restaurants and works to improve profitability for its franchisees.
 You can see shares pop in, though, out of the box. The turn of 6 percent. Morning call will be right back.
 Welcome back to Morning Call. Let's get a check on some of the morning's latest headlines.
 Mexico is seeking lower auto tariffs and trade talks with the US. The Wall Street Journal reports
 this is part of discussions. To rework the US-Mexico-Canada agreement under Mexico's proposal,
 tariffs would only apply to the value of auto parts made outside of North America.
 Parts produced in Mexico and Canada would be duty free. Well, Apple was in talks to pay publishers
 to use current news and information to improve Siri. The journal reports Apple has proposed
 multi-year deals and has discussed the nine-figure budget for those payments. Apple has declined
 to comment. Well, Anthropic is reportedly in talks to buy D-Cart AI. This is a startup that's
 backed by Nvidia for about $6 billion. Reuters says it would be Anthropic's largest known acquisition.
 DeCart makes so-called world models which aim to simulate the physical world. Well, the deal
 news coming ahead of a potential Anthropic IPO. As soon as this fall, we're hearing September
 or October. Financial Times reporting investors expect the company to target evaluation of
 $2 trillion or more, which would top SpaceX to become the largest ever IPO,
 depending on how you slice it. Powerball officials say one lucky ticket holder in Illinois matched
 all the numbers and last night's drawing for the roughly $1 billion jackpot. The winner can
 choose the lump sum of about $450 million as both four taxes or an annuity that's paid over 29
 years. And we are still more than two years out from the U.S. presidential election, but there's
 a new front-runner candidate for the Democrats. Traders on CalShi have Congresswoman Alexandria
 Ocasio-Cortez at the top of the list ahead of California Governor Gavin Newsom,
 Senator John O'Suff, and former Vice President Kamala Harris. AOC hasn't formally announced
 she's running, saying her main focus right now is to help Democrats win the midterms in November.
 But she also hasn't ruled it out. All right straight ahead, the morning call crew
 teaming up the trading day ahead and the AI trade threat that one crew member says is keeping him
 up at night. We're back in a moment. Time for your call sheet where we look at the topics
 driving the trading day ahead. Crew members today Steve Grasso, Grasso Global, also CMBC contributor,
 Peter Schier of Academy Securities and Jose Torres of Interactive Brokers. Great to have you all
 here. Steve, we're going to get you in the studio one of these days. You're going to have a ride
 with me. We're going to, we're coming and we're going to do this. But it's good to have you here
 even on the panel on the screen, I can say. Peter, I want to kick this off with you. We tease it
 right before the break. The AI trade threat that one crew member is concerned about. What is it?
 The cheap Chinese compute. I'm really worried about China's ability to flood the market with cheap
 Chinese compute. You know, they have the energy, the electricity price, you know, in their favor,
 they maybe take shortcuts into stealing their models using our AI to train themselves cheaper.
 And it's something I don't think we fully priced it. And I think from a national security
 standpoint, which is very consistent with Academy Securities, as well as kind of this
 onshoreing what we call ProSec, it's important to make sure that we protect our industries.
 And we've got to be very careful about allowing Chinese compute to steal it.
 Yeah, I mean, Penny's on the dollar for some of these models and actually had a conversation with
 Booz Allen, CEO about this and some of the cybersecurity risks to your point around this.
 Steve, I want to get your thoughts though because we are seeing token prices collapse and it
 isn't just the Chinese potentially either. This is part of what pushed SpaceX shares higher yesterday.
 They released GROC 4.6 and their early testing. It's scoring nearly as well as some of the top
 models from Anthropic and AI. But here's the kicker. It is approximately 80% less expensive than
 Anthropics Fable 5. Approximately 60% less expensive than Clawed Opus 5 and Open AI's GPT 5 as well.
 Are we seeing a race to the bottom here, even as the spending to build out all of the compute
 infrastructure continues as well? Well, this has been my premise that we're talking about commodity
 based issues and commodity based products. We've never seen the usually boom bus cycles and
 specifically in D-Ram and in NAN and when you look at it throughout the whole market, AI is a
 commodity. So if you think about it, it is a race to the bottom but there's so much spending now
 that keeps the market going. Eventually that day of reckoning will come. Is it tomorrow next month,
 maybe not, but it will come. Okay, do you buy SpaceX here? Steve, I know you've been a shareholder.
 Well, I own SpaceX so yeah, I'd be buyer here if I'm long it now and that short covering rally
 that we saw with the much anticipated unlock that everyone feared really turned it out to be
 a short covering spike and think about it. If you have everyone avoiding something and thinking
 about that's going to be the collapse in the stock and it doesn't happen that day, if forces
 shorts that cover, if forces high beta stocks to cover as well. So everything that was short
 Morgan got covered and I think SpaceX was the catalyst. Yeah, I mean, I'm looking at SpaceX on
 the screen right now. I think at the lows we're around like 108. We're 147 in change pre-market but it
 also speaks to Jose just this re-ignition of the AI trade more broadly that we've seen here. The
 momentum trade more broadly. I mean, just over the past two weeks has been very dramatic. I mentioned
 it in the show earlier today. Corby even Nebius with the moves we saw on those stocks yesterday.
 They're now up 75% from where they were two weeks ago. Yeah, it's been terrific moves
 and the data has been really supportive. You know, yesterday we got this team course CPI big gap
 with headline CPI and that really points to the geopolitical conditions masking the progress we're
 seeing on inflation. I think long end rates with course CPI at 2.5% should definitely come in a lot.
 In fact, the 20 year bond and the 30 year bond should be at around 4847. So a lot of
 opportunity for continued investor enthusiasm in AI if rates come down. That's interesting
 to hear you say that. So we're talking about AI as already starting to show up or potentially
 be poised to show up as disinflationary, even potentially deflationary because we've heard a
 lot of federal officials say at least in the near term it's going to continue to be inflationary.
 Yeah, you know, I disagree. The inflation data is very, very cool, specifically the housing
 area. When you look, when you exclude food and energy, things look very good. We'd actually be
 within striking distance of the feds 2% target within three to four months if oil prices or some
 dude. In fact, that's why in September we're not talking about a hike anymore. We're talking
 about a pause. We're talking about an increase maybe in October or December, but Morgan,
 that can quickly turn into a pause. And then next year we can start talking about cuts again.
 All right. I see two nodding heads here on either side of you right now. So Peter,
 want to get your thoughts on this? You know, one thing I want to add to that is I think the data
 task force is going to be one of the most important task forces that were launched. I think we
 are going to look at new ways to think about inflation, whether it's trueflation, zillow
 real-time rent. There is a lot of information that we ignore that I think was more accurate in 2020
 and 2021, were showed much higher, would have changed the fed decision. I think we've been acting
 on bad data. So I think if they start pulling some of this out, we'll see that inflation
 story play out even faster, whereas trueflation core is at 1.6 right now. So I think they are going
 to create a really good case. I don't think we see a hike any time in the cycle. If anything,
 I think we're back to cuts by the end of this year. All right. Steve, your thoughts? I think I know
 your thoughts. Yeah, I think the panels, the world preaching to the choir, I do believe inflation
 is lower than most people think. You don't hike into a supply issue. That's the last thing that you
 do. The tools that the Fed have are very dull, but I agree with Peter, if anything we see a cut
 towards year-end or we're on hold. Okay. I do want to go back, though, Peter, to geopolitics here.
 And yes, it does seem more broadly, at least within the U.S. equity markets, investors are shrugging
 it off. But if we just did a show of hands here, who thinks that we're going to see any
 kind of deal, any kind of reopening, real-true reopening of the straightforward moves before
 November 3rd, which is midterm election day here in the United States? You think we're going to get
 it. Okay. But it's also Russia, Ukraine. North Korea, by the way, yesterday launching missiles ahead
 of drills between the U.S. and South Korea. I mean, there's some stuff going on. I think when we
 look at it from a geopolitical angle, I think our generals are now kind of a assumption that
 the Gulf has told the U.S. to back off in the military threats if we can't protect them. It's
 unclear that we can protect them. Even if only 5% of the attacks that Iran's making come through.
 So I think we're in the status quo. We'll try some economic pressure. We'll get some oil coming
 through and we'll bounce around. I don't think we see any great deal. On the other hand,
 I don't think we go back to full disruption. Yeah. Jose, how are you factoring this in?
 Yeah, I don't think there's appetite on either side to keep going. I think there's
 everyone just kind of wants to stay back and act tough. But the U.S., at this point,
 you know, where our stockpiles are running low. Iran, of course, is running out of money.
 Like President Trump said. So I think everyone's trying to appear tough here. But I don't think
 we're going to get an escalation in tensions. All right. I want to end on a fun note. Steve,
 I'm going to put this to you. We had a billion dollar powerball winner overnight.
 If you were the winner, if you got the jackpot, what would you be buying right now?
 Yeah. Well, you know, I'm a cowboy with stocks, right? So I buy a lot of high beta names. But I
 would put the chunk, the bulk of it into the market. Look at the chart chart on the market.
 Markets are up 10% since the beginning of market on an annualized basis. You've got to have your
 money at risk. You've got to have your money in the market. Okay. We got 15 seconds.
 I was going to say land in Venezuela. Wow. Okay.
 All right. You got five seconds. Long and bonds. All right. Look at that. Okay.
 Thank you to our morning call, Creel. You guys are the best. Appreciate it.
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