Morning Call 8/14/26

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 I'm Morgan Brennan, and this is Asia Morning Call.
 Good Friday morning. That's right. We've made it through another trading week here. Almost, almost.
 Let's get a check on US stock users. The S&P 500 sitting at a record-high similar situation for the Russell 2000.
 You can see it's a mixed picture this morning. I'll be at modest moves here, pre-market, which is a trend we've been seeing all week.
 I'll be at a mid, what we'll call maybe the early innings of a summer slowdown as volume has ebbed here in trading.
 But S&P is basically poised to open slightly higher, flat to the upside.
 Dow down 80 points to the Nasak poised to open up 50 points.
 A mixed picture right now. I'll be at fractional gains and losses for the major averages with the Dow poised to close in the red as of right now for the week and the S&P and the Nasak higher.
 The Dow's and I just mentioned also at a record. It's riding a three session win streak as you can see this morning taking a tiny bit of a breather, flat to the downside.
 One stock to watch on the back of earnings though, applied materials. Those shares are under pressure following results.
 We're going to have more on that in just a moment. Shares are down 5.5%. Take a look at treasuries too, though. We've got retail sales.
 We've got University of Michigan consumer data this morning as well to cap off what's been a pretty busy week on the macroeconomic front.
 If you look at treasure yields that higher across the curve this morning, US 10-year treasure yielding 4.66% fed sensitive to your treasure yielding 4.15%.
 Keep in mind this is after both the two year and five year yields were at three week plus lows in trading yesterday.
 We're going to have more on what we've been seeing in the bond market and some of that rate action overall throughout the hour.
 But we're also watching energy defense secretary Pete Hegseth saying the US can maintain a naval blockade of Iran indefinitely.
 Meanwhile treasury secretary Scott Besson saying the White House plans to ratchet up economic pressure on Tehran as ceasefire talks have stalled.
 And you can see oil right now is higher here, but we are off the highs that we've seen earlier in the week in trading.
 WTI's up about 1.5% trading rate 82 dollars 47 cents a barrel. Brent is up about 1% trading just below 88 dollars a barrel.
 Let's see how markets in Europe and Asia are closing out the trading week as well. Lisa Kim is in Singapore and Ritaka Gupta is in London with the trade there.
 So Lisa, let's start this off with you.
 Hey Morgan, Asian markets ended the trading week mix South Korea gained 10% this week now firmly in bull market territory.
 Samsung Electronics at SK Heinix added 14 and 16% respectively this week on renewed AI optimism.
 A standout winner today was Hanhwa Ocean, one of the three largest South Korean shipbuilders yesterday.
 President Trump signed a national security memorandum temporarily allowing the Navy to have ships made overseas for the first time in decades.
 Hanhwa Ocean has the most ties with the US most notably a Philadelphia shipyard it bought back in 2024.
 And President Trump has been saying particularly last month that the US will be turning to South Korean and other foreign companies to work with on ships.
 The trading of single stock leverage ETFs tracking Samsung Electronics and SK Heinix has subsided in Korea but over in the states where you are five American asset managers are reportedly seeking regulatory approval
 to launch leverage ETFs linked to Japanese flash net memory chip maker Kyoksia and Morgan Kyoksia is not listed in the US which could potentially raise questions.
 Yeah Lisa Kim thank you. I hope you have a wonderful weekend. I appreciate you sticking around to wrap it all up for us.
 And certainly something to watch to these single stock leverage ETFs in South Korea as well as we've seen some regulatory changes too regarding training for trading.
 So it's been very interesting year not just here in the US. Let's turn to the early trade in Europe and Ritika Gupta for that. Hi Ritika.
 Hey Morgan lots of mixed bag for European equities in early Friday trade.
 Trade is suggesting the latest economic threats by the US against Iran with Treasury Secretary Scott Besson.
 The trading measures that have never been seen with largely seeing red across the board when it comes to a regional level however there is an outwire here.
 Germany's DAX outperforming and looking to end the week on a positive note you can see there just up half a percent.
 Now let's go underneath the herd and take a look at a sector level picture the technology and media stocks there are leading the gains UK software and data stocks are rising in early trade.
 This is following a report from Reuters that Silver Lake is in talks to buy US based workday in what would be amongst the largest software buyouts efforts.
 You can see the stocks 600 tech index up more than 1% along with media insurance and autos also amongst the winners.
 Morgan. All right. Ritika Gupta. Thank you. You have a great weekend as well. Let's turn back to the markets here in the US with the S&B 500 sitting in a new record.
 August is bucking the seasonality trend that though is after a tough July that included the implosion of a situational awareness hedge fund the collapse of that U.S.
 Iran deal that push oil prices and rates back up July was really marked by liquidation and forced selling of crowded tech positions in the NASDAQ 100 briefly tumbled into corrections territory but take a look at what has happened since July 20th.
 The S&P is up and the NASDAQ is up to the tune of 5% and 7.5% respectively and that is nothing compared to some of this week's top earnings movers.
 In just over two weeks core even nebius are seeing massive moves to the tune of 70% plus gains in both of those stocks.
 It's a similar situation for super micro and lament them not quite that high percentage wise but still very robust on the back of their results to this week.
 We've had big moves for two of the markets biggest momentum names as well SpaceX and Palantir and actually just in the past week and a half you've been before those stock lock up
 stock lock up expiration started to kick in for SpaceX to me traded as low as 107 per share. It's now trading above $140 per share.
 We're seeing double digit gains respectively in both of those names and it's even more dramatic post earnings.
 So after taking the global market cap crown late last month another mega wait mega tech player apple has since surrendered it has since surrendered that back to Nvidia and now tops apples market cap by more than a trillion dollars in
 video does and this has become a momentum versus defense trade in the market.
 It's a mixed picture though for other mag seven and hyper scalar stocks as they spend more on compute infrastructure and on their supply chains.
 Investors are betting on their capex recipients semi conductors data center providers and suppliers all of those names have served.
 That's true again for memory as well.
 It was a parabolic trade before July pulled them back to earth at least somewhat but memory stocks have reignited over the past two weeks.
 Names like micron SK high next. Those new US ADRs that have been trading as well and Sandisk which is also a big in part this week because of their investor day.
 So the question now are all of these moves in this tech trade sustainable are they a sign of leverage and frost or do the fundamentals for the AI build out supports a run that could go even higher.
 So let's dig more into that and bring in Jessica in skip director of investor research at stockbrokers dot com Jessica.
 It's great to have you back on the show and let's start right there with that question.
 Is this leverage and frothiness or are the fundamentals supporting the moves that we're seeing here.
 Yeah good morning morning or good morning Morgan there we go great way to start today nonetheless.
 There's actually a lot to cover here so what we've been talking about consistently is the two year note and how that's been elevated and it's just tying to the hiking concerns.
 We've saw that come down about 20 basis points that's a very good environment that's conducive to high capEx spend that supports these tech stocks so seeing that come off.
 I think is created this rally where we can reach these new all time highs now where I have some trepidation right now.
 If we were to look at the socks index it's hitting its 13 weekly moving average which it fell below in July.
 So once we fall below that that's where we started reaching those lows that resistance is the 13 weekly moving average around 12,500 for the socks index.
 If I'm looking at the big four every single one of them are actually reaching resistance at their 13 weekly moving average less Microsoft which tells me we need another catalyst.
 Otherwise we're at a stopping point right now unless I see a weekly close which this is the end of the week above that 13 weekly moving average.
 So the great news is the environment is conducive to this rally the bad news is we have hits the stopping points.
 Interesting I mean in light of that how much are the broader moves we see across the major averages like the S&P like the Nasak tied to the socks or tied to the semiconductor stocks.
 I guess what I'm trying to understand is does that mean that it could trigger a rotation to some of the other sectors again.
 If you don't get the catalyst.
 Yeah.
 If you don't get the catalyst absolutely it's going to trigger a rotation to the other sectors and there's still a lot of health that's there.
 So we have continuously seen this outperformance of the equal weight index versus the S&P 500.
 The healthcare is looking very positive in just drills are looking very positive.
 So I'm okay seeing this this rotation but what I'm afraid of is it's going to put a sideways for a little bit but that's healthy for looking at Dow theory.
 We look at when we see these parabolic moves upwards we need an area of consolidation so the market can get its footing and then that supports us having a stronger base to go higher.
 That so it's not bad if we see that rotation it's bad if we see that rotation with a major decline in the big four and this is looking at the hyperscalers and this is looking at stocks.
 What the catalyst though of course is Nvidia which we can talk about the calf expend as well but Nvidia is actually above that 13-weekly moving average.
 So it has additional room to go it's proved that it's creating that base and that could help support the rest of the market because it represents such a larger portion of it mathematically.
 Yeah.
 Stakes are even higher than coming into earnings and about a week and a half for Nvidia.
 And I love that you're citing Dow theory here I mean this is like starting my Friday off right.
 Okay I know you've been watching the relationship between treasure yields and equities very closely as well so I do want to get your thoughts on the latest we've seen there.
 Yeah so I think the bull case there I have been it came down 20 basis points.
 What we've been talking about is it's not necessarily that it's extremely high it's we can handle an elevated time within the two year yield.
 What we can't handle is it parabolic moves that's what I'm always looking for in the market is something that moves too far too fast that equates to a shock which gives us a downturn or a rally.
 If we said it on the top there we've got you mission flation expectations that comes in that's going to be another input just to watch the two year yield so it's the correlation of the two year yield if that starts coming down then that helps that will help push us higher because of the large cap expense.
 And it's very very interesting be especially with what's happening in South Korea we have to separate almost I feel like three separate things in the market right now.
 One is the environment to is the actual fundamentals of the underlying security so it's conducive to that environment and third is market mechanics and so we have this influx of the retail investor with those additional leveraged ETFs and what that does is accelerate those those moves higher so it's it is a very tricky puzzle that putting together all of the sudden within this market so I think that's really important to watch but.
 The big four has spent it's 165 billion this quarter that was up 27% quarter of a quarter which is nearly isn't nearly triple the pace of the previous quarter which is about 9.4% over 87% year over year for capex they're earning still beat significantly and I think if we look at the fundamental aspect Microsoft really triggered this because we saw.
 How how how they were handling their capex spend and some real revenue and that started creating that good environment layer that with this perfect setup where CP eyes coming off PP eyes coming off employment as well.
 That allowed the two year to come down and then the markets rallying so what I'm trying to say here to the longest answer to your question Morgan is as long as that environment stays and sustains and we're on that trajectory where the labor market isn't collapsing but is still soft.
 In fact expectations are coming down the two year is as well that's the environment and then we have positive earnings with Nvidia and we still see that revenue.
 Show up then that's okay now the problem is if we have higher capex spend and higher rates that's bad okay all right never a dull day for this market that's for sure Jessica and skip great start the show with you.
 We have a lot more come here morning call we really do more on applied materials pullback on the back of earnings and why the bar may have been set too high.
 It goes back to we're just discussing plus we talked to the CEO of one company that's looking to help bolster America's critical minerals security.
 It fresh off of the meeting with the president just about a week ago now deep sea mining have you been tracking this we're going to break it down for you and later forget AI.
 We are going to show you what's been one of Wall Street's hottest trades right now here's a hence it's the best part of waking up especially if you're waking up with me morning call right back.
 What made you confident that you could do something that hadn't been done before I have no fear of failure trail blazing women changing the game one of my favorite pieces of advice.
 Think about what your bosses boss needs leadership can look in many many different forms it really does come down to just trusting yourself life is short and you just got to think big to accomplish big things.
 Julia Boerson hosts CNBC change makers and power players new episodes every Tuesday wherever you get your podcasts.
 Welcome back to morning call we got a market class market flash on up wide materials those shares are falling down about five and a half percent pre market even as a chip equipment maker reported better than expected third quarter results and sees fourth quarter revenue coming in above estimates.
 And let's say investors were hoping for more as a Matt stock has doubled this year the results also coming after rivals land research and KLA posted sell numbers and forecast strong revenue growth as well.
 Here's here's really the takeaway here's what you need to know that they said last night quote we are making additional manufacturing capacity investments to support projected demand through the end of the decade.
 Also we are watching shares of the metals company reporting a bigger than expected loss for the second quarter as spending rose on exploration and development worked tied to its deep sea mining plans results for the company which focuses on critical metals and minerals central to energy defense manufacturing and infrastructure coming after the company CEO met with president trump last week.
 On his administration's efforts to secure domestic supplies of critical minerals is that big round table about a week ago for more let's bring in Jared baron a CEO of the metals company I should note with earnings you are pre revenue and what we're talking about specifically Jared it's great to have you in the show welcome we're talking about specifically is deep sea mining so let's just back it up and break it down for our viewers what that entails where you are focused and why it's necessary.
 Sure good morning well we're focused on polymetallic nodules and if I can take a step back we should think of the planet as 70% oceania today we take no metals from the ocean and the analogy is oil and gas if we think back 50 60 years ago there was no oil and gas coming from the ocean and then today we have more than 30% of hydrocarbons coming from the ocean and the same will come when it comes to critical minerals in fact may not be
 even more when it comes to nickel and cobalt and manganese and that's because in the area where we are focused called the clarion clippet and zone it's about a thousand nautical miles southwest of San Diego.
 No one to be 70% of the global planetary reserves of nickel and cobalt and manganese so 70% of them sit in the form of these polymetallic nodules and they literally just lie on the sea floor like the one in the palm of my hand
 and our opportunity under the Trump administration is to to bring these nodules to the USA and turn them into the critical minerals and today America imports 100% of its nickel cobalt and manganese demand and about half of the copper demand and this is such an enormous resource that can really make a dent when it comes to mineral independence that America is so desperate for.
 Yeah and I want to get into the policy piece of this especially coming off of that meeting a week ago with the president but first I mean mining on land is hard.
 What is it going to take to extract these minerals from the seabed?
 Well you know the only hard thing is doing it for the first time and that's both hard and exciting but if you think about terrestrial land-based or bodies firstly a lot of the very obvious ones have been found
 and so it means that we're going after lower grade material. It means that there are often community or environmental issues that are big challenges.
 There's also a massive infrastructure because with a terrestrial mine you've got to build roads and rail and port and places for people to live and that can put a gating item of often many billions of dollars.
 And of course a lot of the all bodies happen in the developing world and so there's also a lot of sovereign risk when it comes to land-based.
 Whereas in the ocean yes there are 4,000 meters below sea level but a lot of these technical challenges have been solved by the oil and gas and the pipeline and the cable trenching industries.
 And it means we can also scale the operation a whole lot faster. If we want to double our offshore production capacity we convert another production vessel and sail on out there and we can be in production days later.
 And so while it can excite people with regards to some of those challenges at an operational level they end up being a whole lot more manageable compared to the terrestrial operations.
 So in light of that how much hinges on policy that is coming from the administration that is coming from the federal government and what does that mean for the metals company's position to pioneer this newer type of mining?
 Well policy has been in our favor since 1980 and in fact this industry almost got started because in the 1970s there was a lot of trial mining there was a lot of exploration America led the way in deep sea mining but then the United Nations got involved and decided that they wanted to have a say over this area as well.
 And so America went ahead and put it in their own regulatory environment known as Dishmerer and that's managed by Noah who fall under the commerce department.
 And so the rules and regulatory environment are very very good for us. What's been lacking is the conviction and the will to do it.
 And of course what's helped President Trump get a focus on this and also many of his cabinet who've been big supporters of the house while they're in opposition.
 They see the urgency to solve the critical mineral supply problem and I guess it first really dawned on people during supply chain interruptions during COVID and then of course the world woke up to the fact that China dominates critical minerals both the mining and the processing.
 And if you want to build and re industrialize then you need to know that these materials these important base metals and materials that are used for defense and all sorts of super allies and used in the chip manufacturing industry are available to you.
 And so but of course the challenge with that has always been having the conviction to do it.
 And so when President Trump was re elected we were delighted to see an issue in executive order in March last year.
 And that really showed me what the administration's intention were when it comes to deep sea metals and that's really provided with renders boost for our company and our efforts.
 Okay well Jared Baron it's great to have you on the CEO of the metals company will continue to track this and see how all of it evolves.
 I'm also noted a time where a lot of folks are talking about missiles and munition production and getting more of it more quickly.
 You need critical minerals like this to do it so important conversation appreciate it straight ahead.
 A look at why Europe's ongoing heat waves maybe just the start of aluminum power prices and the US companies that could step into help but first let's look at one of the hottest trades right now even if it's summertime and people like it iced.
 It's not AI it's coffee coffee futures are up over 13% over the last three months and that is outperforming the vanics and we conduct your ETF which is only up 2%.
 The roundtale memory ETF that's up over 7.5% it's even outperforming the S&P 500 which is up 4% in that time morning call we'll be right back grab your coffee.
 What made you confident that you could do something that hadn't been done before.
 I have no fear of failure trail glazing women changing the game one of my favorite pieces of advice think about what your bosses 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.
 Julia Bourston hosts CNBC change makers and power players new episodes every Tuesday wherever you get your podcasts.
 Welcome back retail and focus this morning with retail sales figure out before the open July's reading expected to show a 0.1% gain from June that would be a slight drop from the prior month or deceleration.
 In terms of growth and ahead of that reading a look at the XRT retail ETF it's down over 4.5% from its 52 week high the data also coming ahead of a big week for the sector.
 We're going to get results from retailers next week including Walmart target Home Depot lows and TJX mixed picture for those stocks since their last reports as you could see right there.
 The outperformers actually been target but that has been a turnaround story now from retail to the campaign trail and this week's high profile primaries in several states.
 NBC News is reporting that one of the reasons David Crowley was able to come from far behind to beat Francesca Hong in the Wisconsin Democratic gubernatorial primary was because he spent almost all of his money on television ads.
 Hong spends none of her money on TV if that's going to continue into the midterm election November 3rd and into the presidential election two years from now.
 There are three big local TV stocks to watch they all operate in states with a contested House Senate or governor's races.
 Sinclair operates in 79 markets next star is in 132 markets covering 80% of American TV household and local markets across the USA.
 In gray media operates in 115 markets. Sinclair is up 9% in four months next star is up 7.5% in a month and gray media has really parked up.
 It's jumped 30% over the past month. As we had to break though we're checking shares of work day after they closed up 18% it was a single best single day performance ever.
 That pump coming after reports by Reuters that Silver Lake is in talks to buy the company and what would rank as one of the largest software buyouts in history.
 Workday and Silver Lake have responded to requests for comments they have not.
 Also note that the stock was halted a couple times for volatility yesterday morning call be right back.
 I'm Morgan Brennan welcome back to morning call on this Friday morning. Let's get a check on US stock futures with the S&P sitting at a record highs.
 It makes picture this morning albeit not major moves in either direction as of right now.
 The S&P is poised to open basically flat to the upside. Dow poised to open down 90 points and the Nasdaq higher by about 48 points.
 This of course amid a mixed picture also fractional moves for the week for the major averages with the Dow currently sitting at slight losses.
 The S&P and Nasdaq poised for gains on the week.
 Let's get a look at treasuries with retail sales and consumer sentiment data on tap today with University of Michigan reading.
 You can see yields are higher across the curve. 10 year treasury yielding 4.66% to your treasury 4.15% and the 30 year treasury yielding 4.23%.
 We're watching energy to right now with oil in the green this morning albeit off the highs that we saw earlier in the week.
 WTI is up about 1.2% trading around $82 a barrel and Brent is up six tenths of 1% trading around $87.64 a barrel.
 Europe meantime is facing the prospect of an energy crunch this winter. Benchmark Dutch TTF Nat Gas Futures get this.
 They're trading at their highest level since the start of the Iran War.
 With a straight-of-war moves still effectively shut, choking off supply. Data shows that gas storage levels are less than 60% full.
 That is on par with 2021 when Russia started restricting exports and this as it's been a sweltering summer on both sides of the Atlantic.
 We've got parts of Europe that are experiencing their fifth heat wave of the season this week as drought conditions push water in rivers like the Rhine and Danube to drastically low levels, record low levels in the case of the Rhine.
 For some countries to curtail the use of nuclear power and also stymying freight flows. So joining me now is Gabe Dowd, Energy Analyst at Truist.
 Gabe, it's great to have you on the show and that is exactly what I want to start the moves that we're seeing in the energy complex in Europe.
 By the way, all of this amid a super El Nino that could really change dynamics and bring some weather impacts this winter too, what does it mean for energy stocks?
 Yeah, hey, Morgan, thanks for having me. So you're right. Super El Nino could certainly have a number of pretty drastic implications for heating demand here in the US.
 If you just take a step back, the US natural gas market is really in an interesting position as we wait a more potential bullish setup to emerge in 2028 and beyond.
 The next term, it's still very much a weather driven story. To start the year, you had a pretty strong winter event, winter storm fern, which drove heating demand for residential and commercial customers to pretty elevated levels with significantly drew down on storage.
 But you fast forward. June was a pretty mild start to the summer.
 So last year, at least just based on heating degree days, we're there down about 10% near the year. July was warmer. It's obviously been a pretty warm July.
 Natural gas is held at share in July. It didn't lose a little bit of share year or year to solar when the nuclear.
 So natural gas holding share just like the fact that again, July was a little bit warmer than normal.
 And then more importantly here in the US, which was does impact your event, and I'll certainly get into this.
 But because of planted unplanned maintenance on the LNG export side, we're headed for about 6% above normal storage levels heading into winter this year.
 So US coming from position of strength, we're certainly well supplied on the natural gas side, which as you noted earlier,
 we could help our allies in Europe as we look to export as many molecules as we can, given the situation with their storage levels, which as you know, it is right around 60%.
 Normally this time of the year, it's around 80%. It's highly unlikely. Europe hits its target of about 90% heading into the winter.
 So certainly significant implications. It remains to be seen how super El Nino could impact European winter.
 Certainly, if you do have a warm winter here in the US, you have a normal winter in Europe. That would incentivize US, LNG export as many molecules as they can.
 Okay. And of course, you know, factor in layering the fact that you have this Ukraine war that continues with Ukraine specifically ratcheting up strikes on Russian energy infrastructure too.
 There's a lot to watch here, especially as we come into the end of the year and into the winter to your point.
 So let's talk some names, especially if US gas providers are in a tent pole position to benefit from this.
 Sure. So if we do continue to export a significant amounts of LNG currently, we're right around 17 BCF a day and about 115 BCF a day market.
 So we do export about 16, 17% of US volumes. If that were to continue to increase because of the widespread between TTF as you noted, sitting at significantly elevated levels relative to US Henry high, which is the key benchmark here, export will continue to ran, especially when you look at the rest of this year, the number of projects that are expected to come on.
 It could bring feed gas flow. So again, the amount of US production that hits the dock to export. It could increase to about 20 BCF a day. So that would occur.
 It could pull on it'll pull on US vines and obviously increase Henry up to an extent. So from a name perspective, but the US natural gas producers are one of our favorite names is EQT not necessarily exposed to the LNG theme today.
 They are in the process of building out their LNG marketing book, which will impact their cash flow in EBITDA in 2020 and beyond. But here in the US, one of the largest natural gas producers, lowest cost supply wouldn't integrated mid street pipeline business.
 Okay. So relative to peers, they do generate free cash levels down to gas prices as low as about $2 per MMP to you.
 And they do also have those pretty significant resource that I think it's applied natural gas for about 25 years.
 Okay. Keep down. Great to have you on. Appreciate it. We got a lot more to come here on morning call, including tapping into AI to strengthen the Navy's fleet.
 We're going to talk to the CEO of one company, striking a massive agreement with HII, the company formerly known as Huntington Ingalls Industries to help supercharge production of ships.
 Morning call is back after this.
 Welcome back. We got a marketplace on Reddit. Those shares are surging up about 12% right now as the social networking platform gets an invite to join the S&P 500.
 It will be added to the index before the start of trading on Tuesday and it will replace Avalon Bay communities, which is being bought by equity residential.
 All right. Well, HII recently announcing long term performance based production agreements with gray matter robotics and path robotics under the agreements.
 Huntington plans to award a combined $900 million in work to the two companies to accelerate the development and deployment of advanced physical AI and automation across US Navy shipbuilding programs.
 So for more, let's bring in Andrew Lawnsbury, he is CEO of path robotics. Andrew, it's great to have you on welding robots.
 Am I correct to say that? What does that bring to the equation when you talk about building ships for the military, whether it's aircraft carriers or some of these autonomous drones that we're seeing used in the Middle East conflict?
 Yeah, hey, good morning Morgan. Thanks for having me on. So yeah, welding robots. I mean, that's what we focus on.
 Welding is the most critical job on the shipyard. It's the job that is needed the most.
 It's the hardest job to take somebody and train them for. It's the hardest job to retain that person for.
 And ultimately, we see in the welding force at aging workforce with expectations around 20 to 25% of the workforce retiring over the next 10 years.
 I'm leaving a huge deficit in the industry and industry that we're already struggling to scale into.
 And we need to produce more here in the United States. We need to produce more faster.
 So that's why we set off to build path. Path is meant to be physical AI for manufacturing, but our first use case that we deploy into isn't welding.
 To give US manufacturers the ability to augment their workforce and just produce more here and produce more faster.
 Yeah, I've had conversations with multiple CEOs of HII over the years now about how tough it is to get folks up and running and trained and then keep them when it comes to welding.
 There's competition against things like oil and gas and trucking and all kinds of other industries because it is tough to get people skilled in this.
 So what are the robots bring to the factory floor that either humans can't do or how does it help upskill those humans more quickly?
 Yeah, so traditional robotics have been around for 50 plus years. We've seen robots in, you know, tier one automotive or OEMs of automotive for decades at this point.
 Traditional robots usually can't adapt though. They can't see. They can't think they can't learn and they can't usually do these really hard tasks that need the skill and ability to utilize eyes and brains to see what's in front of them and then change and adapt their path plans or the welding parameters to ultimately be able to do and perform really high skilled well.
 So our system is built to be able to give robots that exact ability. It's the ability to see what's in front of them. It uses a large no network called obsidian. It's our AI that allows these robots and controls these robots from end to end to then be able to do these tasks.
 So the goal of these robots are to take on more of the high volume work augment the workforce a lot of work for us to go and do more of the high skill or even higher skill work and ultimately allow the workforce and these robots in conjunction to be able to produce more.
 Okay, Andrew Lonsbury. It's great to have you on. Keep us updated as all this continues to roll out. Appreciate it. Awesome. Thank you so much. And of course, we're having this conversation on a day where the US is planning to send another aircraft carrier to the Middle East to be able to do that maintenance work on the USS Abraham Lincoln.
 So perhaps a lot of opportunity here moving forward when it comes to the naval fleet straight ahead. The morning call crew team up the trading day ahead and why one crew member says the surprise summer rally is back. We're back in a moment.
 Time for your call sheet where we look at the topic striving the trading day ahead crew members today, Ryan Dietrich of the Carson group. Stephanie link from high tower and James Pethacookis from the American Enterprise Institute all three.
 Our CNBC contributors. I love that. All right. We got a lot to jump into here. Ryan, I'm going to kick this off with you. We've gotten soft and expected or in line inflation data so far this week. We're going to get you mentioned numbers, including an inflationary meeting there this morning and retail sales your thought.
 Yeah, first off. Good morning. Happy Friday. Thanks to me in person. It's always fun to do this. We'll talk retail sales. How's the consumer doing? Of course, that's the big one that comes out today. I think what's interesting is I know the labor market last week at some weak-ish data with the jobs number.
 One of our contrarian calls this year, the labor market's actually better than people give a credit for unemployment rate still historically low.
 Initial claims are still low. One more that ISM manufacturing last week showed above 50, so expansion for the first time in years with the labor market. Maybe average is about 50,000 jobs this year, which is what we need to keep unemployment a little on it and keep the economy moving.
 On to that point, you've certainly seen a shift in market expectations around Fed Hikes versus Fed on hold now through the rest of the year with some of these readings.
 So Jimmy, want to get your thoughts on all of this, especially when we're talking about a retail sales number at a time when the average price of a gallon of gasoline is the highest it's ever been on record for this time of year.
 Yeah, obviously the consumer has done a good job shaking off all these concerns, high gas prices.
 But the way I tend to look at it is sort of as a cumulative pressure on consumers, a cumulative pressure on the economy.
 I don't love like the message the markets are sending as far as interest rates. I know stocks are up because we have good profits.
 But you know, nothing's like a broken record on this, but I am really concerned that the markets are sending a message about US debt, about the sustainability of sort of a high inflation economic policy, which includes tariffs.
 I'm glad the consumers are doing great for the moment, but those sorts of pressures, oil prices, tariffs month after month give me great concern and pause.
 Plus interest rates.
 Okay, I mean, along those lines, you got USMCA negotiations continuing here. We get, you know, continue to get some more headlines.
 It's a minimus court decision that was in favor of the Trump administration, I believe that was yesterday, as well.
 You got drone tariffs now too.
 Okay, so we have all that to think about if you're an investor, Stephanie, then you also got to think about the bond market overall because on the one hand to that point, what are you seeing in the long end?
 Highest yields at the long, at a long bond auction since 2001, that's for the $25 billion 30 year auction that happened yesterday.
 On the other hand, we continue to see quite a bit of corporate debt issuance high, you know, high grade investment grade debt issuance, including this Monday, which I think was like the busiest day in seven months.
 I mean, I think that interest rates are higher for a number of reasons. I think it has to do with elevated inflation, even though it's not accelerating, it's still elevated.
 And it's also, it also has to do with better than expected growth. The Atlanta Fed tracker for the third quarter is running at 5.8% GDP growth.
 Now we're not going to get that, but the direction is a lot faster than the second quarter.
 And I think in terms of retail sales and the consumer overall, the data points from Bank of America, the surveys, if you look at the H8 data from the Federal Reserve, blown growth is running 8 to 10% from the banks.
 That's a good sign. Credit quality is okay. They do have jobs. I'm with Ryan in terms of the labor market. I look at the weekly claims versus the non-farm payroll numbers and the weekly claims are still historically low.
 So all of this, you added up. This is one of these are one of the reasons why the earnings have been so strong, up 50% for this quarter so far with double-digit revenues and margin expansion.
 Yeah, and we talked about it at the top of the show, but this August is not going according to history right now. But we also were coming off of a pretty stark shakeout in the second half of July.
 I mentioned at the top of the show, right? I mean, we've seen some like a reigniting of some parabolic moves in some of the semi-stocks, some of the AI infrastructure stocks as well since those lows at the end of July.
 Well, kind of combined with Jimmie just said and stuff just said, you know, message of the markets. I love hearing that. Look what's happening right now, right?
 We have, remember, private equity and how it was terrible those were and how it was going to bring the market down. They're leading. They're breaking out.
 Right now, you have consumer staples on a relative basis, Morgan, to the S&P 500 hitting the lowest level ever.
 That's very bullish. You want that defensive area to lag. Lastly, US dollar looks very topi. A lot of people expect a dollar to hire. If the dollar goes lower, that's usually a risk on sign also. So I know August is usually weak.
 Maybe August of September surprises is here to the upside because we had that early weakness this year already.
 Interesting. Or maybe speaks to that gold rally we've been seeing here too. Okay, we got one minute left. I'm going to see how quickly we can get through here.
 Jimmie, we're having this conversation to midterm election year. We got more primary surprises this week.
 Yeah. We have primary surprises and we may get a few more. I think the continued problem for Democrats is that there are candidates who are running strong.
 Maybe they lose unexpectedly the running strong with an economic message that seems to resonate, but kind of a social and cultural message that completely undermines their economic message.
 And really may make it slightly, you know, they'll probably take the house chance to take in the Senate are less good and that's really self-inflicted in a year where they should really do quite well. And it's a mixed bag.
 Okay, we got five seconds left. Stephanie, record highs. Do we continue here?
 100% into the end of the year. Better earnings. All right. Great to have you on. Have a wonderful weekend. Happy Friday. Thank you to our call crews.
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