Morning Call 9/3/26

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 A key September jobs report after the Fed's first rate hike in three years will the labor market show signs of cooling the new numbers and what they could mean for the economy.
 Good, there's a morning. Let's get a check on US stock futures. The major averages coming off their first positive trading sessions in for attempting for another one here with a lot of green on the screen as you can see right there, the S&P is basically poised to be fractionally higher, indicated to open up about two points right now at the down 95 points and has that 17 points yields, though, still elevated still a big focus, especially given the fact that it is a low volume week coming into labor day here in the US. You can see taking a little bit of a breath.
 There, though, this morning versus what we've seen the last couple of days yields a bit lower across the curve. US 10 year treasury yielding 4.77% fed sensitive to your treasury yielding 4.36% and 30 year treasury 5.25%. If we get a check on the dollar index as well, dollar software against other major currencies. The big story there continues to be the spike we've seen in the end in the last two days here and speculation about the possibility of intervention there again. You can see dollar index 99.20%.
 This morning also getting a check on oil, which is hovering around July highs, but we'll call it stabilization. We're seeing some stabilization here this morning. So WTI is up fractionally is trading around $91 a barrel. Brent is also up about a half a percent trading around $96 a barrel.
 Aside from rates, the other big driver this morning rains big tech and earnings. So let's start with Broadcom shares and get a check on where we're trading there this morning.
 There you go. Down about two and a half percent right now the company posting a top and bottom line beat for the third quarter with particular strength from its AI semi segment. Easily topping street expectations at 16.7 billion dollars forecast to hit 21.7 billion.
 Next quarter Broadcom saying the third quarter profit more than tripled and revenue nearly doubled, but it is the outlook that is weighing on shares.
 Failing to top analysts most bullish estimates with zero margin growth and Broadcom saying demand for its custom AI chips should keep growing is very bullish commentary on the call last night, protecting revenue for that business to double in the next two years.
 If we turn to shares of Hewlett Packard enterprise though also under pressure despite raising sales outlook for the current and next fiscal year and also beating on top and bottom line estimates for the most recent quarter.
 The company CEO says however sales are being held back by a continued lack of components and the company is working with partners to secure additional multi year supply agreements.
 And we're going to hear more on the results when HPE's CEO joins CNBC at 10 a.m. Eastern that's Antonio Neary flip side though take a look at shares of snowflake.
 Those are soaring and I do mean soaring up 23% right now the enterprise software player raising its full year sales outlook after topping street estimates for its most recent quarter thanks to quote rapid adoption of its AI assisted coding tool cocoa.
 Here we're going to hear more from snowflakes CEO when he joins squawk on the street at 10 a.m. Eastern time as well and let's see how Europe and Asia are shaping up today Karen show is in London with more from around the world Karen.
 Good morning to Morgan much more muted action on this side of the world we've got a steady picture for European equities in fact has taken us about two hours to climb even the ranges that you're witnessing at the moment.
 At the moment the Italian stock market bouncing but the strongest signal we're getting on the foot in mid there as we move ahead by about four tenths of the cent modest elsewhere and the French stock market still showing patches of red the uncertainty over global bond yields prevails even as they pull back from.
 Record highs of late now the Asian indices they would largely mix with investors later laser focused on bond markets to what you had don't forget you just mentioned the strengthening Japanese yen that has taken some of the heat out of the equity market as well so a red picture for the Nikkei 225 elsewhere the calls be moving ahead up positive territory today about a quarter of one percent.
 Now we continue to keep a close eye on rates as U.S. Treasury yields hovening multi-year highs but the bond sell off on this side of the pond has eased as traders look to the upcoming U.S. economic data for more clues on the feds next move and as you can see across the board from bonds out of Germany a tracking lower 3.36 the level across to Italian paper BTPs also drifting below the 4.2 percent mark so just a slight reversal from some of the highs we've seen and recent trading sessions Morgan back to you all right Karen show thank you.
 Let's continue the market conversation around earnings yields feds next move bring in Luke bars chief business and current officer for fundamental equity at Goldman Sachs asset management Luke it's great to have in the show welcome to you.
 Let's let's start right there looking for a little bit of a summer slow down maybe perhaps for getting it right now here coming into a holiday weekends state side but overall underneath the surface how would you assess the action we've been seeing.
 Oh look I think clearly Morgan the summer has been one of fairly heightened volatility but more volatility at the stock level the necessarily index level and the backdrop we see for equities is still constructive it's part of this transition we're seeing especially in the U.S. away from a consumer led economy to one that is very much corporate capex led and so to the extent that earnings continue to beat on the upside to the extent we still see estimates for especially hyperscaler capex.
 Increasing through the back end of this year and into next year we think that dynamic still fuels a positive backdrop for equity earnings and for markets more broadly but there will have to be selectivity even as we're seeing this morning at the individual company level if you can beat and raise markets are going to reward you if you can't show that positive for guidance there's going to be a lot more scrutiny around that for outlook.
 Yeah and light of that I mean we just we just mentioned it you see broad calm shares under pressure this morning on the flip side you see snowflake spiking higher are we seeing rotation within tech right now to and in terms of how the markets interpreting the latest round of winners for AI.
 I think we're seeing a natural and quite healthy rationalization of some of the things we saw through the earlier part of the year which is not to say we don't see opportunity in the hardware cycle.
 We absolutely do because that continuation of hyperscaler capex driving the demand for semis it is not going to abate in the near to medium term but we're seeing a broadening out of that perspective and so I think as you go through the value chain on the hardware side especially into infrastructure and power.
 That's becoming more compelling story especially given where multiples are and then on the software side we know what we've seen through the course of this year the scrutiny around software outlooks and the disruption from AI.
 But you're starting to see companies bring forward products and solutions under pin by those AI capabilities that actually have economic value and so the monetization of that which has been the key scrutiny and where you've seen the market really focus has started to really fuel positive both near term earnings but also forward guidance.
 So in light of that at least here in the US I mean when you're when you're looking at an early season that's wrapping up that's what 50% plus in terms of EPS gross I realize some of that has some noise you've got tariff refunds you've got you know companies that have stock stakes in other companies as well.
 We strip all that out still so much more robust than expectations going into Q2 results here is this a peak earnings moment or if there's more realization to be had in terms of the productivity gains and the return on investment from AI are we really just getting started.
 Well I think from our perspective we're really at the early stage of this and you make the point that earnings 50% year on year but even when you strip out some of that noise
 it's still looking like 25% to 30% organic growth in a lot of these areas and that is a hugely positive statement especially in the current context of how do you monetize the capital investment spend.
 And so as we think forwards over the next three months but also more importantly over the next one to two years that cycle looks very healthy for us now what I would say is it is going to be about individual company performance
 an individual company execution the monetization of that spend is going to be a key variable that the market focuses on and I think within that what you are also seeing maybe not in the last six weeks or so but more holistically across the course of this year is the broadening out of that opportunity set.
 And so especially as we go down the market cap spectrum in the US as we go outside the US the growth story that has been very anchored in the US for the last few years is now starting to drive earnings in a very healthy fashion in many other parts of the market.
 What do you like outside of the US right now?
 We continue to be bullish on the emerging market story obviously we know most of the growth this year has been in the AI value chain in the memory space and career in Taiwan on the semi side but actually if you look at what that's doing to the local economies in many of those emerging market that's actually very favorable.
 And so you're starting to see the pull through of earnings into the real economy and that's actually starting to lead some positive economic data points again it's a very heterogeneous universe so you can't just paint it with one broad bush but what we're seeing on the earnings progression both through the course of 26 and forecast into 2027 gives a huge amount of optimism.
 Yeah I mean we've been talking so much about what we're seeing in this global run up and rates particularly in developed economies right now you've obviously had a dollar that's been.
 For the most part stronger recently as well here too and I just wonder how all of that is factoring into this investment picture when you do look around the world when you do see something like emerging markets that has had a strong air.
 Well I think there's obviously a funding cost aspect to that and then there's the legacy concerns around what EMFX does in environment where where dollar is stronger and maybe fed is a little bit more hawkish but the reality is actually the dynamics there have changed a lot in the last decade and so most of that is still now local currency funded.
 The underlying economies are increasingly domestically orientated notwithstanding that AI value chain story we mentioned but at least the pull through into the domestic economy is very healthy and so we think it's a fairly resilient backdrop.
 And as we see that growth dynamic globally stay fairly robust and improve across the key EM markets that to us drives earnings in a very healthy fashion for the course of the next 12 to 18 months.
 All right Luke bars from Goldman Sachs great to have you on appreciate it.
 We got a lot more to come here on morning call including the AI model price wars meta turning up the heat on the competition plus cost conscious consumers.
 Plush toys squishies if you have kids you know what I'm talking about.
 Driving the bottom line at five below a check on the pre-market action is coming straight ahead and later what's next for Clipper's owner Steve Bomber.
 After a major salary cap investigation multi million dollar fine and a one year ban a very busy hour still ahead one morning call returns.
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 A key September jobs report after the Fed's first rate hike in three years will the labor market show signs of cooling the new numbers and what they could mean for the economy.
 Friday 8 30 a.m. Eastern streaming on CNBC plus.
 Welcome back to morning call the race to launch bigger and more powerful AI models rolls on and we really got off to a strong start here for September.
 The latest entrant meta which dropped muse spark 1.3 yesterday which it says puts it on par with top rivals like open AI and Anthropic.
 This is the third AI model released just this week following new versions from Google and Anthropic.
 And it comes as token prices are hitting fresh low breaking below one dollar per million tokens.
 It's the lowest reading since this metric started being tracked late last year.
 Let's bring in Sarah Kunst managing director at Cleo capital Sarah.
 It's great to have you back on the show.
 There's so much news in the tech world to get to but I do want to start here with you because it was met a yesterday on the heels of Google.
 And one of the things that gets my attention here with met a specifically is the fact that not only is this the latest launch here for met I think four models in five months now.
 But you have Mark Zuckerberg taking a social media last night and saying that the new model costs almost nothing to run.
 Are we entering the commodification phase when it comes to these models and what does that mean in terms of a price war phase to gain more market share now.
 I mean I think that the price war whether or not that's a good or bad thing really depends on whether you've gone public already or not.
 For metas investors that is great news and I think we're starting to see that in the stock and we'll continue to see it.
 We saw this with the legless metaverse right you want Zuck to say yeah I'm going to make new things but I'm not going to spend the earth on it.
 So the idea that he is guiding his investors towards hey guys this isn't going to hurt as much as we thought.
 Maybe it's not going to be maybe as much catbacks that's going to be great for meta.
 I think it's similarly going to be good for names like alphabet.
 I think it's not so great for in particular open AI but anthropic SpaceX.
 Those other names where the story they're trying to tell is we're going to make a bunch of money on AI doesn't go well when AI is getting cheaper and cheaper.
 So in light of that how to think about it feels like every day every week there's different horses leading the race here.
 When you have meta which is a pre market 1% right now you had alphabet yesterday and I think there was sort of the sense that they needed a win.
 Especially given how shares have been performing over the last couple of months.
 What does this mean in terms of this idea of driving down costs for models here in the US when open AI and anthropic are burning cash and spending a lot of money.
 SpaceX to a certain extent to and then on the other hand you have Chinese cheaper Chinese models that are coming in and undercutting the market globally as well.
 I mean I think it means that this is not necessarily something where you're going to see the revenue to the spend that people have been promising for the last couple of years right.
 But we've kind of already known that if I had to sort of put a first date of hey there's trouble in paradise.
 It certainly was around the time that Uber came out and said yeah we don't actually want our engineers spending all of this money on AI.
 We're going to start throttling it and we've seen that ripple across basically every enterprise industry where people just are not particularly willing to pay the prices that these hyperscalers had originally hoped.
 All right so in light of all of this what do you make of Broadcom results last night.
 I mean the commentary on the call was very very bullish they're obviously catching a lot of demand to custom build chips and and work silicon here for some of these very same companies that we're talking about.
 And yet the current quarter guidance does seem to be disappointing investors this morning.
 I mean that was a great sort of doing everything right for like 16 months ago.
 But the market has changed and there is no there's anything wrong with Broadcom Broadcom is one of those cockroach companies that I absolutely love been around forever.
 It'll be around forever not concerned about it as a company but that AI story that has worked like magic over the last kind of year and a half.
 Two years for a lot of these companies it's not working the same anymore because that optimism in the trade has has left right certainly the consumer optimism for AI is not there right now.
 You know we see that with the data center backlash and then increasingly everything from enterprise to to what the street wants to buy we're just not seeing the same sort of blind enthusiasm that we had when Papa John said AI and it's earnings call 20 times or whatever.
 So and we just touched on this a few moments ago in the show as well but given what we are seeing with a renewed interest and renewed pick up and some of these software stocks coming off of earnings snowflake perhaps being the most recent here in the last call it 12 hours or so but you had sales for his last week there are a number of other names that have been in focus to is this an area that is capturing investor interest as AI investments begin to pay off to I mean I guess this is this an inflection point for software.
 I think the people are realizing that software is not going to go away you're not going to have five AI agents that that look like a sales force and a trench coat and that was never really particularly logical I think to to a lot of people it never really made sense that AI agents were going to completely wipe out software and so I think now that trade has sort of right size is there a risk that now software takes off kind of past where where it looks like.
 There where it logically should be certainly but I do think that that there is sort of a coming down to earth moment happening right now where people realize that AI is a great tool but it is not a panacea.
 Alright Sarah Coons great to have you on always great to get your insights appreciate it.
 We'll straight ahead we're digging into the quiet rally in Tesla shares ahead of a cyber cap event tonight and what could be a make or break moment for the stock more in call we'll be right back.
 You can think of the car in autonomous world as being like just a little lounge you're just sitting in a comfortable little lounge and you can do whatever you want
 while you're in this comfortable little lounge and when you get out you will be at your destination so yeah this can be awesome.
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 CNBC changemakers spot letting women who innovate lead boldly and are transforming business do you know someone who is rewriting the future nominations for the 2027 list are open now at changemakers nominations dot CNBC dot com.
 Welcome back to morning call let's check us in this morning's other big stock movers five below is higher after the discount retailers second quarter earnings revenue and same store sales.
 Came in better than expected same store sales cops were 14% that beat forecast the company also raising its guidance for the second time this year as it's seeing strong demand for new and trendy products like.
 Squishy toys they also raised their guidance for comp sales to double digits for the years well you see the shares are about 5% see three a.m. time is lower at first quarter results that just passed estimates and revenue guidance for this quarter.
 That is below forecast the company has had a rough go of it shares are down more than 20% this year and haven't closed above $20 since last August turn around strategy marketing turn around strategy is what's underway there right now shares down about 1.5% trading around $10 a share net app meantime is also following despite the company reporting first quarter results second quarter outlook that were well ahead of estimates but deferred revenue came in just shy forecast net app shares are still up more than 50%.
 On the year despite the movie see right there on your screen down about 9% pre-market still on deck though we've got JP Morgan share of global research Joyce Chang here on the global bond yields shock the E.M. markets and so much more morning call continues next.
 I'm Morgan Brandon welcome back to morning call it's get a check on you stock futures with the major averages coming off the first positive at trading session in four.
 You can see attempting to continue that rally here this morning the doubt points to open up 113 points the S&P fractionally higher but one two points the Nasak futures though just turning slightly positive here in the last couple of moments.
 So basically flat three stocks to watch on the back of earnings though broad com queue at Packard enterprise snowflake.
 You could see shares right now moving in all directions broad comes down about 3% HPE is down about 3.5% and snowflake is spiking almost 24%.
 Let's get a check on what we're seeing in treasuries as well right now I think really the themes morning stabilization across asset classes and you could see that playing out in the treasury market with yields.
 Taking a bit of a breather across the curve here US 10 year treasury yielding 4.77% fed sensitive to your treasury 4.37% and the 30 year treasury yielding at 5.25%.
 Let's get a check on energy to fresh strikes in the Middle East we've got more on that in just a moment and you could see energy is crude oil futures are fractionally higher up about
 about half a percent for WTI trading around 91 dollars 47 cents a barrel Brent is also up trading just below 97 dollars a barrel.
 We had a check on global markets to mix session in Asia taking a look at the early trade in Europe mixed trading there to but we'll say very fractional moves marginal moves right now.
 Let's check some of the morning's latest headlines Kuwait says it's army is facing a fresh round of hostile missile and drone attacks from Iran.
 This is just one day after President Trump said the recent fighting in the region would quote not last too long.
 Microsoft me time is shaking things up the company says it will start disclosing quarterly revenue numbers for its Azure cloud business for the first time previously Microsoft only reported growth figures.
 The changes part of a broader shift to change its reporting structure it's going to trim operating segments from three down to two but they are promising more transparency in that process for the most recent quarter.
 Microsoft says Azure had nearly 30 billion dollars in sale it's well behind Amazon 42 billion but it is ahead of Google and certainly represents an accelerated growth rate.
 Tesla meantime is set to hold an event tonight for its cyber cab robot taxi in Austin Texas. Hopefully answering questions about regulatory roadblocks and safety of its full self driving technology.
 Also some of the economics and business plan around how these robot taxis are going to roll out and what that's going to mean in terms of who owns them.
 The cyber cab was originally unveiled about two years ago and Musk said there that it would eventually be available for $30,000.
 And speaking of EVs Ford is reportedly aiming to sell more than 100,000 of its new Fathom EV trucks and its first year of production that is set for next year.
 The Fathom is set to start around $30,000 and aside from Tesla no other automaker has sold 100,000 units of a single EV model in the US in a year.
 Well, if we turn back to the markets and ongoing focus on bonds both here in the US and around the world, New York Fed president John Williams telling CNBC yesterday that the recent surgeon yields is the product of a strong economy rather than market dysfunction on the topic of a potential central bank hike.
 Williams would not commit on whether he thinks one is necessary saying he's still absorbing economic data and that recent inflation data has been encouraging.
 We're not seeing kind of second round effects or broadening of the tariffs. We're not seeing unusual broadening of the effects of higher energy prices.
 And we're seeing well anchored inflation expectations and pretty contained compensation growth.
 So I am actually seeing the trend in inflation moving slowly down as some of the effects of the tariffs can move into the rear-view mirror.
 More let's bring in Joyce Chang, Chair of Global Research at JPMorgan. Great to have you here on set.
 Great to be here Morgan. You know it was interesting hearing from Williams yesterday. I think he's sort of seen as more modern, maybe slightly more dovish when it comes to Fed composition.
 But I did think the comments about how a strong economy is feeling what we're seeing in the bond market.
 We're particularly interesting given both what we've heard from the Treasury Secretary from Fed Chair Worsh, but then also on the flip side of that all the debate around war induced inflation.
 And fiscal imbalances and some of the other things that you know seem to be driving up yields globally. Just love to get your thoughts on that.
 Well look I think the deficit is a key area to focus on and the numbers that have come out they've revised the deficit up 170 billion dollars.
 There's a lot on both sides. You don't see any movement in the Congress where they hold the pursuance where they're going to bring the fiscal deficit down.
 So you're looking at six and a half percent of GDP and you know we call it the six D's that most important one being the deficits as far as some of these long term secular trends which mean higher yields.
 And I still would use a baseline of you know a real yield that's around two and a half percent if you're looking at two and a half percent inflation that's still above target.
 And we're still looking at the potential for Treasury yields to move a little bit higher from here 4.85 percent by the end of the year.
 So I don't think that it's necessarily going to go off the charts, but I also think the message from Jackson Hole was very clear they're not comfortable that Worsh is not comfortable with where inflation is right now.
 So if you get a print that really points to that lack of comfort being there I think the next move will be hikes.
 We have it in December. I think December is not off the table.
 Okay. The other thing I think that's kind of fascinating about all of this is that even as we've seen a run up and rates here in the US and we're trading at multi your highs.
 It's still nothing compared to what we've seen in other markets like Japan and UK.
 What you're seeing in France right now for example as well too.
 So what does that mean in terms of looking around the world where you invest and how to think about some of these dynamics and how it translates back to other asset classes?
 Well I think that markets have to accept that on developed markets the higher for longer on the long end is there.
 And one of the big issues really is just the amount of crowding out you're seeing from longer duration issuance that's coming out from the hyper scalers because we keep on revising those numbers up.
 The Treasury is still the deepest and the most liquid market. So all of the countries though that you've mentioned they all have issues with the deficit.
 So I come back to the deficit as one of the indicators but the Treasury still has the benefit of having greater liquidity, greater size and the ability to have less concerns about the overall market function even if you're worried about the deficit.
 What do you think about emerging markets right now?
 I've seen a pretty strong run there. Yeah there's been a strong run there but I think it could go further.
 I think a lot of that still has been an AI trade because it's been Asia outperforming and a rebound from the sell-off in Korea like Latin America actually has lagged a little bit.
 But one thing that we have looked at is just the profit growth and the margins, the profit margins.
 And we track 28 different economies and 24 out of 28 economies we've seen the profit margins growing.
 So it's not just a developed market phenomena. I mean emerging markets as well.
 We've seen some broadening beyond AI of some of the profit margins but Asia has been where you've seen the strongest performance last couple of weeks because it's still the memory trade.
 I was having a conversation with the CEO of a who's on the front lines I will say of global freight flows and trade flows right now too.
 And one of the things this person said was that they're seeing growth, they're seeing strong demand really across the world right now.
 And so we talk about the economic story here in the US but how is that playing out globally too?
 Is it a strong global economic growth story moving forward?
 Well I think that you have a recovery that has been broadening and we've been seeing that in the majority of the economies that we have been tracking.
 But still those that have been in the AI trade so looking at Korea, China, Malaysia have outperformed and that's where we have a lot of our recommendations as well.
 Or you've seen Latin America lagging that a bit so there is a broadening of the I think that is extending to the non-tech sectors as well.
 But what we still have seen is it's uneven across regions.
 Yeah I mean it's pretty incredible we're having this conversation despite the geopolitical backdrop as well.
 We have some news crossing right now so we're going to bring that to our viewers.
 US employers announced nearly 59,000 job cuts in August according to Challenger Grand Christmas.
 That's up nearly 40% month on month but down 38% from this time last year.
 So of course that's the other big piece of the picture that we haven't touched on yet and that is the labor data.
 I know everybody is talking about CPI readings next week and sticky inflation at least here in the US.
 But how much is also going to hinge on the jobs report this week especially if it's softer than expected?
 Well look I think we have seen sluggish job growth and the work we've been looking at is that you know the AI is starting to influence some of that.
 It's not necessarily printing out in the data right now but I think you've got a number of structural factors in place there.
 You're seeing sort of greater capital efficiency.
 I wouldn't necessarily even say it's AI but just not necessarily the amount of job growth that you would expect given where the pace of the recovery is.
 I do think that some of that is really structural in nature.
 But I also think that Worsh's comments made it clear the focus is less on the labor markets than on the inflation prints that come out.
 So that's what we're really looking at right now is are you going to inflation print which lets them wait a little bit longer.
 But the next move is a hike.
 You can quibble a little bit about the timing whether it's September or December.
 But I think that that's where the bias has been very clear.
 So there's inflation you know there is the deficit and I think the numbers that are coming out on the job market will continue to be on the side that is probably you know softer than anything we've seen historically when you look at these growth numbers.
 Stay close we're going to bring you back. You're going to be part of a call crew can't wait for that. We'll continue this conversation.
 We do have a lot more coming up here. I'm morning call to the NBA dropping the hammer on Steve Balmer and the LA Clippers over its massive salary cap investigation.
 We're going to dig into the fallout for the sports world and beyond morning call. We'll be right back.
 Welcome back. We're turning to the dramatic story out of the NBA.
 The league is spending Los Angeles Clippers owners Steve Balmer for one year finding the team a record 30 million dollars as part of a series of sanctions over its salary cap probe around superstar superstar Kauai Leonard.
 The league making the move after a nearly year long investigation that found that Clippers circumvented the salary cap by allegedly facilitating quote no show endorsement deals for Leonard saying Balmer quote knowingly tried to help the former star forward.
 The Clippers denying the NBA is finding with the team vowing to challenge them as well as the punishment.
 So for more, let's bring in Lee Eagle professor at the NYU Tish Institute for global sport SPS at NYU.
 The best school says the alum sitting next to you right now said at all.
 Okay. Were you surprised by this punishment? Why is it so harsh?
 The punishment so harsh for the Clippers and Steve Balmer's owner because one is there have been allegations before accusations before the league is investigated and this time it seems so severe.
 What the what the league is discovered that the penalties and that it come through and it's a web it's it's sort of found out from the Clippers to sponsors and organizations outside of the Clippers.
 Do you think this is a situation in which whether it's explicitly or implicitly Balmer is sort of pushed to sell the team.
 I'm no good at predicting it doesn't seem it doesn't seem so it's a popular question that makes sense it doesn't seem so the NBA has been pretty clear in the past especially under the leadership or with leadership of Adam Silver as commissioner when there's been an owner who's done something or that a series of acts and actions that have been so beyond that they've needed to move an owner on or really get into those kinds of conversations.
 That doesn't seem to be the case here and it probably isn't likely it seems with what the NBA has come up with in terms of penalties that what you see is what you get at least so far.
 Is this a situation where it's going to impact the valuation of the Clippers and I ask that knowing that valuations in general have continued to climb to record highs.
 It's a question that always gets asked any time that there's any circumstance any situation that comes up where an owner might look like he's got to sell.
 That happened also with the Clippers in 2014 when Donald Sterling owned the team and Steve Balmer came in with a $2 billion purchase that he had of nowhere and raised valuation for all the clubs all the franchises in the league.
 The same thing here this is now upwards of $7.5 billion as an enterprise it involves arenas it involves the club all sorts of other parts and pieces of ownership.
 There's also the LA Lakers down the road $12 billion at least as far as Josh Kushner and Bob Igergo as new owners so start to get into the valuations it doesn't seem like this is the one that goes out it's all going to tank from here.
 Yeah LA certainly seems to be for different reasons the epicenter of some NBA news this summer that's for sure and I believe a new deal in for that stadium with within to it as well.
 I am curious if you think this sets a tone for the league or what it says about the league's decision making now moving forward.
 In terms of the league's decision making the league has been really consistent in terms of how it makes its decisions and it's interesting in that way that with Adam Silver and the leadership team at the headquarters in New York.
 There's the financial there is the legal and then there's the socially responsible and they're very conscious about that.
 So when it comes to things like this situation they really run it through and not just made sort of a snap decision or had a report made conducted and discovered the findings and then meet it out some sort of punishment legally financially there's really all of it wrapped around in some things or moral ethical socially responsible.
 We go it's great to have you here on set appreciate it. Thank you.
 All right straight ahead morning call crew team up the trading day ahead and why one member says investors may be in for a surprise when it comes to the markets September performance.
 We're back in a moment.
 Welcome back it's time for your call shoot where we look at the topics driving the trading day ahead crew members today we've got Joyce Chang of JP Morgan is still here Ryan Dietrich of Carson Group also seem to see contributor and Paul meek so freedom capital markets.
 Great to have you all here OK we just tease it before the break so Ryan I'm actually going to kick this off with you September slump seasonality that we know and sentiment that's associated with September your thoughts.
 Yeah Morgan thanks for me back and hope everyone has a nice three day weekend coming up here September is the worst month on average everyone's heard this last 10 years 20 years third worst in a midterm year.
 I think it's kind of like it's important to note though as you're coming into September how are things going Morgan you'll get the 10 worst September's ever nine of them saw a down year to date return going into it
 and the worst ever were like down double digits coming in 74 2002 2022 and 2008 that's not the case now right so that's one positive and one more.
 When you're up in August and up double digits for the year September historically does pretty well but it's the rest of the year that's higher like a 10 out of 11 times
 so one more quick one we do have some internal deterioration more and more stocks are below the two day moving average.
 Very real low number above their 20 day moving average a little flush out maybe a little more trouble early in September but I think we have a surprise September rally and all said and done.
 Alright Joyce would love to get your thoughts and especially since we know it's also a midterm election year and once we get through the elections and we have outcomes you do see tend to see the stock market rally in response.
 Well I think it's all been about the cat backs numbers I mean we keep on taking the cat backs numbers up me take a look at the cloud service providers and we have that up now it's at 940 billion dollars
 and we've also taken up just even the issuance that's coming out of data centers so you're receiving the demand there you're seeing the cat backs growth that's still very much on track.
 I think what everybody's looking at is you know oil prices what's happening on the Iran conflict is this going to be something where the Iranian strategy is to have this indoor through the midterm elections.
 But I'm not expecting many big surprises out of the midterm elections I think you know the House will flip but it's not going to be a full blue wave there are just not that many competitive seats.
 I think markets will look at though is there a third reconciliation bill that can go through there seems to be no progress on any fiscal consolidation measures.
 I think that's going to keep bond yields high even if the equity markets end up you're sort of bucking the trend of being down on September and having a more positive return.
 I don't think you're necessarily going to get much relief you want more treasury yields are at.
 Paul would love to get your thoughts and have you weigh in on this whole conversation especially when we talk about midterm elections.
 One of the things that really is and it doesn't matter what your political party is one of the things that very much is on the document here is AI infrastructure build out and how the public is reacting to it and how potential incoming lawmakers are going to react to it.
 It's a very serious issue because you have some governors that have been very pro AI development you think about Shapiro and Pennsylvania and Abbott in Texas and Texas is particularly interesting because in the United States the bulk of data centers are in West Texas with honorable mention going to the state of Virginia.
 So now that these fellows are trying to get reelected they do what they always do.
 There's a 180-degree flip-flops and so we do have some regulatory angst some regulatory push back I expect it to only worsen and we know that this is a very important driver not just for technology which overwhelms the markets but also for its impact this development on GDP growth.
 So I'm a little bit cautious and I think in the end we will be fine but we're going through a period right now where the narrative is clearly anti-AI development.
 And we're having this conversation as we have more earnings from more tech companies including Broadcom who was very bullish on their call last night Ryan about this ongoing AI demand and what that means for a company like that.
 Well that's right and they're not the only one that said that right and they're down that would 3% or so pre-market you've got snowflake on the other side of 20 something percent on this incredible news also.
 I think Morgan you know a month a week ago today was a signal right that's when software had a 7% rally one of the best one day rallies we've ever seen go back the last 10 years when software gains more than 5% a day near lows like it was.
 That usually means software is up significantly 3 and 6 months later listen lifeblood of a bull market is rotation I've said it with you for a while.
 Yes it was all about chips first half of the year but I think software clearly showing they're taking back the baton and that's some a good thing for diversified portfolio.
 One more quick one on a monthly closing basis the software equal weight ETF last month closed at all time high.
 Nobody probably expected to say that back in March or April that's a good thing with the market broadening out I'd say.
 Okay Paul looks like you want to respond to that.
 Yeah I listen to the AI results from Broadcom last night and consider this this is a company that has a October fiscal so for fiscal 28 which isn't so far out in the future.
 The company is probably going to do 35 to $40 earnings per share and before the call the street was expecting $26 a share.
 So I think despite the reaction today this is overwhelmingly positive news not necessarily for the near term but for the long term I'm very comfortable with AI infrastructure building probably the super cycle last into 2030 in my view.
 Joyce I want to go back to something you're just talking about energy prices geopolitical landscape everything we're seeing around that one of the things you said earlier in the show is that you've built in a case for a hike in December.
 Why December and especially in a day where we're going to get more fed speak in general how much that does hinge on some sort of conflict resolution whether it's Iran whether it's Russia Ukraine if that were even to happen or something else.
 So the key thing we're looking at is how the August inflation print comes out you know and there is a case where you could hike in September depending on that outcome.
 But what we're forecasting right now like 0.2% we think there's probably a case where you can wait a little bit longer till December.
 But I think it's very clear that whether it's September December you know the case for hiking is there and succumb the nation of different things it's the higher energy prices it's the sticky inflation but it's also the higher deficit numbers.
 So I think the case is less about whether it is September or December but just what kind of hiking path are we on are we looking at one hike and it's done or are we looking at that you know typically what happens in these cycles ends up being 50 to 100 basis points.
 So September is in focus right now but it is very dependent on the August inflation print we still have December in the forecast but you know I wouldn't rule it take it off the table for September.
 Okay we got a minute left I'm going to just lightning around this Ryan the other earnings in focus consumer earnings whether it's five below Lou lemon where you get after the bell tonight to thoughts.
 Yeah I mean overall we'd say the consumer still pretty solid the labor market I know that's everybody's discussion right now it's a little bit stronger under the surface some of those regional manufacturing data pieces showed some big jumps in employment.
 So overall consumers still pretty healthy would say Morgan.
 Okay and Paul we're going to get Tesla cybercab events tonight as well we've seen that stock rebound here in the last call it month or so space X to alongside it they've been trading kind of similarly.
 Yeah when I take a look at those companies Tesla clearly it's EV businesses in a decline not necessarily in far as unit volumes but profitability is very poor.
 Space X that was out even before the IPO the fact that this was valued at two trillion dollars and even three trillion of one time really just blows me away 92% of the total available market according to must for this company is AI not rockets.
 Yeah.
 Not satellite broadband and the problem there is they're not even close to the top.
 All right we're going to have to leave the conversation there thank you to our morning call crew great to have you all here.
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