Rising yields, AI earnings and oil risks test markets 9/2/26

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 I'm worried, Bretton.
 And this is your morning call.
 Good Wednesday morning.
 Let's get a check on US stock futures
 with the major averages riding.
 A three session losing streak
 and you can see under a bit of a pressure.
 Again here, this morning, pre-market.
 S&P is poised to open down 20 points.
 The Dow, about 42 points.
 The Nasdaq 147 points.
 Tech earnings in focus today.
 On the back of Dell and Palo Alto Networks.
 Among others, blowout results from Dell.
 And also ahead of Snowflake and Broadcom
 after the bell later today.
 We're going to have much more on everything we're seeing
 with that tech trade coming up.
 Treasuries. Let's get a check there.
 Because bond markets sell off.
 Global bond markets sell off continues to be
 the big story that is driving markets
 across the world right now.
 So we get a check on treasury yields here.
 Higher across the curve.
 US 10-year treasury yielding 4.8% right now.
 We're now flirting with levels last seen in fall of 2023.
 30-year treasury 5.28%.
 So we're basically back to levels that were last seen right
 before the Treasury Secretary announced changes
 to refunding.
 So we continue to watch those levels
 and the Fed sensitive two-year treasury yielding 4.40%.
 Right now, as we see,
 shorter dated debt here begin to move higher as well.
 Energy, let's take a look there,
 because we've got oil hitting its highest level.
 Since July, with US oil, WTI,
 trading around $90 a barrel.
 As we've seen, a re-escalation in terms of strikes
 between the US and Iran and the last couple of days.
 Frank Crude is up fractionally trading just below $95 a barrel.
 To the action around the world,
 we mentioned it, but the rate shock story
 that is playing out globally.
 Steve Sedgwick is in London.
 He's tracking the action.
 There are Lisa Kim is in Singapore.
 Steve, let's start this with you.
 Morgan, I've got a script here or I can go off script.
 So I've decided to do the latter for our audience this morning.
 This is not rocket science.
 We're down on the equity market.
 And as you mentioned, the concern in equity market stateside as well.
 Because bonds are continuing to see the yield spiking
 and the underlying value of the bonds going down as well.
 But I looked at this compared with GFC, compared with 2007.
 And so many of these bond markets,
 it is obvious why people are concerned.
 We talk about the crowding out trade.
 We talk about the inflation concerns and whatever central banks have got to grip on it.
 We talk about bond vigilanteism, if that's even a word.
 But it's just down to pure math.
 Look at the numbers compared with 2007.
 By the way, 2007, long before it was called the GFC, that period.
 It was actually called the European sovereign debt crisis.
 We'll remember that one when people worried about queues in a nicocere ATM
 and selling off treasures on the back of that.
 I remember it anyway.
 Look, the UK, back in 2007, had a debt to GDP of 36%.
 36% of debt compared to the size of the economy.
 It's now up to 94%.
 Of course, people are concerned about the purse strings.
 France, where we're seeing the OATs and we'll put up some of the European bonds now as well.
 France, where the OATs, was 64% of debt to GDP back in 2007.
 They're now up at high as 118%.
 It's the same story wherever you go, although Germany and the notable exception.
 They're still roughly at 64% of debt to GDP.
 The US, we made this big splashy headline, you and I and others, a couple of weeks ago.
 40 trillion dollars of debt.
 But it's not that figure.
 It's the comparison of debt to GDP, which in 2007 was 55.8%.
 Now trading significantly north of 100% as well.
 So no wonder people are concerned.
 Yes, the inflation is an issue.
 Yes, the overcrowding from AI debt issuance as well.
 And concerns about people on momentum trades.
 But surely it's down to the basic numbers, running big deficits and big debt to GDPs.
 With these kind of yields, that is where the problem lies.
 Back to you.
 Yeah, and all of this with sticky inflation to your point.
 And now major central banks poised to potentially begin hiking again.
 Put it all together.
 And this is the discussion that we just can't seem to get away from.
 Steve Stedrick.
 You're the best.
 Let's turn to Lisa Kim because this is the same story that is playing out across Asia right
 now as well.
 In particular, Japan, especially given some of these central bankers week, we've gotten
 here in the last couple of days.
 That's right, Morgan.
 So risk of sentiment push stocks lower and government bond yields higher across Asia today.
 JGBs continued to be top of mind for investors.
 10-year JGB yields rose even higher today.
 And they've doubled over the past year.
 Investors now expect the Bank of Japan to hike rates at its meeting scheduled to happen
 in about two weeks.
 And so higher yields weighed on Japanese stocks.
 The Bellweather Nikkei 225 dropped nearly 3%.
 Tech investment giant soft bank lost nearly double that number.
 And also other chip related stocks.
 Tokyo Electron and Adventist slipped as well.
 But though bucking the trend Japanese beverage maker Ittoen popped more than 8%
 after an earnings speed.
 It produces those bottled green tea that you've likely come across if you've been to Japan.
 And it has its vending machine business to think for that beat.
 And it was really a similar story over in South Korea where Slitz shared Slitz to a two-week
 low with Samsung Electronics and SK Hydex both down around 4% back to you.
 All right, Lisa Kim.
 Thank you.
 Back to the energy markets.
 The US launching fresh wave of strikes against Iran in response to Tehran targeting US troops
 and commercial ships in the region.
 The strikes are the second round in three days.
 Well, let's get to Dan Murphy and Abu Dhabi with the latest Dan.
 Hey, Morgan.
 Good morning.
 We'll bring crude move back to 95 USD about earlier this morning.
 Global bonds also hitting multi-decade highs as you've been discussing after this fresh round
 of US strikes on Iran.
 US Central Command saying it targeted Iran's air defense and radar sites, maritime assets,
 mainland capabilities, and communication facilities overnight.
 Washington now saying these strikes were in response to Iran's attempted attacks on commercial shipping
 in the Strait of Hormuz and on US personnel.
 Now President Trump on Truth Social called the operation large and powerful
 and also sent another warning shot to Tehran as well, saying there would be very little left
 of the Islamic Republic if Iran retaliates.
 Now Iran responded with missiles and drones across the region.
 Jordan said it engaged 13 ballistic missiles in its airspace.
 Kuwait and Bahrain also report taking hostile fire.
 So it really seems as if now markets are attempting to price where the conflict goes next.
 It seems as if the United States and Iran are back possibly in a cycle of direct military escalation
 and the fight really still centered on the Strait of Hormuz.
 Is it an insisting overnight that the US has almost total control of Hormuz?
 But these latest strikes kind of tell us that the Iranians still pose a threat there
 and of course a threat to US allies and countries in the region as well,
 even in the face of this new military and economic pressure from the White House.
 Morgan?
 Alright Dan Murphy, thank you.
 Also worth noting that aircraft carry USS Abraham Lincoln arriving in Thailand overnight too.
 We're seeing a lot of attention given how long it had been deployed,
 the fact that it's now going into servicing and some of the reports that we got about troops
 that were aboard that aircraft carrier.
 Escalating tensions mean time around Iran and elevated oil prices.
 You got a big factor in the renewed global bond sell-off.
 We're seeing the 10 year yields, the US Treasury yields now at its highest level since November of 2023.
 We're trading firmly at 4.8% right now.
 For more, let's bring Jeffery U, senior market strategist at BNY.
 Jeffery, it's great to have you on.
 I guess they'll start right there, but Steve Cedric, I think, set it up really well for this conversation.
 It's the fiscal imbalances in some of the world's biggest, most developed economies.
 It's oil-driven inflation, and now it's monetary tightening and you put it all together
 and it's creating perhaps a very tricky situation for the bond market
 that's now rippling across other asset classes as well.
 Absolutely, and while watching the 10 year JGB yield, it went through 3%.
 Yesterday, for the first time since 1996, there are 303 overnight.
 We had one BOJ hawk, admittedly, talk about while hinted at 50 basis point rate hike.
 That seems to be the baseline we have reserved the Reserve Bank of New Zealand hike overnight.
 Canada, perhaps less so today, but Bundesbank chair or a nargall of saying the ECBs are going to move then go meeting by meeting.
 This is a source of the new normal right now, and I think markets will just have to deal with the tightening and financial conditions.
 Yeah, I mean, you just mentioned the JGB 10 year yields.
 Crossing below is three decade high, two year as well in Japan hitting a fresh 31 year high in trading overnight too.
 How much is Japan and some of the headlines that we're getting out of Japan dynamics with the yen?
 How that's relating back to the dollar, basically driving this global story right now.
 Well, two ways, and really firstly, it just brings through this comprehensive view of fiscal credibility.
 If you don't have a path to bring down debt levels, and of course, Japan's debt levels are well above them.
 The U.S. equivalent and elsewhere, there's no structural reform or a little talk of structural reform.
 Then there is a credibility issue, and the yield is going to go one way now.
 Another side for the dollar, which is much more interesting is what happens if one way to let's say strengthen the yen or really shift that allocation preferences.
 For not just Japanese pension funds, but households in general who are heavily invested in the U.S. and globally for them to shift their assets back to Japan as well.
 And this could take place all over Asia.
 So this will have more far-reaching consequences of the dollar over the medium to longer term.
 But I would say that's actually a healthy thing.
 These economies need to invest in themselves, some to drive reflation rather than just park things and hire yielding U.S. assets.
 Yeah. Okay. Well, and sort of in light of that, when you look at some of the lower debt countries, like Switzerland, they are not seeing long-dated bond yields rise here.
 They're not participating in the sell-off as well.
 So how much of this really is driven by the fiscal picture?
 And in addition to the geopolitical headlines, the political headlines and dynamics that we're seeing in each of these countries as well.
 Of course. Well, Switzerland's fiscal dynamics are very unique.
 Here stuff happens, one of the local levels. So if you look at government debt, there's a far less of that to speak of.
 If you've got countries like Sweden, they've got very, very solid fiscal rules.
 And again, it just shows you credibility matters.
 If you stick to the fiscal rules for Sweden, like as a country, unlike Norway, which does have natural resources.
 And Sweden has committed to that over the years. So if there is a path and even emerging markets, for example, in South Africa has benefited from that as well.
 So if there is, let's say, a bipartisan path in the US, some too stick to a long-term trajectory, markets will reward that.
 Look at Hungary, 7.5% deficit expected for this year.
 It's 10-year bond yields since April's come down by 200 basis points.
 Markets reward that we just need to see it in the larger economies right now.
 I mean, we are starting to hear some of these concerns bubble up of a repeat of a 1997 Asian financial crisis.
 Other events that we've seen play out at different moments in time in the last couple of decades.
 Do you think there's cause for concern here?
 I would say it's a very, very different environment.
 So during the financial crisis, this was a very dollarized economies in Asia back then,
 relying on capital inflows and the balance of payment and work quite stretched.
 This time around, we're not seeing any of that.
 A lot of countries are self-financed and right now.
 If anything, we're seeing greater home bias.
 So local investors investing more, unsure.
 So I guess on a global level, we're not seeing any of those really financial stability risks and the like.
 I know a few things have been flagged, such as a hyperscaler issue in some, for example.
 But regulation and financial stability officials are there much more attuned to this.
 So nothing imminent to speak of.
 But basically, if central banks need to tighten far more aggressively than what's been priced right now
 because of supply shocks and the rest, then that's going to be a much more volatile environment.
 So fixed and convolatility, something we're watching very closely.
 Okay, Jeff, for you, it's great to have you on.
 Thank you for breaking it down for us.
 Thank you.
 We got a lot more to come here on morning call, including fiber defense giant Palo Alto,
 warning of the rising AI cyber risk as open AI scales back the release of its latest AI model over similar concerns.
 But first, a big day for Dell and possible lifeline for the beaten down momentum trade.
 And later, the market impact of Venezuelan crude, how much can the US get?
 How fast can it get it?
 And when will all of this matter for your next trip to the gas station?
 We got a very busy hour still ahead when morning call returns.
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 Welcome back.
 Some morning call returning back to tech.
 We're watching shares of Dell ahead of the open the latest litmus test for the health of the AI trade.
 Shares are popping 9% right now after top and bottom line results.
 It was a blowout quarter for Dell.
 Your forecast easily beat street expectations margins coming in much better than expected.
 We're going to get to that just a moment.
 Top line sales beat even more than the most bullish analyst estimate surging by about 58% year on year.
 Driven by demand around AI.
 Dell says sales at its server business rep 100% from a year ago to 16.4 billion dollars.
 And with today's pre-market move shares are up more than 260% since January.
 It's a different look though for a cyber defense trade palo alto networks.
 After following more than 5% yesterday shares are down again this morning about 2%
 that's despite topping street estimates for the most recent quarter.
 CEO Nikesh aurora on mad money last night discussing what's next for the company.
 And for the sector as a whole in the face of raise of rising AI threats.
 The world has realized that we have to pay attention to cyber because AI is going to be weaponized by bad actors.
 And they will need the large players and cyber security space to help protect them.
 So I think that's what we're seeing. We're seeing the early signs.
 Well joining me now is Melissa Otto head of research at visible alpha at S&P Global.
 It's great to have you here on set. Welcome.
 Thanks for having me.
 I mean we were just talking about this on the commercial break but compared to Dell.
 Everybody else in the tech space that reported after the bell last night.
 And they were all solid reports.
 I mean selling on the news because the comparison there is just so stark.
 Exactly.
 Palo Alto was a bit of a snoozer. It looks like it was priced in.
 I mean the beat to consensus was not that much.
 It was just a couple of percentage points but when you look at Dell.
 It was such a massive beat.
 I mean especially those AI optimized server orders.
 They beat by 20 billion dollars.
 I mean coming into the quarter consensus was expecting 75 billion and they guided to 95.
 Yeah.
 Unbelievable.
 Yeah. I mean it seems to be two big takeaways from Dell that enterprises are spending on tech here across the board.
 When you just look across it's different business segments.
 And that as Ben writes this put it gross margin shocking.
 That even though we're talking about higher input costs and memory costs and all the other things
 that they seem to be being able to push that out to the marketplace and show stronger margin growth than everybody expected.
 They certainly are.
 I think there's like a bigger question here to around valuation.
 Is that just looking at the two companies Palo Alto versus Dell.
 Dell trades at a fairly reasonable valuation.
 We look at consensus estimates for next year and ranges from anywhere from 15 to 25 times.
 That's something that an investor can get their head around.
 I think Palo Alto investors may struggle to wonder how they get to that valuation in a way
 that makes them comfortable with the cash flow and where the trajectory of earnings are going.
 So how does this set us up for more tech earnings after the bell later today.
 Broadcom which is going to be you know a big one coming off of Nvidia and Marvel last week.
 Both both names that have struggled despite very strong reports.
 And then we're going to get more on the software side too with snowflake.
 Absolutely. Broadcom probably going to be very solid similar to what we've seen.
 I suspect that what the market is going to be very focused on is going to be guidance.
 Guidance for not just the quarter, but a longer term for the next fiscal year.
 Networking is likely to be the driver.
 And the market is going to want to have visibility around those AI revenues that the company has been talking about.
 What is going on with them? What the magnitude of it is and how they quantify it.
 It's going to be very important for that stock.
 Snowflakes, another interesting exciting one also valuation likely to be an issue.
 But what they say around their AI demand is going to be critical.
 Okay. I mean I am curious your thoughts on what we have seen in terms of the renewed interest in SaaS.
 And enterprise software, maybe perhaps you could argue that Salesforce and their results last week are helping to fuel this.
 But it was at least for the better part of the first half of the year.
 It's almost inverse trade between AI infrastructure and enterprise software.
 And that seems to be changing now.
 That's my get in maybe coming to an end.
 I think Salesforce really potentially was the catalyst there when they came out and demonstrated that their business is starting to fly on all cylinders.
 It got the market excited, stopped this trading at a fairly reasonable valuation and starting to put together a strategy with AI and software that could be really compelling.
 And that may be getting the market excited to look at other names that may have a similar benefit.
 All right. Melissa Otto, great to have you here on set. Appreciate it.
 Thank you.
 All right. Straight ahead. Forget nuclear, wind, hydro.
 Our Pipa Stevens is digging into another green energy source that could power the next generation of AI computing.
 Geothermal power has been around for more than a century, but so far it's failed to take off.
 We're live from the Utah desert where first of its kind project is about to connect to the grid.
 It's a make or break moment for the industry. The details coming up next.
 We're live NFL team valuations with sports business expert Mike Losanius NFL is by far the most profitable league NFL team valuations now on CNBC dot com slash sport.
 Welcome back. Take a look at yesterday's move in fair vote energy up 28% yesterday after drinking a deal with Google to power some of its data centers.
 Geothermal energy has been around for decades, but historically was only accessible in certain geological formations.
 At least until now, Pipa Stevens is in Utah and she has a look at Firveau's first commercial scale enhanced geothermal project.
 I'm about 200 miles southwest of Salt Lake City at Firveau Energy's Cape Station project, which next month it's going to connect to the grid,
 becoming the first enhanced geothermal system in the world to reach commercial operation. Firveau is using the same drilling and hydraulic fracturing methods
 developed by the oil and gas industry to tap into the hot rock beneath my feet cold water is sent more than two miles into the Earth's core where temperatures above 400 degrees heated up.
 It returns to the surface goes through a heat exchanger and ultimately produces base load emissions free electricity.
 The more than a mile long horizontal wells are what's key since it vastly expands geothermal's potential footprint.
 Firveau just signed its largest off take agreement to date with Google and CEO Tim Latimer told me the hyperscalers are a big part of the opportunity looking forward.
 What we're finding is that in this market that kind of power is an incredible demand across the entire set of hyperscalers and utility customers.
 And to be in a situation now where we understand that the product that we're selling 24-7 reliable electricity that can come online fast is in this once in a generation boom moment where hyperscalers utilities and other customers need it.
 This is a total transformation from 10 years ago when people were questioning even the need for more new electricity.
 The company went public in Maine as big expansion plans but cost remains a key hurdle. Firveau says it can bring it down to $3,000 per kilowatt longer term which it says makes it competitive with other forms of generation.
 Right now geothermal is less than 1% of the U.S. grid at about 4 gigawatts but the DOE says that could grow to 100 gigawatts by 2050 and a lot depends on the success of this project here at Cape Station. Morgan.
 Thanks to Pipa Stevens, we're going to hear a lot more from her on the ground there throughout the day.
 But as we had to break right now, we got a space alert.
 NASA awarding Blue Origin a contract yesterday to develop the agency's Mars Telecommunications Network. This is a next-gen communication system that will enable reliable high bandwidth communications and navigation services for current and future Mars missions.
 It's a firm fixed price contract max potential value of about $700 million to deliver a high performance Mars Telecommunications orbiter to NASA no later than December 31st of 2028.
 Blue Origin beat out rocket lab for this contract. It was a pretty tight competition and you can see it's playing out now in rocket lab shares which are down 3% this morning. We're back after this.
 Welcome back. I'm Morgan Brennan and this is Morning Call. Let's get a check on U.S. stock futures with the major averages riding a three session losing streak and on pace for perhaps a fourth at least as of right now looking at the action here pre-market. All the major averages are poised open lower.
 The S&P down 22 points, the Dow down 78 points and Azac down 162 points.
 Treasuries are in focus again today amid this global bond sell-off that we continue to see and track two and 10-year yields are at their highest since January of last year except that's not true because we've moved higher in the 10-year treasury.
 We're now at 4.81%. This is the highest level we've seen in 10-year treasury yields since November of 2023. Let's get a check on the 30-year treasury yield as well.
 5.29% and if we check on energy we're seeing crude climbing as well again this morning oil hitting its highest level since July and U.S. oil WTI is trading firmly around $90 a barrel and Brent crude is up for actually right now trading around $95 a barrel.
 Tech earnings are in focus today on the back of Dell and Palo Alto networks and ahead of Snowflake and Broadcom after the bell later today we're going to get some other names as well.
 But let's get a check on global markets because it was a lower finish in Asia the knee can't cost be where the biggest lager is there.
 And of course we've seen that amid this global bond sell-off with in particular JGB's the yields there are moving to multi-decade highs both the two-year and the 10-year.
 And if we take a look at what we're seeing in early trading in Europe it's a similar situation there as well that is putting pressure on European forces to this morning.
 Let's get a check on some of the morning's latest headlines. The U.S. launching a fresh wave of strikes against Iran in response to Tehran targeting U.S. troops and commercial ships in the region.
 The strikes are the second round in three days on social media president Trump writing in part that he is not trying to force Iran to the bargaining table and could not care less if they sign a new deal.
 The House meantime last night voting in favor of a stopgap spending bill a continuing resolution that is aimed at averting a government shutdown ahead of the midterm elections.
 The measure which was passed by the Senate in August will keep the government funded at current levels through December 11th.
 And OpenAI saying that its latest upcoming AI model Astra is so advanced that it will require more safety measures and guardrails before it can be released.
 The company adding internal testing has determined Astra is capable of devising and executing novel cyber attacks against hard-to-reach targets with limited human input.
 The news from OpenAI coming as Google is reportedly readying the release of its latest Gemini 3.8 Flash AI model as soon as today as after months of setbacks and talent exits.
 So this is going to be watched very closely. And you can see those shares are at fractionally pre-market.
 We've also got new details in random videos reported deal for hugging face. That's now expected as soon as this week for about $14 billion which may include a $1 billion retention package for hugging face employees.
 And Stan Kronke agreeing to take a controlling stake in the Los Angeles Angels from the Moreno family valuing the team in its regional sports network at $4 billion.
 Kronke sports an entertainment which is in itself worth more than $26 billion also owns the NFL's LA Rams the NBA's Denver Nuggets and the NHL's Colorado Avalanche.
 Also really one of the pioneers in terms of monetizing sports brands around the real estate involved as well.
 Well U.S. Energy Secretary Chris Wright landing in Venezuela last night and his second trip to the country since the U.S. captured a president Nicholas Maduro in January.
 Wright is expected to announce deals today with Chevron as the largest U.S. oil producer in Venezuela that's continued to operate there and other companies on new energy projects throughout the country.
 Now this comes just days after President Trump unveiled a separate deal for the U.S. to get long-term access to a fifth of Venezuela's proven oil reserves under that deal.
 North American blue energy partners. This is a private U.S. backed company Venezuelan company will receive a 100 year lease for 17 oil fields and Secretary Wright telling reporters including our own Brian Sullivan that this will all lead to a significant increase in oil production.
 The American investment in Venezuela is to grow the flow of private capital from a great number of American businesses.
 We want to see a lot of investment coming from the United States into Venezuela to grow opportunity and prosperity for Venezuelans and for Americans and for energy consumers.
 When do you anticipate meaningful increases in Venezuelan oil production and exports?
 So that deals that will be announced tomorrow, several deals will be announced tomorrow just those deals will lead to a more than doubling of Venezuelan oil production in the next few years.
 Well, let's talk more about a potential time frame for a ramp up in Venezuelan oil production and exports.
 The U.S. is head of Middle East and OPEC plus insights at Kepler. It's great to have you back on the show. We could honestly spend an entire hour digging into this.
 But let's start right there with your reaction to Secretary Wright, who is on the ground in Caracas today.
 Obviously the U.S. has really been plans Morgan for for Venezuela, $100 billion of investment over 25 years.
 The scale is huge, but it's just a matter of making sure that these investments are consistent over this period.
 Because for Venezuela to grow its production and we estimate that its production is currently something like 1.4 million barrels a day and an order to significantly go over the 1.5 million barrel per day mark and potentially doubling to 3 million barrels a day.
 That's going to take a lot of years, at least a decade of consistent investments, because it's not just a matter of drilling well some organ.
 It's a matter of investing in infrastructure that isn't there in the country has been under sanctions for such a long time.
 So we have to question the ability of companies signing these contracts today to be committed for this very, very long period.
 And you make a very key point in your most recent note on this and that is that some of these companies have been here before that we have seen this type of dynamic play out in Venezuela in decades past and maybe have been burned by that.
 So perhaps some trepidation at least among the biggest players, which you could argue might be why they haven't been the first ones to the table to ink deals.
 Yeah, for sure. I mean, we've seen this happen in multiple oil producing states, I mean, of an in Venezuela in the Middle East in Iraq and so on.
 Everything looks promising to start with and we hear a lot of deals being signed, but we just have to also put in context that we're dealing with an interim government here.
 We don't know what the political future looks like and we're also dealing with the Trump administration. So what happens after Trump?
 Will this still continue in oil companies look at the commercial prospects of it? They really, you know, they want to make sure that they do get a return on the long run.
 So for now, sounds promising, but we have to wait and see.
 I mean, raise a key point too, because there's going to be questions about legality and we're already seeing that regarding this in Venezuela, but we're going to have a new composition of Congress too.
 At the end of this year and with the 25% equity stake through the Department of Defense, no less in the name of national security that could potentially raise some questions around lawmakers in this country to looking forward as well about this deal.
 I should say 25% equity stake in a Venezuelan company or a company that's run by a Venezuelan.
 Okay, so in light of all of this, what does it mean for the future of OPEC? What does it mean for global oil supplies in the near term as well, if anything, especially when it's my understanding that some of the shipping data is suggesting that you're seeing more tankers come to Venezuela right now to load up.
 Yeah, for sure. I mean, there has been a search for more barrels given the destruction that we saw in the Middle East. So buyers have been looking for alternative barrels. So Venezuela has been one of these sources that could potentially in the future continue to be an alternative source, but it just needs to be noted as well that Venezuela oil is of a very heavy grade.
 So you need to have the right configuration of refineries to process that.
 And in terms of OPEC, I mean, you've seen the reports out there saying that Venezuela is considering leaving the group, which to me doesn't make sense at all because the currently Venezuela doesn't have an OPEC quota.
 It's not part of the system. And even if it starts at the investments and signs deals and so on, it's not like OPEC is going to slap it with a quota immediately.
 It's known that any country under sanctions has the right to recover its production before we set a quota. So it doesn't really make sense to me for Venezuela to be considering that step.
 Plus I'll go back to the legality which you mentioned. There is no doubt Morgan that Venezuela needs the capital and the technology from the US, but it doesn't need another alternative government to control its oil resources.
 And this is something for the Venezuelan government and constitution to closely examine them, not a lawyer here, how legal is this agreement?
 So in light of all of this, let's take this back to something you and I have talked about quite a bit over the months.
 And that is whether this offsets any of the activity we've seen or lack of activity we've seen in the Middle East and with renewed strikes, what you are seeing with the data showing you a Kepler right now there.
 Listen, Morgan, we have been seeing kind of a fluctuation of flows through her moves and some weeks we see higher flows than others, but volatility is still there as you rightfully said.
 I mean, the US is still attacking Iran and Iran is vowing to retaliate and we've even seen Bahrainian Kuwaiti reports of them defending their land against the attacks that happened overnight.
 So the conflict is very active and we don't know when this conflict would end and we do need immediate supply.
 So will Venezuela, will all of these deals bring immediate supply to the market? The answer is no. Is there current spare capacity in the system to make up of like the huge loss that we're seeing?
 Also, we're not seeing that spare capacity emerge that takes years. So for in the short run, I would say there isn't a replacement for Middle East oil.
 Okay, I mean a block. It's great to have you on. Appreciate it.
 Thank you. Don't miss to first on CNBC interview with US Energy Secretary Chris Wright from Venezuela. That will be later this morning at 7 30 a.m. Eastern with our own Brian Sullivan.
 You don't want to miss that a lot more to come here on morning call in the meantime though, including two stocks to watch and two very different moves in the pre market details on what's driving the big swings in MongoDB and GitLab shares this morning.
 And as we had to break a check on Berkshire Hathaway shares class A is sitting around $752,600. Class B shares at just over $500. Both are more than 6.5% off their 52 week highs.
 For class B shares, they're flat for the year so far well behind the S&P 500 gain of 11.5%. Why are we breaking this down free? Well, Squawk Box is going to dig into the stocks performance when it speaks exclusively with CEO Greg Able.
 That's coming at 6 30 a.m. Eastern morning call. We'll be right back.
 Let's get a check on some of this morning's big stock movers. MongoDB is dropping despite reporting better than expected earnings and upbeat guidance.
 On the call and analysts pointing out the company's forecast is implying a slowdown in growth for its atlas cloud database offering in the CEO responded by saying they're taking a quote prudent approach to their outlook needing to see how this quarter plays out.
 Look at those shares. It down almost 14% pre market shares of GitLab meantime. Those are soaring. The clouds off were maker second quarter results beating forecasts as it saw record bookings the company also issuing strong guidance for the current quarter shares are 20% right now.
 Apple updating its maps app to show Lake America instead of Lake Ontario to users in the US after President Trump renamed the Great Lake in an executive order last week amid renewed trade dispute with Canada.
 And Google made a similar update to Google Maps saying a couple days ago saying users in Canada will still see Lake Ontario and users elsewhere will see both names.
 It's also given a resurgence to map quest all of this renaming of major bodies of water will straight ahead the morning call crew is seeing up the trading day ahead and the risks one member says the rise in global rates is creating within markets.
 Here's what's watch day economic data including ADP figures weekly mortgage applications factory orders federal release its latest beige book at 2 p.m. Eastern today and ahead of that we've got CNBC speaking exclusively with New York Fed President John Williams that's coming up on squawk box at a 15 a.m. Eastern.
 We're also going to get earnings from the likes of Broadcom HPE five below and snowflake and it's time for your call sheet where we look at the topics all of these topics and more driving the trading day ahead crew members today Craig Johnson of Piper Sandler.
 Peter Bookfarb 1.bfg wealth partners also CNBC contributor and Phil D'Angelo a focused wealth management it's great to have you all here film and kick this conversation off with you.
 I'm going to we're going to end the hour where we started the hour and that is this global bond sell off what's driving it how do you see it.
 So look when I was last here in April we talked about rates going up for the right reasons and I think that a large portion of this is that you have a very hot economy right now.
 However, we do see this sticky inflation hanging around on the back of this Iran war and where oil has gone.
 So you know it's interesting I look back look back towards the mid 90s and you see Treasury rates during that time period on the 10 year Treasury in the 6 to 7% range.
 So rates are up for the right reasons economic growth but you also have this stickiness of inflation that's persistent through the system on the back of higher energy prices.
 You also have this demand for yields coming out of the AI build that and that's putting pressures on treasuries too.
 So you have kind of a mixed message coming out for the markets but running diversified portfolios as we do for our clients.
 I think you have to take advantage of rates right now this is a great time to be putting money to work in a great yield.
 OK Peter want to get your thoughts on this especially since we've had many conversations about the world that fiscal imbalances are playing in some of these markets including the U.S.
 where we've seen this run up in longer dated debt here I mean 4.8% on 10 year Treasury I mean that's the highest yield I think we've seen since November of 2023.
 Yes and the rising rates is global. I mean French yields are rising not because economic growth is robust there.
 Japanese yields are rising not necessarily because economic growth is robust there. It's a global sell for I believe the same reason.
 You have the BOJ that has taken its foot off the neck of interest rates over the last couple of years which I think unleashed this global rise in long term rates after the initial rise in 2022.
 I think debts and deficits matter certainly in France certainly in the U.K. and I also believe in the U.S. I do think that there's just a global aversion to taking on bond duration.
 Now with respect to where fixed income rates are attractive I'm finding them much more attractive on the short end and I think tips happen to be very attractive because I think they're way underpricing expected inflation in the coming years.
 Craig want to get your thoughts on all this especially since your technical guru and we are hitting some technical levels whether it's in bond markets or whether it's in other assets right now too.
 Yeah Morgan I mean 4.80 on the 10 year here in the U.S. is a really important level any sort of sustained break above that level really leaves 5% as sort of the next level for investors and I think if we see yields continuing to work their way higher it's going to be a headwind for equity markets.
 But more important if you also just sort of look at the sectors that typically perform when you have this bear steepeners what it would be called right now where the long end is going up the short end is remaining unchanged you go back through history over the last 9 episodes when this has occurred.
 You have found that the tech sector is one of the weakest performing sectors and you tend to find that financials and energy are your best performing sectors and I just don't get the sense that most portfolio managers are positioned for a market where you're going to see energy be leadership in the market like it is now.
 If you want to get your thoughts on this especially as we do see US oil WTI trading at 90 bucks a barrel again.
 Yeah so look as you have oil going up again that's going to put pressure on upward on rates going upwards.
 I think right now it's really important to look at those technical levels as was pointed out that 4.80 on the 10 year treasury but I do think that once energy and once this war does calm down a little bit when you have then as well eventually back online and when you have these downward pressures.
 That rates will eventually ease out now we're going to have rates at these levels for quite some time so I don't think this is going to be a quick pass or by to what Peter mentioned with deficits at these levels globally right I mean you look all throughout the G7 nations and everyone's running debt to GDP ratios of about 120 to 130 percent that is too high for the short term once that backs off if we have continued economic growth.
 I think we'll be in a better spot but the markets have done well all year in spite of this and I think that's something to recognize you were in September the worst month of the year.
 So this is what to be expected and this is the catalyst of the month I would say yeah I mean week season Allen and you're seeing that you know in turn feed week sentiment here.
 Peter you're my macro guy and we were just talking about with a mean about her you know this Venezuela deal we're going to hear from the energy secretary in the next call it hour hour and a half as well
 from the ground in Caracas and then of course this renewed strikes in the Middle East right now which is pushing energy prices higher.
 We've also got wheat prices shooting higher given what we're seeing with Russia and Ukraine as well so other commodities that you and I have talked about in the past.
 Something we haven't talked about as much though is how this is all funneling through to the economy especially in a day where you're from the beige book diesel prices are up 50 percent since the middle of June.
 The refining piece of this is exponentially more outsized versus the crude price and the impact it's having not necessarily in the markets but on consumers and businesses.
 I think we're in a full-fledged commodity bull market and to add to your point about oil products you now have agricultural products prices going up as you mentioned with wheat but we've also seen with corn and soybeans the Bloomberg agriculture index yesterday
 we've touched its highest level since late 2023 and that's going to be a challenge for a consumer particularly the lower the middle income one that's already dealing with stubborn inflation and the cumulative rise in inflation over the past five years.
 Now having to deal with paying higher grocery and fuel bills that that's going to be a challenge unfortunately.
 I do think prices are going to continue to go higher on the oil side on the ag side and I think in the industrial metal precious metal side as well.
 Craig you mentioned tech I want to get your thoughts on that given that we got broad calm after the bell tonight we're also going to get snowflake the Dell was just a blowout report yesterday how to think about this AI trade especially as some of these enterprise software names have started to catch more of a bid lately.
 Right Morgan before I jump into that I agree with Peter that this is a bull market for commodities and we are seeing that looking at the CRB index breaking out and doing very well shifting that into the AI trade at this point in time.
 I think it's time to be taking some money off the table in these AI stocks now that's not to say the AI is over AI is just beginning.
 But we're in the job of trying to figure out how to make money and right now a lot of these stocks are not making new highs in a market and you've got about 90% of the names in the S&P 500 that are driving the performance right now and specifically thinking about snowflake coming after the close MongoDB sets the tone right now and that very well could be a bit weaker in here.
 All right we're going to have to leave it there thank you to our call crew great to have you all here.
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