Morning Call 9/1/26

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 I'm selling off. I'm Morgan Brennan,
 and this is your morning call.
 Good Tuesday morning,
 with the Dow,
 the Nasak S&P 500,
 riding a two-session losing streak,
 so that we did see gains for the major averages
 for the month of August.
 Let's take a look at U.S. stock futures
 here right out of the gate.
 You could see firmly in the red.
 We've taken a leg lower here in the past call at hour,
 or so.
 The S&P is poised to open
 down 46 points, the Dow,
 about 277, 278 points,
 and the Nasdaq are really taking it
 on the chin this morning,
 and the Nasdaq is poised to open down 278 points.
 Why? Because we are seeing
 this global bond sell-off reignite this morning.
 Let's take a look at the Treasury market,
 the 10-year yield,
 sitting at its highest level since January of 2025.
 We broke above 4.75%.
 Yesterday, you can see right there on the screen,
 10-year Treasury yielding 4.78% this morning.
 30-year Treasury yielding 5.27%
 in the Fed-sensitive 2-year,
 4.36%.
 It's not just a U.S. bond sell-off story this morning,
 and we'll get to this a bit more in just a moment,
 but Japanese JGB's,
 the 10-year yield,
 they're crossing 3% this morning.
 Highest level we've seen in three decades.
 We have much more on all of this coming up throughout the hour,
 but also take a look at what we're seeing
 in cryptocurrencies right now.
 Bitcoin under pressure down about 1.5%
 $77,843.
 This morning, you can see other crypto currencies
 also falling this morning.
 Energy, in focus,
 amid ongoing tensions between the U.S. and Iran,
 regarding the strait of Hormuz.
 You can see WTI climbing further this morning,
 up to 1.5%.
 Just below $88 a barrel,
 2% move for Brent as well,
 which is trading around $92 a barrel.
 Our bug gasoline futures up 1% this morning.
 Let's see how Europe and Asia are shaping up,
 though Ben Bulos is in London.
 Lisa Kim is in Singapore.
 Ben, let's kick it off with you this morning.
 Yes, good morning to you,
 and it is the start of the new trading month, of course,
 and European equity markets really on the back foot,
 and they have taken a more negative turn
 as we've gone into the session.
 We're now a couple of hours into the trading day.
 Amid the wider sell-off in global bonds,
 the jump in the oil price,
 which has fueled those inflation fears as well,
 investors will also be watching out
 for bits of U.S. economic data out later.
 The Joltz job openings and final manufacturing PMIs,
 but as things stand this morning,
 this is the picture across the key benchmarks you can see,
 down sharply on the London,
 the Frankfurt, the Milan in-date.
 The Katkaron was above the flatline briefly
 at the start of the session,
 but even that has now tipped into the negative.
 So very much a cautious,
 risk-off sentiment prevailing here in Europe.
 Meanwhile, the bond sell-off continues
 in Europe as well contributing
 to those equity falls.
 Short-term borrowing costs have shot up
 as Germany's two-year bond yield hit its highest level
 since July 2024,
 and France's two-year government bond yield rose
 to its highest since April 2024.
 We know that, of course,
 that is linked to the moves we've seen on U.S. treasuries,
 and you can see the consequences,
 the ripple effect, as I say,
 if you would drop a penny
 in the water off the East Coast,
 we feel the ripples right the way across the ocean here
 in Europe, Morgan.
 All right, Ben Boulos, thank you.
 Let's get to more regarding this global bond sell-off.
 The overnight action we've seen in Asia,
 we just touched on it, but for more,
 we turned to Lisa. Lisa Kim.
 Hi, Morgan.
 So Asian stocks traded mixed today
 with the bigger markets closing near the flatline,
 but the two big stories out of Asia today
 wore the sell-off in Japanese government bonds
 and she is trading debut in Hong Kong.
 Eels on the benchmark,
 10-year JGB surpass a key level of 3%
 for the first time since 1996 joining a global bond sell-off.
 And reasons behind this are one inflation
 from higher oil prices.
 Remember, Japan imports a lot of its crude oil
 for the Middle East.
 B, investor expectations that the B.O.J.
 will hike rates sooner rather than later,
 and also worsening fiscal health
 as Prime Minister Tanaitakaichi doubles down
 on pumping money into the economy
 to bros to boost economic growth.
 Over in Hong Kong, the fast fashion retailer,
 Sheen, it was really the third time
 the time for that company after failing to go public
 in New York and London.
 Sheen shares fell 9% at one point
 before pairing some of the losses by clothes
 and our Asia Business Reporter Jenny Lee writes
 that while Sheen had enjoyed first-mover advantage
 in gamified discount hunting TikTok
 now offers some of the same value back to you.
 All right, Lisa Kim, thank you.
 September has the reputation as the worst month for the markets,
 but this year could be different.
 We'll see.
 The S&P 500 closing out August in the red,
 but it's still well above its 200-day moving average.
 We're going back to 1950.
 The index has averaged a gain of 0.2%
 when starting September above that trend level
 that compares to an average loss of 3%.
 When the S&P begins the month below,
 it's 200-day moving average.
 Joining me now, Mark Hayfully, Chief Investment Officer
 at UBS Global Wealth Management,
 Mark, it's great to have you on before I start getting into
 whether this could be a September to remember or not.
 I do want to get your thoughts on what we are seeing
 in the bond market and whether equities
 and other asset classes are taking their cue
 when we see some of these levels reached.
 Well, this is an interesting case
 because I think that rather than equities in the broader sense
 or more than a couple of days,
 I don't think they're taking the cue from the bond market.
 I think the bond market is taking the cue
 from what's going on,
 what we're seeing in equities and company earnings,
 which is just strong growth,
 continued AI CapEx investment,
 and that is leading through
 where we're seeing these higher interest rates
 as one of the factors.
 Yeah, so it's interesting to hear you say that.
 So in light of that, how do you see,
 we'll pull some of these apart.
 How do you see this AI investment cycle continuing
 to play out here, especially as we do look to some more,
 I think, key measures for the market,
 including broadcommering tomorrow.
 Well, this is the big one, right?
 I think everybody has an AI bet on whether they
 mean to or not.
 And so yes, we're watching it closely.
 We still feel pretty good about the AI CapEx investment
 continuing and the rally that we've seen in equities
 that is in part due to AI and the boost
 that it's created for GDP growth.
 We see that broadening out as more companies take advantage
 of AI and the growth that is out there.
 So when we get to the end of the year,
 we're actually looking at something like
 8100 on the S&P 500,
 a lot of it driven by what's happening in AI.
 So you've got the AI data center build out.
 You've got,
 presently mandated tariffs.
 You've got war driven energy supply shock
 that's affecting the world right now.
 And then you have underlying core CPI
 that's actually moving in the right direction.
 So, and just looking at your notes here,
 how do you cut through the noise to focus on the data
 and what is the data suggesting?
 Yeah, I think looking through the data is very important
 at this time,
 especially since the new Fed share is saying
 focus on the ball, not the referee
 and getting his legs in terms of communication.
 For us, it's a close call.
 We do see that the inflation is heading
 in the right direction,
 certainly not where they want it to end up,
 and fast enough.
 We're going to have some job numbers end of the week.
 That's going to go into their thinking.
 We don't think that they want to hike in September.
 It's very close right now,
 and we'll see how some of this other data plays through.
 But again, even a Fed hike or two
 is unlikely to derail this story.
 Now, if the Fed does hike
 and does start to give forward guidance
 about a rate hiking cycle,
 that would certainly impact the market.
 All right.
 I mean, there's so many different factors
 that are playing into this investment picture right now.
 So in light of that,
 whether it's for the month of September,
 whether it's through the end of this year,
 and by the way, it's been a pretty strong year overall
 so far for 2026,
 whether it's looking to position yourself into next year,
 how would you be advising investors to do that?
 And what does that mean?
 Not only from an equity standpoint,
 but from something like fixed income right now,
 where we know there is a lot more volatility.
 Well, there are so many factors
 and that is what makes investing at this time very interesting.
 I think, you know, we can't predict
 which of all these factors, the growth,
 the inflation, the uncertainty around two wars,
 the elections coming up,
 you know, how that's going to play out
 for the long end of the bond market.
 And so we would probably stay away for that from that.
 And in fixed income, try to stay more,
 you know, five to seven year duration,
 where you're getting good yields.
 A lot of our clients still really like that income
 for their portfolios,
 that ballast in their portfolios.
 We still like global equities here.
 We still like in the AI sector,
 AI-affected companies.
 And we want to have exposure to those kind of long-term trends,
 but I think you need to be a little more selective there.
 And then we also like commodities
 as another way of playing some of these trends
 around inflation and growth.
 And then, you know, coming back to your original point
 about there's so much going on,
 we still have a lot of clients who look at the world
 and kind of still have too much cash.
 And so, you know, participating in the market,
 getting that cash to work,
 is often the biggest thing we can do to help clients.
 All right.
 Mark, carefully.
 Great to have you on to start the hour.
 Appreciate it.
 Okay.
 We got a lot more to come here on morning call, including Apple,
 ramping up its legal fight against Sam Boltman and OpenAI.
 Plus, new details and a new equity stake
 for this US deal for Venezuela's oil and oil assets,
 just in time for a high-stakes energy executive face-to-face
 at the White House today.
 But first, from Bitcoin Miner to AI Data Center Powerhouse,
 we're going to speak to the CEO, the co-CEO of one company,
 going all in on the AI build-out boom of very busy hours,
 still ahead one morning call returns.
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 This message comes from Viking,
 committed to exploring the world in comfort,
 journey through the heart of Europe,
 on an elegant Viking longship, with thoughtful service,
 destination-focused dining, and cultural enrichment,
 on board and on shore.
 And every Viking voyage is all inclusive,
 with no children and no casinos.
 Discover more at Viking.com.
 AI is here, transforming how we work, live, and lead.
 And the women I talked to aren't waiting for the future,
 they're shaping it.
 I'm Julia Borsten, senior media and tech correspondent at CNBC.
 This is CNBC Changemakers, where I talk with the female leaders
 transforming business, as AI reshapes the world.
 Follow and listen to CNBC Changemakers,
 women leading in the age of AI,
 wherever you get your podcasts.
 Dan, it's great to have you on the show.
 It's been a moment.
 I almost look at you and Iron as sort of the original,
 when it comes to Bitcoin miner turned AI data center player here.
 You just had earnings last week.
 So that's really where I want to start with you,
 because they seem to be noisy,
 as you are shifting away from Bitcoin mining to NeoCloud.
 Yeah, that's right.
 See you again, Morgan.
 We had our earnings last week.
 A lot happened, so the short version.
 We signed a number of new customers.
 Cohe, Higgsfield, Fowl, Hume,
 and a leading frontier lab where we can't announce yet.
 Four billion of ARRs, now contracted,
 pricing's going up.
 We delivered a first 50 megawatt cluster to Microsoft.
 They accepted it.
 We raised six and a half billion of GPU financing.
 So there's a lot happening.
 Yeah. In light of that, it does seem like more broadly,
 the topic that the market and investors are grappling with,
 overall, is what it's going to require from a capex
 and funding perspective to build out all of this AI compute capacity,
 where that's going to come from,
 and whether the demand is actually going to be there.
 So how do you see it at Iron?
 Yeah, it's interesting.
 People worry about overbuilding.
 We can't build fast enough.
 Customers are literally pre-paying 50% of the GPU capex
 to secure capacity.
 That's not what it overbuild looks like.
 And if demand slows, our spend can slow accordingly.
 But demand isn't slowing.
 Weekly token usage is up 17 times.
 In the last eight months, the bottleneck isn't demand.
 It's bringing GPUs online.
 In terms of bringing those GPUs online,
 how is that process of funding that build out
 actually changing right now in real time?
 It is changing the lot of time.
 Capital markets are evolving.
 And on our earnings call,
 we use the analogy of commercial real estate.
 A couple of decades ago,
 it was very difficult to finance commercial real estate.
 But as the market matures,
 as the demand, the revenue line,
 the asset class matures,
 the capital markets mature as well.
 3-1-12 months ago,
 GPU financing was entirely new asset class.
 Fast forward to last week,
 we announced 2.8 billion of GPU financing
 without an investment grade off-take
 sitting behind it for 90% of the value of the GPUs.
 Is there going to be room ultimately for everybody, though?
 You think about how aggressively SpaceX and Elon Musk
 is moving into this arena,
 some of the other players in the NeoCloud space.
 We just mentioned it coming into this conversation.
 Some of the other Bitcoin miners that are also focusing
 on the higher margin compute possibilities, too.
 Is there a point at which we do become oversaturated?
 There are a lot of announcements,
 but I think you've got to ask three questions
 of any announcement in this industry.
 First, is the Greek agreement actually signed?
 Two, are the long lead items,
 the transformers, the switch gear,
 actually procured?
 And then finally, how many workers do you have on site?
 We've got over 4,000 across our sites.
 So I feel like the next 12 to 24 months
 is really going to be a story of execution and delivery.
 The other piece of this is the political piece of this.
 Now, at least here in the US,
 AI and data centers have become a political lightning rod.
 Whether it's states that are hitting a pause button
 and placing more atoriums in terms of data center buildouts
 or on the other side of this even President Trump,
 just yesterday weighing in on true social saying,
 quote, the only reason that communities throughout the USA
 should not want data centers
 is if they want to end up being backwards and poor.
 It has become a political hot button
 and certainly a focus of debate.
 How do you navigate that?
 What does that represent in terms of possible risk here?
 Look, in terms of navigating,
 just do the right thing at a grassroots level.
 We employ locally.
 We've got 200 people full time on our site in children's Texas.
 We've got a large community grants program.
 We have used 100% renewable energy since inception
 of our business.
 Any opportunity to do the right thing,
 whether it goes to the grid, whether it goes to community,
 you need to do it.
 And we understand the political sensitivity.
 We understand the demand imbalance relative to the available supply
 and we think that this scrutiny is going to continue.
 You need to be efficient around water use.
 You need to be efficient around power consumption.
 And we've been doing that since day one.
 I just want to go back before I let you go.
 I just want to go back to Bitcoin mining for a moment.
 Do you think that chapter has come and gone?
 Do you think we're going to see, I guess,
 what's the word I'm looking for?
 A dearth of Bitcoin mining out there moving forward.
 And if so, what does that mean for something like Bitcoin?
 Oh, look, Bitcoin derives its asset as a store of value.
 It's distinct from the mining that secures it.
 While there is a price for Bitcoin, which we believe there will be,
 there will be a market for people to secure the protocol.
 But for us, it's a legacy operation that's converting.
 The substantial majorities can be decommissioned by the end of this year.
 And every megawatt that comes off goes back on as AI cloud
 as multiples of the revenue.
 Okay.
 Daniel Roberts of Irons, great to have you on.
 Appreciate it.
 Thanks, Murray.
 Well, straight ahead, the White House laying out its plan
 to rebuild Venezuela's oil sector as President Trump hopes
 for a fast track to get that crude state side.
 I think that your latest headlines and much more morning call
 right after this.
 It'll go fast, much faster than what they had.
 They say two years, three years.
 But it was two years.
 That's a short period of time.
 It's hundreds and billions of dollars.
 It's actually three years of dollars we're talking about.
 Three years.
 And it'll come out as fast as possible.
 One of the things I want to do with all of that oil that we now have,
 I want to fill up these strategic reserves.
 And we'll get that done fairly quickly.
 There's a certain feeling you only get on a Sunday drive.
 No rush, no noise, just space to breathe.
 That's what car insurance from the Viva Direct is like.
 Easy as Sunday driving.
 Get a quote in minutes at Aviva.ca.
 This message comes from Viking committed to exploring the world
 and comfort journey through the heart of Europe on an elegant
 Viking longship with thoughtful service, destination focused dining
 and cultural enrichment on board and on shore.
 And every Viking voyage is all inclusive with no children and no casinos.
 Discover more at Viking.com.
 AI is here, transforming how we work, live and lead.
 And the women I talked to aren't waiting for the future, they're shaping it.
 I'm Julia Borsten, senior media and tech correspondent at CNBC.
 This is CNBC Changemakers, where I talk with the female leaders transforming business.
 As AI reshapes the world.
 Follow and listen to CNBC Changemakers, women leading in the age of AI.
 Wherever you get your podcasts.
 Welcome back to Morning Call.
 Let's get a check on some of the morning's latest headlines.
 President Trump says the US has struck a deal with nine more drug makers
 to voluntarily lower prices on prescription medicines, including bridge bio,
 a sun format and teva.
 You can see all of those shares or at least a couple of them are under some pressure this morning.
 Me and time the SEC is reportedly stepping up scrutiny on firms
 behind so-called special purpose vehicles, claiming to offer exposure to
 private companies for retail investors before they go public.
 According to the report, regulators are asking registered investment advisers
 for proof that they have exposure, especially ahead of Anthropics planned fall IPO
 and in the wake of the SpaceX IPO as well.
 The Trump administration is also releasing new details of a deal for the US
 to take over a huge swath of Venezuela's oil reserves, including a hundred year lease
 for oil fields, holding some 65 billion barrels of crude,
 granted to North American blue energy partners.
 Now as part of the deal, the US will be taking a 35 percent equity stake
 in blue energy, receive a guaranteed 20 percent of all oil production
 and have a right of first refusal for the remaining output.
 Experts note, however, that blue energy is controlled by Venezuelan businessman,
 Alejandro Betancourt, who has been investigated by the US and European authorities.
 But this comes ahead of a reported oil executive summit at the White House today.
 We will be watching that closely as well.
 Apple ramping up its legal fight against open AI meantime
 in a new court filing alleging the chat GPT parent is actively destroying
 crucial evidence that some of its employees stole trade secrets from Apple.
 In response, open AI maintains its innocence, saying,
 quote, this dispute is a mess of Apple's own making,
 and it is trying to blame everyone else.
 And the US Army Secretary, Dan Driscoll, is stepping down after a series of clashes
 with Defense Secretary Pete Hegseth.
 Now, according to reports, the resignation remains pending
 and has not been accepted by the White House.
 And if it does go through, though, it would follow the exit of US Secretary
 John Falen back in April and a number of senior officials,
 particularly on the military side within the Army service as well.
 In a statement to CNBC, the White House calls Driscoll,
 quote, highly effective in advancing President Trump's agenda
 to make America strong again at the Department of the Army
 by providing outstanding leadership during historic military operations.
 Adding quote, the US Army is more powerful than ever thanks to his work.
 This is something, this Army transformation is something that I have been following
 reporting out for several years now.
 John Deere, meantime, is unveiling a new AI assistant called JD
 today at the Iowa Farm Progress Show.
 I spoke with dear CTO Jamie Heinemann about the offering,
 which will be a free service to Deere's customers,
 and I asked how this will build on precision agriculture
 and boost productivity for farmers.
 It will be available to the farmers globally no matter
 where they might have their operations.
 I think in terms of benefit, benefits to the farm,
 that's going to increase and probably accrue over time as data comes into the model
 and we have the opportunity to make the model more intelligent over time.
 I think already, though, it's given farmers the opportunity to assess
 the progress of their farm over the course of the last decade
 and ask themselves some important questions around,
 what varieties did I plant and how did they perform?
 What was my crop rotation schedule and should I change that?
 What impacted weather have on the output of my yield?
 Those are questions that are really hard to answer.
 They're tangled up with a lot of other information on the farm,
 other variables that might impact that outcome.
 And really, this AI capability gives us the opportunity to start to surface
 some of those more complex insights to them.
 Well, this adds AI applications and accompanying data protections
 to a product and service lineup that includes machinery connected to
 SpaceX's Starlink and autonomous equipment.
 But with corn, soy and wheat prices at multi-year highs,
 I also ask time and weather.
 The North American Ag market is at an inflection point
 as some analysts have suggested and how high diesel prices
 storing fertilizer costs and elevated interest rates factor in.
 The cycle is hopefully bottomed out at this point.
 I think there's brighter days ahead as we sit here talking about this.
 We've seen corn futures improve showing.
 I think some positive signs in the marketplace.
 We'll get a good sense that the farm progress show here in another day or two
 relative to farmer sentiment.
 But I think the sentiment is gradually improving with respect to time,
 which is a great thing for us obviously.
 And our goal to your point, Morgan, is to make sure that we try to
 take and mitigate as much risk for the growers as we can.
 You mentioned the input costs going up on the farm.
 We're actively working to try to ensure that we only put as much input
 cost into the equation as generates outputs for that grower,
 whether that's diesel fuel or whether that seeds in the ground
 or whether it's fertilizer in the ground.
 We have the ability and with the analytics and the intelligence
 that we can now apply against that data set to help those growers
 make more intelligent decisions on their cropping inputs
 to hopefully boy that profitability for them on the farm.
 As Deerstock jumped yesterday on a beard upgrade,
 feeding gains of 40 percent so far this year for Deer.
 Full interview is at CNBC.com. Go check it out.
 We'll still on deck.
 Treasury Secretary Scott Besson sounds the warning at the G20
 about China's massive global trade surplus
 and how the potential impact of a slowing economy
 could ripple across the world.
 As we had to break though, a check on shares of how met
 these aerospace those are up fractionally here pre-market.
 That is after closing down more than seven percent
 of yesterday, a sell-off that came after Elon Musk
 confirmed SpaceX's plans to bring a manufacturing of gas turbine
 blades in-house at a foundry in Texas.
 The decline was the biggest single-day drop for how met
 in more than a year.
 A number of analysts coming out saying this is a buying opportunity
 which is perhaps helping shares this morning.
 One call to your back.
 Welcome back to morning call.
 Let's get a check on US stock futures which are in the red.
 As you can see right there, I see some of the selling here
 pre-market is accelerating.
 So the S&P has poised to open down about 53 points to Dow.
 342 points to Nasdaq 313 points.
 This is after a down day.
 Yesterday although gains for the month of August for the major averages.
 We're seeing pressure in the equity markets this morning
 as we see bonds sell off and not just here in the US but globally as well.
 So let's take a look at what we're seeing in treasuries right now.
 US 10-year treasury yielding 4.78%.
 We continue to trade here at levels.
 We haven't seen since January of 2025.
 Fed sensitive to your treasury yielding 4.35%.
 And the 30-year treasury of 5.27%.
 In terms of the dollar index, we just get a check there.
 The dollar is for an emerging against other major currencies.
 And you can see dollar index levels right now 99.55%.
 Energy as well as we see crude oil climb again this morning.
 WTI is up to 1.5% trading just below $88 a barrel.
 And Brent is up 2% trading around $92 a barrel.
 We see red arrows across Asia and Europe as well.
 Amid this global bond yield surge in Japan for example.
 10-year JGB yielding 3%.
 It is the highest level we've seen in 30 years.
 Quite literally.
 You can see the loan green on the screen right now is Kriya's
 Cosby overnight.
 Treasury Secretary Scott Besant says he met with the head of China Central Bank
 ahead of the start of the G20 meeting but isn't sharing details on their conversation.
 Besant told CNBC yesterday that he will ask his counterparts at the meeting
 if they will join the US in its goal of cutting off Iran from the global economy.
 He says Operation Economic Outcast can work even if China doesn't.
 Co-operate.
 I would push back on that false narrative that somehow the media has jumped on this.
 Oh, you can't do it without China.
 Well, you can because one of the things is there's only the 30 million of
 Iranian barrels of Iranian oil left on the water because of the blockade.
 So even if they were to get remittances from China, that's going to run out.
 And we have more in common with the Chinese on Iran that we disagree on.
 Well, Besant telling Reuters this weekend that the US will also urge G20 members
 to reexamine their trade relationship with China to press Beijing to rebalance its economy
 away from exports saying the world can't have a China with a $1.2 trillion trade surplus.
 Joining me now is Sean Ryan, founder and managing director at the China Market Research Group.
 This is a strategic market intelligence firm based in Shanghai.
 Sean, it's great to have you on the show.
 Obviously, a lot of details are still coming out from this G20 summit
 in real time here, but do you want to get your thoughts on this evolving relationship
 between the US and China, especially since you are joining us from Shanghai
 and can give us a perspective that we don't necessarily get here domestically?
 It's great to be here, Morgan.
 Well, on the first hand, China actually almost feels betrayed by the United States
 over the last 10 years since Trump first started the trade war.
 I mean, 20 years ago, the Americans would always criticize China for producing cheap products
 for IP protection.
 China do, they started buying a lot of American products like semi-conductors.
 Before the trade war, China was buying $300 billion US dollars of semi-conductor chips
 from the United States every year, but proof that basically evaporated once Trump and Biden
 launched a trade war against China and put on export controls.
 So now the Chinese can't buy chips, which they want to buy from the United States,
 which is why we now have a $1.2 trillion US dollar trade deficit
 because all the stuff that China wants to buy from us, we are not willing to sell to the Chinese right now
 because of what I consider to be exaggerated hype and fears of a national security threat, Morgan.
 Why do you think it's exaggerated?
 Well, I haven't seen why there is necessarily a security threat.
 You know, as Scotty Besson just said, he thinks that there's more things in common
 between China and the United States on Iran than things that are differences.
 So if you look at it through the war in Iran, China has not gone to Iran's defense
 by sending a lot of military weapons.
 They've not sent a lot of military weapons to Venezuela.
 So China has actually acted like a good actor.
 They've actually reduced the amount of oil that they've consumed by about 50% month on month,
 which in many ways have saved the world's oil markets.
 So they've actually been a good player and they haven't been acting militarily like maybe Putin has,
 you know, against Ukrainian.
 So I want to be clear, China is not militant in the same way that Putin's Russia is.
 So in light of that, and given some of these conflicts that we see playing out here in real time,
 is there, I guess, a larger opportunity opening up for the U.S. and China to work together
 then to come to some sort of conflict resolution, whether it is the Russia-Ukraine war
 or whether it's what's going on in Iran.
 And I guess just as importantly, the central role that China plays as a consumer of oil from some of these places.
 So there should be a detente because both the United States and China do better by working together.
 You can look just how many Chinese about 400,000 go to the United States to study every year.
 You've seen that many former presidents like Deng Xiaoping, his grandkids went to the United States to study at Duke.
 Hu Yao-Bong's grandkids went to Yale Law and the current chairman Xi Jinping's daughter went to Harvard.
 So a lot of Chinese actually have a natural affinity for the American system.
 I actually haven't heard of any elite Chinese sending themselves or their kids to Russia or the Soviet Union since the 1980s.
 They all went to the United States.
 What I would like to see happen is we lessen some of the export controls against China
 so that the Chinese start buying more semiconductors, start buying more agricultural products.
 In 2022, they're buying about 30 billion US dollars a year of ag products.
 That number is only down to 7.5 billion because they're smarting from the trade war.
 And so they don't want to buy from us right now.
 If the two countries work together, we might not be friends and allies, but we could be strong friendly competitors
 and get a lot more business between the two countries and have job creation in the United States.
 And importantly Morgan, I was just in the United States last month.
 And inflation is really crippling the American consumer and you have to be honest.
 That's because of the trade war.
 The high tariffs is causing high tariffs at Walmart and Target and it's being transferred to our fellow Americans.
 And too many fellow Americans are hurting. We need to stop the trade war now.
 I know both of these companies have also said they're taking tariff refunds and reinvesting into lower prices.
 We'll see how all of that plays out including how this summit between this expected summit,
 some between the two presidents goes here later this month. Sean Reign, thanks.
 We've got a lot more to come here on Morning Call including what Palo Alto networks and Dell earnings mean for the health of the momentum trade.
 We've got your Morning Call crew going in, but first we're watching the fallouts.
 After PG&E and other utility stocks closed sharply lower yesterday,
 over fears of increased shareholder liabilities are related to wildfires.
 PG&E is seeing its worst day in six years closing down 20% a huge move for utility like that.
 And as you can see pre-market action here, you're seeing PG&E, Edison, Sempra, others are attempting a rebound this morning.
 The Morning Call will be back after this.
 Welcome back. Jack Daniels, Whiskey parent, Brown 4 minutes.
 That's report earnings tomorrow morning. The company's already faced a challenging year with consumers shifting away from alcohol altogether
 and renewed trade tensions with Canada as select provinces boycott American labels.
 The premiere of Nova Scotia telling CNBC last week that while Prime Minister Mark Carney has asked leaders to return US alcohol to stores,
 it's another discussion where their consumers will start buying again.
 They'll probably be a time when that is returned, but I don't know that people will rush to buy it because of these.
 These are the types of long, standing, long-term implications that are happening right now,
 and they'll be a long time to unwind.
 Our food and wellness reporter, Brandon Gomez, joins us on set with what the street is expecting
 and a look at those Canadian trade developments, and it does feel like booze has become the lightning rod here.
 Yes, it keeps on coming back into the conversation, and Whiskey just keeps getting dragged into this trade battle with Canada.
 The Distilled Spirits Council says US Spirits exports to Canada actually fell more than 70% year over year.
 From March through December of last year, a Brown format has already felt that pain.
 I looked back at the most recent earnings calls, and the company reports organic net sales in Canada fell nearly 60% last year.
 And there's another hit coming. The premiere of Saskatchewan says while American alcohols will remain on shelves,
 it will face an additional 50% levy starting September 8th next week.
 So what needs to happen to turn the tides?
 I spoke with Michael Belello, CEO of the American Whiskey Association.
 He says three things. First, the US needs to regain market access through negotiation.
 Okay, then provinces need to align because removing tariffs doesn't help if provincial wholesalers refuse to order American products.
 And finally, brands need to reconnect with Canadians who have been boycotting American labels to the Nova Scotia premier's point.
 But the markets already punished these companies.
 Brown format down 20% since March of 2025, along with others.
 I spoke to some analysts, Morgan, and it's not all doom and gloom.
 Brown format's emerging market sales jumped 14% last year, ready to drink canned cocktails, grew 11%.
 So tomorrow, investors need to see those growth areas offset a tougher North America environment,
 and that's what investors are going to be asking as they look to these companies.
 Yeah, it's super fascinating. We need to remember that it's a political environment on both sides of the border too,
 and alcohol is certainly in focus for all of this.
 Brandon Gomez, thank you.
 Alright, we'll straight ahead. The Morning Call crew is teeing up the trading day ahead.
 Welcome back to Morning Call.
 We're just going to give you some headlines here at development that's been playing out here over the last call at hour or so.
 Two oil super tankers struck by unknown project dials, according to a number of reports.
 In quick succession while transiting the straight of poor moose.
 And so we're going to continue to monitor that, but that is contributing to the move hire we're seeing in crude prices this morning with WTI.
 Trading just below $88 a barrel and Brent also up about $92 a barrel.
 And also weighing on the futures market here when it comes to the major averages.
 And of course, perhaps contributing to what we're seeing in terms of a renewed bond sell off this morning.
 So with all of that in mind, let's get your call sheet where we look at the topics that are driving the trading day ahead.
 Crew members today, bespoke investment group co-founder Paul Hickey,
 high-tower chief investment strategist and CNBC contributor, Stephanie Link,
 defiance ETFs co-founder and CIO, Sylvia Jablonski.
 Stephanie, I'm going to kick this off with you.
 It's almost a day to day dynamic now in terms of what we're seeing with the straight of poor moose
 and potential tankers and other ships being targeted.
 But when you see the moves that we are seeing right now, not only in energy markets but in the bond market, your thoughts?
 Yeah, I mean, like there's a lot of uncertainty recently, but there's always a lot of uncertainty more again.
 And I think you have to kind of look through it and focus on fundamentals.
 And fundamentals are that the economy is continuing to grow despite all of this uncertainty.
 And it is led by the AI boom and we did get confirmation last week from Nvidia.
 We're going to get confirmation tomorrow on Broadcom that the AI spend cycle is still in the early innings.
 And that is driving the economy to above trend growth with land-fed trackers at 4.6%.
 I understand that bond yields are higher and that's causing some angst.
 But at the end of the day, earnings are the thing that matters the most
 and they continue to be quite strong and very favorable into the end of the year.
 Yeah, and to your point about the intersection of AI and economic growth,
 that something both Treasury Secretary Bessent and Fed Chairman Kevin Warsh had been talking about in recent days
 or it gets that in just a moment too.
 But Paul, I do want to get your thoughts on what we are seeing in the bond markets.
 Not just here in the U.S. and Treasuries, but globally as well for Case in Point, Japan.
 Yeah, I mean, I think that's the most important part around the world.
 So Treasury yields are up in the U.S., but they're up all over the world.
 And I think, to part of Stephanie's point there, we're seeing economic growth.
 We're seeing the economy doing well and there's a real demand to borrow.
 And so we're seeing it from governments and we're seeing from corporates around the world.
 So that's pushing yields higher.
 And I think in the short run, when you see these big headlines to new 52-week highs in yields,
 it causes some angst on the part of investors.
 And to cure intro, the higher prices in oil, I think that's a short-term headwind for the market.
 So we've seen all these cross-currents going on.
 And what's so surprising is that the VIX had its narrowest range for even the month of August going back to 1994.
 So there's been a lot of brewing underneath the surface, but the indices don't have a lot to show for it.
 And we're right where we were three months ago at the index level as the growth trade tends to weigh down the overall market.
 Yeah, I love having you on Paul because you always have stats and historical reference points for us.
 So if you want to get your reaction to this, including the comments about growth trade.
 Yeah, and so I'll just elaborate on what Stephanie and Paul have said.
 Sometimes angst leads to opportunities.
 So, you know, if you look at August, S&P was up 3% Nasdaq was up 4%.
 This isn't a typical bond sell-off. You have geopolitics in the background.
 You have a less than then we hope to dovish Fed and investors are sort of wary of inflation.
 And so you see a sell-off here, but when you see that, you're likely to see a pullback in equities as well.
 And that could be an opportunity to get into some of these growth trades and AI, as Stephanie said.
 You know, this is still a time when the market's doing incredibly well.
 AI is building out.
 You're seeing a lot of opportunities here for investors to dip their toes in on these pullbacks.
 And also a rate or two if we get one is unlikely to move the market.
 Yeah, Stephanie, I see you nodding your head.
 You mentioned Broadcom, but today after the bell, we're going to get Dell.
 And on the heels of Mark Benioff's, you know, SaaS apocalypse being overblown comments.
 Last week we were going to get some software names too, including Palo Alto Networks and MongoDB.
 In terms of what you're looking for and how high the bar is, that needs to be hurtled with some of these results.
 Well, the bar is high for cyber security for sure, right?
 I mean, and CrowdStrike set the example last week. I think Palo Alto is going to be quite strong.
 But these stocks are almost, you know, they're up 100% year to date.
 Palo Alto is actually up 145% from the February lows.
 So the expectations are high, but the demand is going to be very strong.
 You've heard me say this many, many times.
 That cyber security is bigger than AI because of AI.
 AI is not secure and we're coding more and more by using AI instead of people.
 So that also by definition means it's not nearly as secure.
 So I think cyber security companies will continue to do well.
 Whether they sell off on the news, I mean, we didn't see it last week from CrowdStrike because they raise numbers.
 But that's very, it's entirely possible. We see it.
 However, that is your opportunity. Broadcom, I think, is different.
 It is underperformed to the SMH by 50% year to date.
 And so I think the expectations are a lot lower.
 I think you want to use September, historical September being weak.
 Normally it's down about 2.7%.
 I think you use the volatility to buy.
 And because I think you're going to see October and November, we normally see a rebound.
 I think you're going to see that this year as well.
 Yeah, Paul, your thoughts, especially given the seasonality, we typically see in September.
 Yeah, so I mean, I think what you tend to see is September weakness comes in years when we're already down.
 So when you have the market up 10% or you have most sectors, most sectors actually when they're up year to date, trade positive in September.
 So it's not necessarily as scary as it seems to be.
 But I think the key here going back to the momentum trade that you were talking about with semis and memory stocks.
 Both those corrected real hard in the summer.
 They rallied right to their 50 day moving averages.
 And those rallies stalled out right there.
 And they've been trading water underneath since then until we can get the socks.
 And the D-R-M-E-T-F back above that 50 day moving average, the burden of proof is on the bulls for growth here.
 And whereas value continues to outperform.
 Okay, we have to leave the conversation there at the end of the show.
 Thank you so much to our call, Kuro.
 I know, Shucks.
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