Morning Call 9/15/26

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1:00U.S. 10-year yield hit their highest level since 2007. I'm Dominic Chiu and this is your morning call. Top of the morning to you, I'm Dominic Chiu and for Morgan Brennan, who we will see in just a moment, but first, the global rate shock hits Wall Street. Checking equity futures right now, they are on the offer, down side, down by about 300 points implied at the open for the Dow, the NASDAQ, down by about 151 in the S&P, down by 32, because it's being driven a lot by rates. Let's check the treasury side of things where yields again on the 10-year have top 5%. You can watch that and they've gone up significantly over the course of the past 48 hours. The benchmark 10-year yield currently at 5.03%, it got as high as a hair over 5.04%.

2:01So far today, the two-year note yield, 4.68% and the 30-year long bond, 5.393%. All of this as oil continues to march higher. U.S. benchmark West Texas Intermediate, now at levels not seeing going back to May, right now those prices are about 2% to $103.57. It's a similar percentage advance for ice-brent crude futures, the World Gauge, 107 Spot 81, the last trade there. Heating oil, by the way, also surging as you can see here, up by around 4% as well, so the entire complex in oil and gas moving higher. The latest numbers, by the way, from AAA coming in in just the last hour, the price for a gallon of regular, unleted fuel up again from yesterday, same with diesel prices, sitting now at its highest level on record, right now $4.33 a gallon for regular unleted, $6.27 for diesel fuel per gallon. So let's see now how the rate picture is playing out around the world. Our Steve Sedgwick is in London with the latest market action

3:03from the international side of things, Steve. Yeah, dumb look, I sometimes feel like I have to apologize to viewers because I'm still not spending all my time looking at these bond markets and I'm looking at the AI story, but they are so compelling. And all that red you can see behind me with that tiny bit of green was about seven stocks in the green and then about 30 stocks in the green and grey. Most of it, most of it is about AI and it's about the reaction that we're having to the concern about bond markets, the concern about banks, the concern about interest rates as well. So Monday it was the fear around AI security and prospective guardrails that drove the risk of sentiment in markets. Today it appears to be that ever rising cost of debt as investors brace for a hike from the Fed tomorrow. European equities across the border easier than on the market giving up eight terms of 1% as indeed is the Zedra Dax and the Cat Caron as well. The Swiss market down around about 1.3%. By the way, Mr. Trump said a couple of days ago he wants the US to have the lowest interest rates in the world.

4:04Well, you'd have to have 0% interest rates if you were to get that because that's what they've got over in Switzerland. Right, the bond markets here. We're seeing a couple of multi-year highs for the European 10-year yields. During my show just, I don't know, an hour ago, Dom. We saw the the the T bonds getting up to 5.04, 1%. Now we've got the guilt in the UK hitting their highest level since 2007. We've got a 5.42% matched only by some of the other yields which are picking up the German 10-year, for instance. That has hit its highest level since 2009. While the 10-year French OAT yield is at levels seen last, well, last seen in 2008, September of the year. So you've got three things going on. You've got the bond market concerns. You've got the AI concerns and you've got the oil concerns. And at to that, I've got to say European banks over here, Dom, are selling off because of what Brian Moynerhan said as well about profitability going forward. Back to you. All right, Steve Settrick with the interest rates superlative story out there.

5:05Thank you very much for that. Checking again on US equity futures. Again, they are solidly to the downside. The Dow's implied lower by roughly 300 some points. The S&P down by just about 32 in the tech heavier NASDAQ trade off by about 150. Now, aside from AI trade troubles, which we will get to in just a moment, bond markets as Steve just said with the 10-year touching its highest level since 2007. All of this, of course, as the Federal Reserve kicks off its latest policy meeting today. Interest rates and traders and users on CalChi are all, but certain we're getting a quarter percentage point hike tomorrow. That's the first under New Chairman Kevin Worsh and the first for the Fed going back to December of 2025. Joining me now is Peter Oppenheimer, the Chief Global Equity Strategist and Head of macro research in Europe over at Goldman Sachs. This is an interesting development only because it has been fairly well telegraphed. You could argue that the rise in rates, but the speed that it's come to us with has caught some perhaps market

6:08participants off guard. Is this something that we need to fear that we could see even higher beyond five to five and a quarter, five and a half? And what exactly does that mean for the market? Yeah, absolutely. I think the Steve had mentioned before this interview, you know, the markets are very, very focused on the speed of this adjustment we're seeing, not just in US interest rate expectations and bond yields, but around the world as well. And I think it's a reflection of a number of things, of course, rising inflation pressures as oil prices, as you reported, continue to increase. But also the scale of the demand for capital coming from central banks, all borrowing money together at the same time, competing for investment dollars just at the time when the private sector is also being asked to fund huge amounts of capics in the AI ecosystem.

7:11So there's a big increase in demand for capital. And this is pushing up the cost, the price of capital. And of course, if bond yields continue to rise, particularly quickly, in the end, it has to have some effect on the valuation of equities as well, because it really represents the discount rate that future profits or cash flows are priced off. So that's really the anxiety that we're seeing right now. Peter, how much of this is about the central bank side of things, right? When we're talking about controlling money supply, cash supply out there, and thereby interest rates, and how much of it is about treasuries all over the world having to fund their own needs in terms of their countries and their sovereign wants. Right. And then competing to your point, with many of these hyperscaler type AI type clients who are all trying to raise money at the same time as well. Yeah, I think that has a lot to it. Obviously, there's a combination of factors. We are seeing rising inflationary pressures again, and

8:14that's pushing up expectations about policy rate increases by the Fed and indeed the UCB and others. And of course, if short-term policy rates rise, it has an effect on longer-term borrowing rates. But in addition to that, there's also a growing anxiety about the scale of the borrowing that governments around the world are doing, as they have to reflect new priorities in proving and securing the resilience of supply chains of energy, capacity, and supplies. And of course, on things like defense spending. So the borrowing demands of governments are going up just at the time, as you say, that big tech companies are trying to borrow huge amounts of money to build out the infrastructure of the AI ecosystem. So what we're seeing is a very dramatic increase in the demand for capital from both the private sector and from governments. And that's having this effect also of pushing up long-term

9:16interest rates. And long-term interest rates in the end affects all financial assets, credit markets, of course, bond prices. But also, equities too, because they're all related to the same kind of discount rates. And that's what the focus is really increasing on right now. Obviously, we also have Europe's case, a number of elections coming up, and that's increasing the focus. So I mean, the risk-free side of things, it does change the calculus, as you point out, because you discount cash flows at a different rate, and the hurdle rates become higher. I wonder, though, is the rate picture right now enough to stifle that AI momentum that we are seeing in the marketplace? In other words, at what rates do we see that AI trade? I'm not saying going to pop a bubble because that's being a little bit melodramatic. But that AI trade is dependent in many ways on risk-free rates being relatively low. Absolutely. And we should again reflect on the fact that for many years,

10:19of course, after the financial crisis, interest rates went to zero, and even very long-term interest rates fell to those levels. And we mentioned Europe just before, just five years ago, for example, 30-year bond yields in places like Germany had a zero yield, and now they're around 3.5%. So that is having an impact. I think that what is important to say from an equity market perspective, however, is that underlying profit growth has been and continues to be very strong. And that's really why equities have been able to offset or withstand the rise in interest rates that has been developing in recent months. And also the biggest technology companies that are doing this borrowing have seen their valuations actually coming down. And so I don't think there's a bubble in the classic sense of excessive valuations. But of course, as bond yields continue to pick up and do so

11:21at a faster pace, that is going to have some effect on equity valuations. And that's what we're seeing reflected really in this pullback across the equity capital markets as well. But fundamentals underlying equities are strong. Economic growth is still positive. And companies are reflecting nominal GDP, real GDP plus inflation. That's really what drives sales and revenues. So that's really still quite healthy. And is really underpinning at least equities, even as bond yields go higher. And to your point, Peter, in video shares or trading it about 17 times next year's earnings. So the valuation story still in play as well. Peter, thank you very much. Peter Oppenheimer, Goldman Sachs. We appreciate it. We'll see you soon, sir. All right, turning back down to the energy trade as oil rips past $100 per barrel, G20 leaders are gathering in Houston today, weighing crude and the industry's next move. That's where we find, ironically enough, our own Morgan

12:23Brennan who joins us now with what she's going to see in the day ahead, Morgan. Yeah, Tom, it's good to see you. And I think what we're going to see here in the day ahead is a lot of news, a lot of deal making today, tomorrow as well. You just mentioned this is the G20 energy abundance ministerial. And as you were just talking about with your last guest, I mean, we're seeing crude oil and treasury yields move lock step with crude well above $100 per barrel and a 10-year treasury yielding 5% now. Strategists, a number of strategists are saying that this is the tightest correlation we've seen between these two in years. So what happens here today and over the next couple of days, the stakes have arguably never been higher. It's you're going to see all of the usual suspects at a G20 summit here, the Europeans, the Japanese, the Chinese, but also Russia is in attendance here. The Saudis are here and guests of the US, the Venezuelans will be here over the next couple of days as well. So there is a lot to watch. And throughout the day, I'll be speaking to the most senior administration officials

13:25who are focused on energy as we see all of this play out, not only from a geopolitical lens, but from political lens as well, an economic one as the Fed continues to meet here. That's going to be starting here in just a few moments, a little bit later, on morning call when the executive director of the National Energy Dominance Council, Jared Agen, joins me for an interview to tee up what we should expect here on site in Houston today. Dom, for folks that maybe are not as familiar with the National Energy Dominance Council, it's really the connective tissue, not only between the different agencies of the administration and the federal government, but also between the US and other countries, and the role that industry plays in all of this. As in real time, we are seeing the rule book be rewritten in terms of this world order with energy, really the tip of the spear. Of course, it is the tip of the spear and something everybody's watching arguably, the big driver behind interest rates right now. Morgan, we'll see you later on this hour. Thank you very much for that. We've got a lot more to come here on morning call including calls to throttle back AI Asian development,

14:26growing louder by the day. This is President Trump makes a call of his own. They're just playing right into the hands of a lot of people that don't want to see it happen and that could be political people. It could also be China. President Trump calling into Jensen Huang there. Plus, we're live from the sidelines of the Gas Tech Conference in Bangkok, Thailand, speaking with one CEO on the front lines of the AI data center buildout. And then later on, another strong kickoff for the NFL. Got a very busy hour still ahead when morning call returns after this commercial break. Never bad against American grit or American energy. Through innovation, venture global is not only building some of the largest energy facilities in the world right here in the United States, but delivering American energy at a fraction of the cost and a fraction of the time. So while others are busy talking, we're busy building. That's venture global. That's unstoppable energy.

15:32That's the sound of Lego Pikachu training for battle. That's the sound of Lego Pikachu enjoying a post-training snack. And that's a reminder to not let Lego Pokémon in the recording studio. Lego Smart Brick brings Lego Pokémon Play to life. Lego Pokémon with Smart Play. You're the trainer now. You know it's not a great use of time? Getting data ready for AI. That's why IT leaders turn to CDW. We help unify data and govern it, building the foundation for your AI and agents to deliver results. Because when your data is ready, AI stops being an experiment and becomes an advantage. We configure, optimize, and deliver the tech that runs business. CDW make amazing happen. Welcome back to morning call, turning back now to the AI safety debate.

16:34President Trump doubling down on his comments from Sunday, crying foul on warnings connecting AI models to various doomsday scenarios. In a series of posts on social media just yesterday, the president calling the alarm bells of AI quote, a hoax perpetuated by Democrats and revolutionaries. The president following up that on a phone call with NVIDIA CEO Jensen Huang during a live fireside chat in LA last night. I'm telling you it's all a hoax. The data centers are great and they make people wealthy and they make states wealthy. And it's the oil of the next 20, 25 years and it's bigger than the internet and the AI, you know, much more so. And they're just playing right into the hands of a lot of people that don't want to see it happen. That could be political people and it could also be China. And we're not going to let that happen. It's a hoax. And you're right. We're not going to let that happen, sir.

17:36All right, another member of the White House executive team taking the president's concerns a step further. Former White House AI's are David Sachs calling for anthropics Dario Amade to step down. Well, I think if Dario believes that we're going to have the worst outcomes, my question for him is why are you doing this? It doesn't make sense to me that you're running a frontier AI company if you think frontier AI is going to end humanity. So again, I would push that back on him and say, how are you going to make this safe? And if you don't think you can, you should probably either shut down the company or step aside and let someone else lead it. All right, from the White House to Wall Street as we continue to track the fallout from yesterday's AI sector sell off, we are watching shares of Broadcom. One of anthropics key hardware suppliers, those Broadcom shares are fractionally just about one quarter of 1% in the pre-market trade. This is after falling more than 5% yesterday. CEO Huck 10 joining our own Jim Kramer on Mad Money last night

18:40saying he is not in the least concerned about the AI slowdown debate impacting his company's optimistic sales outlook for chips. We see the demand for compute infrastructure for AI development or AI frontier models and inference for the products that they feed to the wall as continuing to be very strong and I believe very durable. All right, we're watching, of course, the rest of the AI chip trading in the pre-market given that big sell off yesterday. And we're for the most part mixed but stable. You can see in video shares up just about two tens of 1% micron down one tenth of 1% but ASML up 1.5% in trading so far today. We'll have much more on this with our morning call sheet in the call crew later on in the show. But first, crypto may be finally getting its day in the Senate but not before one congressional critic gets her say on what she calls President Trump's new bank. But first, watching shares of Bank of America after closing

19:42down more than 5% yesterday on comments from CEO Brian Moynihan telling analysts that fees charge through its investment banking business will likely fall more than 10% this quarter from a year ago period while trading revenues will be roughly flat compared to a 33% jump in the second quarter right now. V of A shares following up on yesterday's 5% drop with a 1% drop pre-market morning call is back after this. Adventure global we think about what can be done. Not what's usually done. Through innovation, venture global is not only building some of the largest energy facilities in the world right here in the United States but delivering American energy at a fraction of the cost and a fraction of the time. So while others are busy talking, we're busy building. That's venture global. That's unstoppable energy. That's the sound of Lego Pikachu training for battle.

20:45That's the sound of Lego Pikachu enjoying a post training snack. And that's a reminder to not let Lego Pokemon in the recording studio. Lego Smart Brick brings Lego Pokemon Play to life. Lego Pokemon with Smart Play. You're the trainer now. Hey, make it ringer. Look it. Hey, prime members. Grobhoven Amazon have just the thing to help you save. You can get zero dollar delivery fees on eligible grob hub orders like that snack call for moving night. No delivery fees. Those wings for game day, no delivery fees. And yes, that pasta for date night, no delivery fees. It's a dream deal. Visit amazon.com slash grob hub to start saving terms and additional fees applied. Welcome back to morning call turning back to the energy sector as the price of oil continues to climb past $100 per

21:46barrel. Right now you see benchmark prices for US crude or just around $103.94 international benchmark Brent crude currently up about two and a half percent to one oh eight spot 26 energy security and diversification to the big themes at this year's gas tech conference underway right now in Bangkok Thailand as well as rapidly rising demand fueled by the growth around AI and data centers. Mario as are is the chairman and CEO of black and beach and joins us now from the sidelines of the gas tech conference out in Bangkok. He's also a member by the way of the CNBC CEO counsel Mario thank you very much for taking the time all the way across the world. Let's talk a little bit about the expectations that you were going into these conferences with given the backdrop in the Middle East specifically against the US and Iran. Well, first of all glad to be with you today. Dominic expectations of course a lot of discussion here at gas tech about energy not only about energy prices but it's

22:50really about energy demand and those are not new. You started talking about gross in energy demand driven by data centers beyond data centers its electrification it's everything else so that of course is driving more demand for fuel whether it's gas or oil and power. Here at gas tech we're talking a lot about gas and we're talking in our case specifically about liquid-fired natural gas technology that black and beach has been in for over 60 years. So if it's about liquid-fired natural gas as helping the power that AI and data center kind of revolution that we're seeing unfold right now. How much of that story is being impacted by the fact that we do have kind of crimped supplies is specifically out of the Middle East we know that the US is very big in liquid-fired natural gas other parts of the world as well.

23:51How much does that macro backdrop fit into how you think that AI data center build out and powering it will actually be affected in the coming years. Yeah Dominic I think it depends on where you are. Countries that are relying heavily on LNG for their gas supply obviously have been feeling crunch for a while this is not just this year the Russia Ukraine war really started the crunch. So that increased demand for LNG in our case the technology we focused on is floating LNG. This is essentially taking the liquid action on a ship to the gas field to liquefy the gas so it's it's exported and many countries need this LNG in Asia and in Europe etc. So of course data center and the demand for more power has only increased demand for LNG but it's not new.

24:52This would been dealing with this now for a while and that that increase in demand has been substantial over the last few years. How much do you think the natural gas story in terms of the total addressable market for powering data centers we've talked so much about nuclear alternative sources geothermal how much is natural gas in your mind going to be a part of the story for powering AI and data centers is it going to be a large portion the majority portion of it is it a transition fuel before we get to full nuclear hypothetically how does that natural gas story play out. Yeah, Dominic will look at it as the demand needs all of the above it needs gas it needs nuclear it needs renewables geothermal enamel today gas is the dominant source of energy for base loaded power on demand power if you will renewables with batteries are complementing nuclear in areas where nuclear

25:55is is abundant of course becomes a very good alternative for base loaded power and the advanced nuclear technology is are going to make that an alternative so you could call it bridge fuel I think it's going to be a long bridge it's going to be a while where gas is dominant for powering data centers which require reliable consistent power. All right Mario is our chairman of black and beach and CEO thank you very much and good luck at the conference this week sir. Thank you Dominic. All right well still on deck for the show here software stocks are doing something for the first time in history as more and more sound the alarm over unchecked AI advancement will have that story when morning call continues next. I'm Dominic Chiuin from Morgan Brennan welcome back to morning call US equity futures right now are in the red the Dow's implied lower by roughly 285 points the S&P down by 30 and the tech heavier NASA X rate off by about 145 points the big driver this morning is the treasury yields were

26:57watching the 10 year right now currently back up to above five five point zero three one percent the two year note yield 4.676 percent in the 30 year long bond 5.393 percent oil continues to march higher will WTI is now at levels not seen since May currently up about two and three quarters percent a hundred and four dollars and 14 cents for West Texas intermediate ice-brank crude futures one away spot forty three up to and a half percent as well the latest numbers by the way from triple a coming in this morning the price for a gallon of regular unleaded is up from yesterday and the same with diesel currently sitting at its highest level on record that six dollars and twenty seven cents for a gallon of diesel four dollars and thirty three cents for a gallon of regular unleaded will have more on that in just a moment as Morgan Brennan speaks with the national energy dominance council executive director Jared Agen checking some of this morning's latest headlines the Senate is set to hold a key procedural vote on the clarity act later on today the bill which saw the house version passed

27:57more than a year ago would establish a new regulatory framework for cryptos and other digital assets the measure will need democratic support to overcome a filibuster senator Mitch McConnell returning to Capitol Hill yesterday for the first time since being hospitalized three months ago McConnell says he has assured Senate majority leader John Thune that he will do his best to be present for votes when Republicans need him McConnell is not seeking reelection and will leave office later on in January the Trump administration has overturned Biden era greenhouse gas requirements for power plants the rules had required that existing coal plants and new natural gas plants control 90 percent of their carbon dioxide emissions China's industrial production accelerating last month rising more than 5 percent from a year ago topping expectations fueled in part by the country's a i driven tech boom and more than 25 million people tuned in for the kickoff to NFL's season opener on NBC and peacock that's according to the Comcast own networks

29:01sports division the Super Bowl rematch of the sea hawks versus the Patriots was actually down about 12 percent from last year's opener meanwhile Netflix revealing its stream of the Rams 49ers game in Australia averaged 18 and a half million viewers in the United States. Well turning back now to the energy markets the price of oil continuing to climb higher holding above that $100 mark per barrel this as G 20 energy leaders are gathered in Houston Texas talking key matters including the ongoing fuel disruptions stemming from the Iran war that is where we find our own Morgan Brennan who's joined by a very special guest over to you Morgan. All right Dom thank you know it's interesting you just talked about the news regarding changes in greenhouse gas emissions that's news that came from here from this G 20 energy abundance ministerial of it works like the more news more deals throughout the next couple of days and joining me now is Jared again the executive director of the National Energy Dominance Council it's great to speak with you I think we have to start

30:01right there what should we be anticipating what should investors be anticipating from here yeah well the difference about this G 20 it's very much in what President Trump likes to see deals this is all about deals that are going to help the American people and help our allies around the world so what's different here is we've brought three different departments to this G 20 on energy abundance so you've got the EPA you've got the Department of Interior you've got Department of Energy all represented here the secretaries and the administrator all here and we're here to work deals so you're going to hear announcements from the stage about a tangible energy deals to help drive down costs in the U.S. create jobs in the U.S. and onshore more investments from our global partners here to the U.S. the big announcement yesterday so this is not here about you know coming up with just statements that aren't going to go anywhere we had a huge announcement yesterday from EPA again about getting rid of these crazy regulations that is going to entice more development of energy here in

31:03the U.S. drive down costs in the U.S. and that's a theme throughout this this is all about not about energy transition this is about energy addition this is about creating more energy here in the U.S. and more energy around the world we are now the global leader in producing oil and gas we are the global leader exporting oil and gas and that's been a huge theme of the first day and it's going to carry through in the conversations today yeah and and certainly when you talk about that I mean it sounds it sounds very exciting and also sounds like it's going to take some time to see some of this investment realized so in the near term when we are talking about diesel at a record high six dollars twenty seven cents a gallon according to triple A today gas prices that are higher crude above a hundred bucks a barrel what can be done near term yeah well it's the it's all about refining that the the issue we're facing is globally is refining capacity so you've got were about about a hundred percent refining right now here in the U.S. of you looking at how much we can refine you look globally at what's happening around the world in Ukraine and Russia you've got

32:05some refining offline you've got China taking some exports offline which which takes some of the refining capability offline and then obviously issues in the Middle East of of refining capacity down but here in the U.S. what can we do this is why the president brought the top refiner to the U.S. you've got twenty twenty five years of of Democrats trying to shut down refining here in America and here we are trying to bring refining back and so there's levers we can pull the president's looking at the defense production act what can what can be be used to not only streamline some regulations so in some states they have burden some regulations that is preventing additional refining and we can put some short term investments that could help boost refining in the in the next six months and so building new refineries takes a long time but some of the refining that we have now if we can just give them some investment and they can boost some of their infrastructure some of their storage they can do more refining in the next six months or so and then again if you can ease some of the

33:07state regulations like California has which is killed refining over the past ten twenty years that might help our refining in the state of California as well. Yeah and California I think it seemed to refineries closed to your point just since the start of this year or the past year so you're going to be meeting with the Saudis here a lot of focus not just on what's happening in the state of for moose but also now what is happening with the Hooties and Bob and Deb and the East West pipeline that's closed as well. Yeah well again this is about diversifying how we get refined product or crude product out of the middle east so you want to diversify how you can do that as much as possible you want to deemphasize the straight of her moose in the long term obviously the president has focused a lot on getting the straight open but we want to have more infrastructure more pipelines through that whole area to get product out of the area we've seen this in Europe over the past year where we looked at how do we build more infrastructure to reverse the flow of natural gas or LNG so we can send us LNG into Europe and so it's not

34:11coming from Russia down into Europe we need to look at that same type of system of the US quarterbacking an overall effort where we can get more diverse flows through that whole region so if that's the East West pipeline building more capacity there it's also pipelines going up into the middle east or up into the Mediterranean through the Middle East and so you know you don't want any one point that can be attacked you want multiple areas so that we can get as much out as possible and diversify the flows as much as possible. You've been one of the key officials on the front lines of reopening and normalizing relations between the US and Venezuela and the role that oil will play all this so how quickly can Venezuela oil actually ramp up and come online to help offset some of the dynamics that we're talking about. It can go pretty fast and so you've already seen obviously Chevron expanding operations there you've seen some of the incumbents there they're like E&I the Italian company that's

35:11been there they're all ramping up fast so they just announced deals a couple weeks ago they're already sending more rigs down they're already producing more but one of the great things about being here in Houston is we we're at the center of the oil and gas universe for America we had a huge event last night with industry a lot of people coming up to me they're going to meet with the Venezuelan delegation that is here in town they're ready to go so so what they're telling me is we can get rigs down there like the next day once we sign deals and so one of the differences President Trump wanted a strong Venezuela delegation here to meet with our industry to meet with our secretaries who are here so we've got ministers that are focused on hydrocarbons here we've got ministers on mining here we've got the finance minister here as well from all from Venezuela so all those conversations are going to happen over the next 48 hour period what's great to is not only of these conversations starting here it's kind of a two week block where we're going to have delegations here where you know we've got the UN in New York next week

36:14so we've got a lot of international groups coming in next week and so these conversations are going to happen this week we're going to get some deals over the line when we leave here by Wednesday we're going to get announcements out when it comes to Venezuela but we're not going to stop we're going to do this through next week when we've got all these international delegations up in the UN next week too. Alright so the beginning of the conversation and I think you and I will be meeting next week as well. Yes exactly the executive director of the National Energy Dominance Council it's great to be here with you appreciate it. Thanks Morgan. This is the beginning of the conversation here on CMBC as well today. Dom a little bit later this morning 1130 a.m. Eastern will be joined by US Energy Secretary Chris Wright as well and later today we'll be speaking with the Secretary of the Interior Doug Burgham too so be covering all of the news as it's coming out of here throughout the day and speaking with folks and continuing this conversation and building on it back over to you. Alright Morgan Jared thank you very much for the conversation we appreciate it we'll see you throughout the course of the day today. A lot more to come here on morning call including more on those fresh fears around the AI

37:15trade and the ripple effects shaking out in the tech sector morning calls back after this. Alright welcome back checking the cyber security trade after shares of Crowd Strike hit an all time high yesterday right now those shares are off by just about a percent but again all time high yesterday Crowd Strike and others were some of the top performers in the S&P 500 yesterday as the rest of the AI trade fell very sharply taking a look at those socks in the pre market trade right now Crowd Strike Fortinet Palo Alto Cloud for Zscaler all giving back some of those big gains from yesterday. Cyber's move helped the software sector outperform the chip trade by the largest margin in history according to data from Dow Jones market data taking a look this morning the I shares expanded tech software ETF is now going down after a big gain yesterday meanwhile the I share semiconductor ETF ticker S O X X is relatively flat after a big drop yesterday we're back after this. Welcome back to morning call time now for your call sheet where we look at the topics striding the trading day ahead

38:16the crew members assemble today are Ryan Dietrich of the Carson group is also a CNBC contributor there's also Gina Martin Adams of H. B. wealth and Kevin Maughan of Hanyin and Walsh thank you all for joining us for the morning call sheet here let's start with our first topic which has to be these days the yield story because you know it's now going back we've hit the superlatives it was the highest since two thousand twenty three at one point yesterday now it's the highest since two thousand and seven so I will start with you Kevin yes because you make a living managing a lot of bond portfolios so this yield story I'm going to say I'm going to ask this question yeah is five percent a level where people are saying I'll take it back up the truck ten years five percent I'm good with that yeah it's becoming a level where investors are starting to become a lot more attracted to the market and I remember now that the ten year yield has reached levels we haven't seen since two thousand and seven and I would argue dumb that the bond market right now is doing

39:17a lot of the inflation fighting work on behalf of the Federal Reserve which is almost what chair Walsh wants he wants the bond market in the market reacting to data as opposed to speculating on what the Fed may or may not do and that's pretty important especially considering what's going to take place tomorrow Gina how exactly do you view the rate story vis-a-vis the market if we have a situation where rates are rising with the speed that they have multiples do get compressed so is this a story where the equity markets are reacting normally to what's happening with the bond market rates yeah I think this is actually a great point and one of the we've been been making all year the equity market has been derating as rates have been rising over the course of the summer we saw the equity market multiple fall a couple of turns even as rates were rising and earnings were rising much faster than prices so when you look in the grand scheme of things the valuation levels of the equity market are already reflecting and expectation that rates are rising this is why markets were able to sustain the rate rise up until September I think

40:19what we're experiencing today in September is more about seasonality than anything else we tend to have week September's we came off of an incredible earning season in July and August so we're naturally experiencing a bit of information that's supporting stocks at the moment and we're contending with a lot of rate volatility a lot of uncertainty with the Fed a lot of changes in oil prices now a little bit of AI and in environments where we don't have that earning support we tend to lean on rates and rates are rising so you're seeing valuations compressed but longer term the market has been acting very very rationally normally and some would aren't frankly I think we were talking about 5% we were talking about 4% in the same fashion a few years back probably be talking about 6% next we're in a long term repricing cycle in the bond market the equity market has absorbed it well because of earnings all right so Ryan I was going through my ETF screener yesterday and looking at a bunch of high yield funds that are now at the lowest

41:21levels that they've seen for the past year plus at this stage so we are seeing a bit of that pressure building up in certain areas of the credit market is it concerning from a charting technical perspective to see some of the weakness that we've seen on that credit side of the equation first off thanks for me back Tom good morning everyone great conversation very quickly what Gina just said this is options expiration in September go back and look at history this is one of the worst weeks of the year so little indigestion here wouldn't be a shock beginning to that and we have seen you know the nominal price of some of the high yield ETFs we can yes but I think what's fast basis look at high yield relative like intermediate term bonds a dumb high yield is still actually outperforming right if you get high yield spreads across the curves we're not seeing a lot of stress in high yield spreads either so I'm not saying things are perfect but go back in history when you see those spreads start to increase like early 25 early 26 that was a warning sign maybe something's off a little bit here we're not seeing that so all it all I mean similar to what the conversation just was we've

42:21said all year an inflationary growth environment here Carson the economy is going to grow nicely a conflation between 3 3 and a percent and this is still a bull market we haven't changed our to and that's I think what's happening here all right so Gina that re rating is also affecting certain parts of that equity market normal normalize as it is right now but AI specifically that's our next topic because those rate stories are now translating in some way to the narrative around what's happening with AI in the momentum there are rates going to be that thing that derails the AI trade I actually think that no the answer is no but broadly mostly because AI is in a story of give and take and cyclical rotation inside the AI trade we may be moving into another period of time in which the AI spending beneficiaries underperform the AI spenders because of the news that we got yesterday that doesn't necessarily mean the AI trade is over it just means leadership inside the AI trade may change a little bit in the near term I do

43:21think also something to keep in mind is if the Fed does tighten rates as anticipated tomorrow that may calm the bond markets nerves and this is I think an underappreciated aspect of what's been going on part of the reason why rates are rising is because the bond market is begging the Fed to tighten and the point when the Fed starts to tighten we might start to see a little bit of a period of calm emerge and the bond market saying okay the Fed is actually on the case the Fed is not losing track of the longer term sort of perspective and we might see the bond market calm down I do think that that's an underappreciated possibility later this week and into next week. All right Kevin what do you think? Yeah I find it that investors continue to poke at this perceived AI bubble almost hoping it's going to burst whether it's software whether it's semis whether it's the data centers we saw a nice rotation take place yesterday from semis to software I think that's going to continue to play play place over the course of the AI revolution as we see more rotations within the entire AI ecosystem but I still believe if you follow the money that's where you're going to find

44:22growth opportunities look at those receiving the money as opposed to who's spending the money for bigger growth today. All right and the last topic that we have today and Ryan I'll go to you for this one first energy markets are of course in focus maybe somewhat argue the bigger driver of the interest rate story right now how exactly is that energy trade shake out for the last part of this year. Well I mean you're right I mean we see one of the highest correlations ever right between crude oil in the 10 year all in all we're not surprised to see crude oil doing this I mean this is a commodity super cycle I know it's kind of cliché to say that but real in a way crude oil is playing catch up with a lot of other commodities have been going higher in this inflation or growth environment so our base case is listen you want to have a diverse life portfolio like Kevin just said some growth over there but you really still need to have we have managed futures we have some energy exposure some commodity exposure some gold exposure so some other stuff in your portfolio as you made over it equities but underweight bonds how we see a dumb. Kevin how do you view energy as a portfolio play. Yeah the longer that oil prices stay above $100 a buyer the higher guys prices aren't the

45:25higher diesel prices are remember every product that we purchase gets delivered to us ultimately by a trend. So we're going to have a lot of energy and we're going to have a lot of energy that's delivered to us ultimately by a truck that truck needs these prices that could slow down the economy so we do need to see some reprieve as it relates to oil prices but I still question going back to the Fed meeting tomorrow if they raise interest rates by 25 basis points what is that going to do to open up the straight of her moves or low oil prices I think it would be a mistake for them to raise tomorrow although they likely. Gina quick last word energy overweight underweight we're overweight energy our sector score card has been overweight energy in fact all year and not in light of not instead of tech I think this is the interesting call right now is you've got to have both energy and tech all right Gina Martin Adams Kevin Mon Ryan Dietrich thank you guys very much we appreciate it futures again solidly lower thanks for coming here again adventure global we think about what can be done not what's usually done through innovation venture

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