Oil shocks, IPO frenzy, and AI reshaping markets 3/26/26

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I'm Morgan Brennan and this is your morning call.

Good morning and welcome to morning call.

Let's get a check on U.S. stock futures,

which are lower this morning.

All the major averages poised to open in the red here.

This after a rally for the major averages

yesterday, though, closing off session highs.

If we take a look at treasure yields right now,

those are continuing their march higher.

With the 10-year U.S. treasury yielding 4.378 percent,

the two-year treasure yield 3.943 percent,

that is really where a lot of the market action has been

within the bond market here over the past call at week or so.

Turning that's a dollar index.

A little changed right now.

99.68 is the level there.

And finally, let's take a look at energy.

Because we do have crude oil prices and other energy commodity

prices moving higher again this morning, WTI crude.

Up about 4 percent, 93.73 and Brent crude.

Also up about 3.5 percent, 105 dollars per barrel

and change here.

We're also keeping an eye on memory chip stocks

and both here and abroad.

After sharp losses yesterday on a new breakthrough at Google

that aimed at reducing the amount of memory needed

for AI workloads.

So you could see shares right now across the screen,

lower.

That was the case yesterday in trading here in the U.S.

and that has helped to pull the NICA

and the Cosby lower in trading as well

as K high-necks in Korea right now at about 6 percent.

Now let's get to our top story.

Global markets on edge once again.

As Iran rejects a U.S. ceasefire offer

instead laying out its own list of conditions

to end the war, including retaining control

of the state of Hormuz,

according to Iranian state media.

This is the first time Iran has formally acknowledged

that it's received the White House's 15-point peace plan.

Adding these exchanges do not amount to negotiations

but we continue to see and watch the headlines as we get them here.

Let's get to Dan Murphy in Dubai with the latest, Dan.

Hey there, Morgan.

And as markets digest that july narrative,

the voice from the Gulf is growing louder.

The U.E. Ambassador to the U.S.

Yusuf Al-Ataiba taking a firm stand in the Wall Street Journal today,

warning that a simple ceasefire isn't enough

and that building a fence around the problem

would only defer the next crisis.

Of course, Iran has launched more than 2000 missiles

and drones at the Emirates alone

and Abu Dhabi is now making it clear

it will not accept a deal that leaves Iran's

threat capabilities intact.

And Morgan, that message is being taken directly to Washington as well.

The CEO of Abu Dhabi's National Oil Company, Sultan Al-Jaba,

met with Vice President JD Vance at the White House overnight.

He told the VP that restoring free passage

through the straight-of-horn moves is the only solution now

to stabilizing global markets.

And that is also on top of a new joint statement

from the UAE, Q8, Bahrain, Saudi Arabia, Qatar,

and Jordan today, which are also making it clear

where they stand as well and ratcheting up the condemnation of Iran.

Morgan, we're of course approaching the one-month milestone

of this conflict.

If the talks that the White House says are underway

continue to go south,

then the next conversation in the region

won't be about diplomacy.

We have U.S. Marines already on their way here,

thousands of additional troops deploying.

The question of whether Washington is prepared

to put boots on the ground in Iran

to try and end this stalemate

is moving from hypothetical to very real, very fast.

Morgan.

Okay, Dan Murphy, thank you.

Well, we've got tensions in Iran,

also front and center in France today,

where G7 foreign ministers are meeting today.

CNBC's Rithika Gupta joins us now from the conference, Rithika.

I'm here, Morgan, in Hombulier.

It's just an hour outside of Paris in the French countryside.

This is where G7 foreign ministers are going to be

meeting. It actually goes back to the original summit,

which was back in 1975.

The very first one today.

Of course, the agenda is going to be dominated

by the war in the Middle East.

This comes as U.S. President Donald Trump has said

that he will unleash hell if Iran doesn't accept

a deal to end the war.

Now, immediate concern is the state of Hormuz.

The critical oil supply route,

which is effectively shut and disrupting oil markets

and energy markets across the globe.

The G7 has tried to show unity.

They've condemned Iran for its attacks

on energy infrastructure in the region

and signal that they are prepared to step in

to support energy supplies.

But the real focus is going to be the pressure

from Washington to do more.

U.S. Secretary of State Marco Rubio,

he's going to be attending the meetings tomorrow.

This is going to be his first international trip

since the war in the Middle East began.

And then he's going to try to win over skeptical allies

because most of the G7 members have been reluctant

to support a U.S.-led military intervention.

They don't want direct involvement in this.

And this has drawn the eye of President Trump.

And this comes as Trump has delivered his 15-point peace plan,

which goes way beyond ceasefire.

He's demanding Iran get rid of its nuclear

and ballistic missile program

and reopen the straight of Hormuz.

Now, Iran is rejecting this,

but G7 isn't fully on board either.

Whilst they agree around the problems,

the risks with Iran, they can't agree on a solution.

They are prioritizing diplomacy and de-escalation

over direct military intervention.

But as we're seeing the markets in disarray

and oil markets in focus,

it's becoming clear that these divisions

are becoming harder to ignore. Morgan.

All right, Ruthika Gupta, thank you for joining us.

Let's get to the growing chorus on Wall Street,

including of JP Morgan, Black Rock, Citadel.

Those are all warning that the war and ongoing oil shocks

are being underpriced.

Experts say a prolonged conflict could hit growth

and lift inflation, raising the odds of recession

as we highlighted right here on morning call yesterday.

Odds of recession on prediction markets also rising.

35% of those on Kalshi saying they expect

to recession this year, it's up from 22%.

The day before the war began.

For more, let's bring in Mark Malik,

Chief Investment Officer at Seabirt Financial

and Stephanie Roth, Chief Economist at Wolf Research.

It's great to have you both here.

Mark, great to have you on set.

I'm gonna kick this off with you.

Are markets and investors underpricing

the real shock here from oil?

I think so, I mean, look at the moment in the beginning,

I think there is a little bit, a little overshot itself,

but at this point, I think everyone's now recognizing

that this conflict can go on for much longer.

It doesn't take much for the Iranian regime

to threaten the state of Hormuz.

A simple $50,000 drone can literally bring traffic to a halt.

So now I think we're trying to factor in,

hey, what would the really long-term scenario look like?

What would be that impact ultimately?

So I think the repricing is slowly happening now,

so it's not necessarily reactive.

I think most of us are trying to be now proactive

and we're looking ahead.

Okay, I wanna get into what that actually means,

but first, Stephanie, I wanna get your thoughts on this,

especially as we got a hotter than expected inflation reading

for what it's worth with the U.S. import export prices

for February yesterday, on the one hand, on the other,

we continue to see signs and we'll get jobless claims

later this morning that the labor market here is,

we'll say, tepid or stable or at least not growing.

So what does this mean and how is it playing out

in the bond market when you look at treasurials,

especially something like the two-year?

Yeah, I mean, I think the bond market

is overly concerned about the risk of a hike.

The Fed is very likely to trade this as something

that is ultimately gonna be a risk off of the Fed

where growth is slowing and ultimately probably look through this.

So I still think that the Fed can cut this year

just by the market pricing in higher odds of a hike.

When you think about the pricing dynamics,

you mentioned import prices.

They were elevated in the most recent print.

That was more tied to computers, perhaps tied to the rise

in memory prices, which is a bit of a different story,

but that just tells you that you have elevated prices

into a shock where we're gonna get more inflation.

So the Fed will probably stand hold for a while

because you have elevated inflation.

And eventually they'll be able to cut

as you see growth slowdown.

So rising risks of recession that makes sense to you

or is it overblown?

Yeah, I think I mean, certainly risks of recession

have risen since before the war.

Are they quite 35% maybe not?

I think it's probably a little bit lower than that,

maybe 25 to 30, but risk of undoubtedly

risen since the crisis started.

So Mark, back to the comment you just made.

What's an investor to do here?

How do you look forward?

How do you move through it?

How do you price it?

This is a tough one, right?

Because pretty much all asset classes

are impacted one way or another.

But we view this as a moment where you sort of knuckle down

and you start to look very deep in your portfolio

because not all stocks are the same.

Not all instruments are the same,

but there are still some babies

that were thrown out with a bath water.

And so the theme investing that we've been doing

for the past several years that we've been getting away with,

that's sort of going away.

But there are opportunities here for folks

that are even looking, not even value investors,

but people who do like to buy growth.

There are still stocks out there

that if you have the patience and the time,

there are opportunities.

So now again, we're just sharpening our pencil

and we're cleaning out those themes

and we're focused more on, okay,

what's going to survive beyond this?

What's going to have the most potential growth here?

Yeah, and it's not just the headline risk associated

with geopolitical tensions

and this war in Iran specifically

and this bike we're seeing in commodity prices.

It's also some of the other common themes

that we've been talking about since the start of the year,

whether it's AI disruption

or continuing cracks in private credit.

I know you've been digging to that pretty deeply.

Yeah, absolutely.

I mean, that is one that still keeps,

I think most of us up at night,

that's the story that just won't go away.

Every morning, I say,

I cannot write about this again for one more day,

but then something else starts to happen

and we get a little bit more clarity on what's going on.

For now, it looks like it's contained within that area,

so there's not gonna be some massive contagion

or anything like that,

but a lot of people do have exposure to those companies

which are still great companies,

but again, just like all stocks,

they're not all created the same.

So we have to dig a little bit deeper

rather than just go broadly after, let's say, private credit

and say, oh, this is a great opportunity,

we have to look at the company specifically.

So I think that's gonna be the theme

that we're all gonna have to follow

because really, there's nowhere to hide.

It's just a matter at this point

of just cleaning up your investments

and thinking forward and looking at what this whole situation

has presented us.

And it's a lot more information

than let's say that we had,

let's say a week ago or two weeks ago.

So now, the themes are becoming clear to us.

Okay.

I wanna get your thoughts on this, Stephanie, too.

And whether there are other risks

within the economy right now

that are perhaps getting overlooked

because of all the talk around geopolitics.

Yeah, I mean, it's ironic that the impact of AI,

it's disinflationary narrative

and also it's impact on the labor market

and are no longer being talked about,

which then of course ties to private credit

because of the concerns related to software.

But I think there's risk that you end up

seeing softness in the labor market,

not even tied to what's going on in Iran,

but because AI hasn't gone away,

yet the market may not be focused on it,

but we're still likely to see some upward pressure,

especially on the unemployment rate over the summer

because there tends to be seasonal upward pressure

as young people graduate school and to the labor force

in an environment where AI is reducing the demand

for entry-level workers.

We're likely to see some upward pressure

on the unemployment rate in the next couple of months.

All right.

Stephanie Roth and Mark Malik, great to have you both here

to kick off the hour, appreciate it.

Great to be here.

We've got a lot more to come here on morning call,

including history at the TSA,

and not a good way.

What it's chief just told Congress,

as lawmakers appear, no closer to getting a deal done.

Plus, a double black guy for meta-platforms,

why it's problem-stretch from Silicon Valley

all the way to Beijing.

And later, postal problems as well as fuel costs

force the agency to do something for the first time ever.

We have a very busy hour still ahead.

You don't want to miss a moment.

Stay with us, morning call will be right back.

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Men are struggling with their mental health

that some of the highest rates we've ever seen,

but most aren't getting the support they need,

and that needs to change.

I'm Dr. Guy Winch, your host for season three

of The Visibility Gap, presented by Signal Healthcare.

This season, we're focusing on men's mental health,

bringing together real stories and expert insight

to explore the pressures men face every day,

and why opening up can feel so difficult.

Join us for the new season,

wherever you stream your podcasts.

Welcome back to morning call to the partial government shutdown.

Now in its 41st day, lawmakers in Washington are,

now less than 48 hours away from Easter recess,

with time running out to reach a deal on DHS funding.

Sources tell CNBC the house is expected to vote

on a funding plan around 2.30 p.m. Eastern today.

We've got no word on a vote by the Senate, though.

This after Republicans and Democrats in the chamber,

each formally rejected the other's latest proposals

to fund and reform ICE,

and in comments on Capitol Hill yesterday,

the head of the TSA, the acting head,

is now warning the agency may consider closing

some airports as call out rates in places like Houston

and New York and Atlanta, surge.

Multiple major airports or experiencing days

were 40 to 50% of their staff are calling out,

because they simply cannot afford to report to work.

This has led to the highest wait times in TSA history

with some wait times greater than four and a half hours.

Ooh, joining me now,

former Department of Homeland Security Assistant Secretary

Robert Lyskowski, it's great to have you on,

and what is it going to take?

That seems to be the question.

You've got all these terrible waits, record waits.

You have people that are not only not coming into work,

but are also leaving the workforce for TSA.

What is it actually going to take to get politicians

to the table to get funding in place?

Yeah, Morgan, thank you, good morning.

Listen, I can't speak to the politics

as much as I can speak to the security situation,

and regrettably, that might be the thing

that gets people to the table.

We have increasing threats.

I think we forget about 9-11,

and the reason that TSA was created as well

as the Department of Homeland Security.

We had serious national security threats,

that TSA was created to stop.

And as a consequence with the politics

that are currently going on,

I think that the American people

are being done into service,

because we're degrading the amount of security

that's available to them through transportation,

security administrations, shutdown,

or not their shutdown, but through the DHS shutdown.

And I think we forget about the economic impact

of 9-11, and I think we forget about the economic impact

of post 9-11, that the transportation industry felt,

and the economy felt as a result of that.

And of course, to your point,

we have a war with Iran right now.

We have heightened geopolitical tensions.

So in moments like this,

are the security risks typically elevated at airports,

or is it always an elevated issue?

Well, they're always elevated, right?

So the posture of TSA is always one

that's at the highest levels.

But when we have issues like this,

we look at threats manifesting themselves

to the transportation industry through the network

or other areas, and TSA is even on fire alert.

And they should be now more than ever,

because we have evidence that there are sleeper cells

here in the United States,

whether they be Iranian or otherwise,

and we understand that they're going to look

to exploit this opportunity that they can.

So we just talked about it,

that there's a scramble to try and get this done

before lawmakers started two-week recess.

But there is also already talk out there

that if this doesn't get across the finish line

here before the end of this week,

that you could see this drag out

as long as the entire fiscal year,

what would actually happen to the system

if we were to see something prolonged like that?

Yeah, so if past this prologue,

and we look at the 9-11 attacks,

and what happened there,

and how long it took for TSA to get stood up

in the wake of 9-11,

and the economic impact that had then,

I think we're talking about something

that could potentially be a similar situation.

We TSA suffers, right?

As most organizations do,

I turn over recruitment issues,

increasing demand on their staff.

We have an economic expansion going on.

We have more people traveling.

We're going to be hitting this summertime travel peaks,

and I think the lines are just going to get longer.

Well, we see air traffic decline because of this,

or consumers actually buying tickets

to travel decline because of this?

Well, I can't predict that,

but it seems to me that if you shut down airports,

or if there's a slowdown and the ability

for passengers to make aircraft on time,

their flights on time,

I think it's going to have an impact

on the airlines themselves without a doubt.

I think we're already seeing that.

And if airports shut down as a result of a TSA slowdown,

then I think that's exactly what's going to happen.

Okay, Robert Laskowski,

thank you for joining me, appreciate it.

Thank you.

We should also remember it's not just TSA workers,

it's also Coast Guard and FEMA.

Well, straight ahead,

the oil price premium giving a big boost

to one corner of the market, but first,

watching shares of Lockheed Martin, Honeywell,

and BAE systems, the Pentagon announcing

that it has reached framework agreements

with all three to boost production

of some key defense systems,

specifically in missiles and munitions.

This is a big part of the push

to put the US military on a wartime footing,

been talking about it for months now,

but it continues to accelerate

and gain some momentum here in the wake

of what we're seeing in Iran.

If you look at Lockheed Martin,

it's down fractionally right now they all are,

but bouncing more than 2% yesterday,

similar situation for Honeywell on that development.

Morning call, we'll be right back.

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It drives America's economy.

Every dollar invested generates another $2.50

in economic activity, spurring growth

from farms to factories.

And here's the best part.

Freight railroads fund their own infrastructure,

saving taxpayers billions

while powering the economy forward,

from reducing highway congestion

to delivering goods safely and efficiently.

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Men are struggling with their mental health

as some of the highest rates we've ever seen,

but most aren't getting the support they need

and that needs to change.

I'm Dr. Guy Winch,

your host for season three of The Visibility Gap

presented by Signal Healthcare.

This season we're focusing on men's mental health,

bringing together real stories and expert insight

to explore the pressures men face every day

and why opening up can feel so difficult.

Join us for the new season,

wherever you stream your podcasts.

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Welcome back to Morning Call.

We're turning back to the war in Iran.

The impact on energy.

We're looking at WTI and Brent,

which are each up about 38 and 44% respectively

since strikes began just under a month ago.

Even off the highest levels

that we've seen in the oil futures market,

that rapid rise in prices,

helping to fuel many stocks in the energy sector

to new highs, including US focus names,

both in production and infrastructure.

So APA, that's up 36% since the war began.

And that stock is at a new 30 month high.

Occidental petroleum, that's up 17%.

Sitting at a 20 month high.

Nat gas, heavy weight, EQT, that's also up 10%

at a new record.

Pipeline player, Kinder Morgan, up 2%

as well at an 11 year high.

And even some of the global oil field services giants,

like SLB, it's up 1%, but it's sitting at a 2 year high.

Now, amid these elevated energy prices, though,

the steady drum beat of companies and countries

warning about price impacts,

and or making policy moves to mitigate supply shocks.

Well, that continues.

And just yesterday here in the States,

the US Postal Service announcing that it is seeking

a temporary 8% charge on some products,

including packages and priority mail.

This is to help ease the impact of rising fuel costs.

Pending approval, the new charges would take effect

at the end of next month, stay in place until next January.

And that is on top of the warning that we got just earlier

this month from Postmaster General,

that the USPS is poised to run out of cash

within a year unless lawmakers make changes.

Well, still on deck.

We have a rate shock in the housing market

as the spring selling season kicks off.

We're going to break that down on the other side

of this break.

And we're in call continues next.

I'm Morgan Brennan.

Welcome back to Morning Call.

Let's get a check on US stock futures, which are in the red

with major averages poised for a lower open.

This, of course, after a rally for those averages yesterday,

which all finished higher were actually poised for gains

for the major averages on the week.

So far, we'll see if that holds.

If you take a look at the treasury market,

we're seeing bond yields move higher again,

as well with the 10 year treasury 4.38% right now.

Dollar index mean time is holding steady, pretty stable

against other major currency is with what we've been seeing

so far this week.

Turning to the cryptocurrency market too,

where we saw Bitcoin rally yesterday.

That's under a bit of pressure this morning

back under 70K.

And finally, take a look at energy and oil prices,

which have joined the action across so many other asset classes

here in recent weeks.

You can see the steady climb higher has renewed here

with WTI up about three and a half and was 4% in 93.67

and Brent crude trading above $106 a barrel right now

up almost 4% this morning as well.

Well, checking on some of the morning's top stories.

Iran is rejecting a U.S. ceasefire offer

instead laying out its own list of conditions to end the war

including retaining control of the straight-of-form moose

that's according to Iranian state media.

Well, this as the White House reportedly explores

what a potential spike in oil prices to as high as $200

of barrel could mean for the U.S. economy.

The war in Iran is not just hitting energy though,

housing also feeling the pain.

Mortgage demand is down more than 10%.

Week on week, this is mortgage rates

hit their highest level since October.

Well, we're also watching shares of Jeffries

out with results that mistreat estimates

over losses on bad credit bets.

Investment making meantime posted its strongest quarter

on record so 45% surge in sales there.

You can see shares of Jeffries down about 3% right now

pre-market but speaking of credit,

one of Blue Owls CEOs is trying to sue the investor concerns

saying his firm has not seen a rise in default

within his loan book.

JP Morgan chair of Global Research Joyce Chang speaking

on our era on this show just yesterday.

This is not a problem that we see as being more systemic

or having a lot of spillover.

You also have unused bank commitments.

There will be some secondary fund raising that's going on

and there is a lot of dry powder

and that is one reason why we do see a lot of the

specialists firms now really holding out

and saying are there some opportunities

to step in right now.

We close in on the end of the first quarter.

Can you believe it?

Tech has been under some of the most pressure

within the broader market.

So Nasdaq is down more than 5.5%

or on track for its worst quarter since 2022.

We've got several factors at play including, of course,

the Iran War, but also AI disruption

and concerns about the credit picture.

The latest subsector feeling the heat, memory chip

and storage makers this after Google announced

a new compression breakthrough yesterday

that could limit the amount of memory

that is required to run large AI language models.

SK Heinix and Kostya slumping today in Asia

and we're seeing more losses today for micron and sand disk

as well as joining me now to break all of it down.

There's so much to get to, Eric Mandel,

Senior Managing Director at Guggenheim

who focuses on the tech and AI space here on set.

Where do we start here?

I guess broader tech outlook given all of the conversations

we have been having on a daily basis.

First of all, great to be here.

Congratulations on the new show.

Thank you.

It is amazing that the first quarter is almost over.

I completely agree.

And I think the most fascinating thing that we're seeing

which is not only translating into the broader market

but into M&A is the AI trade was so clear only a month ago.

It was so apparent that AI was going to disrupt software

at the point that software was going to go away

and AI was going to be everything.

And I think what we're seeing

and we see this across our client base

but we also see this in a lot of that M&A

that we're working on is the market has made

a little bit of a mistake.

The market has said that all AI and all software

has created equal.

So we all know that the market loves certainty.

And when there's no certainty, the assumption is

is whatever I can't understand, I'm going to discount.

And that's what happened on the software trade.

What's been secretly happening over the last month or so

is we have on the investor side a lot of people saying,

if I look at the S&P, one of the largest components

of it is technology.

And within technology is software.

And software is one of the most profitable segments

in the history we've ever seen in the market.

So in a way, people are pulling back and saying

maybe I was a little too rough on the software sector

and I'm spending a little more time there

from a public perspective.

On the private side, I can tell you

that if I compare our busyness level

with where we were only a month ago, it's night and day.

We have board meetings that are entirely focused on

what are the software companies that

might be open to having a conversation.

How can they help us?

And this is the most important key thing, which

is beginning to come out more and more

thematically with AI companies.

Who are the software businesses that are best positioned

to work with some of the AI platforms?

Because I know we talked about this last time

we were on together, there is going to be a friendship

that is designed with the best AI businesses

and the best software businesses to go to market

and just solve customer's problems.

A very simple thing, but it hasn't played out yet.

So it's very hard to figure out who wins in that war.

Oh, you just said so much here.

So we're going to dig into all of it as much as we can here.

And first, just in terms of what we've

seen publicly in the software space,

is it valuations feel right sized here for this moment?

That's a phenomenal question.

So there are going to be haves and have nots.

That's not a bad thing.

That's the way the market always works.

The market has to get to a point where they understand

if a company is traded at 10 times revenue forever,

meaning last couple of years.

And now it's trading at seven times revenue.

Is that fair market value?

And I think everything has been lumped together.

So to answer your question directly,

what we're seeing now is the questions

that the market is asking.

And these are the same questions that M and A buyers are asking.

What is your moat?

What is your ability to work with these AI platforms?

And what is your talent?

And this talent component is really important.

We've seen the alphabets and the nettles and the Microsofts.

Do transactions for just a few human beings?

That concept lives in software as well.

They may not be startups,

but there may be someone who, a set of customers,

trust so much that that in and of itself

could be interesting from an M and A perspective.

We're going to talk more about the IPO pipeline

a little bit later in the show.

But first, we talk about the fact

that it's been sort of slow to open up

in a bigger, broader, more meaningful way,

at least until now, perhaps.

But I also just wonder if it's because to your point,

you're seeing a lot of these companies

that might have been contenders to go public

now being snapped up by these other players.

Great point.

At Guggenheim, we do both.

We do M and A and IPOs,

and we'd love to be doing more IPOs,

but you just made the point.

There are so many private companies

that have proven how they can actually capture market

and interest from customers.

But the real problem is,

once they get to that 100 to $250 million revenue level,

years ago, those businesses would be public already.

But now, there is such a desire

by the heads of corporate development,

CFO CEOs, Chairman, to say,

I want to own that business.

And we're going to bring back a term

that I think we all loved years ago, which was FOMO.

The FOMO trade was, I needed to be intact

because if I wasn't in it, it was game over.

That same concept is playing out in M and A,

and we're going to see that play out

in the public markets, for sure.

Okay, Eric, stick with us.

So we have a lot more to talk about here.

We've just scratched the surface.

So we'll see you back in just a few minutes.

Part of today's morning call crew stay with us.

We got a lot more to come, including setbacks for meta,

including officials in China,

reportedly putting new pressure on the company's latest AI

acquisition, speaking of M and A.

Morning call, we'll be right back.

Welcome back to morning call, turning now to a landmark

social media addiction case involving both meta and Google.

Both companies are vowing to appeal a California

jury's ruling that their products are to blame for the depression

and anxiety of a woman who compulsively use social media

as a small child.

The jury ordering meta and Google to pay the woman

a combined $6 million in damages.

Now this trial, along with a similar ruling in New Mexico

and Tuesday, are expected to serve as bellweathers.

For thousands of similar cases,

with two of them scheduled to go to trial in California

just later this year.

If we stick with meta, though, executives at one recent

high-profile AI acquisition target reportedly being barred

from leaving China by regulators,

their UNICE UNE has more on this and how it speaks to

this decoupling, if you will, of this AI tech trade

more broadly, UNICE.

Yeah, that's right.

More again, you know,

the CEO and the chief scientist of this AI agent company

called Manus, are reportedly not being allowed to leave

the country.

The financial times is reporting that the two were summoned

by the country's state planner this month for questioning

over potentially violating foreign direct investment rules

related to Chinese companies.

Now the executives co-founded the start-up in China

but they relocated to Singapore and then the country's

a commerce ministry had launched a regulatory review

of this $2 billion sale soon after Meta had announced it.

A manus has not responded to CNBC's request for comment

of the Chinese government, the foreign ministry,

also would in comment.

In a statement, though, Meta says the transaction

complied fully with applicable law.

We anticipate an appropriate resolution to the inquiry.

Now, so far there are no official charges,

but the way that Beijing's move is being read here,

especially in the Chinese tech community,

is that it's a sign that the Chinese leadership

wants to keep a very tight grip on its AI and high tech talent

and that it's concerned that by moving out of China,

some of these start-ups might be able to get picked up

by American or non-Chinese firms.

Now, as for Meta, analysts that I speak to say

that there are a couple of scenarios.

One would be very dramatic and that would be Beijing demanding

that this deal be unwound.

I'm told that this would be the nuclear option,

but more likely or possibly,

Manus's founders could be fined

because they have some Chinese entities and exposure here,

but also that Meta could also be fined

because even though its apps are banned here,

Morgan, it does have a sizable business

because a lot of Chinese companies place ads on Meta's apps.

It's such a good point, Eunice Yoon.

Thank you.

Let's get more reaction on this as part of your morning call sheet

where we look at the headlines driving the trading day ahead.

The crew members today, Eric Mandel,

of Guggenheim is still with us, plus J Woods,

a freedom capital markets.

Tom Lee from Fundstrat, both of whom are also CNBC contributors.

So great to have all of you here.

Eric, I'm going to kick this one off with you.

We were just talking about the trends in big tech right now

and the M&A action we're seeing.

How much does geopolitics now factor in?

It's probably a net positive because just as your colleague

said on air from China,

if you're a private company no matter where you are in the world,

you want to have access to a set of US buyers.

So in a way, there are very few places

if you're a large-cap tech company,

if you're an ultra-large-cap tech company,

or if you're one of the large private AI firms,

how do you deploy your capital?

It's great to deploy it in businesses

that actually are open to teaming up with you,

looking for a big brother, big sister to solve those problems.

And as we've discussed multiple times,

the talent drive is off the charts.

So I would say it's a net positive.

Okay.

Jay, want to get your thoughts on meta here?

We also got some headlines yesterday,

by the way, of some job cuts there,

a small compared to the overall workforce.

Yeah, I'm a little concerned as a technician looking at

where we are in the trend right now.

This 585 level, it needs to hold.

We're seeing a lot of these stocks on the road,

Alphabet as well, with the nice head and shoulders

topping formation.

So when you hear news like this,

and the domino effects it could have at the negative impact,

we could see a breakdown,

and that could lead to more of an acceleration to the downside.

The geopolitical theater,

that's going to be interesting to watch.

The president's going over to China was announced earlier today

or last night in early May.

So this could be a big negotiating tool as well.

But right now, given the geopolitical backdrop

and the technical setups,

it's got me a little concerned.

Yeah, and of course, the announcement of that meeting,

actually taking place in May is being sort of seen as a bullish signal

that perhaps you are moving closer to and into the war

and around.

We're getting to all of that.

More in just a moment, Tom Lee, I want to get your thoughts on this,

whether it's meta or mag seven overall,

and just the trading we have been seeing in tech.

Well, you know, I think that the tech trade had been really difficult

for the past few months because of doubts around AI spending

and return in a lot of capital.

And of course, those business models shifting

from being like cash flow generators to ones

really putting a lot of dollars into the ground for energy, et cetera.

But I think since the war started,

tech actually has shown better relative strength.

You know, if we look at the global sectors

since the Iran war started,

tech is one of the few groups that's actually positive

in that period of time.

The others being energy and crypto.

So I think investors are starting to view these as

things that can grow while there's a lot of war uncertainty.

But you know, as Jay's pointed out that the charts

aren't that great on an absolute basis.

Okay, we're going to get into those charts and much more.

So all of you stay put because morning call crew,

including questions about valuations, IPOs, talk about peace talks

and what the trade looks like there.

All of this is still on tap on the other side of this breaks

and don't go anywhere.

Welcome back.

Here's what to watch in the week ahead.

We're going to get economic data,

including initial jobless claims the day ahead.

And we'll hear from Fed officials starting this afternoon.

I'm getting ahead of myself.

We're back with more from our morning call crew meantime.

Eric Mandel is of Guggenheim.

It's Jay Woods of Freedom Capital Markets.

Tom Lee from Fund Strat.

Great to have you all still here.

Still a lot to get through.

I've got to start though with the SpaceX IPO.

Potential, confidential filing as soon as this week.

And now we're getting numbers that they could be raising

as much as $75 billion and I'm looking at you, Eric.

Yes.

$75 billion in an initial public offering,

which more than dwarfs history's largest to date.

How does this speak to what a reopening of the IPO pipeline

actually look like and how much capital this is going to suck out

of other parts of the market?

100%.

And Jay and I, and I'm sure Tom has a similar view,

we were just chatting before the break.

No matter what happens on an international basis

and some of the unfortunate things going on with the war,

this perhaps is the most anticipated deal in history.

Certainly by size.

And Elon Musk, you know,

there are a lot of strong points of view about him,

but he made a brilliant move of combining that business with X.

There's a data angle to it.

There's a FOMO angle to it.

There are all these really interesting idiosyncratic things

that investors love.

And I think as Jay will probably tell you in a moment,

there is immense demand.

And there are very few businesses that have ever looked like this.

So, you know, you never can be sure,

but there's a very high probability that this will be sought after

and successful.

Yeah, and an expectation, Jay, that retail investor interest

is going to be off the charts here.

And quite a flurry of IPO filings,

I think with folks trying to get ahead of it too.

Yeah, we've been seeing the retail investor wanting to get in

on these companies while they've been private

because they're missing the bulk of the gains

because once they go public, you know,

the real investors are cashing out.

Robin Hood just had a vehicle at the New York Stock Exchange

where investors can buy a basket of stocks in the private market

and that is taken off.

So, we're seeing that demand and the FOMO in this one,

forget about it.

I mean, I've been at the Stock Exchange for 30 years.

We've seen some big IPOs, Ali Baba and Jack Maul running around

in Twitter.

These things are euphoric,

and there is definitely a desire

from the retail public to get in on this one.

And then you have Elon Musk at the helm.

People like to ride those coattails.

They've been rewarded for it in the past

and they could be rewarded again.

Yeah.

Tom, want to get your thoughts on it?

Well, SpaceX and then also rumblings that we could see open AI

and Anthropic before the year is out too.

Tom.

SpaceX and then also the possibility of open AI and Anthropic.

Yeah.

Well, these are all, you know,

NF1 companies.

I mean, super unique.

They've been transformational to the economy

and they don't exist anywhere else in the world.

So to me, these companies going public

is not only good for the equity markets.

It is a chance for investors to own really unique companies.

I think it's actually a positive that they're raising so much money

because as you know,

I think the indices are also going to really take seriously

including these into the major indices.

And I mean, from a funding perspective,

I think it's going to divert capital away from alternatives

back into the public markets.

Speaking of indices,

we've seen some technical damage here

in the last call it week or so.

Jay, your thoughts?

Yeah.

We've been taking the stairs down.

Every time we break a level,

we find another support level.

And those support levels are starting to thin out.

That 200 day moving average,

everyone talked about it.

I was more focused on the October November lows.

We broke those on Friday.

6,564.73 to be exact

is the new level that we're watching.

Will that hold?

We've had rallies in the past

where we've bottomed on Fridays ironically enough

in that October low,

in that November low,

and now this recent low.

The problem is we have overhead resistance now.

So when we rally,

every time we get to the 200 day moving average,

sellers are coming into this market.

So that by the dip crowd seems to be thinning out

and those rallies are being sold.

So right now this is a relief rally

until proven otherwise.

Tom, you've written about the fog of war here.

I mean, is this still a market

that's going to be driven by headlines

and thus the price of oil in any given moment?

Yeah.

I think investors are very confused

because we hear so many conflicting reports

about progress of the war

and who's communicating

and really the state of the Iranian regime.

But markets are also starting to find

I think levels as Jay's pointing out,

even though indices are struggling,

there are some groups that are showing leadership.

So I think eventually markets will start to,

I think find equilibrium

with the uncertainty around war

and then we start to rally.

But hopefully we're through the worst of it.

It's hard to tell.

It's been interesting because yesterday

with talk of peace talks,

what sort of emerging here

as arguably a peace talk trade

has been silver and gold and bitcoin.

I would not have expected, you know,

as recently as maybe a year ago,

that gold would be rallying

on the possibility of peace talks.

I think it would be an inverse relationship

and yet here we are.

Tom.

Yeah.

It's been, I think it is curious to me.

I mean, gold was did very well last year.

It did actually really poorly

when the war started.

So you're right.

I don't know if it's because of flows like make,

was it harder to get your hands on converting gold

into other currencies if you're in the Middle East

and that's why we start to see prices fall?

I'm not sure, but you're right.

To me, maybe the big surprise has been

how well bitcoin and crypto have done.

Eric, want to get your thoughts on

how geopolitics is factoring into the conversations

and the consultation you're having with clients?

Yeah.

It is no doubt when we're in board meetings.

It's the first thing that people talk about,

but it might sound shocking.

It's actually the other side of J's technical analysis.

If you're a large cap company

and you've been tracking all of these

fascinating software businesses that are highly profitable

and they've created new lows.

They're down 30%, 40%, but they popped a little bit.

There's a thought, are the boards of those companies

actually open to having conversations now?

And I think we're going to see a resurgence

in the software trade, not just because of the M&A,

but because of our earlier conversation,

the only way that you're going to be able to substantiate

your value is to marry your free cash flow

with these AI optionality pieces from platforms.

So that's on the come.

We've got less than 30 seconds left.

J Woods, how are you setting up for today?

I'm setting up a little defensive.

I want to see if we can retest at 6500 level

and get in there by software

as coming to a nice support level as well.

I think there are opportunities there.

All right. We've got still got 20 seconds left.

So let's get a check on US equity futures right now,

which render a bit of pressure.

That's of course after gains for the major averages yesterday,

energy prices back on the mood, move upward again.

And of course, as we just talked about,

this is a market that's being driven by headlines,

so we'll continue to monitor that throughout the day.

Thank you to our morning call crew.

This is morning call.

Squawk box starts now.