AI, crypto and market breadth drive the trading day 10/7/26

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1:17Good Wednesday morning. Let's get a check on U.S. stock futures with the S &P 500 and the Nasdaq sitting at fresh record highs as of yesterday's close. You can see it's a bit of a mixed picture here this morning, taking a breather with the Dow poised to open lower by 111 points, the Nasdaq down 91 points. The S &P is basically sitting at the flatline pre-market, poised to open up fractionally higher. And I do mean fractionally, half of one point. But we have a big thanks to big tech for the move. The sector also sitting at a record. It's the only S &P 500 sector at a fresh record high, which tells you how much of a lift it has been doing.

1:52We're going to have much more on that in just a moment. Meantime, let's get a check on the other big market mover, which is the bond market and what we've seen in treasuries. You can see right there yields are higher across the curve this morning. Ten-year treasury yielding 5.3 percent. We get a big 10-year offering this afternoon, so keep an eye there. And Fed-sensitive two-year treasury, 4.8 percent. 30-year treasury yielding 5.68 percent. We'll also get a check on the dollar index since we know that has been an area of focus and movement to start off the week. And you can see dollar index level right now, 102.23.

2:30And let's also get a check on energy because we did see crude move higher this morning, and that continues here. WTI is up fractionally, trading just below$89 a barrel. And Brent crude is up six-tenths of 1 % as well, trading around$101 a barrel. In focus is renewed attacks or potential renewed attacks on tanker ships in the Middle East, Persian Gulf area, despite the fact that we have seen supply come back to pre-war or near pre-war levels. Let's get to some of the morning's top stock stories, though. SpaceX reportedly looking to raise as much as$40 billion in a new financing round that would be led by Apollo Global.

3:09About$10 billion in bank loans,$30 billion in investment-grade credit. the goal, buy more NVIDIA chips. According to the FT, the deal is expected to close next year. SpaceX shares are riding a three-session win streak, up some 16 percent since the beginning of trading on Friday, although under a bit of pressure this morning, down 2 percent on this FT report. Keep in mind, SpaceX works very closely. NVIDIA is their exclusive supplier for these AI chips. Shares of Corona beer apparent, though. Constellation Brands is also under pressure in the pre-market action. Company is out with earnings after the close yesterday, reporting higher profit and sales for the second quarter.

3:46Strong beer sales at restaurants and bars outweighing weakness in the grocery business. Constellation adding that it bought ready-to-drink beverage maker Spike Aid for$75 million, which could rise to an additional$278 million over the next five years, depending on brand performance. But they did not raise their full-year guidance, despite the fact that they'd have stronger than expected quarter, and those shares of Constellation are down 4.5 % right now. Apple, meantime, reportedly making a new push into smart home devices, focusing on doorbells, thermostats, and smart locks, some of which are being developed in partnership with LG Electronics.

4:24Now, according to Bloomberg, all the devices will work with Apple's new Home Hub and forthcoming HomePod Mini. The device is expected to be unveiled as soon as next week. Shares of Apple are about three-tenths of one percent higher pre-market. But let's see how Europe and Asia are shaping up. Ben Boulos is in London with the action we are seeing overseas. Ben.

4:49Yes, good morning to you. A negative trade across Asia this morning with almost all of the region's main indices closing in the red. The worst performer there on the board, South Korea's Kospi, which sank ahead of Samsung's earnings guidance tomorrow. Japan's Nikkei and Hong Kong's Hang Seng also closing in the red. You might be surprised that we've seen such declines in Asia, given that there are a lot of big chip makers in the region. And given we saw the tech basket of stocks close at a record high on Wall Street, especially the Mag 7, collectively now worth something like$25 trillion, you might have expected some of that rally to feed through into Asia.

5:25Not so. We have seen sharp falls in that trading session. In terms of how things are playing out in the European markets, Plenty of red ink to be found on the regional bourses here. It's the Italian market leading the way lower off around one and a fifth of one percent. The other key markets also trading negatively as well. The FTSE 100, a little bit of resilience there. Remember, you've been talking about the oil price ticking higher. Brent crude above$101 a barrel at the moment. And that lends some support to some of the oil and gas majors listed on the London index. So keeping it slightly outperforming its peers on the continent, but in the red nonetheless.

6:04Morgan. Well, let's stick with oil and gas because you just had Chevron CEO Mike Wirth on your program last hour. A big, long, meaty interview. What was your key takeaway from it?

6:15Some really interesting elements that emerged from that discussion. It's great to have Mike Wirth around the desk with us here on Schoolbox Europe. And we asked him about, you know, that touted diesel export ban that the Trump administration was considering. He described such a move would be unwise. He said it could even worsen the supply pressures. We also asked about the drawdown of inventories. Remember that plan for the EU to release 100 million barrels of diesel? He said that that is what inventories are there for, to provide a buffer to buy us time. But he did also say that now there is an alarm bell around.

6:52There's a wake up call given the inventories are depleted. he said it is a serious situation and it could leave the world more vulnerable at this stage. All right. Ben Boulos, great stuff. Thank you. Well, investors are dealing with a host of worries lately. Elevated bond yields both in the U.S. and abroad. Oil price is still hovering around $100 a barrel as the Iran war continues. And the midterm elections are fast approaching here in the U.S. Less than a month. And by the way, political dynamics, uncertainty, volatility are playing out in quite a few markets right now, also adding to what we've seen globally in the bond market.

7:24Yet the markets overall remain undeterred with the S &P 500 and Nasdaq at record highs. The S &P is up over 20 percent since hitting lows in late March. Nasdaq and Nasdaq 100 are each up over 30 percent in that time. And not all markets are created equal. A little bit of tongue in cheek there. Dow is still about six percent from a new high. The Russell 2000 is about eight percent from the high that it hit over the summer. But joining me now is Phil D 'Angelo, Managing director at Focused Wealth Management. Phil, it's great to have you back on set. Welcome to you. Great to be back. Good morning.

7:56That's where I want to start. S &P and Nasdaq at record highs. The only sector in the S &P that's also at a record high is tech. So how does that speak to this bifurcated market? So look, we're coming into a period right now. We know anything can happen in October, right? As we were here last time. October surprise. As we were here last time, we talked about technology and how we felt the multiples got really cheap. So we continue to like technology here. We also love treasuries. So we're telling our clients in a diversified portfolio, TNT, tech and treasuries. All right. What do you love in treasuries and why?

8:30I think that as yields have gone up, they've gone up again for the right reasons. And so when we look across the globe, a lot of yields have risen for the wrong reasons. The U.S. continues to be the economic engine of growth, especially with our technology rollout. I mean, this innovation that's coming out is absolutely amazing. It's going to be life-changing, business-changing, and you can see it accretive to earnings. Third quarter earnings are coming out right now. We'll see how those go, but we are extremely bullish on the tech sector. You know, it's interesting because we've had these debates, we've been having these debates in the tee-up to this earnings season, and that is, yes, earnings are supposed to be strong, double-digit, you know, EPS growth again.

9:09But have we already seen the strongest quarter that we were going to see this year, including when you look at tech? Because those numbers are, at least the estimates coming into results are markedly lower than what we saw in Q2. You know, interesting. For the year, S &P earnings are forecasted to be up 35 percent. And to your point before, you know, year to date, we're up about 14 percent on the S &P 500. So we think those geopolitical headwinds have definitely kept a lid on where the markets can return. So we would expect going out November, December, January to have a pretty strong market right now, provided there's no more geopolitical unrest and oil stays where it's at today, which is right around that hundred to a little bit below.

9:51So in light of that, I mentioned we've got a 10-year Treasury auction later today, 30 years tomorrow. We have Fed minutes as well. What's happened since the Fed had its last rate decision, though, is you have started to see a little bit of a shift in terms of the Fed speak as the data has come in, you know, perhaps a little more dovish here. So how much weight do we put on what we get from those minutes today? I think they're going to be incredibly important. However, to your point, you know, they're looking at all 199 inflationary inputs right now to really make the decision on rates here. I don't think they move at this meeting.

10:23I do think, you know, the other two hikes are priced in the market right now. Look, the 10-year Treasury from its low point to where it's gone today has basically risen by about 100 basis points, really in a quick amount of time. I do think a lot of this inflation has to do with the price of oil getting into all the products. I mean, you know, just look at your grocery shelves and look at the gas pump right out here on the Palisades, over$6 still for diesel. That's got to come down. And I think the Fed will have to move. But I think they're going to wait until later on in the year. Yeah. So in light of that, I mean, how closely are you continuing to watch the energy markets and the price accrued right now?

10:58Incredibly important. I mean, you know, what's going on in the Middle East is incredibly important. How oil, Chevron's CEO is on your prior show this morning, CNBC Europe, talking about, you know, how the U.S. should maintain our exporting of diesel because it's so important to the global markets, right, to keep that supply safe and to keep it flowing. So we're watching energy prices very closely right now. All right. Phil D 'Angelo, great to have you here on set. Appreciate it. Thank you, Morgan. All right. We've got a lot more to come here on Morning Call, including a frontline report on the push to bring manufacturing back to the U.S.

11:34That's right on the heels of two big announcements from the White House. Plus, President Trump prepping for a phone call with Russia's Vladimir Putin over that suspected plague outbreak in Siberia. And later, Blue Owl reportedly preps a new lifeline as surging rates and other headwinds keep that stock under pressure, although it's up for actually right now, pre-market. We've got more when Morning Call returns. With the Discover Cashback card, it's payback time when you earn cash back on everyday purchases. Activate and earn 5 % cash back at different categories each quarter on up to$1 ,500 in purchases.

12:10That's 5 % cash back at different places each quarter, like grocery stores, on gas, and at restaurants. It pays to Discover. Terms apply. See discovery.com slash five for details.

12:26Oh, look, you just got added to a meeting about coordinating another meeting to prepare for the pre-meeting ahead of the follow-up meeting, which will, of course, require a recap meeting and then another meeting. hit your booking point book with Southwest and enter airplane mode weren't agents supposed to take things off your plate building another to handle the others is a bit much don't make more work out of work Gemini is the one agent that knows all parts of your business and actually gets stuff done you give it a project, close your laptop and when you come back, the job's finished no matter your industry or role your agent has the skills to help every team stay in their flow Seriously, make work less work with Gemini on Google Cloud.

13:19Check response, subscription required. Welcome back to Morning Call. The Trump administration's push to revive manufacturing in the U.S., taking two new steps in the past 24 hours. The president yesterday announcing the federal government and Andrel are investing$6.6 billion combined to build critical components for submarines, Virginia-class submarines in Baltimore. Meanwhile, BD announcing that it's struck a partnership with the Trump administration to expand domestic manufacturing and strengthen the supply chain for medical supplies, saying it will invest a total of$19 billion in the U.S. over several years.

13:53Now, all of this after the manufacturing sector was a bright spot in Friday's jobs report, showing the sector accounted for 9 ,000 of the 29 ,000 jobs added last month. And last week's ISM read on manufacturing revealed that U.S. manufacturing activity remained in expansion territory for the ninth consecutive month in September. So for more on all of this, let's bring in Suresh Krishna, the president and CEO of digital manufacturing company Proto Labs. The company stock recently hitting a fresh 52 week high. It's great to have you here on set. Glad to be here, Morgan. Let's talk about this. What I'm calling manufacturing 2.0 other, you know, it's been called reindustrialization.

14:30What are you seeing on the front lines for Proto Labs? We are seeing a lot of demand from a lot of sectors. Our model is unique because we are focused on driving speed through manufacturing and helping innovative companies bring new products to market faster. So how do you do that? What does that look like? Yeah, our business model is very different than traditional manufacturing. We invented what we call digital manufacturing 25 years ago. We don't use machinists in our manufacturing process. So we do CNC machining, injection molding, 3D printing, sheet metal fabrication. software does most of the work.

15:07And because of that, we are able to respond with tremendous amount of speed. We can make parts same day when companies come to us with their CAD drawing, which is a drawing that a design engineer comes up with. We can use that drawing and use a digital chain entirely to our manufacturing floor. And the software then makes the part. We do have operators in our factories and we are hiring people, but they're not running the machine software is. So the jobs on the factory floors are changing as well. They're dramatically changing. And our model is the model of the future because we don't have enough machinists in this country.

15:42So reindustrialization is absolutely happening. We are getting more work back to the U.S., but we don't have the machinists who left 30 years ago. And the way to do it is with software. The way to do it is the way we do it today. This has been particularly true, I think, when it comes to shipbuilding, military shipbuilding. It's part of the reason why we have such a big backlog for these nuclear submarines that are supposed to be getting built. It's supposed to be two a year, and it's been more like one a year in terms of deliveries. So where are you seeing the most demand? And what are the types of companies and industries that are coming to you to turn out more parts more quickly?

16:19Yeah, so we see a lot of demand in aerospace, and I break it into aero and space, defense, drones, data centers, robotics. We serve all industries. We are industry agnostic. We serve 18 ,000 labels in the country. And we are seeing demand primarily in these, what I call, high-growth sectors right now. And the reason they like us is because we are able to make parts at the speed of software. A lot of software companies are getting into physical manufacturing spaces. and whether it's Google, whether it's Meta, and you have Neoprime, Zandrill, we work with Lockheed Martin, we work with space exploration companies, Blue Origin and others, and all of them are used to innovating at the speed of software.

17:09So they want manufacturing companies to respond the same way, which is not how traditional manufacturing has worked. So there is a reason why there is tremendous demand for us is because we move with the speed of software. Robotics, how does all of that evolve from here? That's evolving fast, rapidly. In the last one year, I mean, first half of this year, we were up 100 % on robotics. So when we look at different sectors, drones is up 90 % over the last three years. Robotics is up 100 % over the last year. Data centers are up 100 % over the last year. So we are seeing growth in companies, whether it's air environment in making drones, Android making drones, traditional primes like Lockheed Martin, we serve them, we serve Boeing.

17:52All of these companies are in rapid growth mode right now. And Blue Origin and other space exploration companies. So all of them need parts fast. They are in a race. Speed wins. And most importantly, I think what is necessary is a sovereign supply chain. And what we do, we have about seven manufacturing facilities in the U.S. is we are supporting the building up of a resilient supply chain in the United States. What do you think the competitive landscape continues to look like here? And I ask that because there's some startups that are also focused on this now. We've had some of those, you know, founders on the show.

18:31But then you're also now starting to see a pickup in M &A activity. Case in point, you know, this industrial software deal we're seeing between Schneider and PTC. Yeah, so there is room for digitization of the industrial base of the United States. There's 30 ,000 small machine shops that form the backbone of manufacturing for this country. We have large, we serve Fortune 500 companies and we serve startups. They all depend on this backbone that is there, which is the 30 ,000 machine shops. That needs to get modernized and that's going to get modernized with software. So companies like us are in the forefront of modernizing this entire backbone of the country.

19:08and the only way it can happen is not one, two, but multiple companies get into this. So when you talk about competition, we love competition because that helps us make us better because we are a leader. We invented this space and when competition comes, it pushes us to stay in the forefront and continue to innovate. We have over 100 patents and trade secrets that allow us to take apart from when it's uploaded onto our website all the way to our machining floor in a matter of minutes. That's how we are able to make parts same day. Our normal lead time is three days for custom parts. So that is the power of digitization, and that is the power we are bringing.

19:50And we are open. We are open for people to come and see us. Because we need multiple companies to be able to help U.S. industrialization. Okay. Suresh Krishna, ProtoLab CEO, great to have you here on set. Thank you very much. Appreciate it. Straight ahead. AI-fueled job cuts hit this financial services stock, which is already down more than 59 % this year. We've got your mystery chart. We're going to reveal it when Morning Call returns. With the Discover Cashback card, it's payback time when you earn cash back on everyday purchases. Activate and earn 5 % cash back at different categories each quarter on up to$1 ,500 in purchases.

20:33That's 5 % cash back at different places each quarter, like grocery stores, on gas, and at restaurants. It pays to Discover. Terms apply. See discover.com slash five for details.

20:49Oh, look. You just got added to a meeting about coordinating another meeting to prepare for the pre-meeting ahead of the follow-up meeting, which will, of course, require a recap meeting. and then another meeting. Hit your booking point, book with Southwest, and enter airplane mode. Weren't agents supposed to take things off your plate? Building another to handle the others is a bit much. Don't make more work out of work. Gemini is the one agent that knows all parts of your business and actually gets stuff done. You give it a project, close your laptop, and when you come back, the job's finished.

21:33No matter your industry or role, your agent has the skills to help every team stay in their flow. Seriously, make work less work with Gemini on Google Cloud. Check response, subscription required. Welcome back to Morning Call. Let's get a check on some of the stocks on the move this morning. Fair Isaac cutting about 15 % of its workforce as part of a broader restructuring and integration of AI technology by the credit scoring giant. Now, it is the latest company to cut jobs as they automate tasks and direct more spending towards AI. In case you didn't know, this was our mystery chart right before the break.

22:06You can see shares are basically flat here, pre-market. But the Financial Times reports that Aramco, Saudi Aramco, is exploring options to export gas from Saudi Arabia's growing surplus. Last month, reports emerged that the state-run company was looking at a potential spinoff or a listing of its gas business. So apparently looking to raise more money there. We'll keep an eye there. Zim integrated shipping, meantime, raising its profit guidance for the year, this is the second upside pre-announcement that we have seen from a major shipping firm after Maersk. This is a potential sign, according to Adam Crisofoli, friend of the show, of how resilient demand and geopolitics is boosting volumes and sending shipping rates soaring.

22:47You can see shares of Zim are soaring to a 4 % right now. And a check this morning on shares of Marvell. They surged nearly 6 % yesterday after the CEO of the shipmaker unveiled an ambitious growth plan at its Investor Day. Marvell is now targeting$70 to$90 billion in revenue in fiscal 2031. That would represent about 60 % growth for the next half decade and much higher than the street had been anticipating. You can see shares, though, taking a bit of a breather this morning, down about 1.5%. Still on deck, AMD's Lisa Su continues her South Korean tour in the search for more memory. and Elon Musk pushes back against reports of some tariff fab partnerships.

23:27Got your latest headlines when Morning Call returns. I'm Morgan Brennan. Welcome back to Morning Call. Let's get a check on your stock futures with the S &P 500 and the Nasdaq both sitting at record highs. You could see taking a bit of a breather after a strong start to the week here right now with the S &P poised to open lower by about five points. The Dow down 160, the Nasdaq down 127 points. Let's get a look at the Treasury market, too. We've got a 10-year auction later today that will be in focus, plus Fed minutes. And ahead of that, we have yields higher across the curve. 10-year Treasury yielding 5.32 percent, and the Fed-sensitive two-year Treasury, 4.8 percent.

24:0630-year Treasury yielding 5.7 percent. So we're basically still sitting at multi-decade highs here. We'll get a check on the dollar index with the dollar stronger against other major currencies again today. What a move we've seen this year in the dollar. $102.29 is the level in the dollar index. And of course, this, as we've seen this week, significant weakness in the euro, given some of the geopolitical and fiscal angst playing out in places like France and Spain. Let's turn to the energy market, too, because we have crude continuing its climb, renewing its climb this morning, albeit fractional moves here.

24:40WTI is up slightly, trading just below$89 a barrel. Brent crude is up more than 1 % right now, trading above$101 a barrel. are about gasoline, heating oil contracts, even natural gas are higher this morning. Global markets, meantime, we've got pressure in Asia. Most of the indexes trading in Asia finished lower overnight. And early trading in Europe, as you can see right there on your screen, also some red with the DAX down 1 % and the French CAC down another eight-tenths of 1 % today. We're going to check on some of the morning's latest headlines. President Trump says that he plans to speak with Russian President Vladimir Putin, quote, very soon about the death of a Siberian lab worker from a suspected case of plague.

25:22Trump adding that U.S. intelligence agencies are in very deep discussions about the incident and will likely have more updates today. The CDC adding at this time there is no indication of a broader threat to the U.S. Well, Vice President J.D. Vance and exclusive comments to Reuters saying that Iran must make a, quote, meaningful reduction in its nuclear enrichment capacity to satisfy U.S. demands to end the war. Speaking late yesterday, quote, if you don't want a nuclear weapon, then why do you need 60 percent enriched fuel? And the European Union is reportedly considering new taxes on big U.S.

25:56tech companies like Meta, Apple and Alphabet while weighing the risk of Washington backlash. This is part of the plan, according to the FT, would include changes to one proposal that would require all companies operating in the EU with more than one hundred and to$112 million in annual sales to pay an annual lump sum tax contribution, which right now maxes out at just over$840 ,000. AMD CEO Lisa Su, meantime, continuing her East Asia tour, saying she plans to meet with the head of Samsung's chip business to discuss the industry's memory chip shortage as soon as today and to explore new partnerships.

26:32The two companies struck their latest partnership back in March. Sue has already met with executives from Foxconn, Taiwan Semi and SK Hynix. You could see shares of both Samsung and AMD are lower pre-market. Paramount Skydance chief David Ellison securing new members for the company's board of directors, including investor and philanthropist Laureen Powell Jobs and former Activision Blizzard CEO Bobby Kotick. Former UK Prime Minister Tony Blair will also become a board advisor. And we're going to hear more from Ellison when he speaks exclusively with CNBC tomorrow on Squawk Box. That's at 8.45 a.m.

27:07Eastern. Well, SpaceX is reportedly in talks with banks and investors to raise$40 billion to buy AI chips from NVIDIA. The Financial Times says Apollo Global and PIMCO are involved, although talks are in the early stages. SpaceX is looking to raise about$10 billion in bank loans,$30 billion in investment-grade debt to pay for NVIDIA chips. You can see shares of SpaceX are down 2 % this morning pre-market. But keep in mind, we've had a Torrid run. Look at that. We're trading around$168 a share. That's been a move that really took off starting Friday. President Trump speaking at an event in Maryland yesterday where Andrel unveiled plans to invest$3.7 billion into a new shipyard to build parts for Virginia-class submarines.

27:49The project, which is expected to generate more than 3 ,000 jobs, will also get a nearly$3 billion contract from the U.S. Navy. The president is saying the U.S. will also get a 40 percent stake in the shipyard. Fearless, confident and strategic use of American power shows why we're investing so heavily in the shipyards and Navy of the future. We want to maintain America's unmatched capability and freedom of action for all future generation. generation last year. I proudly signed into law, a record-setting defense budget, and this year is going to be$1.5 trillion. I believe I don't want to speak too early, but we broke the trillion mark and we're going to be at$1.5 trillion.

28:34All right, let's talk about this and the broader defense tech sector. Joining me now is Doug Philippone, co-founder and general partner at Snowpoint Ventures, a VC firm that invests in startups and technology serving commercial markets and national security and defense, and also an old timer, if you will, from Palantir, really one of the key players at Palantir who kicked the door open in terms of defense tech contracting for Palantir and now arguably for others in the industry, including Andrel. Do you want to get your thoughts on what we heard from the president yesterday? No, I mean, look, it's great to be with you.

29:05And I think that what the president is doing and trying to reindustrialize the United States and then also rebuild our ability to manufacture these systems here with speed and efficacy. It's admirable. It's really hard. You've got to get it started. So the vision is amazing. They actually got it done. It's a really big deal. I mean, the conversation I find myself having repeatedly now is, OK, the narrative has shifted. Capital, contracting starting to shift in terms of going into this new defense tech ecosystem. But now everybody actually has to produce and have to ramp production. and everything associated with that?

29:41No, for sure. I mean, when I got started, so I started the firm in 21 and thinking about, you know, when we first started, it was sort of in the sin bucket of, you know, you couldn't raise any money from Europe and it was sort of in the, you know, tobacco and alcohol thing and everybody was like, I'm not touching this, but it's gone full tilt the other way. And so when people ask me now, whether it's members of Congress or the administration, hey, what do you need? And at this point, it's just, we just need to execute. And there's just enough, I mean, I mean, one of the bad things about the government in the past has been choosing winners.

30:12And there's still a little bit of socialism in the government. But, you know, they always want to have multiple vendors, et cetera. But it's OK to pick a winner. And when you see that there's four or five names that are actually really excelling, they're getting real contracts. You can see it keeps that flywheel going where the next entrepreneur wants to do it. And then the next investor wants to put money in. So you have to have that cycle going. Yeah, you just closed another fund. I think you're raising for yet another fund as well. So what are you focused on? What do you see as the next opportunities and innovations that are going to come to this landscape?

30:41Yeah, so what I'm trying to do in a sense is, first, I'm trying to give back. I've lived a really hard life, both within the military, my education, and my journey. Everyone looks at Palantir now, and they're like, oh, a Fortune 50 company or whatever. It's so easy and awesome. It was not easy. I started covering Palantir as a$7 stock. Yeah, well, for sure. And I got started with$0.05. So anyway. Yeah. But it was incredibly hard. we had to break open the door of government, change that, the kind of whole perception of the monopolies of the systems integrators. And what I'm trying to do is focus with very specific discipline.

31:19I'm doing around 10 companies per fund. And how can I pick winners that I actually work on and my whole firm works on? And we just hired Randy George to help me out. That's great. Yeah, I know he's an amazing human being. But we're just, with discipline, critical technologies for defense that also have a dual-use perspective. That's important because what I've learned at Palantir is you have to have that second business to keep it going. Well, and what's interesting is it does seem like the U.S. government, the administration, the Pentagon are leaning in much more heavily on this idea of dual-use technology.

31:53Oh, 100 percent. I mean, you've never seen in my adult life, I mean, a little bit older now, but I've never seen a bigger macro tailwind in terms of, you know, you look at 5 percent GDP switching to defense for all of our allies. The president's talking about one point five trillion. We'll see if we get that. It might be less. But like our like our thesis is we are building better systems that can be delivered faster and they have to be cheaper so that our companies can survive in down market, a flat budget. but it's always better with more. But the tailwinds and the partnership of government, it's usually been very adversarial.

32:28And that was the biggest, I would say, I don't know if you agree, but the problems are objectively super cool. It's satellites, it's planes, it's face computers, it's just cool stuff. But the problem, the resistance was the friction of government. And that's obviously, I built the firm around, it's like all my learnings to help the companies. Yeah. I mean, obviously, I agree. It's super cool, which is why I started covering it a decade ago. I mean, it's good television. And yeah, it is interesting that we're sort of shifting gears beyond that value of death to touch base on where you say. So the fact that we've seen the pendulum swing 180 degrees here in terms of interest and excitement from investors, from private capital into this sector.

33:11Are we in a defense bubble? Are we at risk of that? Yeah. No, I mean, I think it's fair to say that there is a bubble. There's probably more firms that are getting money in the sector. Every time you turn around, somebody's starting a new defense something something. And then there's also more companies that there should be. I think this is normal, though. You'll see a washout. When I look at the number of companies in there, you just have to – I'm trying to be very disciplined where I'm de-risking it based off of myself and my firm working on the companies. where it's like I can see the vision of like, okay, I know how to get you revenue.

33:47I know who wants this. It doesn't take risk to zero, but it's just my investors expect me to not chase crazy prices. And so, you know, you do miss deals that way, but I think it's what I'm doing. So just finally, is there a certain technology? Is there a certain innovation right now that's coming that's on the horizon that you're especially excited about? Well, look, my fun too, I love my portfolio right now. It is super, super exciting. We just did two new deals in advanced manufacturing, which kind of, you know, your previous, I'm all in on that. We have, I think through greed and a bunch of other things, we sold away our manufacturing prowess.

34:33Like it exists in our DNA in America. And it's just about getting, you know, this is one of those old things in the early days when we were recruiting people at Palantra. But it's like, I believe that our best engineers and computer scientists should work on societal problems for all of our good. That's important. And we have people focus on that where you can see like, OK, I can actually make money at this. This is exciting. And, you know, a couple of companies in Detroit and other places, but they're really working on that hard problem in manufacturing. It's exciting. Doug Philippone, it's great to have you here on set.

35:05Appreciate it. Thank you so much. We've got a lot more to come here on Morning Call, including the new push by one private equity player to find new opportunities for investors as the sector's struggles continue to drag on. And as we head to break, let's get a check on Penguin Solutions. Those shares are popping 6 % right now, jumping on the back of fourth quarter and full year earnings that were much better than expected, rising nearly 6 % in terms of earnings. Well, actually, the stock is rising 6%. The numbers were much stronger than that. The company beating on the top and bottom lines for the quarter.

35:37Net sales for the quarter hitting a record. Penguin raising its fiscal 2027 revenue guidance with its CEO saying the company's memory business remains strong. Morning call. We'll be right back. Welcome back. Let's get a market flash on shares. It's Taiwan Semi. Those shares are under pressure, down about one and a half percent after Elon Musk on X this morning pushed back on reports that TSMC will play a role in the TerraFab chip project. Musk saying, quote, we will build and run the fab. Let there be zero doubt about that. Adding maybe TSMC sublease is part of the tariff fab if they want, but nothing more than that.

36:11Well, Intel was also moving this week on speculation of a tariff fab partnership. Shares are higher ahead of the open, up 1%. Keep in mind, they are actually working together with SpaceX. Turning to shares of Blue Owl, though, the Financial Times reporting that the alternative asset manager is planning a, quote, big push into insurance. Co-CEO Doug Ostrover telling the FT that Blue Owl is, quote, not managing enough capital. He sees insurance money as a way to build a much larger, longer-term pool of capital. This is a trend we've been seeing overall for years now. And the timing is worth noting because the private equity companies have been getting hit hard as Wall Street reprices the rate outlook.

36:47Apollo is down 25 percent off of its high. It's down 13 percent in a month. Aries down 35 percent from its high, down 16 percent in a month. KKR, 37 % off of its high, also down 16 % this month. And Blue Owl is the biggest laggard. It's down 47 % from its recent high. It's down 23 % in just one month. The issue here, higher rates can mean more expensive financing, tougher dealmaking, and more pressure on asset values. So for Blue Owl, the insurance push might be about more than just growth. It could also be about locking in a more durable source of capital as that rate environment gets tougher and investors have been skittish.

37:30All right. Well, straight ahead. The morning call crew teeing up the trading day ahead and the next test one member says markets face to capture new highs. We're back in a moment. Here's what to watch today. We're going to get a fresh read on consumer credit this afternoon. Levi Strauss reports earnings after the bell. We have a 10-year Treasury auction this afternoon, along with the release of the minutes from the latest FOMC meeting. So we have all of that with stocks, the S &P and the NASDAQ sitting at record highs here. It's time for your call sheet, where we look at the topics driving the trading day ahead, including that.

38:00Crew members today, VEDA Partners co-founder and director of economic policy, Henrietta Traes, VanEck product manager, Nick Frosty, and Piper Sandler, chief market technician, Craig Johnson. Great to have all of you here. And actually, I am going to kick this conversation off talking about something we haven't talked about yet this hour, and that is the plunge we're seeing in Bitcoin and other cryptocurrencies. So, Nick, I'm going to start this with you. Why are we seeing that move? It's good to say I guess it's happening overnight. At the end of the day, I think, you know, there's probably a lot of regulatory risks sitting around crypto.

38:34You know, what people see within that and where volatility might stem from, I think, can be flippant at times. I think we've seen a strong resurgence of Bitcoin. There's a lot of strength. We're coming out of the lows. But at the end of the day, we're still within that kind of halvening here. And there's a lot of questions around, you know, the build out AI, some of these crypto miners flipping to, you know, AI infrastructure. So, yeah, I think there's a lot of headline risk. But at the end of the day, I think we are pretty constructive on crypto as a whole, specifically Bitcoin. Yeah. And to that point, we did just have a chart of some of those stocks that have been crypto miners turned into AI data centers.

39:13And all of those are under pressure this morning. So the regulatory piece of this, Henrietta, your thoughts? Well, I think with 90 percent odds or as high as you're willing to go, the Democrats are going to take the House. And at that point, it doesn't really matter if they take the Senate as well. Investigations are going to begin. And the first thing they want to really get into is what they view as basically inside dealing corruption within the White House. and the Trump family specifically and their relationship with the crypto markets, the predictive markets, as we were discussing, any kind of investment in private companies or even public companies wanting to get to the bottom of that.

39:48What is the back and forth? So whether they get the chance to pass legislation is not necessarily the only thing that matters for the crypto names. They're going to be hauled up for investigations throughout the first couple of months of next year. So we might have a Congress that's a new Congress that's busy, but not busy the way people might anticipate. I just I got to stick with this before, Craig, I bring you into the conversation. And that is, I mean, you saw this Andrew deal yesterday with President Trump in Maryland. It's yet another company for which the government is taking an equity stake.

40:16On the one hand, you could call these types of deals a backdoor towards building out a sovereign wealth fund. On the other hand, to your point, I have to think that Democratic lawmakers are going to be looking at those deals very closely. and just what it means from a congressional appropriation standpoint. Absolutely. And what's interesting is that the president has historically been doing this through the Chips and Sciences Act, which is a Biden-era piece of legislation. So they're going to want to see if they need to reopen that or if they want to carry this equity stake idea forward. And at that point, you know, are we going to take equity stake in AI?

40:50I was at a client dinner last night, and this was the topic I think is most interesting. How much of an equity stake from the U.S. federal government are these companies comfortable with. And, you know, on that matter, how much is this comfortable for the Republican conference for Republicans to come after President Trump? Is this the new normal for the Republican Party? I think that's really serious questions that we're all going to find out over the course of not just the next immediate couple months, but two years and then into the presidential. OK, Craig, meantime, it is tech that's leading the charge and AI specifically.

41:23When we see an S &P and a Nasdaq at record highs, does it continue? you. You know, Morgan, I think that at this point in time, we will probably see a little bit of a push higher for some of the broader averages, but we got to be a little bit cautious. It's a little bit spooky as we watch these, the NASDAQ, the S &P 500 move the new highs and the participation below the surface is just not there. We're continuing to see less than 20 percent of all stocks that we're measuring are in some form of an uptrend at this point in time. And our new highs, new lows indicators, they're in sell signals at this point in time.

42:01So I'm a little bit worried in the short term here that this sort of breakout could be a little bit of a head fake at the short to intermediate term here. And again, I've stuck with my 7 ,500 year end price objective. I know that we're through it at this point in time, Morgan, but I think you got to get some backing and filling in this market, just given the weak underlying participation and breadth of this market. Craig, I mean, I realize that semi-stocks are under a bit of pressure taking a breather here this morning, but in general, there's been a lot of market chatter about what that stocks chart has looked like versus 2000.

42:34You look at that and you look at the SMH and on both of these particular indices, we have not confirmed a new high yet. We have seen a very nice downtrend reversal rally over the last several weeks in here, but we've not gotten to a new high. And that's what I'm ultimately sort of watching. Do we make a lower high? Do we make a double top here on the charts? And from my perspective, taking some money off the table in these semiconductor stocks, I think, makes a lot of sense. I'd rather own software names at this point in time. Microsoft looks more constructive. I also think Amazon, among the Mag7, also look really attractive right now, too.

43:11Yeah. Nick, I mean, MAG7 is having its moment. It's now outperforming the S &P, or at least it was as of trading yesterday. I'm just looking at some of your notes here. And one of the things you talk about is AI adoption and specifically the role that agents are going to play. I realize we're still kind of early innings here. But how does this continue to move forward and evolve, especially when we are talking about something like software? Yeah, for sure. And, you know, I agree with a lot of what's been said already, you know, from a VanEck perspective and maybe coming at this from an asset management perspective.

43:42We try to have 10 year macro trends that we keep in mind. And AI is definitely one of those. I think the genie is largely out of the bottle. We're not going back. Adoption, like you mentioned, is wide, but we don't believe that the depth is really there yet. And I think we've just kind of seen enterprise adoption come online this year. So as those workflows become more entrenched, and then on top of that, as you mentioned, these agents like Muse, like GrokBot, like OpenAI's Dots, these agents are really what are going to get us there from a token consumption, right? So we're already woefully behind from a data center and compute perspective with the human in the loop.

44:19As these agent systems come online and they're running towards broad-based goals and running in loops and spending tokens, adoption and token consumption is going to continue to outpace the supply of what we have. And that's why we're constructive over the next decade. Right. So, you know, picking individuals, I think we can all see now at this point is very difficult to pick individual names or what are going to perform in the next quarter or so. So, you know, taking a broad based approach and capturing the entire ecosystem, whether that's data center supply chain or semiconductors like SMH, you know, we think is the best way to approach it.

44:53OK. Meantime, we get Fed minutes later today. What are you watching there? How big of an event is that going to be or not going to be, given the Fed speak and the data we've gotten since then? I mean, what's best about the Fed over the last couple of months is that you get all ginned up in the immediate aftermath of a hike. And you're like, there's going to be another one. And then everything sort of calms down. So I'm very much looking forward to what they're looking ahead to for December at this point. Very hopeful that there's no hike in October. It would just be amazing from an electoral standpoint to have a hike just a couple of days before a midterm election cycle.

45:24That would be pretty problematic. But I think Warsh has really done an excellent job trying to, you know, come back from the start and really corralling the market, getting the confidence of the market. And that's the direction that we'll see from the FOMC. Okay, we got sub 30 seconds here. Craig, final thoughts. Final thoughts for me is I agree that AI is here to stay. And I think ultimately, it's gonna be more about the consumption and utilization of AI and watching companies get higher ROEs and also higher productivity for their employees. That'll be a longer-term positive backdrop. Software companies, Palantir, certainly can benefit from this.

46:01And again, selectively overweight certain parts of the AI trade, not as far as strong. All right. Thank you to our call crew. It's great to have all of you here for a fantastic discussion. Real talent is defined by what people can do, not where they learn to do it. So by stopping at the education section of a resume, you might throw away the perfect hire. Skills First Hiring helps you see talent others miss, like more than 70 million stars skilled through alternative routes. Let their story unfold and gain a competitive advantage because hiring managers who start with skills are 60 % more likely to find a successful hire.

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