Markets, AI and rising yields test the outlook 9/28/26

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1:18Good Monday morning. Let's get a check on U.S. stock futures, which are under pressure right now. You can see right there on your screen, the S &P poised to open down 34 points, the Dow 224 points, the Nasdaq 297 points. This after Wall Street's best week since August, at least for the S &P and the NASDAQ. We had a Friday rally. Treasuries, though, are very much in focus this morning, and that is part of what is pressuring futures in equities right now. Take a look at what's happening with yields. We don't only remain at multi-decade highs here, and you can see yields are higher across the curve.

1:51The U.S. 10-year Treasury yielding 5.22 percent now. That is the highest we've seen since 2002. The third-year Treasury, 5.53 percent. I believe that is also the highest since 2002. And the Fed-sensitive two-year Treasury yielding 4.91 percent. This as energy continues to climb this morning. We're monitoring the latest around Iran and possible ceasefire talks. Are they happening or are they not happening? The door seems to be open despite some rejections from President Trump over the weekend. We'll have much more on that in just a moment. But as you can see right there on your screen, WTI is up almost 3.5 percent right now.

2:26$95.50 a barrel, give or take. Brent crude is also up 3.7 percent, trading around$108 a barrel. Our Bob gasoline, heating oil contracts all spiking this morning as well. Natural gas under a bit of a pressure. Let's see how Europe and Asia are shaping up, though. And Karen Cho is in London with all of that. Karen.

2:47Morgan, good morning to you. Well, Asian equity markets have closed mostly lower today amid rising crude prices and persistently high bond yields, dampening investor sentiment as we get going again for the trading week. The South Korean market down the most about 2.7%. You can see Japanese stocks also on the back foot sliding 7 tenths of a percent and China's stocks weaker today. The exception really just the Hong Kong market up in modest territory. Now, we've just seen the oil price take off in the last 20 minutes or so. A big escalation there amid some of that disappointment around any breakthrough around the Strait of Hormuz.

3:21The benchmark Stocks Europe 600 has actually been trading higher this morning. It's been in the green. UK homebuilders in particular, though, are in focus. The country's ruling Labour Party, which is holding its annual conference in Liverpool, announced the return of a help-to-buy scheme aimed at first-home buyers. So we're seeing double-digit moves in some of the property companies. Typically, that is something associated with, say, an interest rate cut, some sort of interest rate sense of news announcements. So very big moves on the policy initiative today that are supporting the FTSE 100. Some of the big cap oil stocks also high thanks to that oil move.

3:56And interesting to see that there's still territory in the green for the rest of Europe, despite that Brent price jumping just in in previous minutes. So we're still resilient despite that finish that you saw across in Asia that was mostly in the red. Morgan, back to you. All right, Karen Cho, thank you. Looks like we're shaping up for another manic Monday here. We've got some breaking news to bring you as well. NVIDIA announcing it is launching what it calls the NVIDIA Open Agent Safety Platform. This is a new security software suite designed to keep AI agents operating inside their set boundaries and quarantine any agent that may attempt to go rogue within milliseconds.

4:30NVIDIA announcing the launch with more than 100 key partners and stakeholders, including Cisco, CrowdStrike, Dell, JPMorgan Chase, SAP, along with real-world applications in robotics with Gecko Robotics. We're going to have you can read more about that now on CNBC dot com. But we're going to hear more about that as well. When Gecko's Robotics CEO Jake Luserarian joins me in about 10 minutes. In the meantime, though, NVIDIA CEO Jensen Wong will be live in the 8 a.m. Eastern hour with the Squawk Box team. Well, let's turn back to energy markets and the price accrued higher once again this morning after President Trump reportedly rejected Iran's latest ceasefire proposal.

5:09but at the same time telling Axios that he expects more talks with Iran as soon as this week. Let's get to our Dan Murphy in Abu Dhabi with the latest. And Dan, as Karen just mentioned, we're seeing crude take a leg higher in real time just a short while ago in the last 20 minutes or so. What's propelling that? Exactly, Morgan. Take a look at this. Seems like higher oil is going to be a key catalyst into the session today. Oil moving higher right now as markets weigh fresh signs of diplomacy against the risk of a new escalation between Washington and Tehran. As you mentioned, President Trump telling Axios he expects talks with Iran this week after rejecting Tehran's most recent proposal to reopen the Strait of Hormuz.

5:54Iran had offered to reopen Hormuz and return to nuclear talks within seven days. But it says only if the U.S. met its conditions, they would include an end to what Tehran calls U.S. aggression, the naval blockade and economic warfare, as well as the release of frozen Iranian assets. That proposal, of course, coming from a country that also says now it's prepared for more fighting. Iran's foreign minister, Abbas Arakshi, saying diplomacy remains on the table, but that Tehran is ready for what he called a doomsday war if the U.S. attacks again. Of course, President Trump has already dismissed Iran's offer as totally insufficient right now, saying Tehran wants to reopen Hormuz immediately because it is, quote, losing so badly.

6:43Now, important to also point out, Morgan, the White House hasn't necessarily set out what terms it would accept, at least for now. But of course, we're watching and waiting to see exactly which direction this goes. Right now, it seems like markets are pricing in an escalation, but the diplomatic path, it would seem, remains open. Back over to you. All right. Dan Murphy, thank you. Let's get another check on U.S. stock futures right now, which are under a bit of pressure. We do see crude climb higher and we see Treasury yields move higher this morning as well with new multi-decade highs for both the 10-year Treasury yield and the 30-year.

7:17Let's see how investors should be reacting to all of this. Bring in Robert Teter, Chief Investment Strategist at Silvercrest Asset Management. Robert, it's great to have you back on set. Welcome to you. Wow. What we're seeing in the bond market right now. And just to put it in perspective, yes, equity futures are under pressure this morning. But last week, we saw a huge move to multi-decade highs. And the S &P and the Nasdaq still had their best weeks in almost a month, more than a month. Yeah, shaping up is a really interesting time because there's this tension building between the fantastic earnings that we've had and a lot of earnings.

7:49But we're still in this time gap between now and earnings season. As you said, we've got a lot of tension building on the macro front, particularly with oil prices higher, bond yields higher, the Fed hiking, a change in the policy around the Fed communication. So you've really just got a long list of macro problems that equities are contending with hanging in well so far. But some of the weakness today seems to say that macro has got the narrative again. Yeah. I mean, one of the other things we've been focusing on is how poor breath has been. Yes, absolutely. It's been very weak in September, so equities have been OK.

8:19But breath has been really negative. Small caps have lagged again. You've had more stocks down than up. It's really been a challenging time. You know, there was a period there where markets started to broaden out. It looked like the narrative was heading in the direction of broader gains, earnings leading the way. And then when you had this macro tension building, things went right back to where they were before. Very narrow market, very little gain and a lot of tension around what's building on the macro side. Does this put extra onus then on the upcoming earnings season after what's been a really strong start to the year already?

8:47Absolutely. I think the bar is really high here for what has to come in on earnings. You have to get not only great numbers, but really, really great numbers because they've been so solid. And again, weighing against this backdrop of yields are a lot higher now. So with yields where they are now, that really puts a lid on the multiple front. And so you're not going to get any multiple expansion from here on out. It has to come from earnings. Yeah. So that may be the case, but does it also trigger a rotation into fixed income here because you have yields that are looking so attractive? The yields really are looking pretty good here, especially compared to what you might see from an earnings yield on equities.

9:20And so we may get some rotation here. If we get that, that'll probably keep yields under control a bit. But yields above 5 % are really pretty compelling. I do want to circle back to earnings for a moment because I realize that it basically wraps up the earnings season, if you will. But how key, how critical will Micron results be this week, both to AI and to the broader market narrative? Yeah, the AI story has become just absolutely powerful and dominant in a number of ways. So not only driving earnings for the tech sector, but really driving optimism around productivity and the longer economic cycle.

9:53And AI and AI related companies, the equities are up so much that's leading to the wealth effect. So these narrow gains have really been coming from AI. So that story has to hold together. Earnings from any AI related company have to come in strong and there has to be a very strong outlook for the momentum to continue. Yeah, I don't know that we talk enough about the fact that you see record and growing retail investor participation in this market, too, to your point about wealth effect. It's probably something to dig into a little more deeply here. You mentioned macro. The other thing we're going to get is, you know, that PC inflation reading this week.

10:22We're going to get jobs report on Friday. How much is data going to matter here in this moment? I think the data matters a lot to how investors are forecasting the Fed. So right now, a lot of the focus around the Fed has been around purely around inflation. And we're seeing that in real time with oil prices, oil prices up, yields up. You get an extension of the Fed cycle. Maybe if we get some cooling of PCE, maybe if there's some weakening of the economy, which is the bad scenario, you'll get some easing of yield. But right now, it seems that investors are really locked in on the oil side more than anything.

10:49OK, Robert Teter, appreciate it. Great to have you on set to kick off the hour. Thank you. All right. We've got a lot more to come here on Morning Call, including OpenAI caught on the wrong side of the AI safety debate once again. This is President Trump had his first face to face with Anthropics CEO last night. Plus, we're getting set for SpaceX and what's set to be an historic morning for its Starship rocket. why it matters. And later, Apple on the hook for$5.7 billion over a critical component that it's to its iPhones and watches. We've got a very busy hour still ahead when Morning Call returns.

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12:46Seriously, make work less work with Gemini on Google Cloud. Check response, subscription required. Welcome back. New developments in the AI regulation debate. OpenAI says it is carrying out a, quote, extensive review and has paused training of its most advanced models after the company reported new instances of models escaping secure testing environments. while also reportedly accessing public U.S. government data from the SEC, the Census Department, and Commerce. What's more, since Friday, the company says 53 user images were posted by bots online. Its agents used aggressive techniques to access a U.N.

13:20website. And as of this morning, both OpenAI and Anthropic are probing, not dozens, not hundreds, but tens of thousands of incidents in which their frontier models took steps that outside evaluators would consider problematic. That is according to reports. Now, this coming as Anthropic CEO Dario Amadei has his first face to face with President Trump meeting during a White House dinner last night. And that dinner coming just weeks after Amadei called for more A.I. safety guardrails while Trump maintains, quote, the only control or guardrails that A.I. needs is a strong and smart president. He's also talked about DOJ and the laws that are currently on the books.

13:58Well, we've got a new announcement from NVIDIA this morning that it's collaborating with former CNBC disruptor and U.S. military contractor Gecko Robotics on a new AI safety platform that's designed to keep AI from going rogue. Joining me now in a CNBC exclusive is Gecko Robotics co-founder and CEO Jake Lusserarian, live from his company's factory floor in Pittsburgh, Pennsylvania. He is also a member of the CNBC CEO Council. I love a good factory floor shot. It's great to have you, Jake. Appreciate it. Let's start right there. We're talking so much. I mean, we just ran through the headlines just from this weekend regarding open AI and to a lesser extent, Anthropic, when it comes to security concerns and breaches by AI bots.

14:41What does your partnership with NVIDIA enable? Great to be on. I agree to talk about such an important topic. This whole announcement is all about ensuring that we keep humans in control while deploying agentic agents as fast as you can in the robotics sector to ensure that we're able to use the benefits of robotics, especially with those DOW contracts that we have at Gecko, but also ensure that safety is paramount. And so that's what this partnership is all about with NVIDIA. Yeah, I mean, there's a lot of focus on cyber instances from a software standpoint. But as we start to move towards physical AI and actual implementation of robotics, what does that represent here?

15:24What you want to do is be able to leverage the models that are the best in the world and here in the U.S. But you want to be able to leverage it in the physical realm in a really safe way. And you can see the deployments of these sorts of models in self-driving vehicles. But you don't really see them within these industrial settings, within harsher environments where in decisions and information and data sets, there is just like no information about this sort of environment. And so Gecko being the leading company in the world deploying into these sectors allow for the partnership with NVIDIA to just make a bunch of sense as it relates to the ability to supercharge a Gentic tool stack.

15:59but do so in a way that's safe, ensuring that humans remain in control and that we have safety standards that can really lead the industry in terms of what's possible and what you need to do to ensure we stay ahead of adversaries here. How do you ensure it's safe? And we were just talking about reports of tens of thousands of incidents relating to OpenAI and Anthropic. What do you and what does NVIDIA do that's different that ensures it's safe? Oh, great question. Well, the open agent safety platform is all about ensuring that you can leverage these models, leverage them within the robotics to be able to actually path plan, to be able to do diagnostics with the robots that were collecting information on these surfaces.

16:38So, for example, with the military contracts that we have, we're ensuring that we get ships out of dry dock faster. It allows for our robots to be able to be deployed using these agents to be able to understand what sorts of paths, which are the data sets to be able to gather and where to ensure that you're getting more information. but doing so in a way that ensures that you keep safety standards super high. So setting parameters to ensure that robots aren't going off guardrails at human set and that there's also abilities to be able to reel in the sort of Agentec path that's being planned and actions that are being taken.

17:10And so what's exciting is that this is the first instance really of an announcement where a company deploying all these types of tools in the real world are now using a gem check tool sacks safely in this guardrail environment that NVIDIA and Gecko are really showing how fast and how impactful it can be for the most important customers in the world. And that's what it's all about is ensuring that our warfighters are the best tools to be able to keep the world safe. Where are we in terms of the realization, the full realization of robotics and physical AI? And I asked that question knowing that we just came off this Trump-She summit as well.

17:49And China certainly seems to be, you know, no systems, all systems go in terms of its own deployment. Yeah, well, what you're seeing is that in China, President Xi is moving at a lightning pace in terms of deploying into the real world robotic systems. They have advantages of manufacturing, where U.S. has advantages on the intelligence and the brain of the robotic stacks. Now, Gecko and NVIDIA, what this partnership represents, is a step to try and usurp that, to take advantages with the brain and also the deployment. Robotics and the deployment of robotics in these environments, that's the big moat.

18:31The models, I'm so excited about all the models that we're building. But our core belief is that deploying into these critical environments and doing so safely, keeping humans in control, that's where the real advantages are going to be. And so that's exactly what this partnership is all about. is accelerating the deployment using the brains that we're being able to develop here with these models, but doing so in a way with robotics that ensures that we take the advantages that China is seemingly trying to put their flag in the ground on, but instead pass them over. Okay. Jake Lusrarian of Gecko, it's great to have you on.

19:10Appreciate it. Yeah, thanks for having me on. From the factory floor. We're going to hear more on NVIDIA's safety platform when CEO Jensen Wong joins Squawk Box at 8 a.m. Eastern. Well, straight ahead here, where Vanguard says is the sweet spot for yield-hungry bond investors. We're going to see if our morning call crew agrees. But first, we're watching shares of Circle. The company announcing late Friday that its CFO plans to step down after more than five years in the role. Circle says it's working on finding a replacement, but shares are down about 4 % this morning. Morning call. We'll be right back.

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20:41Markets, Inc. Member FINRA and SIPC. At Jared Jewelers, we know it's about more than fine jewelry. It's the moment they open the box. That smile they can't hide. Knowing you chose exactly right. Because the right gift can bring a lifetime of meaning. A promise. A milestone. A memory in the making. Make every moment unforgettable. Find great gifts starting at$250. Jared, Make the holiday last forever. Shop Jared Jewelers. Welcome back to Morning Call. The Pentagon is leaning further into new technology as part of its increasing efforts to solidify its combat capabilities, announcing this morning that it's awarding Ampheus Technologies a grant of up to$75 million for domestic production of its high-energy drone batteries.

21:31For more, we are joined in a CNBC exclusive by Tom Steppian, the CEO of Ampheus Technologies. It's great to have you here on set. Welcome to you. Thank you. Great to be here. Okay, so you're breaking some news with us regarding the company today. What's so important about this? So Ampryus received a$75 million grant from the Department of War and their industrial-based program. And it's to make batteries like this here at home. I love a show and tell. Got to have a show and tell. So this is twice as energy-dense as anything else that is out there. And we are making them here at a high volume. We partnered with a South Korean major to bring our tech and their manufacturing muscle to the U.S.

22:12and make these batteries, mostly for drones. How quickly can this happen? Pretty quickly. Early 2028, we'll start delivering from this factory. It's a retrofit to a factory. So we're not pouring concrete. We're not putting steel up. This is retrofitting an existing factory with existing workers and repurposing them to work on these drone batteries. Yeah, I mean, we know drone warfare is not only the future, but it's the now when you look at conflicts around the world right now. So in terms of solidifying that supply chain, where does Ampryus fit in? And do you have the metals and the materials and the other products that are necessary to be able to make a high-tech battery like this?

22:50We do. We've been the very fortunate recipient of money from the Department of War previously. The Defense Innovation Unit has been a really strong supporter. Starting in July 2025, we've received a total of 18 million. Part of that is to do exactly as you asked, the anode, the cathode, the separator, the electrolyte. All the internals of the battery have to be outside of a foreign entity of concern in about 15 months from now. And these cells need to be put together also outside of a foreign entity of concern. We are well on that path. We have set up a brand new supply chain. We have vendors from Korea, from Japan, from U.S., from Europe for the internals.

23:33And this new announcement gives us a shot of the arm for this very serious production, 12 million cells a year for drones here in the U.S. And you supply most of the major military drone makers. So there's an article in The Wall Street Journal over the weekend. And it's basically saying, you know, how the U.S. is attacking China's control of critical minerals, that all of these deals, all of these, you know, policy moves that have taken place in the last, call it, year and a half, that it's actually starting to work. And so I wonder, as we start to see similar models applied to other industries, including drones, where you think we're going to be two years from now, five years from now, ten years from now?

24:10Yeah, I think we'll be very balanced. We use China today to make sales, and we're very happy with the cost and the production, and many of our customers are happy with those products. Starting about a year ago, we added South Korea because customers started asking for batteries outside of China, and we announced a cylindrical manufacturer in January, and now we have pouch. There's a couple different formats of these batteries. So I think we'll see a balance. We'll see some customers that are insensitive and they want the best technology. And a lot of times that comes from China. Sometimes because their contracts or the relationships, they need batteries outside of China or specifically from the U.S., which is why the industrial base is so intent on setting it up here so we have our own domestic production capability.

25:01So what does that mean in terms of the opportunity for Ampryus, not only on the military side, but on the commercial one as well? It is very strong in terms of our pull. This deal itself, the 12 million batteries, represents approximately$150 million incremental revenue over time on an annual basis. But we're seeing strong uptick for drones for delivery. We are seeing drones that are tied into the 911 systems, right? The idea there, as drone is first responder, is to get a camera on the site. The site could be in a traffic accident, could be a fire, could be a lost kid. And these drones are very asymmetric in terms of providing value and displacing, whether it's helicopters that might fly to do some of these things.

25:45So it's across the board. We've seen it certainly in war where the asymmetry is huge, but we're also seen in very many industrial applications. Okay. Tom Stepien of Ampryus, it's great to have you here on set. Morgan, it's great to be here. Thank you. Well, still on deck. What you need to know ahead of what's set to be an historic Starship launch today. Hopefully, we'll see. Morning Call continues next. I'm Morgan Brennan. Welcome back to Morning Call. Let's get a check on U.S. stock futures, which are under pressure this morning. You can see the S &P poised to open down about 40 points. The Dow, 262.

26:22The Nasdaq, 317 points. This after an update on Friday and gains for the major averages last week with the S &P and Nasdaq both having their best weeks in over a month. That despite what we've seen in the bond market, which continues here this morning. Treasuries, let's get a check there. Yields are higher across the curve and you've got yields hitting fresh multi-decade highs again this morning. Specifically, the U.S. 10-year Treasury yielding 5.23 percent. We're at the highest level since 2002. 30-year Treasury, 5.54 percent, also highest since 2002. Fed-sensitive two-year Treasury, 4.91 percent.

26:58Let's get a check on energy as well because crude continues its climb this morning, which, of course, is funneling back into the other markets we just checked. WTI is up more than 3 percent right now, trading around$95.50 a barrel. Brent is also up more than 3 percent, trading just below$108 a barrel. Heating oil contracts right there on your screen spiking almost 4 percent this morning as well. Of course, diesel is tied to that. After President Trump reportedly rejected Iran's latest ceasefire proposal over the weekend, that is part of what is propelling energy prices this morning. Also telling Axios that he expects more talks with Iran as soon as this week.

27:34So perhaps that thawing in diplomatic relations continues here, even if an actual deal was not reached over the weekend. We're checking some of the morning's latest headlines. Apple saying that it will appeal a jury's decision that it owes more than$5.7 billion in damages to a San Diego-based company for using its patented technology to power the haptic feedback in iPhones and Apple Watches. Apple says its technology is, quote, fundamentally different from that flagged in the lawsuit. You can see shares are fractionally lower, though. And the information is reporting that China's government is considering allowing ByteDance and Alibaba to buy chips from NVIDIA.

28:09So in a statement to Reuters, NVIDIA says U.S. firms continue to be restricted by a combination of outdated U.S. export controls and China's own limits on U.S. imports. Well, President Trump says he's approved new fuel economy standards for cars and trucks, removing Biden-era rules to cut oil use, improve efficiency and boost EV production. The move will reduce vehicle fuel economy standards through 2031. We're still waiting, I think, full details on that, though. Boeing, meantime, says it's flagged a software glitch in some of its 737 MAX aircraft in fleets outside of the U.S. last month. You can see those shares are down more than 1 percent right now.

28:46The company says it could impact certain landing procedures, adding its engineers are, quote, working on a software update to permanently address the issue. And Attorney General Todd Blanche says that President Trump has the right to restrict press access to the White House and Air Force One, defying a judge's order last week to reinstate press credentials to CNN, MSNOW and Politico. This is what the president has said, is that he is sick and tired of certain media outlets just refusing to report accurate news. And so, look, it is a privilege. It is a privilege to be in the White House for anybody.

29:25And the president knows that. It's the people's house. All right. Well, Blanche's comments coming after the White House denied CNN access to Air Force One this past weekend. Well, as soon as 8.15 Eastern this morning, SpaceX will attempt a milestone launch of Starship. Flight 14 will be the mega rocket system's first ever orbital launch. and it will be, according to CFO Brett Johnson, the first revenue-generating commercial one. The nearly 10-hour mission will deliver the first 26 next-gen Starlink V3 satellites to low-Earth orbit. SpaceX will not attempt to catch the booster with its tower. Instead, there will be controlled ocean landings for all of their hardware.

30:02The stakes, though, huge. Bringing Starship online is critical to SpaceX's long-term growth prospects, including deploying orbital data centers to enable vast sums of compute capacity. And industry is watching closely, too, because not only will Starship boost the amount of cargo that can go to space and drive down the price exponentially, but SpaceX is expected to wind down its workhorse Falcon rocket fleet in the not too distant future as well. Though competitors see a big opportunity to take on more business in launch. But it's not just about Starship either. The V3 satellites represent a huge development for Starlink, a tenfold increase in bandwidth capacity over V2, with Elon Musk saying on X last night that, quote, it is increasingly probable that Starlink will carry a majority of Earth's IP traffic long term.

30:48At that point, Starlink would de facto become the Internet and everything else would connect to Starlink. Ambitious comments. But what else would you expect from Elon Musk? Let's check on shares of SpaceX right now. They're basically flat to the upside of fractionally three tenths of one percent ahead of this launch and just below 150 bucks a share. Well, joining me now is Chad Anderson, CEO of Space Capital. It's a venture capital firm with more than$1 billion in assets under management, investing at the space market crossroads. And one of the, as I like to say, OGs in terms of investing in space, including in SpaceX.

31:24It's great to have you on set. Good to be here. What's at stake from your viewpoint? What's at stake here with the Starship launch? Yeah, look, I mean, you've been covering this on your show, the test program over the last few years, right, as it's been ramping up. And today is the big one. Today is the attempt to get to orbit, and this will be the first revenue-generating flight. So this is bringing this revolutionary capability online. The largest rocket ever built, fully reusable, will carry more mass to orbit than any vehicle ever by a long shot, and it's designed for airline-type operations.

32:00So it will be flying very frequently and taking a lot of mass to orbit. What is it going to mean for the rest of the space economy? Yeah, I mean, it's obviously very important for SpaceX and all their ambitions, but it also has a lot of knock-on effects for the space economy at large, right? So the question is, this vehicle comes online, but how much of it will be used for SpaceX and their own ambitions and their own products, right? Because they are launching a lot of Starlink satellites, but they're also talking about these new AI satellites, right? Launching a million of them over the next 15 years.

32:29Well, that's going to take up a lot of capacity. So is there room for anyone else? at the same time they're retiring their Falcon 9 workhorse launch vehicle, right? And so SpaceX doesn't really run two versions of the same product. So I think we can expect to see Falcon 9 be retired a lot faster than a lot of people think at the same time that Starship is ramping up. So is there capacity? I don't know. I think there's a few mitigating factors out there to sort of think through if you are a satellite company. One, the national security apparatus has bought many launches with SpaceX. They're buying more and more all the time.

33:04A lot of our portfolio companies are building the satellites for those missions. We have new vehicles coming online. There's a handful in the U.S. and also globally. And at the same time, SpaceX is launching today three out of four, four out of five launches on Falcon are for their own product. Going forward, if they keep that ratio, I mean, if they launch as many times as they're talking about launching, I mean, that's a lot of launches for the market. Yeah, we've had Rocket Lab, Stokespace, Firefly, others come on this show and basically say, hey, if they start, you know, putting their capacity towards their own, you know, business businesses, we're here to pick up the slack and we're expecting to.

33:41To your point, I'll take it a step further. Crew Dragon at some point is going to retire, too. This is what brings the astronauts to the International Space Station. We actually have a crew mission later this week from SpaceX as well. Later today, NASA is expected to announce that it's reengaging with Boeing for its Starliner capsule. which for folks that maybe don't remember is what stranded astronauts at the space station for something like nine or 10 months a couple of years ago. Yeah. So, I mean, you've got to think about this in terms of where we are and where we're going. So there is an international space station that's been in orbit for 20 years that is retiring.

34:10It's an aging piece of infrastructure. And there's been a lot of developments in terms of new commercial stations, new commercial outposts that can be built. Right. And also Starship is so big, it could be a station all on its own. And so you have to think about, you know, we built this this International Space Station for a particular reason. Going forward, it's going to be retired. And what replaces it? Right. So I think Starship is going to usher in a brand new way of thinking about how we utilize low Earth orbit. And that goes for the satellites, the size of the satellites, the capability of satellites we build, the stations.

34:45And also it's going to bring in our our ambitions, NASA's ambitions of landing on the moon, setting up an outpost there and then going further. All right. I'm going to give you a twofer here. I mean, the V3 Starlink satellites, how meaningful is that in what is becoming a race toward connectivity from space? And just as importantly, in a week where we're also going to see Google launch Project Suncatcher with Planet, do space investors and space analysts also have to be AI investors and AI analysts now? Well, I mean, if you're thinking about the opportunity at large, and this is like our thesis really helps you understand the space economy in terms of not just the infrastructure that's being built, but also how you're using it.

35:26Right. So if you only think about the supply side and the hardware manufacturing and the launch vehicles and the satellites, then you're missing out on how that technology is being used. So that's where the opportunity is, is thinking about it holistically. Right. So these V3 satellites are hugely important. We know that they are the cash cow and the revenue generating part of the SpaceX business. The AI satellites are going to continue to be. I think the sort of through line here is that SpaceX's launch vehicle means that they have access to orbit, which is hugely important. Their AI infrastructure that they're building means that they own the compute that the future is being built on.

36:08So like the company likes to say, they're building the infrastructure of the future. And that gives them a lot of option value in terms of what gets built. And is it their products or someone else's or a combination of the two? You know, we will see. All right, Chad Anderson, great to have you here on set. Thank you. All right, 8.15 Eastern, we're going to be watching. I'll be covering it for you. A lot more to come here on Morning Call in the meantime, though, including gold losing some of its shine this morning. We've got details of what's driving that pullback and the stocks are getting hit as a result.

36:34Morning Call, we'll be right back. Let's get a market flash on gold. The price falling below$42.50 per ounce for the first time in six weeks. And right now,$4 ,183 is the level. Let's get a look at some of the names in the mining space that are getting hit on that pullback. Two, names like Newmont, she said, Barrick. Also Freeport-McMoran, which is a copper miner, but also pulls some gold out of the ground, too. This is Australia's top gold producer. Northern Star Resources says that it's rejecting an unsolicited$27 billion takeover proposal from South Africa's gold fields. Shares are moving in opposite directions, as you can see right there on your screen.

37:12Gold fields down 16 percent. We're back after this. It's time for your call sheet where we look at the topics driving the trading day ahead. The crew members today, Ryan Dietrich of Carson Group is also a CNBC contributor. Ed Mills of Raymond James and Joyce Wong of Vanguard. You know, I was just looking at my notes. I'm going to kick this off with you, Joyce, because, man, we've got an action-packed week ahead. So a lot to get to here. But first, I've got to start with what we're seeing in the bond market with Treasury yields running up 10-year and 30-year to new multi-decade highs this morning.

37:38Your thoughts? Yes, we have not seen yields this high since 2007. But I like to put it in context because I think what we've been used to and accustomed to since the 2008 financial crisis is very, very low interest rates like ZERB, right? we are just going back to a more normal interest rate environment. When you look through the fundamentals, the economy is strong. Jobs are good. Rates probably should be at this level. So we aren't terribly concerned about this recent rise in rates. We think that is likely to stay rather contained. OK, Ed, I want to get your thoughts on this, because we've had basically an entire generation of young adults that's grown up with, you know, super, super low interest rates.

38:23And while this might be normal in the context of history, it's not normal to them at a time where affordability is front and center. Yeah, Morgan, this is super fascinating because it's all about I look at things through the Washington policy lens. It's all about what's being signaled out of D.C. If you didn't have Treasury Secretary Besant trying to control the long end of the curve and it's seemingly as if it's going against him, this wouldn't be as much of a political problem. We are less than a month and a half away from the midterm elections. And when borrowers are out there trying to get a mortgage and it's north of seven percent, when Donald Trump wanted to say that mortgage rates are low and housing is more affordable, that's a problem when they pay their credit cards and it's higher when they go to get an auto loan.

39:03It's higher when we have the Fed already hiking rates before the midterm elections. When President Trump was very clear he wanted a rate cut, those create political problems for Republicans. And it's just the latest headwind as they go to the voting booth here in November. Yeah, another brick in the wall of worry. And yet, Ryan Dietrich, stocks are hanging in there pretty well, even if breath is not so great. Well, that's right, Morgan. Good morning, everyone. Happy Monday. Building what we just said, Morgan, I've come on with you all year. We said this is an inflationary growth environment. Yields will be stubbornly high, inflation a little high, but the stock market economy do well.

39:37That's kind of where we are. I mean, last week historically is one of the worst weeks of the year. Yields soared. What happened? Tech took back the baton. Absolutely. Breath has been weak. We've talked about that. Lots of guests have talked about that. But I'll tell you, I'm a message of the markets person. Staples relative to the S &P 500, Morgan, just hit like new lows last week. High beta relative to low volatility just hit new highs last week. What's that tell us? I mean, that's still a risk-on scenario. And one more just for the bulls out there. October in a midterm year is the best month of the year in a midterm year.

40:09And November is the second best. I get it. We don't blindly invest in seasonals. But that's just something to know that the fourth quarter of a midterm year is usually a really strong quarter. We're still optimistic, Morgan, and have a good end to this year. Yeah, I mean, given the orderly drawdown, if you want to call it that, that we have seen in equities, Joyce, can we call this more of a rotation, especially when you see, you know, bond market with Treasury yields at compelling levels for the first time, to your point, in decades? Yes, you're finally getting income and fixed income, right?

40:36And we think that that is a very compelling opportunity for investors to get back into bonds and especially think about adding a little bit of duration. Our studies at Vanguard have shown that investors are very short duration, mostly concentrated when you look at industry flows in cash, money markets, very, very short debt. We think this is an opportunity to reset and take advantage of those multi-decade highs in yields. Now, we know that it's not the only thing that is pushing yields higher, Ed, but energy, certainly bond market, other markets are taking at least somewhat of a cue from what we're seeing in the energy markets as well.

41:13So how much now hinges on the back and forth of the possibility that at least a door to more talks is open between the U.S. and Iran here? Yeah, I mean, we've seen all the headlines related to Iran and geopolitical risks move these energy markets. Here at Raymond James, what we've said is we're in a bit of a loop as it relates to Iran where there's military strikes, then there's a ceasefire, there's negotiations, those negotiations break down, we're back to military strikes, and we keep going through that. So whenever I get these headlines, I always remain optimistic, but I think the bid-ask spread between where Iran is and where the United States is just too wide.

41:47And I think there's a real risk here that Iran tries to escalate going into the midterm elections because they want to put pressure on President Trump. And I also think there's a risk after the election that President Trump escalates this because he said he tried to do everything else. And after the midterms, he does not feel that pressure and that escalation. It gets worse before it gets worse, I think, is what we hear from all of our national security contacts here at Raymond James. OK, Ryan, the counter to some of these geopolitical risks and some of the weakness, as you just pointed out, that we've seen the consumer has been this A.I.

42:22build out. How important then is Micron? I mean, three hundred and forty five percent growth year on year in revenue. And if it's anything like last earnings, like you could still potentially see the stock sell off. So I guess how high is the bar here? Yeah, that's a good question. I mean, the bar is pretty high, yes. But again, you know, let's go back to the Fed a couple weeks ago, right? We all know they came off, the market sold off, we rallied after. When we look back to Morgan, they didn't really say anything. He didn't say anything about the AI CapEx rollout. I mean, we think, you know, this economy, let's be honest, that's what hinges on this economy.

42:53That's where most of the earnings growth is coming from. If the Fed isn't looking to slow down the AI CapEx rollout, that's a positive sign. And the lifeblood of a bull market is rotation, as lots of people point out, including myself. And I look at this, and I see MAG7 taking leadership. We look at, you know, semiconductors and software starting to do a little bit better. I mean, if tech takes back to a ton in the fourth quarter, this is still a positive. Micron's probably going to put more good news on there. But let's be honest, earning season's right around the corner. And we're probably still going to see more of that as the economy continues to go.

43:21We have one more quick one on this. I mean, retail sales came in really strong, you know, two weeks ago, okay? 5.3 % annualized on the control group. 10 % annualized the last three months on restaurants. The economy's not perfect, but we have a lot of labor market news this week. We think the labor market's going to improve. That might increase that lower consumer confidence. All economy's still pretty solid in our view. Yeah, we got labor market data. We got ISMs this week. We're also going to get PCE. How closely are you watching those? Perhaps just as important, how closely are you watching in terms of companies looking to raise more capital?

43:55We got this Aura IPO. So that's that's more on the equity side. But I was, you know, with somebody late Friday evening who said, look, don't just keep an eye on high yield. Keep an eye on investment grade, too, with all the, you know, tech capital being raised here. Yes, absolutely. So short term, we're obviously watching the economic data that's coming out this week that is going to feed into what the Fed decides ultimately to do at the end of October at their next meeting. but in the intermediate run, we are watching issuance in investment-grade corporate markets. That's where a lot of this AI-related hyperscaler debt is coming to the market.

44:32It's high-quality issuers that people are very comfortable with, but we try to differentiate between the issuers, and we like to pick and choose and find the ones that make the most sense to add to our portfolios. And of course, we know, Ed, that AI has been a political hot potato coming into this election. We get an open AI developers day tomorrow, too. So probably some news there. But coming out of the weekends, the security issues continue to be a I'm not going to call it a steady drumbeat. It's been like a loud drumbeat. Yeah, Morgan, and the thing that I get concerned with when I talk to investors, they think that so much of this AI news is going to stop after the midterm elections.

45:14And I think we are in the very early innings of D.C. getting around to this. I've always said things are never as bad as you fear or as good as you hope in D.C. I think the market's been pricing in as good as you hope on A.I. issues. After the midterms, we're going to start a presidential election. I think the Democratic and Republican nominees are going to say they're going to do more. The way in which we regulate A.I. is probably decided by the next president. We don't even know who those nominees will be. And I do think that not only are we going to see more changes to data centers, we could see legislation over the next two years that puts real restrictions on the development of AI models.

45:49And the big question I have, Morgan, is, is this going to be disruptive to these market valuations or are these large hyperscalers looking for a moat? Because sometimes we talk about too big to fail here in D.C., but there's also too small to comply. Is regulation, is D.C. the moat that this industry is actually asking for? All right. We're going to have to leave the conversation there. Thank you to our call crew. Great to have all of you here.

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