Morning Call 9/11/26

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1:00Morgan Brennan: I'm Morgan Brennan, and this is your Morning Call.

1:16Morgan Brennan: Good Friday morning. Welcome to Morning Call. I am Morgan Brennan. Before we get to the markets, we are honoring the memories of those lost 25 years ago in the September 11th attacks on New York City, the Pentagon and Shanksville, Pennsylvania. President Trump will appear at the Pentagon later this morning to take part in ceremonies while Vice President Vance will attend events in New York City. Throughout this next hour, we will be taking a closer look at downtown Manhattan's recovery over the last 25 years, plus here, unique insight and experience and reflection from that tragic day from Wall Street to the White House and the lessons that have been learned in quarter century.

1:51Morgan Brennan: So with that, let's turn to the markets. U.S. stock futures are on the upswing with the major averages riding a four-day losing streak. We are still on track for losses for the week for the major averages. But you can see right there on your screen, S &P is poised to open up 44 points, the Dow 275 points, and the Nasdaq 170 points as of right now. Why are we seeing this? Because yields are a bit lower, oil's a bit lower. So let's take a look at what we are seeing in the bond market right now. Treasury's 10-year yields is hovering close to 5%, just below 4.93 % right now. We are still at a multi-year high for the U.S.

2:30Morgan Brennan: 10-year Treasury. Just to put this in perspective, we started the week at 4.77%. Similar situation for the two-year, the Fed-sensitive two-year Treasury. We are at 4.54 % right now. We started the week at 4.36%. We're at a more than a two-year high in the two-year Treasury yield. And the 30-year Treasury, 5.35 percent, which is also the highest, hovering right on the highest since 2007. If we take a look at the dollar index, basically flat on the week here. The big action has been dollar yen this week. But you can see right now this morning, 99.10 is the level. And we just mentioned it, energy.

3:08Morgan Brennan: Let's take a look at what's happening with oil, which is on pace for its steepest weekly gain since July. Under a bit of pressure here again this morning, WTI back below 100 bucks a barrel, down about 2.5 percent. And Brent crude is down more than 3 percent, trading around$104 a barrel. Let's see how Europe and Asia are closing out the week. Ritika Gupta is in London with that trade. Ritika.

3:33Good morning, Morgan. Let's kick it off with Asian equities. Those closed in the red, led lower by the Nikkei, which at one point was trading more than 3 percent to the downside during the session. And it joins the majority of its Asian peers, posting a decline for the week, apart from the cost piece. That's the outlier there, which is up by more than 3%. But European equities over here, they're notching a day in the green. Banks actually leading the way, even as concerns over a tougher policy path on both sides of the pond. ECB governing council member Joachim Nagel indicating to us today that it might be time to move to more restrictive policy there.

4:13Now, all of this as we take a look at European bonds falling prey to the global sell-off and fixed income, actually posting their worst week since March, with that two-year yield on the German paper hitting its highest level since 2023, trading at a 3.5 percent handle. Back to you.

4:32Morgan Brennan: All right. Ritika, thank you. Have a wonderful weekend. We're turning back stateside, a very busy morning shaping up for investors, starting with the latest tech, the latest test, I should say, for the tech trade. Oracle and Adobe coming off of their earnings reports. Oracle was a beaten race for both. Oracle topping street estimates reporting a smaller cash burn than expected. The company says for the first quarter, it booked more than$30 billion in AI cloud contracts, boosting its sales backlog to$664 billion, also saying that its cloud computing business more than doubled from a year ago to$7.4 billion.

5:04Morgan Brennan: You can see that sending shares higher, up about 6.5 % right now. It's a different situation, though, for Adobe after its fourth quarter sales outlook fell just shy of street estimates, though it too did beat on the top and bottom lines for the most recent quarter, thanks to demand for its AI offerings. You can see those shares are down about 3 percent this morning. But from the tech trade to the economy are also getting set for the release of the August CPI report. The expected year-to-year number is 3.4 percent. That's after yesterday's hot PPI read, which is essentially in line but still shows that The pace of inflation is accelerating here.

5:41Morgan Brennan: You could see core CPI month over month is expected this morning to come in at 0.2 percent year over year for core CPI, which is really what matters here for investors and for central bankers, 2.4 percent. And 24 percent of those on Calci think that it comes in even higher than that. Big driver for the year on year gains, gas prices, other types of energy prices, diesel specifically, that has hit an all time high. It is now above six dollars a gallon. That's according to both AAA and GasBuddy. And proxy for diesel is heating oil as well. And that's also up about 11 percent on the week. We've talked a lot about things like diesel crack spreads and it's an immediate impact to different parts of the economy.

6:20Morgan Brennan: Then there's the Treasury market as the 10 year creeps closer to that critical 5 percent mark. Yesterday, Treasury Secretary Scott Bessent defending the Treasury's operations in the fixed income space. this whole nonsense today that our operation didn't work well our operation didn't work because we only had 10 billion of offers for our buyback program normally we get 20 billion and we we only buy the bonds back cheap so when it said i didn't buy back as many as i said that i was going to buy it's because we buy them cheap well there's a lot to dig into here Joining me now is John Stoltzfus, Chief Investment Strategist at Oppenheimer Asset Management.

7:03Morgan Brennan: John, it's great to have you back on the show. I do want to start right there with you because it was a huge market from a Treasury, a huge news week for the Treasury market, she said, whether it was Treasury's refunding or whether it was more auctions this week, the huge moves we have seen, expectations around the Fed and the decision there next week, and then, of course, how inflation readings are going to funnel into all of it. Well, I think that's what it is, Morgan. There's a lot of stuff on the front burner. I think the front burner is kind of crowded. The one thing we'd have to say is, you know, we've said meeting after meeting over the course of the last few years that whenever people get freaked out about the 10-year approaching 5 percent, it really is quite normal based on what we've had before, just plain sticky inflation, and now what we have with the oil prices because of the war in the Middle East.

7:58So you've got to consider that where we are today is the bond market is most certainly doing the heavy lifting for the Fed, okay, and for the Treasury in this particular case. I think that's why Besson said he didn't step in as much as he might because he likes to buy treasuries cheap. They were getting rich. As I recall, the auctions for the 10 and the 30 have been pretty good.

8:21Morgan Brennan: You just touched on it, but what we've seen in the energy space, Adam Kobisi put up a really interesting chart online yesterday tracking the almost direct move we've seen between oil prices and CPI readings in recent months as well. So how much is that factoring into the broader picture here right now? Well, I think quite a lot. I mean, it's weird. It's tethered to oil whenever it comes because the price of oil is linked to everything on the kitchen table, everything if you're buying furniture, if you're fixing the house outside, whatever it is, or the industrial development that's occurring in the U.S., it adds to the price tag.

9:05And with the price of diesel, as you mentioned earlier, that$6 handle, you're talking about for the near term, we're dealing with this situation. I think the good thing is, if you're ready for this, is it will give added experience for traders who are 30 today, who were 12 years old, or rather, yeah, they were 12 years old back in the great financial crisis, as dealing with dramatic markets. That said, I'm not looking for a great financial crisis, big drop. In fact, if you look at it, as of yesterday's close, the S &P 500 was down about 2.6 percent from its record high back in just in August, on August 13th.

9:52And the Nasdaq was down about 3.7 percent versus its last high, which was, as I recall, in June. So the dramatic effect is still being avoided, particularly by the equity market, though not necessarily in individual stocks. They remain vulnerable in that sense. But the indices look like they're weathering it pretty good. And stocks that are well-managed, companies that are well-managed and have a plan around energy, they're doing good. Or if they're oil companies, of course.

10:29Morgan Brennan: So as we see a green screen right now for Oracle, can the tech trade help offset some of the recent weakness we've seen in equities? You know, I tell you, I think that that's a very positive thing. I mean, the reality is for us as professional investors, when we meet in conferences, I was just at a conference yesterday, another media outlet. And what we learned there is sports is using AI like man, another area, and they're using it not to sort of tweak or juice the performance of the athletes, but they're looking to improve the experience of the viewer, give them more options about what angle they'll watch the trade, if they want to go, anything that they want to do in their viewing.

11:14And so we think AI is going to deliver the goods here. It has worrisome prospects, no doubt about it. It always happens with watershed innovation and technology. But we think this is manageable. And if anything, we have to keep up with communist China in terms of AI.

11:32Morgan Brennan: John Stoltzfus, it's good to have you on. Appreciate it. Thank you. Have a good weekend. Thanks, Maureen. We've got a lot more to come here on Morning Call, including bending to pressure. why OpenAI reportedly says it's open to scaling back new model development. Plus, big banks, beware what the Treasury says it's preparing to do as soon as next week. But first, we are taking a look at downtown Manhattan, then and now, how 25 years since the September 11th attacks has reshaped the finance capital of the world. We have a very full hour for you when Morning Call returns.

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13:38Morgan Brennan: Welcome back. We are honoring the memories of those lost 25 years ago on this day in the September 11th attacks on New York City, the Pentagon, and in Shanksville, Pennsylvania. Here's a live look at the reflecting pools at the 9-11 Memorial in Lower Manhattan. That area, once the site of tragedy and massive destruction, has recovered, undergoing a profound transformation.

14:07Morgan Brennan: On September 11, 2001, the finance capital of the world became ground zero. When the New York Stock Exchange finally reopened, politicians from both sides of the aisle rang the bell. A day veteran trader Jay Woods refers to as the most impactful of his three-decade-plus career. When we came back to work just a few blocks from where that travesty happened, we were telling the world, we're back. That shared determination is what fueled New York and the country in the days and years that followed. Terrorist attacks killed close to 3 ,000 people in New York, and lower Manhattan saw an exodus as smoke enveloped it for months.

14:50Morgan Brennan: Many wondered if the area could ever recover. As a symbol of America's resolve, my administration will work with Congress and these two leaders to show the world that we will rebuild New York City. 25 years later, it's thriving. Once a 9-to-5 business district, lower Manhattan has metamorphosized into a 24-7 residential neighborhood. It's been a remarkable transformation. There was 20 billion dollars of public and private money that was invested here after 9-11. And so it's been working with landlords, trying to attract tech tenants, creative tenants, looking to the future as we rebuild. After 9-11, many office buildings sat empty.

15:35Morgan Brennan: But a big policy and investment push enabled many high-rises to convert to residential apartments. For example, this building, right across the street from the New York Stock Exchange. Once the headquarters of J.P. Morgan, it's now luxury condos. known as Downtown by Philip Stark. Before 9-11, this area stretching south from Chambers Street had 188 residential buildings. Today, 351. The Alliance for Downtown New York says the population has tripled. There are now 70 ,000 people who live in Lower Manhattan, which if I had told you that in the days after 9-11, you would never have believed me. We have over 40 hotels.

16:14On 9-11, we had about a half a dozen. But what's been exciting is to see the job growth in the neighborhood in new creative industries. It's still the financial capital of the world, but it's home to Uber and StubHub and Spotify and the list goes on and on.

16:28Morgan Brennan: New York State's office of the comptroller says nearly 254 ,000 people worked in lower Manhattan last year, meaning employment was 5 percent higher than back in 2000. The number of businesses in the area has jumped almost 32 percent. And the mix has changed as well, with the state reporting that financial activities as a share of total private jobs fell from almost half in 2000 to about a third in 2025, with media and tech moving in. Take Spotify, which announced its plans to relocate from the Chelsea neighborhood to Four World Trade Center in 2017. Lord Manhattan has always been the pulse of New York, and it speaks to the transformation of the city that the World Trade Center today is home to a diverse array to businesses in tech, media, law, as well as finance.

17:13Morgan Brennan: In July, American Express broke ground on the site's last major development. It's all attracted more visitors as well. Over 8 million tourists came last year, according to the Downtown Alliance. About a million more annually than before the attacks. A quarter century later, Wall Street is still the financial capital of the world. But time has changed the way it looks. The way people rallied that day and continue to rally in this neighborhood, we brought this place back to life. Well, for more on the 25 years since the September 11th attacks, I'm joined by Bob Fasani, former CNBC senior markets correspondent, and Larry Derita, Bank of America's head of global policy and president of the company's greater Washington, D.C.

17:56Morgan Brennan: market. He previously served as the assistant to the Secretary of Defense for Public Affairs at the Pentagon during the attacks. It's wonderful to have both of you here. And may we never forget, Bob, good to have you here on set. It's always a pleasure to be back. I spent 35 years at CNBC and much of my heart still here with you. Yeah. You weren't just down in lower Manhattan on September 11th, 2001. You were in front of the World Trade Center when the second plane flew through the second tower. Yeah, it was one of the most traumatic events I'd ever experienced. We were going to work. We came in, and the first plane hit.

18:34The entire West Side Highway stopped. I was on the West Side Highway. We went right to the downtown area where everybody thought it was just a terrible accident. The second plane hadn't hit, and then the second plane hit. And I remember very clearly the sound of 10 ,000 people gasping, just the sheer impact. And then the debris started falling, and we all ran. I went into the NYSE and reported on what was going on with Mark Haynes, my dear friend and our colleague, what I call Mark Haynes' finest hour. He led us through that whole morning in a wonderful way. And we were trying to understand what happened and whether the NYSE would even reopen at 10 o 'clock.

19:10The first building came down and the NYSE had shuttered the entire building to prevent ash from coming in. And we had to report from inside the building. And then about two o 'clock, we went outside right on Broad Street, right where you were in that beautiful report. And eventually I walked onto the site, did a report with Bill Griffith, phoned in and took some photographs and came back. All of us were pretty traumatized by the event. But as you noted, it's really about resilience and what's happening. For the next year was the really hard part because the downtown was a smoking ruin and it was really difficult to go to work.

19:47A lot of us had lost loved ones, people we cared about. The economy was in a recession. The markets were down. That was a big focus. And yet the spirit of resilience and that beautiful piece you did, there was me a week later reporting from the site, really helped because the downtown eventually became rebuilt. And I think that's the story here, remembering what happened, reminding people, young people who weren't even there at that time, the importance of this event, but at the same time, emphasizing the spirit of resilience and the ability of human beings just to keep going on with their lives and rebuilding.

20:21Morgan Brennan: Yeah. And I think it's such a key point because the terrorist attacks, you saw the worst of humanity in those moments when it happened. But in the aftermath, you saw the best of humanity as well. Larry, you were at the Pentagon the day the plane was attacked there. You know, that was the way Bob describes New York. I mean, it was a day that we had other priorities in mind. But by the time the Pentagon had been come under attack, the World Trade Center attacks had already become clear that there was something very serious happening in our country. And so we were a little bit more into the idea that this is an act of war, this is an act of terror, and we were beginning to think about, Bob talked about resilience.

21:07It was actually the beginning of resolve, the resilience for sure, but just to understand what happened, recover in the first instance, dig out amazing first responders that day, and then start to think about what comes next. But, yeah, no, it was it was it was an amazing day for all of us, obviously.

21:27Morgan Brennan: Bob, we just talked about it a little bit, the 25 years of transformation that's taken place in lower Manhattan. How has how has the financial markets, how have financial services and and the way that trades get conducted and business gets done? How has that changed completely? There's been a transformation due to technology. When I arrived as the stocks correspond on the NYSE floor in 1997, there were 4000 people on the floor. They did 80 percent of the trading on the floor, open outcry, guys yelling back and forth at each other. That changed while we were there. Today, there's probably 200 people.

22:01They do 20 percent of the business. It's mostly electronic business. The world has changed. The futures market, the options market has expanded. There's now other kinds of business that goes on. We have futures markets again and we have Bitcoin. We have all sorts of new things that are happening. So the important thing about the history of the United States is financial innovation. This country has always been innovative and new ideas come along. So you have blockchain now and you have Bitcoin and you have prediction markets. Not all these may be necessarily successful or even great investments, but they are optional and they are available.

22:35And that's the secret to the country's success. Always keep innovating, find new ways to create new products that are out there. And the country is very different than it was 25 years ago. And I'm very proud that we were covering all of those new innovations.

22:50Morgan Brennan: And, Larry, you served under the Trump administration, excuse me, under the Bush administration and and in the Pentagon. You were the Pentagon spokesperson and then you transitioned over to Bank of America, where the work and the policy outreach continues here. And so what does that involve now, 25 years later? Well, first, and let me just mention about Bank of America, because like so many other institutions in New York and Wall Street, we were impacted by the attacks and had six teammates who were killed, actually, on that day. But we've subsequently recovered. We've done a lot to kind of support veterans and veteran service organizations, first responders, et cetera.

23:29And, you know, as Bob talked about, we've evolved since then. all of us have, the industry has, how we think, how private companies, public companies think about geopolitical risk and how we think about, you know, understanding the world that we're operating in and what are the potential things that could impact our ability to serve our clients, serve our customers, to help drive the economy and help create prosperity. We think about that. And so, as you asked about, you know, I've got a great team of analysts and we help the businesses think about the what-if scenarios and trying to put some context into the kinds of issues that we face now.

24:07I think geopolitics has become embedded in how business leaders think about making decisions for the interests of their shareholders, for the interests of their customers, and really for the broader American economy. So it's a very important part of how we think about it. And again, as Bob talked about transformation since 9-11, that's probably an area that all public companies have transformed more to have this capability and to be able to embed that kind of thinking into business decision making, for sure.

24:34Morgan Brennan: Yeah. Bob, what's next for you today? Well, we're going to go down to the New York Stock Exchange. There'll be a bell ringing. There'll be, of course, people who were there on 9-11. Dick Rouse is going to be there, who led the NYSE through all of that. And we'll see some old friends. It's a day of remembering, but like I had a day of education as well. I went to an event earlier this week of six young college students getting scholarships. Their loved ones had died due to 9-11 illnesses, and they were not even born during that time. So there's a whole process of letting people know what happened, educating them.

25:07While it's painful for those of us who were there to relive it again, it's really necessary and really important. At the same time, as I said, as Larry mentioned, resolve, but also resilience and understanding how this fits in the broader life lessons, how you can rebuild, how you can keep going. I had my own moments of crisis. I had a really tough time for a year afterwards emotionally. I learned how to meditate. I joined a Buddhist meditation society. I know that sounds a little crazy, but it helped stabilize me. It helped me realize that this grief and anxiety I was going through were emotions that you could address, that you could deal with, that they don't have to necessarily control you, that you can change your relationship with these anxieties that you were feeling.

25:49And so that's how I got through it. A lot of people cope. But it's a matter of I learned how to become more resilient myself as well as the downtown. So you emotionally learn how to become more resilient as well as physically around you. You see the rebirth that goes on. And it's a metaphor for living life in general. Larry, final thoughts.

26:11Morgan Brennan: What message would you leave our viewers with today? Well, and Bob touched on it. But, you know, we talk about never forget. It's actually always remember. And that's a little bit more of an active thought. And he talked about kids who weren't even born then, Americans. A hundred million Americans weren't born then on 9-11. So when we think about in our era, Pearl Harbor, something that we'd put the flag at half mass for all those years when we were kids at high school and talk about it. That's this is this generations and the follow on generations event of that nature. And so you think a third of the American public wasn't born on 9-11.

26:46It's something to think about how you sustain the memory and then learn the lessons from it and move on.

26:52Morgan Brennan: Larry Derita, Bob Pisani, thank you both for joining me today. It's an honor to have you. Thank you very much. Never forget. Morning call. We'll be right back. Something amazing is happening in networking. Organizations are scaling with less stress. That's because CDW is designing and implementing intelligent HPE Aruba networking solutions that simplify and secure operations. With automation at the center of your data center, growing pains can be a thing of the past. HPE Aruba Networking and CDW. Make amazing happen. Learn more at cdw.com slash aruba. If you're a parent and want to help set up your child for success, then iExcel is right for your family.

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28:36Morgan Brennan: Welcome back to Morning Call. Let's get a check on U.S. stock futures, which are attempting a rebound this morning, as you can see right there on your screen. The S &P poised to open up 39 points, the Dow 250 and the Nasdaq 153. That, after four straight down days for the major averages, were on pace for losses for the week. Oracle and Adobe are in focus right now on the back of earnings last night. Beat and raise for both of those stocks, but as you can see right there, inverse reactions in the markets pre-market. Oracle is poised or is up 6.5 % right now, and Adobe is down 3%. It's turned to the Treasury market where really it's about stabilization this morning.

29:12Morgan Brennan: The 10-year creeping closer to that critical 5 % mark overall this week, but down a little bit from where it was trading just hours ago, 4.94%. We are at a new multi-year high when you look at yields really across the curve here. Fed-sensitive two-year Treasury yielding 4.56%. And the 30-year Treasury, 5.35%. Big moves here. since the start of the holiday-shortened trading week. Treasury Secretary Scott Besson defending the Treasury's operations in the bond market as well. Energy is also in focus. Oil on pace for its steepest weekly gain since July. Diesel hitting an all-time high. It is now above$6 a gallon.

29:53Morgan Brennan: You can see a bit of a breather here this morning. WTI is down about 2%, trading around$100 a barrel. And Brent is down 2.5%, trading just below$105 a barrel. Let's check on some of the morning's latest headlines, though. We just mentioned it. Treasury Secretary Scott Besant says, quote, a large bank will be sanctioned by Washington as soon as next week, not specifying if it will be a U.S. bank or not. Besant says the move will be part of a strategy to isolate Iran financially. The Pentagon is reportedly in talks to lend up to five billion dollars to AI cloud computing startup FluidStack. The Pentagon's Office of Strategic Capital has struck similar deals with companies like Vulcan Elements, Energy Fuels and others.

30:32Morgan Brennan: We've followed those pretty closely for you over the months. And OpenAI CEO Sam Altman is telling staffers that he is open to slowing down development of new AI systems. And according to a report, the all-hands meeting comes after a number of former AI engineers and researchers have sounded the alarm over unchecked AI models. Well, as we head to break, let's get a check on shares of RH as well. This was the other earnings report last night after the bell. The furniture retailer's second quarter profit blowing past estimates. It's raising guidance for the year as well. The company says its luxury RH Estates brand, which was launched this summer, could eventually be a main driver of revenue growth.

31:08Morgan Brennan: They saw tariff refunds, which offset some of the higher costs associated with a war in the Middle East and energy prices. We're back in just a moment. Those shares are up 9 percent. Turning back to what will be a somber day across New York and the world as we commemorate the 25th anniversary of the September 11th attacks. To mark the occasion, a special tribute was on display last night in New York City featuring a fleet of 2 ,977 drones recreating the Twin Towers in the sky above New York Harbor. That number honors each of the victims who lost their lives inside the Trade Center on that tragic day in 2001.

31:42Morgan Brennan: The lights spiraled into a helix shape before forming replicas of the towers at their original dimensions against the city skyline. According to organizers, the project was developed with input from victims' families, survivors, and emergency responders. It's giving me goosebumps to look at that video right now. Joining me now on set with unique insight into that day and the weeks following is Congressman Jody Arrington, currently representing Texas 19th Congressional District, but back in 2001 served as special assistant to President George W. Bush. Congressman, it's good to have you here on set.

32:17Morgan Brennan: Good morning. Appreciate it. An honor to have you. And this is why you're in town today, is to commemorate the 9-11 attacks and 25 years later. We can never forget. And we have a generation that wasn't born or too, they were too young to remember that fateful day. And for most of us, not just people serving in the White House on 9-11 or here at Ground Zero, but for all Americans, those images and the emotions have been seared on our hearts forever. However, it's hard to believe it's been 25 years. But as a Texan and as an American, I want to be here at Ground Zero with my friends in New York, remembering the lives lost, loving on those of the families of the victims and grieving with them.

32:58But also reflecting on the best of humanity that we saw and the the rays of light, the acts of heroism and selfless, selfless acts by, you know, strangers helping strangers, New Yorkers rallying. President Trump throwing the pitch out saying we're going to stand tall and strong and united against terror, against all threats to this country. And it was pretty special, I think, in many ways. I don't think we've unified like that since that day and since the days after. And I think it's a good reminder to all of us, especially those who work in Washington, that we have more that binds us and that we have in common than we have that separates us or that we have that are different.

33:43And so those are great lessons learned. And those are the things I think we need to be reflecting on today.

33:49Morgan Brennan: Yeah. It's a powerful message. And those are powerful lessons. Just in terms of what folks need to understand about what happened in the aftermath of that, what it meant from a policy standpoint, and to dig further into this lessons learned idea, what that meant in terms of how U.S. policy changed, how security changed, how, you know, legislation changed in the wake of this. Well, yeah, life changed for Americans in many ways, and we created an entire department of homeland security and consolidated a lot of the various appendages of the government that would be focused on our homeland security and our fight against terrorism in the aftermath.

34:36President Bush was resolute in his commitment. That was a defining moment for him and his tenure as president. And I think you can say he was successful in saying we're going to marshal all resources to make sure that that never happens again on his watch. He He promised on the rubble to all of us that he would go after those who did it and bring them to justice. And that happened. So, yeah, life changed security at airports. The way we are vigilant individually. This isn't just a government responsibility. It's a whole of America responsibility. So, yeah, that that that's one of the things that changed.

35:21But again, lessons learned, evil exists and you have to recognize that. And some evil you cannot negotiate with it. It must be met with force and that whole notion of peace through strength. And what's happening right now as America confronts a nuclear Iran, I think I think those lessons are being applied right now. We never thought terrorism would come to our shores because it was thousands of miles away. We'd watch it on TV. And then one day it was here. It was surreal. But we have to be vigilant. And the most important job of federal government lawmakers is to provide for the common defense.

35:58So we have to be vigilant, make the investment. And we've got to remember that we have people risking their lives for us every day.

36:04Morgan Brennan: So in light of that and in light of this message of unification in the wake of those terrorist attacks. Looking to the end of this year, what can Congress get get done? Well, in light of the terrorist attacks, I wish we could get the Senate to respond to the budget reconciliation instructions that would replenish the munitions and refuel for the fight against the nuclear Iran threat. That's something I think we should all rally for. I don't think it should be a partisan endeavor. But between now and the midterms, I don't have a lot of hope that we're going to even get a response from Republicans in the Senate.

36:43But that's, again, our first job. And that languishes there in the Senate. We'll see if they respond. We have FISA, which is a tool against terror. We have the Farm Bill, which is important for our food supply and our agriculture independence and food security. We have the NDAA, which is the National Defense Authorization. That is the basically joints and sinews that uphold all of our national defense. That's the so there's a list of things that are languishing in the Senate. I don't hold sadly, I don't hold out a lot of hope, but we're going to get a return serve on these. And and then, of course, there's going to be a loaded agenda in the lame duck.

37:27Morgan Brennan: Congressman, it's great to have you here to be with you. And I hope you'll come back again soon. You bet. You bet. I look forward to God bless my friends here in New York and in all of America. And let's never forget 9-11. And let's continue to remember that we're stronger when we are united. Best lesson, I think, that I learned from that experience. Never forget. Appreciate it. We're back after this. Let's get a check on copper prices, which are basically flat right now. That's after falling 5 % yesterday, breaking a four-day win streak. Hit a record high the day before. So we're still hovering right near there.

38:04Morgan Brennan: Yesterday, I spoke with Freeport-McMoran CEO Kathleen Quirk about the supply-demand divide regarding copper. Freeport is the largest copper producer in the U.S. Morning call. We'll be right back. If you look at some of the reports that have come out, you know, S &P Global came out earlier in the year with a report about it. They're showing, you know, multi-million ton deficits as we go out. So they're saying it's going to take, you know, 10 new mines a year to be able to do this. And and so as an industry, we need to develop new supplies. We need to do it economically. Inflation's a factor. Here's what to watch today.

38:48Morgan Brennan: We're going to get the latest read on CPI at 830 a.m. Eastern. We're also watching for fresh consumer sentiment data. We're also going to get some inflation expectations to read there, too. Earnings from Kroger before the open. And it's time for your call sheet where we look at the topics driving the trading day. I had crew members today, Bill Lee of Global Economic Advisors and Ray Wang of Constellation Research. Ray, it's well, first of all, it's great to have you both here. Ray, I'm going to start this conversation with you. We also got earnings from Oracle and Adobe last night. But before we get into all of that in general, just what we're seeing in the markets more broadly, as we do talk about inflation and higher oil prices and questions on the macro and whether that AI and tech trade can actually offset it.

39:30It's crazy, right? We've got$100 barrel of oil. We've got$40 trillion in debt. Investors are trying to figure out what's happening next across the board. And so the macros are working against us. But on the other hand, earnings are great. And that's kind of confusing everybody at the moment.

39:45Morgan Brennan: OK. And Bill, and I also want to bring in Tom Lee from Fundstrat. He's also a CNBC contributor. He's joining the conversation, too. But Bill, do you want to get your thoughts on what you're watching most closely when we do get this inflation reading later this morning, especially with diesel prices now at a record high and a PPI that maybe was largely in line, but still shows that the pace of inflation is accelerating for on the wholesale side. For some time, I've been saying it's a serious mistake for the Fed to be raising rates. But now with the persistence of high energy prices and the likelihood that we're going to be seeing it go through the end of the year, it looks as though Chair Walsh is coming in to a very rowdy FOMC, and he doesn't have the kind of gravitas that that Paul Volcker did to be able to tame everybody and get his way.

40:29So I think he's going to have to give in and perhaps allow a rate increase for the next meeting just to demonstrate that he can have independence from Trump, but also to acknowledge that the markets are sending him a pretty clear signal that they're expecting him to fight inflation, even though most of it is supply side.

40:48Morgan Brennan: Yeah. I mean, Tom, that's been the big story this week is what we've seen in the bond markets and particularly in the Treasury markets. with the rate run up here, even just since the start of a holiday shortened trading week, it's been pretty dramatic. It is. And I agree sort of the market's concept that they're impatient and they want a rate hike. But at the same time, you know, if Waller's correct and we see demonstrable improvement in inflation in August, and that's going to be coming in a few hours, I think it's going to change the market's minds. I mean, I think in a lot of ways, CPI has already been trending lower.

41:30Of course, we know PCE has a sizable gap that is actually much higher. But I think it's possible Friday is a pivot point. If we get a decent CPI, you know, hopefully 0.2 or lower, I think you're going to instantly see market price in no hike in September. And I actually think that that's going to be the start of a pretty sizable equity rally as well.

41:51Morgan Brennan: Gray, I see you nodding your head as we have this conversation here. Your thoughts? Yeah. No, I mean, it's all down to CPI, right? If the CPI is down, then the Fed can actually be a little bit more dovish. I think that's what we're looking for. That's one of the hard part. Tech stocks are all dependent on this number. Okay. Bill, what else are you watching here? As we do look to a Fed decision next week, we got ECB yesterday. We're also going to get BOJ. And so we can't lose sight of the fact that there have been certain global machinations that have been playing out across markets here and asset classes as well.

42:23It's a global rate increase coming because I think the ECB and BOJ are both saying we really have to contain the inflation, even though it is supply-side driven. And so the rate increase, I think, in the United States will be consistent with that. I absolutely agree with Tom. But unfortunately, as a former Fed staffer, the Fed is famous for saying we're not going that any one data point pushes around. And even though we might get a good CPI rating, it will not be enough to stem the tide, I think, in the revolt that we see. By the way, now that we think about what's happening in the last 25 years of the financial system, one thing to keep in mind is the huge amount of financial risk that's come up because of the transformation of the financial system toward more private credit.

43:02That is opaque and hard to understand and hard to see and for regulators to understand where the risks are.

43:08Morgan Brennan: I mean, when you talk about the role that that plays, for example, Tom, in the AI infrastructure build out when you see Oracle popping this morning, not going to be spending quite as much as everybody thought, not going back to the markets to raise more capital, at least not yet. How does that perhaps calm fears, at least right now? Well, it might actually help quite a lot, Morgan, because we know the AI infrastructure build is really asking a lot of the debt markets, right, as a percentage of total issuance, it's growing. And we know this is ultimately, you know, a$30 trillion infrastructure build.

43:43So it is quite inflationary. And the bar is high. I mean, these companies probably can justify their spend, even if the Fed raises rates 100 basis points. I think that's the challenge that the Fed raising rates is probably not going to solve or slow down the AI spend. So it's good to see the industry sort of take other reasons to actually slow their expansion.

44:06Morgan Brennan: You know, we just talked about it before the break or just, you know, showed a soundbite from the conversation before the break. Copper, right near record highs. I mean, there's so many knock-on effects in terms of how AI is impacting different parts of the market. And yet, when you look at software, Ray, and Adobe specifically, it's under pressure today, even though it's been so beaten down. And AI seems to be benefiting it, too. Well, Adobe's in a different situation. It's a management change. And what you've seen here is really the announcement of a new CEO. If you look internally, a lot of folks thought it was going to be someone else.

44:37And I think that's really what's driving the price down. Plus, also, the threat of AI coming after the business is trying to figure out, is Adobe still going to be around or are they actually something that's in a moat? But Adobe is in a moat in itself. And they've been very self-contained. But I think it's really coming down to the leadership question.

44:53Morgan Brennan: All right. And, Bill, how closely are you watching energy prices and crude, which seems to be moving in tandem with other things like treasury yields? To me, the more important price to look at would be the distillates. The diesel price is going at$10 here in California and over$6 nationally. That's the concern because that's the kind of price increase that feeds into the supply chain. And that makes the Fed fear it'll affect inflation expectations. And that's the more important one, the crack spread. All right. And Tom, final thoughts here. Well, my final thought is, I think it's even if the Fed raises rates next week, which I don't, I believe is what the market's pricing.

45:36And this is not what we're expecting because a lot of that's baked in. I actually think it would be something the stock market would rise on because it's been waiting for this actually to happen.

45:46Morgan Brennan: All right. Well, that's going to do it for us here at Morning Call. I want to get a check on U.S. stock futures right now, which are rallying here pre-market. As we do see yields stabilize, we do see crude move a little bit lower from the highs of the week. And we would also just say our hearts and prayers go out to all of those as we commemorate the 25th anniversary of 9-11. Imagine relying on a dozen different software programs to run your business because of the way it promotes growth. Some say Odoo is like a magic beanstalk, scaling with you while being magically affordable. And some say Odu's programs for manufacturers and accounting and more are like building blocks.

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