Morning Call 9/15/26

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1:21Top of the morning to you. I'm Dominic Chu in for Morgan Brennan, who we will see in just a moment. But first, the global rate shock hits Wall Street. Checking equity futures right now, they are on the offer. Downside down by about 300 points implied at the open for the Dow. The Nasdaq down by about 151 and the S &P down by 32 because it's being driven a lot by rates. Let's check the Treasury side of things where yields, again, on the 10-year have topped 5%. You can watch that. And they've gone up significantly over the course of the past 48 hours. The benchmark 10-year note yield currently at 5.033%.

1:56It got as high as a hair over 5.04 percent so far today. The two-year no yield, 4.68 percent, and the 30-year long bond, 5.393 percent. All of this as oil continues to march higher. U.S. benchmark West Texas Intermediate now at levels not seen going back to May. Right now, those prices up about 2 percent to$103.57. It's a similar percentage advance for ICE Brent crude futures. The world gauge 107 spot 81, the last trade there. Heating oil, by the way, also surging, as you can see here, up by around 4 % as well. So the entire complex in oil and gas moving higher. The latest numbers, by the way, from AAA coming in in just the last hour.

2:40The price for a gallon of regular unleaded fuel up again from yesterday. Same with diesel prices sitting now at its highest level on record. Right now,$4.33 a gallon for regular unleaded,$6.27 for diesel fuel per gallon. So let's see now how the rate picture is playing out around the world. Our Steve Sedgwick is in London with the latest market action from the international side of things. Steve.

3:09Yeah, Dom, I sometimes feel I have to apologize to viewers because I'm spending all my time looking at these bond markets and I'm looking at the AI story. But they are so compelling. And all that red you can see behind me with that tiny bit of green was about seven stocks in the green and then about 30 stocks in the green and gray. Most of it, most of it is about AI and it's about the reaction that we're having to the concern about bond markets, the concern about banks, the concern about interest rates as well. So Monday, it was the fear around AI security and prospective guardrails that drove the risk off sentiment in markets.

3:41Today, it appears to be that ever rising cost of debt as investors brace for a hike from the Fed tomorrow. European equities across the border easier. The London market giving up eight tenths of one percent, as indeed is the Zetra DAX and the Cat Curran as well. The Swiss market down around about 1.3 percent. By the way, Mr. Trump said a couple of days ago he wants the U.S. to have the lowest interest rates in the world. Well, you'd have to have zero percent interest rates if you were to get that because that's what they've got over in Switzerland. Right, the bond markets here, we're seeing a couple of multi-year highs for the European 10-year yields.

4:16During my show just, I don't know, an hour ago, Dom, we saw the T-bonds getting up to 5.041%. Now we've got the GILTS in the UK hitting their highest level since 2007. We've got a 5.42 % matched only by some of the other yields which are picking up the German 10-year, for instance. That has hit its highest level since 2009, while the 10-year French OAT yield is at levels seen last, well, last seen in 2008, September of the year. So you've got three things going on. You've got the bond market concerns, you've got the AI concerns, and you've got the oil concerns. And add to that, I've got to say, European banks over here, Dom, are selling off because of what Brian Moynihan said as well about profitability going forward.

5:01Back to you. All right, Steve Sedgwick with the interest rate superlative story out there. Thank you very much for that. Checking again on U.S. equity futures. Again, they are solidly to the downside. The Dow's implied lower by roughly 300 some points. The S &P down by just about 32. And the tech heavier Nasdaq trade off by about 150. Now, aside from A.I. trade troubles, which we will get to in just a moment, bond markets, as Steve just said, with the 10 year touching its highest level since 2007. All of this, of course, as the Federal Reserve kicks off its latest policy meeting today. Interest rates and traders and users on Calci are all but certain we're getting a quarter percentage point hike tomorrow.

5:39That's the first under new chairman Kevin Warsh and the first for the Fed going back to December of 2025. Joining me now is Peter Oppenheimer, the chief global equity strategist and head of macro research in Europe over at Goldman Sachs. This is an interesting development only because it has been fairly well telegraphed, you could argue, the rise in rates. But the speed that it's come to us with has caught some perhaps market participants off guard. Is this something that we need to fear that we could see even higher beyond five to five and a quarter, five and a half? And what exactly does that mean for the market?

6:21Yeah, absolutely. I think that Steve had mentioned before this interview, you know, the markets are very, very focused on the speed of this adjustment. We're seeing not just in U.S. interest rate expectations and bond yields, but around the world as well. And I think it's a reflection of a number of things. Of course, rising inflation pressures as oil prices, as you reported, continue to increase. But also the scale of the demand for capital coming from central banks, who are all borrowing money together at the same time, competing for investment dollars just at the time when the private sector is also being asked to fund huge amounts of capex in the AI ecosystem.

7:10So there's a big increase in demand for capital, and this is pushing up the cost, the price of capital. And of course, if bond yields continue to rise particularly quickly, in the end, it has to have some effect on the valuation of equities as well, because it really represents the discount rate that future profits or cash flows are priced off. So that's really the anxiety that we're seeing right now. Peter, how much of this is about the central bank side of things, right? When we're talking about controlling money supply, cash supply out there, and thereby interest rates, and how much of it is about treasuries all over the world having to fund their own needs in terms of their countries and their sovereign wants and then competing, to your point, with many of these hyperscaler type AI type clients who are all trying to raise money at the same time as well.

8:06Yeah, I think that has a lot to it. Obviously, there's a combination of factors. We are seeing rising inflationary pressures again, and that's pushing up expectations about policy rate increases by the Fed and indeed the ECB and others. And of course, if short-term policy rates rise, it has an effect on longer-term borrowing rates. But in addition to that, there's also a growing anxiety about the scale of the borrowing that governments around the world are doing, as they have to reflect new priorities in proving and securing the resilience of supply chains, of energy capacity and supplies, and of course on things like defence spending.

8:50So the borrowing demands of governments are going up just at the time, as you say, that big tech companies are trying to borrow huge amounts of money to build out the infrastructure of the AI ecosystem. So what we're seeing is a very dramatic increase in the demand for capital from both the private sector and from governments. And that's having this effect also of pushing up long term interest rates and long term interest rates. in the end affect all financial assets, credit markets, of course, bond prices, but also equities, too, because they're all related to the same kind of discount rates.

9:29And that's what the focus is really increasing on right now. Obviously, we also have, in Europe's case, a number of elections coming up, and that's increasing the focus. So, I mean, the risk-free side of things, it does change the calculus, as you point out, because you discount cash flows at a different rates and if the hurdle rates become higher. I wonder, though, is the rate picture right now enough to stifle that AI momentum that we are seeing in the marketplace? In other words, at what rates do we see that AI trade? I'm not saying going to pop a bubble because that's being a little bit melodramatic, but that AI trade is dependent in many ways on risk-free rates being relatively lower.

10:15Absolutely. And we should, again, reflect on the fact that for many years, of course, after the financial crisis, interest rates went to zero and even very long term interest rates fell to those levels. And you mentioned Europe just before, just five years ago, for example, 30 year bond yields in places like Japan or Germany had a zero yield. And now they're around three and a half percent. So that is having an impact. I think that what is important to say from an equity market perspective, however, is that underlying profit growth has been and continues to be very strong. And that's really why equities have been able to offset or withstand the rise in interest rates that has been developing in recent months.

11:03And also the biggest technology companies that are doing this borrowing have seen their valuations actually coming down. And so I don't think there's a bubble in the classic sense of excessive valuations. But of course, as bond yields continue to pick up and do so at a faster pace, that is going to have some effect on equity valuations. And that's what we're seeing reflected really in this pullback across the equity capital markets as well. But fundamentals underlying equities are strong. Economic growth is still positive and companies are reflecting nominal GDP, real GDP plus inflation. That's really what drives sales and revenues.

11:47Sure. So that's really still quite healthy. And, you know, is really underpinning at least equities, even as bond yields go higher. And to your point, Peter, Nvidia shares are trading at about 17 times next year's earnings. So the valuation story is still in play as well. Peter, thank you very much. Peter Oppenheimer at Goldman Sachs. We appreciate it. We'll see you soon, sir. All right. Turning back down to the energy trade, as oil rips past$100 per barrel, G20 leaders are gathering in Houston today, weighing crude and the industry's next move. That's where we find, ironically enough, our own Morgan Brennan, who joins us now with what she's going to see in the day ahead.

12:26Morgan.

12:28Morgan Brennan: Yeah, Dom, it's good to see you. And I think what we're going to see here in the day ahead is a lot of news, a lot of deal making today, tomorrow as well. You just mentioned this is the G20 Energy Abundance Ministerial. And as you were just talking about with your last guest, I mean, we're seeing crude oil and Treasury yields move lockstep with crude well above 100 bucks a barrel and a 10-year Treasury yielding 5 percent now. strategists. A number of strategists are saying that this is the tightest correlation we've seen between these two in years. So what happens here today and over the next couple of days, the stakes have arguably never been higher.

13:03Morgan Brennan: You're going to see all of the usual suspects at a G20 summit here. The Europeans, the Japanese, the Chinese, but also Russia is in attendance here. The Saudis are here and guests of the U.S., the Venezuelans will be here over the next couple of days as well. So there is a lot to watch. And throughout the day, I'll be speaking to the most senior administration officials who are focused on energy as we see all of this play out, not only from a geopolitical lens, but from a political lens as well, an economic one, as the Fed continues to meet here. That's going to be starting here in just a few moments, a little bit later on morning call, when the executive director of the National Energy Dominance Council.

13:42Morgan Brennan: Jared Agin joins me for an interview to tee up what we should expect here on site in Houston today. Dom, for folks that maybe are not as familiar with the National Energy Dominance Council, it's really the connective tissue, not only between the different agencies of the administration, the federal government, but also between the U.S. and other countries and the role that industry plays in all of this. As in real time, we are seeing the rulebook be rewritten in terms of this world order with energy really the tip of the spear. Of course, it is the tip of the spear and something everybody's watching, arguably the big driver behind interest rates right now.

14:18Morgan, we'll see you later on this hour. Thank you very much for that. We've got a lot more to come here on Morning Call, including calls to throttle back AI agent development growing louder by the day. This is President Trump makes a call of his own. They're just playing right into the hands of a lot of people that don't want to see it happen. And that could be political people. It could also be China. President Trump calling into Jensen Huang there. Plus, we're live from the sidelines of the Gas Tech Conference in Bangkok, Thailand, speaking with one CEO on the front lines of the AI data center buildout.

14:51And then later on, another strong kickoff for the NFL. Got a very busy hour still ahead when Morning Call returns after this commercial break. This message comes from Wise Business, the only account your business needs to scale globally. You're building a business with global ambitions, but hidden fees are eating into your margins. With Wise Business, you can pay overseas suppliers without exchange rate markups. Have customers worldwide get payment details in 22 currencies so you get more of each hard-earned payment without hidden conversion fees. Be smart. Get Wise Business. Download the app.

15:29T's and C's apply.

16:00Your sausage McMuffin with egg didn't change. Your receipt did. The sausage McMuffin with egg extra value meal includes a hash brown and a small coffee for just$5. Only at McDonald's for a limited time. Price and participation may vary. Promotion pricing may be lower than real pricing. Welcome back to Morning Call. Turning back now to the AI safety debate. President Trump doubling down on his comments from Sunday, crying foul on warnings connecting AI models to various doomsday scenarios. In a series of posts on social media just yesterday, the president calling the alarm bells of AI, quote, a hoax perpetuated perpetuated by Democrats and revolutionaries.

16:41The president following up that on a phone call with NVIDIA CEO Jensen Huang during a live fireside chat in L.A. last night. And I'm telling you, it's all a hoax. The data centers are great and they make people wealthy and they make states wealthy. And it's the oil of the next 20, 25 years. It's bigger than the Internet and the AI, much more so. And they're just playing right into the hands of a lot of people that don't want to see it happen. And that could be political people. It could also be China. And we're not going to let that happen. It's a hoax. You're right. We're not going to let that happen, sir.

17:22All right. Another member of the White House executive team taking the president's concerns a step further. Former White House A.I. czar David Sachs calling for Anthropics Dario Amadei to step down. Well, I think if Dario believes that we're going to have the worst outcomes, my question for him is, why are you doing this? it doesn't make sense to me that you're running a frontier AI company if you think frontier AI is going to end humanity. So again, I would push that back on him and say, how are you going to make this safe? And if you don't think you can, you should probably either shut down the company or step aside and let someone else lead it.

18:04All right. From the White House to Wall Street, as we continue to track the fallout from yesterday's AI sector sell off, we are watching shares of Broadcom, one of Anthropik's key hardware suppliers. Those Broadcom shares off fractionally just about one quarter of one percent in the pre-market trade. This is after falling more than five percent yesterday. CEO Hock Tan joining our own Jim Cramer on Mad Money last night, saying he is not in the least concerned about the AI slowdown debate impacting his company's optimistic sales outlook for chips. We see the demand for compute infrastructure for AI development or AI frontier models and inference for the products that they feed to the world as continuing to be very strong and I believe very durable.

18:54All right, we're watching, of course, the rest of the AI chip trade in the pre-market given that big sell-off yesterday, And we're for the most part mixed but stable. You can see NVIDIA shares up just about two tenths of one percent. Micron down one tenth of one percent. But ASML up one and a half percent in trading so far today. We'll have much more on this with our morning call sheet and the call crew later on in the show. But first, crypto may be finally getting its day in the Senate, but not before one congressional critic gets her say on what she calls President Trump's new bank. But first, watching shares of Bank of America after closing down more than 5 % yesterday on comments from CEO Brian Moynihan, telling analysts that fees charged through its investment banking business will likely fall more than 10 % this quarter from a year ago period, while trading revenues will be roughly flat compared to a 33 % jump in the second quarter.

19:46Right now, B of A shares following up on yesterday's 5 % drop with a 1 % drop pre-market morning call is back after this. The quarter pounder with cheese is made with 100 % fresh beef cooked when you order it. Add hot crispy fries and an ice cold Coke and hopefully a lot of napkins. All for$8. Ba-da-ba-ba-ba. Ever notice how every new AI tool asks you to explain your business to it all over again? Google Workspace with Gemini skips that. You get Google's AI built right into the premium versions of Gmail, Docs, Sheets, and more. No new tools. No extra logins. Just one subscription that gives you personalized AI right inside your actual workflow.

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20:39Morgan Brennan: This episode is brought to you by Schwab Market Update, an original podcast from Charles Schwab. Schwab Market Update, an original podcast from Charles Schwab, provides an information-packed daily market preview on stock updates, U.S. and global economic news, monetary policy decisions, and key results and statistics that may impact your trading. Download the latest episode and subscribe at schwab.com slash market update podcast or find Schwab Market Update wherever you get your podcasts. Welcome back to Morning Call. Turning back to the energy sector as the price of oil continues to climb past$100 per barrel.

21:17Right now you see benchmark prices for U.S. crude are just around $103.94. International benchmark Brent crude currently up about 2.5 % to 108, spot 26. Energy security and diversification, two of the big themes at this year's gas tech conference underway right now in Bangkok, Thailand, as well as rapidly rising demand fueled by the growth around AI and data centers. Mario Azar is the chairman and CEO of Black & Veatch and joins us now from the sidelines of the gas tech conference out in Bangkok. He's also a member, by the way, of the CNBC CEO Council. Mario, thank you very much for taking the time all the way across the world.

21:55Let's talk a little bit about the expectations that you are going into these conferences with, given the backdrop in the Middle East, specifically against the U.S. and Iran. Well, first of all, glad to be with you today, Dominic. Expectations, of course, a lot of discussion here at GASTEK about energy, not only about energy prices, but it's really about energy demand. And those are not new. You started talking about growth in energy demand driven by data centers. Beyond data centers, it's electrification, it's everything else. So that, of course, is driving more demand for fuel, whether it's gas or oil, and power.

22:47Here at GasTech, we're talking a lot about gas, and we're talking, in our case specifically, about liquefied natural gas, the technology that Black & Veatch has been in for over 60 years. So if it's about liquefied natural gas as helping to power that AI and data center kind of revolution that we're seeing unfold right now, how much of that story is being impacted by the fact that we do have kind of crimped supplies is specifically out of the Middle East? We know that the U.S. is very big in liquefied natural gas, other parts of the world as well. How much does that macro backdrop fit into how you think that AI data center build out and powering it will actually be affected in the coming years?

23:31Yeah, Dominic, I think it depends on where you are. Countries that are relying heavily on LNG for their gas supply obviously have been feeling the crunch for a while. This is not just this year. the Russia-Ukraine war really started the crunch. So that increased demand for LNG. In our case, the technology we focus on is floating LNG. This is essentially taking the liquefaction on a ship to the gas field to liquefy the gas so it's exported. And many countries need this LNG in Asia and in Europe, et cetera. So, of course, data centers and the demand for more power has only increased demand for LNG, but it's not new.

24:23We've been dealing with this now for a while, and that increase in demand has been substantial over the last few years. How much do you think the natural gas story, in terms of the total addressable market for powering data centers, we've talked so much about nuclear, alternative sources, geothermal, How much is natural gas in your mind going to be a part of the story for powering AI and data centers? Is it going to be a large portion, the majority portion of it? Is it a transition fuel before we get to full nuclear? Hypothetically, how does that natural gas story play out? Yeah, Dominic, we look at it as the demand needs all of the above.

25:04It needs gas. It needs nuclear. It needs renewables, geothermal, you name it. Today, gas is the dominant source of energy for base-loaded power, on-demand power, if you will. Renewables with batteries are complementing. Nuclear, in areas where nuclear is abundant, of course, becomes a very good alternative for base-loaded power. And the advanced nuclear technologies are going to make that an alternative. So you could call it bridge fuel. I think it's going to be a long ridge. It's going to be a while where gas is dominant for powering data centers, which require reliable, consistent power. All right.

25:51Mario Azar, chairman of Black & Veatch and CEO. Thank you very much and good luck at the conference this week, sir. Thank you, Dominic. All right. Well, still on deck for the show here. Software stocks are doing something for the first time in history as more and more sound the alarm over unchecked AI advancement. We'll have that story when Morning Call continues next. I'm Dominic Chewin for Morgan Brennan. Welcome back to Morning Call. U.S. equity futures right now are in the red. The Dow is implied lower by roughly 285 points. The S &P down by 30. And the tech-heavier Nasdaq trade off by about 145 points.

26:24The big driver this morning is Treasury yields. We're watching the 10-year right now currently back up to above 5, 5.031%. The two-year note yield, 4.676%, and the 30-year long bond, 5.393%. Oil continues to march higher. WTI is now at levels not seen since May, currently up about 2.75%,$104.14 for West Texas Intermediate. Ice Brent crude futures, 108 spot 43, up 2.5 % as well. The latest numbers, by the way, from AAA coming in this morning. The price for a gallon of regular unleaded is up from yesterday, and the same with diesel, currently sitting at its highest level on record. That's$6.27 for a gallon of diesel,$4.33 for a gallon of regular unleaded.

27:10We'll have more on that in just a moment as Morgan Brennan speaks with the National Energy Dominance Council Executive Director, Jared Agin. Well, checking some of this morning's latest headlines, the Senate is set to hold a key procedural vote on the Clarity Act later on today. The bill, which saw the House version pass more than a year ago, would establish a new regulatory framework for cryptos and other digital assets. The measure will need Democratic support to overcome a filibuster. Senator Mitch McConnell returning to Capitol Hill yesterday for the first time since being hospitalized three months ago.

27:43McConnell says he has assured Senate Majority Leader John Thune that he will do his best to be present for votes when Republicans need him. McConnell is not seeking reelection and will leave office later on in January. The Trump administration has overturned Biden-era greenhouse gas requirements for power plants. The rules had required that existing coal plants and new natural gas plants control 90 percent of their carbon dioxide emissions. China's industrial production accelerating last month, rising more than five percent from a year ago, topping expectations fueled in part by the country's AI driven tech boom.

28:20and more than 25 million people tuned in for the kickoff to NFL's season opener on NBC and Peacock. That's according to the Comcast-owned network's sports division. The Super Bowl rematch of the Seahawks versus the Patriots was actually down about 12 percent from last year's opener. Meanwhile, Netflix revealing its stream of the Rams 49ers game in Australia averaged 18 and a half million viewers in the United States. Well, turning back now to the energy markets, the price of oil continuing to climb higher, holding above that$100 mark per barrel. This as G20 energy leaders are gathered in Houston, Texas, talking key matters, including the ongoing fuel disruptions stemming from the Iran war.

29:04That is where we find our own Morgan Brennan, who's joined by a very special guest. Over to you, Morgan.

29:12Morgan Brennan: All right, Dom, thank you. You know, it's interesting you just talked about the news regarding changes in greenhouse gas emissions. That's news that came from here, from this G20 energy abundance ministerial. We're expecting more news, more deals throughout the next couple of days. And joining me now is Jared Agin, the executive director of the National Energy Dominance Council. It's great to speak with you. I think we have to start right there. What should we be anticipating? What should investors be anticipating from here? Yeah, well, the difference about this G20, it's very much in what President Trump likes to see, deals.

29:41This is all about deals that are going to help the American people and help our allies around the world. So what's different here is we've brought three different departments to this G20 on energy abundance. So you've got the EPA, you've got the Department of Interior, you've got the Department of Energy all represented here, the secretaries and the administrator all here, and we're here to work deals. So you're going to hear announcements from the stage about tangible energy deals to help drive down costs in the U.S., create jobs in the U.S. and onshore more investments from our global partners here to the U.S.

30:17The big announcement yesterday. So this is not here about, you know, coming up with just statements that aren't going to go anywhere. We had a huge announcement yesterday from EPA, again, about getting rid of these crazy regulations that is going to entice more development of energy here in the U.S., drive down costs in the U.S. And that's a theme throughout this. This is all about not about energy transition. This is about energy addition. This is about creating more energy here in the U.S. and more energy around the world. We are now the global leader in producing oil and gas. We are the global leader in exporting oil and gas.

30:53And that's been a huge theme of the first day, and it's going to carry through in the conversations today.

30:58Morgan Brennan: Yeah, and certainly when you talk about that, I mean, it sounds very exciting. It also sounds like it's going to take some time to see some of this investment realized. So in the near term, when we are talking about diesel at a record high,$6.27 a gallon, according to AAA today, gas prices that are higher, crude above$100 a barrel, what can be done near term? Yeah. Well, it's all about refining. The issue we're facing globally is refining capacity. So you've got we're about 100 percent refining right now here in the U.S. of you looking at how much we can refine. You look globally at what's happening around the world in Ukraine and Russia.

31:35You've got some refining offline. You've got China taking some exports offline, which which takes some of the refining capability offline. And then obviously issues in the Middle East of of refining capacity down. But here in the U.S., what can we do? This is why the president brought the top refiners to the U.S. You've got 20, 25 years of Democrats trying to shut down refining here in America. And here we are trying to bring refining back. And so there's levers we can pull. The president's looking at the Defense Production Act. What can what can be used to not only streamline some regulations?

32:10So in some states, they have burdensome regulations that is preventing additional refining. And we can put some short term investments that could help boost refining in the in the next six months. And so building new refineries takes a long time. But some of the refining that we have now, if we can just give them some investment and they can boost some of their infrastructure, some of their storage, they can do more refining in the next six months or so. And then, again, if you can ease some of the state regulations like California has, which has killed refining over the past 10, 20 years, that might help our refining in the state of California as well.

32:47Morgan Brennan: Yeah. And California, I think it seemed to refineries closed to your point just since the start of this year or over the past year or so. So you're going to be meeting with the Saudis here. A lot of focus, not just on what's happening in the Strait of Hormuz, but also now what is happening with the Houthis and Bab al-Mandeb and the East-West pipeline that's closed as well. Yeah. Well, again, this is about diversifying how we get refined product or crude product out of the Middle East. So you want to diversify how you can do that as much as possible. You want to de-emphasize the Strait of Hormuz in the long term.

33:20Obviously, the president has focused a lot on getting the straight open, but we want to have more infrastructure, more pipelines through that whole area to get product out of the area. We've seen this in Europe over the past year where we looked at how do we build more infrastructure to reverse the flow of natural gas or LNG so we can send U.S. LNG into Europe, and so it's not coming from Russia down into Europe. We need to look at that same type of system of the U.S. quarterbacking an overall effort where we can get more diverse flows through that whole region. So if that's the east-west pipeline building more capacity there, it's also pipelines going up into the Middle East or up into the Mediterranean through the Middle East.

34:03And so you don't want any one point that can be attacked. You want multiple areas so that we can get as much out as possible and diversify the flows as much as possible.

34:14Morgan Brennan: You've been one of the key officials on the front lines of reopening and normalizing relations between the U.S. and Venezuela and the role that oil will play all of this. So how quickly can Venezuelan oil actually ramp up and come online to help offset some of the dynamics that we're talking about? It can go pretty fast. And so you've already seen, obviously, Chevron expanding operations there. You've seen some of the incumbents there, like ENI, the Italian company that's been there. They're all ramping up fast. So they just announced deals a couple of weeks ago. They're already sending more rigs down.

34:48They're already producing more. But one of the great things about being here in Houston is we were at the center of the oil and gas universe for for America. We had a huge event last night with industry. A lot of people coming up to me. They're going to meet with the Venezuelan delegation that is here in town. They're ready to go. So so what they're telling me is we can get rigs down there like the next day once we sign deals. And so one of the differences, President Trump wanted a strong Venezuela delegation here to meet with our industry, to meet with our secretaries who are here. So we've got ministers that are focused on hydrocarbons here.

35:25We've got ministers on mining here. We've got the finance minister here as well, all from Venezuela. So all those conversations are going to happen over the next 48-hour period. What's great, too, is not only are these conversations starting here, it's kind of a two-week block where we're going to have delegations here. We've got the U.N. in New York next week, so we've got a lot of international groups coming in next week. And so these conversations are going to happen this week. We're going to get some deals over the line. When we leave here by Wednesday, we're going to get announcements out when it comes to Venezuela.

35:56But we're not going to stop. We're going to do this through next week when we've got all these international delegations up in the U.N. next week, too. All right.

36:03Morgan Brennan: So the beginning of the conversation. I think you and I will be meeting next week as well. Yes, exactly. The executive director of the National Energy Dominance Council. It's great to be here with you. Appreciate it. Thanks, Morgan. This is the beginning of the conversation here on CNBC as well today. Dom, a little bit later this morning, 1130 a.m. Eastern, we'll be joined by U.S. Energy Secretary Chris Wright as well. And later today, we'll be speaking with the Secretary of the Interior, Doug Burgum, too. So we'll be covering all of the news as it's coming out of here throughout the day and speaking with folks and continuing this conversation and building on it.

36:35Morgan Brennan: Back over to you. All right, Morgan, Jared, thank you very much for the conversation. We appreciate it. We'll see you throughout the course of the day today. A lot more to come here on Morning Call, including more on those fresh fears around the AI trade and the ripple effects shaking out in the tech sector. Morning Call is back after this. All right, welcome back. Checking the cybersecurity trade after shares of CrowdStrike hit an all-time high yesterday. Right now, those shares are off by just about a percent. But again, all time high yesterday. CrowdStrike and others were some of the top performers in the S &P 500 yesterday as the rest of the AI trade fell very sharply.

37:08Taking a look at those stocks in the pre-market trade right now, CrowdStrike, Fortinet, Palo Alto, CloudFerr, Zscaler all giving back some of those big gains from yesterday. Cyber's move helped the software sector outperform the chip trade by the largest margin in history, according to data from Dow Jones Market Data. Taking a look this morning, the iShares expanded tech software ETF is now going down after a big gain yesterday. Meanwhile, the iShares semiconductor ETF, ticker SOXX, is relatively flat after a big drop yesterday. We're back after this. Welcome back to Morning Call. Time now for your call sheet where we look at the topics striding the trading day ahead.

37:46The crew members assembled today are Ryan Dietrich of the Carson Group. He's also a CNBC contributor. There's also Gina Martyn Adams of HB Wealth and Kevin Maughan of Henyon and Walsh. Thank you all for joining us for the morning call sheet here. Let's start with our first topic, which has to be these days, the yield story, because, you know, it's now going back. We've hit the superlatives. It was the highest since 2023 at one point yesterday. Now it's the highest since 2007. So I will start with you, Kevin, because you make a living managing a lot of bond portfolios. So this yield story, I'm going to say I'm going to ask this question.

38:25Is five percent a level where people are saying, I'll take it back up the truck 10 years, five percent? I'm good with that. Yeah, it's becoming a level where investors are starting to become a lot more attracted to. Remember now that the 10 year yield has reached levels we haven't seen since 2007. And I would argue, Dom, that the bond market right now is doing a lot of the inflation fighting work on behalf of the Federal Reserve, which is almost what Chair Warsh wants. He wants the bond market in the market reacting to data as opposed to speculating on what the Fed may or may not do. And that's pretty important, especially considering what's going to take place tomorrow.

39:03Gina, how exactly do you view the rate story vis-a-vis the broader market? If we have a situation where rates are rising with the speed that they have, multiples do get compressed. So is this a story where the equity markets are reacting normally to what's happening with the bond market and rates.

39:22Morgan Brennan: Yeah, I think this is actually a great point and one that we've been making all year. The equity market has been derating as rates have been rising. Over the course of the summer, we saw the equity market multiple fall, a couple of turns even, as rates were rising and earnings were rising much faster than prices. So when you look in the grand scheme of things, the valuation levels of the equity market are already reflecting an expectation that rates are rising. This is why markets were able to sustain the rate rise up until September. I think what we're experiencing today in September is more about seasonality than anything else.

39:54Morgan Brennan: We tend to have weak Septembers. We came off of an incredible earnings season in July and August. So we're naturally experiencing a bit of dearth of information that's supporting stocks at the moment. And we're contending with a lot of rate volatility, a lot of uncertainty with the Fed, a lot of changes in oil prices, now a little bit of AI. In environments where we don't have that earnings support, we tend to lean on rates, and rates are rising, so you're seeing valuations compress. But longer term, the market has been acting very, very rationally. Normally, and some would argue there. Frankly, I think we were talking about 5%.

40:29Morgan Brennan: We were talking about 4 % in the same fashion a few years back. We'll probably be talking about 6 % next. We're in a long-term repricing cycle in the bond market. The equity market has absorbed it well because of earnings. All right. So, Ryan, I was going through my ETF screener yesterday and looking at a bunch of high yield funds that are now at the lowest levels that they've seen for the past year plus at this stage. So we are seeing a bit of that pressure building up in certain parts of the credit market. Is it concerning from a charting technical perspective to see some of the weakness that we've seen on that credit side of the equation?

41:07First off, thanks for having me back, Dom. Good morning, everyone. Great conversation. Very quickly, what Gina just said. This is options expiration in September. Go back and look at history. This is one of the worst weeks of the year. So a little indigestion here wouldn't be a shock. But getting to that, we have seen the nominal price of some of the high-yield ETFs weakened, yes. But I think what's fascinating on a relative basis, look at high-yield relative to intermediate-term bonds, Dom. High-yield is still actually outperforming. If you look at high-yield spreads across the curves, we're not seeing a lot of stress in high-yield spreads either.

41:39So I'm not saying things are perfect, but go back in history. When you see those spreads start to increase, like early 25 and early 26, that was a warning sign. Maybe something's off a little bit here. We're not seeing that. So all in all, I mean, similar to what the conversation just was, we've said all year, an inflationary growth environment here at Carson. We said the economy is going to grow nicely, inflation between 3%, 3.5%, and this is still a bull market. We haven't changed our tune. And that's, I think, what's happening here. All right. So, Gina, that re-rating is also affecting certain parts of that equity market.

42:08Normal, normalized as it is right now. But A.I. specifically, that's our next topic, because those rate stories are now translating in some way to the narrative around what's happening with A.I. and the momentum there. Are rates going to be that thing that derails the A.I. trade?

42:24Morgan Brennan: I actually think that no. The answer is no, but broadly, mostly because AI is in a story of give and take and cyclical rotation inside the AI trade. We may be moving into another period of time in which the AI spending beneficiaries underperform the AI spenders because of the news that we got yesterday. That doesn't necessarily mean the AI trade is over. It just means leadership inside the AI trade may change a little bit in the near term. I do think also something to keep in mind is if the Fed does tighten rates as anticipated tomorrow, that may calm the bond market's nerves. And this is, I think, an underappreciated aspect of what's been going on.

43:03Morgan Brennan: Part of the reason why rates are rising is because the bond market is begging the Fed to tighten. And the point when the Fed starts to tighten, we might start to see a little bit of a period of calm emerge in the bond market saying, OK, the Fed is actually on the case. The Fed is not losing track of the longer term sort of perspective. and we might see the bond market calm down. I do think that that's an underappreciated possibility later this week and into next week. All right, Kevin, what do you think? Yeah, I find it odd that investors continue to poke at this perceived AI bubble, almost hoping it's going to burst, whether it's software, whether it's semis, whether it's the data centers.

43:38We saw a nice rotation take place yesterday from semis to software. I think that's going to continue to play place over the course of the AI revolution as we see more rotations within the entire AI ecosystem. But I still believe if you follow the money, that's where you're going to find growth opportunities. Look at those receiving the money as opposed to who's spending the money for bigger growth today. All right. And the last topic that we have today, and Ryan, I'll go to you for this one first. Energy markets are, of course, in focus. Maybe some would argue the bigger driver of the interest rate story right now.

44:09How exactly does that energy trade shake out for the last part of this year? Well, I mean, you're right. I mean, we've seen one of the highest correlations ever, right, between crude oil and the 10-year. All in all, we're not surprised to see crude oil doing this. I mean, this is a commodity super cycle. I know it's kind of cliche to say that, but in a way, crude oil is playing catch-up with a lot of those other commodities that have been going higher in this inflationary growth environment. So our base case is, listen, you want to have a diversified portfolio, like Kevin just said, some growth over here.

44:36We still like tech. I mean, that rotation, right, a 10 % outperformance yesterday from software to chips, that baton being passed. So own some growth over there, but you really still need to have, we have managed futures. We have some energy exposure, some commodity exposure, some gold exposure. So some other stuff in your portfolio as you're made overweight equities, but underweight bonds, how we see it, Dom. Kevin, how do you view energy as a portfolio play? Yeah, the longer that oil prices stay above$100 a buyer, the higher gas prices are, the higher diesel prices are. Remember, every product that we purchase gets delivered to us ultimately by a truck.

45:07That truck needs diesel prices. That could slow down the economy. So we do need to see some reprieve as it relates to oil prices. But I still question going back to the Fed meeting tomorrow, if they raise interest rates by 25 basis points, what is that going to do to open up the straight of Hormuz or lower oil prices? I think it would be a mistake for them to raise tomorrow, although they likely will. Gina, quick last word. Energy, overweight, underweight.

45:31Morgan Brennan: We're overweight energy. Our sector scorecard has been overweight energy, in fact, all year. And not in light of, not instead of tech. I think this is the interesting call right now is you've got to have both energy and tech. All right. Gina Martin-Adams, Kevin Maughan, Ryan Dietrich, thank you guys very much. We appreciate it. Futures, again, solidly lower. Thanks for coming here again. Your call is important to us. Please hold for the next non-existent representative. Ever get a pit in your stomach when you realize your afternoon is about to become a bureaucratic cage match over a bill? Someone will be with you shortly.

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