Morning Call 9/21/26

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1:00Morgan Brennan: Oil back below$100. I'm Morgan Brennan, and this is your Morning Call.

1:18Morgan Brennan: Good Monday morning. Let's get a check on U.S. stock futures and what is sure to be a very busy week here with the Dow coming off of its third straight negative week, its worst weekly performance since late March. It was a mixed picture overall for the average in terms of weekly performance last week. And you could see attempting gains here to start the new trading week. S &P poised to open up about six-tenths of 1 percent. The Dow of about half a percent, I guess about six-tenths of 1 percent. And the Nasdaq poised to open higher to the tune of 1 percent. Let's get a check on treasuries with the 10-year holding just below 5 percent right now.

1:49Morgan Brennan: You could see U.S. 10-year treasury yielding 4.95 percent. Fed-sensitive two-year treasury 4.72 percent and the third year treasury 5.29 percent. The real story last week, especially amid that Fed rate policy decision, has been the yield curve flattening. It's actually its tightest level since the start of this year. We're going to take a look at the dollar index, too, right now because the dollar is firmer against other major currencies for the most part. We've been particularly focused on dollar-yen trading, particularly after that BOJ decision that we got last Friday as well. You can see dollar index level right now is 131.

2:25Morgan Brennan: And if we turn to the energy markets, oil prices are under pressure with WTI back under$100 a barrel right now. And this after President Trump and Iran spent the weekend exchanging new threats with the president here saying that in an interview that Tehran should make a deal or face the potential of being wiped out. Meanwhile, Yemen's Houthis are claiming responsibility for an attack on Saudi Arabia's capital this weekend. That attack appearing to target a jet fuel storage facility at Riyadh's airport, marking the first direct attack on the capital in months. Let's get to the very latest with our Dan Murphy in Abu Dhabi.

3:01Morgan Brennan: Dan. Hey there, Morgan. Good morning. Well, a new week here and a new escalation risk for the markets. Houthi missiles and drones targeting Riyadh over the weekend, really putting the focus squarely back on the regional conflict and how President Trump might respond. The Houthis saying they hit sensitive sites in the Saudi capital. Saudi authorities say they intercepted a ballistic missile after smoke was seen rising near King Khalid International Airport. President Trump telling Fox News he is in deciding mode on Iran and that very big things could happen soon. And the New York Times also reports today that he's been wavering over Saudi requests for U.S.

3:42strikes against the Houthis, at one point telling the Pentagon to prepare options before pulling back again on Sunday. Now, all of this also coming ahead of what is a critical week of diplomacy. President Trump meeting with Gulf and Arab leaders at the U.N. General Assembly this week, where the next phase of the conflict is really going to be front and center. President Trump said he would probably be open to beating Iran's President, Mashoud Pazeskin on the sidelines of the summit this week. And Iranian state media today has confirmed he is likely to attend. So that really leaves the next phase of the war and the oil market risk hanging in the balance ahead of what is really going to be a really important week on the war front, Morgan.

4:24Morgan Brennan: Yeah, absolutely. And we're going to be watching all of that here from the sidelines in New York City with the General Assembly meeting and everybody descending onto Manhattan. Dan, what I can understand is if you've seen this escalation, this broadening of this war, why we see crude prices, at least here in the U.S., back under 100 bucks a barrel. Exactly. So WTI pulling down today. Brent also off its most recent highs. And there's probably two reasons for this, Morgan. I would contend the New York Times report suggesting that the president wouldn't be going ahead with additional strikes on the Houthis on behalf of Saudi Arabia, may be taking some of the risk premium out of the pricing headline at the moment.

5:05And then the other factor is this JP Morgan report that also suggested flows through Hormuz may be a little higher than what the market believes. So at the moment, those two factors likely contributing to the downside pressure here. But again, a lot still in the balance as we come into the UNGA meeting through the course of this week. And exactly what comes from that could determine exactly which direction the war goes next.

5:31Morgan Brennan: All right, Dan Murphy, thank you. WTI trading below$99 a barrel and Brent trading around$102 a barrel. Let's take a look at this chart as we stick with energy. It's the breakwave tanker shipping ETF, which tracks the cost of transporting crude from the Middle East and West Africa. It's at more than, get this, 4 ,400 % year to date. It's the best performer year to date in terms of the entire ETF universe. It's a small ETF, we should note, but we wanted to show it to you because it's emblematic of the skyrocketing shipping costs for tankers as disruptions from the Iran war continue. And just over the weekend, as you have seen, increased reports of shortages of super tankers, which are also adding to this dynamic.

6:12Morgan Brennan: It's something we've spoken to Nordic Americans CEO about in recent months, too. You can see BreakWave Tanker shipping ETF, the BWET. It's up another 4 % right now pre-market. Well, let's turn to this weekend's meeting between Trump administration and China in New York. This was ahead of the big sit-down that's coming between Presidents Trump and Xi later this week in Washington. Both Treasury Secretary Besson and his Chinese counterpart touting the talks as successful, hitting on key areas including trade, investment, AI. On AI, Besson saying the two sides agreed to set up a dialogue on the technology and that the U.S.

6:46Morgan Brennan: has proposed a new notification mechanism for AI incidents that could affect national security. The notification for whether there are incidents, whether there has been something that rises up to a national security level from AI. because we think that just like with any cross-border activity, that moving from opaque to more transparency between the number one and the number two AI powers in the world is very important. We're going to hear more on the U.S.-China talks when Treasury Secretary Besant joins Squawk Box at 8 a.m. Eastern. We're also going to hear more about it here with the chairman of the XM Bank as well, just a little bit later in this show.

7:34Morgan Brennan: But let's see how Europe and Asia are shaping up. Steve Sedgwick is in London with the trade there. Steve, another busy, we talk about a busy weekend here in the U.S. It was a busy weekend in Europe as well.

7:47Yeah, absolutely. I mean, the news flow kept coming, didn't it, as well? Well, look, tech stocks, Morgan, are leading us higher today. They've boosted shares in Asia this morning with oil prices easing, as Dan was pointing out. Amid those reports, the more supply was finding its way out of the Gulf. Japanese markets, though, were closed for a national holiday today. The European markets, they're also pushing higher today as the tech momentum picks up. But here in Europe, we're closely watching Germany after the Chancellor Friedrich Merz vowed to stay in power despite his conservative CDU party suffering heavy losses in state elections over the weekend.

8:26Really important corporate story here that all our viewers will be interested in. And that's Novo Nordisk unveiling its strategic ambitions for 2030 ahead of its Capital Markets Day. Now, it's a Danish pharma giant, but of course, it is huge in GLP-1s. It was the originator, the OG of GLP-1s, and it said it's targeting more than$23 billion in pipeline sales by 2035 to increase its obesity customers by 10x. Increase its obesity customers by 10x. Extraordinary. But there was a lack of any significant short-term news, and that weighed on the stock this morning. The shares are at their lowest level since April.

9:05Look at this share, 268 Danish kroner. That is down 30 % on the year. At their peak in 2024, they were over 900 Danish kroner. Back to you.

9:15Morgan Brennan: All right, Steve Sedgwick, thank you. For more on the big week ahead and for the markets, let's bring in Storm Uru, LionTrust Asset Management Global Innovation Fund co-manager. Storm, it's great to have you back on the show. So what's an investor to do with all of these cross currents to work through right now, whether it's on the macro side, whether it's on the micro side, whether it's geopolitics, whether it's AI, how everything's intersecting right now? Yeah, Morgan, there's definitely a lot going on in markets, and it's definitely been the case this whole year. Look, we're using macro's cross currents with yields moving up, oil moving up, producing significant individual stock price volatility to really add to our key positions across our funds, areas where we see strong structural growth, strong fundamentals, and also, importantly, with high rates, strong profitability.

10:03So we're using market volatility to add to positions that we have very strong conviction on. There's no doubt that macro events right now are definitely driving markets.

10:13Morgan Brennan: So what are the areas where you would have strong positions on? And I ask that because when you look under the hood on the S &P 500, there are some cracks here, whether it's financials, whether it's in the transportation and freight area, a lot of focus right now in Dow theory for the wonks out there, the longtime market wonks out there and the divergence you're seeing between industrials and transports and those two charts. So where do you see compelling opportunity? Yeah, you did, Ryan. You know, it goes back to the playbook. You just don't want to fight the Fed. But what we're looking for is accelerating demand for the key investments we're making today.

10:44And so what we heard over the last couple of weeks is that we're moving to a gentle AI, moving from experimentation within enterprise to deployment. What we do know is that a gentle AI requires, you know, 10 ,000 times the amount of compute that single shot answer buys. What that means is that demand for compute is accelerating. Now, that's really important because what we saw over the summer is a reset in a number of stock prices across this part of the ecosystem. So, think Sandisk, think Bloom Energy, think NVIDIA, you know, really looking really attractive this particular point. So this is the area where we're adding to.

11:21And then when we saw the announcements over the last week about alignment and the extra compute that's going to require, this is just a wall of demand for compute coming through. And we just see this as a very attractive place to be putting capital to work today.

11:33Morgan Brennan: We talk so much about it from the US lens, but in a week where Trump and Xi are going to meet in Washington, are there opportunities to invest elsewhere, including in China? yes what we're seeing is we're seeing the building out of two different technology stacks one in the west and one in the east um the the the technology stack in the east is is a bit further behind but we expect that to accelerate over the next two years as as they are able to expand capacity of silicon particularly in china so but we're seeing opportunity sets right across the us europe and in particular, starting to emerge in China as we sit today.

12:11And then the trade negotiations that happened later on this week are given a very important part about underwriting the risk there.

12:19Morgan Brennan: How do interest rates and treasury yields factor into this entire conversation, especially when you could argue that equities are pretty expensive here right now? Yeah, you're dead right. And where we put capital work today, we need to be able to underwrite that with underlying profitability and accelerating growth. So where we're not looking at the moment is banks, consumer staples, areas of the markets which we see as being quite expensive and not having the underlying fundamentals that we require. So it really is a market where you just can't pay any price for any particular investment. The underlying valuation really matters.

12:55And that's the reason why we're looking for companies that have accelerating demand for the end products right now, operating leverage. And that means that as that demand comes through, have stronger than expected earnings per share growth. And also that these stock prices have come down from the 52-week lows from earlier in the year.

13:15Morgan Brennan: Storm Uru, great to have you on. Appreciate it. Thanks for starting the hour with me. Thanks, Megan. We got a lot more to come here on Morning Call, including more on that Trump-She summit and hopes of fresh deals around agriculture. We're going to talk to the CEO of Agco about what that could mean for his clients on farms across America. Plus, the chairman of the Export-Import Bank of the U.S. is standing by. He's going to lay out where Washington and Beijing need to find common ground when it comes to trade. And later, Anthropic tapping the brakes on its highly anticipated IPO when the company will now be making its public markets debut.

13:54Morgan Brennan: We've got a very busy hour still ahead when Morning Call returns. 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. T's and C's apply.

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15:26Morgan Brennan: Welcome back to Morning Call. Let's get a check on wheat and corn prices. Jumping on the back of this weekend's talks between the U.S. and China ahead of the meeting between Presidents Trump and Xi later this week. Treasury Secretary Besant and his Chinese counterpart giving a positive take on the sit down as investors look for signs that Beijing will buy more American agricultural goods. For more, let's bring in Eric Hansodia, chairman and CEO of agriculture machinery maker Agco. Eric, It's great to have you on the show. Welcome to you. And we were already getting reports that the Chinese are starting to buy more soy ahead of this sit down.

15:58Morgan Brennan: When you think about some of these dynamics, these trade dynamics, what does it mean for the agricultural market and for demand for your products? Yeah, the biggest good to see you again, Morgan, first of all, thanks for having me on the show. The biggest thing that we look for is certainty and stability in farmers markets. There's been a lot of uncertainty both in their market access and their cost base over the last couple of years. And so any kind of long-term agreement would help farmers all around the world be able to plan better. The average age of their fleet is about the highest it's been.

16:31They're thirsty for our technology. And so more stability, more certainty would be the biggest outcome we're looking for.

16:37Morgan Brennan: Okay. I want to get into that thirsty for your technology piece of it a little bit more in just a moment. But it does seem like it's a perfect storm for American farmers right now and really for farmers globally. I mean, you've got record diesel prices, farmers on the front lines in terms of feeling the knock-on impacts of that. You have fertilizer shortages. You've got trade and tariff dynamics that continue to evolve here. You've got very intense weather with Super El Nino. And now you have higher interest rates, too. So what does that mean for this recovery that we've been hearing about, potential recovery we've been hearing about in the ag market?

17:13Yeah, you nailed all the top issues for farmers and then maybe add on top of that the uncertainty of how all these things will play out. So our focus is to do what we can do, manage for the farmer some things like labor through a use of autonomy, through input cost savings through our technology where we can do intelligent spraying and save the chemical, save about 60 % of the chemical for the farmer. And then our new data platform. It's got an AI agent embedded right into it so that it makes it easier for the farmer to understand over their last several years of data collection, where are their areas that they can farm more intelligently and make changes to their operation.

17:50So we're trying to help them with things like that to make more efficiency out of the existing operation since they're under so much pressure.

17:57Morgan Brennan: And when we talk about precision agriculture and all the investments into that and these new technologies like AI and what that enables all the data collection on the farm, You've got a partnership with Trimble, too. Does the case become stronger in an environment like this to invest in new products to be able to realize better cost savings moving forward? Yes. You know, there's this macro trend and the micro trend. The macro trend, there's 8 billion people going to 10 billion people. There's more biofuels and there's more meat in people's diet as the economies mature. Those are all demand generators for grain.

18:33And yet, farmers are not allowed to use more chemical, more land, more water. All the inputs are constrained. And so the only way to make that equation work out is to do farming more precisely, precision agriculture. So there's this long-term need to solve that equation through technology. And then in the short term, there's even more pressure right now because of the economic pressure the farmers are under. So that's why we have a dual-role technology business. One is putting technology on our new machines, which all of our competitors do too. That's kind of understood. But then we have this whole separate business that we call Precision Technologies Multiplied.

19:10And it's a tech business that creates modules to go onto existing machines and give them new capabilities, automate a feature. And we do that not only for our brand of equipment, but for all the farmers in the market, no matter what they've bought. So we'll put new technology upgrades onto competitors' machines to give that new capability. And that comes at a much lower cost point because the farmer can upgrade their product with that new feature instead of having to buy an entirely new machine. Many times there's a lot of mechanical life left, but this gives them access to the latest and greatest cutting-edge technology.

19:44Morgan Brennan: I want to go back to trade dynamics here and what it means in terms of manufacturing your products, whether it's from an interest rate standpoint and what it takes to finance them and sell them to farmers. or when we're talking about things like, you know, potential trade agreements between the U.S. and China or others with UNGA this week, how you're thinking about that manufacturing footprint and navigating some of those cost inputs in general? Well, a couple of things. One is we're always trying to drive down costs for our farmers around the world. We serve farmers everywhere. About 20 percent of our businesses in North America.

20:24and then we serve all the rest of the farmers all around the world. And so we're always evolving our footprint of where our supply base is and where we manufacture to try and access the lowest cost for our farmers. We've made several adjustments to optimize for the tariff environment, but it's moving fairly quickly. And so you have to be a bit measured and certain about what the future will bring. These are high capital investments, and we're still relatively low volume relative to industries like automotive or others. And so we've made many changes, but you don't wholesale change your footprint.

20:58In general, our strategy is to manufacture as much as we can on the continent where the farmers are. So that's why we've got footprint in Europe and South America and North America to as much as possible serve the farmers locally.

21:11Morgan Brennan: Okay. Eric Ansodia of Agco, it's great to have you on. Appreciate it. Great. Great to see you, Morgan. Thank you. Well, straight ahead, details on potential progress over Paramount's push to clear regulatory hurdles for Warner Brothers. First, though, let's get a check on SpaceX shares because it will make up 2.8 percent of the Nasdaq 100 starting today as the index's quarterly rebalance takes effect. That weighting is a sharp increase for the space and AI company, up from just 1.3 percent when it was added to the index in July. At that time, most of the shares were still locked up, limiting SpaceX's waiting even after Nasdaq changed its rules to let newly public large cap companies enter the index sooner.

21:51Morgan Brennan: And despite a market cap that currently sits at$2 trillion. So since then, SpaceX's float has surged from 639 million shares in the IPO to 1.8 billion and counting now. Why does all of this matter? A bigger weighting means more passive funds need to buy more shares to adjust their holdings, including the QQQ. This is one of the largest ETFs. And more than 200 other investment products that track the NASDAQ 100. That forces demand for the stock. You can see shares are up 1 % pre-market. We're right back. This message comes from Wise Business, the only account your business needs to scale globally.

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23:53Morgan Brennan: The S &P 500 will look a little different starting today. And going into the index, Bloom Energy. genetics company Illumina and water filtration company Everpure. You could see Bloom is popping on anticipation of that with trading this morning up 3.5 percent. Similar situation for Everpure. Illumina is under a bit of pressure. But on the way out from the S &P 500, Molson Coors, the trade desk and Builders First Source all will move to the S &P small cap 600. Well, let's get a check on some of the morning's latest headlines. President Trump says he'll appoint a new AI advisor and create a new AI force around the technology.

24:27Morgan Brennan: The president unveiling the plan on Truth Social Saturday, though, didn't provide further details about either initiative, although there have been some comparisons perhaps to the Space Force. The president's comments come as NVIDIA founder Jensen Huang suggests that the recent focus on AI regulation from major research labs is primarily an effort to sidestep existing regulations and laws. Well, sticking with AI, the Wall Street Journal is reporting that Anthropic is pushing back its IPO to November. Investors had expected the company to make its market debut next month. The apparent move comes as the AI industry deals with calls to slow its pace of development, including by leadership at Anthropic.

25:03Morgan Brennan: Meanwhile, the Financial Times is reporting that OpenAI expects to burn through nearly $280 billion in cash between this year and 2030. This as it ramps up spending on computing power and infrastructure. We're also watching shares of Paramount Skydance and Warner Brothers, jumping on reports of possible concessions by Paramount in settlement talks with California's attorney general over that merger. That includes a financial penalty if the company fails to make good on a promise to distribute 30 films per year in theaters and one and a half billion dollar investment in production in the state.

25:39Morgan Brennan: You could see shares of Paramount are up about six percent right now and Warner Brothers is up almost eight percent. You could see a settlement as soon as today, according to some reports over the weekend and a busy weekend in the sports world to Apollo Global reportedly set to get a 16 percent stake in the baseball franchise known as the Yankees after announcing a two point six billion dollar financing deal with the firm, making the Yankees the most valuable team in baseball. Also, some reports that you could actually see the caps for private equity lifted in this deal, too. So that would be meaningful.

26:14Morgan Brennan: Meantime, French soccer star Mbappe has ended a two-decade partnership with Nike to join Swiss sportswear brand On. On holding shares, getting a boost on the news. Financial terms of the deal have not been disclosed, but you could see On is up about one and a half percent. Well, still on deck, the chairman of the Export-Import Bank of the U.S. is standing by. We'll be talking that big meeting between Presidents Trump and Xi, what Washington needs to accomplish with Beijing when it comes to matters like trade and AI and how the XM Bank is working to navigate all that and finance all that. Also, we're going to talk a little bit about Greenland.

26:50Morgan Brennan: Morning Call continues next. Hi, Morgan Brennan. Welcome back to Morning Call. Let's get a check on U.S. stock futures this Monday morning. The Dow coming off its third straight negative week. Its worst weekly performance since late March and what was a mixed picture from a weekly standpoint for the major averages. You can see this morning right now we have a rally underway with all the major averages pointed to open higher. S &P poised for gains of 48 points at the open. The Dow up 319 points. The Nasdaq 315 points. Let's get a check on Treasuries, too, with the 10-year holding just below 5 percent right now.

27:22Morgan Brennan: You can see bonds overall firmer across the curve. U.S. 10-year Treasury yielding 4.95 percent. Fed-sensitive two-year Treasury, 4.72 percent. Really, what has been the story here has been the yield curve flattening. So we continue to keep an eye on that. Checking energy, too. Oil prices are under pressure, with WTI back below$100 a barrel. And then some. We're down about 1.8 percent right now, trading right around$98 a barrel. Brent crude is also lower, about 2 percent, trading just below$102 a barrel. This after President Trump and Iran spent the weekend exchanging new threats. So we continue to keep an eye there, too, as we have a very big week from a geopolitical standpoint, macro standpoint.

28:00Morgan Brennan: We're turning back to this weekend's talks between the Trump administration and China, though, ahead of Presidents Trump and Xi's meeting later this week. The two sides hitting on key areas during their New York City meeting, including trade, including trade. Treasury Secretary Scott Besson and U.S. Trade Rep. Jameson Greer revealing that the Board of Trade announced by President Trump during his visit to Beijing in May has been made operational, exploring the potential for lower tariffs on, quote, non-sensitive products. We expect that the types of goods you'll see in those lists are consumer goods, low-tech items coming in from the Chinese side, on the U.S.

28:38side, energy products, agricultural goods, potentially medical devices and other things like that. There is a world where you have a relatively small subset of American and Chinese goods that can be traded in a balanced way that are nonsensitive.

28:55Morgan Brennan: Well, for more, let's bring in John Yovanovitch, the chairman and president of the Export-Import Bank of the United States of America. Chairman Yovanovitch, it's great to have you back on the show. Welcome to you. Wow, we have a big week straight ahead. I think I am going to start with you, though, on what folks, what investors should expect from these U.S.-China trade talks and where XM Bank fits into all of that. Sure, Morgan. Good morning. It's great to be here with you. You know, what Secretary Besson and Ambassador Greer sought to do yesterday was really pave the path to ensure that the president has a productive series of talks later on this week.

29:28And, you know, As Secretary Besson mentioned, the overarching objective is to help maintain the stability that we've enjoyed over the past year, in addition to setting up an AI dialogue framework, which will be really important. So those talks went well, and we anticipate that the president will be successful later on this week.

29:45Morgan Brennan: Yeah, and of course, we're anticipating other dealmaking to happen, too, on the sidelines of the General Assembly meetings as well, including with allies around energy infrastructure and the like. So how to understand that as you are thinking about a reshaping of the global order and this idea of supply chain resilience? You know, this is going to be an incredibly busy week for us. You know, we've just come off a busy week as well, where we were in Minnesota on Thursday, opening up the first new iron ore mine in America in nearly 50 years on the Iron Range. And what we've demonstrated is that we can do what nobody thought was possible again, thanks to President Trump's leadership, vision, and more importantly, his unwavering commitment to reindustrializing America.

30:29And it ties back into what we were talking about a moment ago. How do we make America more competitive and more resilient? And domestic supply chain security is a huge issue. And when we talk to the people in Minnesota, and by the way, the Iron Range, Morgan, has been mining iron ore for nearly 150 years. Actually, the steel that was used to win World War II, to build America, came from this exact iron ore range. Now, they've been waiting for federal partners and people to help them unlock all that potential. And that's what we're very proud to do.

30:59Morgan Brennan: Yeah. I mean, you've been on the forefront of this reestablishment of supply chains domestically, critical minerals, rare earths, other types of metals, including iron ore here. Project Vault. How is all of that process going? Yeah, look, we're expecting to hopefully make some news this week with Project Vault and advancing that. But as you know, Morgan, all of this is foundational to the reindustrialization of America and to advance manufacturing again. And this is all having to do with how do we deliver the American dream 2.0 for another 250 plus years. And in order for us to manufacture again in America, we have to be able to iterate, to innovate.

31:37So we have to be able to make things here. And we believe that supply chain resiliency paired with, you know, an infusion of AI and advanced tools and advanced manufacturing is going to help make America competitive again.

31:50Morgan Brennan: As we go into this Trump-Xi summit, what does that mean in terms of U.S. reliance on China for some of these metals and minerals and materials? You know, the president's been very clear that we need to find ways for us to be competitive and resilient. And so whether it's opportunities like Project Vault, where we brought together the public and private sectors to help create shock absorbers in the event of shortages in some of these critical raw materials, or it's unleashing America's energy dominance, where we can help bring American energy molecules and technologies to every corner of the globe.

32:24All that value accrues here. It's no surprise, Morgan, that the states in America that are the largest energy exporters also enjoy the lowest cost of power and utilities. and all these things come back to how do we stay competitive and how do we stay resilient?

32:37Morgan Brennan: How does Greenland fit into all of this? We got this news of a deal over the weekend. It's expected to be inked and made final this week at the UN. We don't have the details, at least not publicly yet. It certainly makes sense from national security standpoint. And you can't have, you know, you can't have a new Golden Dome missile defense without that, arguably. But what does it mean from the supply chain side to and possible investment into things like critical minerals into Greenland? You know, we at the Export-Import Bank of the United States, you know, we have something called the Supply Chain Resiliency Initiative, which allows us to deploy capital in projects all around the world.

33:14So long as the critical raw materials, those minerals, Morgan, come back to the United States and help accrue supply chain security here. And so these things are super foundational, as you know, not simply for advanced manufacturing, but to ensure that the American warfighter has what he or she needs when they need it most. And so all of this plays into how can we ensure that American manufacturing, American companies and American technology is armed with the right approach.

33:43Morgan Brennan: So in light of all this, you just touched on it before, but AI, what do you see as the greatest risk to American AI deployment across the world right now? We're very grateful for the president's leadership on this point. He put together something called the Global AI Export Plan, which he called for in an executive order. We at Ex-Im were the first federal agency to actually change our policies, to modernize them. Look, we've learned the lessons of the past, whether it's telecom or other large recent innovations, where the rest of the world wants to partner with us, Morgan. They're constantly coming to us saying, how can you help us implement an American-led AI solution?

34:24And so one thing that will determine the success of it is can American companies and American technology play a leading role in bringing AI to every corner of the globe?

34:33Morgan Brennan: So in light of that and given the fact that you are the financing arm to implement this AI tech stack to allies and globally, is security now part of the conversation and what that looks like, internal regulation, things like that? Look, trusted technology, trusted vendors, this is something that we're laser focused on. And thanks to the great leadership of Michael Kratzios at the White House and our fantastic interagency partners across the Commerce Department, Treasury Department, State Department. You'll see a lot of movement and some announcements on that this week. Okay. John Yovanovitch, the chairman and president of the Export-Import Bank of the U.S., it's great to have you on the show.

35:14Morgan Brennan: Appreciate it. Great to be here, Morgan. Thank you. All right. We've got a lot more to come here on Morning Call, including investors not loving it when it comes to McDonald's stock performance lagging the market in a big way. Brandon Gomez lays out how the company plans to address those worries. Morning Call, we'll be right back. Welcome back to Morning Call. McDonald's heads into this week's Investor Day with a problem shareholders might not be able to look past. The stock has been lagging the market and in a big way. Shares are down 27 percent since their March high and are near their lowest level since 2024.

35:43Morgan Brennan: Brandon Gomez is here on set, joins us now with more. I know. Is the market loving it? Well, we'll find out on Wednesday. But Wall Street is waiting for evidence McDonald's can fix its biggest market, the United States. McDonald's U.S. same-store sales grew just eight-tenths of a percent last quarter, trailing competition like Burger King and Shake Shack. And the company has acknowledged its value messaging and execution have been uneven. Now, the brand that has long defined affordable fast food now has to restore the perception without asking franchisees to absorb unsustainable discounts. Now, that is The Balance CEO Chris Kamchinsky and new U.S.

36:17President Skye Anderson need to explain on Wednesday. The layout McDonald's next. The company's new strategy built around building better food, marketing, restaurant technology, remodels and improved service. Analysts I've spoken to are looking for a near-term bridge of promotions and personalized digital offers to secure the value narrative. Now, a longer-term plan for innovation in food is important with particular focus in chicken and beverage offerings, easier operations, remodels. The list goes on. There's also a growth test here. McDonald's has pushed its 50 ,000 restaurant goal to 2028.

36:50And investors want to know what next will cost and whether those investments can still deliver the free cash flow and returns the stock is built on. And specifically, when the turnaround in the U.S. starts showing up in results, Morgan. So again, a lot on the plate for Wednesday.

37:04Morgan Brennan: Yeah, I mean, in light of all this, we're talking about a little bit earlier in the show, there's cracks under the hood when you look at the stock market. And a lot of it is tied to economically sensitive parts of the market, whether it's Dow transports, whether it's the rollover we've seen in financials, but also the weakness we've seen in consumer stocks. How much of this is McDonald's specific story and how much of this is just pain across the restaurant space for a number of reasons in general? It's such a great question. And when you talk about to what's happening in retail spending, in addition to what's happening in restaurants and the food, there is sort of a split, right?

37:35You're seeing that K-shaped economy take hold. Now, the question is, how much of it is McDonald's specific. There's a lot of it that has to do with execution. Even the CEO has said the most recent $3 value meal promotion didn't resonate with consumers because a third of the franchisee owners weren't executing at the same level across the board. So again, we're going to hear some of those turnovers, some of those quicker triggers that could be pulled to turn around the stock. But there are some of these longer term factors at play that you're mentioning.

38:01Morgan Brennan: All right, Brandon Gomez, good to have you here on set. Appreciate it. Well, straight ahead, the morning call crew team up the trading day ahead, including the two things one member says are the key for interest rates. It's time now for your call sheet where we look at the topics driving the trading day ahead. Crew members today, Peter Scheer of Academy Security, Stephen Whiting of CIO Group, and Henrietta Trays of Veda Partners. It's great to have you all here. It's not just the day, it's the week ahead. It's a big one. Peter, I'm going to kick it off with you because it seems like we really have two big categories and they actually intersect, and that's geopolitics and AI.

38:32Morgan Brennan: What are you watching? Really watching what's going to go on with Trump and Xi this week, right? Do we come to any sort of agreement on where we stand on AI. Will we slow China down? I continue to be very worried about China flooding our market with cheap Chinese compute. That's an issue. I think we probably wind up getting good vibes from this. I'm not sure whether it's real, though, or not. How about you, Stephen? What do you think? Well, this is the week of geopolitics, of course, but we have to look two weeks out at what's going to happen with earnings season. And it's pretty clear that the estimates have been cut nicely ahead of these actual earnings results.

39:05It's most obvious in financials and energy. And I think we're going to see big beats yet again.

39:11Morgan Brennan: Henrietta, what are you watching right now, especially as we do also as we look across the world right now, we do count down to a midterm election. And we know that this administration is looking to get as many deals done as quickly as possible ahead of that. Yeah, I'm not expecting a ton from the U.S.-China meeting. The focus should be on the Board of Trade, which USTR Greer and Treasury Secretary Bessent have really been touting as their shining star from this meeting. But I want to be clear that when we see headlines that tariffs are going to be reduced, it's going to be across roughly$30 billion worth of trade, which equates to 7 % of trade between the United States and China.

39:48So these are going to sound like big wins, but I think it's the calm before the storm as we get into the post-election period, as you point out, Morgan, where we're really going to be in an era of a lame duck presidency, which is when you see the president do even more on foreign policy, more on tariffs, more on war, in fact. And that's going to be the hallmark of everything that comes after November 4th.

40:10Morgan Brennan: I do want to get your thoughts, Henrietta, because I know you've written about this quite a bit and including this morning on this idea of a diesel export ban. I was at the G20 Energy Conference last week, you know, spoke to all the folks there on the ground from the administration, including Secretary Burgum, Interior Secretary Burgum, on camera, who said it's very unlikely that we see that. Why do you continue to believe it could actually be enacted? Desperate times call for desperate measures. We're at$4.48 in average gasoline right now, going into an election, and I'll put it into numbers for you.

40:40When you have one-party control in Washington, historically, the majority loses 21 seats in the House. When gas prices are rising, they lose 32. We are rapidly approaching$5 average gasoline. And Congress has absconded. They have left D.C. That leaves us with only one option, just the White House. And so then you're necessarily dealing with more extreme things. The president doesn't have the authority to bring down the gas tax, for example. But what he can do is impose an export ban. And you're seeing support pop up in Iowa, Tennessee, Leader Thune in the Dakotas. The Republican Party is asking, begging for some sort of executive action to bring prices down.

41:22And you can either end the war and reopen the strait, which doesn't seem likely, or you could start to do outside the box thinking like impose an export ban.

41:29Morgan Brennan: Okay. I know there's a lot of talk about invoking the Defense Production Act here too, to do more with the refining capacity in the near term here in the U.S. So that's another thing to watch. In light of all of this, how important our energy prices to the broader markets right now? Peter? No, I think we have to keep watching diesel. That does have the potential to flow through. I do like the fact, though, the president's really kind of pushed past this idea that this has to be done by the midterms. I think that takes away some pressure Iran might have felt. So I think that allows us to put more pressure on, threaten them again more militarily, have things come to play.

41:59So I think we're pushing them hard. And I think it's actually good if he says, hey, I don't care about this. I'm going to let this go past the midterms, because that takes away a pressure point I think Iran thought they had. I'm optimistic. We're going to keep pushing this. We'll get through this. And I think as a nation, you know, we hate to say it, but we almost have to suck this up, deal with these higher prices if we are ultimately going to get a real win there. And I think that possibility is growing. The economic sanctions are working. The blockade is working. We're getting some oil through.

42:23We are doing a lot. I think doing an export ban would be one of the worst things we do. It would kind of take away trust from dealing with U.S. companies. I would avoid that, deal with this, and continue to push Iran and get these economic sanctions. and hopefully Xi says something that says, OK, we're not fully behind supporting Iran's economy, that could be enough to tip the scales.

42:42Morgan Brennan: Do you think we're going to see any sort of meaningful dialogue or deal making, whether it's between the U.S. and the Saudis or some of the other Gulf leaders that are going to be in New York this week or even a potential meeting between the U.S. and Iran? I think there is that possibility. I think this is kind of grinding on everyone. I don't think we will necessarily get this big, huge win, but I think we're close enough to a point where Iran probably has to capitulate on enough If we can go back to some sort of MOU, maybe a better MOU than before. And everyone's kind of writing off Trump in the election.

43:08It's still two months away, right? There is plenty of time if we can fix oil, address this. And I think Iran's been under a lot of pressure. There's a lot going on. The Hooties did raise the stakes to us. I'm optimistic we can push this and get better outcomes.

43:20Morgan Brennan: Yeah. We haven't even mentioned Greenland. We'll come back to that in just a second. But Stephen, I want to get your thoughts on this whole conversation, especially as we look not just to the energy markets, but also to the bond markets and all the activity we've seen there as of late? Well, look, I think that one of the most troubling things that we heard out of Chair Warsh's statements was that geopolitics was a guide to raising interest rates. Just take a look today. What could happen in geopolitics? As you just heard, Iranian officials are in New York. It's possible these things can change.

43:49Interest rates have risen 100 basis points out for every tenor, out to 30 years. So if you really think about it, this will outlast the energy shock. And so we've been in a place for many years where it was possible to look through energy shocks. Now, the correlation that we've seen between bond yields and oil is troubling, but you can see it can cut both ways. We can also have some relief.

44:10Morgan Brennan: So, Stephen, how do you layer what we're seeing with the AI trade and what I would argue is a net negative weekend in terms of news reports, whether it's OpenAI or Anthropic or even a data center in New Mexico tied to Oracle. Well, this is the big issue. We are living through a boom. We've seen a massive rise, 65 % growth in IT investment heading into its third year. And unfortunately, it just will not stay there. These companies don't exist just to spend this money. So eventually there's going to be a drop and we're going to be in a period in which interest rates will be too high for that economy, the one that has the payback for the investment boom.

44:51But that's not now. But it's really what investors will ultimately have to watch. It could be as soon as 2027 that we're going to start to see that.

44:59Morgan Brennan: Henrietta, I want to get your thoughts on what we're seeing with AI, because it's been so busy. And then in the background, you have the whole debate around so-called pacing the frontier. What a deal, if we get some sort of deal or guidelines between the U.S. and China could look like, what that could mean, and just how to think about this from a geopolitical standpoint in terms of competition overall. You know, my background is D.C., and what I would report to clients and investors is that D.C. is nowhere on this. They don't know how to tax AI. They don't know how to regulate AI. They don't know what to do on data centers, and they're taking the lead from the states.

45:31And the states have a hodgepodge of answers right now, and they're really taking their cues from the American public, which is, hey, not yet too much. They're taking our electricity, they're taking our water, the noise pollution is too high, just pump the brakes. And that's what the federal government is seeing. So there's going to be efforts in the Senate to at least hold a hearing on that this week. But I think this is a 2028 presidential agenda story, and therefore you won't see legislation until 2029.

45:58Morgan Brennan: We got 15 seconds. MetaConnect, is that going to matter in light of all this this week? You know, I think it's a secondary thing. I really do think it comes down to where we're headed on compute. It's such a big part of the GDP, that growth. I do agree with Besant that there are national security reasons we need to build the data centers out. We're starting to see these companies take steps towards public relations to get that going. I think that's urgent for the country. It's something important to do. I think we get that. And I love energy stocks. They are going to do well because we need so much energy.

46:26Morgan Brennan: All right. Thank you to our call crew. Great to have all of you here. The quarter pounder with cheese is made with 100 percent 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.