Morning Call 9/9/26

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1:00Morgan Brennan: A hundred dollar oil. I'm Morgan Brennan, and this is your morning call.

1:17Morgan Brennan: Good Wednesday morning. Let's get a check on U.S. stock futures after the Dow's worst day in more than two weeks with all the major averages finishing lower yesterday. Back to back losses. As you can see, it's a mixed picture here this morning. S &P is poised to open basically flat, down two points right now. Dow down 91 points. And the Nasdaq flat to the upside, poised to open up a single point as of right now. Well, let's get a check on the Treasury market ahead of a big buyback announcement today. We're also going to get a 10-year Treasury offering. You can see, speaking of 10-year, U.S. 10-year Treasury yielding 4.8 percent right now.

1:52Morgan Brennan: Fed-sensitive two-year Treasury, 4.4 percent, and the third-year Treasury, 5.25 percent. We're also going to get a check on the dollar index, which is at the lowest level since late August. We've seen the yen strengthen considerably here against the dollar. So if we just do a check on the dollar index levels, 98.78 this morning. We're also keeping an eye on copper. Dr. Copper hitting an all-time high in trading yesterday, taking a little bit of a breather here this morning. You can see copper that's traded here in U.S., the U.S. futures. down about eight-tenths of 1 percent right now. Around the world, though, it's a mixed session.

2:27Morgan Brennan: Overnight in Asia, KOSPI up nearly one and a half percent. And the Hang Senn down, closing down fractionally. Japan's Nikkei as well down fractionally. Europe just getting its trading day underway, though. And as you can see right there, it's some red on the screen here, with the DAX down about eight-tenths of 1 percent, FTSE down fractionally, and the French CAC down 1%. Let's turn to the energy markets, because this is really driving the story, the market action this morning underneath the surface. Price of Brent crude hitting 100 bucks a barrel this morning. First time we've seen that since July as Iran and the U.S.

3:00Morgan Brennan: ramp up their kinetic attacks in the region. You can see Brent crude is up 2.5%,$100.35 a barrel right now. U.S. crude is not far behind either. It's hovering right around$94 a barrel. And let's get to Dan Murphy in Abu Dhabi with the latest. Dan. Hey there, Morgan. Good morning. Well, energy, higher oil prices, Brent, back to triple digits here, certainly a key catalyst as we come into the Wall Street Open. And if you haven't seen it already, take a look at this extraordinary vision released from CENTCOM overnight. CENTCOM saying U.S. forces destroyed five IRGC-linked crude carriers on Tuesday after it said Iranian forces attempted to target a U.S.

3:44Navy warship with ballistic missiles. Now, four of the tankers were in the Gulf of Oman. There was a fifth tanker that was near Karg Island. And this brings the number of Iranian crude carriers hit by U.S. forces to eight now, a huge number. CENTCOM, of course, saying these tankers are all part of a shadow network funding the Revolutionary Guard and its proxies. So the U.S. taking them out, as you can see here, and hitting Iran where it hurts. Now, what's interesting as well, Morgan, is that there's a Wall Street Journal report today that says Iran's attempts to hit these American naval assets have failed.

4:22But the journal says they've also been pretty close calls. And that reportedly is raising the alarm among some U.S. officials who fear the regime, this is Iran, may be using more sophisticated weapons now and could even be getting assistance tracking the warships from China or Russia. So that's important to watch. The links here obviously still continuing to evolve. Nevertheless, Iran also tried to fight back, which is part of the reason we've seen oil prices pop here. Jordan saying 20 ballistic missiles were fired from Iranian territory towards its country this morning. Its air defences intercepting 18 of those missiles.

5:03Two of them fell in unpopulated areas and there were no casualties reported. And then separately as well, Houthi missile and drone strikes have also targeted four cities in southern Saudi Arabia this week. The Saudi-led coalition saying 73 people were wounded, including women and children. The energy ministry in Saudi Arabia saying fires broke out at oil facilities and utilities. That has forced a temporary suspension of some operations. We know Jezan, obviously a really critical Saudi refinery, was reportedly among those targeted earlier this week. Jezan, home to that 400 ,000 barrel a day refinery operation.

5:45The full extent of the damage there still unclear. But of course, all of this feeding into the higher high for oil this morning, Morgan. Back over to you.

5:53Morgan Brennan: Dan Murphy, thank you. And of course, diesel at record highs as well, speaking to the refinery capacity piece of this. Well, for more, let's bring in Amrita Sen, founder and director of Market Intelligence at Energy Aspects on the CNBC Newsline. She's joining from the Asia Pacific Petroleum Conference in Singapore. Amrita, we appreciate you making the time for us this morning. Brent, back at$100 a barrel. Make sense here? Yeah, absolutely. Thanks for having me. And, you know, this is what we've been telling our clients for some time now, that crude is poised to move sharply higher. And I think the biggest driver, of course, is escalation in the Middle East, like Dan has been highlighting.

6:28But the pace of crude drawdowns in inventory has just been eye-watering. Over the course of the last two, two and a half weeks, really since middle of August, we have drawn down over 130 million barrels of crude oil. We've managed to balance crude through most of this crisis by drawing down inventories, China wasn't buying. But look, I've been on the road. I've been in China just last week. They are buying now, right? The demand's going up. We can't keep runs down forever, given how tight product markets are. And now as soon as runs are starting to pick up, you've seen a massive over-tightening in crude markets.

7:06So we are really in a tipping point. That's something we've published two weeks ago, calling that this is a tipping point for crude. I'm not surprised crude's at 100. I do expect it to continue going up.

7:15Morgan Brennan: When you talk about a massive drawdown in inventories, like the one you just laid out is how does that compare to historical reference points? And when we have seen massive, massive drawdowns in inventories like this, what has it typically meant in the near term and in the longer term for the crude market? I can't even give you historical reference from that's partly the problem. I'll give you overall numbers because you don't draw like since the conflict began, we've been drawing at three million barrels per day on average. But what I'm telling you, the pace of draws has been more like four, four and a half over the last couple of weeks, right?

7:49And I think the issue has been, look, the macro investors in the US, all these clients of ours say, oh, we don't care about crude. We've got AI. You know, crude doesn't go above 100. We've been highlighting, well, it is product prices, right? Diesel is above$200. That's what feeds into inflation. That's what's driving the 10-year. It's not crude. But the challenge is that the reason we've not seen crude go up, there's been a buffer, but because refineries have been hamstrung, they haven't been running. But if refineries do decide to run a bit more, well, then there's not enough crude either, right?

8:20So we just do not have any buffers left. I think that's the main thing I would highlight. We came into the conflict with 400 million barrels of excess. Clearly now that's gone. Since the start of the conflict, we've now drawn down 550 million barrels of crude oil inventory. And the SPR, the U.S. had pledged and other countries, we've absorbed all of that, right? There's not that many bullets. Maybe Europe has a bit more for diesel in the winter. They haven't released everything, but we really don't have that many bullets on crude oil left.

8:49Morgan Brennan: I mean, we always focus here when it comes to the price of crude on the front end contracts. But what is the market over the longer term now pricing in in terms of this conflict and the impact on energy? I'd say it's still a bit of a mixed picture. Generally, of course, the back end has also gone up. You know, you're talking about very high 70s, early 80s for the like basically December 27. Clearly, if you're drawing down this level of inventory, and we also have restocking demand. For instance, Japan's already come out looking to refill some of the SPRs already. So there will be a bit, and I think that's a fair price.

9:24But there are still some concerns in the macro community around oversupply, you know, non-OPEC supply growth. But all of those are valid concerns. It's just that if we keep drawing at these kind of levels, well, we will need the supply to refill. My bigger concern for the back end of the curve is a recession because we may well get into that, right, simply through high product prices. And I think that's what then helps rebalance the crude market if the situation in Hormuz or in Russia, Ukraine doesn't improve.

9:53Morgan Brennan: OK, Emerita Sen, thank you. Appreciate it. Thank you. A lot of green on screen when it comes to the energy markets and what we're seeing in terms of not only crude oil, but also some of those refined product contracts as well right now. Going back to what Emerita just had to say about diesel at$200 a barrel. A lot more to come here on Morning Call, including what to expect when Apple CEO John Turnis takes the stage in Cupertino today. His first hardware unveil as chief executive. Plus, the U.S. government reportedly turns up the heat on a media mega deal. We've got those shares falling in response.

10:28Morgan Brennan: It's Roku right there on your screen. and later Ford calling out the White House for what it calls a wrong-headed attempt to capture headlines. A very busy hour still ahead when Morning Call returns. Who's ready for a bike ride? Peppa Pig is learning to ride her bike. First, pop on her helmet. Safety first. Then attach the push stick and give her bike a push. And watch Peppa paddle. Her legs go round and round as the wheels turn. with more than 75 sounds and phrases. Every ride is a big adventure. Peppa Pig Ready Paddle Go, available at all major retailers now. Weren't agents supposed to take things off your plate?

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12:10Morgan Brennan: Welcome back to Morning Call. Let's get a market flash on Alphabet. Google announcing this morning that it plans to invest just over$15 billion into AI infrastructure in Finland, marking the tech giant's largest single investment in Europe. Finland has emerged as the key location for data centers amid the AI boom due to its available land and power supplies. Well, Google also announcing it's signed a 22-year power purchase agreement with Finnish energy company Fordham. And those shares are jumping on the news. They're up about 10 percent right now, even as Google trades about flat pre-market. Well, we're getting set for Apple's big product unveil meantime.

12:45Morgan Brennan: That is at 1 p.m. Eastern time today at its headquarters in Cupertino, California. analysts and Apple Watchers like expecting the launch of the company's first folding phone, along with an AI version of Siri. But of course, this will be the first product event under new CEO John Ternus. And that might be the thing that takes the most attention, his performance here after he took over for Tim Cook at the beginning of the month. Heading into the event, Apple is riding high with shares up more than 21 percent over the past six months. So joining me now, longtime Apple shareholder Jason Ware of Albion Financial.

13:17Morgan Brennan: And for the product angle, Abraar Al-Hiti, senior technology reporter at CNET, who will be attending the event in Cupertino later today. This can be a long day for you, Abraar. Appreciate it. So let's start right there. Foldable phone. We've been waiting for one for a long time from Apple. And even just earlier this week, other competitors, most notably in China, running ahead of the expectations that that's going to be something that drives this event. Yes, the foldable is something that people have been waiting for for years. So this is really John Tarnas' time to shine, but it's also Apple's time to shine.

13:49I can say from personal experience that anytime I'm testing a foldable phone, the response from a lot of people is, that's really cool, but I wish it was an iPhone, right? So this is really Apple's turn to step into the spotlight. And we know Apple, we know that they like to wait until they have everything nailed. So we have to see what that phone will look like in terms of, will they reduce the crease? That's something people get really, really pressed about. What will the camera setup look like? It might be more scaled back, but they'll probably really make sure that that shines as much as it can.

14:16And what will battery life look like? Will it be lightweight? All of those questions we'll find out more about today.

14:20Morgan Brennan: Jason, what do you think is going to matter the most, especially for a stock that historically, we'll say over the last decade or so, has traded lower as sell news the event on these iPhone unveil days, but overall in the last six months has had a good run? Good to be with you, Morgan. So, you know, we're going to be watching pricing. I think that's the big thing that's going to be an unveil for the stock. And the reason is because I think for the most part, you know, we know what to expect. We know a refresh of the 18 lineup. We know foldable is going to be there. And as you mentioned, it's going to be John Ternus' first time, first big major product announcement.

14:54And coming from the hardware engineering side, I think there's going to be a lot to talk about. But look, the pricing is going to be going to be key because this is really like the first premium SKU upgrade for Apple in some time. And so north of 2000, and you run that through the numbers, looking at how many units they could sell. It could be a needle mover for EPS over the near term.

15:14Morgan Brennan: Okay. Siri and AI, how much is that going to matter here, Abrar, and specifically how John Ternus lays out the case for the trajectory for this? It's going to matter a lot. This is another area where people have been waiting for Apple to really shine. So, you know, Apple already announced during WWDC that Siri is finally getting smarter. It's finally able to understand the context of what's on your screen and pull information from conversations and emails. And it's something that is really critical because competitors like Google and Samsung have already baked this very, very deeply into their mobile devices.

15:50And that's something that iPhone users have been waiting for. The hardware has stagnated for years. iPhones have looked the same for years. And the Apple intelligence has also stalled. So this is the time, hopefully, for hardware to shine and for software to really shine.

16:04Morgan Brennan: When we talk about pricing, Jason, how much is memory chip dynamics going to factor and funnel in here? And how much does that either stymie or perhaps, well, I guess I'm trying to figure out how to say this, but like how much do memory chip prices actually matter here? And is there a point at which it becomes a tipping point in terms of the possibility of a super cycle? Yeah, it's a great question. And I think the thrust of it is, are we just going to see an increase in the cost of this phone because of the increase of memory? And so therefore, it's kind of a push in terms of margins. And our view is that there's going to be incremental margin that's going to flow through as it brings up overall ASP.

16:47The average selling price has been a big piece of the story on Wall Street for years in terms of, you know, the overall Apple iPhone revenue. And so I think what we're going to see today is a fairly notable increase that's going to cover both the memory situation, which, by the way, I think is only going to last for a couple of more years. And then also be able to add, like I said, to the product hardware margins. One thing that's really important to note is that as we think about the average selling price for iPhones, you know, this change here, I think, certainly moves the needle in terms of making the sell side run those numbers a little bit more bullishly in terms of what that can contribute to the bottom line.

17:27So we think it will improve the mix on margins.

17:30Morgan Brennan: OK, we're going to leave the conversation there. Abrar Alhiti and Jason Ware, thank you both for joining me to preview this event later today. Thank you. Straight ahead. A double dose of early morning CEOs. We've got IonQ chief Nicola DeMasi and then it's Martin Marietta, chief Ward Nye. But first, let's get a check on shares of Chime. The fintech is buying Oklahoma based community bank Stride for just about six hundred million dollars. Chime has long partnered with Stride to provide checking accounts and other services. But the deal means that Chime, which has built itself as a challenger to traditional banks, will actually become a bank itself.

18:06Morgan Brennan: It's going to be acquiring that bank charter. Morning Call is back after this, and Chime is up 11%. Who's ready for a bike ride? Peppa Pig is learning to ride her bike. First, pop on her helmet. Safety first. Then attach the push stick and give her bike a push. And watch Peppa pedal. Her legs go round and round as the wheels turn. With more than 75 sounds and phrases, every ride is a big adventure. Peppa Pig Ready Paddle Go. Available at all major retailers now. Your financial life rarely fits between 9 and 5, and the questions shaping your future don't follow a schedule. That's why Citi created Citi Sky, a secure AI member of your Citi wealth team built with the Gemini platform on Google Cloud.

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19:59Morgan Brennan: Welcome back to Morning Call. While INQ closing 2.5 % higher yesterday after trading up as much as 12 % in a down day for the broader market. As you can see this morning, down fractionally here, about half a percent. The company holding its investor day, boosting full-year revenue guidance in the wake of its Skywater Quantum Chip Foundry acquisition and unveiling a flurry of announcements, including a new quantum computing platform called Superion. I spoke with CEO and Chairman Niccolo DeMasi about INQ's vertical integration and what it means for making quantum computers mass market. We've talked a lot about the fact that our systems, as they become more powerful, don't actually become a lot more expensive.

20:39And so we're focused on driving the broadest mass market quantum computing ecosystem that we can. We want to see people starting companies using our computers, building software applications. I think we have at least one order of magnitude, potentially two orders of magnitude advantages. when you look out at our more powerful machines later this, in the 2020s, later this decade. And what that will be translated into is a much broader reach globally. But you're going to see, you know, by the end of this administration, that this increasingly becomes part of the narrative for every company, every applied science research activity in combination with what's going on in the GPU AI space.

21:20You know, quantum is going to slip, stream in and give people superpowers. That's why we're calling this the superior range.

21:26Morgan Brennan: Well, Demasi telling me quantum data centers are coming and that some will be pure play and some will be hybrid with AI combining GPUs and QPUs. How does this conversation change if it does with this quote unquote era of AGI coming upon us? Well, I think that you're going to watch a lot of research happen at the intersection of GPU machine learning, which has been rebranded AI, and QPUs. You know, quantum computers look at solving algorithms currently exactly. So it's like old school computing, like CPUs, where you sort of say, hey, I want a material with these properties. Make me a material or a drug that has these problem solving capabilities, right?

22:17So personalized medicine is a great example of what QPUs will do. In terms of artificial general intelligence, that is a philosophical concept. And I think it will end up combining GPUs and QPUs to deliver better AGI with hopefully fewer hallucinations because of the quantum computers, more accuracy, less power consumption, cheaper training, faster training, more accurate training.

22:45Morgan Brennan: Well, INQ also published a research paper with potential implications for encryption. IonQ reports a 20 ,000 physical qubit quantum computer could break the cryptographic standard that secures Bitcoin in under 26 days. This is a capability that's not here yet, but that Demasi warns is coming and coming faster than the industry is forecasting, reiterating 2028 as his expectation for Q day. On the cybersecurity front, our Pennycrest paper this morning absolutely is historic. It is the first time that someone has been able to show down to every single operating command how a 20 ,000 qubit INQ machine could, in the future, run an elliptical encryption retrieval.

23:32We announced this today not only because we want everyone to understand the way we're thinking about our roadmap and how an algorithm maps exactly to our fault-tolerant machines, but also because we're a huge participant, investor, and solution provider in the quantum security space.

23:52Morgan Brennan: Well, Damacy also discussing how cybersecurity is evolving right now in real time. I call them the open AI and anthropic lab leaks, but the last few months haven't been quiet when it comes to GPU-based AI machines kind of finding their way out of the lab into the real world, allegedly to solve some problem. And then you find that they've gone and hacked somebody on their own volition. I think that's not just very concerning, but I think it's an inflection point on the start of a trend, which is not going to lessen. And so we're in the fall of 26 now. And if you look out a year from today, two years from today, total cybersecurity threats are increasing.

24:37They're not decreasing. And so that threat's increasing for classical hacks. And it will unfortunately also involve quantum computers at some point in the future.

24:48Morgan Brennan: Well, security and networking are big and growing businesses for Iron Q as well, which is the largest pure play quantum company by market capitalization, also by revenue. It's backed by a large retail investor base and a growing roster of commercial clients and expanding government business as well. That said, it wasn't the only name that made news in quantum yesterday. The Commerce Department also finalized deals to trade equity for capital with other more nascent players, including Regetti Computing, D-Wave, Quantum and Continuum. INQ did not participate in that deal, which was announced earlier this year.

25:20Morgan Brennan: But the full interview with INQ's CEO is on CNBC.com. Still on deck. Could it be the end of a very short era as Live Golf files for Chapter 11 bankruptcy? We've got those details when Morning Call returns.

25:39Morgan Brennan: Welcome back. I'm Morgan Brennan, and this is Morning Call. Let's get a check on U.S. stock futures after the Dow's worst day in more than two weeks. The indexes are coming off back-to-back losses. The Dow closed down more than 600 points. It was the underperformer yesterday. And as you can see right there on your screen, we are in the red across the major averages as of right now here at pre-market, with the S &P poised to open down six points, the Dow down 116 points, and the Nasdaq fractionally lower, down 25 points. We are watching energy this morning. This is moving other markets right now.

26:06Morgan Brennan: Brent crude hitting$100 a barrel. Again, this is the first time we've seen that since July, as Iran and the U.S. ramp up their regional attacks. Right now, you've got Brent trading up 2.5 percent, trading right at$100.40 a barrel. And U.S. oil, WTI, is trading just below$95 a barrel. Our Bob Gas futures are higher, and so is ultra-low sulfur diesel is really popping this morning. And, of course, that is what diesel prices are tied to as well. Treasuries ahead of big buyback announcement today. Let's get a check there. And we've also got an offering for 10-year bonds today. You see the 10-year yield 4.8 percent right now, and Fed-sensitive two-year Treasury yielding 4.4 percent, and the 30-year Treasury yielding 5.25 percent.

26:55Morgan Brennan: We're also keeping an eye on copper, which hit an all-time high yesterday, taking a bit of a breather here this morning, both in terms of U.S. copper futures and LME copper as well. And if we get to check on the morning's latest headlines, the U.S. slapping new tariffs and import bans on a number of Canadian goods in response to Canada's counter tariffs that went into effect yesterday. The new measures take hold on September 29th. They cover items from alcohol to mattresses, dairy products, motorcycles, leather and golf carts. But the Department of Justice is reportedly widening its antitrust probe into Fox's$22 billion deal for Roku, which would create the third largest player in the TV viewing and streaming space behind YouTube and Disney.

27:41Morgan Brennan: And you can see shares of both of those companies are down pre-market. According to Semaphore, this, quote, second request from the government comes just months after the deal was first announced. Live Golf, meantime, filing for Chapter 11 bankruptcy protection. The league says it intends to restructure its business with a more than$49 million bankruptcy loan backed by Saudi Arabia. The company has between$500 million and$1 billion in liabilities and between$100 million and$500 million in assets. According to the filing, Liv says the bankruptcy will allow it to go forward with the support of a new backer and transition to a player-first ownership mode.

28:17Morgan Brennan: quote. Ford is pushing back against the White House after Transportation Secretary Sean Duffy called out the company on its business ties to China, including joint ventures and licensing agreements. In a statement to CNBC, Ford calls Duffy's letter, quote, a wrongheaded attempt to capture headlines at the expense of a company that has done more for American manufacturing than virtually any other in the nation's history. Some strong wording there. Ford adding that the Secretary reached out to the company before issuing its letter and that we would have been happy to share more details about our U.S.

28:50Morgan Brennan: commitment. Shares of Ford are higher fractionally this morning. And the NTSB investigators say they are continuing to document the crash site of that Amazon cargo plane that overran the runway in Miami International Airport on Sunday, killing five people. At an evening press conference, NTSB Chairwoman Jennifer Hamendi telling reporters this voice recorder has good quality audio and that investigators will be interviewing the pilots today. The cockpit voice recorder contained more than two hours of good quality audio. Now we're interviewing the pilots tomorrow and we want to hear their account of the accident before we release a readout of the cockpit voice recorder.

29:36Morgan Brennan: Well, the NTSB adding that two systems that could have slowed the flight were not deployed in the were not deployed correct correctly at the time. Now, if we get a check on Amazon and Boeing shares, you can see both of those stocks are down fractionally right now as well. Jeffries, meantime, is hosting its annual global industrials conference this week in New York with presentations and meetings with more than 200 companies, institutional investors, private equity, venture capital firms. The event comes as recent data show that U.S. construction spending dropped to nearly three-year low in July.

30:09Morgan Brennan: That's following a massive manufacturing and tech build-out, though. One sector that's still showing solid growth is data centers, which account for more than a quarter of development sites this year. That's just behind apartment buildings. Joining me now in a first-on CNBC interview before he speaks at the conference is Ward Nye, president and CEO of Martin Marietta. It's the leading supplier of building materials. It's so great to have you here on set. Welcome. Martin, great to be back. Good to see you. What is your message going to be for investors today? Yeah, our message is going to be this is an incredibly durable time for our business.

30:36It's an incredibly durable company. And as you said, Morgan, if you're looking at areas of the economy that are actually doing quite well today, infrastructure continues to move along in a very, very constructive fashion. If we're looking at heavy non-res, to your point, data centers, energy, warehousing is even seeing degrees of comeback. It's fascinating looking residential today because there's a huge need for single-family residential. It's not doing as we would wish and as it needs to do today. Multifamily is doing fine. And so here we are in a moment that a lot of building, as you said, is not going terribly well.

31:09Our company is doing, I think, extraordinarily well.

31:13Morgan Brennan: Yeah, you just said a lot there that I want to dig into. But I'll just, you know, pick up with the residential piece of this. I mean, we talk so much about how higher interest rates, higher home prices are affecting that market right now. What would you expect to see to see an unlock of more more building? I would look for several things. One, if we look at overall building right now in multifamily, that continues to be quite strong. But it moves around pretty considerably based on the geography. So if we're going back to even COVID and looking at what's happening in the southeastern United States, southwestern U.S., that's continued to move in a very constructive fashion.

31:46But here's the dilemma, to your point, that people have. They're moving to those parts of the country. They're moving into multifamily. That's not where they want to be right now. They can't make the pivot to single family. So what's happening in the Carolinas, what's happening in Georgia, what's happening in Texas, what's happening to Greece and Florida, what's happening in Colorado, is you have a lot of people living in apartments who are looking to make that move. I don't think it's going to take a lot of interest rate movement to get some people to go. I think as we look at adjustable rate mortgages and what we're seeing in more activity in that space, that will move some in single family.

32:19But it's still going to take a bit of time to do that because we're going to have to have single family builders in the position that they're buying land, that they're going through the entitlement process, and then building out the subdivisions. It's not a single family home on a new lot that's just been cleared. It's really building out the subdivisions themselves.

32:38Morgan Brennan: Yeah, and that takes time. AI data centers, you just touched on it. How big, how growing is the demand there? What does it mean for Martin Marietta? Well, the fact is it means a lot for Martin Marietta. I think it means a lot for the nation as well. So the building in that space continues to be robust. It's going to be interesting to watch how that plays. Because if we were looking at this several years ago, it was all about Northern Virginia. Now, not so much. Now it's a lot about Texas. You're seeing it also in places like Wyoming. If we're looking at Stargate, that was announced a couple of years ago.

33:07What's fascinating to me is you hear about it a couple of years ago. It continues to move in phase after phase after phase. Equally, if we're looking at states like Wyoming, Project Jade, which is relatively new there, is going in. But here's part of what's different, Morgan. Now you're seeing energy come with these projects. So back to your point, what does it mean for Martin Marietta in heavyside building? These are significant projects needing a lot of materials simply to build them. They need a lot of materials as well to prepare the soil for what's going on top of it. And then energy is coming in behind it or oftentimes in front of it.

33:45Morgan Brennan: I mean, we've been hearing about this, this growing trend of bring your own energy if you're a data center. And it's interesting to hear what you're saying about Stargate because there's been so much speculation about that project specifically and whether it's derailed, whether it's moving forward, you're obviously on the front lines of some of these major developments. How does it speak to how your portfolio is changing as well? We're talking about copper at record highs, but we've been tracking so many different types of critical minerals and materials in general that are going into this industrial side of the economy.

34:12I would say several things. One, you don't build anything that's heavy without crushed So that's our core product. So if we think about what we've long said about Martin Marietta, it's an aggregates-led business. Now, to your point on degrees of evolution, we've also recently bought the largest lime producer in the United States. And that's highly complementary to what we've done. We've always had a very attractive lime business. It's been a part of our portfolio since we went public back in the early 1990s. Now it's just a more robust portion of it. But what's important, Morgan, to your point, if we look at lime's position that we bought in infrastructure, they have a leading position.

34:50If we look at lime's position relative to steel, they have a leading position. If we look at lime's position relative to purifying water, they have a leading position. So if we're looking at data centers, if we're looking at power, if we're looking at the evolution of how that's going to play and how we think the reindustrialization of America is going to play, That's led to this upstream portfolio reshaping that we've been in the middle of now for the last several years.

35:16Morgan Brennan: It's interesting to hear you say that. I mean, there's so much focus, too, from an administration standpoint on building out a domestic critical mineral supply chain, too. And it sounds like you're on the front lines of that as well. I think we are on the front lines of that. And part of what's interesting to us as we look at it, if we look at our aggregates business at today's extraction rates and what's going over our scales, we've got over 85 years of reserves in our portfolio today. If we look at what we've done relative to Lime, we've got about 200 years of reserves in our portfolio today.

35:45So, again, this is not a week-to-week, month-to-month, quarter-to-quarter business. We're looking to build a business over a period of time, 5, 10, 15, 20 years. And the way that we typically plan our business, if we're looking at our strategic planning process, that tends to come in five-year increments. So if you're really trying to get in the head of these big, heavy side building materials companies and the way that they see these trends going, we're looking at those types of trends for not, again, quarters, but rather years.

36:14Morgan Brennan: So at a time where there's a lot of focus on the strength of the U.S. economy, what are you seeing from your vantage point? And what do things like trade dynamics and tariffs, including, as one guest said yesterday, not a war, but a trade row with Canada, how does that impact it? Well, it's fascinating to watch that to a degree. I would say two things. One, as a largely domestic company, tariffs don't hit us particularly hard, as we're just looking at that. Our supply chain is largely American. Our customer base is largely American. So we don't feel the front lines of that. Now, there are areas in which we do feel it.

36:47So, for example, I mentioned before, will you need crushed stone in the manufacture and maintenance of steel? Yes. Will you need lime in the manufacture of steel? And is it a critical mineral? The answer is yes. So as we look at tariffs and the way that that's impacted the steel industry in particular, have we seen volumes come from that? We absolutely have. There's no doubt about that.

37:10Morgan Brennan: OK, Ward and I of Martin Marietta, it's great to have you here on set. Appreciate it. Nice to be here. Well, we got a lot more to come here on Morning Call, including we're shaking up in America's munitions landscape amid reports of stockpile shortages. My conversation with the defense tech startup emerging from stealth with a long range cruise missile that's already flying. What it means for other defense companies. Morning call. I'll be right back.

37:37Morgan Brennan: Welcome back amid re-escalation in the Middle East and amid a steady drumbeat of reports that American stockpiles of missiles and munitions are depleted. one company is emerging from stealth with a new long-range missile that can carry heavy payloads and could potentially disrupt a cruise missile market that's been dominated by RTX's Tomahawk. Covenant is a two years old, but its Anthem missile has logged more than 200 test flights, and it has government contracts in the U.S. and Europe and touts investors, including A16Z and Altimeter. Today, the startup is unveiling its new factory in Texas, and Covenant president Abby Denberg says the missile will cost, quote, a fraction of the exquisite capabilities in the U.S.

38:14Morgan Brennan: arsenal. But what I can say is when we look at the U.S. arsenal today, there are high-end exquisite capabilities and there will always be a need for that. And there's a lot of capability in the tactical sort of short-range, low payload space, drones. Those all came out of the Ukraine crisis. But there is a gap in the middle of that for affordable mass at strategic range. And that's the gap that Anthem is filling. Well, Denberg says most of Anthem's parts are commercial off the shelf. And this is one reason that the Dallas factory will be able to produce 1000 missiles per year right out of the gate with a similar production rate planned at its facility in Germany.

38:51Morgan Brennan: It'll ramp from there. We're going to check on shares of RTX, which makes the Tomahawk missile. You can see basically flat here pre-market, but we'll keep an eye out. Bottom line here, hundreds of billions of dollars are going into missiles and munitions, some to traditional players like most recently, just yesterday, L3 Harris, which is helping to make Patriot interceptors. And some is going increasingly more is going to new entrants. And it has big impacts for the investment landscape and for the stocks, but also for the U.S. economy. Full interview for Covenant is on CNBC dot com. Straight ahead.

39:25Morgan Brennan: The Morning Call crew is here and they are all here in studio to tee up the trading day ahead. Why one member says this week could set the agenda for the market's direction in the months ahead. We'll be back in a moment.

39:39Morgan Brennan: It's time for your call sheet crew members today. Michael Rourke of Jones Trading, Jay Woods of Freedom Capital Markets, and also CNBC contributor, and Bilal Little of Direxion. Got you all here on set. This is the way we like it. You know, we're sort of back with a bang here from Labor Day. And so that's really where I want to start. And Michael, I'll kick this off with you. We see re-escalation in Iran right now. Crude, Brent crude back at$100 a barrel. How is it affecting everything else? I mean, if we keep going like this, it's a problem. And, of course, inflation is a big concern. We have big inflation data coming out this week.

40:12So, I mean, personally, I'm shifting my point of view from I thought we were going to give disinflation a chance. I think the Fed's going to have no choice but to consider raising rates next week. So I think it's a big deal right now.

40:24Morgan Brennan: Yeah. And it's not just, you know, Brent crude at$100 a barrel, Jay. It's also, as Amrita Sen pointed out, you've got diesel at 200 bucks a barrel. And that's really what affects inflation more than anything else here. Yeah, look at the transports. They're breaking down. So we're seeing weakness now start to creep in across many of the sectors here. It's not just affecting us at home, but it will be affecting us because that price always gets passed down to us. But to Mike's point, you know, about hikes, you know, when we talk about what we're going to be watching now, it's a CPI number on Friday.

40:55That jobs report got us, OK, you know, remember we lowered rates because jobs were a concern. Well, what is the biggest concern for Kevin Warsh? It's inflation. And, you know, after Jackson Hole, it didn't seem like he was against hiking. We had three descents last meeting. If that CPI number takes us for a little surprise and inflation is hotter than they expect, then next week is going to be very interesting.

41:18Morgan Brennan: Yeah, and in the meantime, you've got an ECB that's expected to hike tomorrow as well. It hasn't just been a U.S. phenomenon. It's been a global phenomena, especially as we do see these tensions in the midiest. What is an investor to do? What is driving things here in the near term? Yeah, look, I think if you think about everyone paying attention to CPI, last time I checked, Thursday comes before Friday. PPI is a more important number. And the reason that's so critical is because diesel is starting to seep through. And what you're going to see is basically over the next quarter or two, how will that inflation actually play out to CPI?

41:49That's downstream. So the more important thing that I think right now for investors is to really take a step back and say, look, concentration might be a little too much right now. So should I be looking at equally weighted investments on the equity side? And that's across the S &P as well as the triple Q's.

42:02Morgan Brennan: Yeah. And of course, energy, higher energy prices has been one of the things that has fed into higher rates in the Treasury market as well. We get a refunding announcement. I know you've been writing about this, Mike. But, you know, we're also have more issuance here this week, today and tomorrow as well. Yeah. I mean, the refunding announcement is going to be a big deal today. Obviously, last month, Secretary Best in surprise markets when he announced the increase of the repurchases. And I think that triggered a rejuvenation of the debasement trade. And I think that's something Treasury really does not want to do.

42:33So I'm hoping that this winds up being a non-event. But obviously, there's estimates of up to$10 billion in repurchases when Treasury just went from$2 billion to$4 billion in their announcement. So I think it's going to be a big, big event today in the sense of it could set off precious metals, cryptocurrencies and, of course, the bond market itself. So, again, I'm hoping it winds up being a non-event, but I feel like it's going to be a bigger deal than people expect.

42:58Morgan Brennan: Meaning a reversal of the so-called debasement trade? Well, I'm hoping if it's a smaller announcement, you see the debasement trade unwind, you see crypto sell off, you see precious metals sell off. And bonds would sell off initially, but I think that would be a buying opportunity for treasuries. Yeah. Meantime, copper right near record highs here, Jay. Yeah, copper. Also inflationary. So something that goes into every technology piece we use. A concern, but copper looks great. But to Mike's point, gold, if we get a surprise to the upside out of this two to four billion range, we saw what gold did the last time this announcement was made.

43:32The gold trade, the crypto trade, those alternative assets. I think you want to put money to work there. And then it's about shocks. We started the segment with oil, oil now creeping up to$100 a barrel. Creeping is the key word. The 10-year oil, these things that should have negative impacts on the overall market, have not because it's been slow, it's been steady. But if we get a surprise today, if something causes a knee-jerk reaction to this market with the September backdrop, we could see that 76, 76.20 to be the exact level that was tested last week be tested again and fail. And that's my concern as we go into this Fed meeting next week.

44:12Morgan Brennan: Yeah. I mean, we know September, also seasonally, week time of the year as well. How much does that funnel in here? I actually don't think it's as much as we paid attention to in the past. I think this time is slightly different. I think you have a Fed that's trying to figure out, like, hey, are we independent? Do we not pay attention to what's actually happening in Washington? Washington is fighting a couple of different wars, let's be honest here. It's the war in the Middle East, but obviously they're also fighting for their independence at the Fed level. I think the Treasury is telling a different story, and they're saying, like, look, Fed, cool off.

44:37that we need to continue to actually support and show a strong, I would say, administration at this particular point in time because there's so much macro data coming at the back end. If I'm sitting here looking at the markets right now, I'm paying attention to all the tectonic shifts that are happening underneath. Energy's up, bond yields are up, equities are down, and we're going into, I would say, a seasonally slow quarter.

44:58Morgan Brennan: Tectonic shifts, tech trade. We got an Apple event today. We're going to get Adobe and Oracle after the bell tomorrow. There's a number of other smaller names here, too. and then the Communicopia Conference just in general, when we talk about all of this. I mean, the inverse reaction has been within momentum. Yeah, I mean, it's interesting. Over the weekend, you had Jensen Wang bless the open AI as being, you know, open AI as Astromile as being AGI. And interestingly, yes, that was great for the AI trade in space, but NVIDIA was down 2%. The hyperscalers were all weak yesterday. So what you're seeing is that technical weakness within that group.

45:33And that to me is really interesting here. I actually like what Bilal said earlier, talking about the equal weights. I think if you're going to be in this market, that's a safer way to invest for probably the rest of the year. And even if you see a slowdown in the S &P 500 or the performance there, you can see the equal weight outperform. So I think that's the way I position myself.

45:54Morgan Brennan: Well, yeah, and we've talked about it a lot on this show, but sort of the beneficiaries of AI infrastructure build. I mean, case in point, we just spoke to the CEO of Martin Marietta. Yeah, well, the AI data center build is going to be the front and center for the coming weeks as we go into the midterm elections. What's the one thing that the public agrees on? You know, 70 percent bipartisan don't want data centers in their neighborhood. So this is the stumbling block that this great build and this great rally that we've been building on is going to have to face. I think they'll get through it, but it's not going to be easy.

46:27So we're talking midterm elections coming up. So the next week, you know, we have Adobe and we have why my blank. Thank you. Adobe and Oracle. I've only written about it five times coming out Thursday afternoon. But then what do we have after that? Cracker Barrel and NAR. We have no earnings until October 13th. JP Morgan kicks us off. So that catalyst to really push us higher is going to be tough.

46:53Morgan Brennan: All right. Macro will dominate. Ah, that's the end of the show. Gosh darn it. Thank you all. It's great to have you here on set. Thank you to our call.

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