When we do cardio in the morning on an empty stomach we pretty much eliminate option one. Muscle glycogen stores can never be 100% depleted, if they were we wouldn't be able to move. But, there are three places where glycogen can be found in the body (remember - we don't actually eat glycogen). The first place is in the liver, the second place is in the muscles, and the third place is in the blood stream. In the morning, after your 6-10 hours with no energy (food) liver glycogen will be just about depleted, blood glycogen will have been burned for energy, and muscle glycogen will have been severely depleted. What this means is that your body is in a state of extreme catabolism, it is literally breaking down muscle at an alarming rate. This is because when the liver runs out of glycogen it takes alanine, arginine and the other substrates, from the muscles in order to make more. This is muscle breakdown (atrophy). After waking up, you start to do activities (yes, going to the bathroom and watching TV is an "activity"). What this means is that you are increasing the bodies immediate energy requirement, which means - more muscle being broken down to meet energy needs.