Closing Bell - Closing Bell: 4/10/25

Episode Date: April 10, 2025

From the open to the close, “Closing Bell” and “Closing Bell: Overtime” have you covered. From what’s driving market moves to how investors are reacting, Scott Wapner, Jon Fortt, Morgan Brennan and Michael Santoli guide listeners through each trading session and bring to you some of the biggest names in business.

All right. With that, welcome to Closing Bell. I'm Scott Wapner, live from Post9 here at the New York Stock Exchange. This Make or Break Hour today begins with yet another highly volatile day for stocks. A big comeback from yesterday's historic, a big give back, I should say, from yesterday's historic move. The scorecard was 60 to go and regulation looks like that. Yeah, it's red across the board. Not as bad as it was because at one point the Dow was down by more than 2,000 points. The S&P 500 came awfully close to tripping a circuit breaker and that would mark a 7% decline. Got within 40 S&P points of that. Hard to hide today other than in gold there's a little bit green there but

bond yields they're moving higher today too and that's been a point of pain for stocks. We're keeping our eye on the 10 year. That's the one that matters to this market right now perhaps more than anything else and it is moving up stocks moving down. Coming up in just a bit we'll ask the former St. Louis Fed president Jim Bullard what Chair Powell and company might be thinking right now about all this. Elsewhere in the market today big moves in China relatedrelated names, Apple, Tesla, Nike, Starbucks,

all down sharply. Some of the travel-related names really red today, like the airlines, for example, Delta, United, American. It does take us to our talk of the tape. What should investors do from here? Let's begin at the White House this hour with Eamonn Javars and what the president is saying about all of this today. Eamonn?vers and what the president is saying about all of this today. Eamon? Hey there Scott. President Trump said in a cabinet meeting today that if he's

unable to get a deal with countries around the world within that 90-day timeline he's going to impose the very high tariff levels that he had paused or he said he could extend the deadline again. He said it's going to depend on what happens and every country is different he said. The president also addressed recent stock market turmoil although he said he wasn't watching today's sell-off. There will be a transition cost and transition problems but in the end it's going to be a beautiful thing. We are doing again what we should have done many years ago. We're

letting it get out of control and we'll add some countries to get very big and very rich at our expense and not gonna can't let that happen. It's not a sustainable formula. So the president there acknowledging transition costs and transition problems. The White House has said as many as 75 countries have reached out seeking negotiations. But White House Council of Economic Advisers Chair Kevin Hassett said today that the number in active negotiations is around 15. And officials have said of those two deals may be close to being ready for the president to announce. No word though on whether we're going to get any announcements today, Scott. Back over to you.

I'm trying to figure out this line about transition costs and what that might mean and to whom. To the value of the stock market, to the value of investors' portfolios. What are the costs that he thinks we need to pay to go through this transition that he wants to take us through? Yeah, look, I mean, the president has said throughout the stock market downturn over the past week that you have to be willing to take your medicine. There's a price you have to pay. He is clearly willing to tolerate a very high level of stock market pain.

And I think we saw maybe what his limit was, was the bond market pain. But he's willing to tolerate a very high level of stock market pain that's, of course, absorbed by investors in order to get to this vision that he has of a reindustrializing, sort of 1950s economy style, United States of America. We saw the president in the cabinet meeting talking about, sort of reminiscing about steel plants in the country and the tall towers pumping out smoke and the industrial capacity going on for miles and we've lost that and he's frustrated by that and he believes that these tariffs will be one of the tools to

bring that back. Alright, Eamon, keep us up to date as you always do. Appreciate that. Eamon Javers on the North Lawn of the White House for us. Let's bring in our panel, Joe Terranova of Veritas Investment Partners, Courtney Garcia of Payne Capital Management, Cameron Dawson of New Edge. Well, it's good to have everybody here.

Joe and Courtney are CNBC contributors. So what do we do? How do we think about this after this historic move yesterday and the give back today, the so-called transition costs that the president says are going to happen as a result of what he's trying to do. Well it doesn't make the bulls from yesterday

afternoon feel too good and I don't think the Bears should be feeling good as well. I think it's very clear the most important thing on your trading screen is where the 10-year Treasury is pricing because we have learned that's where the Trump put is in the marketplace without. In the bond market, not the stock market. Oh, absolutely. That's what you're alluding to. Not in the equity market. It is in the bond market. And he's going to react.

Probably in the equity market, too, just as Eamon was saying, a lot lower than where we are now. So I think what's interesting is, and what's interesting about today is the 10-year's at 440. Think about that. After the CPI, the 10-year the tenure is at 440. Think about that. After the CPI, the tenure should not be at 440. So it's another day of what should be happening to the tenure is not happening, and you're kind of puzzled by it.

But I think we're going to get a lot of appearances from the administration. And the intraday low today was at 1227, right as the cabinet meeting was about to start. So you have to be careful here playing the short side because I think you're going to hear whether you get the comforting news, you're not gonna get the type of comforting news you got yesterday, but you're going to hear the words, you're going to get the appearances

and that's gonna attempt to try and pull the market away from the critical lows of the last several days. But overall, I don't think we're out of the woods here. I think the personality of the market is still very defensively oriented. Is that how you see it, Cora? I think it's clearly way too early to say the all clear. And I think people were hoping for that yesterday.

But really where we ended was it looked like we were gonna have this all out trade war. And now it's kind of a head to head with these two largest economies in the world, which is the US and China. So clearly that has not subsided. We also have a 90-day delay, but this is also not yet a reprieve in tariffs. So markets are really trying to figure out where to go here and that's what I think as an investor you need to continue to watch here. And there has been some underlying good data, which Joe you point out very accurately here. Like the CPI just came down, it's now at 2.4%,

which bond markets may not be reacting the way we think. Neither are the stock markets, which typically would react positively to that news. So clearly markets are setting that aside because they see tariffs as a bigger concern here. And also last Friday, when markets were in turmoil, you saw unemployment is still at a good level showing we have a strong labor market.

So the economy is coming into this in a good direction. It's still in a good position. It's just what are tariffs gonna do to that? And that's what markets aren't sure of at this point. These moves, I mean, as you know, as well as anybody, because you like literally study this kind of stuff, are so abnormal to see that we're down 2100 points on the Dow at the low plus.

And we came within a whisker of the circuit breaker for the S&P 500, which marks a 7% decline. As I ask you the question, we're only down 3% on the S&P. It's such volatility that it's kept everybody off balance. It's such a good reminder that big up days are very normal in bear markets that they're not necessarily healthy So the big update that we had yesterday does not mean that we're at the start of a new bull market Because we go back to those big historic updates

They typically happen in the midst of major bear markets So we think at the end of the day vol is here to stay and if you go back to strategist Chris Verone, you put out an interesting stat. Eighty five percent of the time you retest the lows. And so there are certain scenarios like 2018 or 2020 where you had a true V shape

recovery. But given the fact that this is true policy uncertainty in the hands of one person, we think that you have to get used to this volatility remaining. One of the issues, too, is that even with what happened yesterday and the fact that you have to get used to this volatility remaining. One of the issues too is that even with what happened yesterday and the fact that you have

now these elevated tariffs on China and a full-blown trade war between these two countries, it keeps recession risk very high. It keeps uncertainty very high. The opacity that CEOs have had doesn't look to be clearing anytime soon. Our senior economics reporter Steve Leesman joins us now. You know, there's that, the uncertainty that persists. There's this view that Eamon was talking about that the president sort of whimsically, you know, talking about these times of yesteryear with, you know, 90,000 factories that left and they're all going to come back and more it just doesn't seem to be a credible view that something like that

can actually take place in any real-world scenario. Yeah Scott I'd like to say you can't make a deal with the past because there is nobody around from the past with whom to make a deal and if you could make a deal with the past, you would hold no cards. I think that's the way to think about it. And Scott, just one thing. I don't think we debate enough some of the things the president says. He says those other countries got rich at our expense. That's really not true.

To the president, anytime there's a trade deficit, it's they're ripping us off. It could be that there are trade barriers there and their trade is unfair or they're subsidizing their trade. It could be because they are poorer than we are most likely. It could be because they have stuff we can't build. And the most important part when we talk about the economic outlook, it could be because they have an input to our manufacturing process that ends up being an essential and an essentially lower price component that we need to have manufacturing in this country. There's all kinds of stuff that we bring in. I think it's something like 30 or 40 percent of our manufacturing is done in part with imported products.

So we are going to get poorer, Scott, and that's why a lot of economists right now, they still have very negative numbers when it comes to the GDP impact of these tariffs and also the inflationary impact of these tariffs. Yesterday, the market was a buoyant and the dismal scientists were dismal. They looked at it and they said, well, wait a second. What just happened there You cranked up the tariff on one of our biggest partners that doesn't change anything. In fact, it changed very little I'll give you the tale of the tape here Scott 3% where the tech there's Goldman Sachs saying they went from 65 to a still at 45. Drew Madison met life was very unimpressed.

He went from a 75% recession risk to 60%. JP Morgan, I talked to Bruce Casman, he kept his recession outlook. And then Morgan Stanley said it lowers the immediate downside risk, but we're going to be uncertain for a while. One more chart I'd like to share with you, Scott, which is what happened to tariffs. Here we go. We were at 3%. The Rose Garden announcement raised it to an average of 30. The current is 25 and it depends on what you do with China, but if you take out China where trade may just stop, which is a very, very worrisome outcome, it's 18%.

That's the highest since 1934. So economists heard it yesterday and they thought, oh, this sounds great, wait a second, let me put the numbers in, it didn't sound so great. You know, let's be real, right? As you were saying, are there unfair trade practices that need to be dealt with and should be dealt with, and you have somebody like President Trump

who's willing to take that on and deal with it? Of course. But the notion that, as Peter Navarro says, the trade deficit is the sum of all cheating is just not a credible no comment No, it's just not and and and we need to do more to counter that Scott because it is simply untrue Think about a country like they put tariffs on Los Oto. What do they do? They mine diamonds We are not going to be mining diamonds Madagascar has vanilla. We're not going to be growing vanilla here in America. Maybe some entrepreneur might do it on a greenhouse, but

we're not going to be doing vanilla here. There's all kinds of countries. The other thing is, the reason why, one of the reasons, two reasons why we went from a trade surplus to a deficit with Canada. Reason number one is they had a bunch of cheap oil that we could buy, that they could sell only to us. We save billions and billions of dollars on that oil from Canada. They bring it into us. We refine it.

We sell it back to them at a higher price. That's good. The other reason is we had a better economy than Canada did. So one of the things that happens is, I mean, Scott, we talked about this. The best way to reduce the trade deficit is to have a recession. That's the only time it ever really goes down. Every time there's an expansion, Americans have extra money, they do well, they buy stuff domestically, they buy it here, and they go overseas to buy things that they want and they need. Yes,

there are trade barriers. There are subsidies out there. These need to be negotiated. There are parts of the American economy that have been absolutely devastated. But I don't care about the hate mail I'm going to get. On average, average Americans have done better for their ability to buy cheaper stuff abroad. Average businesses have done better in America for their ability to bring in cheaper foreign components. Look, look at the number of primary metal people, people who make the metal, people who use the metal. Scott, there are four times more jobs in people who use the metal than people who make the metal.

Steve, I appreciate it. Thank you. Steve Leesman, our senior economics correspondent. The segue from Steve to all of you is the idea that we still have very elevated recession risks within this market. And if we in fact do have one, which remains clearly uncertain, the market's going to try and get ahead of that, as it always does for everything. And if we do, and it looks like we are, then the stock market's mispriced

for that, isn't it? It's a risk to earnings for sure. Behavior is already changing. So you could anticipate a recession and you don't change your behavior when it's finally confirmed. You change your behavior ahead of the recession. It was interesting because I heard Cameron say it's a rally in the context of a bear market. I agree with you. But I've heard so many people today say and acknowledge it's a bear market. I didn't hear that in the last several days. Last several days, people were kind of wondering is this a bear market or not.

So that is the- Josh Brown's been saying it half time and other people have been saying it well as well. Josh Brown in Miami a month ago said it was a bear market. I'm just saying there are a lot of stocks, many, many, hundreds of stocks within the S&P 500 that have been down more than 20%. Significantly more than that. So while at the superficial level it may not officially be a textbook bear market, bear market.

But let's talk about the statistical effect on the consumer. So last night I was at a dinner for Ameriprise and there was 50 clients in the room and everyone was kind of talking about the wealth effect and how they're feeling about what their portfolio looks like right now. And I really do believe in the moment right now today I think consumer behavior is changing. We know corporate behavior is changing. We heard that from Ed Bastien at Delta the other day and now you're going to hear that. It's going to be a parade of conversation about how behavior is going to change and we're going to hear that throughout the earnings season.

Yeah, I mean how do you guys think about, I hear from both of you, Cam, you first, the elevated recession risk that's just going to play out day by day as we see how the developments with China go. And how you're supposed to invest into that. Well, I think you have to acknowledge that you're still trading at 19.8 times forward earnings on an earnings number that's supposed to grow 9 percent this year. So neither of those two things are contemplating a recession. You've also seen this deterioration in trends and momentum from a technical perspective which is why we think this is more likely a bear market versus this short

term kind of of of draw down in a big V. shape recovery back. It means that you have to be disciplined to add to the market on big down days not to chase these bear market rallies that we saw like yesterday. Having the courage to step in

when it feels really bad in those scary days when markets get oversold like they did on Monday, where you have the VIX spiking to 50 and 50 day, percentage of names under the 50 day gets to 6%. Those are all signs that you can have a tactical rebound, but then being very disciplined when you have the bear market rallies not to chase.

I asked this at halftime too, and I hear it from people on the floor that I go around and talk to. It's kind of hard to get all short now and get all negative now because you are literally a statement from the president away of just talk to President Xi. We had a good productive call. We're going to continue to talk. They they wanna make a deal. Yeah, I mean, yesterday. He says that, what does this do? Yesterday was a great example of that. You also saw that on Monday when there was that false tweet

that came out that said there was a 90 day reprieve, market shot up on that also. I think this is a good reminder, you don't wanna get out of the markets here. I know this can be a very nerve wracking thing, we're getting a lot of calls from clients of what should they do. And Cameron, you bring up a really good point

that you tend to get these really big updates, even if this is a bear market, you don't wanna be out when those happen. And some of your biggest days in the market typically happen within a month of your down days. And this is a time as an investor, and especially as a long-term investor, you wanna look at your investment strategy

and say, okay, where am I off balance? Where can I take profits? Where can I reallocate back into the markets? Because it's a question of how long this is gonna take to recover, not if it's gonna recover. The tragedy of this whole thing, as I think all of us know, are those who didn't have the ability to just sit tight.

They got scared, they looked at their 401ks, IRAs, 529s, and thought it was gonna get a lot worse and were forced out of this market through fear, through fear from a self-inflicted incident. And now we're trying to tell people just to hang on, these are moments to buy, not sell. Great piece in the journal today, specific to 529 investors,

how you don't have the affordability to wait. Can't wait around for a market rebound and big recovery for expenses that you have within the next months. For example, that's the tragedy that's going to come out of all of this. You look at the market today and you see the NASDAQ, for example, is down 4.2%. It was down like a thousand points earlier. Christina Parts-Nevoulos is looking at the chips which are getting really beat up today, Christina. Yeah, Scott, you've been talking about it over the last few days.

You know, semiconductors typically first in, and today they are first out when it comes to these market moves. This dramatic flip really just comes after yesterday's 17% increase in the SMH ETF, a good barometer for chips, 18% higher from the stocks, clearly not the case today. Some of the drive though, I have to point out, likely reflects some heavy shorting, short covering with at least 13% of their float shorted within those two ETFs.

So there are some people betting against the chip sector. And if you look at these numbers, you'll see really the damage is still quite substantial. And I mean by the numbers AMD, Micron, On, Marvell, Microchip. All of these names are trading more than 50% below their 52 week highs. And then you got to talk about Nvidia and Broadcom because both those names are driving the NASDAQ 100's movements downwards just showing how much weight these two giants carry in the index. And with macro uncertainties growing by the minute, investors remain on edge with upcoming earnings and whether companies will need to walk back their forecasts in the face of these headwinds, Scott.

Yeah, Christina, thanks for that set up there. I mean, just unbelievable moves in tech in general, but certainly chips. I think you're making the case that what you had first in in terms of the chip underperformance could be first out. Good luck with that. Well,performance, could be first out. Good luck with that. Well, no, that's your indicator. That's your indicator on when markets will ultimately rally.

Why do I say that? Because you think of it from a deleveraging process in terms of positioning. And clearly, positioning was at overweight, going back into 2024 for semis and for technology itself. But you began the deleveraging the process early. Some of the other areas of the market where momentum represented a bullish nature like financials,

I don't think you've really gotten to that point. Can you tell me that we've completely deleveraged the financial sector trade? I believe you can't. So what does that mean? That means on the other side, you have the room for positions to build very quickly once again in semis and in the Magnificent 7, AI adjacent names. And I think that's your

lead. That's your indicator that tells you when you're going to get these bear market rallies. You watch what semis do early on. You watch what the Mag 7 are doing. They're going to be the leaders right now on any bear market bounce. I'm watching some of these financials that you talk about. I mean, they're they're down, some of them relatively less than other parts of the market, which are getting harder hit. Do bank earnings bring any sort of clarity? Leslie Pickers obviously following that for us. She joins us now as earnings start tomorrow.

Yeah. What a time to be a bank reporting earnings right in the middle of a tremendous rate volatility, a trade war uncertainty, heightened concerns about an impending recession as RBC Capital Market said in a note this morning, quote, the upcoming reporting season seems a little like a box of potentially bittersweet chocolates to us. We aren't sure what we are going to get. As our market guru Robert Humm points out, earnings estimates for the big six U.S. banks haven't really changed much since the start of the year. The average EPS expectation for analysts covering Goldman Sachs and Morgan Stanley have come down a little bit. Same is true with Citi.

But as Erica Najarian at UBS points out, the street's EPS numbers in this policy environment could unfortunately prove to be stale on arrival. Najian adds, quote, it is exactly this lack of visibility that is roiling the markets with more questions than answers. She says any positive prints will seem backward looking and stable outlooks may be met with skepticism, and yet any color on the calls that is perceived as bearish could punish the whole sector. It's very tough to envy bank executives right now, Scott. Yeah. Leslie, we'll look for you tomorrow. All of these earnings, of course, I'm sure I'll see you then as well.

What about the banks? Cameron, what do I do? So we are a little bit concerned that there's some complacency within financials. We can't deny the relative performance has been extraordinarily strong, one of the best sectors. However, financials is the only sector that has seen bottom up earnings estimates actually revised higher through the course of this quarter.

So we're going into this earnings season with a pretty high bar. But that's a high bar that includes no M&A or IPOs that have happened this year, very little investment banking activity. The curve is getting steeper now, but it wasn't steepening through the course of the first quarter.

So we are concerned that financials have become momentum names. They're still trading at high valuations relative to their own history, which just suggests that the bar is high. So tomorrow could be a volatile day. Yeah, of course. Yeah, and I think what you also wanna watch

for with bank earnings is what does that mean for the consumer? Because they have a really good read on how the consumer is doing. Yeah, Brian Moynihan, right, is going to talk a lot about that. And I think that's going to be a bigger indication of how the general economy is going forward. So I would be keen to see how their rhetoric is. Financials are Momentum's favorite sector. They have been all year and they remain so today.

There's a risk in that. When we talked about this massive run up in Moment momentum, like the MTUM, obviously you run, for those who might not know, a momentum and quality-based ETF. But JP Morgan and Goldman Sachs were right in that mix. It wasn't all Palantir in terms of these stocks that were running up. In some of these AI data center plays,

it was JP Morgan and Goldman were along for the ride. Now obviously they got hit in the unwind a bit of that, of these AI data center plays, it was JP Morgan and Goldman were along for the ride. And now obviously they got hit in the unwind a bit of that, but now they're caught in this uncertainty of what is a growing bit of uncertainty around the economy. Insurance companies are there, regional banks are there, private equity was there. Remember private equity six months ago? Everyone loves private equity, Blackstone, KKR. So the run up was real, the momentum was validated,

and I will tell you, it still remains in place today. I go back to, okay, everybody knows, it's almost like the numbers are wholly irrelevant. Whatever these companies report from this prior quarter, it's like, yeah, great, whatever. What are you saying about the next? Does anybody expect anything but negative outlooks if companies are able to give outlooks at all?

Outlooks at all, right? I think that's the question. What are they going to say? And that's where I think at least the banks can give us some sort of indication what the consumer looks like, what they know their own earnings look like. I don't know what they're going to say there. That's why I think we really have to see what comes out. But that goes to the point, though. what could surprise us tomorrow? Negative commentary is expected. That's not going to be a shock. What, does anything more dramatically than that prove a surprise? I think listen to the commentary of those that are able to navigate this. Listen to Walmart this week saying we're holding our sales guidance flat because we're going to absorb the tariffs and not pass those on to customers.

Big companies can do that. Small companies can't do that. And that actually says a lot about the state of the U.S. consumer because if companies are saying we can't raise prices, it means that the consumer cannot tolerate price increases and that they're concerned that they'll pull back on demand. That's why tariffs are a negative growth story for the economy because consumers will simply pull back on spending. Well, I mean, they're're attacks, they're regressive. I'm not telling you anything that anybody else hasn't already said.

I would urge the viewers to utilize a bad news, good price action strategy. And I don't mean on one day. I mean over the course of three days. If you get a JPMorgan, a Goldman Sachs, Morgan Stanley, whoever it might be in the financial sector that delivers bad news, and you don't get the negative response and subsequent to that, you see stabilization, and it begins to appreciate,

that's a signal to you that that's an opportunity to buy. Yeah, people talk about that, a stock that actually doesn't go down on bad news. Why? Because there's already a lot of bad news in the stock. Give it a couple of days though, not just one day. And we heard the opposite from the semis when they had good news and the stocks went down

over the past couple quarters. Guys, we'll leave it there. Thank you everybody for helping us understand this better today. And it's been tough to figure out, that's for sure. Cameron, Courtney and Joe, we'll see you soon. We're just getting started. Up next, the former St. Louis Fed President,

Jim Bullard is standing by with what President Trump's tariff pivot might mean for the Fed in the months ahead and the economy joins us after the break. Stocks are off session lows, but still giving back a good portion of yesterday's historic rally after President Trump's tariff pivot. Let's now bring in Jim Bullard. He's the former president of the St. Louis Fed, now dean of the Mitch Daniels School of Business at Purdue University.

Welcome. It's nice to have you on our program. Great to be here on an exciting day. I mean, I suppose. It's been volatile yet again. How do you think the Fed is taking all of this in? I think the Chair had it about right. Let's do wait and see from the Fed's perspective.

I don't think this is about interest rate decreases right now. This is all about how are we going to reorder the global trade arrangements and what effect is that going to have, especially on global investment. I think the uncertainty is a damper to global investment and that's why there's recession warnings coming around. How close do you think the Fed got yesterday or would consider getting in a situation where the bond market does what it did yesterday, if not get even worse than that?

I interviewed Mohammed El-Aryan on this program yesterday. In his mind, they would have gotten pretty close to doing something. Yeah, there's a lot of volatility. Although if you zoom out and look at the 10 year and the two year, they're not trading too far differently from what they have over the last couple of months and years.

So I think, yes, there's a lot of volatility. Yes, it's very upsetting in the markets, but I feel like overall, so far, the markets have been able to handle the sort of volatility that we've seen. What do you make of the continued rhetoric, I suppose, from the White House, obviously mostly from the president, this notion that you can do a full reorder of this economy and that you can go back to the times of yesteryear, however many decades you wanna go back to do that, and bring all of these manufacturing jobs

back to the United States, never mind the fact whether people actually wanna do those types of jobs, but just the idea of itself, because the president is the president. And as long as he continues to talk about that, and if that is in any way part of this strategy, if they actually believe that, how should the Fed and economists think about

what that might mean for future growth, costs, and everything else? I don't think you can go back to the manufacturing percentage of the economy that you had in yesteryear, but you probably could get sort of high quality manufacturing or sort of manufacturing of technically sophisticated goods.

I think you bring some of that back, probably with a lot of automation, to U.S. shores. You do see some of that occurring. And why not have products closer to markets? There's some of that occurring. And also the ability of foreign economies to claim that they've got dramatically lower costs than the U.S. That was once a yawning gap between the costs in the two countries or the developing world and the U.S.

That's not as big as you go forward as those countries get richer over time. So I think there's, you know, you could probably stem the decline and maybe get a little bit of increase in the size of the manufacturing sector. It won't be like 1950, but, you know, it's something I think voters wanted and the president's trying to get it to happen. Well, I mean, I think people would agree with you that for things like semiconductors, for example, where we have had announcements for the future production of those things here,

it makes perfect sense for the security of this country and simply for where the economy is moving in this technological revolution of artificial intelligence. We should have more chip manufacturing here. We shouldn't rely on all these other countries to get chips and have to deal with the nonsense that we do in some cases to get them here. But it's things like the textile manufacturing, for example,

the notion that you're gonna have sneakers sewn together here or t-shirts, undershirts, and all the stuff that you would consider to be that. That doesn't seem to be possible. Yeah, I agree with that. I think there's certainly a security component, and as you go back into this Cold War mentality, which we thought we were out of,

but we're in the thick of a cold war here. Security is a bigger concern. And so you have to think strategically, and not just economically, but also strategically about what goods you want to be produced where. And certainly the Chips Act was in that bipartisan agreement in that kind of environment. Textiles, I would say about lower value goods like that, automation sure seems like it's coming fast and it already is, a lot has been done, but much more will be done in the future. And so what the combination is of robotics and human labor and producing goods is a good question going forward.

Even a car factory today has huge amounts of robotics. Let me ask you lastly, you know, there were times when you were still sitting on the Fed that you weren't afraid to speak your mind, even if it was against what the consensus was either talking about or thinking about. The current view, certainly espoused from the chairman himself, is that right now you look through inflation caused by tariffs as more than likely a one-off until you're proven otherwise.

Is that the way that you see it yourself or do you have higher expectations about what this tariff policy is actually going to mean for inflation expectations? Now I think that tariff policy, especially on this kind of scale, the risk is really about recession and possibly global recession. So that's what markets are selling off here. They're very worried about that. It doesn't have to work out that way, but it might work out that way if everyone retaliates and you get a smooth holly type event here. So that is very worrisome, I would say. The inflation component, I think it's overplayed a little bit. It's not like all these firms can just turn around.

They're selling a good in a market. It's a competitive market. They've chosen their price. They can't just raise that price 25% or 50% or 100%. They're going to lose sales if they do that. There might be a few goods that have very inelastic demand. And in those cases, you might be able to get a price increase. But even then, why weren't you charging that price before if it's so easy to raise prices

in these markets? So I don't think that logic really holds up as well. And I'll say one other thing about this, which is 2018, 2019, you had a trade war going on. I didn't see the inflation component really come on board there. It was really the uncertainty about investment. And that's what caused the slowdown of the U.S. economy, and the Fed did react to that, but it was by going lower with the policy rate. I mean, I hear you when you answer that question, how you started with the beginning of that

answer. you started with the beginning of that answer, the idea that it sounds to me in your voice that you're reasonably concerned about Smoot-Hawley type actions and the dramatically negative effects that could come from this trade war that we've put ourselves into. Oh yeah, I think Smoot-Hawley was debated and then passed in 1930, and the other countries just reacted by, okay, we're going to put up tariff barriers as well, and global trade

collapsed. Now, I don't think at the end of the day that that will be the outcome here, but certainly the probability of that has ratcheted up considerably. And you've got some countries, possibly China, which, because of the domestic considerations, aren't willing to lower their trade barriers. And so, you know, their option looks like just stay at a high level and don't negotiate. So we'll see what happens here. But I think the probability of that kind of outcome is what's kind of markets very nervous big sell-offs since since liberation day.

Given the fact that you're clearly not too worried about inflation you said I believe the words you use I think it's a little overplayed if that's the case then theoretically it would free the Fed up to potentially cut rates quicker than maybe some think if the economy starts to turn south sooner rather than later. I also wonder how they might be thinking about preemptively rather than reactively. How would you answer that? Yeah I don't they can't do the preemptive here because inflation's still above target it's not totally clear it'll come down to target. And if you try to be-and it's a bad environment to try to be preemptive anyway,

because if you lower the policy rate and then the trade-all of a sudden there's a deal with China, with the EU, and everything's fine, now you've lowered the policy rate, and the situation has changed rapidly. So it's best to stay on the sidelines here. I don't think anybody's really worried about 25 basis points on the Fed funds rate right here. And let's see how this plays out. They could move later on this year, depending on how this plays out and whether it really

shows up in the hard data as the slowdown in the economy, as I'm talking about, or, you know, there are some good possibilities here where foreign economies just say, you know, maybe it is time that we reform the tariff system and maybe we just go to a lower level of tariffs across the board and maybe that would be a better outcome for everybody, that would be closer to the free trade outcome and that would be better for everybody. So there's a little bit of upside here. I know it's hard to see it when you're trading in markets on a day like today.

Well, it's of course also how much damage you do along the way to get to the good outcome. And we don't know. Let me lastly ask you before I let you go real quick. If you were a dot, so to speak, where would you be? How many cuts would you have on the ledger for this year? Yeah, I probably wouldn't be too different from the majority there. I do think they have the benchmark idea is that inflation would come down, still come down to 2%. But with all this uncertainty, I'm not sure the dots are really that informative about

what's going to happen. So I'm afraid we're just going to wait and see situation right now. Well, now you open the door for me to ask you whether the Fed should even be giving forward guidance. Well, as you might know, I suggested at some points that we not do the dot plot. But certainly, let's say this, in a calmer situation, the dots would give pretty good forward guidance about where the committee thought the future was going to be in a more uncertain environment. The uncertainty is so wide that the dots may not give very much guidance. But the current way that the dot plot is done doesn't really convey that uncertainty very effectively.

And that's something that the committee could consider reforming going forward. But they've looked at it a lot. I'm'm not sure that we're gonna get much change. Jim, I appreciate your time very much. We'll see you soon. Jim Bullard, former St. Louis Fed president, joining us. Another ugly day shaping up. We are weakening into the close today.

Up next, we'll talk to 314's Warren Pies. He downgraded stocks back in February. We'll see if they've corrected enough that he's ready to upgrade them now. We'll do that after the break. We have another volatile day for the market as you know. Our next guest downgraded stocks in February. 314 Research's Warren Pies joins me now for where he stands now. It's good to see you. Enough damage to upgrade them now? You tell me. Yeah, thank you for having me. We are not officially upgrading stocks yet, but

definitely we're done de-risking, let's put it that way, and we are watching every day for signs to get more aggressive in the equity market. And. Not not an official upgrade- I think they're really too broad components to a market bottom that we want to see you want to see depressed sentiment. We got that- all the retail metrics inverse ETF volume that

we look at- of all targeting funds the things we model for the institutional side everything was depressed. On the sentiment side. VIX at forty five. All those things point to a bottom but we want to see technical confirmation. Philosoph at 45. All those things point to a bottom. But we want to see technical confirmation.

Philosophically, we decide in these situations, whether you want to be early or late. Philosophically, we are going to be a little late, probably. So I think when you look out from here, it's going to be a goodbye and opportunity, but we haven't pulled that trigger just yet for our clients. I mean, as long as rates remain hot, the stock market feels like it's gonna have a problem.

We don't wanna get into another situation where we're literally hanging on every move of the bond market to decide whether we've got a bigger problem to worry about. Yeah, definitely. I would say that's one of the things that's giving me pause here is just like what we've seen out of bonds here has been a little bit disconcerting.

There's been some force selling, of course, rumors that foreign governments are selling some of their treasuries, which I think is one of those nasty potential consequences of the trade war. I mean, it kind of goes back to, do you think that the tariffs that are stated right now, the extensively in place tariffs, are going to stay in place. Our view from the beginning of this is that the policy proposed on April 2nd, and even the policy as it's stated right now, is kind of too absurd and destructive to stay in place. And so that which cannot be maintained will not be maintained. So I

look at it as a negotiating tool more than anything. And I think at the end of the day, you'll see rates settle down and reflect more of the fundamentals of the economy versus some of the stuff we've seen over the last week. But if that's the case, at what point does the market anticipate that or start to move into that? I think most people expect deals

that we would expect there to be some kind of deal, I suppose, to get that number on China down from 145 percent. So when does the market start to suss that out? Well, I think it started yesterday, to be honest. And I think we even saw it today. So the market was kind of in freefall. And then Trump had his press conference. And when did we turn around and rally 100 points is when he said, hey, I want to make a deal with China.

I think what the market is seeing is just what I said. Like, OK, we can all have economists come on TV and talk about how destructive tariffs are. We all know that. If we run the tariffs in the current state that they're in, we're gonna disrupt global supply chains and have a recession. We know that.

But when the market is starting to, as you said, suss out is that we're not gonna be here. This is gonna be a negotiation. And so each one of these deals as I see it is gonna be a potential catalyst for the market to move higher as we go forward. So yeah, I wanna get my technical confirmation and everything like that. But as it go forward. So yeah, I want to get my technical confirmation and everything like that.

But as it's set up right now, I just don't think the negative feedback loop that's hitting the White House is starting to have its impact. That's what the market's seeing. Yeah, we're giving back some of the gain from yesterday, but we were up, you know, this was the tide for the third largest gain

in modern history on the market. So I'm not reading too much into just like a little bit of a sell off today. I mean, I know we're it's crazy that we're used to these types of move moves where where you would describe this as a little bit of a sell off with the S&P 500 down 4%. You know where I'm getting at, like, okay, welcome to the new world of a volatile stock market. Are you surprised that we didn't get follow through from yesterday? Not really.

No, I mean, what I did is I went back and looked at all the days where the markets rallied 7% in one day. And so, because I've heard a lot of people say, hey, this is not bull market behavior. You don't get rallies like that in a bull market. And that's not really true. Like I said, there've been eight of these days where you're up 7% in one trading session. Four of those days have been around the bottoms,

major bottoms of bear markets. So start of a big rally. And then four of those cases have been in ongoing bear markets. So three times 2008 one time in early March 2020 where there were bear market rallies that faded and so what you see in those cases is that within the next if it's a bear market still within the next week you will break lower below the old lows and fade off this rally and so that number to watch is 49 82 in the current market.

So giving back and consolidating, that's fine and normal. It doesn't take us out of a potential bottoming behavior. But if we break down below 49.82, then the bear market still has more room to go. I hear you. It's just, you know, these historical references and trying to glean things from how markets have performed in Times past or so difficult in part because this was an own goal right we scored on ourselves and

Now we're facing Pele and Brazil in the heyday as The greatest striker in the world and we're trying to figure out how we can still win the game But we did a lot of damage to ourselves already. Oh Yeah, I, look, I just think there's I'm sympathetic to some of the problems that the Trump administration is trying to solve with the with the with the proposal. But I think it was I mean, it's been we're beating the dead horse. But yeah, it was just it was just an awkwardly done thing.

It was absurd policymaking. And I think it was counterproductive. Even if you're a Trump fan, I mean, he risks his entire legacy and spends all of his political capital here. So yeah, we're behind the eight ball. I think he's scrambling. I think you're seeing a little bit of an internal struggle there where you have the Besant wing versus like the Lutnik and Navarro wing of the administration. And it

does seem like, I think this is what's going on in the market. I think that cooler heads are prevailing. The Besant wing is taking control. Some people will say the bond market got Trump's attention yesterday. Maybe it did. And I think what we see going forward is going to be a de-escalation of all that rhetoric, including just like you said today, some kind of a deal around China that I think ultimately allows the market to get comfortable and continue to move higher. All right, Warren, we'll talk to you soon. Thanks man, I appreciate it.

Thanks, Warren. Apple shares falling in today's sessions. Kind of been a trend lately. Steve Kovach is here with more. Steve? Yeah, Scott. It's hard not to be baffled by the optimism around Apple yesterday. Yeah, things got a lot better, but it's not out of the woods yet.

Not even close though, hitting that intraday low of nearly 8%. That extra China tariff today woke folks up to 145% but there's some good news here because look Vietnam is down to 10% a lot of products like air pods and watches I think some Mac books as well are made there and then India also down to 10% we hear so much about India especially during covid as Apple is attempting to migrate some of its manufacturing over there to counteract some of those COVID policies there.

And we hear stories all the time about like just Reuters reporting this morning saying there is these plain fools of airplanes of iPhones going over to the United States in order to get ahead of these terrorists. But I did want to talk about how people are kind of gaming this out, Scott. We had Morgan Stanley's Eric Woodring had another really interesting idea this morning in his note for Apple to sort of mitigate these tariffs. Not gonna be a panacea, of course.

They can increase the storage for the base version of each model. That would improve margins. And they've done that before in the past. It's kind of a quiet way to increase prices without like really increasing them. Still not going to be enough, but it could help Scott. All right Steve, thank you very much. Steve Kovac, we're in the market zone now. CNBC senior markets commentator Mike Santoli is here to break

down these crucial moments of the trading day. It's good to have you. I feel like and I've been you know talking and talking to some folks on the floor that you know the risk is the upside just because you know unless the bond market starts to go haywire again, obviously. But again, it's one comment from the president that you got to look out for if you want to get too negative now. Well, yes, or at least the risk to the upside would be sudden and painful if you were standing against it. And there's no doubt about that.

I mean, yesterday's action, as much as we wanna say, oh, it was really just kind of a swing back from the negative extremes we got Friday and Monday, I sort of learned not to dismiss it as a fluke when you see historically high volume, almost everything up, a complete chase for exposure that you're buying back or that you need to reestablish. So that to me means you kind of have the lows somewhat defended.

Maybe we're talking about a trading range, maybe something could rocket us up to the top of it. Today's action, you can survive it. If you just kind of tested the range again, gave back some of it. The thing that I think I would be mindful of is you have stocks down, bonds down in price, oil down, dollar down hard. Okay so basically people are turning pretty much all dollar assets into cash or something owned elsewhere. Hey gold's green. Gold of course is green. So I think that without trying to suggest that this is going to be some destructive stampede out of our markets

that's where the marginal dollar seems to be moving. And I think we'll be lucky if we come out of this, and I've said this since the announcement last Wednesday, if all we're doing is being on recession watch and talking about how much S&P earnings have to come down and what do you have to do to price in a downturn in the US economy. We'll be kind of lucky because it'll mean we didn't really just crack a huge hole in the financial system and create some volatility,

a spiral that we can't get a hold of. So we're not there yet. I think there's still a world, and talk about upside risk, where this somewhat looks like the 1998 panic, the 2011 US downgrade panic and European sovereign debt and all those things where it basically looked and acted like a bear market,

but it ultimately was able to find its footing because the US economy mostly held together and maybe you eventually got some policy help. Look, and we're gonna, we think, get some policy help. And we, you know, investors still think they have a pro-growth and pro-investor and pro-market president and that ultimately that's going to win the day. I think the policy help that you could plausibly look for more in the near term at this point is obviously rapid de-escalation with China. That's policy help. And then if you get inflation much more friendly even beyond today's number

and all of a sudden it feels like the Fed is at least going to be able to talk like it has the room to cut. I don't think we want the conditions under which the Fed is rushing to cut right because that means that they are doing an emergency response as opposed to just managing the rate the way they want. Yeah you did not want the Fed to have to do anything relative to the bond market. Definitely not. You want these issues to get settled and calmed down on their own. Sure. Or you have a bigger problem if you force the hand of the Federal Reserve of the United States of America to come in and save the day.

We don't want that. No. And you definitely don't want it. You know, yesterday we sort of tested levels where it seemed as if we got the attention of the administration. We didn't get down to levels where the Fed would be motivated, you know, in terms of the illiquidity of the Treasury market or anything like that. You're seeing stresses, but you're not seeing anything crack at this point.

So I would remain on those terms and say, probably, unless something really nasty blows loose, the floor might be in for the short term for the S&P 500. As Warren was saying, if you lose this all together quickly you probably have you know another leg lower but we're a while from that we're several percent off the off the lows. Yes I mean I know it feels tremendously worse that I mean we're down 10 and a half percent year to date. Yeah.

It feels like we're down a ton more than that because we've mentally been through so much for sure. Plus you are also like ups 7 percent or something, go 5% year to date at one point, right? So you really gave it all for the most part back in a hurry, unusually quick. There's a lot of work about if you reach a 20% drop quickly, you actually have a better time looking forward than if in fact it was a slow grind lower. I'm not sure that's something we can latch on to. These volatility clusters tend to last a little while but ultimately it wears down the fast twitch muscles and something settles into the rim. It was only down a thousand a win today considering where we were down 2100 points on the Dow. It is what it is. I'll see you tomorrow into overtime.