Closing Bell - Closing Bell: 5/12/25

Episode Date: May 12, 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.

Welcome to Closing Bell. I'm Scott Wobner live from Post9 right here at the New York Stock Exchange. This make or break out begins with a stock surge today and what happens now that the U.S. has rolled back its tariffs on China? We'll ask our experts over this final stretch including Schwab's Lizanne Saunders. She will join me in just a bit. We're looking forward to that. In the meantime, let's show you the scorecard here with 60 to go in regulation. Take a look at that. 4% on the Nasdaq, three percent for the S&P. We're pretty much at the highs of the day, we're there about, and we've been strong from the get-go following this weekend's trade meeting and news of that breakthrough. Tech and chips, they are

leading. That's why the NASDAQ looks the way it does this hour. Discretionary doing well, along with China exposed stocks like Nike and Caterpillar and Starbucks and just about anything that has exposure there is up big. Defensives like Staples and Utilities they're going the opposite direction and for obvious reasons today. How about Golds? Sharply weaker. The VIX also in retreat today below 19.

It does take us to our talk of the tape. Is it the all clear that we've been waiting for? Let's bring in Avery Sheffield, Vantage Rock co-founder, CIO and portfolio manager back with us at Post9. Nice to see you again. Great to be here. How would you answer that? Is this all clear? Nothing's ever all clear, but I think that this is a materially positive outcome. And I think 90 days from now, both the United States and China have seen the very negative consequences of decoupling. And we're probably unlikely to have tariffs higher from here unless there's some geopolitical

event that I don't foresee. So yeah, I think that things are definitely much better. We're getting back to closer to a place than before the tariffs. I think 30% tariffs from China can be absorbed by both economies as well as the 10 percent floor elsewhere in the world. So if not full all clear, do you feel like it's enough of a lifting of the fog for both investors and companies that we can take at least the worst case scenarios off the table? Absolutely.

Yes, definitely, definitely. Because I think the fact that we've seen Trump react to how dire the consequences could be from tariffs that effectively stop trade, I think that's why we're unlikely to go back. And we're only going to have tariffs at a level that can be absorbed and digested. OK, so what do I do? If I'm an investor now and I was somewhat paralyzed by the unknown, I thought maybe there would be an eventual good outcome to all this, but I still wasn't certain. I'm worried about a recession.

The Fed tells me they're not going to cut anytime soon. So now that I feel like that's changed, what do I do? Yes. Well, I think that you can lean, I mean, you maybe have been over the past few weeks, but you can lean into less expensive cyclicals, right? Because we're in a backdrop that is going to be okay. I don't think this is all clear that the economy is going to go gangbusters, right? But we still do have about a 3% increase in the fiscal deficit, right?

So the fiscal is still expansionary. It has been all year. You remove this, and that's a pretty benign economic backdrop. You do have the counter of interest rates higher, and I think it's going to be hard for Trump to accomplish his really low interest rates with the deficit where it is and the expansion as well as tariffs coming to a more manageable level. So you have the headwind of rates, but you have the rest of its positive. And so that to us means that stocks that are exposed to the economy, that are reasonably

priced, so valuation hasn't gotten extreme, can probably outperform in this type of environment. I mean, you could say, well, perhaps this frees the Fed up to actually cut, right? Because you've removed the tariff-induced inflation out of the picture. They were poised to cut anyway before all of this happened. And then they had to say, well, now we might be in conflict with our two mandates because we thought we were in pretty good shape. But now we've got an inflation issue, potentially,

to think about. How about that? Is that too far-fetched? I think it is. I think the tenure is telling us that there's no reason to cut, right? The reason you cut is because the economy is really slowing and the economy is holding up.

I mean, all of us have been worried about the economy slowing, and we do have at the low end of credit, you are starting to see some signs of stress, but they're pretty minor. We're still at full employment. Businesses are gonna be more optimistic about spending. And so I think the Fed would be very concerned

about reliving what happened last September, right? So everyone in the summer thought like, oh, the Fed's going to cut rates. All rates are going to come down. That's going to be great for the economy. But the problem is the Fed cuts rates too early. What happens is the 10 year blows out. That's not great for the housing market.

That's not great for long-term investing. So I think the Fed's still gonna meet a place where they're gonna stay put because they wanna save that fuel for when they really need it, and they definitely don't want the 10-year to be going higher. Unless they think they're just too restrictive now

and in all things being equal environment, right? But the 10-year would go even higher. If they cut. Because it's stimulative. Right, because if you cut when you don't need to cut, you're basically just freeing up money for the economy. I mean, that's, yeah, that's definitely my concern. And I think the markets are telling you this, right? Rates went up, not down with tariffs coming down because it's bullish for economic activity.

It unleashes the money supply. What about the idea that, you know, as all this was unfolding, you had a lot of money going into other parts of the world. Does that eliminate that? Are we back to talking about US exceptionalism again today? I don't know that we're back to talking about full US exceptionalism, but I do think that you won't see the same fear factor of investing in the United States that you did before. But I think that people, that this whole event has led people to pay attention to the opportunities that exist elsewhere in the world. Right? So already

people were starting to pay attention to Europe. They're paying more attention to Europe. They're paying more attention to other economies. And there are a lot of developing markets that are leveraged to China trade with the rest of the world, including the United States. So I think you can continue to see money move into those markets, but also people less fearful of the United States. Stay with me for a second. I want to focus a little more on this tech trade, which is extraordinary today. NASDAQ, as we said, is up better than 4%.

Steve Kovach is here with us on that front. You got a lot of things going on on your beat. Not only are all these stocks up, but there's some Apple angle that we've been following throughout the day as well. Yeah, that's right, Scott. President Trump this morning was saying he spoke to Apple CEO Tim Cook about those temporary rollback of the China tariffs and also kind of said that he thinks Tim Cook is going to be spending more than that $500 billion Apple has already committed.

No comment from Apple on that. And I just note that the president has in the past just said things. Apple is going to do things that it never actually does at the end of the day, like building factories, et cetera. But I'd also note that the tariff picture really hasn't changed for Apple because of this rollback, because remember about a month ago, Scott, we got those exemptions for things like laptops and smartphones and all those other stuff that Apple already sells. So the fentanyl tariffs were already in place.

The Liberation Day tariffs got the pause. So nothing really changing for Apple at least yet. But that brings us to another report we got about Apple today in the Wall Street Journal saying that Apple plans to increase prices on the next lineup of iPhones that we're expecting to come out here in the fall. And this is pretty interesting because let's take away tariffs out of the equation for just a minute here and talk about iPhone prices and iPhone sales because iPhone sales have been down to stagnant coming out of COVID for the last two to three years and they really need to find a new area of growth.

It wasn't artificial intelligence. Maybe it's something like this new thin phone that they keep talking about that's reported to come out this fall. But at the same time, price increases could actually make sense, and they could be leveraging their pricing power here as opposed to mitigating tariffs. Because the last time they raised prices on the regular iPhone lineup, that was in 2020. You can see it right here.

They brought it up to 799, raising about 50 bucks. And then the pro phones, those prices haven't increased. They've been stuck at 999 since back in 2017. So there is some pricing power at play here besides just mitigating the tariffs. For example, if you run over your iPhone with a truck, Scott, you need that phone. You're going to go out and buy one anyway. And that's the pricing power Apple has. Yeah, appreciate that, Steve.

Thank you for a little rundown on why Apple shares are up better than 6% today Let's now bring in Wells Fargo's Samir Samana, Avery Sheffield, of course still with us Samir i'll spin you towards the tech side of the story today since that's where the biggest part of this gain is Does this make that trade again the leadership? It does. I mean we upgraded tech on April 4th to favorable, and I think we got it just right. And I think, you know, whether you look at kind of the fact that yields are pretty still well behaved, if you look at the fact that, you know, a lot of AI spend is still, you know, kind of going on and the fact that, again, the president seems to have warmed up to the tech sector more broadly, we do think that that's where leadership is.

But I would say it's maybe a little ahead of itself. Comm services is another favorable of ours and I'd maybe look a little bit there. How about that, Avery? I mean, it sounds to me like you would favor the more cyclical areas of the market over this idea that tech's gonna reemerge as the leadership, is that right?

Well, I think there are technology companies that participate in that, right? I wasn't trying to say that you wouldn't buy reasonably valued tech companies that have really strong growth prospects. I think that they're absolutely a companies in technology that fit in and you know our favorite way to play it is really an interactive media. So the interactive media companies showed through this earning season really very little negative impact from the tariffs, from the kind of the modest economic

slowdown that maybe we saw going into it because of the efficacy of their ad platforms, right? They're targeting better, they're continuing to monetize better, both their content and their advertising. And that doesn't look like it's going to subside anytime soon. And with the continued benefits of AI, we would expect, you know, ongoing strength there. And those companies are just very reasonably priced. My concern with technology as a whole

is that you still have some very expensive companies that have very high expectations built in. And over this earnings season, we definitely saw those that are more expensive with very high expectations, even if they're still growing, but not growing at the same rate, really getting hit. So we're not in the environment we were a year

or a year or two ago, where if you're a high growth company like your multiple goes up kind of no matter what there it was definitely a more discriminating market. So when you say reasonably valued it sounds to me like you'd put mega cap for many of them in that basket. So I'm in the mega cap I absolutely would put in that basket. Yes, yes. I'm definitely not saying all mega cap is negative. I think within mega cap you've got very dispersed evaluations, right? You have very different business strategies. So yeah, I would pick those that are really just more reasonably priced because that's

in an environment where the 10 years, you know, getting closer to four and a half percent, I don't think that we're going to see, you know, stocks that trade at 50, 100 times earnings continue to have valuation expansion. They're going to have to that traded 50, 100 times earnings continue to have valuation expansion. They're going to have to have very meaningful earnings growth. And it's just easier if you buy a less expensive company that's solid to see that stock go up and not have hiccups along the way. All right.

Stay with me now because I want to focus on other areas of the market that are having a great day. Financials among them from the banks, private equity, almost everything in between. Leslie Picker follows that money for us and joins us now with a look. Hey, Les. Hey, Scott. Yeah, along with other risk on assets today, financial stocks on the move much higher on the prospect that this weekend's Geneva trade war detente may avert the worst case scenario for the economy. And of course, that is critical for bank credit card and private credit borrowers.

The KRE, an index of regional banks, is up more than 5% today, while the KBE, comprised of larger banking peers, is up nearly 5% and has almost recouped its losses year to date, kind of a round trip there. And credit card providers like Synchrony, Discover, Capital One, are some of the biggest outperformers in the sector in hopes that the trade talks will allow the health of the consumer to continue to thrive. That was a concern recently. And alternative asset managers like Apollo, KKR, and Blackstone also gaining today with

the hope that progress on the tariffs means less impact to their portfolio companies, supply chains, and that the stable markets or the prospect of more stable markets may help open that window for IPOs and M&A. Scott? Yeah, just with the doctor ordered there. Les, thank you. Leslie Picker. Samir, financials, large cap ones are high on your list, right? Yeah, I mean, look, we're favorable there. If anything, I would say if there's a dark horse pick for taking the leadership baton from tech and some of the other growth sectors, I think it is financials. I think we are now living in a world with probably percolar inflation and probably percolar interest rates. Both of those translate into just much higher profit

margins and a lot more optionality with respect to running a financial business and then you take into account that as certainty kind of makes an appearance we should see M&A start to pick up, deal flow start to pick up. I think financials look really interesting here. There's going to be a moment for these stocks. This clears, I mean, the fog was hanging pretty heavily over these kinds of names. I would absolutely agree. Yes.

I mean, I would just add that we also are likely to have deregulation among the large cap banks and we're likely, as a result of that, to have share in private credit shift back to the banks over the next several years. So the regulatory backdrop, like, probably will not be, has not been as good of a prospect as it has been for multiple years. You have the yield curve steepening. I mean, maybe the Fed will cut, but certainly the long end coming up is positive for them. And what's really nice about the large cap banks is that they have, in general, tended to be underwriting more conservatively, right? Because we still do have a low income consumer under pressure. We still do have those companies that took out loans at very low interest rates, their need to refinance at higher interest rates. And if they don't have really strong pricing

power can get caught up. So I think the low end of the credit spectrum, look, we're not seeing breaks, but like there's some risk there, but the large cap banks in general, you know, are lending in just in higher quality credit or in lower quality just underwriting it with the right interest rate where they can do well in this type of backdrop and they're so recently priced You know, we would expect them to continue to do well. Yeah, you need the economy obviously to stay strong on that note Let's bring in our senior economics correspondent Steve Leaseman I mean two prongs to your story today I mean, two prongs to your story today. Really, what this means now for an economy

that may have been heading into an abyss, and also what it means for a Fed that's made it clear its intent on being patient for a while. Well, let me see if I can handle both of those, Scott. First, futures markets quickly priced out, a summer Fed rate cut after the U.S. deal with China for that 90-day pause on the most extreme tariffs.

And now they see just two cuts this year. The probability of the first cut in July, it's fallen to 42% from 69% on Friday. September now priced with an 82% probability of that first cut. Second cut now priced in for October. A third cut, once priced for for December that is gone for this year Markets clearly bet the Fed would meet the stagflation threat by responding to the weaker growth side But the risk of both higher inflation and lower unemployment I think right now are both somewhat reduced by an easing of trade temp tensions Christmas goods shipments

Look to have been saved but the dangers not gone moments ago The New York Times released this quote from an interview with Chicago Fed President Austin Goolsbee commenting on these new tariffs. He said, it is definitely less impactful stagflationarily than the path they were on, yet it's three to five times higher than what it was before. So it is going to have a stagflationary impulse

on the economy. It's going to make growth slower and make prices rise. Despite the agreement, some tariff-related price increases are certain to hit the economy. 30% is still a big number for China tariffs. Separately, the Treasury reported a record $16 billion in April tariff revenue, nearly double the previous record of $9 billion and $200 billion at an annual rate. So that's real money now coming from the economy for these tariffs and I guess it goes down but how much it goes down is it is it important question yeah remains to be seen as

well Steve thank you for that that's our senior economics correspondent Steve Leesman Samir I'll send it back to you the idea being that this breakthrough if you want to call it that hasn, has not necessarily eliminated the great risks to the economy according to Goulsby, but they've certainly reduced them. Yeah, I mean, look, I would agree with that. And I would say, you know, look, this is a mulligan for investors, right? You're back to levels where you kind of get to do a do-over, right? You get to see levels before, you know, Liberation Day.

And so I would say look at your small cap exposure, look at your emerging market equity exposure, look at your consumer discretionary exposure. If there is any disappointment, if there is any disappointment on the economy or on interest rates, I think those are the three areas that are probably most vulnerable

and you get a chance to kind of do it all over again. But I mean, if last week we were still concerned about the recession risk being high, where are you today on that question? As I was to say, what are the chances in your mind that we're going to have a recession or an even deeper slowdown from the shock that we've already experienced that it still has to be filtering through the economy? It's just going to be on a lag.

Yeah, I mean, we're not in the recession camp, but clearly things are going to slow, probably in Q3 especially. Maybe Q2 is okay because there's some front loading of purchases because of tariffs going into effect in 90 days. But by Q3, Q4 will definitely be slowing. And if there is a shock, we think the economy is very vulnerable. But again, hopefully we've kind of learned a lesson and we all get to kind of move on as unlikely friends from here.

Why do you see limited upside in the near term? Is it simply that we've come a long way in a pretty short period of time? We just cleared a big dense fog that was over us. And as Avery and I were talking at the top of the show, now we can focus on tax cuts, deregulation, and all that other good stuff. Yeah, I think the tricky part is

the multiple's not gonna come back. So even if you gave me our full earnings number to start the year around 275, if you just put a 20 multiple on it, that only gives you 5,500. So I think the tricky part is once you dent the confidence, it takes so long to rebuild it that you're just not going to get the multiples back probably until 2026. How about that, the multiple? Yes, I think that's why I'm more concerned about more expensive stocks.

The multiples are so high that it's hard to have them go higher given that we don't have massive fiscal stimulus. And the earnings aren't good and are going to be strong enough to carry the load. Well, I mean, certain companies will be, right? There are always those companies that have a product that's so compelling, it's such a great price point that they're going to grow into them. But as a whole, the bar is higher now than it's been before. And so we prefer to focus on those

much less expensive companies, companies in general, much less expensive than the market, or if they're around a market multiple, growing much faster than the economy as a whole, because we are worried that valuation for the market as a whole is going to be capped. All right, great. We'll leave it there.

Avery, thanks for being here. Appreciate it very much. Good conversation. Samir, thanks. We'll see you soon. Thank you. That's Samir Samana All right Let's send it to Christina parts and nevel us now for a look at the biggest names moving into this very big close Christina let's start with shares of NRG Scott to touching an all-time high and on pace for their best day since July

2017 on news that will acquire a power portfolio from LS energy in a deal worth $12 billion the company also reported a major beat in its Q1 earnings earlier today, so a double whammy, and that's helping shares climb 25% higher. Retail stocks, Amazon, Target, seeing large gains today after the US and China, we talked about it, agreed to suspend most tariffs on each other's goods for at least 90 days. But you can see on your screen, look at that red, it's Walmart. It's notably absent from the gainers. The retail giant had been viewed more of a safety play during trade tensions with its diversified supply chain focused on value. Walmart really faces a little bit less upside from the tariff reduction than competitors

who were more exposed to Chinese exports. And so that's why you're seeing just the discrepancy between Amazon Target and then Walmart, Scott. All right, good stuff. Christina, thanks. Christina, parts of Nevalos. We are just getting started here up next. Star strategist Chris Verone flagging the one sector he says could hold the key for the market's next move. And later Schwab's Lizanne Saunders is with us.

She'll tell us if she thinks it is in fact the all clear. We're live with the New York Stock Exchange. You're watching Closing Bell on CNBC. Well, the House committee has released their first initial version of that major tax package and we're starting to get some of the nitty gritty details that lawmakers have been negotiating over. One of the main sticking points, of course, in this bill was the deduction for that state and local tax, the SALT. According to this version of the bill they are raising that cap to $30,000 up from $10,000 but only for those who are making $400,000 or less from there it would phase out and if you are making $500,000 or more you're just back to that $10,000 cap we're also seeing there are a number of

wins for President Donald Trump in this bill things he campaigned on like no tax on tips no tax on overtime deductions for seniors are all Trump in this bill. Things he campaigned on like no tax on tips, no tax on overtime, deductions for seniors are all included in this package. Now granted, these provisions are pretty limited. It's not simply for anyone. There are a lot of caveats as to who gets to actually get no tax on their tips. And then we are seeing a number of other things,

including some revenue raisers. This includes a tax on college endowments, particularly for colleges that have large endowments and a smaller number of students. It could be up to 21% and then higher taxes as well for private foundations with high assets. Scott this is a almost 400 page bill we continue to comb through and learn new things about it but the House Ways and Means Committee is going to be starting to mark it up and amend it at 2.30 tomorrow. And we expect to vote sometime,

it could be early on Wednesday. So this is not necessarily a starting point. It's maybe midway through the process, but still up for negotiation on a number of these points? I would say members have been discussing this from behind closed doors for a number of months now. I would say members have been discussing this from behind closed doors for a number of months now. They are finally showing their work. We are finally getting some actual details. But of course anything that has to go through the committee, go through the House,

then it has to go through the Senate. There is a long process yet to go, but I would say that we are finally seeing some stuff on paper and that is a major step forward into what is ultimately going to be in this tax package. No doubt. A little bit different though obviously when things become public and then the court of public opinion among other things gets to weigh in and then the lawmakers hear from their constituents too. Emily, thank you.

Emily Wilkins joining us with the very latest in Washington. All but two S&P sectors rallying today and our next guest is looking to one area in particular to confirm the market's overall strength. Joining us here, Post9, Strategist Research Partners, Chief Market Strategist and Partner is Chris Ferrone. Welcome back, it's good to see you. Great to be here, Scott. If we were overbought or close to it last week,

what are we today? Yeah, I mean, I think that's the challenge of the next couple of weeks, really separating the tactical call, which is overbought, with the more strategic view that, hey, in evaluating the character of this rally off the lows, we've seen some good things. Namely, finally the internals have expanded here.

Something like 60% of the S&P's making a one-month high today. That is generally in the ballpark of what you wanna see to kind of confirm durability of an advance. I think secondly, financials never really deteriorated on the way down, and they've led on the way out here, as have industrial. So two of the, what I would say, financials never really deteriorated on the way down and they've led on the way out here as have industrial. So two of the, what I would say three important sectors are in gear.

I think the remaining question is, can we get discretionary back in the fold here? You'd say that's the biggest question for confirmation. Yeah, if you look historically, the two sectors with the highest correlation to the market itself are discretionary and industrial. So to get both in gear is really confirmation that the market has new highs on its mind. So I think especially discretionary here, given that it's rate sensitive, given

that it's been in the crosshairs of all the trade and tariff talk, to get discretionary back in the fold would really be kind of the trifecta of the three sectors we care about. Aren't all tactical calls of last week, they're like obsolete now, right? I mean, who cares about them now? We just reset the goalposts, didn't we? You know, I think certainly if you look at the internals, we have probably reset the goalposts here. And, you know, go back four or five, six weeks ago, all the conditions were there for a very good rally. The key in those oversold rallies is does it have the character that you typically find in

the longer term advances and I think more and more certainly this advance is checking those boxes. What the next couple weeks looks like is challenging. When you've seen these big expansions in one month highs, the next three or four weeks can be a coin toss, totally random. The next three and six months, generally pretty positive. I feel like though, yes, but one was based more technically speaking, and this particular time now might be fundamentally based. We've cleared, as I've said, the fog in large respects to allow the fundamental backdrop of the economy to be better than it otherwise might have been. We got so oversold that we were due for a technical bounce, but now if we can add fundamentals to the picture, doesn't that matter more?

Well, let's think about two things in that respect. So the S&P is up about 20 off the lows. 17% of that advance came before we had the clarity of Sunday. So if we're thinking about the market as a discounting idea here, certainly had most of the strength before that. I think secondly, the credit conditions and the financials really never confirmed all the recession fears out there. So if you look at the last four or five, six weeks when I think the general view on

the street was this was an oversold bounce but in a deteriorating macro environment or tearing economic balance. You kept hearing about. But financials pushed back on that and did credit. I mean, credit as of last week was basically back at the tights. So you never got that confirmation that there was an economic event playing out.

So it looked more in that respect like a 98 than it did say a 07 or 2008. Well, of course. And then the data itself confirmed what the market was probably telling it, that we weren't as close to an economic calamity as much as some thought, right? The most recent jobs report confirmed that.

So we're not falling off a cliff. Yeah, and I think that's been the leadership message as well. When you have industrials making new relative highs, it doesn't sound like an economy that's on the cusp here. Financials, I mean, the bank stocks in particular, look at Bank of New York, look at Wells Fargo, look at Goldman Sachs. Look at them all today. They're basically back at the highs. Private equity is finally moving. So it was the one part of the market that really never confirmed all the consensus agitation about where the economy would go from here.

I think the question moving forward, we got to watch the 10-year yield here. That's the one thing out there. I mean we're back to this 445, 450 range. Above 460, you begin to raise an eyebrow. At what level do rates actually start to work against you? How do you think about that question? Because again, we're back to, well, okay, it's okay. Rates are moving up now because we've eliminated the worst case scenario out of the picture. And now the economy's going to be just fine.

And you know what? The Fed, now that's pushed off till September. So we're not getting any cuts in it. So this is going to be a pretty unsatisfying answer but when you look at the last two years the only correct call on rates has been no call. You've been in a range for basically two years. I think to push up and out of that range you're talking about 460, 465. Above that you begin to wonder okay is this going to work against the consumer now.

I find it curious the home building stocks are outperforming a touch today, but they're not as dominant as other parts of consumers. When you look at discretionary in aggregate, where has the strength come from? Travel, airlines, cruises, not necessarily your doorables. I think it's important we watch the doorables here if they start to respond negatively to higher yields, and then watch these banks.

They've been so good, but if banks start to work against you with rates up, that's not the best message out there. Yeah, you know, housing is obviously an issue. We'll follow it. Chris, thanks. Thank you as always. Good to see you here at Post 9. Chris Ferrone up next. Schwab's Lizanne Saunders is with us. We'll get her first reaction now to today's big time rally. She'll be with us right after the break. Welcome back. The big question is this the all- clear investors have been waiting for and is now the time to increase your exposure to stocks? Lizanne Saunders is Charles Schwab's chief investment strategist and joins us now. It's nice to see you. Nice to see you, too How would you answer that question? I

Don't know. I mean, that's the honest answer I think I think based on what we knew at the time the near-term economic data was still pretty decent I think we probably overshot at the time the near term economic data was still pretty decent I think we probably overshot at the April 8th lows or intraday on the the ninth in terms of discounting the near term negative impact of what was happening or at least what we knew at that point. We may now have overshot on the upside in terms of just this delay suggesting that we're in the economic all clear. I think we're still going to be at the mercy of some of these headlines but clearly we get these rip your face off rallies. I

remember on April 9th I was at one of our conferences and I was speaking that morning it was before the announcement of the delay of the reciprocal tariffs and talked about the nature of a market like this with high volatility as you can get these rip your face off rallies. We may at some point near term get to more significantly overbought territory and sentiment could provide a little bit of a swing factor. But this is an example of better or worse mattering more than good or bad. And things are better today than they were last week.

If they're good enough that I can take recession off the table, does that tell me that I think stocks are more fairly priced today than I might have thought last week? If recession is off the table, then that's a that's a fair bet. If you look at past serious corrections, meaning, you know, you go down by more than 10 percent, but maybe you just come just shy of bear market territory using just the simplistic 20 percent rule. The differential when looking back at history of those severe corrections that either do or don't turn into bear market

is generally that dividing line is recession versus no recession. I think the odds, the odds players, for the most part that I've seen, have lowered the odds of a recession based on this. I don't know that it's been eliminated based on this because we're still talking about a delay, not to mention the fact that at least as it relates to imports from China, we're now talking about a 30% tariff. That's well better than 145%. But if just that had been announced on liberation day, that was a significant upside, maybe somewhat known shock. So I think the ripple effects into the economy have not fully eased by virtue of this.

But even if recession is still in the realm of possibility, the magnitude has probably been diminished by virtue of this de-escalation. That's kind of the Austin Gulls Gulsby perspective this afternoon speaking to the New York Times that yes maybe we've taken a lot of worse case off the table this is my paraphrasing obviously not his direct comment but that we are still susceptible to an economic shock from all of this that we may not have seen yet because of exactly what you say. I think that's absolutely a fair point. We know there was a tremendous amount of tariff front running. That did a couple of things. It boosted inventory such that particularly many smaller companies that were really at the mercy of some of the tariffs on imports from China

built a little bit of an inventory cushion but even for the larger companies the build up of the inventory cushion coupled with the 90 day delay means that I think companies can maybe play around with pricing to see what sticks they've got the inventory base that they can do that see what they potentially can pass on to consumers, what they might have to eat in profit margins. And so I think it still means that the economic outlook is tricky. What will be interesting to see is if there's any change in terms of the companies that have withdrawn guidance altogether, or whether we continue to see an on pace number of companies withdrawing guidance, given what is still somewhat uncertainty.

I think if you, interestingly, if you were to see some companies either that withdrew guidance or are now affirming guidance, that would be an important tell that the economic hit is one that they don't see as terribly detrimental, but we probably won't get, it'll take until next earnings season to get a sense of how stable profit

margins are and that's a function of how much flexibility companies have to pass on those price increases versus eating in their margins. Are there areas of the market that you just didn't like last week that the news of the weekend forced you to rethink about? Well you know Scott I think we talked about it about a month ago, we neutralized our sector recommendations because of just rampant sector volatility. It's akin to what we did back in the early part of COVID when you had a large number of companies with strong guidance. It was an incredibly murky outlook and felt it was really tricky to try to have a tactical call on sectors. And for now, we stay in that that mode but we have been very factor focused I

think in a backdrop like this some of the- more stable oriented factors like low volatility like like stable dividend yield- those I think in this kind of risk on environment. And to fall down the ranking spectrum in terms

of sector factors and you get more of those traditional growth oriented factors and higher volatility names prior, you know weak names Finding some momentum. So I think there could be a factor shift at least those that traders tend to focus on Away from those standard risk off factors to more of the risk onset of factors. I mean, so I know you think, you know, bigger picture, like you're just sort of outlining and not of the moment.

It sounds like you say tactical calls in this environment, just especially perilous, because we still are going to be headline driven and it's impossible to either time or be tactical in a market like this. But here's what you can do. Think of it a different way. Instead of being tactical and trying to get in front of some of these moves and timing them in these cases on an intraday basis at times to the hour. One strategy that investors can employ, certainly individual investors that aren't under constraints

that might be applied to the fund community, mutual funds or exchange traded funds, is maybe volatility or portfolio based rebalancing. Where when you get these big moves, you're gonna get outsized changes in terms of the allocation to certain asset classes or subsets within asset classes, be it at the sector level or at the group level, say like a Magnificent

7, and take advantage of some of that volatility to actually trim in certain areas into strengths that you don't develop a renewed concentration problem and add to areas where there's weakness. So it's rebalancing to put you in front of moves by trimming into some strength, adding into weakness as opposed to trying to front run engage what's going to happen in advance, which to your point, that's the impossible thing to do right now because we're so at the mercy of policy changes and how those announcements are made, which is often on the fly and via social media. Yeah, lucky to have you today.

Lizanne, we'll see you soon. Thanks. Thanks, Scott. See you. Lizanne Saunders, up next, we track the biggest movers into this close today. Christina Partzanevolo is back with us to tell us what she sees now. Well, we are seeing a lot of market movers

making headlines today from Pansino stocks surging to a telecommunications giant really facing regulatory scrutiny. Those stories and more right after the show break. Less than 15 from this closing bell, back to Christina Parts-O-Nevelis for the stocks that she is watching. Thanks, Scott. Well, let's look at Wynn Resorts, Las Vegas Sands, MGM surging right now.

Look at that. Wynn up over 8% after the US and China agreed to reduce tariffs for about 90 days. The casino operator stocks really rallied on this improved outlook for the Macau operations, which are heavily exposed to Chinese economic conditions. So that's why you're seeing those shares higher. Echo Star, though, moving the opposite direction, plunging this afternoon, you know, more past a 1 p.m. Eastern time after the Wall Street Journal put out a report saying the FCC is investigating the telecom's use of cellular and satellite

spectrum licenses, including airwaves that have been sought out by SpaceX. EchoStar owns both DISH Network and Boost Mobile, and that's why shares are down almost 17% right now, Scott. All right, Christina, thanks for that. Christina, parts of the novel is still ahead. We drill down on some big moves today in the energy space. We're back on the bell just after this break. We're down in the energy space. We're back on the bell just after this break.

We're down the closing bell market zone. CBC senior markets commentator Mike Santoli is here to break down these crucial moments of the trading day plus Pippa Stevens with a check on energy. Phil LeBeau looking ahead to Hertz and OT and Kate Rooney on the latest multi-billion dollar valuation for perplexity. Pippa, we begin with you.

Tell us about energy today. Yes, Scott. Oil jumping after the US and China agreed to those temporary tariff cuts easing some concerns around an oil demand slowdown in the world's two largest consuming countries. EOK financials Dennis Kistler saying for traders it is a risk back on signal adding the WTI is now targeting its 50 day moving average. Energy stocks are getting a boost with refiners. Phillips 66 and Valero leading the gains. JP Morgan saying that amid the recent oil sell-off,

product prices and refining margins have remained steady, while U.S. gasoline cracks have surged. Drillers APA, Oxy and Conoco also getting a lift on the back of higher WTI. But gas-focused drillers, EQT and Expand Energy, those are names are in the red with NatGas down some 4%. Scott? Alright Pippa, thank you.

To Phil LeBeau now on what to expect from Hertz in overtime, Phil. A lot of questions regarding Hertz, regarding whether or not the company needs to go further with the restructuring, Scott, but the things that people will be focused on when these numbers come out in a few minutes, first of all, what's happening with fleet residuals? Always the driver of revenue per quarter for the rental car companies. Corporate demand, we've seen some reports of it softening around the country. Are they noticing that? And then there's the Pershing Square impact.

Remember, as you take a look at shares of Hertz, Pershing Square, within the last couple of months, announced that it has taken a 19.8% stake in Hertz. That's the pop that you see there. What I think that was about three or four weeks ago Scott. The analyst focus during the call today Will Hertz have to raise capital. This is a company that's got more than a few problems Scott. Numbers come out in a few minutes. Yeah we had first reported that too and that was that move on that day so we'll see now. Get some real numbers there. Phil thanks. Phil DeBeau. Kate Rooney speaking of real big numbers perplexity wrapping up talks. Yeah so Scott this is the AI start-up if you

haven't heard of it trying to compete with Google on search I am hearing it is in the middle of raising another mega funding round it's gonna value the company at 14 billion dollars at least on paper it's according to a source familiar with that financing no comment from the company at $14 billion, at least on paper, it's according to a source familiar with that financing. No comment from the company. I'm hearing it's a $500 million round and that $14 billion number does mark a significant step up from the prior $9 billion it underlines. A lot of the investor demand we're seeing out here for AI startups, but it is lower

than some of the reports out there. At one point, we're closer to $18 billion. Journal first to report this one earlier, perplexity has tried to take on Google search as the tech giant faces a potential breakup of its business. It's leaned into advertising as well as paid subscriptions. I'm hearing from a source it's got around a hundred million in annual recurring revenue or ARR. There is fierce competition out there in AI search, got open AI and anthropic also sprinting in that arena, Scott.

Okay, thank you, Kate Rooney with the latest there. We're approaching the close here. Mike Santoli is with me now. We're right around the highs of this day. Yes, I mean and all the kind of body language, the internals of the market are checking off a lot of those boxes that are encouraging consumer cyclicals and banks leading pretty good breath, I still will say pretty low volume. I mean, you look at the queues and stuff, they're not even going to get to their 30 day average volume. Why? Because we were already up 17% going into this.

There is a chance that this move, as much as it's based in fundamental reality, which is lower recession risk and lower inflationary risk after this move on tariffs, it could be kind of a short-term culmination move. Some of it seems pretty forced. Who knows how much more buying under-invested hedge funds or systematic investors need to do here. But you've got to just be aware of less bad has done its job. Now it's a matter of do we get genuine improvement?

Does the economy prove that it's in a decent spot here? Because remember, it's 5% from here on up to the old highs in the S&P 500. That was February 19th. On February 19th, we weren't thinking about 30% tariffs on China. You weren't thinking about even necessarily 10% universal tariffs. We were thinking about tax cuts and deregulation. Tax cuts, deregulation, no landing, and the Fed probably has room to ease a little more. So I think we're going gonna be caught in between maybe

unless we just get a further upside positioning shock where people have to buy them, and if the retail trader really starts to gun the momentum stocks again, and the mega caps kind of catch fire, that can happen, and that can happen in the absence of further confirmation from the real economy. You just gotta be aware of how far we've come off.

The retail trader didn't run away in mass either, which plays into, well, the next catalyst. Where is this money going to come from to keep the market climbing? We're going to go out at the highs of the day. Going to be, well, not quite 1,200 on the Dow, but not that far either. And as Mike said, we're a touch less than 5% away on the S&P

from its all-time high.