Closing Bell - Closing Bell: Navigating the Trade Twists and Turns 4/23/25

Episode Date: April 23, 2025

Solus Alternative Asset Management and RBC Capital Markets’ Lori Calvasina weigh in on the trade tug of war. Plus, top tech investor Jeff Richards of Notable Capital weighs in on the volatility in that sector. And, BofA’s Jill Carey Hall tells us where she sees small caps heading from here. 

Welcome to Closing Bell. I'm Scott Wappner live right here from Post 9 at the New York Stock Exchange. This Make or Break Hour begins with the ongoing market volatility taking investors on yet another ride today. That's the scorecard with 60 to go in regulation. Yes, there's a lot of green. It's been all over the map though today based on whatever tariff headlines were moving at that particular time. Tech especially strong and so is discretionary. Probably no surprise thanks to that move in Tesla today. Sharply higher on the back of earnings. All of the mega caps

are strong as well. Standouts like Amazon and Nvidia are leading the way. Data center stocks also performing well today. Vertiv and GE, Vernova, Vistra, Eaton. Some of the names you should follow here in the final stretch. Constellation

Energy as well. Dell Technologies, Oracle, a lot of green there. Does take us to our talk of the names you should follow here in the final stretch, Constellation Energy as well. Dell Technologies, Oracle, a lot of green there. Does take us to our talk of the tape, the latest tariff trade twists and turns. We start there with our Eamon Javers in the center of it all once again on the North Lawn of the White House. Eamon. Hey there, Scott. Within the past couple of hours, we got a statement from the Chinese Foreign Ministry that was posted online by the Chinese embassy in the US. We can put it up on the screen for you, but it's a sternly worded statement from the Chinese saying, if a negotiated solution is truly what the

US wants, it should stop threatening and blackmailing China and seek dialogue based on equality, respect and mutual benefit. To keep asking for a deal while exerting extreme pressure is not the right way to deal with China and simply will not work. Now I can tell you I just spoke with Caroline Levitt, the White House press secretary in her office a short time ago, to get her reaction to that and what she says is the president has said that he's not going to unilaterally reduce tariffs and the world is finally paying attention. The administration is consistently in touch with our Chinese counterparts and I asked her about some of the confusion throughout the day as to whether there are talks there aren't

talks because we had Treasury Secretary Besant saying there were no talks yet early in the day then we had President Trump out here on the North Lawn later in the day saying well there are active talks so what does that mean? Caroline Levitt says that Besant was saying that there are no talks between the two heads of state and actually there is a set of talks at a staff level, she says. And that brings me to this fight

that's just been reported by Axios between Elon Musk and the Treasury Secretary, Scott Besant. They report a shouting match in the West Wing over who's gonna to control the IRS. And a witness, according to Axios, describing it as almost a WWE-type environment. I got a statement from Caroline Levitt about that as well, which we can put up on the screen for you now. She said, look, there are disagreements sometimes at the White House.

That's part of any healthy debate and policy process. And everyone here knows they serve the president. I asked her who won the fight, she said well, they're both here Scott Yeah It's I mean actually, you know, they have a source that says, you know of that Quote it was quite a scene. It was loud and I mean loud So a day full of twists and turns yet again some palace intrigue to go along with it keeping you busy as ever. Eamon Javers on the North Lawn as we said.

Let's bring in Dan Greenhouse now of Solace Alternative Asset Management and Lori Calvicina of RBC Capital Markets. Good to have you both with us. The market Lori feels like it's a right now anyway two steps forward one step back based on

you know headlines that are deemed to be overly positive, market explodes higher, market responds to a little bit of watered down headline, and here we find ourselves. So what do we make of all of it? So look, I think there was this debate going on throughout March. Is there or is there not a Trump put? Is Trump paying attention to financial markets?

What's happening with the trade war? And it does feel like some attention was paid, whether that was to equities or to bonds. It does feel like we've sort of hit that turning point for now. And I think markets are still kind of bumping along this bottom of what we call the tier two of fear, which is a growth scare, fear of a recession or a crisis that doesn't materialize. I don't think markets have been sold yet on the idea that a recession is coming or a major crisis is coming And I think we're reasonable to hold where we're holding. Yeah, I think it's a good point I mean it it does feel like that the markets have gotten the president's attention in one form or another

Bond market getting angry the dollar doing what it had been doing prior to today this gold move Exploding now it is obviously getting hammered and then you end with the stock market doing what it did. Is it a change that we need to pay more attention to if in fact it's true? I don't think, well listen, clearly it happened. The reporting bears that out and those of us who are just watching the change in tone following the market sell off, both equity equity and bond, saw it happen. So I don't think that should be surprising to anybody.

Do I think it's a change? No, I don't think it's a change. I think that the ultimate goal here for the administration is clearly unchanged. And so while I think they're dialing up and down the rhetoric or the goals or level-setting expectations, in response to markets, they're still trying to skate to the same place, reducing the world's reliance on China, reducing the budget deficit, reducing the trade deficit, reducing the value of the dollar. Yeah, but the markets, like we acted like it earlier today, it was like, I'll go with

you on the skating to the same place. But we were speed skating until Besant spoke again. And now we're sort of like we have the beginner walker on the ice again because he's talking about two to three years. I'll borrow your phrase two steps forward one step back but but also the two years I reject the idea that the narrative put out there our friend Torsten Slock talked about this trade deals take two years to put together I reject that they're not trying to negotiate NAFTA style trade agreements.

They're trying to lower tariff and non-tariff barriers, something that you can do in a one page word document in 15 minutes. You agree to do X, I agree to do Y. I don't think these have to be. Claim victory and then we're all good. Claim victory and we're off. And part of the reason I've been more optimistic

than many others, which is a very low bar. You actually have bet. Thank you for the actually. It's a very low bar. You actually have bet. Thank you for the actually. It's a very low bar, admittedly. I mean, it was suicidal here for a while. But part of the reason was on the idea that you didn't need a NAFTA-style trade agreement. You could get some modest headlines,

some modest concessions on everybody's part, declare victory and move on. There are those who though say this is nothing more than bear market rallies and that you know you look at the S&P two-thirds is down at least 20 percent. You may not have you know the textbook definition of a full bear market but nonetheless the market it sort of it walks like a duck talks like a duck call it a duck.

I mean Wolf research today says remain defensively positioned because of that. Did you take issue with that? Well, look, I think that unfortunately visibility is limited and there's still a lot of fog in the outlook and we, you know, we're all paid to make forecasts and sometimes we have to be intellectually honest and say that's more difficult than it should be. And so what I've actually been advising clients to do in terms of sectors is short term, we don't know how long the short term is going to be, but I like utilities. So if you want to get defensive, buy some utilities.

I'm overweight there. But I've also done this a long time, Scott, and I know that we always feel despair at the bottom and we only identify it in hindsight, no matter how good we are. That's just a reality. And so I also wanna use these opportunities in the market to add to some offense,

so we also like financials. They're not gonna both work at the same time, but they serve different purposes in a portfolio. I just want to add also real quick, I get it, there's a lot of pain underneath the surface. So X number of stocks are below the 50 day moving average. Y number of stocks are down 20% from the high. But eight of the 11 sectors

are outperforming the stock market. The S&P is down, call it eight and change percent. And not just outperforming, the worst of the eight is energy, which is twice as good, is down only 4% year to date. It's really those big tech com and discretionary, which we all know is of course, is, Jesus, Amazon and Tesla, which is doing a lot of the heavy lifting here. So to the extent that you've over-weighted one of those eight sectors, including utilities, which is the best, on a relative basis,

you're not doing terribly. You've taken though your entire view of what this year can produce down somewhat, right? Are you at 5,500 on the S&P? We're at 5,550 for year-end, and we started out the year at 6,600. In mid-March, we took that down to 62. And we said basically if we hold at 10%,

6,200 is still feasible, but if we break 10% and experience a growth scare, we're gonna have to cut the target and pivot to the bear case. So that's exactly what we did the day after the Rose Garden Tariff when it was apparent that we were gonna blow through that 10% downside. And so that's still up a little bit from now.

I'll tell you one fascinating thing, I'm gonna date a nerd out on you for just a minute, but my valuation model, we're baking in a stagflationary forecast, so half a percent real GDP, inflation in the mid-3s, a couple of cuts from the Fed, a little bit of margin contraction. That gets me an earnings number this year for 258,

a multiple of 20.7 on a trailing basis at the end of the year. You do the math, that gets you to about 53.50 at the end of the year. So I feel like based on that stagflation, avoid recession, we're kind of where we should be right now. The question is where are we going from here? We've used the being on the ice analogy

where the puck is going. If it's just a growth scare and we don't have a full blown deep recession, whether we make the turn and we feel better about what earnings can do in 26, where we can justify a higher multiple I get the idea of twenty plus on a on on a trailing perspective but forward is the hardest part of of your game yeah right now don't you think I think it is and and you know I think generally I try to operate with a twelve-month time horizon it feels more

like six right now and I'm really interested to get into the meat of this reporting season. We've heard from the banks. We heard from a few consumer companies at conferences at the end of March. But we've really got to get into the heat of like this industrial tech earning season to understand where's our starting point, right? We know that sentiment has collapsed. We need to understand how that's reverberated in terms of actual behavior. We also frankly need to know if these tariffs stay on

for a while, how much buffer there is. I've come to the conclusion companies have done a lot of pre-ordering, they're moving things around on supply chains, they've got some mitigation plans in place, but I'm not quite sure how long those are gonna last. So we're used to investing, we're thinking about things in a 12-month time horizon for like when forecasts come out

and price targets, et cetera. Lori's talking about a six month timeframe because there's a lot of fog out there. I feel like it's a six hour time horizon at this point. You're not wrong. Sometimes a minute. Sometimes minutes, that's right. I listen, when you do the job, Lori does the job I used to do when you think about markets our way you brought up 2026

which is important because what you want to try to figure out for the end of 25 is what am I going to price in for 26? What's going to be my forward valuation on what earnings next year? And to the extent that you think as I do and I've articulated that this is a for lack of a better word temporary temporary, we're watching the sausage get made situation here. You can still be optimistic about markets at fair value as Lori defines it for next year if you think that there's not a huge carryover.

And I think the street is, the variance is very wide. You've got a couple of people in the recession camp. JP Morgan, I think, has two negative quarters of GDP in Q3. People are all over the place. But again, I think if you can get out of this without too much damage done, then your earnings estimates for next year are not going to be too impaired. And I would just add to Laurie's point about earnings season, which is already fascinating, a number of companies have suggested not only through the end of March, but into April, traffic, activity, consumer, we're all fine.

Capital One just said that, Netflix said that, CSX, I'm sorry, Norfolk Southern just reported and said, and markets so far, if I'm interpreting what they said correctly, and markets haven't been particularly hit. So you have a head of steam here heading into this. Well, one of the biggest earning stories thus far has been Tesla.

I know you've seen that the shares are surging today after the report last night. Not great, obviously, but Elon Musk talking about going back very soon to run the show there. Steve Kovac joins us now with more on that and the tech trade, because we're going to get Alphabet tomorrow tomorrow as well but it's the Tesla news that is helping the market the most out of that space arguably today both tech and discretionary the Nasdaq of

course leading the way. Yeah that's right it's a good day for me to be hit the Nasdaq here today Scott and look let's talk about what happened at Tesla last night and we're seeing those shares rise not because they're selling more cars in in fact the opposite is true. It's up because Musk said he's going to be spending less time on Doge starting in May. He's still going to be part of the Doge team, said he's going to serve as long as the president wants him, but that was just enough to send shares up aftermarket and throughout the day to day.

And then let's look ahead to the rest of the Mag 7 because it's a completely different environment than it was three months ago last earnings season. We got Alphabet reporting tomorrow and two or three things I want people to watch here. First of all the impact of tariffs on the AI data center build out and anything they're seeing in the economy that hints at a slowdown in ad spending. That is the bread and butter of Google, of course. And then on top of that with ads, how they plan to monetize their AI search feature. That's what you see at the top of the screen when you do a Google search now.

And then for the rest of the Mag 7, the other five, the shine has really come off all of them during this trade. Where you have the Mag 7 index, which is down about 18% or more so far this year. We've got Meta, which is of course in that middle of its antitrust trial, also potentially with that ad spending slowdown if the economy takes a dip. And then we've got Apple, which is so sensitive to tariffs, as we've learned over the last several weeks here.

And on top of that, still trying to catch up in artificial intelligence after that big whiff earlier this year. Then you got Amazon with CEO Andy Jassy saying to expect tariff costs to pass on to consumers. Microsoft those same concerns on a slowing macro economy meaning IT spending could drop later this year. And then Nvidia chip restrictions and tariffs and just so much more hitting this one. Those earnings are going to be for several more weeks.

And I want to kind of talk about something that Dan was hinting at. I met with some tech VCs earlier today and they were saying there's just lots of concerns. There won't be a tangible slowdown into the summer. They're saying right now the first bit of the year looks great. We're probably going to see great earnings, maybe deceptively great earnings this earnings season, but it's not gonna be until early summer into the back half of the year that the squeeze might actually come in, Scott.

Yeah, we'll see. Steve, thanks for that comprehensive report for us. It's a good setup for the next part of our conversation. That's Steve Kovac. About this space, how rely, I mean, the NASDAQ's holding up pretty well. And it has for most of the day, I mean, it was up a little more than 500 points earlier, but it's still holding onto a two and two thirds percent

gain. Do we stay here again? One thing that we've noticed on our data, and we just saw it in this week's weekly, was the rate of upward revisions. So think of that as earning sentiment has collapsed in the top 10 mega cap names relative to the rest of the market. And if we had gone back, you know, even a couple weeks ago, it was still holding up.

There was still more kind of earnings optimism on those big mega cap growth names. So I think that's a problem in the short term. When I do look at my valuation work sector by sector, tech has actually resolved its valuation problem. Now, again, nobody believes that statement because we don't really know what the E is yet but at least my charts are finally kind of out of the red grid on my page and moving back to a better place. So I think there's going to be opportunity in this tech space.

You know, have we found sort of the right level? I'm not quite so sure but I think longer term this is the right place to be fishing. What are you going to be listening to more than anything else out of these earnings reports? Is it CapEx spend? I think CapEx spend, I think cost management and frankly Scott like I don't really care so much if companies are giving me official guidance and kind of what those numbers are but I want disclosure about what exactly is going on in terms of cost exposures, revenue exposures.

Give the analyst community the details and we'll figure the rest out. But this whole thing of like, we're not really going to talk about this, we're hoping it goes away, that's not going to fly anymore. And I will say the good news over the last couple weeks is companies are finally having really robust, mind-numbingly detailed conversations about what their exposures are. And I think that's a necessary step in the healing process of this market. So you'd rather get two different forecasts from a company rather than nothing?

Right, I want an honest conversation. I wanna know all the nitty gritty numbers, and I wanna know that you moved stuff out of China, and it's in Vietnam and Mexico, and whether or not your stuff is USMCA compliant. We need those details at this point in time. I'm glad you raised that. I'm glad you raised that. I'm glad you raised that.

Real quick, I just want to say, it's a good thing conference calls are known for their honesty. But, I mean, it's true, though. It's impossible for investors to feel they have any clue as to where things are really going. If it's that hard for the CEOs, imagine what it's like for the investing community that has money on the line. So if you get any more clarity or a willingness to be more open and honest about what they're

really seeing now and what they forecast, even if it ends up being wrong, give me what you want, what you got now. Real quick to Lori's point, I would be shocked if guidance ratios aren't the widest ever. Why would you possibly give positive guidance right now? So I think you get a pass this quarter, so you might as well do anything along those lines. I still feel like you have this view that all of this can be solved quickly and much easier than most people think. Well, it's not that quickly and easier. Well, first of all, again, relative to what's going on,

you've got people foaming at the mouth and cursing on the halftime show. So, you know. This is true. It can get heated. But again, I'm looking at myself on a relative basis in that sense. But listen, again, I think people are looking at this

originally and hearing 154% tariffs, we're all going to go to hell in a handbasket. And I didn't think that would be the case. I thought a lot of what would happen, a lot of what did happen would happen. I think you can get out of this with less damage than other people think. Do I think the global trade system is being reoriented? Absolutely. Do I think that's going to end in two months

if we sign a couple of agreements with Japan? No. But as an investor, I don't really care about that per se. I'm worried about the immediate and I'm worried about reducing my downsides. I'm worried about making sure that those worst case outcomes that a lot of people thought were their base cases

aren't gonna come to pass. And if you sign a couple of agreements and it sounds like we're teeing up the UK, perhaps India and Japan, et cetera, et cetera, you can start to take in a more concrete fashion some of those worst case scenarios off the table. And that's enough from my standpoint, with the stock market down 16%, 18%, 20% at the lows, to start taking further downside off the table. That's why you hear from some that it's very, very difficult to get even more negative from

here. The headlines of the last 20 hours would prove that out to you. It doesn't take much at this point. You have had a market downturn primarily because of the policy demands of one person. And if that changes or softens in any way, because as we started this whole conversation with that one person, maybe being more focused on the market activity now than before, can't things theoretically change reasonably quickly before too much damage to the underlying economy is actually done?

I think that's fair. I would go back to Monday and sort of the debate over the Fed, which went away in about 24 hours. But it illustrated to me just sort of the, and we weren't down that badly, right? It was only down sort of like 2% on the day. But I don't think this is a market that really can absorb a lot of new problems right now.

I think that we can manage through the problems that we've got if the news flow continues to head in a better direction. And just to give you a sense of the stats, A A I I sentiment is at rock bottom. G F C lows, 2022 lows, 90 91 recession, our CNBC, you know, survey, um, that we've just rolled out this week shows that there's such little interest from investors in the stock market. Yeah. And I will contrast that though, with the CFTC data, which is more of your

institutional look. It's maybe like third inning of decline. It's been de-risked but it's not collapsed. So it's a needle that we're trying to thread here. The other thing I think is sort of this concept of we can get out of this with too much damage but there are still probably going to be some scars and so maybe the upside is not as faster as we would like it to be on the other side. And I think one of those scars is the psyche of the international investor, the investor sitting in Canada, sitting in Europe, who have been awakened to the fact that they may need to diversify out of the U.S.

And even if they put a little bit of money back in, I do think that there's a certain distrust that's emerged that we're going to be contending with for a while. And just to tidy this up, and that's why the AI story is so important. Because to repeat my narrative, you've got two things that have driven the outperformance of the US. One is your relative growth profile,

US is doing much better, and the AI story which attracted inflows from everywhere. The growth story obviously is being challenged right now. If the AI story is well, if it's Microsoft, if it's Amazon, if we're pausing on the capex cycle, that raises a secondary concern, which is why Vertov's report, among others, is so important.

I should clarify, too, what I mean out of the CNBC survey. There's tremendous interest in the stock market, but people aren't feeling good about it at all. And that was one of the most standout items that we returned in our own survey. So it matches kind of where everybody seemingly is feeling right now, other than this guy right here. Again, relative, relative.

No, but look, and I will say again, we've all done this a long time, right? And we know that when we feel this bad, it's usually a buying opportunity over some duration of time. The question is, have we hit that absolute bottom and what's the duration of time? All right, we'll pick it up another time. Appreciate you both being with us. Thank you Laurie and Dan. We will see you again soon. Speaking of the markets and speaking of AI, do not miss our exclusive interview with the Vista Equity Partners founder and CEO Robert Smith. He's going to be here at Post 9 tomorrow on closing bell,

and we cannot wait for that. Let's send it over to Christina Partsanevolis now for a look at the biggest names moving into the close. Christina? Something else you can't wait for, right? So let's talk about Enphase Energy. Shares sinking right now after the solar stock reported worse than expected results,

and said tariffs would actually hit margins this year. The company's battery business expected to be heavily impacted. And why? Because it relies on sourcing from China. Shares down almost 16% right now. Meantime, Morgan Stanley providing a big boost to shares of Duolingo. The bank initiated the language learning platform

at an overweight rating and said, it has the rare combo of rapid user growth, strong margins, and gen AI upside. Shares are climbing almost 10% at this rate. Scott? All right, Christina, back to you in a little bit. Thank you, Christina Parts-O-Nevelos. We're just getting started here.

Up next, top tech investor, Jeff Richards from Notable Capital's back with us. He'll tell us how he is navigating this volatility next. All right, welcome back. Tech rallying today, as President Trump says, the tariff rate on China will come down quote substantially. It's still one of the worst performing sectors here to date more than 16%. Let's bring in now top tech investor Jeff Richards.

He's managing partner at notable capital. It's good to see you. Welcome back. Great to be here on a green day, Scott. Yeah. Well, I mean, don't jinx it. Don't jinx it the way things have been going. You never know.

Good point. I guess my first question, what's the valley view, if you will, of all this? I'll give you two data points. One, our founders, founders of private technology companies, have been through a crazy ride the last five years. We had the COVID pandemic. We had the market crash at 22, we've had up market cycles and down market cycles for fundraising.

So there's an incredible amount of resilience and durability in our companies. And I think folks are taking a stride into saying, hey, just tell me what the rules are and we'll play the game on the field. The second thing I'd say, obviously, we have one of the biggest tailwinds of our lifetime in AI behind us. And I heard your last guest talking about it as well. All of us who were here for 08, 09, where we saw the advent of the iPhone and cloud computing, would love to go back in time and invest in the next Facebook, the next Shopify, the next Square, the next Stripe. All those companies came out of that cycle, DoorDash, Uber, et

cetera. We know the cycle will be similar. It's just in the early days. And so we're in a very long duration business. We're investing for seven to 10 years with most of the companies we're investing in. And folks are putting a ton of capital to work and just seeing amazing things happen on the ground and couldn't be more bullish despite what we're seeing in the headlines every day. We know the long term outlook is extremely positive. It's interesting, though, where you say they're saying just tell us what the rules are and and and then we'll be okay Because then we can navigate it's difficult though when you and we know nobody else really knows what the rules are

so I mean those conversations are are Must be so interesting. Yes. I I I understand the fact that we've been through different periods of Uncertainty before but this one truly does feel a little bit different And yes, I understand the fact that we've been through different periods of uncertainty before, but this one truly does feel a little bit different. Yeah, I think if you wind back the clock two years ago in 2023, there's a great chart from Goldman Sachs that showed 60% of economists were forecasting recession and that didn't happen. So I think a lot of founders and CEOs have also learned that, there is a lot of noise day to day.

And if you're building a company over a 5, 10, 15, 20 year period, you're gonna have a lot of updates, you're gonna have a lot of down days. You really can't pay attention to it. I'd say the biggest thing where it does make an impact is when we think about what the end customer buying cycle might be like. So if we do see a slowdown in earnings or growth for S&P 500 companies, for example, that could have some negative impact on the software and technology industry. But we saw that in 23 and 24 and we navigated it. Folks pulled back budgets

for buying in software in particular, and you saw growth slow down for a lot of the public companies, but founders have navigated that. And so again, so much of the investment and the focus right now is on AI, building things that are going to matter for the next three to five to ten years. And you've always got examples in the market today of what AI can do. I always use Waymo as a great example. You get in a Waymo and it's hard to dispute what an unbelievable experience that is. We're going to have that kind of experience across a whole bunch of

categories, not to mention enterprise software, cyber security, all these really important categories to our country as well as many others. And it's, you know, I was here for the dot com era. I was here for the cloud and mobile era. And I think we all know this one's going to be much larger and have a much bigger impact on our economy and the world's economy. Well, where do you think we are, though, in this cycle? I mean, there have been questions about some of the spend by hyper scalers. You see those concerns show up in some of the data center power names, for example. Now today's a great day for all of those because of some of the earnings reports and commentary that's come out, but it's not going to extinguish the questions that exist.

Yeah, I think if you think about the cycle and the way it normally plays out, the first fave of benefit and value shows up with the chip companies, so the AMDs, the NVIDIAs, the TSMCs. Then you see the hyposcalers and obviously the spend that they're putting to work, and they're putting it to work for a reason because they know this is the future of a major computing paradigm and they can't afford to miss it. And now you're just starting to see it benefit the software players. So notably, a number of the names that have held up reasonably well over the last three to six months, and I'd give you a couple of examples.

Snowflake, CrowdStrike, Monday. These are companies that people believe have a lot of tailwind behind them with AI. Snowflake's up 31% in the last six months. CrowdStrike's up 21% in the last six months. Monday, which sells to small businesses, mid-market, productivity software with a heavy dose of AI, up 9% year to date and up 37% in one year. So it's a lot of folks would have come into this cycle saying, gosh, these are the names

that are overvalued. But I also think you see that's where folks see durability and if you will a put on AI because they know there's upside in those names. Good catching up with you. We'll see you soon. Jeff, thank you. Thanks, Scott. All right.

Jeff Richards joining us here on Closing Bell. Up next, Jill Kerry Hall from Bank of America Securities. She'll map out her market strategy. Tell us where she sees small caps heading from here. Well, they have had a really tough time, so we'll get an update next. All right. Welcome back. I want to introduce you once again to see me sees

newest subscription streaming product that's called CNBC plus you can see the data feed on your screen now you can stream closing bell all of your favorite CNBC shows anytime anywhere and also on demand for more information to scan the QR

code on your screen or head to CNBC dot com slash plus small cap seeing some gains today much needed to the Russell though still down more than 13 percent this year my next guest says she's still cautious on that space and specializes in it. Joining me now is Jill Kerry Hall of B of A securities it's good to have you back you know I don't need to tell you that this has been a dreadful place to be this year. Do you have any do you feel like you have any visibility into when you think it might turn. Well I think the earnings backdrop is important because if you think about you know a year ago at the start of twenty twenty four that's what got investors excited in small caps was

the earnings recovery. We were coming out of the 2023 earnings recession. Everyone was expecting that by mid last year, these stocks were gonna be seeing double digit earnings growth that would be outpacing large caps. That got pushed out more than a year. And so now, we've obviously sold off a lot. And we've obviously gotten some potential good news on tariffs, but there's still a lot of uncertainty. And, you know, we're in a backdrop where earnings revisions have still been negative.

So I would feel more comfortable if we're in a backdrop where there's more confidence in that earnings recovery, because, you know, last earnings season, the commentary was a lot more negative from small cap companies than large cap companies. And so far this earnings season, it's still early for small caps, but guidance in both large and small has been weak. So, I think if we can see earnings and ratio start to turn around, if there's a lot more confidence, if not only the tariffs are better than expected,

but the economic backdrop is better, that would be a better picture. But we're also in a place where our economists think the Fed stays on hold this year, and the Russell has been very sensitive to Fed expectations. Yeah, no doubt about that. We always, we talk as though, you know, all small caps are created equal. Of course, they're not. Is there a portion of the small cap area that comes out of the

malaise first. Yeah look I think this is definitely a year where you want to be selective because as everyone's seen there are you know groups of stocks that are more sensitive to tariffs. There are groups of stocks that

are more global versus more domestic. There are groups of stocks that are more levered and have higher refinancing risk within small caps if rates stay high or if credit spreads stay elevated. So you know I would stick with with higher quality small caps, you know, profitable stocks, anything that has strong operating margins. Those have been some of the best performers within the size segment recently, given all of the tariff risks. So more higher quality domestic small caps,

stocks with strong margins, stocks that are seeing positive revisions in this broad backdrop of negative revisions. I think from a sector perspective, if you're still looking to be a bit defensive, utilities screens well across our work, both within small caps and large caps. So I think there you know will be opportunities within the size segment if one can be selective. I also think

mid caps you know within this mid space mid caps which have been the best performing size segment this year. We've liked mid caps for this year we think they've seen much better revision trends, they have cleaner balance sheets, they're They're less at risk from potential earnings hits from tariffs than small caps because small caps have thinner margins and could see a greater hit. So we do like the mid cap segment. I mean, it does say something

when the head of US small and mid cap strategy at Bank of America Securities prefers large cap value more than anything else. It sort of tells you everything you need to know about the current market environment. We do like large cap value and I think, you know, within the S&P we've favored the rest of the index over the mega caps and the Magnificent 7.

You know, we did take down our S&P 500 target recently, the 5600, but we still are expecting upside there. You know so we do see large cap value as an attractive place to be. So we'd stick with large cap value, we would stick with mid caps and we would be selective within the areas I mentioned within small. Jill we'll see you soon. Thanks for being here. Jill Kerry Hall.

Thank you. Bank of America Securities. Up next we track the biggest movers into this close today. Christina Parts-Navaros is standing by with that. What do you see? Well, we have an aerospace giant soaring on narrowed losses and production increases despite burning billions this quarter. And a farmer player tumbles after its newly acquired schizophrenia drug failed a critical

trial. Those stocks next. All right, we're 15 from the bell. Let's get back to Christina now for the stocks that she's watching. What's on your radar? Let's start with Boeing shares taking off after they narrowed their losses in Q1 and said they're preparing to raise the monthly output of their 737 Max jets. The aerospace giant still burned about $2.3 billion of cash, but the CEO told CNBC they're

on track to generate cash in the second half of this year. Shares are up over 6%. Bristol-Myers shares are sliding, though, after a late-stage trial said its drug failed to show a statistically significant difference in patients with schizophrenia. Bristol-Myers obtained the drug through its takeover of Coruna Therapeutics, and it was seen as a key area of growth for the company. And that's why you're seeing shares down 3% on a day when most other stocks are higher. Scott? All right Christina, thank you. Christina Partzanova still ahead. We'll tell you what to watch

out for when Chipotle reports its results top of the hour. We are back on the bell right after this. I want to remind you once again do not miss our exclusive interview tomorrow with Vista Equity Partners founder, chair and CEO Robert Smith right here at Post 9 on the closing bell. Coming up next we get you set up for all the big earnings coming in overtime that and much more inside the market zone next. Now the closing bell market zone CNBC senior markets commentator Mike Santoli is here to

break down these crucial moments of the trading day plus a number of big earnings reports we are watching closely in overtime Christina Partzanevalos on Texas Instruments and Lam Research but the Stevens has the setup for us for Chipotle. Micah begin with you another one of these volatile kind of crazy days we're going to end up well just not as great as we were. Yeah inconclusive a little bit of path of maximum frustration type action where it was this quick silver rally to the upside, 3%. Maybe you feel like you have to chase it. This is the start of something real. Then we back up.

This is the fourth day in the last two weeks when the S&P 500 has made a run above 5450. Nothing magic about that level except for the fact that all four times you couldn't hold it. And it sort of retraced from that. It's sort of defining the upper end of this range, at least for now, that's how you have to presume. I think it makes sense. We did get a bit of a relief bounce today,

just because you were able to dial down the perceived worst case on, you know, the tariff levels ultimately. Maybe there's some moderating voices being heard. Powell, you know, the Powell stuff. And it all makes sense, but you really have to, I keep having to emphasize, you don't want to assign a tremendous amount of meaning

to big, meaty looking moves within this range, when the market's already been correcting, when you've already had one of the worst starts to a year into this point in April that you've ever had, because it is much more about positioning, looking for pain points, the tactical concerns, the technical extremes. It's not really about, hey, the market has a clear vision on to what comes next.

You know, what comes next is Alphabet earnings tomorrow, and that is when earnings start to get real. You really get to hear from the mega cap starting tomorrow. I mean, obviously, Tesla yesterday, but for real with Alphabet, the economy, the advertising market, AI, the spend, and everything else about where we currently are. Yeah. And, you know, I think the market has been okay with regard to how numbers have come in versus expectations versus what was implied in the price. Alphabet is a bit of

a suspect case. Obviously, the market's a little bit, you know, unconvinced of its ability to navigate through this particular period, but the stock is cheap, and we'll see if the numbers give any kind of value buyers an excuse to get in there. I'll come back with you in a minute. Texas Instruments, Lamb Research,

Christina, about ready to report. Investors are zeroing in on how Trump's tariff drama will shake up the chip world this earnings season. I like how Santoli just said it, maximum frustration. I'll steal that and use that for a lot of these companies. Texas Instruments should post solid Q1 numbers, but thanks to customers loading up on inventory before tariffs hit, which helps balance out those struggling auto and industrial markets. So I think demand pull forward.

But can Texas Instruments leadership team really navigate this trade war mess that's already hammered down their stock? What last I checked about 18% year to date, they've already dialed back factory utilization rates with gross margin sliding to the mid 50s. So the big question is, aren't more cuts coming? Meanwhile, Lamb Research, they make equipment and they continue to be Wall Street's chip equipment sweetheart, perfectly positioned to cash in on that upcoming memory chip upgrade cycle. Both reports, though, will give us the first real look at tech spending amid these escalating US-China tensions or maximum frustration for all. Just gonna keep saying that.

Alright, Christina, thank you. Christina Partzanovales. Chipotle, Pippa. So there are some muted expectations for Chipotle, which shares down nearly 20% on the year. Wall Street is expecting same store sales growth of just 1.7%, which would be the lowest since the second quarter of 2020 and compares to 7% in the same quarter a year ago and nearly 11% two years ago. Now Chipotle previously said that sales in January were volatile because of weather and then the LA wildfires, with analysts also forecasting little sales boost from the limited time honey chicken offering. Now tariffs, of course,

will be front and center in the last few years. Chipotle has diversified its supply chain and said only about 50 percent of their avocados come from Mexico, with Colombia, Peru, and the Dominican Republic, other suppliers. There's also the question of consumer demand and made a softening economic backdrop. Still, Citi reiterating its buy rating ahead of the print saying shares are undervalued relative to the long-term opportunity. Scott? All right, Pippa. We'll see what happens.

Thank you, Pippa Stevens. I go back to Mike Santoli. Let's throw up gold, too. Yes. You know, we never really talk about it, but, you know, De Graaff, kudos to De Graaff and Krinsky and the ones who are saying Oh, man is so overbought it's due to get pummeled And if you look at gold over the last couple of days don't look at the intraday give me a two-day

Yeah, yesterday was a really pretty significant apparent tactical reversal there to the downside and You know the dollars up almost 1% today the the dollar is up almost 1% today. The dollar index is up almost 1%. Obviously stocks up. VIX maybe looks like it's going to close below 30 for the first time in a while. So I think again you're just seeing a little bit of pressure release out of these markets. It's been sell everything dollar based and buy gold. It's been the only story. Now Bitcoin is also perked up. I think Bitcoin is doing a little bit of a catch up to what gold has done after gold is outperformed by so much. So again, I don't know if you want to say, okay, that's it. The fever's broken. We've passed the moment of maximum

tariff uncertainty or growth scare. I don't think we have. I just think that short term, things got overdone enough. You needed further bad news to really push everything further in that direction. One difference today, treasury yields did back up throughout the day. It has a bit alarming, they're not up a lot, in fact the tens are down on the day, but since the morning, even as stocks gave back half their morning rally,

you didn't get a bid into treasuries. Don't wanna make too much of one day, but that remains a little bit stubborn, this idea that yields have been allowed to sit up there without you know really benefiting bondholders for the growth scare props to Verone to its strategic as I've I didn't forget about your sad on this and that's here in that share everybody who is looking at a rare gold the gold price was relative to its long term trend and also the flow into gold ETFs and things like that really did register a bunch of extremes and I don't think you could ignore that.

Now everyone's going to say, every one of those guys you mentioned is going to say, hey, longer-term trending gold, it looks higher, it feels like a net beneficiary of this global uncertainty, maybe that's the case. But for now you want to see if other asset classes can make any hay out of the fact that you're finally getting some spill back. We're making a little bit of progress on things like tone change. You mentioned yields, just calming down the dollar, not doing what it was doing with Tesla. All of these things are helping. The next step is let's have a day when the market basically is boring and lose 40 basis points and not 1 and 3 quarter percent like today.

There's the bell, we'll be green, you obviously know that. We do have those earnings in overtime. I'll see you tomorrow.