Closing Bell - Closing Bell Overtime: 4/25/25

Episode Date: April 25, 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.

That bell marks the end of regulation. Log Pro style ringing the closing bell at the New York Stock Exchange, Versabank doing the honors at the Nasdaq, and stocks drifting higher to cap off a solid week for the bulls. S&P closing above 5,500 for the first time since April 2nd, with nearly every sector positive

since Monday's open, led by tech. And the volatility index, the VIX pulling back. That is the scorecard on Wall Street, but winners stay late. Welcome to Closing Bell Overtime. I'm John Ford. Morgan Brennan is off today. Coming up this hour, we will talk to Ben Reitz.

This is from Melius Research about whether the tech rebound can last. Ahead of results next week from Amazon, Apple, Meta, and Microsoft. And Moody's analytics chief economist, Mark Zandi, is gonna join me with his warning about the odds of a recession and one data point next week that needs to be on your radar. But first, breaking news from the Fed, Megan Kasella has the details. Megan.

Hey, John, that's right. The Fed just now putting out its biannual financial stability report. This looks at risks and vulnerabilities in the financial system. And the top line here is that despite all the recent volatility, the impact on these vulnerability indicators that the Fed tracks has been limited. The Fed says valuations remain high across a range of assets, that's equities, treasuries, and real estate. And that is in spite of the declines that we've seen

so far this month. They say liquidity in treasury and equity markets was low and got worse in April, but they also say in the report that market functioning remained orderly. Now total debt levels for households and for businesses remain low as a share of GDP, but indicators of business leverage they say are elevated. Private credit continues to grow and the report says that a sustained decline in earnings could put some vulnerable business borrowers at risk.

Delinquencies on both credit cards and auto loans also both remain above their pre-pandemic levels. Now, the banking system, they say, remains sound and resilient overall, but some banks do have concentrated exposure, they call it, to commercial real estate. Hedge fund leverage is also at or near its highest levels since 2013. And finally, John, a New York Fed survey of market participants, academics, and some others that's released as part of this report. It shows a 40-point jump in the share of respondents citing risk to global trade as a potential near-term risk to the

financial system. There was also a 10-point jump since the fall in the share citing Treasury market functioning as a potential risk. Now 27% are saying that could become a vulnerability. John? All right. Megan Casella, thank you. Well, with that context, let's get to today's market action. Joining me is Ariel Investments Vice Chairman Charlie Babrinskoy and Vital Knowledge founder Adam Chrisafouli. Guys, happy Friday. Welcome. Charlie, we closed above 5,500 on the S&P. Haven't been here since before the tariff announcement. Now you say you've been bullish, but now you're bearish. You also say to sell growth and buy value,

but how's that different from what you've been saying? Well, for five years, I think I was saying that equities look cheap, particularly value stocks look cheap, and that people were too pessimistic about the economy, and therefore cyclicals were inexpensive and you should invest there. And I think the difference is that today, I'm a little worried that with this rally, we're whistling past, excuse the metaphor, whistling past the graveyard.

A trade war would be extremely negative to the economy. And although there's been some signs of backing down from the outrageous hundred and 140 percent tariffs that we were talking about, I still haven't heard anything that says that the current administration is going to give up on the core idea of at least 10 percent tariffs. And that would be, we're already seeing the impact of less goods coming into the ports, less trucking, less items that are going to be on the shelves. I think we have a much higher chance of a recession

than we did two years ago. And so I think if anything, people are not worried enough about the effects of the trade war. Okay, well, Adam, the dominant market mindset this week seems to have been maybe it won't be so bad. Maybe some of the China tariff indications of flexibility from the Trump administration, perhaps, maybe less Peter Navarro, more Scott Besson.

But is that safe, especially as we look at the beige book, the soft data versus the hard data, and now this Fed report also, there seems to be this continuing disconnect between soft and hard data. Yeah, so we've had this ebb and flow now for the last several weeks. So remember on Monday we were flirting with about 5,100

and we've had a very healthy rally since then driven by decent earnings. You can't forget about earnings. Corporate America performed better than Feared in Q1. And then also we had a lot of hopeful rhetoric out of the White House about striking trade deals in the coming days with certain countries. It seems like South Korea, India, and Japan

are furthest along in that process. These might just be memorandum of understanding or frameworks of deals, not actual deals. And then also you've had some indications of de-escalation on both the part of the US and China in that trade war between those two countries. So definitely a lot of hope on the trade front, but at 5,500 now, I think it's time to fade the trolley

rather than to chase it because, you know, we've already priced in a lot of the trade optimism and on an absolute basis, you know, we're still talking about very significant tariffs that will be in place even after these deals are struck. And that's something that will have stagflationary implications for the economy going forward. Okay, so Charlie, if people are looking for what to buy,

you say regional banks, certain regional banks could be an option here, but why, given the Fed financial stability report and if the consumer's gonna get here, presumably small businesses will too. Yeah, we're still seeing that credit is holding up very well at the regional banks. Bank of Oklahoma just reported a zero credit loss

for the current quarter, and it's trading at 1.05 times book. My grandfather bounced me on his knees a long time ago and said, buy them at one, sell them at two. Buy regional banks when they trade for one times book and sell them when they get to two times book. We have some of the strongest banks in the country trading very close to book value. So I think regional banks are very appropriately priced, which is different from large cap growth, which is still expensive.

So look for what's being discounted right now, what's trading at valuations way below its historic averages. That's regional bank, that's housing stocks, that's auto stocks. Those are the things that are cheap right now. Charlie, how does the rally this week set us up for a week coming where we've got some pretty major names, particularly in technology reporting? Do you want me to take that one? I'm happy to. Actually, no. Actually, let me give that one to'm happy to know actually i want to give that

one to add a sense i do you ask for trial is our adam go ahead uh... yes i do i would say i don't know your service tech is had the best urges is so far uh... you know who last night was just the latest in the unbound research service now that was s a p o x instruments uh... positive results attack tech is traded very well as a result. But now the bar is a little bit higher into next week.

And like you mentioned, we get a lot of major tech reports, Apple, Amazon, Microsoft, Meta, and others. It looks likely, though, that the group will continue to outperform as far as just fundamentals and being relatively or less immune to tariff fallout versus some other sectors, just given the nature of software and how it's largely not being impacted directly, at least by the trade war. And Charlie, Bitcoin is now back around 95,000, very healthy level. And given the types of risks, particularly that retail investors have been willing to

take in this market, I'm thinking about margin leverage here and leveraged ETFs. What kinds of moves should we be expecting? Should investors perhaps be prepared for given the week's rally? Yeah, I think there are still some things that are at scary levels. I would put Bitcoin in that. We're getting close back to 100,000. So Bitcoin would be on my list. I think you got to be very discriminating about names that are exposed to the consumer. Names that are exposed to the low end and names that are exposed to the high end where they have stock market

losses are both problematic. We're seeing the middle class actually do pretty well. Boyd Gaming announced numbers today and their constituents is pretty middle-class and they hung in there and actually beat expectations. So be careful of companies exposed to the top end and the lower end. Look for companies with a middle-class customer base. Okay the top end interesting. Charlie, Adam thanks you both. Well does this week's bullish action suggest the market bottom could be behind us Let's ask senior markets commentator Mike Santoli Mike Yeah, John some of the characteristics of this rally have been seized upon people saying it did maybe argue for some technical signals that suggest the low is in now. The low in the S&P 500

in intraday basis was like 4835. That's a big drop from here. A lot of these rallies off of a correction low require some kind of a retest. And we've also come up to a really interesting spot here, 5525. That's actually right about what the pre April 2nd low was just a few days before that. And it's right in this central gap right here from the day after the April 2nd tariffs were now so essentially we're in kind of that no man's land as the market tried to absorb that maybe it's a logical place for the rally to get tested going into next week or maybe it requires a little more tangible progress rather than just the hints that we might get some de-escalation in there.

One, again, tentative positive sign. Take a look at correlations among S&P 500 stocks. This is a gauge of the options markets, a pricing of how much stocks are gonna move altogether as one big blob or on their own corporate merits. And when this index is high and you see it was very high, it shows you kind of a macro panic, where essentially it's a sell everything

and then buy it all back. And what you wanna see this do is settle down. Earning season might be able to help with this process to sort of bring more corporate specific factors into play. We're still though, right where we were, at the peak of the macro panic, back in the late summer when we had the yen carry trade situation and all the peak of the macro panic back in the late summer when we had the yen carry trade

situation and all the rest of it. So obviously a long way to go before this market calms down in a kind of sustainable way, but this week probably did represent progress in that direction. Okay, Mike, I'm wondering from your perspective, how useful is history at a time like this? Looking at that first chart, the low was not arguably from natural causes. That was about the threat of certain tariffs that, yeah, maybe they're kind of off the table now, at least at that extreme, but we don't know exactly

what is on the table. I don't recall a time when policy both influenced the market so much and was such a moving target, like what the actual policy is going to be. I'm sympathetic to that thought, and I do think there are unique aspects right here where it's kind with such a moving target, like what the actual policy is going to be? I'm sympathetic to that thought, and I do think there are unique aspects right here where it's kind of not a process the market can handicap. It really does seem a bit capricious or one person's choice.

That's a little bit different. But the way the market ever has one of these moves here is because the market's thinking we have no idea what to make of this, right? So by definition, the overshoot in the market to the downside for whatever reason usually reflects a broad crowd sentiment that says we can't handicap something here. And so as much as I think that you're right, I look at other examples like 1998, there was a global margin call, hedge funds blowing up, we don't know how that's going to go. 2011, the US federal debt was getting downgraded, Europe might be insolvent, we don't know if

there's a way out of this, maybe we're still in the financial crisis. In other words, it almost always seems as if there's something intractable going on. Now, doesn't mean the market has it right in rallying this week and saying maybe we have a handle on it, but I don't think it's strictly because nobody knows the future, therefore the market can't tell us anything. And I guess there's also the possibility that if we have a low, we might also have a high somewhere. No doubt about it.

Sometimes the market can go so high. Yeah. All right, Mike Santoli, thanks. When we come back, tech stocks jumping this week and more Mag-7 names report results next week, including Microsoft, Amazon, Apple and Meta. We're going to talk about whether tech's rebound could have legs and Moody's chief economist

Mark Zandi says recession risks are high and rising. There's one key indicator next week that could give a clear signal of a slowdown. Overtime's back in overtime. If you take a look at your screen right now, you'll see CNBC's newest subscription streaming product CNBC Plus. So what you're looking at is the CNBC Plus data feed features an enhanced data view and the latest business news headlines. You can stream overtime your favorite CNBC show and all the other CNBC shows you like anytime, anywhere on the go, also on demand.

Well tech coming off a big week of gains. The sector's up nearly 8% since Monday's open, led by ServiceNow, Microchip and Palantir and big tech earnings ramp up next week including magnificent seven names, Microsoft, Meta, Amazon and Apple. Joining me now is Ben Reitzes, he's head of technology research at Mellius Research. Ben, I wanna start with Apple here because there's questions about whether the high priced items that they have could rise, whether if they don't rise it hits their margins.

What's the language from Apple that you think matters the most in figuring out for investors how this is going to play out? It's margins, John. If tariffs have any impact on margin, we got to hear about it. I think it's a black box. It's really hard to figure out how much they plan to raise price versus how much they get hit by tariffs, how much they can move to India, and nobody knows the mixes. I know you guys reported a 60-mill figure, which might be a year or two out, out of India,

but it's really hard to know. So we need guidance from them. Every point to product margins about up to 20 cents a share to EPS, maybe 15, and we got to know. We actually have numbers below the street in the near term because we think margins will be hit, but we're very optimistic long term about Apple. We think this will all get sorted out, we hope, within a year. And you think margins will be hit because they won't sacrifice market share by raising prices? Well, I think that there's hoops

they got to jump through. At the very least, they got to change the supply chain, move some things over to India. Who knows about air freight? Who knows about what they're going to do to try to make sure they have ample supply and lower tariff jurisdictions that are going into the US? So we got to hear about that. I mean, the margins outside of this

were on a great trajectory with the mixed shift towards services. We actually in our model near term have it dipping towards the mid 40s, maybe even lower 40s, and then overall and then going back up again once this gets sorted out. We think it will eventually. With Amazon, we talk a lot about AWS and the cloud business, but maybe more emphasis this time on the retail e-commerce business, given the tariff implications, especially around third party sellers. I imagine on one side of this,

with Shian and Temu getting hit, that could be good for Amazon, but then those third party sellers, maybe they don't do as much volume as they otherwise would, and that hits them. What can we learn from this report? Well, we don't cover Amazon, but we'll be looking at AWS quite a bit, and what they say about tariffs on their retail has a really big impact just in terms of life for many

investors. But we actually will be laser-focused on AWS. They do a really good job there. Actually not looking for very much upside in cloud. We didn't have upside from Google, not expecting a ton of upside in cloud whatsoever from Amazon, but they're gonna have to use that division, which doesn't have much tariff exposure,

maybe on the cost side they do when they're buying servers, and then use that to obviously be a profit offset. So I think that not only what they say about tariffs on the retail division will get a lot of exposure in the media and with investors, but you got to make sure AWS is humming so they can go into that for earnings power when they need it. Speaking of cloud and hyperscalers, we also have Microsoft reporting and we're used historically to there being these mega suppliers of technology But the hyperscalers are essentially mega consumers of technology where there's so much focus on whether their demand for data center

Creation and leases remain strong. How much will any language around that from Amazon and from Microsoft potentially move all of tech? I Think Microsoft's the one you gotta circle. That is the big one because Microsoft's been the one that is, you can tell from some of their language and some of the checks out there that things might be slowing a little bit. And I think Amazon and Meta, it'll be really surprising if they change course.

I mean, Amazon basically just reiterated the other day at a conference. Meta, we think they'll stay with their 60 plus billion. We think Amazon will stay with theirs. So Microsoft's the one that I think people should circle because what's happening there is they're focusing a little bit more on compute. So a lot of their spending is going to go more towards buying Nvidia and networking gear and away from data centers.

And this noise has created a lot of confusion in the marketplace. We urge Microsoft to tell us what's going on, maybe again, and how that's going to go into the next quarter and then next year. And remember, their fiscal year starts in the third quarter of the calendar. So what they say about next year's spending, which starts in that July timeframe, is really big deal. They're going to be kind of set the tone for what CapEx is doing. I think if they say it's over 20% growth next year, people will be elated.

But how much below 20, that's the nuance there. And we're really going to be listening. That is so key for tech. For Meta, the chance that the tariff and consumer uncertainty actually benefits them as businesses actually need to target consumers differently with advertising? Well, another one we don't cover, but we do cover Google. We'll be looking to see if they have a similar resilient trend in potentially on the advertising side. Meta's been executing really well on that side. Actually, the big question that might come out of Meta though

is this llama four problem that they had and that it didn't come out to very good reviews. So you're gonna wanna make sure they're still spending. And what we're hoping as someone that covers the AI space is that they wanna spend more to get it right., John, let's see what they say about that because that's going to be key for tech too. We think they're going to stay the course. We think Amazon stays the course. Microsoft is the one you got to be laser focused on.

A lot hinging on that spending. Ben writes us, thank you. You got it, John. Take care. Take care. Well, coming up, U.S. stocks outperforming for a change this week, but still lacking their international peers for the year. We're going to talk to Pimco's emerging markets expert about where in the world he sees opportunity. And the CEO of Latin American e-commerce company Mercado Libre says one surprise country could end up being a major winner in the trade war.

Find out what it is when Overtime comes right back. Welcome back to Overtime. U.S. stocks getting a solid boost this week, still lagging emerging markets for the year as investors seek opportunities outside of the United States. Well, joining me now with this playbook is Pimko's head of emerging markets portfolio management, Pramil Dawan. Pramil, happy Friday. So in my imagination, these tariff barriers in the US have emerging market economies scrambling to figure out what other countries have maybe got a middle class with consumers who might be willing to do a deal.

Is that how it's working? And if so, who are the new bedfellows you expect to see hook up here? Thanks for having me today. Well, the tariffs are clearly important, but it's much more of a dollar story right now for emerging markets. And what we are seeing is really a reversal of a multi-year, decade-long, monotonic rise in the dollar.

And that's providing a boon to emerging market economies. Over the past decade or so, what we've really seen is the US spend a lot of money running very large persistent deficits. The rest of the world have been saving, running big surpluses, and those surpluses have been recycled back to the US economy. And that's pushed the dollar up and it's pushed US asset prices up. But really since Liberation Day, we've started to see a reversal of that trend. And that's really marked by the decline of correlation or the negative correlation between US assets

and the US dollar. Really, it's a very rare event. It happens in less than 4% of the occurrences. But as the US equities fall and the dollar fell for an international investor, that's an incredibly painful experience because they lose on both sides of the legend. So really for the first time in the best part of a decade, investors are really having to think about diversification, which assets that they own, how many dollars do they own, and emerging markets are coming into the conversation once again.

And they come in at a great time where balance sheets are very healthy and it's fundamentally an under-owned asset class. It sounds like you're convinced that this sell-America trade, as we've been calling it, isn't just a blip, that it's the beginning of a new era? Yeah, I think it's ultimately a paradigm shift. And these paradigms, they take time to formulate.

If you go back to the mid-'80s, the dollar cycle was a 25% to 30% move. In the early 2000s, something similar was a 25% to 30% move. In the early 2000s, something similar as well, about a 30% move. We've moved about 5% to 7% so far. This is probably consensus in the fact that people are talking about it, but it's not overly subscribed. And this has been two decades of buildup of positions whereby the MSCI world comprises

about 70% US corporations now. The whole world is long US assets, in particular US equities. And it's really that need to hedge and really rethink the overall allocation to US equities, which is happening right now. And it's not just equities for emerging market equities, it's how many equities do we want in a world where growth is going to be structurally lower in this multipolar world that we as we call it where we think that it's going to be sort of not just an America first agenda but a UK first, a Europe first, a Japan first and so on and so forth.

That brings down the headline level of growth in that environment. You want less equities, you want more debt, you want less dollar assets, you want more international assets. It's about diversification. That's the only free lunch that you get in markets. You think this is good for Mexico? I think Mexico is in a good position right now, given that it was broadly speaking left off of the punitive end of tariffs. But Mexico is very tied to the US economy and it's going to be highly dependent on how the US-China situation plays out.

If the current level of tariffs stay in place, which is 125% reciprocal and up to 245% on certain goods, then effectively Mexico is not going to be immunized from that. Longer term, sure, there'll be some nearshoring benefits, but the US economy will suffer as will the Chinese economy and Mexico will be dragged down by that. But is it if as the market is expecting that these tariffs do come down to some kind of quote-unquote normal level between the US and China well I think Mexico is pretty well set to be a low-cost producer a friendly at the southern border of the US and can be a preferred partner to the US

as it seeks to near shore. We've been asking this week if maybe the bottom's in for the US equities, is the bottom in for China? Well, I think China's response has been very interesting here. They had a chance to do what the market expected them to do which was to do a large currency depreciation. They chose not to do it.

And I think they've been very strategic about how they've operated here. Instead of doing a large currency depreciation, which would have helped their exporters out, what they chose to do is keep the currency relatively stable and chose to do a big fiscal stimulus instead. And remember, China has plenty of room to fiscally stimulate to support its economy. They also did some monetary stimulus, but by and large it was predominantly fiscal. And that will help to draw a line underneath the economy in China, albeit if this continues the way it is right now, China cannot be immunized from the decline in growth.

So it will hurt both parties and it will hurt both parties pretty equally as well. Okay. Pramil, thank you. Pramil Dhanal. Pleasure. So it will hurt both parties and it will hurt both parties pretty equally as well. Okay Pramil, thank you. Pramil, Donald. Pleasure. Well, it's time for a CNBC News update with Kate Rooney. Kate Hey there, John. Ukrainian President Vladimir Zelensky acknowledged the country's military cannot take control over Crimea He made those comments while visiting a site hit by Russia's deadly strike on Thursday And it does come after President Trump criticized him for reiterating that Ukraine would not recognize Russia's annexation of Crimea, which the U.S. has proposed as part of a possible peace deal to end the war in Ukraine. Meanwhile, the Department of Health and Human Services backtracking today on the announcement

of what they called an autism registry made earlier this week by the director of the NIH, the department official telling CBS News that it would be using existing data sets instead of private medical records from federal and commercial databases. They did not say why that plan was reversed. And finally, the Jeff Bezos-backed Slate Auto just unveiled a low-cost EV truck that can change into an SUV. The starting price there, $20,000 after EV incentives. It's smaller than most other pickups and SUVs and Slate says the modular vehicle is manufactured. Here in the US, the vehicles are expected to be delivered to customers starting late next year.

Guys, back over to you. All right. Okay, thanks. Well, coming up, can earnings projections predict a recession? Mike Santoli has the chart you need to see next and check out Tesla as we head to break Just wrapping up its best week since November though still down more than 40% from record highs over time. We'll be right back Welcome back to overtime. Mike Santoli returns to track earnings forecasts and what they say about the probability of a recession.

Mike. Yeah, not exactly perfect leading indicators, but definitely a hint in terms of how the market deals with what happens after you have a correction. I mean, buyable corrections are when there's not necessarily a recession being indicated by the markets in the next 12 months. That's what this upper line tells you, historical instances after that 10% correction

was registered, that's this line right here. If there was no correction in the following 12 months, that's the average path of the stock market or of earnings estimates, excuse me, following it. And what you see here is when there has been a recession in the 12 months after the correction initially hit, you have fast erosion in earnings because of course there was a recession.

Now, the current instance, it looked a whole lot more like the non-recession path going into this moment, but it's rolled over to the point where it's starting to track a little more closely with the recessionary path. Obviously these lines are averages based on many, many cycles, so it's not as if it has to perfectly fit one or the other, but it does suggest we need to monitor that path of forward earnings estimates pretty closely

through this earnings season to suggest if perhaps this could be the start of something more long lasting on the downside, John. Will we have a more definitive sense after just this earnings season? Not a fully definitive sense, but I do think you're going to have basically the game after this earnings season is going to be what's the second half of this year look like. Now companies may not know, we have to have working assumptions on what the impacts are going to be, but I do think it's informative when you do see earnings estimates move kind of in a hurting behavior after you have the reports. Nobody is perfectly clairvoyant, but it's really the direction of movement that matters

a little more than the accuracy of the numbers. I'm reminded of Nokia's CEO who wasn't willing to say what tariffs might do to the second half of the year because that 90- day window is keeping the uncertainty open. 100%. And nobody should probably suggest that they have any real sense of how it's going to play out. And obviously that's what the market's

been grappling with for weeks. All right, the recession question. Some think it's irrelevant, but maybe not. Mike Santoli, thank you. Well, coming up, the CEO of Latin American e-commerce giant Mercado Libre whose stock has been soaring since president Trump's tariffs were announced on the major shift He's seeing in the global economy and later Moody's analytics chief economist Mark Zandi on the key data next week that could reveal

Whether we're heading for a recession. Be right back. Welcome back to overtime. Mike Santoli returns to track earnings forecasts and what they say about the probability of a recession. Mike? Yeah, not exactly perfect leading indicators, but definitely a hint in terms of how the market deals with what happens after you have a correction. I mean, buyable corrections are when there's not necessarily a recession being indicated by the markets in the next 12 months. That's what this upper line tells you, historical instances after that 10% correction was registered. That's this line right here. If there was no correction in the following 12 months, that's the average path of the

stock market or of earnings estimates, excuse me, following it. And what you see here is when there has been a recession in the 12 months after the correction initially hit, you have fast erosion in earnings, because of course there was a recession. Now, the current instance, it looked a whole lot more like the non-recession path going into this moment, but it's rolled over to the point where it's starting

to track a little more closely with the recessionary path. Obviously, these lines are averages based on many, many cycles. So it's not as if it has to perfectly fit one or the other, but it does suggest we need to monitor that path of forward earnings estimates pretty closely through this earnings season to suggest if perhaps this could be the start of something more long lasting on the downside. Will we have a more definitive sense after just this earnings season? Not a fully definitive sense, but I do think you're going to have basically the game after this earnings season is going to be what's the second half of this year look like.

Now companies may not know, we have to have working assumptions on what the impacts are going to be, but I do think it's informative when you do see earnings estimates move kind of in a hurting behavior after you have the reports. Nobody is perfectly clairvoyant, but it's really the direction of movement that matters a little more than the accuracy of the numbers. I'm reminded of Nokia's CEO who wasn't willing to say

what tariffs might do to the second half of the year because that 90 day window is keeping the uncertainty open. 100%. And nobody should probably suggest that they have any real sense of how it's going to play out. And obviously that's what the market's been grappling with for weeks. All right, the recession question.

Some think it's irrelevant, but maybe not. Mike Santoli, thank you. Well, coming up, the recession question. Some think it's irrelevant, but maybe not. Mike Santoli, thank you. Well, coming up, the CEO of Latin American e-commerce giant Mercado Libre, whose stock has been soaring since President Trump's tariffs were announced on the major shift he's seeing in the global economy, and later Moody's Analytics Chief Economist Mark Zandi on the key data next week that could reveal whether we're heading for a recession. Be right back. As businesses prepare for the way artificial intelligence is going to change their operations, they're also having to adapt the tools they use.

Today, let's take time out with a CEO whose product helps them do that. Spencer Kimball is co-founder and CEO of Cockroach Labs, a startup with a distributed SQL database product. The idea is that it's more scalable and flexible than some other options. Growing up, Kimball had a lot of practice figuring out novel ways of doing things. His parents didn't have a TV in the house, forcing him and his siblings to find other fun. We did a lot of reading.

I think that was probably my parents major intent. But of course we also I loved building things and would use our backyard, especially in Pennsylvania. My dad complained I cut down too many of the trees. I'd make you know little tents and dig holes and make bows and arrows. So, you know when you don't have a TV, it definitely forces you to get creative. Save the environment, get your kids a TV.

Well, getting creative means something else when you're picking software tools to make AI work for business. Well, purpose-built AI tools, often called agents, promise to act on our behalf in the future. Shopping, making appointments, and more. Kimball said that's already boosting the demand for non-traditional databases like CockroachDB. You've got these virtual agents that are augmenting the activities of normal humans, and they're

doing that at machine speed, and they're doing it very exhaustively and periodically. Every morning they're up at the same time, What should I trade? What should I optimize today? I have a vacation being planned. Oh, there's a big deal. So those things kind of happening in the background are gonna put a lot more load on all of those services. And of course, that means more load on the databases behind them.

So the timeout takeaway, infrastructure strain. I keep mentioning Nokia. I was talking to the CEO there yesterday about how the virtual reality and video ingest aspects that feed AI are likely to shift what customers need from networking equipment. Well, we learned from Kimball that the same might be true of databases. It's not just about making data accessible to human users anymore. It's about making it accessible to a whole legion of agents. Well, coming up, we'll discuss why one specific data point next week could offer a key clue on whether the economy is heading for a recession. But first, Robert Frank is in Miami Beach,

nice, where Latin America's wealthy are gathering at the LatAm Tech Forum. Robert? John, it is all blue skies and a lot of optimism here among the Latin American tech community. We're going to talk tech, tariffs and the trade war and why a lot of money is moving out of US tech and into Latin American tech. We're going to talk to the CEO of the most valuable company right now in Latin America.

That's coming up right after the break. Welcome back to Overtime. Some of Latin America's top CEOs and investors are gathering in Miami Beach today for the Lat-Am Tech Forum. Our Robert Frank has been speaking with them about the impact they're seeing from global trade uncertainty. Robert? John, great to see you.

Well, in fact, more than 400 of the top CEOs and tech founders from Latin America gathered here at the Riverwood Capital Management Latin America Tech Forum and the big theme is that America's loss is Latin America's gain. Their currencies are up, their economies are up and because many of these countries run a trade deficit with the US, very few of them got tariffed. In fact Mexico, which thought to be perhaps getting the biggest tariffs, getting off rather lightly, we spoke to the CEO, Mercado Libre. They are now the most valuable company

in all of Latin America with a market cap of over $110 billion. And he said that this new global trade landscape will benefit Mexico and Latin America, possibly for a long time. This is clearly a very big opportunity for Latin America in general, I would say for Mexico in particular. There's going to be, I think, a bit of a permanent shift.

I don't know how it's going to end, but I think the situation where everything was manufactured in China, consumed in the U.S. and China buys T-bills and in a way finances that, I think that dynamic is kind of over. And John, you know, they're often called, Mercado Libre called the Amazon of Latin America, but they're actually doing much better than Amazon this year. Mercado's stock up about 25% year to date

that compares to Amazon down 15%. Now they are getting more competition from Xi'an and Timu and some of the Chinese competitors, but also one of the big themes here, John, is that Chinese tech companies have actually become major acquirers of Latin American tech companies for years. They've really just been the American tech companies that were the big buyers here.

So that's another sign that the Chinese are kind of displacing the US when it comes to tech. One more thing I'll leave you with is that the family offices that are here still see the U.S. as an attractive place to invest at least their own personal money, even as their companies benefit from being completely decoupled from the U.S. at a time when the U.S. is going through so much trade turmoil and economic uncertainty right now. Interesting, Robert. I can't help but notice, though we're talking about outside the U.S. and Latin America, they're still meeting in Miami Beach and I think, you know, Miami is to Latin America as Hawaii is to Asia. Could Miami and the wealth picture in Miami stand to benefit if these folks are right?

in Miami stand to benefit if these folks are right? Certainly, a lot of the folks I talk to either own real estate here or buy real estate here and as you mentioned, I asked them, well why are you having this conference if many of you don't serve US clients or rely on US capital, why are you having this in Miami? They said Miami is the neutral country in Latin America. So that will certainly remain.

So you expect that to perhaps benefit real estate. It's also become a little bit of a crypto destination, which I guess in its own way is also neutral. Absolutely. What's very interesting is that crypto has a lot of big following in Latin America because if you think about what this region has gone through in terms of inflation, devalued currencies, it's no coincidence that a lot of these young tech founders from Latin America are big proponents of crypto, big proponents

of what they see, let's see, the president of Argentina right now doing with crypto. And so that is a big part of both the investing as well as the startup community in Latin America and also as you know in Miami. So that's another big shared experience and economy between the two. Adds up to a very happy week in Miami. Good week to be there Robert Frank. Thank you. Well, nobody knows wealth and the factors affecting it like Robert Frank.

So get out your smartphone, scan that QR code on your screen or you can go to CNBC.com to sign up for his Inside Wealth newsletter. Up next, Moody's analytics chief economist Mark Zandia, whether it's too late to pull the economy back from the brink of a recession. And don't forget, you can catch us on the go by following the Closing Bell Overtime podcast on your favorite podcast app. Be right back. Welcome back to Overtime Markets closing out the week with some nice gains as investors continue to digest tariff updates but next week we get several economic releases that might put more pressure on investors such as Joltz and job openings and labor turnover survey and some other reports, joining us now is Mark Zandi, chief economist at Moody's

Analytics. Mark, what in particular is important data-wise next week? Yeah, we've got a lot of data, John. Something that makes an economist like me pretty happy because I think we'll get some insight. I think I've got the days right. Tuesday, we get the conference board survey of consumer confidence and that's, believe it or not,

that's my favorite leading indicator. If that falls again sharply, that would be a really bad sign that consumers are losing faith and recession risks are on the rise. Then we get, you mentioned Joltz, that's a really good, gives a really good sense of what's going on under the hood in the labor market

or businesses starting to pull back on hiring. And I don't think they're laying off yet, but you know, we'll get a good sense of what's going on under the hood in the labor market or businesses starting to pull back on hiring. And I don't think they're laying off yet, but we'll get a better sense of that. And then of course, GDP, that's for the Q1. And we could actually get a negative Q1 GDP print, which would highlight the kind of fragility of the economy. And then there's a lot of other data, but you know obviously on that Friday next Friday We get the jobs numbers and that's probably gonna be the best news of the week and suggest that the economy But well struggling and recession risk to hide still not in recession

So there's this disconnect between the soft data and the hard data. We saw it in the beige book I know you're looking forward to consumer sentiment, but do you expect to continue to see a disconnect between? sentiment and reality? Well, I don't know that it's that big a disconnect. I mean, there is, you're right, the soft data is screaming, we've got a real problem here. The hard data isn't saying that, but it's saying we've got a problem. I mean, for example, yesterday we got data on existing home sales. Four million homes were sold annualized. John, you've got to go back in the teeth of the pandemic or the financial crisis to find that. You know, if you look at consumer spending all in, the total shoot match, you know, that

hasn't risen really at all since last November. So you know, I can go on, but you know, I'd say there's not all the hard data signaling a problem dead ahead, but much of it is saying the economy is starting to weaken under the weight of the tariffs and other trade policies. Do you get the sense, though, that consumer sentiment is perhaps being whipped around by different tariff headlines to a similar extent to the way the markets have? I mean, even the Michigan numbers seems to have eased up, perhaps as the landscape was changing on what President Trump perhaps actually intends to do.

Yeah, absolutely. I think people are completely tied into what's going on with regard to the terrorists and the trade war, but the thing that I think has got them so upset and why, I mean, the University of Michigan story we got today, I think there's, we got data decades back and there was only two months in history when it was weaker and not by much.

And those were months when inflation was raging. The thing that makes people really upset is higher prices of inflation. And they know that tariffs are going to result in higher inflation and cut into their purchasing power. So I think that's got them really scared. And thus, they are focused like a laser beam on what's going on in Washington with regard to those terrorists. And if those terrorists continue to, if we don't see them come off pretty soon, I think

that fear, that worry is going to translate into less spending. And obviously, that's the fodder for a downturn. What gives you the impression that people know that about terrorists now, because that seemed to be depending on where you fall in the political spectrum. Oh well I think it's other surveys. I mean you can ask people and it's the ties right in. If you can they you know the University of Michigan or the the New York Fed has a similar survey you can see when inflation so-called inflation expectations started to take off and it correlates you know month you

know to the month when we started getting into the trade war, the tariff war. So I don't think there's any doubt about that. And then there's other surveys that are being done that tie it right back into the...and you can see them buying, right? Consumers bought forward. We sold what, 17.7 million vehicles annualized in March. That's up from what was more typical closer to 15 and a half, 16 million.

That's by far, and that indicates that consumers are very sensitive and know exactly what's going on with the tariffs. All right. Getting us ready for all that data next week. Mark Zandi, appreciate it. Well, we've got a news alert out of Washington. Let's get to our Aiman Jobbers. Aiman?

Hey there, John. Some interesting new reporting from the Wall Street Journal here just in the past couple of minutes. They're reporting that the U.S. Trade Representative's Office is working on a structure for negotiations of the tariffs, and they've broken it down into a number of categories. According to the Wall Street Journal, the framework that they're working on breaks this down into categories including tariffs and quotas, non-tariff barriers to trade, such as regulations on US

goods, digital trade, rules of origin for products and economic security and other commercial issues. That is, they are citing people familiar with a draft document outlining the negotiating terms. Interestingly here, there's a schedule for rolling this out between now and July 8th, the president's self-imposed deadline here. The schedule is that they're going to work with about 18 major U.S. trading partners on a rolling basis over the next two months.

The initial plan, the Wall Street Journal reports, is for six nations to come in for talks in one week, six nations in a second week, and six nations for a third week of talks, an 18-nation cycle that would repeat until that July 8th deadline. So that's the top line of this structure here, John. Interesting that that's sort of the framework for this. We'll see if the other countries will go along with it and if they can get to any deals. Alright, deals promised. We'll see if there are deals delivered.

Eamon Javers, thank you. Well, this was quite a week. The major indices bouncing back. Everything green, even the Russell a little bit. It was basically breakeven, but even a little bit green for the Russell a lot of data coming next week to determine things That's gonna do it for overtime and fast money starts now