Closing Bell - Closing Bell Overtime: Alcoa CEO On Earnings, Tariffs 4/16/25

Episode Date: April 16, 2025

Kevin Mahn of Hennion & Walsh and our Bob Pisani break down the late-afternoon selling after Fed Chair Jay Powell’s speech in Chicago. Earnings reports from CSX, Kinder Morgan, SL Green, and Alcoa are on the radar, while Kristina Partsinevelos tracks the sharp pullback in Nvidia and the broader chip sector. Joyce Chang of J.P. Morgan joins to discuss the Fed, tariffs, and macro policy implications from the global market perspective. Eric Johnston of Cantor Fitzgerald shares his outlook on equity strategy, followed by Alcoa CEO William Oplinger with insights on the company’s quarter and the tariffs impact. Paul Ciana of Bank of America offers a technical read on markets, and Laura Martin of Needham previews Netflix ahead of its earnings.

That's the end of regulation stocks closing sharply lower and tech tumbling as Nvidia and AMD warned about high charges over export restrictions and as Fed chair Powell flags the Stagflationary effects of tariffs you could call this a Powell plunge this afternoon But we did close off the worst levels of the day. That is the scorecard on Wall Street The action is just getting started though. Welcome to closing bell over time. I'm Morgan Brennan John fort is off today. Well, coming up this hour, JP Morgan Chair of Global Research, Joyce Chang,

gives her first reaction to this afternoon's commentary from Fed Chair Powell and how she's thinking about the market and the economy at large. Plus, Kendra Fitzgerald's Eric Johnston will be with us to lay out the bear case for equities right now and where he's putting money to work instead. And we will talk to Alcoa's CEO with his first comments

on earnings results, which crossed this hour and the impact of tariffs on the aluminum industry. That's gonna be a can't miss interview, but let's get straight to this market sell-off. Joining me now is Kevin Mann, Henion and Walsh asset management CIO, and CNBC's Bob Pisani. Kevin, I'm going to kick this off with you because we have

all the major averages lower again, Nasdaq leading to the downside thanks to tech. But really it was those comments from Fed Chair Powell that tilted perhaps a little more hawkish than the market would have liked, that really sent us a leg lower. Were you surprised by those comments? I don't think he said anything remarkably different. And they say that April showers bring May flowers.

Well, let's hope that all this April volatility leads to some May investment opportunities. And I think it very well might. Look, the Federal Reserve is stuck between a rock and a hard place right now with respect to their dual mandate and the unknown, uncertain nature of tariffs and the potential timing of the inflationary impact of those tariffs. But we do know from the feds last meeting coming out of March that they raised their forecast for unemployment, they lowered their forecast for real GDP growth, and they also raised their forecast for inflation, a stagflation type of recipe. So they were already kind of leaning towards the potential

inflationary impact of those tariffs. and they also raised their forecast for inflation, a stagflation type of recipe. So they were already kind of leaning towards the potential impact of these tariffs on the economy. And given that, and given that they were already accommodated by lowering the cap on their treasury runoff from 25 billion to 5 billion, I believe that a potential rate cut of 25 basis point at the end of the second quarter in June is still on the table. Not certain by any means, but still possible. Okay, Bob, I want to get your thoughts on this market and the action

we've seen today as every S&P sector finished in the red except for energy as crude oil moved higher. Right, the only point I would make on the market right now is equal weight did a little bit better Tech was in a very difficult shape all day today and not just on the Nvidia news Look if you're gonna have pressure on earnings the growth outlook is going to be very difficult and that means the growth outlook For tech stocks which are growth stocks are going to be difficult So there's a double whammy here with the Nvidia news on top of these concerns about a potential growth slowdown I would agree with your guests there. I I don't think J pal said anything particularly here with the nvidia news on top of these concerns about a potential growth slowdown i would agree with your guest there i i don't think jay pal said anything particularly

uh startling at all i thought it was an interesting wide-ranging interview but the idea that tariffs are highly likely to generate at least a temporary rise in inflation is hardly controversial but the market was positioned a certain way the The market wanted to hear something differently. That's sort of what happened here today. It wasn't that Jay Powell said something, oh my gosh, I can't believe he said that. It was that we wanted to hear him be more dovish. And it didn't happen.

He stood Pat, but people saying, wanted them to say, oh look, we're really watching here. Things slow down, we're gonna cut rates. That's not gonna happen. He is holding, standing Pat. And what that means is that the tariffs may stay for a while and this means that the earnings outlook is way too optimistic right now. That's why the market is moving and really nobody can figure out what the right earnings

number is. Is it 270 which would be up 10%? Is it 255 which would be up 5%? Is it 242, which is zero? And what's the right multiple? And you can see how difficult it is. Even Jay Powell seems to have a tough time figuring out where the economy is going right now.

And that's why you get these crazy gyrations every day. Kevin, it speaks to the fact that we got two separate full year forecasts from United Airlines in the show 24 hours ago, speaking to all the uncertainty here. I see you nodding your head. How are you trying to wrap your arms around earnings forecasts and what it means for market multiples?

I mean, CEOs are uncertain. Chair Powell is uncertain. We're uncertain. How can we provide forward-looking earnings guidance in this type of environment? But what we do know is that there are multiple things that could take place during the month of April and over the course of the second quarter that could really provide for a market rebound and I believe a strong second half the year.

Let's say we get more clarity on tariffs. A couple of big deals are announced and finalized. Let's say there are an extension of those tax cuts. Let's say the Federal Reserve does start to sound a little bit more dovish as we get closer to the end of the second quarter. And we get more announcements from the likes of Nvidia. Yes, Nvidia, who's planning to spend $500 billion building out AI infrastructure in the U.S. Those are all positive tailwinds for the stock market. We're going to have more short term bouts of volatility over the next weeks and perhaps months. But there is a light at the end of the tunnel. And let's hope that light isn't an oncoming train and I don't think it is.

Well, train might be the right word to use because we have our first earnings report out and it's CSX. Kate Rooney has the numbers for us. Hi Kate. Hi Morgan. So it was a miss in the quarter for CSX. They are blaming operational challenges in the press release here. I'll give you those numbers though.

First EPS was 34 cents, the three cent miss on EPS for the quarter that was on revenue of 3.42 billion, down 7%. They talk about declines in coal revenue, fuel surcharges and lower merchandise volume as well. A couple other key line items, merchandise revenue, a tad light here at 2.15 billion, volume down around 1% and then it looks like pricing was down about 6% as well.

I do want to bring you that quote though about those operational challenges, which appears to be driving the miss here. CSX, as they say, faced operational challenges, they say that contributed to first quarter results that did not meet our expectations. You can see shares down here slightly after hours Morgan back over to you. Okay Kate Rooney thank you we're down about one and a half percent on CSX don't miss my exclusive interview with CSX's CEO Joe Henrichs tomorrow that's gonna happen on

Squawk on the street 10 a.m. Eastern. Bob Pisani I'm gonna go back to you because we had a multi-year low for JB hunts another transportation name on the freight side In trading after their earnings today They talked about a pull forward and inventory and the fact that their customers are trying to reimagine their supply chains and navigate this tariff environment And now we get these results from CSX, which are a miss, not only with volumes down, but also the drop in pricing to me is particularly notable perhaps about the broader macro environment. What are transports signaling about the economy and the market right now?

Slow down in the economy. Look, I'm an old school guy. I've been here 35 years. We were trained in the 1990s. Look at transports as a sort of advanced peek ahead to where people think the economy is going. And when you see transports starting to drop like this, that's a warning sign. That's a warning sign that shipping volumes might not be as strong as people think.

Advanced orders, people think, may not. So you've got to keep an eye on this. Let me just say something quick about the tariffs. What we see now, the general hope, is that these negotiations are centering on China primarily, which is a good thing. Everybody knows that's the right way to look at it. The problem is these other negotiations with countries, the other countries, are going to be focused on what you guys need to do is be on our side and let's figure out a way

for you to stop dealing with China so much. I think everyone would support that concept, but it's a very strange way to go about it. It seems to be having the opposite effect. In fact, and this is what's making everybody concerned, our allies seem to be more interested in perhaps making other kinds of alliances than with us. That's the central problem here and one of the reasons we have so much pressure on earnings. Yeah, and certainly the U.S. and Japanese officials are today, so that will be one to watch in terms of close alliances. Kevin, name some names for me. What would you be buying right now, if anything?

I mean, there's obviously a very defensive tilt to this market that has in recent days outperformed. Is that where you want to be? You said defensive. I think defense. There has been significant announcements about increases in defense spending, not only overseas but in the US as well, as President Trump proposed a $1 trillion defense spending budget, a 12% increase over last year.

Look at names such as Boeing. They were just awarded the F-47 fighter jet contract, Lockheed Martin, or even L-3 Harris. And then on the AI side, the AI revolution isn't dead. CapEx spending will increase. We're just going to have to adjust to this new trade and supply chain paradigm, but Nvidia trading at these levels looks pretty attractive to me. The data centers look pretty attractive.

The cooling solutions, the AI story hasn't gone away. Okay, Kevin Mann and our own Bob Pisani, thanks for kicking off the hour with me with all the major averages lower. Yields lower, crude a little bit higher here, and gold shooting to a new record high. Intriguing today, well let's talk more about tech, and specifically the chips,

closing sharply lower after Nvidia, and AMD warned about a big financial hit from export controls. Christina Parts-Navalis joins us now with more. Christina. Morgan, well Nvidia plunging what, almost 7% today. The last news, or latest news, is that Congress is launching

its first-ever? Investigation into Nvidia to determine if it knowingly provided critical AI technology to Chinese firms in violation of export controls And this according to the New York Times you're seeing it on your screen I can also confirm Nvidia has been sent questions by Congress on this matter and questioned by them Nvidia spokesperson saying in the last hour They follow the government's direction to the letter. If the government felt otherwise it would instruct us. Quote, our Singapore revenue indicates the billing address often for subsidiaries are for our US customers. The associated

products are shipped to other locations including the US and Taiwan, not China. And the reason why they wrote not China is because there have been concerns that Nvidia chips to Singapore were being rerouted to China. Nvidia shares fell all day after announcing earlier yesterday evening that they would be enduring a $5.5 billion Q1 charge. And this had to do with new US export restrictions on advanced chips to China. Evercore ISI reports Nvidia's CFO sees limited market for these Chinese chips. These would be the H20s outside of China with production lines that can't be

repurposed for Blackwell chips, which is the next iteration. So it's a big question on what's going to happen to these H20 chips now. Morgan Stanley estimates these restrictions would also reduce data center revenues by anywhere between 8 and 9 percent over the coming quarters. I'm saying 8 and 9 percent but I've seen estimates even higher up to 12 percent. AMD, Morgan like you mentioned also warning of an 800 million dollar charge with similar impacts expected also maybe for Broadcom Marvell especially Broadcom given they sell ASIC chips to ByteDent so it's really hitting the entire sector Morgan. Yeah and ASML also reporting earnings missed

on bookings noted heightened macro volatility from tariffs Perhaps also an early indicator where this all headed on the semiconductor machinery side as well. We're keeping you busy Christina Thank you, Christina parts and Avalos Alcoa earnings are out Kate Rooney has the numbers for us. Hi Kate Hi Morgan, so it was a mixed quarter for the aluminum producer Hi Morgan. So it was a mixed quarter for the aluminum producer. Elko is seeing a little bit of impact here from tariffs. Plus we do have some commentary on that topic. But we'll get you the first quarter numbers. Adjusted EPS almost doubled in the quarter to $2.15. That was a 43 cent beat. Revenue did miss street expectations of $3.4 billion on that line item and then alumina shipments those were down 8 sequentially aluminum shipments down 5 for the quarter and then alcoa did reaffirm its full year guidance it does expect 2025 total aluminum segment production and shipments to remain

unchanged as they say here from prior projections uh at least according to the release here for the second quarter though alcoa's segment, they say they are expecting sequential unfavorable impacts of $90 million due to U.S. Section 232 tariffs. That's on imports of aluminum from Canada. They're also looking at a $15 million impact from some of the restart costs for one of the smelters they have. Tariffs, though, this is the commentary I mentioned. They say throughout the first quarter of 2025,

Alcoa actively engaged with administrations, governments, and policymakers in the US and globally regarding the impact of tariffs on trade flows and the importance of primary aluminum to the US economy, they say, through the deeply integrated aluminum supply chain. Additionally, they say the company engaged with customers, suppliers, and logistics companies

to avoid supply chain disruption. You can see shares higher on the results here, Morgan. Back to you. Yeah, a lot to dig into there. Kate Rooney, thank you. Because coming up, Alcoa's CEO is going to break down those results in an exclusive interview with me before he dials into the call with analysts. But back to the broader market,

in the meantime, stocks accelerating their losses after Fed Chair Powell raised concerns about the economic impacts from tariffs this afternoon. The administration is, as I mentioned in my remarks, is implementing significant policy changes, and particularly trade now is the focus. And the effects of that are likely to move us away from our goals. So unemployment is likely to go up as the economy slows in all likelihood, and inflation is likely to go up as tariffs find their way.

And some part of those tariffs come to be paid by the public. Well, joining us now is Joyce Chang. She is JP Morgan's chair of global research. And Joyce, it's great to have you on the show. Welcome. Great to be with you, Morgan. I'm going to start right there because he didn't use the word, but he implied the rising risk of stagflation. Is he right to be concerned about that

in the comments we heard from the Fed chair this afternoon? Yeah, I mean, look, we still have the recession risk, even with this 90-day pause at about 60% I mean we see PC inflation coming towards 4% Over the next year growth flat at the end of the year now. It's not eminent I mean some of the hard data is still looking relatively healthy, but you know flat growth You know higher inflation still very high fiscal deficits. One has to highlight that these stag flushing risks are real risk and that the uncertainty continues.

And I don't think it's over after 90 days. I mean, U.S. China is going to be an enduring issue. And that's where you have the tariffs really at levels where they're going to take a material hit on the global economy. Do you think that those trade dynamics between the US and China, to your point, are very, very sticky and sort of represents a new world order here, or do you think

there's really potentially a possibility that the US and China strike a deal, and maybe even strike a deal more quickly than the US does with some of our allies, like the European Union, which we have not been able to get to a bigger broader deal for a number of years and across a number of administrations now. Well I you know I I think that the uncertainty is going to continue on US-China. I mean China has I think made it very clear that they you know need to be shown some respect they

also need to know who the clear negotiator is and so I think there's a lot to do in the next 90 days. I mean, 90 countries in 90 days. And where we have the tariffs right now, a 10% universal, you know, 140%, 145% on China, that takes the overall tariff rate to, you know, 25 to 30%. I mean, we are talking about, you know, a tax hike that's really over 3% of GDP. And I think that both sides have hardened the other stance a bit, even though you see some exemptions on just what it would take to get to any kind of grand bargain.

I want to go back to your recession call, because you made that what, a little over a week ago, a week and a half ago. But not all recessions are created equal. So just a little bit of context or nuance in terms of what you would expect a potential recession to look like. Look, a recession is not preordained. It's not eminent. But what you would need to see to get to the non-recession scenario is that you

have the terrorists come down on China, that you don't have further escalation here. So that's why we keep the recession risk high at 60%. But it's less about the call itself than just the negative consequences that we see for global growth. Now what kind of recession would it be? The starting conditions for the global economy are in a pretty healthy place. So I think it would be a shallower recession, a more traditional recession. This is not something that's akin to a global financial crisis, but we have to point to the downside risk given the way that the tariff

discussions have played out. The economic data, what are your expectations as we finish up Q1 data and we come into Q2? How noisy is it, especially when you think about pull forwards in inventory amid all of the tariff and trade uncertainty right now? And I asked that thinking about some of the transport results and trade uncertainty right now and I asked that thinking about some of the transport results we've gotten that

where the commentary has been around that. Look we've seen a lot of front loading of the data so you may really not have some of the data really show signs of softening until you know more towards the middle of the year. What we've seen though is a real change in the sentiment indicators. So the soft data is really showing you that plans for future capex and future investment are really being put on hold right now. But the front loading is playing out

and even the China data that came out earlier today, I mean the first quarter was somewhat better than expectations. We've still taken the China forecast down. We now have China's growth in the next year at just a little bit over 4%. So I think there is going to be this lag with the hard data which is why we really don't see the Fed doing anything until September. You're cautious on riskier assets. What do you consider a safe haven to be invested in right now? We've been having this debate for a number of days on whether the traditional safe havens

Still hold up in this environment given some of the behaviors and some of the moves we've seen for example in Treasuries and in the dollar. Yeah. No, it was a historic week for Treasury moves I mean you had the 30-year transverse 70 basis point range So look I think that some of the safe haven currencies are still the euro because you're gonna have a front loading on the fiscal spending. We still think yen here. We think gold is gonna do better.

We've taken our oil forecasts down fairly significantly. And the short end of some of the developed market rate side still looks attractive here as well. But I think we have to be prepared for a higher U.S. term premium to be a trend that holds throughout the year, particularly as we see higher treasury funding needs given the fiscal outlook as well. So I don't think the turbulence is necessarily going to go away. Okay. Joyce Chang, it's great to have you on. Thanks for being with me.

Well, after the break, cancer Fitzgerald's Eric Johnston has three main reasons why he's staying bearish on equities. He's going to join us next to explain and how much farther could Nvidia fall. We'll look at the technical damage done to the stock after another big pullback today and a key psychological level to keep in mind. Stay with us. to keep in mind. Stay with us. Welcome back. Stocks plunging today led by Steve Pullback for Tech and Chip Stocks. My next guest says more trouble is on the way for equities.

Joining us now is Eric Johnson. He's Cantor Fitzgerald's chief equity and macro strategist. Eric, it's great to have you back on the show. Let's start right there. Why are you so downbeat on stocks here at these levels? Thanks for having me. So we think that the risk reward here for equities is quite poor. As far as the economy goes, the real question is, so we're going to slow, we're going to

have slowing growth and we're going to have rising inflation. And the real question is how much are we going to slow and are we going to go negative? So that backdrop right there makes it such that our best case scenario, we think for the next six months, is a stagflationary environment. And in that environment, earnings estimates are going to fall. The question is how much. We've looked at when the GDP is more than 200 basis points below the inflation rate, which we think would be the best case scenario over the next six months. And in that environment, it's been a very poor earnings environment, where you typically

see earnings go negative year over year, and the S&P 500 go negative year over year. And the big issue is the starting point around valuation. So we are still trading at 20 times earnings estimates that are not correct. And we have an equity risk premium that is still only 70 basis points. So if you think about what Waller said yesterday, tariffs are one of the biggest shocks in the US in decades. And yet the equity risk premium is still only 70 basis points versus it being 300 basis points average over the last 20 years. So we think this makes it very tough. Why do you think the S&P is still trading at 20 times? I mean I think about historically speaking

if you're concerned about something like a recession you usually see an S&P that's trading at what like 16 or 17 times and even at 20 times you're still pretty richly valued here. Why do you think you haven't seen a more meaningful downdraft yet? Is it just that everybody's waiting for earnings to come in? So I think it's a great question. If you think back over the last 15 years we haven't had a natural recession. Right? We had COVID. it was, you know, looking back in the scheme of history, it ended up being quite brief, that sell off.

So a lot of investors are accustomed to the fact that we don't get natural recessions. And then number two is, we will get bailed out by the Fed and or the government. And so we always always and so we always bounce. And I think that that mindset is now embedded in the equity market. Now, I'll say one other thing, which is that the companies today that represent the S&P 500 do deserve keeping everything else equal a higher multiple than, say, 20 years ago ago to be fair. But having said that, this multiple we don't think is correct or pricey in any of the risks

that are out there. So if you don't invest in stocks right now at these levels, what do you invest in? Gold has been on a record tear, 33.50 we're at now. It's just been a monster. Yeah. So I think you want to really be defensive right now, because I think if everything works out great and these tariff rates come down significantly, they're still going to be highly likely in place at a level that is still north of 10% on all imports.

So even in that best case scenario, that's still gonna be some sort of a shock to the economy. So while you're waiting, I think cash, I think the short end of the treasury curve, I don't think you can go to the long end because we could talk about that, but all the risks that are involved there, and then I do think gold.

And that's something that we've liked for a while and we do think has some scarcity value in terms of finding a place of defense. Quickly, Eric, why not the long end of the curve? So very unusual situation where you're going into an economic downturn, yet prices are going to be going up and you're heading into the downturn with our deficit at $2.2 trillion. So in a downturn, that deficit is likely going to go up from an already very dangerous level.

And lastly, because we have a situation where the rest of the world is gonna be less inclined on margin to own U.S. after. Okay, Eric Johnson, we covered a lot. Thank you. Thank you. Thank you. Coming up next, Alcoa's CEO joins us exclusively with his first comments on earnings

and how these metal tariffs are impacting his business. We're gonna also talk to star analyst Laura Martin about the pullback for tech, which she's expecting tomorrow from Netflix results. And some news crossing just now on Costco. The company says it's increasing its quarterly cash dividend to a buck thirty per share from a dollar sixteen per share. We'll be right back.

And we're out earlier this hour, the aluminum maker saying in its release, the company is actively engaged with the administration on the impact of tariffs and working with customers and suppliers to avoid any supply disruptions. You can see shares up about 2% right now. Joining me now, ALCOA CEO William Opplinger. Bill, it's great to have you back on. Thanks for joining me.

Morgan, thanks for having me on again. I appreciate it. So I want to start right there with what you saw in Q1, stronger than expected results. One of the things that got my attention is the fact that you are maintaining your 2025 production and shipment guidance. It's unchanged for both aluminum and alumina despite the economic uncertainty. Why? Well, let's start with the first quarter. We had a strong first quarter. We always start as a manufacturing company with safety and we improve the overall safety performance for the company. We delivered on our production and our ship the overall safety performance for the company. We delivered on our production and our shipments that we anticipated in the quarter.

We dropped higher prices to the bottom line and we repositioned debt a little bit in the first quarter also. So as we look out into the second quarter, our order books continue to remain strong and our belief is that that will continue. And so we've maintained our full year guidance. We'll clearly reevaluate that at the end of the second quarter. But as of right now,

we feel confident that we can hit that full year guidance. On one hand, you're seeing higher aluminum and aluminum prices. On the other, so much of your smelting activity is outside of the US. Much of it that funnels into the US coming from Canada. And we've seen these tariffs implemented.

How are you navigating it? So just to be clear, we had high prices in the first quarter. Since the beginning of April, we have seen a sharp decline in both aluminum and aluminum prices. And that is really in our view based on the fact that there's a lot of uncertainty in

the market. The overall economic sentiment has turned downward. And just since the beginning of April that has driven aluminum and aluminum prices lower. How we manage is how we always manage. We have a globally competitive system. We've got plants around the world. We're looking at opportunities to where we ship metal, where we ship lumina to maximize profitability. And, you know, we'll work through the new tariff system to try to deliver profitability to our investors.

What would it take for you to stand up more smelting and more manufacturing here in the U.S.? It's going to take a lot of time and a lot of money. And if I just give you some background on the overall aluminum industry, we use within the United States around 4 million metric tons. We import 2.7 million metric tons of that from Canada. So we have a massive import of aluminum from Canada. To answer your question directly,

to reshore back into the United States, it will take anywhere between seven to 10 years to build an aluminum smelter. It's billions of dollars, and the amount of electricity that would be used is a massive burden to the United States. So reshoring will take time if it occurs. In the meantime, we believe probably the most effective way for our downstream customers

to continue to be successful is to import aluminum specifically from Canada. Why specifically from Canada? Because you expect we get to some sort of bigger and more meaningful deal with Canada? Canada has had a successful aluminum industry for decades. They are, we have our supply chains that are tied. So many of our customers are tied directly to our smelters in Canada and other company smelters in Canada.

So the supply chains are already exist and we believe it makes the most sense to continue on there. Howe Met aerospace invoked a force major on the heels of these tariffs. Howe Met was obviously spun out of Arconic, which was before that spun out of Alcoa. How indicative is that dynamic of what you're seeing

across your end markets and how customers are navigating these dynamics? I think the word of the day and I- Well, shucks. I think we just lost Bill Opplinger. We'll see if we can get him back. That is the CEO of Alcoa on the heels of earnings with that stock higher right now in overtime. In the meantime, as we work through those technical difficulties, let's go to Bertha

Coombs for a CNBC News update. Bertha. Hi, I'm Martin. A federal judge has found probable cause to hold the Trump administration in criminal contempt for ignoring his order, barring the deportation flights that sent alleged Venezuelan gang members to El Salvador. The judge gave the administration one week to explain how it plans to, quote, purge the contempt filing.

The White House says it will appeal. Another Department of Defense official has been placed on administrative leave as part of a broad leak investigation. Politico first reported the story. Sources tell NBC News that Deputy Defense Secretary's chief of staff was suspended, but didn't provide additional details. It comes a day after two other officials were placed on leave. And the Trump administration is planning on ending the IRS Direct File Program, the Associated Press,

reporting that staff who were assigned to the program were told last month to stop working on it for the 2026 tax filing season. Last tax season, more than 140,000 returns were filed using the free direct file when it was available in 12 states. But apparently more than some 400,000 people had logged on and may have had trouble using it. So that's part of the reason they've decided to scrap it.

Yeah, technical difficulties and redundancies, apparently. Bertha Coombs, thank you. We've got tech leading the market lower today. Up next, a top technician breaks down the charts to see if more trouble could be on the horizon for the sector and for Nvidia and Netflix. We'll kick off MAG-7 earnings on overtime right here tomorrow. Coming up, analyst Laura Martin tells you

how to trade the stock ahead of those results as the market has been gaming this out as a defensive play. Is it really? Welcome back. The major average is taking a hit today with Nvidia leading the tech losses, sinking around 7% after saying it will take a $5.5 billion hit from the U.S. government's new controls on exports to China. Let's get the technical read on the stock with B of A securities head of FIC and equity

technical research, Paul Siana. Paul, it's great to have you on the show. Welcome. Thank you, Morgan's great to have you on the show, welcome. Thank you, Morgan, great to be here. So let's start right there with what you're seeing in Nvidia and the semis right now, and then we'll expand. Sure, I gotta tell you,

we took over equity technical outlook for B of A this year, and we initiated a cyclical bear market call for the S&P 500 in equities, and Nvidia fits right into that basket of you know rolling over with the technical top pattern and starting a cyclical bear market. I think what's interesting is of all the cyclical bear markets for NVIDIA except 2008 every decline was more than 50 percent in the stock price and we're not there yet. So what does that tell us then about where we move from here? Because I feel like it's as go the semis and particularly Nvidia, which has been so oversized in this market, so goes the broader market.

What are the warning signs then? Well, I think one way to think about Nvidia is recall back in May 2024, all the hype and all the mania around semiconductors and Nvidia being the next best thing since I spread and it announced the 10 for one stock split when it was trading at about $950 a share. Therefore it's split back now to about 95, which is almost where we're trading once again. So I think for a stock like Nvidia,

the market tends to suss out pain in positions and there's long term longs that may be under pressure to exit, especially if we're kind of crossing below that threshold again. So how does that funnel into what you're seeing in the XLK and how that compares to the broader S&P? Yeah, so XLK, a technology TF, one know, one of the members, of course, is Nvidia and many others. What we're seeing in XLK versus the S&P 500 is what's called a head and shoulders top pattern that suggests the XLK underperforms the S&P 500 or tech stocks underperform the broader basket of the S&P 500. underperform the broader basket of the S&P 500. Thus, there can still be weakness in that, you know, mag seven tech heavy sector out there.

This death cross in the S&P 500, how much to make of it? Oh, you know, there is something to make it for it. I think that's gross on the S&P, that's gross on the dollar index. There's always a moving average cross somewhere. But yes, one of the popular ones certainly is the death cross on the S&P, death cross on the dollar index, there's always a moving average cross somewhere. But yes, one of the popular ones certainly is the death cross on the S&P. I think what we need to take into account here is the fact that the 200-day moving average had a declining slope this time, which does give the signal a bit more efficacy.

Given, you know, the long-term history, it does suggest that the next 20 or so trading days can be weaker and statistically relevant, weaker, before the S&P 500 can actually find some sort of bottom. Now, I think that's interesting because we even went back and did a study of a number of the different flash crashes and sharp declines, and more often than not, the S&P retests that flash crash low or makes a modest new low. So we're still tactically bearish the S&P 500 here thinking the lows this year are tested if not broken and that rising 200-week moving average approaching 4,700 is likely reached.

So we're kind of playing it tactically bearish after this death cross because that 200-week moving average was declining. You just mentioned the dollar index. We had Joyce Chang from JP Morgan on earlier in the show and she was talking about the outperformance of the euro and how it's been behaving as something of a safe haven. It looks like you've done some technical work on the euro too. Yes, we absolutely have. I think there's, oh gosh, we've done a lot of technical work on the euro. I think one of the most interesting ways to look at the euro is how it tends to V bottom in a very sharp manner and rebound in an equally aggressive manner.

And we've seen this, oh, gosh, 12, 15 times since the peak in 2008. The euro's been in that secular decline ever since. And that trend line that's been guiding it lower since 2008 is actually breaking this month. It's a huge potential breakout for the euro this month that does confirm a bias that we could see 120 within a year's time. You're saying sell the US to your break even inflation. You're also talking about the fact that the labor market is on borrowed time. What is it? What is it all signaling about where we're headed and where the Fed on a day where Powell's in focus is headed?

That's right. Look, when the labor market, you know, weakens, it's going to give the runway or, you know, at least open up an alleyway for the Fed to start, you know, loosening some of their monetary policy stances. And that seems like an inevitable thing when you look at the US unemployment rate going back to 1950, after any time that it rounds out a bottom,

it always gravitates higher. So 4.2% US unemployment rate is the trailing high from the last couple of years. If we start to see the rate rise above that, that could be a signal that the Fed takes the labor market weakness a little more seriously. Paul Ciano of B of A, thanks for joining me. We covered a lot of ground there. Yeah, we did. Thank you. Thanks. A major Chinese e-commerce company is slashing its ad spending

in the U.S. because of this trade war. We've got those details straight ahead. And Netflix has been significantly out before in the S&P 500 this month. Coming up, a top analyst tells us whether there is still an opportunity to buy the stock ahead of its earnings right here tomorrow after the bell. Stay with us. Welcome back to overtime. We've got some more earnings movers to tell you about. S.L. Green reporting revenue missed for the first quarter those shares are down Fractionally right now kinder morgan turning a mixed quarter Missing on earnings, but beating on revenues raising its dividend by 2% those shares are up about 1% CSX Missing estimates on the top and bottom lines saying it faced operational challenges to start the year those shares down about 1%

to start the year. Those shares down about 1%. Meantime, discount online Chinese retailer Temu is making some big changes in light of President Trump's China tariffs. This is according to a new report on CNBC.com that's out this afternoon. The company is dramatically slashing its U.S. advertising budget. After spending heavily in recent years on Google and Facebook and through TV ads, Temu's app store downloads have reportedly fallen by more than 60% in recent days. The company also is making price adjustments saying on its website, quote,

to keep offering the products you love without compromising on quality. We will be making price adjustments starting April 25th. So you can read that full story right now on CMBC.com. Up next is today's tech rec, a sign of more selling to come or is this a buying opportunity? We've got a top analyst to weigh in next.

And don't forget, you can catch us on the go by following the Closing Bell Overtime podcast on your favorite podcast app. We'll be right back. Welcome back, Tech St tech stocks plunging today on news of Nvidia's high costs due to export controls. The Nasdaq's sinking around 3% and tomorrow Netflix is set to kick off Mag-7 earnings.

Well joining me now is Laura Martin, senior analyst at Needham. Laura, it's great to have you on. Do you like Laura coming, do you like Netflix coming into the print? I do, I do like Netflix. I think the market is deciding whether it's defensive.

I think we're going to hear about new ad signups at the lower price point. And I'm really excited to hear what they have to say about churn because I think probably other streamers are going to have more churn than Netflix because

Netflix is like the defensive. Everybody has Netflix in a downturn I think. How important is the ads here here as they build out that infrastructure to meet demand? Super important because it's low cost. So to the extent consumers are under pressure thanks to the tariff price increases and inflation,

they really wanna keep subscribers by having them not disconnect but move down to that $7 ad tier. This is the first quarter, right? That we're not gonna be getting quarterly subscriber numbers. So how much onus is that now put on some of the other metrics that maybe have not gotten as much attention in the past?

Right, I think that's the best point that since they've taken away a key, they've taken away ARPU per subscriber averages, they've taken away subscribers. That's all, that all puts a lot more pressure on revenue growth, margin expansion and free cash flow growth as well as content budget estimates. Much more so than in the past, I think. So they put a lot more pressure on a lot fewer metrics come Thursday afternoon tomorrow. So the fact that the stock's been outperforming and is being seen by investors right now as a

defensive play in this market more broadly, you think that's the right take here? Does it have more room to run? Would you be buying regardless of the results we get? You know, we have to hear what they say about guidance and what they've seen since April 2nd, the start of the tariff tantrum in this country. So, but if they say it's defensive and they continue to add subs globally, APAC would be particular concern because they're not giving us subs. But normally, I'm hoping they call out APAC to see if we're getting any repercussions by slower ads of a US company as a result of the fallout from tariffs as an unintended consequence.

How important to the future for Netflix is live sports, not to mention all of the other media companies as we do prepare for an ESPN unbundling, if you will, later this year. Right. So I think unique content is really is really valuable in terms of driving new subscriber ads. And sports is one of the few areas that there are legislative monopolies. So you can get unique content by buying the rights to the NFL and the NBA.

So I think what's happened is that there's so much, it's almost like entertainment streaming content has become commoditized, but sports is still unique. And so I think they have to have, if not live sports, live sports adjacent exclusive content. I think that's to have, if not live sports, live sports adjacent, exclusive content. I think that's what's going to drive subscriber growth going forward is exclusive content rights. So if we expand this out to the rest of your coverage universe, I am curious what your

outlook is for ad spending, especially as we just reported before the commercial break. Temu is pulling back dramatically right now amid all of these trade tensions on its ad spending here in the US. Do you think we could see more of that? And if so, what does that mean for the metas and the alphabets and maybe even the Netflix of the world as they do set up these ad-supported tiers? Yeah, building on that story you just did, which I think is a really big story, the Google ad units globally went from 60,000 from Temu to six, and on Meta they went from 20,000 to four over the last week because of this trade war.

So I think it's going to be a big story, and I would expect Google, they won't miss the first quarter because the trade talks started April 2nd, which is after March 31st. But when these companies give guidance about their outlook for advertising, I would expect all of them, including Amazon, to lower their ad revenue estimates for the year because we estimate that China is about 10% of Google and 15% of Meta's revenue. So if they're not going to advertise, these these guys are gonna have to lower their earnings estimates for the year to Wall Street when they do first quarter earnings.

That's meaningful. I do wanna get your thoughts on Metta as we do see this antitrust trial play out here. We have about a minute left to the show. Yeah, so Mark Zuckerberg on stage. It's hard to get billionaires on stage, but he argued his case. And I think what's gonna be interesting is to see a DOJ, this DOJ lawsuit was filed

like four years ago under Biden. It'll be very interesting to see how a Trump DOJ goes at this and how serious they are about breaking up Big Tech when, you know, Mark Zuckerberg was on the podium at, on the inauguration day and has given a ton of money and committed a lot of resources to American jobs. I think that's a good thing. I think that's a good thing. I think that's a good thing. I think that's a good thing. I think that's a good thing. I think that's a good thing. I think that's a good thing.

I think that's a good thing. I think that's a good thing. I think that's a good thing. I think that's a good thing. I think that's a good thing. I think that's a good thing. I think that's a good thing. Okay, we'll keep watching it. Laura Martin, thank you. Appreciate it. My pleasure. So we do get Netflix right here on overtime tomorrow. In the meantime, major averages finish today lower. And that's gonna do it for us here at overtime.