Closing Bell - Closing Bell Overtime: Tariff Turmoil & Market Sell-Off: Breaking Down the Impact 3/4/25

Episode Date: March 4, 2025

Jon and Morgan lead a packed hour, covering today's roller-coaster ride in the market from every angle. We talk tariff concerns with BCA Research’s Marko Papic and former Walmart US CEO Bill Simon analyzinf the geopolitical and retail implications. Bespoke’s Paul Hickey and JPMorgan’s Phil Camporeale assess broader market moves. Earnings coverage includes Ross Stores, Nordstrom, CrowdStrike, and Flutter, plus Cantor Fitzgerald’s Eric Johnston on the macro picture and Joel Fishbein on cybersecurity giant CrowdStrike.

That's the end of regulation and bridge ringing the closing bell at the New York Stock Exchange and HCAI doing the honors at the NASDAQ. What a session, a stomach churning day for investors as a tariff tantrum initially sparked a sell off before a big intraday comeback. And then just the last few moments, a sharp pullback here into the close. The Dow closing lower by about 700 points. That's the scorecard on Wall Street. But the action is just getting started. Welcome to Closing Bell Overtime. I'm Morgan Brennan with John Port. Yeah, we'll be all over this volatility throughout the hour with market experts,

including bespoke's Paul Hickey, J.P. Morgan's Phil Camparelli, Marco Papich from BCA Research, and Eric Johnson from Cantor Fitzgerald. And retailers, including Best Buy and Target, getting hit hard today as tariff fears show up in earnings commentary. We will talk to former Walmart U.S. CEO Bill Simon about the fallout. And we are awaiting more earnings results this hour from CrowdStrike, Ross Stores, Box, AeroVironment, and Flutter. We're going to bring you those when they cross. Let's get straight to this rollercoaster market action, though, with Bespoke Investment Group co-founder Paul Hickey and J.P.

Morgan Asset Management Portfolio Manager Phil Camporeale. Great to have you both here on what is another down day for the major averages. Phil, I'm going to start with you because it is just every headline it would seem we're getting around trade tariffs and discussions coming out of Washington and maybe investor expectations around possible discussions out of Washington are moving the market right now. Does that continue for a while here? Yeah, and very fast, Morgan. So it's really hard to trade these headlines and keep up with the headlines. We came into the year with about a 10 percent overweight to equity. We were pretty bullish. We were bullish on the U.S. What this policy does is just raise uncertainty around the growth and earnings outlook. So what does that mean? You take your equity overweight down.

We took it from 10% to 5%. We've reallocated some of that overweight to places like the U.S. as well as developed non-U.S. and emerging markets. But, Morgan, really important. This is happening at a time when the economy is coming from a position of strength. 4% unemployment rate, 3% GDP growth. Housing in this country, people are still paying 4% on their mortgages

that they refined in 2020 and 21. Corporate balance sheets look good. So the probability of recession really is not rising for us. So we just want to build staying power in the portfolio. That's an overweight to equity and still an overweight to high yield. And at the end of the day, Morgan, it doesn't seem like it, but we're 44 days into this presidency. So it's impossible for us to make these grand conclusions about what the presidency is,

particularly because part of the mandate are lower interest rates. And that lower interest rate story, I think, paves the way for the good stuff that people were excited about this presidency, which is the fiscal and the deregulation side. And that story is yet to be written. So we're still overweight, low probability of recession, and the economy is still operating from a position of strength. Sounds like you think growth scare fears are a little overblown here. And to your point, we've seen the two-year, five-year, 10-year yields all at the lowest since October of 2024. I mean, the VIX did spike here today, Paul, but want to get your thoughts on the market action that we are seeing and

whether tariffs, whether we even fully know what tariff impact could actually look like here. No, I mean, anyone who says they know what the impact of it's going to be is, you know, lying to you. It's in the short term, these things have a life of their own. But to touch on what Phil was saying just a second ago, he mentioned the word uncertainty. Target CEO Brian Cornell was on this morning. And I think every other word out of his mouth was certainty, as in there is none. There's no certainty around tariffs, no certainty around taxes, no certainty around the economy, no certainty around rates. So it's just this stew of uncertainty in the market. And it's going to cause people to be on guard. You know, you couple that with, you know, we had a nice intraday rally today. And then I think, you know,

President Trump, every time he speaks, it's like Fed Chair Powell, the market goes down lately. And so now he's going to be speaking for 90 minutes tonight. You know, I think investors, you know, we bounced off the 200 day and then getting into the close said, who knows what's going to come out tonight and, you know, took profits or not took profits, but took it reigned in risk again. But the bounce of the 200 day was somewhat encouraging today. But the Nasdaq did that Friday, and look what happened the next two days. So, you know, in the short run, I think you just want to be cautious. But these types of pullbacks, 5% from an all-time high in the S&P 500, it's happened 64 other times since World War II. So, I mean, it's not that uncommon. Phil, looking at the market action

today, the rally off of a low after the president took some action and then it didn't hold, it just reminded me of Friday. Is this a replay of Friday? Are there patterns here in excitement or at least reaction to what the president has done and how long that holds? Yeah, I think, John, that these 200-day moving averages are important. So I'm not sure about the pattern from Friday. But what I do know is that there's $7 trillion sitting in money market funds. I brought that up on your show before. It continues to go up. It's like nobody's listening.

And I think that $7 trillion in money market funds, I think there are people just waiting. You saw the price action in NVIDIA, for example, today, right? People just waiting. That was higher. Yeah. People just waiting to say, OK, here's my chance if, you know, at the end of the day, they feel comfortable putting that money to work. And the other thing is rates. Rates are so important here, John. Like, for President Trump to say that he wants rates lower, tenure rate goes from 4.8 to 4.15. And the Federal Reserve went from barely one ease priced in this year to now over three, I think is so important, again, to the other part of the narrative that people were excited about, which is the fiscal stuff. But if you get an inflationary trade war, can you do it?

We'll talk about that. Ross Storrs' earnings are out. Courtney Reagan has the numbers. Court. Hi, John. Yeah, so this is a Ross Storrs' fourth quarter. It does look like they're putting up a better than expected bottom line with earnings per share coming at 179. The street was looking for 166, but the good news kind of ends there. Revenues

also, revenues, I should say, missing estimates coming in at 5.91 billion. The street was looking for 5.96 billion. Also, when you're looking at the forecast, that's really where the disappointment comes in. The first quarter earnings per share guidance is falling below where the street is, even giving here a range of 133 to 147. They're also expecting comparable sales to be somewhere between down 3 percent and flat. The street was looking for a growth there of more than 2 percent. And there's a new CEO at Ross Stores, and he notes that a combination of unseasonable weather and heightened volatility in the macroeconomic and global geopolitical environments have negatively impacted customer traffic. And so he's calling it a cautious approach, prudence in their guidance here. And shares here, Ross Stores down about 4%

in reaction. John, over to you. Court, put this into context, if you will, versus, say, a TJX. When we're talking about the discounters, we're talking about perhaps a working class up to middle class consumer, the type that hasn't been powering the economy as much as your higherend or luxury consumer, how is Ross faring versus, say, TJX? So TJX did just report their results, and they put up a better-than-expected quarter, but also took a pretty cautious approach looking forward, at least in the numbers. But then the CEO on the earnings call with analysts also said that he really likes the opportunity that he's being presented with here and thinks that actually they could win.

And I think it's important to look at the market cap of TGX is really a multiple of even what Target is. It's something I think we forget, but it does attract a lot of shoppers looking for a bargain and not necessarily those that are just low income. So TGX actually put up a quarter, but also like Ross Storrs and like, frankly, so many others, giving a pretty cautious tone, most especially for the beginning of the year, but also to some degree the entire year because of all this uncertainty. All right. Courtney Reagan, thank you for giving us some context there with shares of Ross Storrs now down about four and a half percent. Paul Hickey, you want to get your response to this? I mean, you're talking about Target and the use, maybe arguably overuse of the word certainty in that interview earlier today.

What is the read through here to Ross Storrs, especially when we're talking about heightened volatility from a macroeconomic and geopolitical standpoint, which I guess maybe it's trade and tariffs. I'm not quite sure what else would be affecting the purchase of pillows for your sofa. Yeah, no, I mean, I think the stock came into this report right near 52 week lows. So the fact that it's trading down in response, the bar was already pretty low. But, you know, the CEO a few months ago, several weeks back, was saying that in terms of tariffs, they're not going to be the leader in raising prices. So implying that they were going to eat some of the tariffs in order to, you know, keep prices somewhat stable, that's going to hurt margins going forward. So I think you're going to see that from a lot of retailers. Who's going to eat the impact of tariffs? And the companies that don't have the pricing power to increase prices, their margins are going to be hurt and it's not

going to be a good situation. And Ross Stores caters to consumers on the lower end of the income scale. So that can be problematic where they don't have as much disposable income. Yeah, it's a key point because companies might feel the pinch of inflation, but consumers might not. It depends. All right. We've got box earnings out. Seema Modi has the numbers. Seema. Quarterly numbers for box Morgan looking in line with sweet expectations for earnings and revenue. However, first quarter revenue guidance a bit light, a bit lighter than what the street was anticipating. So that's perhaps why shares are down as much as 9% in overtime. In addition, the company announcing a new $150 million expansion of its stock repurchase

program. And then there's comments here about the company's expansion into AI, developing the leading intelligent content management platform that transforms their unstructured data into actual information. We'll get more details on the call. Also, just how those Doge cuts are impacting demand for software. Shares are down now 9.5 percent in overtime, John. Yeah, Seema Modi, thanks. Flutter Entertainment earnings are out as well. Contessa Brewer has those numbers. Contessa. Yeah, John, Flutter Entertainment, which is the parent of FanDuel, reports revenue of $3.79 billion in line with expectations. Earnings of $2.94 adjusted. We're not comparing to the streets' expectations because there was an accounting change.

Meanwhile, the U.S. adjusted EBITDA. Remember, that's the key profit metric in gambling. Misses expectations. Now, some of this was expected. Flutter says it was the most customer-friendly NFL results last quarter that we've seen in 20 years. And we've heard that from the other gambling operators. We spent a lot of time on sports betting here nationally, but iGaming, our online casino, is by far more profitable. It's only legally offered in seven states right now. And Fandle reports 43% iGaming revenue growth

in the fourth quarter in just those seven states. And it's holding on to its market leader status with 26% market share in iGaming. Full year guidance comes in a bit shy of expectations here, even at the high end of the range. Revenue growth guidance of 13% versus 19%. Important note here, the strong dollar is end of the range. Revenue growth guidance of 13 percent versus 19 percent. Important note here, the strong dollar is weakening the bottom line. Foreign currency headwinds responsible for a three percent hit to revenue. The same to adjusted EBITDA,

where it translates to about 50 million bucks. The stock up right now and after hours trading about a percent and a half, John. Yeah, see that? All right. Don't miss Jim Kramer's exclusive interview with Flutter CEO coming up on Mad Money, 6 p.m. Eastern. Let's see. Do we have CrowdStrike? Not yet. We're still going through it. Those results are out, though. The stock's initial move is lower by about four, four and a half percent. We'll get you those numbers as soon as they're ready. Phil, back to what we were just talking about. I mean, if we do get a full-blown trade war here, that makes it awfully difficult to lower rates, doesn't it? I mean, this has to be a negotiating tactic. All of this, you know, angst and anger, including Ontario now saying that they're ripping up their Starlink contract because they don't like folks who are rattling the sabers

in trade wars. That's not good for now. Yeah, it's not good for now. And they beat us in the four nations final, which I was very upset about a couple of weeks ago. So, you know, the piece there is the Fed will show their colors if the labor market starts to crack. I think kind of all roads lead back to the labor market. You saw that over the summer when the SOM rule was triggered temporarily. Fed was like, we've got to cut 50 basis points in September. Inflation still wasn't at 2%. But, yeah, if inflation was accelerating, yes, then they'd take pause.

But I think if this were to leak into the unemployment rate, if the number of jobs created, initial jobs claims, more than just the D.C. metro area, the Fed would be engaged to cut rates, even if inflation was a little bit high. All right. More will be revealed. We're just at the beginning stages, to your point. 44 days in, and we do get that address to Congress tonight. All right. Phil Campreale and Paul Hickey, thank you both for joining us on a down day for the major averages.

Well, financials getting hit the hardest among the S&P 500 sectors today. That was led by a sharp drop for the big banks. Leslie Picker has a look at what drove that move. Leslie. Yeah, pretty ugly day, Morgan. As you mentioned, XLF's decline today was the worst in years, underperforming the other sector ETFs. And today's performing putting both Morgan Stanley and Bank of America in the red year to date. Bigger banks faring worse than regionals, although the whole sector has really just seen this sentiment shift over concerns about the economy and a trade war. Wells Fargo analyst Mike Mayo putting out a report today summarizing recent meetings with European investors about U.S. banks. And in it, he says, quote, there are near-term investor concerns about the degree of fiscal, regulatory and

political change. And he said the, quote, talk now includes recession versus almost no mention just two to three weeks ago. He said the, quote, worry is that rapid change causes paralysis on corporate decisions and capital markets inflection. That's why the banks levered to such an inflection. Think Goldman Sachs and Morgan Stanley have seen some of the hardest hit. They've seen the biggest declines, some of the biggest declines over the last month. According to Dealogic, global mergers and acquisitions have declined 15 percent in the year through February 25th, compared with the same period last year. That means March needs to be a very busy month for many of these firms to meet market expectations,

according to analysts. Guys. All right, Leslie, thank you. Now let's bring in Mike Santoli for more on the banks and the broader market volatility. Mike. Yeah, John, first to the broad market, the S&P 500, yes, have finished more than half a percent off of its intraday low. And we bounced off of a level just above this 200 day average. You know, that's not some kind of a perfect tripwire that tells you what comes next. There are some patient investors that say that's a pretty good time to add to stocks if you've had that kind of reset lower. There are others who say if you have a decisive break of the 200 day average, mechanical, disciplined investors would prefer to just go to the sidelines. What we do know is it's a very widely watched moment or point in space for the market.

So we did bounce tentatively above that level. We spent a couple of weeks below the 200 day in an uptrend in 2023, both in the spring and the fall. So for a couple of weeks, it wasn't as if it changed the overall trend, but it is a sensitive area for tactical market players. And today you had the market really in the thrall of those kind of twitchy tactical back and forth type of of traders take a look here mention banks against industrials when you came out of the election there was this very forceful move higher in pretty much all the cyclical parts of the market and industrials which is the orange line here had really given that up

well before this last little bout of overall market volatility. And what you see today is just the banks kind of succumbing to it at this point. I look at it from a trader's perspective or for sort of a tactical market reader's perspective that says you almost want to see the stocks that have not given up any ground start to suffer a little bit if you're going to have a sell off mature and you're going to have some kind of more durable buying opportunity, because usually you don't want to have people feel like there's places to hide. There's a lot of areas today that got hit hard that previously had been places to hide. Now, of course, it also means that the market's registering some possibility of economic weakness. That's also visible in the two year treasury

yield that had sort of gone below 4% for a bit. It did finish also below 4% today. And I've been pointing this out. You know, it's this trough that was right in the deep growth scare of last late summer and fall, where we basically thought the Fed was making a mistake. Recession looked like a possibility. We're still above that. And keep in mind, the Fed funds rate is actually much lower now than it was back then. We took 100 basis points off of it.

So it's sort of not saying that things are definitely turning down, but it shows you the market has registered those concerns. Obviously, tariffs, a huge part of it, seen as much more of a restraint on growth initially than on somehow a kickstart of the inflationary process again. Yeah, it's been some chatter coming into the shakeout. We've seen that maybe some overstretched positioning from big traders as well. Always the case. Yes, a lot to digest here. Mike Santoli, thank you. We'll see a little bit later in the show. CrowdStrike earnings are out. Seema Modi has those numbers for us. Hi, Seema. Let's take a look at this number, Morgan, as we watch shares move lower here. For the fourth quarter, earnings per share $1.03 adjusted. That's not comparable to estimates, but revenue did come in line with what Wall Street had been forecasting.

And then if we look at the first quarter revenue guidance, generally matching analyst estimates. So we'll wait for more details on the call about its future pipeline subscription growth, which also has been an area of interest for investors. Bullish commentary from their CEO, George Kurtz, about momentum building going into 2025, especially as they lean into artificial intelligence. CrowdStrike shares trading at 362, down about 7% in overtime, Morgan. All right. Sima Modi, thank you. For more on market volatility, meantime, and how tariffs and geopolitics factor in, let's bring in Marco Papic, BCA Research Chief Strategist. Marco, it's great to have you on, especially on a day like today. And that's exactly where I want to start, because I feel like I've been saying this a lot lately,

but it continues to be the case. And that is international policy is getting ripped up and thrown out the window, decades worth of it, whether it's from a foreign policy standpoint or whether it is from a trade policy standpoint. Market certainly seems to be reacting to it now. Your thoughts on this moment we're in and what it means for the impact on financial markets, for investors and for global economies. You know, I think that today is a very interesting day. I mean, the last four or six weeks have been interesting in that if this is really all about tariffs, then why is the dollar falling? Why is the euro up 1.1, 1.2 percent in a single day, which is a pretty crazy move? I think tariffs are definitely a catalyst for a market sell-off. But I think what the markets have been basically telling you for the past month and a half is that

they don't like a particular segment of the market, and that's U.S. assets. And, you know, if you talk to allocators 12 months ago and their hedge fund managers, everybody swore that once that trade war came, the dollar would surge and certainly did after the election of President Trump. But there were other reasons to cheer, you know, pro-growth policies, tax cuts, more tax cuts, even more tax cuts. And we're starting to hear from Congress that a lot of this stuff is not going to happen. Only the 2017 tax cuts will be extended. It's not really positive for growth. It's not new growth. And in addition to that, some of the geopolitical plays that are happening are actually starting to look like negotiations. And so you're seeing the rest of the world actually outperform the U.S.

And I think that's fascinating. Yeah. And to your point, you've seen some of the European averages indices move to record highs. The German DAX, for example, defense stocks have been helping spur some of those moves we've seen in European equities. I mean, even just the details today about a 500 billion defense fund to help with Ukraine and to help bolster Europe and Germany, even basically saying that it's going to address its own regulations to be able to support that spending. Is that a place where you continue to invest right now? How do you think about it? Yes, absolutely. At least I do. I've been very bullish in Europe since really December of last year. But even before that, I've expected the Trump presidency to be the end of U.S.

exceptionalism, not necessarily because he does anything to be the end of U.S. exceptionalism. Not necessarily because he does anything negative domestically for the U.S., but just that a lot of his policies will prove to be negotiation tactics. And today, something very important happened that I think Europeans will cheer tomorrow when they wake up. And it's that it's pretty clear that at the speech tonight, President Trump is going to announce, you know, that rare earth mineral deal with Ukraine. Now, why is that important? Is it really important for Ukraine or defense or NATO? No.

The reason it's important is because it illustrates that what President Trump does is he pushes negotiations to the brink. Once you're at the brink and it looks like it's all good, he actually pulls the carpet under the negotiations even further. And then he gets an even better deal, supposedly, from his counterparts. And the reason that the market cares about that is that that may very well be the same framework applied to the tariffs, which obviously are right now on the front pages of the news. OK, well, you seem to also want to pivot a little bit here, be critical of big tech, the Mag7, and say particularly as far as their infrastructure and AI investment, pivoting from innovation to providing the infrastructure for said innovation

is not a lucrative business model. I think it's great to hear somebody challenging all of these billions and billions of spending. But I also want to challenge you. How do you explain Amazon Web Services, which is exactly that, Amazon pivoting from their own infrastructure to building it out for others? It's been lucrative for them. And then Apple's App Store, which is arguably more of the same in the mobile app environment? Look, what I would say is that right now, you're not deploying your next dollar of your client's money so that you can invest in digital real estate. You're deploying it in Mac 7 because you believe they are going to be at the forefront of

AI revolution, and that's not what they're going to do. They're railroads. You're investing in railroads, and nobody made money investing in railroads in the 19th century. In fact, everybody lost money. It doesn't mean the railroads weren't a great technological innovation that changed humanity, but the capex required to build them did not meet the ultimate future expectations of earnings. So nobody's investing in Apple because of the App Store. Nobody's investing in Amazon because of AWS. We're investing in them because we expect there's going to be more innovation coming down the line. And what DeepSeek illustrated is not that the Chinese are cheating or that they're like stealing chips. No, it illustrates that anybody given some money is going to come

up with AI solutions that will challenge even what is the best in the market right now. But there's an underlying macro theme here as well. And the underlying macro theme is that U.S. growth in markets have outperformed the rest of the world because we've had an orgy of fiscal spending for the past five years, four times more than Europe in terms of fiscal outlays. And that's not going to continue. And I think that that is the macro story nobody's covering right now. What's going on in Congress, the revolt against $10, $15 trillion of additional spending, none of that's going to happen. And because that's not going to happen, I think there's an additional reason why we have to re-rate our expectations of U.S. versus the rest

of the world. It's a key point. Marco Papich, thanks for joining us. We've got some breaking news out of Washington on tariffs. Megan Casella has those details. Megan. John, that's right. We have a potentially consequential but light on details announcement on the tariffs here. This is coming from Commerce Secretary Howard Lutnick giving an interview just in the last few minutes where he's suggesting that there could be a compromise coming tomorrow on these tariffs. He says he's been on the phone all day with the Mexicans and the Canadians that both countries are trying to show that they'll do better on fentanyl. And he says that the president is listening to them saying that he thinks, Lutnick thinks

that Trump is going to work something out. He also says it won't be a pause. Lutnick said none of that pause stuff, but he thinks that Trump will find a way to say to the two countries that as long as they do more, he might meet them in the middle some way. The final quote being somewhere in the middle will probably be the outcome. And we're probably going to be announcing that tomorrow guys. So a lot of questions here, just how on board, for example, is president Trump with this plan, but this suggests that there are at

least negotiations going on, which earlier today we weren't quite sure how much conversation was going on among the three countries. Now, Lutnick saying the administration is working on potentially some sort of a compromise. Maybe that's a lower tariff. It sounds like lower at least than the 25 percent we've been talking about. We may get more details in the coming hours. They say they might announce it tomorrow. Guys. Thank you. Yeah. Key question. Middle of what? I guess we will see Megan Kisela. Thank you. Well, when we come back, former Walmart U.S. CEO Bill Simon breaks down the tariff impact on the retailers and his read on whether a consumer slowdown is coming. And Cantor Fitzgerald, chief equity strategist Eric Johnston will join us to talk about why he doesn't see an end to the volatility anytime soon. We'll be right back.

Welcome back. We've got right back. Welcome back. We've got more earnings to bring you. This time it's defense contractor and drone maker AeroVironment. Those numbers are out. And it was a miss on the top and bottom lines. Earnings coming in at 30 cents adjusted. That was versus street expectations of 63 cents adjusted. So a big miss there.

Revenues also softer than expected at 167 million. The gross margin, 38%. That was a little bit better. For full-year adjusted EPS, expecting $292 to $3.13 per share. That was shy of expectations from the street as well. And revenues also coming in softer than expected. Just a little bit of context here in terms of these results. Air Environment, which is headquartered in Southern California, than expected. Just a little bit of context here in terms of these results. AeroVironment,

which is headquartered in Southern California, saying that they faced a number of short-term challenges, including from those unprecedented high winds and fires that we did see in Southern California. Nonetheless, Record Switchblade, this is their kamikaze drone, Record Switchblade and Jump 20 orders, which sent their backlog to a record $764 million, highlighting the announced new Utah manufacturing facility that will double that switchblade capacity. Also noting that the Blue Halo acquisition that was announced at the end of last year is set to close in calendar Q2 of this year. Lastly, saying in the results that while this has been a transition year pivoting away from Ukraine demand, we still expect a strong fiscal year 25, including record Q4 revenue. So that has been a focus for air environment has been if we see some sort of conflict resolution in Ukraine, what is it going to mean for future demand?

So comments there ahead of that. Nonetheless, shares of air environmentVironment are down 18 percent on these results right now. Yeah. We'll take them back to levels of four years ago. Well, President Trump's tariffs hitting retail stocks today with concerns popping up in earnings reports this morning from Target and Best Buy. Both companies warning consumers could see price increases soon. And joining us now is former Walmart U.S. CEO Bill Simon. Bill, covet your insight here, not just on Target and Best Buy, but also we had Ross Storrs results that weren't so hot. And there's a contrast I see between these names and the likes of TJX and Walmart, which seem to be both getting some of the higher end consumer and perhaps, I don't know, tapping into some other operational magic.

What's the divide here? Well, thanks for having me. It's an interesting thing to look at. And I was really anxious to see Target's report after Walmart's report last week. Walmart reported an increase in their apparel and hardline business and its second consecutive quarter of growth. And it's after a couple of really terrible years in those categories so i was anxious to see what target did and target showed about a 400 basis point improvement in those categories too so that's really good for the consumer it shows that they're rebounding uh pretty well you know tariffs could have an

you know an impact on certain items in certain categories. But really, they just squeeze the balloon. They don't make the balloon any bigger or any smaller. It just changes what people buy. It doesn't really affect the overall health of the consumer, in my view. Are these retailers, and I guess there's no one thing you can say about all of them, but overall perhaps going to be able to rely on the more well-heeled, higher-end luxury consumer to continue powering things? Or are some of the more mainstream retailers going to perhaps

feel pain if we do end up with prices remaining high and perhaps going a bit higher and then rates also remaining high? You know, you can get and keep a high-end consumer. And, you know, you know, you can you can get and keep a high end consumer. And, you know, Walmart reported again that they're getting a trade down and some higher end consumers. Historically, they haven't kept them. But, you know, we're every there's nothing that's historical about anything that's going on. I mean, it's like it's crazy town. Right. So none of this has ever happened before. They may well keep them. The problem in the long run for the big guys like Walmart and Target is there's just not as many high-end people as there are middle income and lower income. So yeah, you could get the trade down and you maybe even keep them. But unless you see some sort of robustness regain in the

middle of the economy, it's going to be hard to sustain those levels of growth. So if you see price increases tied to tariffs and trade dynamics and just the cost of manufacturing some of these goods or importing some of these goods that have been manufactured somewhere else, do these companies have pricing power to push it out to consumers? Are they going to absorb that and thus take a hit to their margins? And I ask that knowing that Target, for example, came out, I think it was last year, and said they were going to start slashing prices on thousands of goods. Can that continue to happen? You know, in the end, the consumer decides whether the tariff works or not, right? Like, you know, Brian Cornell in his report said you may see price increases on things like strawberries as soon as this week or next week if the tariffs go through,

because this time of year, a lot of those are imported from Mexico. So then the consumer decides, you know, Target will push the pricing through. They will. They'll try to absorb some, but in the end, they'll have to push some of the pricing through. And the consumer will decide whether they want strawberries or apples, whether they buy the thing with the tariff on it at a higher price or not. And so while certain categories and certain items and even maybe certain companies might feel a tariff impact, broad line retailers like Walmart, Target, Amazon, one, have the ability to source from different places and locations to mitigate the tariffs, and two, have such a broad impact on the consumer that the consumer can make choices inside of their business, and I wouldn't expect them to have

a very big negative impact from the tariffs in the long run. All right. Bill Simon, great to get your thoughts. Thank you. Thank you. After the break, we'll tell you about one surprising part of the market that's been acting as a safe haven during this pullback. And much more ahead on today's After Hours Action. We're going to talk to an analyst about CrowdStrike's results as that stock pulls back about 6%. We'll be right back. Welcome back to Overtime. In the midst of this

sell-off, investors may be wondering where to turn to for safety. Well, one surprising part of the market has been outperforming lately. Mike Santoli has identified it. He's digging in. Mike? Yeah, Morgan, it has been working until today. And this is interesting. I mentioned earlier how the banks had been kind of a source of shelter in this volatile period. Well, so have the traditional telecoms, in particular AT&T and T-Mobile. Looks like the same chart for the last year, right? Ramping higher. Verizon, not as well liked.

But today, AT&T shares down 5.4 percent, T-Mobile down 3 percent, Verizon down a little bit less than that. And it does show you that people have really embraced not just the safety of dividend paying telecoms, but also AT&T is a big weight in the S&P value index. And so those ETFs, what it's done, though, is compress the dividend yield of AT&T to really historic levels, low levels, especially relative to the overall market and bonds and Verizon's yield. So right now, AT&T down around a 4% dividend yield. It's below the 10-year Treasury yield. That hasn't happened in a long time. And this is a massive gulf that's opened up between that and the yield of Verizon,

all because the stock prices have had different performance. It feels as if the market believes AT&T is the upper hand in market share. Verizon is making an acquisition, maybe taking on just a little bit more debt. Not clear exactly why else this outperformance. But be aware when you get just when you feel like it's safe to stay in these boring areas. Sometimes the market gives you a reason to rethink it in the short term. And then you got to phone a friend. Mike Santoli, thank you. Up next, Tanner Fitzgerald, chief equity and macro strategist Eric Johnston on why there could be more pain ahead for investors and the sector he thinks is most at risk.

Plus, CrowdStrike shares are lower, down about 6% right now, despite a revenue beat. Coming up, an analyst with a buy rating tells us what he wants to hear from management on the call, which begins at the top of the hour. Welcome back to Overtime. A wild ride for the major averages today as trade tensions between the U.S., Canada, Mexico and China reach new levels. Our next guest says the volatility isn't going away anytime soon. Let's bring in Kenner Fitzgerald, chief equity and macro strategist, Eric Johnston. Eric, welcome. I'm specifically wondering about how long you think this lasts. We had Commerce Secretary Howard Lutnick suggesting, hinting that perhaps there's a

compromise in the offing. But, you know, listening to Mexico, listening to Canada, the feelings seem bruised. How much of this chain yanking can go on before they start to view the U.S. as less than a reliable trade partner? And that has a long term impact on the economy and the markets. I think you're right. It's going to remain, you know, extremely volatile. The news flow coming out is going to remain extremely volatile. But what's happening is, is that over the course, you know, right now there's so much uncertainty in the economy, and it's impacting how businesses are investing, how they're hiring, how they're planning new orders, and it's showing up in the data.

And we don't expect that to change, you know, any time in the next four, six, eight weeks. There's going to be variability around what is tariff policy, what is tax policy, and how, you know how changes to immigration are actually affecting businesses. And so essentially, the economy is almost going to be stalled for a period of time. And I would expect that when earnings season comes in April, that there's going to be some issues with first quarter earnings and also with guidance. Now, before we get there, the sequencing of the news flow, I think, is really important. And we've seen a significant amount of de-risking in the market. And so to your point about volatility, I think there's a

real possibility that we can get a snapback rally because of the de-risking that has already occurred and because we've gotten the negative tariff news about the tariffs being put on, the next piece of news that we get may be that they're coming off. And so it's going to be this back and forth. But I think the direction over the next six to eight weeks is down. But we're going to see we're going to see squeezes along the way. OK, so investors should do what then? So as far as, you know, a portfolio, I would say for those that are, you know, shorter, shorter term from the downside, I think financials is the one cyclical sector that has not sold off yet. And if you think about financials, they're levered to credit, they're levered to loan growth, levered to capital markets, all things that don't perform well in a slowing

economy. And then they would benefit from rate cuts, which I think could be trickier right now, even though we're seeing slower growth, inflation remains high. I think there's a short-term long opportunity in some of the high volatility momentum names. They've gotten hit very hard and they've been, in many cases, de-risked. And I think you're going to see a likely bounce in the short term in those names. I think that presents an opportunity in the long side. Yeah. And you could argue you already started to see some of that play out in trading today. Some of the hardest hit names that have been high flyers, momentum names, actually seeing some of the biggest comebacks, at least before the sell-off gathered steam again into the close this afternoon. Eric, what's the bond market telling

us right now? Is it good or bad? So I think bond yields are moving down for two reasons. One's good and one's not good. So the good thing is, is that one of the focal points of the current administration is bringing down the deficit. And if you rewind three or four months when we were at 480 in the 10 year, the big concern was a deficit that had expanded to 2 trillion. And there was really no end in sight around where that expansion of the deficit was going to go. Now we have a situation where one of the big focuses is bringing the deficit down. There's even talk about a balanced budget. So that's very favorable. Now, the negative side is that the process to get there around slowing fiscal spending is a short-term economic headwind. And I think the bond market has absolutely sniffed that out where you have

headwinds from economic growth from less fiscal spending, from slower population growth, and then, of course, the uncertainty that I spoke about. So I think they're seeing the bond market is seeing this slower growth environment because they are still pricing in higher inflation. So it's really a growth that I think they're really focused on, along with the deficit outlook. So less spending, less liquidity. Do you buy Bitcoin here? What do you think of some of these other asset classes, whether it is Bitcoin or whether it is a more traditional? I know I probably shouldn't compare them, but gold. So I happen to like both for different reasons.

You know, as far as gold, it's obviously had a huge run to the upside. But a lot of the demand has really come from central banks and the flows into gold ETFs, for example, has actually not been that significant. And so there could be a follow on move to the upside as investors look to where can safe havens, where can I avoid some of the risks that we were just talking about? I think gold will be a beneficiary. And then on the Bitcoin side, you know, I think certainly you have the current administration behind Bitcoin, which is always something that is, you know, quite, quite favorable when you're investing in any asset class. Eric Johnston, thank you. Up next, brand new data that is raising concerns about employment growth ahead of Friday's key January jobs report. Stay with us.

Welcome back to Overtime. Investors are anxiously awaiting the January jobs report on Friday, but we're already getting pieces of the employment picture, and this one's not so good. This is some data from Intuit, the latest QuickBooks small business index. The very smallest companies, those with one to nine employees, shed 125,000 jobs last month. That's a roughly 1% decline from January and the largest drop since 2015, excluding the pandemic period. Employment fell in every region of the country and in all sectors covered by the survey. But it isn't just about the jobs picture. Revenue at small businesses also falling about 0.8%.

Okay. Well, up next to top analysts on the key things to listen for when CrowdStrike's earnings call kicks off in just a few minutes. Welcome back. CrowdStrike's earnings call is set for the top of the hour as the stock moves lower on earnings. Truist Joel Fishbein was one of many analysts raising their price target ahead of earnings up to $460 per share. He joins us now. Joel, I want to get your thoughts on these results because they did post better than expected. Earnings, stocks down something like 6% right now. Why?

Stocks down 6% because the guidance is a little bit disappointing relative to what the street had expected. But I think if you look at this quarter in whole in the year that they just put up after having a significant outage in July, this was a pretty darn good quarter. And that looks pretty strong. So I think this is just a temporary move. We think the stock will likely recover and reach new highs over the next year. And it was near the levels where your price target is not too long ago, right? Just a couple of weeks ago. But now it's fallen even before these earnings results were out, back to that level where it was trading last July before this big outage. So what needs to happen here, CrowdStrike specifically, to give investors that confidence to drive it to new highs after it's been sitting here? Well, actually, you know, when it went after

the July 19th outage, the stock went to 217, right? It's now, you know, 360 or whatever. So it's up almost 80 percent off the bottom from from where it was before this near term move down. We think is a lot of it is still up here to date, 6 percent, which is outperforming the market. A lot of this downside still up here to date, 6%, which is outperforming the market. A lot of this downside move here is really market-related and people rotating out of high-tech stocks and fairly rich-valued stocks. But again, we think that the market will come back to this name. There's very few companies in the S&P that are growing north of 25%, expanding margins. They're generating a billion dollars in cash.

And really what investors are going to focus on is the fact that when they come out of one year after this incident in September, when their customers renew, they're going to renew at a much higher rate. So, Prostrate had to go into a triage mode after that September outage and now is making their way back. And I think investors will be very surprised at how strong the results are going forward after we get through some of this noise that's generated from, you know, missing a cycle. It's interesting to me because I feel like so many of the companies that work with the federal government have just been hit hard in anticipation of what Doge is going to mean for their books of government business. The cybersecurity companies, including CrowdStrike, have actually been growing those

books of business. Is that a contrarian take in terms of how the market's thinking about this right now? Could there actually be more business for these companies? Well, it's a great question. Number one is, you know, I think we're all a little bit worried about Doge. And that's one of the questions I will ask about on the call. I don't know how much color that they'll actually have right now. The CEOs and customers that we're talking to that have a lot of business in the federal government really just don't know right now. But obviously, with less seat count, you're going to need probably less, you know, certainly less technology or software and some of those. I do think that security, cybersecurity is an area where the federal government is really underspent. And I do think there's opportunities for CrowdStrike, Palo Alto, and some of these other vendors where they're really Z-scaler.

They're really digging into helping the federal government modernize their IT and security infrastructures. And really, I think that's an area of underspent. So I do agree with you, Morgan, that that's an area where I think that we could see an uptick in spending, particularly because we think the next cyber war or the next war will probably likely be a cyber war. And I think we're inadequately protected against some of the threats that we see out there. Okay. Joel Fishbein, thank you. Well, we've got a big address from the president tonight and markets that have been trying to find direction. One wonders how much to take him from that into tomorrow's trade.

President Trump on true social tomorrow night will be big. I will tell it like it is. He said that yesterday. All caps will be watching. That does it for us here at Overtime.