Closing Bell - Closing Bell Overtime: U.S.-China Deescalation Boosts Stocks; NEC Director Kevin Hassett On Deal Talks 5/12/25

Episode Date: May 12, 2025

On a pivotal day for Wall Street, Julian Emanuel of Evercore ISI joins to break down what he’s buying as the market rallies on trade talk optimism with China. Marko Papic, Chief Strategist at BCA Research, weighs in the geopolitical environment, followed by NEC Director Kevin Hassett on how negotiations are going with China and other countries, as well as budget talks and President Trump’s executive order on pharma.Steve Sosnick, Chief Strategist at Interactive Brokers, analyzes the afternoon rally. 

That bell marks the end of regulation. Fidelity Investments ringing the closing bell for New York Stock Exchange. Zoom info doing the honors at the Nasdaq. Now let's get to today's scorecard. Bulls took the day by the horns as the U.S. and China agreed to a 90-day tariff pause. The Dow up, let's see, I mean, 1,160 points, over 2.5%, nearly 3%. The S&P 500 up more than 3% above 5800, and the NASDAQ composite up 4% above 18,000. Highest level in more than two months.

Tech was your leading S&P sector, up 4%. Semi-stock surging, the SOX ETF posting its best day since early April, AMD, Nvidia, and Intel outperforming the consumer discretionary getting a pop. Hotels, cruises, casinos in the green, Carnival in Norwegian, both up more than 7%, and the Mag-7 names all in the green, adding $800 billion in market cap.

That's their largest collective move since April 9th. Tesla now back above the trillion dollar market cap mark. That's up a hundred bucks a share from those April 8th lows. And welcome to Closing Bell Overtime. I'm Morgan Brennan along with John Fort. We have a big hour coming up on all angles of the tentative trade deal with,

which sent those stocks soaring. We're gonna get the Trump administration's take on the deal with NEC Director Kevin Hassett, Treasury Secretary Scott Besson calling it a strategic uncoupling from China just earlier today. But the devil is in the details and so far we are still missing some. Marco Papich of BCA Research will be here to tell us why markets may be getting ahead of themselves.

But let's kick it off with this market rally and what a rally it was on this Monday. The S&P and NASDAQ hitting the highest level in more than two months. All three major industries posting their best gains since early April. Our next guest says, "'To use today's surge as an opportunity to lighten up, stick with what he calls quote, the fallen angel.'"

So joining us now is Evercore ISI Senior Managing Director, Julian Emanuel. Julian, it's great to have you back on overtime. Let's start right there. Are these market moves overdone? Where would you be lightening up? Well, so look, we have come a very long way, basically 20% off the lows of April 7, frankly, when the bearishness was as pervasive as we'd ever seen it since the financial crisis. Now, we're not in the exact opposite sort of a bullions, but certainly what we saw today was really a ratification of the fact that things have gotten incrementally better and

that we can sort of quantify what tariffs could look like. But it does feel like it's a bit of a best case scenario. And so for us, what we want to do is we want to stick with the winners of the old bull market, the names that got hit the most during the downturn and the names that have been leading and you've been showing them on your screen, whether you call it Mag 77 or you call it tech or you call it communication services, consumer discretionary, these things in our mind are going to continue to lead the charge

to what we think are going to be eventual all-time highs, though perhaps that may have to wait until 2026. It's interesting to hear you say that because at least ahead of today, and I realize a lot happened and changed over the weekend, but an equal weighted version of the S&P 500 had outperformed that standard cap weighted S&P for six consecutive sessions. It was the longest streak of outperformance since January of 2023. We've been talking about this rotation into the other 493.

You think that's come and gone here then? Well, we wouldn't say it's come and gone because ultimately, if you do get to new highs, as we eventually expect, those names will participate. But if you look at how bull markets tend to evolve, particularly one which we would say is structural like this, with comparisons to the internet structural bull market of the late 1990s AI is a theme that has longer legs and Frankly given the fact that what we haven't seen is a robust capital market cycle And this is part of the anticipation and part of the reason today's gains were as strong as they were those names and those themes tend to lead that type of

and those themes tend to lead that type of capital market cycle. Julian, we now have these two rolling 90-day tariff pauses. One, I think that ends in about two months, another arguably more important in those three months. What does that mean for certainty and predictability in this market? And do you think we see another pull forward of demand during this China pause in particular? Well, so if you get the anecdotal read throughs from shipping people, they're talking about, oh, you're going to have an absolute shipping boom over the next 30 to 90 days to get in front of that expiring period. And that certainly makes sense. So the focus will continue to be on what the cameras look like at the Port of Los Angeles.

But what it really means is that there is going to be this heightened uncertainty, albeit a lot less than it was in April. But when uncertainty remains as pervasive as is likely to be the case, at 23 times earnings at the broad S&P 500, we wanna be selective rather than just, you know, wantonly buying the index. Because we're in mid-May, right? That period where the Christmas stock up starts, everybody's gonna try to get their Christmas inventory

and their holiday inventory in over the next 90 days. Now, do you think maybe the administration touched that hot stove and won't put the market through this again, or is it too soon to make that kind of determination? Well, President Trump said it himself, it may not be $30, but it's gonna be two and maybe five, and maybe it's gonna be closer to 10,

given the fact that the tariffs appear to be going down. But the fact is, is that policy has pivoted over the last month plus, particularly with the intent to make sure that consumers and businesses in general were getting the signal that there's absolutely no tolerance for recession. And that's part of why you've seen the reaction that you've seen.

We've been having so many conversations for so many weeks now about the U.S. versus everything else when it comes to the markets and outperformance and where to be invested right now. Do you buy American here? So, again, in our view, the mega cap names, tech-centric names, are likely to lead the upside looking out over the next 12 to 18 months.

You can make a very good argument that after more than a decade of America First outperformance, that there is going to be longer term give back, but the theme and the concept and the dollar frankly were so oversold over the last number of weeks that it is more than a reflex rebound in America-centric stocks. What a day. That's why people say to stay invested. Julian Emanuel, thank you. Thank you. Well now let's turn to the chips. Semiconductor stocks soared with the SOX ETF, posting its best day since April 9th, but is today's pop enough to reverse its downtrend? Let's head down to Mike Santoli,

the New York Stock Exchange, Mike. Yeah, John, a little bit more work to do, at least by this measure. I'm looking here at the XSD, it's an equated version of the Semiconductor Index, a little more balanced, a little less dependent on Nvidia and Broadcom, although the SOX also looks similar.

So you see, we've just surged as just about a V bottom here more balanced, a little less dependent on Nvidia and Broadcom, although the Sox also look similar. So you see, we've just surged as just about a V bottom here from that steep sell off, that waterfall decline into early April. Just now coming up to touch this 200 day average, which is that longer intermediate term trend line, which is still declining. So usually what's going to happen is it'll need to stabilize, chop around, make some other upsides attempts Obviously in video will be a big part of this Nvidia brought come up a lot today

Nvidia has basically been nowhere for 11 months So in theory there's some catch-up to do take a look at the same index the XSD relative to the equal weighted S&P So sort of semis versus the rest of the field and you see that massive outperform This is a two year chart. So you see just this huge outperformance built up into the middle part of last year, gave all of it back and then some, and now it's just sort of nosing back ahead

to an outperformance on a two year basis. So, you know, obviously it's in the running there to actually resume a little bit of a leadership role. I would say, again, you have to keep it on a somewhat short leash or just honestly, follow exactly what these companies are saying. It's been fascinating as the AI theme has cooled off, at least psychologically, you've seen a lot of folks

in the more sort of lower tech, traditional analog chip world say, hey, finally the cycle is turning. So we'll see if that can help. Mike, if I argued that Nvidia and Broadcom were pretty much the whole story and whether or not it breaks that downtrend at this point, given how the tail had been wagging the dog up to this point, what would you say?

I would say that they are necessary pieces of it, without a doubt. I mean, you're talking about a trillion-dollar company and a three-trillion-dollar company, and then you got a lot of stuff that big companies, by most measures, right? Texas Instruments and AMD and Qualcomm, they're like 175 billion, right? They're that much smaller. So yes, I do think you're right. And in terms of getting investor excitement up, it is probably gonna have to manifest in the broad common

and in videos as opposed to the rest. Okay, Mike Santoli, we'll see a little bit later this hour. Thank you. Up next, as markets soar today, We'll hear from one strategist who says investors may want to pause before celebrating this deal He'll tell us why and a slew of retail stocks rallying big today five below up 20% Shopify 14% on hopes of tariff exemption will be carved out for less expensive goods William Sonoma lulu lemon and Estee Lauder all hire. Overtime's back in two.

MUSIC Welcome back to Overtime. Zoom info falling here in after hours. That about 3% right now. Earnings and revenue beating. Guidance was better than expected. But the stock did gain 10% in the regular session. So John, perhaps a little profit taking here.

Yeah, interesting move. Well, Chinese stocks are charging higher today on the 90 day tariff rollback announced by the US and China. Hang Seng index posting its best day since March. Some of the winners include consumer companies like Pinduoduo, Alibaba, JD.com, and Baidu. All those moves, are they overdone? Is there too much enthusiasm over this tariff pause?

Well, joining us now is Marco Papich, BCA Research Chief Strategist. Marco, it's good to have you back. So we went from much harsher than expected tariff levels on China to a much bigger pause level, down to 30%. What do you think is the impact on pull forward of goods and demand and therefore on Chinese stocks as well? Well, you know, probably no impact.

I mean, if you're going to impose a thousand percent tariff and then take it down to 20% or 30%, the impact is going to be very limited. And so I think that when it comes to Chinese assets, this is really an extraordinary event that is quite positive. There's this right tail risk possibility where Chinese assets actually end up doing really well this year because President Trump has decided not just to focus on deal making right away, but actually deal making with China

before Europe, before Japan, before South Korea, before a slew of other countries that folks thought he would focus on instead. So I do think this is unequivocally bullish for China. Where I think there could be some surprising bearish outcomes is with other countries. For example, once the 90-day pause on the April 2nd tariffs expires, Europe could very well be the one left out of the negotiations. We haven't really heard anything

about European negotiations with the US, and Trump may require at least one major economy to be the punching bag at the end of the whole process. So what impact does this have on these deals what we're seeing. And that's what we're seeing. And that's what we're seeing. And that's what we're seeing. And that's what we're seeing. And that's what we're seeing.

And that's what we're seeing. And that's what we're seeing. And that's what we're seeing. And that's what we're seeing. And that's what we're seeing. And that's what we're seeing. And I think the US in partly, I mean, part of the reason why President Trump is looking to make his own deals quickly is that he has realized that the strategy of fighting a trade war with the entire planet is not that smart.

And that's because the entire planet is not fighting a trade war with the entire planet. So it's really just the US that's on the sidelines here that's fighting a trade war with everyone else. And so there is a temporal aspect where the US has to start making deals. And so I think the most important issue for the US and for investors is that President Trump has flagged very early in the whole process. I mean, we're really just a month away from quote unquote liberation day. He's flagged that this is a negotiation, that trade deals are coming.

I think that the market, the S&P 500, US stocks can actually leap over the chasm of negative hard data. They may or may not come over the next couple of quarters if the reality of President Trump as a negotiator really sets in. We saw treasury yields move higher today. Marco, you've got a 10-year treasury that's now flirting with 4.5 percent. Again, what's the bond market signaling? Well, today the bond market is not signaling anything negative. I think the bond market is simply doing what it always does when there's a positive risk off and probability of sorry, positive risk on, of course, very much a risk on. And when you have probability of recession decline, yields go up. The problem is not that the yields went up today. The problem is that they're already too high. They were already at 4.3% when the day started. And so that's the issue. There is a term premium, but I'm not sure it's associated with tariffs on penguins or Liberation Day or China

US negotiations. I think the term premium is there because of fiscal policy of the United States. So what investors should probably expect over the next, you know, second half of this year is that fiscal policy, that reconciliation bill that nobody really knows what's in it, that's where the focus of the bond market is going to turn now that President Trump has basically signaled that he is negotiating trade deals with pretty much everyone. Yeah. And certainly we're starting to get more details around that big reconciliation package here

this week. We're going to talk to Kevin Hassett from the White House about that just a little bit later this hour. In the meantime, the geopolitical risk premium, how do you assess that right now, given some of the other talks and possible ceasefires and I don't want to call them pieces, but we'll call them maybe stalemates we're seeing with conflicts, potentially some of them as soon as this week around the world? I think the word you're looking for is equilibria. You know, it's normatively neutral, if you will. I think that President Trump has shown to be actually pretty adept at producing equilibria.

The folks don't have to use the word peace because it's morally and normatively laden. But as you pointed out, there is a lot of movement on a number of different fronts. You have the Ukraine front, you have Iran negotiations, which apparently are difficult, but moving apace. A potentially grand bargain deal with China, where US and China significantly reduced tensions really beneath the levels that we were at seven years ago. So this is all very significant. I think that the US dollar has already been responding to this reality. US assets and the US dollar, I think, have been buoyed by many things over the past five to seven years. One is fiscal policy, of course, but the other one is geopolitical disequilibrium and crises.

So there's this safe haven flow that has moved into the US. Ironically, if President Trump is successful in creating new equilibria around the world, it's actually going to reduce the need for that safe haven flow. So it's not just that he's making large allocators around the world nervous about putting their reserves into treasuries. It's not just that.

It's actually there's a positive reason why you wouldn't want to hold American assets. And it's that actually his foreign policy is pretty successful. The other issue that I would say is that gold, you saw what happened to gold today. Pretty big move. Where it went down significantly. And I think that's another way that that risk premium can unwind. Okay. Marco Papich, we covered a lot. Thank you. Well, coming up,

Apple with a 6% rally today, getting its market cap back above $3 trillion, even though it said it's planning to raise prices on iPhones. But President Trump says he spoke with Tim Cook and claims Apple will build a lot of plants in the U.S. We'll discuss all the company's plants when Closing Bell Overtime comes right back. Big day for the Mag 7 adding roughly $800 billion in market cap. Big gains for Amazon, Meta, Tesla, Apple up a solid 6%. Two big pieces of news today. Possible higher prices for iPhones and a conversation between President Trump and Apple CEO Tim Cook.

Our Steve Kovac here to break down those stories, Steve. Yeah, it's not every day you see a move like this in Apple. And so let's talk about the Trump piece of this too. First, so this morning, President Trump said he spoke to Apple CEO Tim Cook about this reversal of the 90 day pause of these tariffs. But keep in mind, the tariff picture really hasn't changed for Apple, that's because about a month ago, they already got the exemption from the so-called Liberation Day tariffs.

They're still subject to the fentanyl tariffs like everyone else's right now. So they're the 20 to 30% fentanyl tariffs are still gonna be impacting Apple. Trump also made some claims like Apple wants to build some factories here. we'll get into that in a bit. But then the Wall Street Journal had a really interesting article this morning saying Apple is thinking about

raising prices on the next line of iPhones that we're expecting to hit this fall. And that could be really interesting here, not just because it would mitigate any potential tariffs if we even have them in the fall. The other thing is just look at iPhone sales and how they've been stagnant to down coming out of COVID over the last two or three years.

One way to really juice that is we know that AI didn't work out so well, that whole bull case theory that AI was gonna drive adoption, but they've also haven't raised prices in a really long time. You're looking right now, 799 for the regular iPhone, that's been the price since 2020, and 999, that's been the price for the pro phones

or pro equivalent phones, let's call them, since 2017. So you can argue, guys, that even without tariffs, and yes, this is gonna help mitigate any tariff impacts, you could also argue Apple's pricing power is already there and it's just gonna be exercising it right now. It's overdue, you could argue, for price increase, and that could help turn around some of this growth story

that's been happening with the iPhone, because look, services have been picking up the slack, and now that's at risk too, guys. I want to ask about this question of Apple building more plants in the US. When Apple does this, they tend to be low volume products, high margin products, like the highest end Mac desktop for pros, and very few jobs, right?

Right, and I would take this with a giant boulder of salt because we heard President Trump talk about this just many times in his first term. You might remember, he told the Wall Street Journal famously, Apple's gonna build three giant plants here and they're gonna be pumping out iPhones. Those factories never materialized. What is Apple building here?

What factories are they building? They announced this a couple months ago. They're gonna be building an AI server facility down in Houston and that production is moving from overseas here. But as far as other factories, other production, Apple hasn't announced anything like that. So it's possible Tim Cook and President Trump

had a conversation about other things, but we do know just last week We are we can have to go we were at Apple and Tim Cook told us we are not producing in the United States We're moving our supply chain to India and Vietnam That is where we're focusing on the products that we sell in the US that is not the United States So, you know, maybe there are some conversations happening about that But Apple hasn't announced anything close to that. And I would be skeptical of those comments from the president.

OK, Steve Kovac, thank you. Well, we have a news alert on a potentially big semiconductor sale. Christina Parts, Nevelis has the details for us. Hi, Christina. Hi, Morgan. Well, the United States has been negotiating a deal that could send U.S. design AI chips, mostly, mostly Nvidia, to an Emirati AI firm. And this is according to a New York Times report specifically about the Emirati firm. They would be sold to G42, which is an Emirati firm that has been scrutinized in the past for its ties to China. The report points out that the talks inside the Trump administration have created some tension, some who want to close the deal before President Trump continues his trip around

the Middle East, and then also those that are concerned about security and worried that the technology could be misused by the Emiratis. The Trump administration, though, is also looking to cut deals, direct deals specifically for AI chips with officials all across the Middle East, and especially as it looks to strengthen U.S. ties in the region. I am expecting some type of a deal or announcement, some type of news coming with Saudi Arabia, and perhaps that could come from Nvidia's CEO tomorrow morning. Jensen Wong is going to be speaking at a U.S.-Saudi

investment forum in the AM. But what this tells us is that the U.S. government is slowly opening up the market, which could be seen as a major positive strength for not only Nvidia, but other custom chipmakers like Broadcom or Marvell as well. All right, Christina, thank you. Thank you. Well, coming up, big news coming out of Washington today and having a huge impact on Wall Street,

a pause that could lead to a potential tariff deal with China and executive order to lower drug prices plus tax talk on Capitol Hill. We will break it all down with NEC director Kevin Hassett. And as stocks rallied gold, seeing a sell off ending the day down more than 3 percent, the dollar, though, on the flip side surging to a one month high. Stay with us. Welcome back to overtime time for a CNBC news update with Pippa Stevens. Pippa.

Hey John, Ukrainian President Volodymyr Zelensky said today that Russia is continuing to attack Ukraine and that Moscow has not responded to a proposal for Vladimir Putin to personally attend direct talks in Turkey this week. The Ukrainian leader says he will travel to Istanbul Thursday and today invited President Trump to be there. No decision yet from the President, but he did say today he would go if it's helpful. McDonald's executives this afternoon announced alongside Labor Secretary Laurie Chavez de Riemer that franchisees plan to hire up to 375,000 employees across the country this

summer. It's the biggest hiring target in years. McDonald's is one of the country's largest private employers. And new images from the James Webb Space Telescope published today reveal auroras on Jupiter that are hundreds of times brighter than those we see on Earth. According to an international team of scientists who analyzed the photos taken in 2023. Jupiter's lights are more intense because the planet's strong magnetic field also captures particles from the volcanoes on its moon Io. Guys, back to you. It's so cool what's coming from the James Webb telescope,

I have to say. Thank you. And just for the investors keeping track out there, it was built by Northrop Grumman. Well, markets cheering the trade de-escalation this weekend between the U.S. and China. But questions remain about the details and when the two sides will sit down again to hash out an actual deal. Joining us now from the White House, Kevin Hassett, National Economic Council Director. Kevin, it's great to have you here on Overtime. I want to start right there. And that is what gave the administration, what gave the president

confidence to move forward with what's essentially a ceasefire here on trade and cut those tariffs down to 30 percent for 90 days? Right. Well, what gave everybody confidence was an enormous amount of work by the entire trade team and the president over the last few weeks, so that as Secretary Bessette and Jameson Greer went into the meeting, they had a complete roadmap of what they wanted and what was unacceptable and what had to be done to make a deal and the Chinese went in with very good preparations as well some of it behind the scenes beforehand with

with people lower level people in both governments and so so in the end I think that what's happening in China is we're rebooting the relationship. We're trying to make it better for both countries and fairer, especially for American workers. The clock is ticking. There are 90 days. What needs to happen? What are the next steps that need to happen for a, to use Treasury Secretary Besant's words, a long-lasting and durable trade deal to actually materialize here?

Well, the president's been 100% clear that Secretary Besant and Jameson Grier are going to continue talking to their Chinese counterparts. If you look at the agreement, we even have the names of the people that we're going to be talking with. And so I think that folks who are able to accomplish this very positive deal are going to continue to talk to make it endurable or durable and also to make it better. And so we've got 90 days to do that. And that's lots and lots of time and truck time as you know.

Yeah. Well, we are right in that window now when retailers typically build inventory for the holiday season. I see the potential for a big pull forward where businesses try to get absolutely everything they might need for the season, for the year in from China as soon as possible. Is that what you expect?

Is that lumpiness? What's the economic impact? Well, some of that was visible in the GDP release we saw in the first quarter, right? And so I don't think the inventory has actually picked up as much as they should have given the imports that we saw in the first quarter. But now I think that basically what people could expect, what markets could expect, which is why they're celebrating so much, is normalization of things.

And so we're going back to where we were with a 10% reciprocal tariff, and that should be fine. I can tell you that we look at what's going on in the shelves every day to make sure that there aren't shortages, and we've gotten briefings that suggested that there wouldn't be, even with the tariffs where they were Shortages at least until the end of the summer and so now there's basically smooth sailing all the way through for Christmas people could put

Their orders in and hopefully they'll be ordering more American products I'm hearing anecdotally about a lot of damage in demand from Canada for example, just because in part of the breakdown in sentiment and feeling between us and them, are you hearing the same and what do you expect to happen from here? No, I think that again, there were some difficult times. I think that Justin Trudeau and the president didn't exactly get along and Canada kept making it worse and worse with their rhetoric.

But now I think that we've had, you've had the Prime Minister come in and meet with the President and begin a new, closer relationship. So I'm sure everything will work out fine with Canada in the end. And don't forget that exempting the USMCA part of trade was a really, really big plus for Canada. And so they've been treated very, very well throughout this renormalization of trade relations. Kevin, I want to shift gears here because the reconciliation package is making its way And so they've been treated very, very well throughout this renormalization of trade relations. Kevin, I want to shift gears here because the reconciliation package

is making its way through the House right now. It includes that tax bill framework, which we're starting to get some details about here. What's make or break for the president, especially since the clock is ticking on that one as well? Oh, for sure. And again, we've been running these big six meetings almost every week with the majority leader, the speaker and meeting with the president and he saw Jason Smith

just last week to go over this bill which he's very very pleased with. The bottom line is that the president's top priorities are to take the previous tax cuts and extend them and make them permanent but then to go after the things that are going to help middle class folks. Let's have no tax on tips, no tax on Social Security, no tax on overtime. Those are the top priorities for the president right now. The early estimates have this coming in, this reconciliation package potentially coming in at trillions of dollars, to cost trillions of dollars more than I think what had been intended initially. How do you close that

spending chasm, especially when bond vigilantes have been out these past few weeks? Well, I think the bond vigilantes have probably noticed that we've got Markets way up. We've got last month We had 16 billion and tariff revenue which you know multiply that out over a year is going to be a big reduction of the deficit It doesn't count in the reconciliation package, but President Trump is all in on in the end. It is budget getting to a balanced budget and that requires supply side tax cuts and getting people back to work with things like the no tax on overtime and reducing government spending and getting revenue from tariffs. And with all that in our budget, we're very

confident that we can balance the budget. I'm confused by the president's messaging. Does he want to raise taxes on the top bracket or not? Oh, no. His rhetoric is very, very clear. There are things that the president said are his red lines. There are the things that he's identified as the must-haves in the bill, including the things we just discussed.

And he understands that the House and the Senate are going to be haggling over the things they need to have in order to get the votes. And what he said is, if they, he wouldn't advise it, but if they were to have to do that, that he wouldn't object. Because he understands that the most important thing for American workers is to get the big, beautiful bill passed

and he's not going to make a whole bunch of straight-jackety rules for the House and the Senate. When is the first big regulation cut that investors should expect? Oh, the regulation cuts have been coming really through the executive orders all the way back to the 20th of January. And so is this as big as they get? Oh, no, they're gonna they're gonna accelerate for sure. And the bottom line is that one of the biggest things biggest things that I found back when we were in the first term in 2017 was that the president's basically making it really really difficult to create new regulations had an

outsized big positive effect on the economy. You could go back and look and small business sentiment for example by the summer of his first term was the highest it had been since World War II and this is because it's like a secret for economists, it seems that they hadn't thought of before 2017, that when you have a new regulation, it's really, really hard on business. They gotta hire all these engineers and lawyers to figure out what are we gonna do with this new regulation at a huge amount of time,

their President Obama especially, who put out a massive, massive amount of new regulations, a huge amount of time was spent trying to figure out what are we gonna do with this new regulation? And so by pausing that already, we're having a big, massive, positive effect. And that's one reason why I think, as you saw, like core GDP at 3% in the first quarter before all of the dust settled with the uncertainty. And so I think the golden age is clearly coming with the tax cuts and trade policy uncertainty

mostly resolved right now. The president also signed his executive order for the most favorite nation policy on drug prices, cutting drug prices. Pharma stocks initially fell and then staged a big rebound today. Is that a signal that the industry doesn't believe much is going to change here? Don't forget that in the first term, the consumer price index for drugs went down year over year for the first time ever under President Trump because he was really pushing for more generics and also making tough deals.

And so what the executive order does is it basically makes everybody come to the table and work to lower prices for hard-working Americans and that's what they're gonna do. And so just as we got a great deal with China and we got a great deal with the UK and we've got 24 deals lined up over the next few weeks, they're going to be great deals with drug companies too. And I think that in the end, you know, it's going to be good for everybody in America, but drug prices are going to be lower.

It's going to be harder or easier for the AI chip makers in the US to export elsewhere. I'm not going to talk about that right now because I saw your news story before you went in and I don't want to step in front of a debate that's going on while the president's traveling. Okay, Kevin Hassett, the White House Director of National Economic Council, thanks for joining us from the White House. Well still ahead, Interactive Brokers Chief Strategist Steve Sosnick. On Weather City's rally is a Seldenews moment.

Plus radar outages and staffing issues creating chaos again at one of the nation's busiest airports. The latest on how long this travel nightmare could last at Newark, straight ahead. Welcome back to Overtime. It was a nightmare weekend of travel at Newark Airport in New Jersey. A nightmare I got to experience myself as dozens of flights were either canceled or delayed because of more equipment outages. Calls are now growing louder for the federal government to come up with a fix. Our Phil LeBeau has the latest details. Phil? Hey John, here's what the FAA, the Department of Transportation, and Newark,

the airport, are doing in order to upgrade the air traffic control situation. They've been doing this for some time in terms of communications and radar are being upgraded. They're adding redundancy. Some of that's going to take some time, by the way. It's not like you snap your fingers and it's done in a day or two. And there will be flight reductions. When you look at Newark, it is the 10th busiest airport in terms of flights on a daily basis. On average, about 470 flights, that's going to have to come down. In fact, the FAA and the airlines are meeting on Wednesday, and the acting head of the FAA says airlines should be ready to explain exactly what they need. All those airlines are going to have to come and explain what they need and making sure

that we're doing this in a fair and open, transparent manner. So I don't want to get ahead of that conversation. I think it's fair to say that both the airport as well as the airlines are going to have strong feelings about what they need to get out of Newark. We will have those conversations and as a result of that, we'll make those decisions public. And we'll see if on Wednesday or on Thursday,

they have a reduced schedule, so to speak, put in place for all the airlines flying out of there. As you take a look at shares of United, remember, Newark is the airline's third busiest hub here in the United States. They've already cut 35 daily flights, but John, expect to see more reductions, not just from United, but from the other airlines that are servicing Newark as well. It's a huge United hub, one of the three major airports feeding into New York, of course. Is this more of a top line or bottom line hit for United?

I would say it's more of a top line hit. Look, I don't know what the implications will be in terms of earnings per share, but clearly when you have to reduce flights at your third busiest hub, you're going to feel the impact. And where they're going to take that are those areas where they can afford to pair off a few flights Domestically your international flights They're not going to touch that if they if they don't have to because those are really the revenue makers for all airlines Not just United. Okay, Phil Labeau. Thank you up next a look at whether history says investors should believe in this market Come back as the major averages get closer to break even levels for the year. And later,

Interactive Brokers Chief Strategist Steve Sosnick, on which stocks his clients are most actively trading right now. The Sone Conference, May 14th in New York City. When you buy a ticket you get direct access to the best ideas from some of the world's most successful investors while helping to fight childhood cancer at the same time. On stage this year, Steve Cohen, David Einhorn, Larry Robbins, soccer star Gerard Piquet, and the mentalist, Oz Perlman. Find out more at soneconference.org.

It's where Wall Street unites to fight childhood cancer. Welcome back to Overtime Markets rallying close to breakeven levels for the year but is the comeback believable let's bring back Mike Santoli. For the answer Mike. Yes a couple of potential answers Morgan you know me so we're going to look at some prior precedents here some patterns from the past that look similar to this episode. Bespoke Investment Group has a new tool that can basically look at pattern recognition of the current market and say what most resembles this from the past. So first of all, the 2018 sell-off in the S&P 500 was down just about 20% into the end of that year. That was the first Trump trade war, plus the Fed was in tightening mode.

Recession fears right there. We bottomed It was Christmas Eve on 2018 and that was a very very bullish v-bottom I didn't have a retest and that's obviously the sort of most favorable type scenario that you might see it also looks quite A bit like 1998 which is another one I've been looking at now a mini panic a mini crash and then a recovery because there was no recession another one I've been looking at now, a mini panic, a mini crash, and then a recovery because there was no recession.

However, take a look at 2022. On a, that was, this was a six month look. On a one year basis, the current path, which is in blue, looks most like the 2022 episode, which was a head fake rally. It was up 20% off the low. It was very rare for that kind of a rally to fail, but it did.

Now why? There wasn't an easy policy circuit breaker to be tripped in this one because we basically had the Fed still fighting inflation still very early in its tightening process and we did not escape further damage that time, guys. Okay, so yes and no. Mike, thanks.

Exactly. Well, what about Momentum stocks? They've been a big driver of this recent rally. Up next, Interactive Brokers Chief Strategist, Steve Sosnick on whether that momentum can keep rolling. And get your smart phone and scan the QR code on your screen to sign up for the Fast Money Live event.

It's on June 5th at the NASDAQ. It'll make the perfect gift for the Fast Money fan in your life. Welcome back to Overtime Markets, posting major gains today. Thanks to the recent US-China trade headlines. Momentum stocks were a big part of the rally, but is that move sustainable? Joining us now is Interactive Brokers Chief Strategist, Steve Sosnick, here with us. Great to have you here, Steve. Great to be here with you, John. So you say today is a rip up the script day,

and to me it was a reminder also of why you stay invested. Don't try to time the market. It seems to me that the fundamental problem, though, from here, of trying to invest based on fundamentals, is you don't know what the fundamentals are gonna look like at the end of the year for companies that sell stuff, right? Absolutely, and that's kind of the problem we've been dealing with here is could you imagine

of an environment even three months ago, the prior earning season, if companies were just sort of withdrawing their guidance, throwing the papers up in the air and saying, we don't know, and the markets would be like, yeah, we're fine with that, that's unbelievable, but the momentum now is so strong, and the trends have been so strong, that basically people are willing to suspend fundamentals. If you're just investing on momentum, you're saying the trend is your friend, stocks are

going up because they're going up. I'm quite okay with that, and I'll worry about the fundamentals later because the price action is doing all the work for me. So what kind of thesis can you sort of believe more in in this market, whether it's domestic, international, what do you sense is a thesis that remains true? I think international actually remains a good thesis here because I do think that while we're past the worst of the foreigners saying get me out of this market, we're moving our money back home, I do think that now that we've come so far so fast, they're not going to be in a rush

to put it back in here. They're doing quite OK in their home markets. The dollar has certainly gotten a lot stronger today, but I think there's still a lot of back and forth going on here. We're basically 2% above where we were on before Liberation Day, and yet the tariff situation is kind of worse than we were expecting then. So this again is pure price action. And so, you know, it's one of these situations where I don't want to fight the trend, but

maybe I want to start insuring against it when you have VIX flirting with 20 when it was 60 or so. Yeah, 10% tariffs is the new normal and the best case scenario depending on the trade deal with the country. To your point, you've talked about it and we've seen it in the market. We've seen this divergence in recent weeks between institutional investor flows and retail and individual investor flows. And retail has continued to buy on the dip. Is that what you're continuing to see at Interactive Brokers?

And if so, where has the appetite been? We've absolutely seen net buying pretty much the whole way through. Our customer base, I don't wanna just call them retail because they do range from small retail to huge institutions and everything in between. And they're very, I'm gonna call them pro-tail, they're sort of professionally focused in many ways,

but they've been net buyers the whole way through. They've never given up on this market. They've also been, they've been embracing the volatility So in any given in any given day TQ QQ the true the 3x levered QQ Q is more active than QQ Q on our platform There's more people trading that than there is QQ Q. So they're basically saying alright the volatility is insane Bring it on I want more and this is you know in any given in given week, sort of four or five of our 25 most active stocks are leveraged ETFs, whether it's TQQQ, SQQQ,

the Tesla or the Nvidia double levered. They want this exposure, and that's one of the ways they're going after it, and they've been aggressive, and we see net buying almost every one of our top stocks almost every day. That's really fascinating. Quickly here, what are the individual stocks or names that are getting traded the most? The most actives at our platform have been Tesla.

It's actually been Palantir, past Nvidia. It's always been, it's actually been Nvidia for the better part of two years but it's but Nvidia slipped behind those two. HIMS had a big move because of the volatility. Berkshire actually perked up recently because there was a dip to be bought and they bought it. That's that fits right in with what your question was. All right, Steve Sosnick, great to have you here on set. Thanks for being with us. Wonderful being here, Morgan. Thank you. Well, we've got some news to bring you. This news is on FedEx. It has reached what it calls a mutually beneficial deal with Amazon to deliver certain larger packages to residents. FedEx and Amazon started cutting ties in 2019

as they increasingly competed on deliveries. It was really FedEx cutting ties. This deal coming after UPS also began cutting ties itself, announcing earlier this year that it would deliver fewer packages for Amazon by the end of next year as it focuses on higher margin businesses. But shares of FedEx are higher in the after hours,

up about 1% right now after jumping in the trading session along with so many other transport names and other stocks in general, John. Are we to assume that FedEx has got a better margin deal here than what UPS was looking to get rid of? I think traditionally in my coverage of this type of market over the years, larger packages have tended to be more lucrative in terms

of deliveries on that last mile. Interesting. So one one more to watch here. But we did we saw stocks surge to start the week. And that's going to do it for us here at overtime. Fast money starts now.