Closing Bell - Closing Bell: Presidential Pivot Sending Stocks 04/09/25

Episode Date: April 9, 2025

What does this President Trump’s big tariff shift mean for your money? We discuss with Altimeter’s Brad Gerstner. Plus, PIMCO’s Richard Clarida tells us what this move might mean for the fed. And, Mohamed El-Erian from Allianz tells us how he is navigating the tariff uncertainty. 

Welcome to Closing Bell. I'm Scott Wapner, live from Post9 here at the New York Stock Exchange. This Make or Break Hour begins with breaking news. A presidential pivot sending stocks surging just about 90 minutes ago. That is when President Trump posted on Truth Social that he was authorizing a 90-day pause on reciprocal tariffs and a baseline reduction down to 10 percent across the board to everyone but China. Those tariffs are being increased to 125 percent, but it's the news of

that stay that has turned this market in a very big way. Bonds very much of the story, the 10-year yield surging over the past couple of days, unnerving many people. A strong treasury auction, 1 p.m. today, taking a little bit of the edge off of that. We, of course, are watching that so closely. So many stocks are up, many tech names, including Apple absolutely surging midday. And that is where they remain currently. Altimeters, Brad Gerstner will be with me exclusively in just a moment to break all of this down,

plus a big lineup to follow. Ed Yardenny, Mohammed El-Aryan, and Pimco's Rich Clarida. It does take us to our talk of the tape, the pivot, and what it means now. Let's first bring in our Eamon Javers at the White House with the very latest. Eamon, they said this was the plan all along. Scott, that's right. There was really no notice for this. It was a very quiet afternoon at the White House until all of a sudden it wasn't. We're trying to get a little bit more of a TikTok in terms of the president's decision

making. We saw Scott Besson, the Treasury Secretary, come out sort of impromptu to talk to reporters here at the White House. He said that he had a conversation with the president back on Sunday about strategy. Here's what Scott Besson said. He said, I had a conversation with the president on Sunday. This was his strategy going forward. But what I just heard from Caroline, there's the comment from Secretary Besson, he said,

and this was again driven by the president's strategy. He and I had a long talk on Sunday, and this was his strategy all along. So the implication I took from that, Scott, was that what Besson was saying is that he and the president decided on Sunday that they would hold the tariffs through Wednesday and then pull them off in order to grant the market some relief. But I talked to Caroline Bessett, the White House press secretary. She says that's not the case. She said this decision was made very shortly before the President's Truth Social media

post about this. So there was an Oval Office meeting. We don't know who exactly was in that Oval Office meeting. We do know it was high level officials and we know that in that meeting they made this decision according to Caroline Levitt and then that's when the President put out this social media post that rocked markets and rocked the world. So that's the state of play as of right now. The President is scheduled to have an event here. It was pre-scheduled with race car drivers. We expect to see him. Caroline Levitt says that he's very excited to talk about this to the world.

And we expect that he might pause that race car event and talk to cameras a little bit about the decision that he just made. Okay. Eamon, thanks very much for the update. Any more let us know please. That's Eamon Javers, as you see there live at the White House for us. Now let's bring in Altimeters Brad Gerstner, who joins us exclusively. It's so good to have you back with us.

After a couple days that we, you know, we're digesting all of this, we all watch these markets. You were with us the other day in which you called this Trump tariff policy an unforced error, an own goal. Your reaction to this is what? Well, let's be very clear. What I described as an own goal is if we were gonna ride the nuclear option

that Peter Navarro was advocating over the waterfalls. Clearly the VIX spiked to 60. We were having turmoil in the bond markets. And the president, credit where credit is due, he's negotiator in chief, he's landing the plane. It's the master of the deal, you know, the art of the deal here. Just when people were throwing in the towel, he gives a 90-day reprieve and he says, listen, set aside the reciprocal tariffs. We're going to 10% flat across the board. We have 75 countries we're now going to negotiate with.

We're going to align the world around a policy that will isolate China and deal with a real trading problem. So for me, this was a day where Howard Lutnick, Besant, Hassett, Elon, all of those who had aligned around a common sense, strategic, targeted tariff policy. They won and those who were, you know, trying to drive us back toward multi-trillion dollar tariffs that was really gonna try to unwind the entire global trading system,

which is really where I think doctrinally Navarro is, they lost and the president makes the decisions. And I think the decision that he made today was a critical one to the markets, made it a critical moment in time. He wasn't paying attention to the fact the stock market is down, but the bond market beginning to crack,

the tenure going up to four or five yesterday, I think really got the attention of the White House. We had an auction that was scheduled to go off today. I'm sure that was being watched very closely as well. But the most important point here is we now have a durable framework that risk takers and investors like Altimeter and CEOs can execute against, they can plan against.

And that was the real danger. Yeah, but the damage has been done as well. The damage has been done, right? If you start the fire and then you put it out and then say all is now well, but the house is left half burned down, then you still have an issue to deal with. We've still wiped trillions of dollars

out of the stock market. We still have an issue to deal with. We've still wiped trillions of dollars out of the stock market. We still have left CEOs paralyzed, because let's be honest, I mean, it's not like 10% tariffs across the board for 90 days or a walk in the park when things are already unsettled and uncertain. And you're likely to hear about that in guidance that we get in just a... Actually, Brad, I'll come back to you in a second.

The President speaking. ...to us on trade, not only with... You know, if you look at it, not only with China, but China was by far the biggest abuser in history, and others also, but somebody had to do it. They had to stop because it was not sustainable. Last year, China made $1 trillion off trade with the United States.

That's not right. And now I've reversed it. It's for a short period of time, but we made $2 billion. We're making now $2 billion a day. And somebody had to do it. Roger actually said it. Charles Schwab was here a little while ago, one of the great financial people, and he said he's been waiting for 40 years for somebody to do what I did over the last month.

And if you didn't do it, you wouldn't have a country. It wouldn't be sustainable. So I'm honored to have done it. And you know, look, nothing's over yet, but we have a tremendous amount of spirit from other countries, including China. China wants to make a deal. They just don't know how quite to go about it. You know, it's one of those things they don't know how quite.

They're proud people. And President Xi is a proud man. I know him very well. And they don't know quite how to go about it, but they'll figure it out. They're in the process of figuring it out. But they want to make a deal. And we have other — we have many other countries, as you know, many more than 75, and they all want to come and they want to come here or they'll go to commerce or they'll go to Treasury.

We have our great senators here and congressmen. They'll call John, they'll do somebody, they'll go through somebody, but they're all calling, how do we do this? They all want to make a deal. Somebody had to do what we did, and I did a 90-day pause for the people that didn't retaliate because I told them, if you retaliate, we're going to double it. And that's what I did with China because they did retaliate. So we'll see how it all works out. I think it's going to work out amazing. I think that our country is going to be at the end of a

year or shorter, but I think we're going to have something that nobody would have dreamt possible. A man like Roger Penske, I don't want to get him in trouble with China, so I won't. But he would know that you have to someday you have to cut the bow and you have to do what you have to do. Right, Roger? And that's what I did.

And I'm very happy to have done it. The Press. The Prime Minister of Greece just told Breitbart's Matt Boyle that he thinks absolutely the European Union and the United States could work out a trade deal that's win-win and quote mutually beneficial to both sides. What do you think about the Prime Minister's comments and do you think a deal could be struck with the European Union? First of all, I know him.

He's a good man and I appreciate his comments. Yeah, a deal could be made with every one of them. A deal is going to be made with China. A deal is going to be made with every one of them. And they'll be fair deals. I just want fair. They will be fair deals for everybody. But they weren't fair to the United States.

They were sucking us dry, and you can't do that. You know, we have $36 trillion of debt for a reason. We don't have it there for fun. They have it for a reason. And people took advantage of our country, and they ripped us off for decades. I've been thinking about this for decades. I've been.

If you ever saw me on television, I was young like these guys. And those are good old days, I'll tell you, Roger. But I was like these guys, young. And I was talking like these guys. And it was a good old days, I'll tell you, Roger. But I was like these guys, young. And I was talking about it. Nothing changed, and nothing was done about it. Then I did it. In my first term, I did it.

And did it well. We took in hundreds of billions of dollars from China and others. And I started the process, but then we had a fix up from the COVID mess caused by China. We had a fix up from that and we did a good job of doing it. And when we handed back the reins after a rigged election, and when we handed back the reins, the stock market was higher than it was before COVID coming in.

So, you know, we did a great job, but we didn't have time to do the big thing, which we're doing now. And it's a, you know, it's like a patient is sick. You have to do surgery. The patient is very, very sick. And Joe Biden handed us over a country that was in very serious trouble, economically and in every other way. They let China run away with things. They let other countries run away with things. And maybe worst of all, in a certain way, is what they did at the border. We had people pouring into our country by the millions. Many of them were murderers and drug lords and thieves and people from prisons from all over the world. And there were people from mental institutions,

insane asylums. They were taking their they were taking their mentally insane and they were dumping them into the, into our country. And I'll tell you, Tom Homan and Kristi Nohman are doing a fantastic job in removing them. And now the courts, the Supreme Court just gave us numerous good rulings where we have to be able to get them out. You had other judges trying to take over the system. And think of it, they take over. They want these people coming back,

trend to Iraq, from Venezuela, the Venezuela jails that cut off the fingers of a man in Colorado. They cut off his fingers because he called the police looking for help. They said, did you call the police? He said, yes, I did. Put your hand down and they cut off the fingers.

This is what they want to bring these people back now. And I want to thank the president of El Salvador for the job he's done because that is, that's the way it has to be done. It's stupid. Yeah, please. Chuck Schumer and Nancy Pelosi, they've been talking about tariffs for decades. How come when these Democrat elites want tariffs, everything's hunky-dory, but when President Trump wants tariffs, all hell breaks loose?

Do you see this double standard? I love this guy. Whoever the hell that is. That's really nice. I appreciate that question. No, Chuck Schumer and Nancy Pelosi, everybody knew you had to do it, but they never had the guts to do it. It does take guts.

It even takes guts for our country to go through it. That's why I say be cool. They were saying about, you see, just be cool. It's going to work out. It's going to work out. And it's working out. I can tell you, working out maybe faster than I thought. But I said it's going to take a little conditioning.

It's a transition to, it's really, I think it's a transition to greatness. It's gonna be greatness. Our country is gonna be there'll be nothing like it and people investing in our country. They're gonna do better than they've ever done before. We have more car manufacturers, Roger coming into our country now speaking of cars, we've never seen anything like it and they're coming in because of the election, but they're coming in because of the tariffs because they don't want to pay 25 or 50 or whatever it may be. All right. That's the president of the White House, as you see outside at the event with race car drivers, obviously along with Roger Penske, a legend from that industry. But the

president saying it's working out. Of course, talking about his 90- day reprieve in his trade war. Nothing is over yet. He said but that everybody in his words is calling to try and make a deal. The stock market has already reacted to his post clearly on on truth social earlier. An extraordinary day back with Brad Gerstner of Altimeter. Look as we were talking right. So we've had the pivot but we've put a lot of trauma, this market through a lot of trauma.

And you've wiped trillions of dollars in value out, you've caused the bond market extraordinary stress, you've left CEOs, as I said, paralyzed, and that just doesn't disappear with a pivot. Yeah, I get, you know, Scott, remember, it was a pivot. Yeah, I get it. Scott, remember, it was a week ago that we announced these tariffs. I know it feels like it was a couple years ago at this point in time. So yes, there's been maximum uncertainty.

Yes, he was hearing from a lot of CEOs that this uncertainty was causing demand destruction. I'm not saying that all this change happens painlessly, but I've talked to five CEOs in the last hour, including some of the largest CEOs in technology, and they've all told me this was exactly the prescription they needed, you know, so that when they get on their quarterly calls now, they can actually, you know, give guidance as to what the path ahead looks like. You know, what wasn't working was them not having a flight path, not knowing whether

or not we're going to have 50 percent tariffs, 70 percent tariffs, but knowing we're going to have 10 percent tariffs that we're going to negotiate down from there with these other countries. That now gives a framework against which I think people can operate. And even Delta today, before these announcements were made, Scott, right, they gave their forecast, their forecast clearly showed demand destruction and the stock was up 10% even before the president came out and announced the 90-day reprieve. So I think that's evidence of the fact that the market was discounting well

ahead of where all this was, that there was a lot the fact that the market was discounting well ahead of where all this was, that there was a lot of fear in the market. Listen, you have a 10% move in the NASDAQ since the president's tweet. That just goes to show you how much fear and how much discount there was already in the market. But most importantly, I think you nailed it, comes to the fundamentals. Are these companies going to be able to get back on path, right, and look back at this and say,

okay, we had a one month delay in terms of our plan for the year. We ran the risk that if this continued for another four, six, eight weeks, that we're gonna find ourselves with one foot in recession. So I think today was essential. I think the president did what was needed to be done. And I think this will go a long way to helping us avoid, you know, the recession path.

But as he said, we're a long way from out of the woods. So I think this is an important start, but there's a lot of work to be done. But I just want to underscore this one point with you, too, that you have spoken directly today with some large technology company CEOs, I'm assuming maybe some in the Mag-7, you can correct me otherwise, who now feel like they have at least a path towards visibility that they might not have had even three hours ago, and we may hear that reflected

in coming earnings calls. Correct. I talked to the same CEOs last night. Listen, over the last three days, there's been a lot of concern. In particular, the concern centered around comments by Peter Navarro, where he said, even if Vietnam reduced its tariffs to zero, that wasn't enough. We had to eliminate the $125 billion trade deficit, which of course everybody knows is impossible to do.

So if that was the standard, if that was the framework, then we were in for a very long and destructive process here. So this was, you know, again, the Besant, the Howard camp within the White House, leading the path forward, saying no camp within the White House, leading the path forward saying, no, this is about tariffs. This is about targeted, smart and fair tariffs.

The president just reiterated again, you know, when you broke away there, that he's about making deals, fair deals. He said these will be fair deals. And in fact, he went on further to say, he expects to get a deal done with China and for that to be a fair deal. That's exactly what CEOs needed to hear. I think if you look at how businesses, I think Q1 was pretty reasonable for all these companies and it was really only

over the last four to six weeks but accelerating after the announcements at the reciprocal tariffs last week, the uncertainty got injected into the market. We saw it reflected in the VIX. We saw it reflected in the bond market. And all of those things were having very negative consequences in terms of the demand coming into these businesses. My suspicion is that a lot of that is allayed as of today.

And these CEOs are gonna be in a lot better position, a lot more confident position when they get on these calls. Some of these stock moves Brad are just extraordinary double-take like moves clearly. Nvidia for example is up near 17%. You told me the other day that you were buying more on the most extreme weakness of that stock. For people who listen to you about these names, what are you doing today on this news? What would you advise people to do now with some of these largest stocks in this market? Yeah, I mean, listen, moves like this are debilitating, Scott, and I don't love this

volatility. You know, I know on Monday and Tuesday that Schwab and Robinhood, they were having record volumes because retail investors, folks like my siblings, my nieces and nephews back in Indiana, they get worried. They can't afford to lose 20 or 30% in their retirement accounts. So they do the worst thing, right? They're forced to sell on days like that

because the fear is going through the roof. They gotta prevent further losses. That's hugely unfortunate. So this is a main street problem when you have this level of volatility. But as I look at it today, I'll just throw out a framework. Go back to April 2nd and look at what the prices were of these companies on April 2nd before we had these announcements. And even with these massive moves today, most of these stocks and indexes are still trading

below the level they were trading at on April 2nd. And I would argue that now we're in a much better position because we know the flight path forward. And so, yes, Nvidia is our largest position. We bought a lot more on the bottom, but listen, we were nervous like everybody else in the market. This was a really important step forward. But we got to see follow through.

I expect we will see follow through in terms of these negotiations. And I'm hopeful and the big win here is that we get to the negotiating table with China. We get a deal done with China. We extend the tax cuts and we continue down the path of doge and deregulation. If we get all these things, the market and the economy can look very different five or six months from now. It's rare in my 25 years of doing this, do you have such negative views and such concern juxtaposed right next to this potential positive outlook for the economy, but it's where we

are. You know to this potential positive outlook for the economy, but it's where we are and the president You know like like you said you can love or hate the tactics But he's the negotiator-in-chief And today is an important day in terms of setting us on a path that I think is durable For the economy. We'll leave it there I so much appreciate you coming on certainly you came on in the depths of it the other day and to come out now and react in real time. I can't thank you enough for doing that for us and our viewers.

Brad, thanks. We'll talk to you soon. Good to be here, Scott. Good to see you. All right, that's Altimeters Brad Gerstner exclusively with us reacting in real time to what all of us are looking at. Just an extraordinary day in the market.

The NASDAQ is now up 11%. 11%, that's the highs of the session and many of the names within it have just had an afternoon to say the least. Let's bring in our senior economics reporter Steve Leesman with more as well. As people are reacting, Steve, to this pivot, whether it's investors like Brad or economists like Jan Hatzius who quite literally an hour and a half or so ago put out a note saying that a recession was his baseline case and now has put out a new note within the last few minutes saying because of the pivot quote as a result we're reverting to our previous non-recession baseline forecast with GDP growth

of 0.5% and a 45% probability of recession. I want to read you what Jan told me. I got on the phone with him to confirm the call and what he said was, we've gone from recession level, recession level increase to a still very growth negative increase in the tariff rate. So what I'm hearing here, there's still very well might be a recession given there's a lot of uncertainty out there and there are still big tariffs

but they're just not as big as they were. It kind of picks up on what Brad was saying. 10% could be the negotiating rate down from there but let's be clear where we're at. We started off at like 2.5% tariff rates. We went to 30% and now according to Libby Cantrell, we're now at 20% tariff rates the we went to 30 percent and now according to Libby Cantrell We're now at 20 percent tariff rates Goldman says it's more like 15. We'll debate over that We still have very large tariff rates

There's still big negatives being forecast because of these tariffs and big increases at least a percentage point around that For inflation so the tariffs didn't go away. They're still there. They're still very high. It's just as the market is now pricing in, not as bad as they were. Well, I mean, you know, look, you could say, however you believe DEF CON is,

one being the worst or five being the worst, we've gone from the worst to off of that for the time being, as it relates to almost everything. And we can at least think that, well, as Brad said from his direct conversations with CEOs, if anything, CEOs can feel like they maybe have a little more visibility for the time being, that they don't necessarily have to plan now for the very worst outcome if we take things at

face value for where they stand at the moment we're having this conversation. Yeah I don't disagree with that at all there's a little bit more certainty there there's still a 90 days we could come back unclear what the criteria will be I think I don't know if it's a leap by Browder maybe he has some inside information that the 10% across the board tariff is negotiable Phil the bow also pointing out we still have large tariffs on the auto So I don't know how they may or may not have moved The other thing is you did have a little bit of relief in the Treasury market. That's good news, although

Rates are still elevated. So I don't want to take the shine off of what you're saying Scott We have come down a notch or two perhaps in the DEFCON scale, whatever it may be. I think DEFCON 1 is the high one. But in any event, it's not all the way back down. And if you put up a chart that goes back to last Wednesday, you'll still see we're down relative to that. And now I think there's a fascinating debate. Do we capture that again? And whether or not, I think you alluded to this earlier, is there any permanent damage inside the plumbing of the economy or the plumbing of the financial system?

We had not heard of it, but there still was concern up to this, maybe now it's all relief and it's all fine. Let's hope so. Sigh of relief inside the Fed this afternoon, Steve? I think so. Look, what Powell said very forcefully, Scott, on Friday was these tariffs were much larger than we thought. That means the economic effects will be much larger.

But I don't know now if he would say they're just large. That's a really interesting question that I think we have to ask. Remember, we're not, we still have probably an operative tariff rate in this country of 20%, one of the highest in the developed world, and there's still a lot of pricing to be done. Maybe your upcoming guests can understand this. What does it mean? Well, we went down 10% in the effective tariff rate

to still a very high rate. So there's still a lot of calculations to be done about which companies have losses where. Steve, thanks so much. Appreciate that. Steve Leisman, our senior economics correspondent. Let's get back now to Eamon Javers at the White House with more on those comments from the president. Eamon? Scott, that's right. Just a couple of comments here to flag for you. One is that when the president was asked why he decided to put in this 90-day pause, he said,

well, I thought people were jumping a little bit out of line. They were getting yippy. You know, they were getting a little bit yippy, a little bit afraid. So the president, presumably they're talking about financial markets. He also said he was watching the bond market last night. He said people were getting a little bit queasy in the bond market last night, but he said that today the bond market looks to him beautiful. And also the president was talking about some of the people he was watching on television including jamie diamond of jp morgan the president said he watched jamie diamond's

interview on television this morning and you know you we saw jamie diamond saying that the likelihood of a recession was now increasing that comment clearly resonated with the president who said that he views Jamie Dimon as somebody who's worth listening to on Wall Street. So there was this debate about, you know, whether Wall Street CEOs could even reach this president and make their point to him, and it turns out that one of the ways to reach the president is by going on TV and talking through the television to him. Scott?

Hey, man, thanks. I think anybody who's played bad golf like me knows what yippie means. Certainly knows what yippie means. When you just can't, you can't make a put because you're just not straight. Aiman, thank you. Thank you very much for that update. That's Aiman Javard. Let's bring in Ed Yardeni of Yardeni Research.

It's good to have you here. Thank you. Bond market do this? Absolutely. I think the bond vigilantes got the president's attention as Eamon just said. The president was watching what was going on in the bond market. I think we were about to have a credit event and that's a fair way to create a recession. So everything kind of fits together. In the past it was usually tight monetary policy that caused the credit event that caused the recession. This time around it was tariff policy that

was threatening recession and the bond market was anticipating a real crisis. What now? Well, I think that we still have obviously a tariff issue and it looks like there's a lot of confusion whether the 10% is negotiable or not. I mean a 10% tariff if it's not negotiable is still about 300 billion dollars. That's still a very big tax increase that'll probably mostly hit American companies and American consumers and so that that is an issue. But I'm I raised my odds of a stagflation recession scenario to 45%.

I was thinking about taking it higher. Glad you waited. But I waited. I did think that the financial markets would have an influence on the president. I've been talking not only about the bond vigilantes, but the stock vigilantes. The silly notion that the rich own all the stocks,

so it doesn't really matter if the stock market's down, it's ridiculous because there's a lot of people with 401Ks, there's a lot of people that are involved in the market, even if it's small shares, it matters a great deal to them. I was hearing a lot of people that got a haircut the other day and everybody was talking about how much money they just lost last week. So I think that this is a positive development for the economy. Did we get a bridge too far in terms of some of the damage that's already been done?

And is that yet to show its face within this market? Certainly earnings remain the greatest unknown that we could talk about. I think it could have been a lot more damage if it went on a few more weeks, a few more months, but I think the fact that it got nipped in the bud so quickly is important. And I think Brad made a very good point here. I was really dreading the idea of going into an earnings season and having managements have to say, we don't know what this is going to do to our business. Now they don't have to say that.

Well, they could, they probably will still say that. Yeah, with regards to China, for example. Yeah, I think China, the issue with China is clearly not over. And that's a big deal. Is this enough of a development today that you would be comfortable suggesting that people buy into this? I never told anybody to sell it. I told everybody it's too late to panic. And I feel pretty comfortable with that people buy into this? I never told anybody to sell it. I told everybody it's too late to panic.

And I feel pretty comfortable with that. And I thought there would be buying opportunities. But you have to be a mind reader. You have to read the mind of the president. Because clearly, this has all been initiated by the president. Depends on what he's watching on TV. And he listens to his advisor at the end of the day. He says, you know what?

This is what we're going to do. and it just kind of comes out of the blue and we all got it with it. Well look I mean you know someone like Jamie Diamond's an influential person. Absolutely. When he's talking about the probability of recession. Yeah well thank you Jamie. Thank you Jamie Diamond. But let's be clear everybody and I'm sure you as well everybody that I've been speaking with from the highest of hedge fund managers to the highest levels of banking in this town, we're worried about what was happening in the bond market. Absolutely.

And it had a real chance to get out of control. Yeah. I think that's absolutely correct. We could have had a credit crisis and a credit crunch, and I think this reduces that likelihood. It's not impossible that something bad will still happen. But we're talking about a lot of small businesses who are really about to get annihilated because they are so dependent on trade,

on what they import. Are you still unnerved at all about the backing up of yields? How much do we need that? Let's just say you take this issue off the boil, the so-called basis trades, and all that stuff that got talked about a lot on our network today.

Let's say the unwind there is, if not fully finished, close to it. Do we need yields to come back down by a significant level to make you feel more comfortable? Well, it would help the mortgage market. It would help the housing industry, but we've been thinking that the bond deal is kind of back to normal where it was before the great financial crisis.

We've been thinking the 10-year should, in fact, be trading at 4.5% plus minus 25 basis points. We did blink and we lowered that a bit to 3. three quarters percent to four and a quarter percent. But no, I think the economy is resilient. I think it's proven over the past three years, its resilience to tightening of monetary policy. I think we're going to be surprised. I think we're going to have a surge in auto sales as people try to beat the tariffs on autos. As Steve said, we're not out of the woods on the inflationary consequences of tariffs. We're going to have higher auto prices if Trump doesn't change his mind on that.

One of the things that left investors so flummoxed was the typical safe havens haven't been safe. Right. Bonds, the dollar, to some respect even munis. Munis coming off their worst day in 31 years. Even gold went down a couple of days there. Do we return to safe haven status for the kind of asset classes that we've always believed were?

Yeah, look, I agree with your concern that we may have already done a great deal of damage, but it was only been a week or so. I mean, it's been since Liberation Day, April 2nd. And to the extent that everybody can kind of breathe a little easier, I think that's a good thing. And I think, yeah, the treasuries are still safe haven. All right, Ed, thanks so much for being with us.

Thank you. Helping us understand these developments and what it all means in the big picture. That's Ed Yardeni joining us here once again at Post9. Now let's bring in Richard Clareta. He's PIMCO Global Advisor, the former Federal Reserve Vice Chairman. What a day to have you as well.

I appreciate you being with us. What a day, Scott. Where to begin? Yeah, you tell me, what's most on your mind now? Well, you know, typically it'd be the Fed minutes, but I think, first of all, the minutes were stale already, given that the meeting was well before Liberation Day. And then of course we had two things,

at least in fixed income, we had a very, very successful 10-year Day. And then of course we had two things, at least in fixed income, we had a very, very successful 10-year auction. And then right after that we had the announcement that you've been talking about, about the delay in the tariffs. So obviously very risk-friendly announcement there. But gotta remember that the tariffs even now are much higher than they were a month ago and the highest they've been in some time, although a lot of that is the U.S.-China

piece of it. A sigh of relief inside the Fed, you think, from the Fed chair? Same question I asked Steve Leesman, but you probably have good perspective on that. The way I characterize it, Scott, is the numbers today, 10% across the board with a lot of extra tariffs on China, is probably in the ballpark of what they were penciling in, at least in one of their scenarios, maybe not their baseline. I think what was really probably of concern to them and the chair indicated that last week in his comments is that these numbers were much, much bigger than I think

almost anyone including the Fed expected, which would have made their job even that much harder. But if these tariffs are in place, we're going to see some upward pressure on inflation at least for a while and potentially a you know, a drag on economic growth. But the magnitudes, I think, will be less concerning than they would have been otherwise. You guys watch the bond market over there as close as anybody. How close do you think we were to the Fed having to get involved by one way or another? You know, I don't, whether it's buying Treasuries or stopping QT or whatever tools they feel were in their box

to deal with stuff like this. How close do you think we were to the Fed doing anything? If you use green light, yellow light, red light, I think we're at yellow light. I think you were beginning to see some indications, not only the magnitude of the sell-off, but what you were seeing in in swap spreads, in the repo market. I think the lights were flashing yellow. I wouldn't want to give you how close where we were, but clearly I think we'd seen enough in the markets

both in the yields and in some of the other signals that it was definitely, I think, probably on their radar, our screen. What do they do now, do you think? Well, I think they take it day by day. Tomorrow there may be another surprise. So I think they take it day by day. The chair said many times

that they think monetary policy is well positioned. I think they're perfectly content to sit on their hands and I think they have a little bit more breathing room now to do that if what we heard today is in fact remains in place. I do think that in the minutes indicated this and we've heard this a number of times from Chair Powell, I do think if the economy does crack and I certainly hope it doesn't, but if it does crack with a rise in unemployment and a sharp slowdown in growth and employment, I think they will cut. But I think I think now the focus is just getting more information on how the tariffs

are going to impact the outlook and and the inflation data. How closely will you all be watching what bond yields do from here, right? They're still elevated. We still have issues to contend with. Yeah, oh sure. Well, pick up on something Ed Yardeni said a moment ago. If you just look at the level of yields right now, it's basically in the middle of the range that we have been in really now since the

fall of 2023, somewhere in the high fours to the low threes. And that would be consistent with a constructive, if not gangbusters, economic outlook, and also consistent with all the debt issuance that the government's doing. The budget deficit this year is going to come in at 6 or 7 percent, potentially more down the road. So that's more or less in the range that you'd expect given the macro conditions. We saw the yield get down of course to the 380s last week on a flight to Treasury safety, but this looks more or less in the ballpark I think we'd expect. Can you set the record straight because of your prior job as Fed vice chair on the relationship

between Wall Street and Main Street? There seems to be a suggestion by some in the administration that they're two entirely different things, that one has minimal relation to the other. The counter argument to that, of course, is that the two have never been closer or more intertwined. That the wealth effect is real, that the performance of the stock market trickles down to what happens on Main Street.

Certainly corporate performance matters for people's livelihoods and jobs. What's the real story? Well, look, I mean, if you look both the direct holdings and through retirement accounts, you know, a very large, certainly well more than half of households have some exposure to equities. Obviously, two-thirds of Americans, you know, live in owner-occupied housing. That's an important part of the wealth effect.

And then importantly, and I did emphasize this, Scott, in a number of speeches I gave as vice chair, the stock market and the Fed oftentimes are looking at the same thing growth and inflation strong growth low inflation is good for the stock market and strong growth and low inflation is good for the economy so sometimes you can get a little caught up in things like central bank puts in the light but a lot of times markets in the Fed are looking at the same macro data. Well, I mean, but you agree, it sounds like, that the performance of the stock market

directly has an impact and a trickle down, so to speak, on mainstream. There is no doubt in the empirical data, and this was established decades ago, there is a wealth effect in the U.S. consumption data. Now, measuring it precisely can be challenging. Estimates are anywhere from 2 or 3 percent up to 10 percent of a change in wealth eventually flows into consumption.

There's absolutely no doubt about that in the data. We'll leave it there. Mr. Claren, I appreciate you so very much. Thank you for being here today. Thank you. All right, Rich, we'll leave it there. Mr. Clarence, I appreciate you so very much. Thank you for being here today. Thank you. All right, Rich, we'll see you soon. For more on today's rally and President Trump's tariff pivot, let's now bring in Muhammad El-Aryan from Ali-Anz.

Good to see you as well. Thank you, Scott. Your reaction? Like you said, it's an important pivot. The question is, how long is this pivot and how much of a reversal is it? I think of it as this was a necessary step to calm markets, but it will not prove sufficient unless we go further in the reversal. To what degree? Look, we came very close today to the line that separates wild market movements in the bond market to market dysfunction.

Rich just mentioned a few things. Look what happened to the off-the-run liquidity. We got close and that's a very uncomfortable place to be. So we don't want to get there again because the more you get to that point repeatedly, the higher the risk that you're going to cross it. So I think you need certainty. I think the 90 days, that's a good period. But quickly people are going to start asking what happens next.

I mean, we may never get certainty, right? But we don't have the degree of opacity that we have been living with for the last many weeks, that in and of itself can keep us from going into a darker place economically, can't it? Yes it can. If you talk to CEOs and everybody has their own group of CEOs, so let me tell you what the people I speak to, my friends are telling me. They're saying that this will stop us from cutting costs, which is where we were in terms of having to adjust our income statement and having to look at our balance sheet really

carefully. But it doesn't give us enough confidence to go back to normal operations. So we will be on the sideline. This will be a wait and see. But the good news is it didn't get them to be uber-defensive, which would have slowed this economy into a recession. But it still means that they're not going to be contributing to the economic

growth that we need. Where does this all leave the Fed, you think? So I think the Fed got very close to having to intervene for the wrong reasons, and that is market malfunction. And it would have been, as you said, some combination of buying treasuries, reducing interest rates. I think we got close to that point today. Now the Fed goes back to the sideline.

The Fed waits and see. It will need overwhelming evidence that unemployment is going up because inflation is going up. So it doesn't have the degrees of freedom that it had in previous shocks to the marketplace and to the economy. Are you still chair of the Under Armour Board, Mohammed? I am. Let me ask you to put that hat on if you could. And I'm not asking you to reveal boardroom conversations that obviously you're having with your colleagues and maybe even the CEO of that company.

But can you let us somewhat into the room of the kinds of things that CEOs are talking about, what you're hearing when we talk about bringing manufacturing back to this country? If you ever would foresee a day where Under Armour products, for example, and textile companies would be manufacturing their things here and what the ramifications of doing such would be. So Scott, I won't speak on behalf of Under Armour. That's for Kevin Plank, our CEO, but I will speak on behalf of what I think is a conventional wisdom and separate feasible and desirable.

Is it feasible to bring it back? Yes, but it will take a long time. It takes a long time to not only build the factories, but to find the trained labor force. We would be going back to an economy that we haven't had for a while and we would have to retrain labor. We would have to do a lot. So is it feasible? Yes, but it will take a long time. Where the big debate is, is it desirable? There's a view that, yes, you want your producers to be at home.

There's another view that says, this is the wrong sort of jobs that we want right here. We can do really well in high quality jobs. We don't have the labor force to do this, enough of this, and let's not undermine our edge. So I think to answer your question, most companies will tell you it is feasible, give us time, but then there's a really big question, is it desirable for the economy of today and tomorrow? And we are on the verge of major innovations. So this is a really important question. When you say it's feasible, the pushback to that would be well at what price, at what cost

to consumers to go out and buy a pair of underarmour sneakers or and by the way you know I've known Kevin well enough over the years that you know he talks about your the company that your chair of the board of as a technology company. The kind of investments that he's made and that you all have made over the last years to technologically advance what you all do. There are severe ramifications in terms of price and cost and end user that have to be considered here too to decide truly if it's feasible, the word you use. Yeah, I mean, if you try to rewire supply chains,

if you try to rewire the way the global system works, it is costly. And there is a view out there that this is a wagon thatcher moment. This is a moment in which we rewire not just the domestic economy, but the global economy, and we emerge after a year, after two years, with a slimmer government, a more enabled private sector operating in a fairer trading system.

There is that view, but there's the other view that says, you know what, it will take a hell of a lot longer, and the journey to that destination will trip you up because the journey, as you say, is stagflationary. So, you know, if you ask me what are the probabilities, I will tell you it's 35.65. And that is what the administration has to decide. Is it worth taking the risk of a really bumpy journey for an uncertain destination. I really appreciate your insight especially on

this topic. Mohammed thanks so much we'll talk to you soon. Thank you. It's Mohammed El-Arian. Let's bring in now Renaissance Macros Jeff De Graaff watches these markets as close as anybody does certainly internally and the technical side of things. It's good to have you here, man. All right, I don't know how a technician keeps his head straight in looking at a market like this. You tell me. Well, I mean, I'll be honest with you, Scott,

and this has taken 35 years of experience to do this, but I just don't get wrapped up in the narrative. It's hard not to do, but I've learned to do it. And I just look for the consistency of signposts. And a few of those things really fired for us Friday. We got pretty long on Friday. And we were looking for a substantial put-call ratios to start to kick in. And we were getting that triggered.

We started seeing what we call negative volatility alerts, which are these standard deviation moves. We had over 50% of the constituents in the S&P there. And that to us is the making of, it's scary for sure, but that's pretty consistent with points where you kind of get to that max stress. And so we had beta, and I think this is probably the most important thing, and we warned clients late last week and early this week that beta in our ranking was in the zeroth percentile.

In other words, you hadn't seen returns this bad for beta ever in the history of our data. And the last time they were even close was in 2020, where we were coming or in the grips of the COVID crisis. And then in the summer of 2022, which was about a week before the lows. So that just, we sent a message out to clients saying, don't be short beta here.

It's going to be really dangerous to be too short beta. So think about what can go right. And clearly, that's playing out now. Look, I think there's a lot more to go, frankly, for this. And this can be short covering. You'll see people talk about it's just short covering and it's not real. Guess what?

That it always starts out as short covering. So if you use that as a crutch, you're gonna get yourself into some trouble. But I think we trade these things back at least to the 200-day moving average. I think it's got some firepower. And even if it's only short covering, it's gonna make people sort of question their thesis

by the time it's all said and done. So many things are up so much. What would you lean into further if you really do believe that there's a lot more to go? Your word's certainly not mine. Yeah, look, if you're tactical, we still think there's beta. There is a massive, massive convexity to beta right now, and that's going to continue to play itself out on the street. And I think that's got days and weeks to go.

So tactically, I think it's beta. If you're looking for trends, and these are global, if you're looking for trends that got oversold but didn't crack the trends, believe it or not, with all this stress in the bond market, all the stress in equities, financials actually have held their own very, very well. So banks, international banks, all those look really, really good and still in long-term bullish uptrends. So if you're more structural, if you're thinking about

now to the end of the year, I'd think financials. If you're thinking now to the end of the month, to the end of the quarter, I'd think beta. What about rates? Good question. Short rates are saying the Fed probably comes in, they need to, I think that's probably right. And that's not because of what we're seeing necessarily from the markets itself But if we look at the data and we look at the trajectory of what's happening

It looks to us like we'll probably have an upside surprise to the unemployment rate and some of the job figures this quarter That should give the Fed some cover to be able to come in and lower rates. Neil Dutta has four rate cuts in our shop. I don't handle the rate cuts, but I would certainly agree with what the market's message is on that and that there is room for rates to come in. The 10-year yield, a lot of resistance at 440. I know we poked our head through that this morning. We're down below that now, but I think this is actually a pretty good time to get long bonds if you're looking to reallocate

Portfolios certainly out of cash. I think long bonds make some sense here It's it's it's incredible as I said to our guests already today some of these moves double and triple take AMD up 24 percent Micron up 19 Broadcom 19 forget about Nvidia, Micron up 19%, Broadcom 19%, forget about Nvidia, which is up 19%, semis had gotten destroyed.

There was a belief that what was first in, so to speak, could be first out. Does this take a longer term relief off of that space? I think it does. There were two sectors, industry groups, and in fact, semiconductors were the ones that flashed for us Monday, so that would be Friday's data. For the first time in a long, long time, really since 2022, our option frenzy work was showing a seller's frenzy in semiconductors.

Now, believe me, it's not good enough to call it by the day or by even the week, but generally you're in the zone that you know that things have gotten bad. It was also happening for home builders and apparel names. So Nike was actually one that was on our list as well. So from that standpoint, what it says to us is it was really a full repudiation of the AI blue skies, can see a million miles in front of you type of thinking and narrative that was out there just, what, six, nine months ago, and you reverse that. And for us, one of the keys, you know, when we're going to look for a bottom is you have

to be able to take out kind of those blue sky narratives of whatever it was, whether that was, you know, switching and today it's AI, whatever it was throughout the ages. And we were able to do that. And that really just happened last week. So that to us was an important milestone to say, hey, now they're taking out the narratives of what was really, really bullish and that's a good setup. Are they going to be leaders? I don't think that they're leaders.

I think they're massive rallies. I think they're part of that beta trade. They're probably exhibit A for that beta trade. But there's more to go there in our view. It's extraordinary what's happening in the NASDAQ. I mean, it's up 12.3%. We've gone in a steady... Thank you guys in the back, in the control room.

We're showing it on the screen here. This intraday move in the Nasdaq is incredible. Yeah. Tell me what's going through your mind here as you're watching this move with all of us. 12.5%? Yeah, don't worry about the number. Worry about the number.

Worry about the price action. That is people absolutely scrambling because they're way too short beta. And it's a gamma trade, it's a convexity trade. All that's taking place and it's going to continue to take place, I think, probably for the next at least two weeks. I think it's good news, not bad news. Now we'll get to some resistance levels and I think we have done damage to the trend. So I think there is still that that we have to worry about in the near term between now and we have me on next

We don't have to worry about it My I have this is the second biggest percentage move ever for the Nasdaq I'll try and confirm that but from what I'm looking at right now That's what it shows and we'll see as things go into the close whether it in fact does become biggest Jeff Thanks so much. We'll talk to you soon. Thank you. You bet. Jeff DeGraff, we're in the market zone now, of course, CNBC Senior Markets commentator Mike Santoli

is here to break down these crucial moments of the trading day. Wow. Yeah. Wow. Part of it is a lesson in kind of the physics of the market, the equal and opposite reactions. Jeff was just detailing a lot of it.

I've been talking for days about sort of how historically washed out, oversold, the amount of liquidation that went on Friday, Monday, generally are the pre-conditions for something wild to the upside, almost like close your eyes and buy, or at least in the vicinity of that. So the magnitude of today's response, I think, owes everything to that.

People were forced out, now they're forced back in. The other piece of it is, you mentioned the NASDAQ, we've never had a market where mega caps can fly and crash the way they do these days because of how they're traded. And so the S&P 500 is up two full percentage points more than its equal weighted version. So it is just a stampede into the same stuff that let us down and that's now insulated the market just on a pure kind of read the tape basis from any idea that this is either a one day fluke or just kind of, now it could be a dead cat. My point is the volume so heavy, 97% of the volume to the upside,

at this magnitude of gains, it's at least gonna make you say, fine. We've ratified that we have a short-term low. Now it's work from there to figure out where it can go. It's just unbelievable that, you know, we've literally had in what anybody would consider to be a good year for returns in a day. Yeah, no, exactly.

The S&P 500 is up almost 10%. The NASDAQ 12.6, as we said. The Russell almost nine. And the Russell, I mean, you talk about something that needed some relief. Well, I mean, it was basically broken down this morning. It had gone down below its 2018 high this morning before bouncing. So the next steps I do think

are look, we're going to sober up a little bit. We're going to figure out what actually has changed relative to what we thought a week ago. The S&P 500 on the day that the president announced the reciprocal tariffs closed at 5670. It's still 200 points above where we are right now after an almost 10% pop. So it shows you just how we basically fell out of that old range all at once, very deeply. And so that's part of the explanation for what's happening here.

Obviously the bond market behaving a little bit better and maybe the market also pulling out of all this an implied suggestion or signal that the administration will buckle when the market eventually sees enough pain. I mentioned this morning you know the old line that markets panic to policymakers panic you kind of got that to the point even you know where the president conceded that he was watching the market. So I don't think you could live off of that.

You know what I mean? You still got to say at a 10% global tariff, there's a $300 billion tax hike that just hit this economy. Right? I mean, that's what happened mathematically. So you still don't know what it's going to mean for growth, what earnings season is going to look like. It really just wipes away the worst case tale scenario away. Sure, but let's also remember and recall what happened

on April 2nd, the president's so-called Liberation Day. Initially the market thought it was 10% across the board and stocks went up. There was going to be a significant rally that, oh, okay, it's not as bad as we thought. So if we're going back to the baseline of, well, it's not as bad as we thought, obviously China remains a significant wild card in that. At least the market can get through the psychology

and get it in its head that, okay, this is more of what we initially planned for, so we can be okay and deal, and we'll figure it out. Yes, that's absolutely the hope. And by the way, we don't even know if the first Twitch rally on that headline that it was gonna be 10 or 15% would have stuck. But I agree with that.

And what you really should hope if you're an investor is that we get some clarity on the process that's underway. The market is good at monitoring and handicapping the outcomes of processes that they have some transparency toward, and you can see incremental information along the way. What the market's terrible at is figuring out what one human being's gonna decide in the next hour,

which that's what this market tells you, that there was literally no way to get in front of this except if you wanted to read into what the president posted this morning. A collapse in the VIX midday as well. VIX was at 50, now we're at 35. It takes a lot to keep the VIX above 40 or so for three days in a row and this is obviously the absolute crash scenario in the VIX that you want to see. And again, it confirms what I'm talking about about the volume skew and all the rest.

It's still 33. Yeah, it's still 33. You know, the- But it ain't 50. Again, it's the same kind of a trade where people are just getting chased out of the thing they just ran headlong into. So all that stuff, it's good.

We're gonna have an interesting time looking at all of the trading dynamics and where that brings us. Because really all it looks like is it sort of brought us back from the brink of something that was gonna be pretty scary to just a scenario that is maybe nuanced, a little bit ambiguous,

maybe not as great as we thought a month ago, but a whole lot better than we thought it was gonna be two days ago. Yeah, and two days from now, of course, we'll be talking about bank earnings, and they are getting significant. If we're lucky in a way. Yes, exactly. Let's just get back to the normal stuff.

Yeah, I really do think that the market wants that. One thing that earnings season usually brings is that stocks move on their own as opposed to just in one big school of fish, the way it does with its macro influence. And that's another thing that's going to allow volatility to come in if we manage to get there. So I think it's still valid to say there's a lot this market has to prove, a whole lot. And not just tomorrow, but in the next few weeks. But for now, it feels like that low near 4,800 in the S&P is probably gonna mean something for a while unless you get some other

bolt from the blue, policy wise, or some other way. And like, you gotta figure out, this is pretty serious with China, that may not be over in terms of the back and forth. All right, thanks so much. That's Mike Santoli helping us really get inside this market dynamic today. This will end one of the most extraordinary days

that any of us will certainly remember. We'll go out real big, across the board, into overtime with John.