Closing Bell - Closing Bell: Tariff-Fueled Swings Here to Stay? 3/5/25

Episode Date: March 5, 2025

Where are stocks likely to go from here? We discuss with Trivariate’s Adam Parker and Fundstrat’s Tom Lee. Plus, Sycamore Tree’s Mark Okada tells us how he is navigating all the market volatility and economic uncertainty. And, Richard Saperstein from Treasury Partners makes the case for two sectors that have been beaten down this week. 

Welcome to Closing Bell. I'm Scott Wabner live from Post9 here at the New York Stock Exchange. This Make or Break Hour begins with a nice bounce for stocks clearly being driven still by tariff headlines. It's made for more volatility yet again today. Let's show you the scorecard here with 60 to go in regulation. The major averages started moving a little bit higher midday on a headline that President Trump spoke to Canada's Prime Minister Trudeau today that raised hopes of some sort of compromise perhaps in this trade dispute Another report suggesting tariffs on autos might be pushed which sent shares of General Motors and Ford higher And there's your look there And that is where they remain we have seen some buying as well today in the banks some tech and even in the momentum names

Say I like Palantir those names have been unsettled lately for sure. So maybe some stabilizing activity today. It does take us to our talk of the tape, where stocks are likely to go from here. Let's bring in our experts, Adam Parker. He's the founder and CEO of Trivariate Research. Tom Lee is the managing partner and head of research for Fundstrat.

Both are CNBC contributors. We're lucky to have you both together today. Welcome guys. All right, Adam, just give me your assessment as you watch what is a increasingly headline driven market. Yeah, I mean, look, as you know, we think it's gonna be choppy. I'm still optimistic that on the other side of this,

we could get back toward, you know, revenue growth and, you know, beneficiaries on the AI front with productivity and margin. So the call we've had is choppier in the first few months, then once the management teams understand what the policy backdrop is, they can, you know, deploy productively capital. So I'd choppy first half and then we'd probably get

a resumption of pretty good growth. Tom, you've tried to remain pretty optimistic through all of this, are you still? Yeah, I am optimistic. I mean, I can understand why investors are sitting on their hands. I mean, they don't really know how severe these tariffs are gonna be, how long they are,

but now we're seeing a big price correction, a decline in sentiment, and then something like today, we got a bad ADP jobs report, and the stock is at the markets actually up So we're actually rising on bad news, which is a good sign that a lot of bad news is priced in but you agree with Adam that the first half of the year is likely to be a little more choppy and That you can get through some of these issues here regarding Trade and then you look down the road to tax policy and think that okay

Well, that's gonna usher in a better back half of the year I mean in fact what's just happened in the last six... Tax policy excuse me. Yeah I mean what happened in the last six weeks is essentially a bear market that has swept through sentiment and positioning right because if you look at hedge fund positioning it's gone almost neutral and a huge correction of momentum so I think it's very possible that March, April, May could actually be like one of these huge rally months where we're rallying 10, 15%.

Even in March, I mean, as we're sitting here, you know, we're gonna be driven obviously by more tariff headlines. We do have to consider the fact that earnings could take a hit. Do we need to reassess that? I mean, look, I think if stagflation were a stock, it's up off the low. That's why the market has been choppy. People are worried

about, you know, a slowing economy, Walmart, consumer confidence, retail sales looking a little light at the same time. They're worried about, you know, higher prices. I don't think that's ultimately what's going to happen. So you'd be short that stock? I would be, I just don't know, I think Tom is shorted today, and I maybe would say it's a- STAG's the second year. Maybe we'd be shorted in a couple months,

but I think we're in the same mindset that we'll get on the other side of this at some point, probably in the second quarter. I just think it's hard to get through it until we really understand. If you're the CEO of a company that's a big company and you've got facilities and customers in Canada and Mexico and China, et cetera, I just think you're a little bit, I like his phrase, sitting on your hands a little until you understand a little bit more about how

to most productively deploy capital. I think that usually takes probably through April earnings and guidance and then I'd probably kind of be more optimistic that we have a certain path. So we're in the close enough for government work if that's a thing. Well, you might be losing. Yeah, exactly, we might get doged.

We might get doged. I don't know if that's so bullish to you. I'll take you two, I'll take you two. I mean, it's one thing for CEOs to be a little skittish, be a little more cautious, that's what thing for CEOs to be a little skittish, be a little more cautious. That's what they get paid to do. Investors often have to place their bets before something takes place.

Is this a buy, this unsettled market that we've witnessed recently? I mean, yes. In my mind, we put out a piece yesterday just talking about the 10 best days that happen every year. Last year, for instance, the 10 best days added up to 21 percentage points of the S&P. X those 10 days the market was only up 4 percent. So you know you don't get 20 percent years because it's good through the year it's just the 10 best days. I think this setup for a 10 best day is near because

if the economy's near stall speed I think people realize the Trump put does come back because otherwise it has to unwind all this austerity. And if the job market's soft, the Fed put comes back into play because the Fed doesn't want to play with stall speed. And I think that's what is going to be the positive catalyst in the next couple of weeks. And on top of that, we already know stocks will bottom before bad news peaks. And so if we're seeing the market not fade on bad news, that means we're already priced in a lot of things

that would scare us. Well, we'll see what happens with the jobs report. What about positioning? I think you guys can be helpful to our viewers on where you think the best opportunities are after you've given your sort of macro, like you've given your 30,000 foot view. Let's go down. let's try and land this

with ways to play the market the best we can. My biggest sector recognition this year has been healthcare. And it's weird, because it's been the best performing sector year to date, but it's not exactly what I thought would lead. You know, stuff like CVS has worked. So, but I'm looking at that sector as the dreamiest of dreamy for AI

productivity there's so many inefficiencies long-term margin expansion and then maybe even ultimately you know better news down the line on the drug front. I see estimates bottom-up estimates are up in every industry in healthcare tools managed care hospitals drugs biotech yet the stocks were really bad for the last two years they They put up a little this year, but I think there could be runway there, and I like owning that dream of margin expansion in healthcare.

I just think people are way too negative about the administration's ability to wreck earnings. So where some would traditionally look at healthcare as a more defensive group, you're playing, sounds like offense. I like offense and defense. I think it could be both. You're playing, sounds like offense. Yeah, I like offense and defense. I think it could be both. I mean, I think there's some names that have a lot of upside and I also think it could be defensive. And I love these businesses that have a lot of employees, a lot of revenue and low margins

and then what is AI actually going to do? It's going to predict customer behavior, predict employee behavior and help these companies expand margins. And so all these businesses like McKesson and Quest and Cardinal and Sincora and Thermom, I mean go down the line that probably can grow the revenue over the next five years without doing a lot of net hiring and then their margins go up. So I wouldn't be shocked if the next five years healthcare is the best performing sector over that period. And I like the fact that sentiment is, I don't think that, on that side of the ledger right now. What about you, Tom? Well, year to date, before the correction, cyclicals were leading, financials and healthcare and international.

And since February 19th, cyclicals have still been leading health care has been leading and financials So I think that financials and cyclicals have actually been pretty strong through this correction health care has been a Actually a good call because it's it's held up great But to me I think there is too much fears of a growth scare because Germany's rally I know it's understandable for valuation reasons, but really tells us that industrial stocks are okay and the ISM's actually still above 50. So I do think you wanna be cyclical

once we're through this correction. Well, I mean, the Beige Book today wouldn't have you screaming growth scare. For more on that, let's bring in our senior economics correspondent, Steve Leesman. Is that the correct read? Steve, I know you can't look at the Beige Book and factor in tariffs because the Beige Book is already out and tariffs are just taking place, but you wouldn't look at what happened

today in that read and say, oh, we've got a really bad economy. No, you wouldn't, Scott, but forgive me, my friend, for correcting you a little bit here on national television, but the Beige Book, which has all the anecdotes around the 12 federal district, did find that tariffs and the uncertainty over fiscal policy are having a profound effect on the current situation and the outlook. As you said, the Beige Book said overall economic activity, it rose slightly, a kind of tepid characterization with consumer spending lower on balance.

But tariffs were said to have boosted uncertainty, with some reports that they already may be increasing prices. Again, as Scott said, this is before the tariffs took effect, but it was already out there. One bank reported that some plan to put planned investments on hold, increase cargo volumes, and was keeping home buyers out of the market, according to one report. The New York Fed in its Beige Book report said, quote, a manufacturing firm noted that either paying tariffs or adjusting sourcing to avoid tariffs would lead to higher selling prices either way.

Firm said it was difficult to pass along price increases because consumers are more price sensitive these days, but these businesses felt they would be forced to pass along tariff inflation to their consumers. So Scott, a lot of tariff talk, I think I counted something like 49 references, maybe some of them were duplicate, but 49 references in the base book to tariffs.

And really it's one of the interesting developments these days economically, which is that a policy that has not been put in place for several months now looks to be having an effect on the economy. I guess my point would be not a really tangible effect on the economy itself. The stuff that you quoted seems obvious, right? That you wouldn't, we've heard from CEOs the level of uncertainty. They thinking about doing this versus that, they're not exactly sure. Maybe consumers are thinking about pulling back spending a little bit because they're

uncertain about the tariffs but really nothing here would match up with the two words growth scare that the markets been driven by over the last few weeks would would you say that's right? I'm a little bit on the other side of that trade. Look we came into the year the economy did well in the fourth quarter, okay? And then we had this decline in consumer spending in January that I'm hearing anecdotally might have been in February. There's a weather issue there that has given me pause in saying, oh my God, the consumer is going to give it up here.

But when I follow things like the uncertainty, the economic policy uncertainty index, and believe that that has an effect on the economy, when I see things like the University of Michigan and inflation expectations going up, and people volunteering, ordinary Americans volunteering, those expectations have gone up because of tariffs. And then I see what the market's done, which is to have completely wiped out the optimism

that accompanied President Trump when he came into office. I say yes, Scott, it's very possible that there's something resembling what could be a growth scare if it continues from the past several months. I'm still reserving judgment Scott because it had been a very long call of mine over several years of the Biden administration when everybody kept saying there's going to be a recession and I leaned against that recession and it ended up being the right call. So I'm taking my time here but the uncertainty

and all the things going on and the profound changes this administration wants to put in place for better or worse are having this potential impact of causing businesses to hold back on investments. That could potentially have an economic impact. So yeah, there's something of a growth scare. One other thing, which is that when I look at what the Fed Fund Futures are doing, they're forecasting a growth scare. They're saying the Fed, regardless of what's going to happen with inflation, is going to be facing reduced growth and it's going to be forced to cut. That's what I'm seeing there. So Scott, I really want this economy to succeed. It's been a good call that it has succeeded and will succeed, but there's some questions

right now. Yeah, no doubt. You stay with me because the guys here sitting with me I think have some stuff for you. Starting with Adam Parker. I mean a lot of the institutional clients for us were mentioning that kind of now cast a GDP from Atlanta that looked much more. Right, so I think that might have been not emblematic, but there definitely was some chatter I was getting about that that related to the growth scare a couple days ago when things were selling off.

One of the things that we tracked, the three of us were together on election night, and we all commented how the polymarket seemed to be very accurate in every election. And if you look at the polymarket, there's a question out there for the probability in Q1 or Q2, there's a tariff that sustainably impacts a 5% or more.

I think it says Mexico, China, and Canada, I can't remember. But we checked yesterday, it was still less than 50%. So I think there's still some doubts that people have about the sustainability of this and how much it will impact. So I'm kind of with this notion that it impacts the management teams a little bit temporarily but not likely the actual ultimate economy and early trajectory. At least that's my take.

Tom? Yeah. I mean, just to add to Adam's point, the uncertainty I don't think is causing a screeching halt to the economy, but I think it is suppressing demand and confidence. So that's why we are getting what looks like a growth scare, but that's why I think the Trump put and the Fed put actually come back into play. Yeah, what do you think about that, Steve,

what Tom puts forth for the second time already in our program, this idea of a Fed put, right? They're not gonna let the situation unravel. They don't, if two, eight negative, like Atlanta has, comes to fruition fruition hello Fed. I think that's right Scott, but I'm going to be I'm going to go for three times a charmier scan. Well, you know, they say Steve three strikes you're out and it's you who's going to be

out. It's OK. That's OK. I can go play guitar for tens and tens and tens of dollars. But here's the thing. What bothers me about Tom's confidence, and indeed the market's overall confidence in the Fed right here, is when do you see them doing this? When is the Fed going to be confident that it has seen the tariff impact and that that

is passing through the economy and not leading to wider inflation. I think the overall call you made there is correct, Scott, that in the face of a negative print on GDP, really soft jobs numbers that the Fed will be cutting. The timing is what bothers me and the Fed's confidence that it's not seeing wider inflation is what bugs me because I cannot imagine a month, and maybe Tom can correct me on this, where you have a one percentage point increase, for example, or even a 0.5 percentage point increase in the CPI, and the Fed is cutting that month in the face of an inflation rate

that is already half a point above its target. I think it's going to be a very difficult thing for the Fed to do to say, we're looking right through these tariffs and we're only focusing on the employment side of the mandate. That's the great conundrum, isn't it, Tom? Well, yes. There's a lot of alchemy in that process, right? So let's just think if it's a May, the May window is the probability is only 28% right now, but let's say that's the May cut that we wanna think about.

The reason I think you could see this move forward is one, financial stability could become a problem if the market has a 10% drawdown. On top of that, confidence indicators actually tank, then the Fed is not really thinking about the imputed inflation of shelter and, you know, goods prices filtering through, but rather the idea of staving off an employment situation that could unravel very quickly. What do you think?

I think we're 5,600 to 6,200 range-bound here until we get on the other side of it. If I were answering Liesman's questions, I would have said they'll get confidence after April guidance and the stock, I like Tom's comment about how the stocks react to that guidance. If they don't go down, and I think the companies are giving you a window for how they see the second quarter and into the second half, that'll probably be the signal. The Fed probably lags the equity market. I think most people I talk to

definitely believe in the Trump put, but back on this Fed put on, that maybe is a little bit more of a controversy at the current moment, I'd say, for people like that. Yeah, Steve, I'll give you the last word, then we'll let you go, and I'm not gonna give you a fourth chance. I wanna add one more thing, Scott.

Yeah. One more thing, which is that if this tax bill gets through Congress, if you have a situation where we're going to have measurable deregulation, and the other stuff that business was excited about when it came to the Trump administration, and that restores business confidence, I will change my mind pretty quickly about that growth. That's growth in the second half. That's growth in the second half, for sure.

Steve, thanks, man. Yeah. Leesman keeping us honest up here. Pleasure. Thank you. We'll talk. We'll see you soon. That's Steve Leesman, our senior economics Correspondent. We didn't talk at all about tech

Which I think you guys have differing views on. You still all in on the mega caps because because Adam has been slowly reducing His exposure and just did it again Slightly, but nonetheless he is underweight technology now Well, technology is our third favorite sector this year within the S&P, so it's financials, industrials, technology. They haven't been great.

I do think this derating and questions about whether AI has already priced in good news is weighing on the Mag-7, but to us, technology spending visibility is I think going to be quite high because one, anytime companies are looking for productivity and let's even think about how tariffs add to uncertainty or inflation uncertainty or consumer, this is companies that are going to be trying to find productivity through technology spend. So I think tech visibility is still going to be good and it's going to track ISM but understandably it's not like the last two years

where Mag-7 was leading. But you'd be overweight, the mega caps? Yes, yeah. I think there's still great businesses and you know, the reality is we know that these stocks have periods where they're dormant, like Amazon has been range-bound for years and then they make dramatic moves.

So I think it'd be a mistake to actually think that the larger story arc of these Mag-7 is done. Yeah, I don't think the larger story arc's over. I mean, I worry about talking about it. He says you're making a mistake. I'm worried about talking about it because I went to Michigan, and I remember we played Notre Dame,

Lou Holtz used to say, "'You want to take your helmet off "'when you score a touchdown, fine, "'but also take it off for every penalty, "'every miss block, every drop ball, whatever.'" And so the Mag-7 downgrade, whatever it was a month ago, was really because I didn't like the capex numbers and the implied capex to sales for a lot of these businesses,

which to me means their gross margins are going lower. And there's no fund out there for decelerating revenue margin contraction stocks. I think the other challenge besides the high capex was the beta of the stocks is super high. So you get a down day, they go down even more than normal, and then their valuation is still discounting that they have these big motes and growth

and margins forever, yet there was a bit of concern that something like Deepsea could come and maybe create or disrupt some parts of some of those companies' business models. You saw the market say Meta's CapEx is awesome, Google's is more defensive, so there's been a little bit more kind of underneath. So if the Mag 7 or plus or minus 30% of the market,

they act like they're 44% with beta, I'm just saying own 22, 21, 23% so that they'll act like they're the 30% that their weight is. I'm certainly not saying don't own any of them. I think there's some great businesses there and there's too much risk not to, but I need to understand the, you know,

the cap-backs to sales for these businesses because they're not low capital spending to sales businesses at 14 and a half percent sales. You always, you talk about your clients, your, you know, I know you have a lot of hedge funds as clients, you're speaking mostly to institutional investors, you're changing that, or at least adding to your business, right?

Something called TriVector, which is gonna speak more directly to the FA and individual investor community. Trying to be like, Tom, thanks for the EFIS. We have a business called TriVector that we sell to advisors and individual investors who wanna care about US equities. It's an inside publication, comes out a few times a week. So people can-

Same kind of stuff that you're giving to the- Capitalizing on the database, it's different content, more, you know, ETF and a lot less quantitative and the stuff we do for institutions, but it's trivectorresearch.com. So a lot of folks check it out and give me a hard time on X or LinkedIn or whatever they want to do. But yeah, we're excited about it. So thanks for that.

All right. Yeah. Appreciate you guys very much navigating us through this. Tom and Adam, we'll see you soon. Thanks. To Christina, parts of Nebelos for the biggest names moving into the close. Hi, Christina. Hi, Scott. Well, I shouldn't be smiling because there's disappointing guidance that sending shares of Abercomi and Fitch lower down almost 11%. The retailer's 2025 guidance called for slowdowns and sales growth and weaker operating margins. Why? Well, higher freight costs played a role and discounting, so they had to get rid of inventory. Shares, like I said, are down almost

11% and have fallen more than 40% since its all-time closing high just last June. Novo Nordisk is bringing its blockbuster weight loss drug, Wigovie, direct to consumers through a new online pharmacy. Patients can pay $499 in cash per month, well below its list price of over $1,300, and that's why you're seeing shares up 3.5%, you know? Weight loss drugs, cheaper. All right, we'll come back to you in a little bit.

Christina, thanks so much. We're just getting started cheaper. All right, we'll come back to you a little bit. Christina, thanks so much. We're just getting started here. Up next, sycamore tree capitals, Marco Cotta is back with us breaking down. He's navigating the volatility in this market. He'll join me right here at post nine after the break. We're back credit markets have remained mostly calm through the early stages of this trade war. It is one of the reasons why the stock market hasn't had a steeper correction perhaps. So will that remain the case? Let's welcome in

Mark Okada. He's the co-founder and CEO of Sycamore Tree Capital Partners here at Post Nights. Good to see you again. Welcome back. Thank you. I mean those are the markets you watch more than the equity markets. Credit and credit's behaved okay right? Sure it's been all right but it's starting. We're starting to see some spreads are widening a little bit? Yeah, a little bit. You concerned? I think it makes sense that the uncertainty that is rising across geopolitical, economic,

consumer markets, rates, Fed, all of this uncertainty has to have a premium to it. There's gotta be a risk premium built somewhere. And so we're starting to see that price to end the markets a little bit. And frankly, if you're bullish, which we still are, which is kind of weird, but we're still close. Sal, I don't know, your voice sounds like

it's wavering a little bit on that view. I hope it does, because that's how I feel. I'm certainly not as risk-gone as we felt maybe six months ago. But I think that the idea that markets need to move and put a higher risk premium given the uncertainty is rational. And so I feel good about it because we're still ramping with the buying credit, and if you can buy it at a better price because there's more spread in it, that's always a good thing per se. We're not seeing it show up in the fundamentals yet, Scott.

The defaults are actually down. So, you know, boring is back, right? In the equity markets, credit's kind of a boring place, per se, I mean, we don't react as much to have to, the fundamentals don't move with tariffs and all this other stuff. But that being said, I mean, these markets have been moving a lot. have to, the fundamentals don't move with tariffs and all this other stuff. But that being said, I mean, these markets have been moving a lot.

Yeah. Yeah. I mean, they've been volatile. You said, you know, you're not as bullish as you were six months ago when this was supposed to be risk on. Yeah. Right? Yeah.

What's happening? Well, I think Trump has come in untethered and I do believe that he has assessed that his time is not long. And so let's say they lose Congress in the midterms, right? And his ability to get a lot more done kind of goes away in that scenario. So get it all done now, push as much of this out as possible. Including a lot of the messy stuff. Yeah, the uncomfortable things.

But on the other hand, right, we had proof today of what markets do. I think Trump probably only listens to the markets. He certainly doesn't listen to anything else. But he listens to the markets. So what happens, right? The markets sell off. We lose the whole Trump bump

and oh, okay, we're not gonna do the tariffs on cars with these guys, right? We're gonna moderate our policy and we see this bump today. So I think as we think about credit, where I would see the canary in the coal mine and the thing that I would be watching if I were an investor at home,

I'd look at probably the IG market. It's a much bigger market. It's pretty high and tight. It's run well, but that spread there, when it starts to move and if it moved, it's up five basis points on this kind of stuff, which is not much, but if it goes up 10, 15, 20 basis points, I'd start to think really seriously about some defense.

Are you worried about corporate confidence eroding further? And that's why you're watching that particular market as closely as you are? I think corporate confidence is definitely down, and it should be. We're seeing earnings revisions down significantly. I mean that that you we talked about this risk on period was supposed to be really risk on but you had and you had almost 17% earnings growth in the fourth quarter. Projection was for 13 this year we're down to 10, 11, maybe 10, 9. I don't know it's come down a lot in two months. So you're right.

And that confidence that a CFO, a CEO has about how they're going to run their company is definitely a problem. And it's also when you think about the Fed, what is the Fed's reaction to all of this? The Fed's in a difficult spot because they've got things that are going both directions on them, right? I mean, employment is definitely an issue. I mean, I think if Doge is supposed to do something about the deficit, it's an ice cube at a volcano. There's only four and a half percent of the budget that's people, that's salaries, right? So Do DOGE doesn't affect the overall sort of deficit, which is really the issue, but it does hit confidence, it does hit payrolls, it's gonna hit one of the things

that the feds really cares about, and so we'll see what happens on Friday with the employment report. So that would kind of, and the market's pricing in three cuts now, so maybe that's what people are thinking, but on the other hand, all this tariff stuff is stagflationary. That's not good. That goes the other way on their mandate. So I think they're sitting on their hands right now. And if that's the case and you're a CEO, you don't know which way the Fed's going to move, that makes it even more uncertain. So yeah,

difficult. How's a guy like you play defense? If you feel like getting more defensive in credit, how do you do that? Well, the themes that we started around before were, you know, we like dry powder in floating rate, high grade stuff. So triple A CLO, seal yielding 5%, floating rate, triple A, better yield, better rating than the US government. That's been good. That's continued to be good. That's a great place to hide.

You're still making good returns that are better than CPI or any sort of risk you're looking at from an inflationary standpoint. And then within the credit book itself, like there's 1,500 issuers that we could be invested in. We're gonna pick higher quality. So quality is the theme that we've had this year and we'll continue to play the quality theme.

Do you think rates are overshooting to the downside right now? I do, I do. I think that's a function of, have you, you've probably had Dan Clifton on, he's talked about this liquidity bazooka. When we hit the debt ceiling, right, the Treasury starts to pay their bills by spending down their cash. That money is outside the banking system until that happens. That goes

into the system, creates more liquidity. This time it's like five or six hundred billion, so it's a big number. that's that's depressing rates it's depressing the dollar but on the other hand it ends around the end of April so you could I mean who knows we could have snapped back to five in the ten year I don't know that you're not planning for that are you I think it's a risk I think it's a definite risk in this kind of market and because this fall is is is really really amazing to watch I mean that you. We didn't talk about the end carry thing, but the end moved from 158 to 148 in 28 days. That's a big move. Yeah. Well, we saw what happened the last time we had an issue with the unwind of the

carry in, I think it was August, right? The first week of August. That's right. That didn't feel good down here. No, no. Which means we'll have to catch up. That didn't feel good down here. No, no. Which means we'll have to catch up with you again. Thanks for being here. Thanks, Scott. Good to see you as always. All right.

That's Marco Cotta from Sycamore Tree joining us. You'll be well. Up next, Treasury partners Richard Saperstein is back with us. He makes the case for two sectors that have been beaten down this week. He explains next. All right. Welcome back. Stocks are higher today, but still down sharply over the past week.

As you know, our next guest sees now as the time to buy two of the sectors that were hit hard during the past few days. Joining me now at Post Nye Treasury Partners Richard Saperstein. One of the highest rated one of the highest rated financial advisors in this country according to Barron's in the top 100 you my friend were ranked number four. Congratulations. Thank you. Which means your advice is I always tell you, better be good. What are these two areas?

What are the two sectors? Well look, Trump's policies have been very widely telegraphed and now the market's trying to digest whether tariffs are going to be inflationary or recessionary, stagflation, whether Doge will cause a slowdown and whether immigration is going to have an effect on labor costs. So I think it's important to look through what's going on now in this current bout of volatility to the structural changes that are occurring as a result of this administration. That includes deregulation, flat to lower oil prices, we have declining inflation, we have an accommodative Fed, and we have an SEC that will be more accommodative

for M&A. So when we look at that, I do believe so. What I mean, what's happened so far, you know, they've already said they're going to stick to the Biden era M&A rules. That's kind of a surprise to people. Right? Rules are going to change. I mean, everything's changing daily.

Remember, years ago, we spoke about the risk of 500 basis point increase in the Fed funds rate. Now is the big risk. Today, the big risk is policies out of Washington. And that's what we have to pay attention to but in the end the landscape for investing will be more beneficial for corporate profits to grow. Is the Fed still really accommodative? Potentially yes. I mean you would think you come into the year thinking yeah they are less than we thought before still accommodative now I don't know

it's like sitting on their hands because they don't know the impact of tariffs any more than you, me, or anybody else. Agreed, and I don't think we need the Fed for stocks to go higher. I think we've got to get through this period where a lot of these policies are implemented, creating the volatility, and look through to the sectors

that will still do well. We teased it here at the beginning, or at least we read it in the intro, you got two sectors that have been beaten down that you like. What's one of them? Okay, so let's talk about utilities. The demand for power is growing 2.5% a year. It's not just from data centers,

which is 40% of that demand. It's from residential, electrification, on-shoring. There's a lot of power demand that's going to occur, and the sectors that we're looking at right now is the utility sector specifically independent power producers and there's two VST, Vistra and NRJ. Okay. Okay. Well Vistra has been crushed in the momentum on wine. Absolutely and it's a great opportunity to add. Right now it it's a $42 billion company,

roughly $5.5 billion of operating cash flow. The free cash flow yield is over 7.5% on that company, so they're going to return it to shareholders. And it's in a position now where we're going to add to our position. You are going to add to it? Absolutely. When are you going to do that? As soon as I feel comfortable. As soon as you get off the show?

Not quite. I'm serious. When are you going to do it? I wonder if you missed your chance. I mean, these things got crushed so bad, some of them have rebounded a little bit. We own it in the 20s since 2021. Okay. So we're going to own this stock for five, ten years. So I still think the market's going to be very volatile, especially through April 2nd when Trump's going to announce the product tariffs. These were just kind of fentanyl and immigration related tariffs. So I think we have to be patient here and look I've seen these drawdowns for 40 years and we don't have to just jump right at the first opportunity. I guess

the only thing I would ask about Vistra again is the idea that maybe after Deep Seek we are coming to grips with the fact that maybe we're gonna need less not more of everything. I mean we're still gonna need more compute we think but maybe it costs less. We're still gonna need a lot of power, but if you can do more with less, maybe you don't need as much power as you thought initially that sent these stocks literally straight up to the moon.

If you listen to Nadella's last interview, all right, I know what you're gonna say. So AI agents are only increasing, so we're gonna need more compute, more data centers. We're gonna need more power to fund all, to power all those data centers. So I think it only increases the demand for inference and compute.

Okay, and the other sector you would buy that's been weak is big tech. Yeah, large cap tech. So Meta, three billion daily users. Google, four billion daily users. Microsoft, two million installed corporate base. Apple, two billion daily users, right? These companies have large modes, recurring revenues,

and they're operating cash flows right now. You take Amazon and Google, it's back up to seven and a half, cash flows right now. You take Amazon and Google, it's back up to 7.5% right now. So I think it's important for every investor to have these in their portfolios and not look at it as just a trade. These are long-term investments. Sure, but you think Apple's worth 31 times forward?

Well, is the market worth 22 times forward? Well, you need to answer that question, but I mean, Apple, are the fundamentals currently of Apple worth the premium of that multiple? This is the biggest debate right now, and we can dissect its services, products, but I own the company. I believe it's going to continue to grow. It's probably at a rich multiple right now, but I think it's got to be essential in everyone's portfolio.

We'll leave it there. Good seeing you again. Likewise. Richard Saperstein joining us back here at Post Night. Up next, oil. It's falling for a third day. We drill down on what is behind that. Next on the bell.

We want to welcome you back. It's a very special bell ringing here. In about 10 minutes, 12 minutes or so, the Congressional Medal of Honor Society is doing the honors today at the New York Stock Exchange. The shot we were just showing you there of that great man, Colonel Paris Davis. He was the Medal of Honor recipient. He is 85 years old, by the way. He was presented with the Medal of Honor

on March 3rd of 2023 for his service in Vietnam. Although wounded in the leg, he aided in the evacuation of other wounded men in his unit. With complete disregard for his own life, he braved intense enemy fire to cross an open field to rescue his seriously wounded and immobilized team sergeant. And while carrying the sergeant up a hill to a position of relative safety, Captain Davis was again wounded by enemy fire. He again refused medical evacuation until he had recovered a U.S. advisor under his command who had been wounded during the initial ambush and presumed dead.

While personally recovering the wounded soldier, he found himself severely wounded but still clinging to life. Not leaving the battlefield himself until after all friendly forces were recovered or medically evacuated. Several Medal of Honor winners up on the podium today, and we are honoring all of them for their great service to this great country.

To Pippa Stevens now for a look at the energy space. Pippa? Hey, Scott. Well, Brent Oil, sinking to a more than three-year low on four key factors, demand uncertainty amid the U.S.'s tariffs on China, Canada, and Mexico, OPEC announcing it will increase production beginning in April, a possible easing on sanctions on Russia, which could bring those barrels back to the market. And finally, U.S. data today showing a larger than expected inventory build. Now, the energy sector turning negative on the year today, dragged lower by the refiners.

That's Marathon Petroleum, Valero and Phillips 66. While the tariff impacts will likely be felt across the supply chain, the refiners are the first exposed since they will have to pay the higher price for that Canadian crude. Scott? Pippa, thank you. That's Pippa Stevens. Still ahead, what to watch for when Marvell reports its results top of the hour. We'll be back on The Bell right after this break. Back on the bell right after this break. Right up next Mike Santoli standing by to break down these final moments of the trading day the market zone is coming up next.

All right with the market zone with CNBC senior markets commentator Mike Santoli. So what's on your mind? Headline driven tariffs. For sure headline driven although arguably a little bit of the pressure was turned down today. So if you, as a mental model, you say, okay, yesterday at the lows, S&P around over 5700, you kind of had the maximum tariff aggression along with maximum short-term concern about how the economy was holding up. I think you got eased up on both fronts, maybe that minor step back to front of the auto tariffs, but also better

ISM services. Facebook usually doesn't move the markets, but it didn't hurt to have a little bit of reassurance. And so it allowed the S&P to escape yesterday's fate. The one day chart today was exactly like yesterday, except we didn't have the last half hour dump, at least not yet. So I think it's sort of like you check off the box an oversold market is able to respond we're sitting right at the way point that you would have expected which is yesterday's high and so in general

I don't think we're we can sort of have a line of sight as to when we're going to going to be free of the headline driven tape and when we can basically say okay we know what the situation is going to be. But ahead of the jobs number bond yields relaxed higher. I think part of that was the German yields running but also just this idea that maybe the economy is hanging together. You could tell yourself a story that it was weather you know kind of weather impacted January and February and then you kind of have a little more spending ammo in the tank here. You don't get out of a growth

scare on Wall Street overnight obviously. And yeah and we're starting to obsess a little bit about the idea of stagflation. Now everybody's talking about it. So let's see how long it takes

for that to run its course. I think you need you're going to need further little moments of reassurance on this and the jobs are going to probably be a good you know good place to see if that comes i'm resistant to the stack inflation i d i know what people are saying you know you're kind of short of your inflation target at the same time

means the fed can't respond to it a short all it's in between space and seeing if tariffs are going to force you to cut earnings estimates. Alright, so we've had a nice snap back today and once again as the bell is going to ring in a moment, just call your attention to the Medal of Honor winners who are here at the New York Stock Exchange right up there on the podium. They just leave the pictures to speak for themselves. I'll see you tomorrow.