Closing Bell - Closing Bell: The Final Tariff Countdown 4/2/25

Episode Date: April 2, 2025

Will today’s tariff announcement clear the way for stocks to move higher or only underscore why they’ve been falling? We discuss with The Wharton School’s Professor Jeremy Siegel, Solus’ Dan Greenahus and Fundstrat’s Tom Lee. 

Thanks so much. 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 the countdown to more Trump tariffs. One hour away now from that event in the Rose Garden. We will go live to the White House in just a moment for the very latest there. In the meantime, we'll show you the scorecard here with 60 to go in regulation. We did start red today. We turned midday. We're still hanging green for the moment. The ADP employment report was stronger than expected. Yields moved up after sliding recently. Tesla is a big mover today. On a Politico report that the president is telling his inner circle now that Elon Musk will be leaving soon. Interesting news. The stock has basically been around that level now, up 5 percent for most of the day here

since that report hit. All of it takes us to our talk of the tape. Will today's tariff announcement clear the way for stocks to move higher or only underscore why they've been falling recently to begin with? Let's first go to Megan Casella at the White House who has the very latest for us. Megan? Scott, this is what we've been waiting for. Less than an hour now until that Rose Garden ceremony where we'll finally hear from the president who has made his decision now on

just how he wants to proceed on the reciprocal tariffs. The Rose Garden is all set up about 150 seats there for steelworkers, autoworkers, manufacturers who will be in attendance for that. I'm told the president now is just focused on finalizing his speech. We only have a few hard details though on what the decision will look like. One is that the tariffs are set to take effect immediately. Everything being announced today should take effect maybe at midnight, maybe sometime tomorrow they start being collected. We also know that Treasury Secretary Scott Besson was on the Hill yesterday telling lawmakers

that these tariffs are set to be the maximum level, that they will be negotiated downwards from here. I will caution though Scott, there is some skepticism around that especially if the president looks to respond to some retaliation that we do expect from trading partners depending on what we hear today. And then as for exactly what's going to happen we know the president has been weighing sort of a menu of options that range from the more extreme on one side that blanket tariff as high as 20 percent a lower than 20 percent blanket tariff on a smaller subset of countries. I've been told those two options are seen as less likely than potentially the other

ones on the table, one of them being tiered tariff rates, something like 10, 15, and 20% for countries to qualify for one of those, or those customized country by country rates, so less than an hour now. And we will find out, but Scott, I can say that what they've been weighing here, and the reason this decision has really come down To the wire is we know that they've been looking on one hand to satisfy a president that has wanted to go big broad and simple On this trying to keep things simple for the markets while also minimizing economic impact and market impact as well They've been looking for that middle of the road and in an hour from now

We'll find out whether they've hit it Scott and we'll see if they can pull it off Megan Thank you, Megan Kasella force as you see at the White House with the latest there And an hour from now we'll find out whether they've hit it. Scott? And we'll see if they can pull it off. Megan, thank you. Megan Casellaforce, as you see, at the White House with the latest there. Let's now bring in Professor Jeremy Siegel of the Wharton School, also a senior economist at Wisdom Tree. It's great to have you on a day like this. Welcome back. Thank you, Scott.

Happy to be here. Will this be the so-called clearing event that people wanted to be? I think we all hope so, but honestly I think maybe a better outcome, first of all we have to find out the average level and we certainly know, I remember when Goldman raised it from 10 which what they thought to 15 that really kind of shocked the market. Now we're talking about 20 or maybe even 25. But I think the most important factor will be how he positions renegotiation, in other words, a willingness, I will enter a negotiation, this is my starting point, if you lower on our exports, I will

consider lowering on your exports. I think that would be received very favorably. Now of course, that is a process, but I think if we can tell by his language or his body language or how the other officials are going to be talking about potential reductions in response to a mutual lowering of tariffs, I think it will be taken well by the market. If he seems very rigid and that levels over 15%, I don't think it'll be taken well by the market. How much damage you think's already been done from the uncertainty?

There are some who think that you know You you can get past this There are others like Tony Pasquerello Goldman Sachs who say the games changed in the market and now it's all about the preservation Of capital because of this uncertainty and what's going to happen even with more certainty of tariffs that are going to be punitive even with more certainty of tariffs that are going to be punitive? Yes, because even if, you know, we know, for instance, if there's 20%, we really don't know what kind of a reduction in GDP that will entail.

I mean, and the ramifications are very strong. I mean, we already see a big decline in travel by foreigners into the United States. I mean, that hits the service sector. There may be some boycotts of US goods, and of course, the big wild card, Scott, as we all know, is the potential retaliation. And if he sounds rigid,

and we hear tomorrow from the EU, Canada, and or Mexico, okay, now these are our tariffs, that is definitely gonna be a negative shock for the market. So, yeah, there is definitely potential downside, flexibility, negotiate, listen, if we could all negotiate to a zero tariff level, at one point I remember Trump saying, well, maybe if everyone had zero, I could take that, you know, that would be ideal, but it seems to be far away at this point. The other point to make, I think, is that stocks have already, as you know, priced in a lot. Right? We're down substantially already.

What doesn't the market know at this point, do you think? We are and we aren't, Scott. We had a 10% bump because of Trump, and most of that's been eliminated now with a much tougher tariff stance than I think anyone certainly expected in November and December. We're still, you know, haven't settled on what this tax bill is going to be and how it's going to be passed. There's still a lot of

negotiations there. So, you know, the other favorable part of the Trump agenda is yet to be passed. And now what we've basically done is wiped out the Trump bump back to that pre-level. If he goes tough on tariffs and on that, I certainly see further downside. Wow. You know, on the idea of what happens to earnings and what we should be willing to pay for the earnings we may get in the future, if you look ahead to 2026, for example,

Goldman Sachs is around $280. 20 on that, a 20 multiples, only 5,600. I don't think that's what people were expecting. And that's even if you believe the 280, that is the biggest wild card in all of this. Yeah. I mean, I mean, I thought even before Trump was elected that the 2025 and 2026 were way too high. Just because we had, you know, 15, 18 percent growth rates in twenty three twenty four people started extrapolate long-term growth uh... with no negative factors such as tariffs is seven eight nine uh... so i i was saying you know how

you know people are saying two percent two and a half percent gdpg that's great uh... how do you get a fifteen percent earnings boost out of that and we all know right now the street is between zero and one percent for this first quarter which of course just ended a couple days ago so you know years there's just no way I can see double-digit earnings growth coming out this year I mean next year obviously depends on how you know how far it goes down this year.

I would say that really no one can accurately predict that. I mean, you've spent your life, certainly the better part of your adult life, thinking about these issues and teaching future investors how to value stocks. And if you're talking about tariffs, which cause price increases which hit corporate margins which then bleed into earnings which then decrease the value of stock prices. Yeah. But one should also say that that

nothing is forever. Stocks are long term assets and that's that's their greatest quality. You know even a couple of year bad earnings, if you put it into a pricing formula such as we academics often do, really doesn't reduce the price that much, as long as it bounces back. And I think that if you take the long view,

are these super high tariffs going to be forever? You know, there could be a change in administration. There could be all sorts of changes. I mean, the long-term pattern of the last 100 years has been downward, now broken by Trump. But certainly, I'm not convinced that that would be the long-term from this position. And stocks, again, you know, they're assets that are the longest- long term from this position. And stocks again, they're assets

that are the longest lived of all of them. And a couple years of declined earnings, certainly it's gonna affect the stock market. People overreact in the short run, we always do know. But in terms of their ultimate value, I still think they're certainly the best investments. Well, because the challenge in all of this is looking through the forest to the trees,

seeing the forest through the trees, and get through this nastiness of tariffs and get to the other side to where the grass is really supposed to be greenest for this market, a better environment for deal-making and deregulation and the extension of the tax cuts and maybe additions to the tax cuts that are already in existence that are set to expire. That's what you're talking about. It's difficult to do that now because there's so much uncertainty from business and consumer levels that it is really difficult

to think about the things that are on the come. Yeah. I mean, you know, throughout history, investors have always overreacted to the short run. It's actually in our human nature to do that and make it difficult to say, oh, my goodness, there is grass greener out there, and history has shown us that that is really always the case. It has always been the case in the 220-year history of the stock market.

And yet, you know, our human nature says, oh my goodness, you know, one year of bad earnings, one and a half year of bad earnings, sell stocks, get out of the market. And that's why so many people fail to get the returns they really should get by sticking through these tough times. Professor will leave it there. I appreciate your time as always. Jeremy Siegel, we'll see you soon. Thank you. Thank you, Scott. All right. Let's now bring in Tom Lee of Fundstrat, Dan Greenhouse of Solace Alternative Asset Management. Tom's a CNBC contributor. It's so good to have you both with us.

Tom, I know you both with us. Tom, I know you agree with a large part of what the professor said. That's what you're trying to do and impart on our investing audience. Those are the headlines from the notes that you continue to put out. Tough now, better later.

Invest for the longer term this year. That's right. We don't want investors to be panicking now or rage selling. We've had a very painful drawdown. And I know we're facing this huge uncertainty that may not end tomorrow, might last months. But like the other declines in stocks, like the one last year or the ones in 2022,

the ones who could endure that short-term pain and took advantage of those declines are going to have good opportunities. Dan, what if things are different though this time? That these tariffs are going to be a favored measure by this president, whether they're permanent, temporary, months, years, no one really knows, they're not going to be a day. Know that. Listen, across the street, every big bank, every medium sized bank, I'm sure Fundstrat

have hosted calls with their clients to discuss what they expect for tariff. And I've been on a couple of those calls and there's universal complete uncertainty as to what's going to be announced in even 45 minutes time, let alone 45 days time. So I think it's fair to Tom's point and to the professor's point for everybody to have a little bit of fog in their investing outlook right now. However, I wanna take a step back here and just note to the professor's point

that stocks are long lived assets, risk assets are long lived assets. And unless you think a recession is forthcoming and a meaningful decline in earnings is forthcoming, then probably your best bet is to ride this out. And to your point about EPS, 280 right now for the next four quarters is basically unchanged over the last couple of weeks.

Now, you could say that's the ignorance of the market thinking that this isn't going to matter and someone thinks it does. But it also could be telling you that maybe the tariff headlines, which populate all the newspapers aren't quite as bad as the reality on the ground. What about that Tom? At the end of the day this entire conversation comes down to what earnings are going to be and then we have to decide what we're willing to pay for the earnings in stock prices. Do you have any level of confidence now that you can see through whatever fog exists? Well, I think people are making what I would call

like linear adjustments to earnings because they're making a tariff assumption, not assuming that there's companies that can find ways to either get efficiency or they're gonna get a currency benefit. I think earnings are gonna change a lot less than people expect. And the easiest way to see that is

the bond market is a very good economist. High yield spreads have not widened dramatically even this week as stocks took it on the gut. And if you look at one year, one year inflation break even, so the estimated inflation from one year from now, one year ahead, that's actually fallen 30 basis points. So the bond market is not expecting more

inflation. I actually think earnings are going to hold up a lot better than people expect. Don't you think, though, that to some level it's almost undeniable that margins are going to take a hit, that the companies by and large don't have the level of pricing power that they once did? Because they know that consumers are sick and tired of inflation, and they're tired of seeing prices go up. There's no appetite to raise prices at least initially. You're going to eat it and you're going to see a lower margin, which is the story. Yeah.

And I don't want to get a little dark here, but we know companies were hoarding labor for the last few years and there was a stigma for downsizing or retirements. But we know AI is actually producing enough PhD level type workers that you could see companies re-engineer. I think labor costs will be one of the solves for why earnings might surprise in the next year. And let me add, while clearly tariffs are not a boost to margins, there's little doubt about that, there are, there's a shared pain here amongst companies and it's not so easy. I was watching a news report

on one of the political news shows before. They were interviewing someone who said, well, the car is coming in, it was 100,000, now it's going to be 125,000. And that's not how it works at all. Obviously, it's on value added. It's a little more complicated than that. And in the case of margins, Walmart, let's say, is not going to eat all of this. Some of the suppliers are going to eat some of this. Consumers are going to eat some of it. Walmart itself is going to eat some of it. So ascertaining the exact hit to margins across sectors, particularly consumer discretionary,

is much more complicated than simply saying... Well, you're also addressing the so-called the power position, the bully position of the companies like Walmart who can have that leverage over their suppliers. Not all companies certainly have that. No, that's fair. And to that degree. And maybe I want to add one more thing. There's going to be a lot of onsharing in the US, maybe as much as six trillion of capital

assets. That's additive to SAP earnings. OK. I'll come back to you guys in a U.S., you know, maybe as much as six trillion of capital assets. That's additive to S&P earnings. Okay, let me, I'll come back to you guys in a second. I do have some news regarding Metta's Mark Zuckerberg. CEO Kate Rooney has that for us, and I believe he was spotted in the West Wing earlier today. Is this regarding that? Yeah, Scott. So this appears to have to do with Mark Zuckerberg's visit to Washington,

to the White House this week. The Wall Street Journal now reporting that Mark Zuckerberg, the Metta CEO and founder, has been lobbying the Trump administration and other officials in the White House to try to get a settlement on this antitrust trial that is set to start later in the month. Again, this is according to the Wall Street Journal, citing people familiar with the matter. The April 14th FTC Commission trial is the one we're talking about here. That would require, if it goes through,

the company to unwind its acquisition of Instagram and WhatsApp on antitrust grounds there. The terms, they say, of this potential settlement were not immediately clear, though. We do know Mark Zuckerberg has been at the White House spending more time with the administration, but it appears they are pushing for a settlement as that is set to kick off in about 12 days. We do actually have a response from Metta, the spokesperson, telling CNBC that Mark's

continuing the meetings he has been holding with the administration on American technology leadership. Scott, back to you. Okay. Kate, thank you very much for that update. That's Kate Rooney. Speaking of CEOs and the White House, President Trump reportedly telling his inner circle today that Elon Musk will leave the administration soon.

Eamon Javers is here with those details that has Tesla shares moving higher today, Eamon. Yeah, Scott. White House press secretary, Caroline Levitt, criticizing a report in Politico this afternoon, even as she's essentially confirming the story's report that Elon Musk may be stepping away from the White House in coming weeks.

Levitt posting on social media, this report is garbage. Elon Musk and President Trump have both publicly stated that Elon will depart from public service as a special governmental employee when his incredible work at Doge is complete. Now, Levitt doesn't put a date on that, but Musk is subject to a 130-day limit on his role

as a special governmental employee. Now, that limit is expected to be reached by the end of May or thereabouts, depending on how they count the days, but Doge itself is slated to continue until 2026 and back in February officials close to the White House told Politico that Musk's timeline was indefinite and could last longer than that 130 day period if Trump wanted it to. But now of course there are these dueling pressures on Musk. Elon is facing enormous pressure on Tesla's stock since its post-election peak. And Musk's relationship with Trump has

really sparked Tesla protests and boycotts and all kinds of problems for the brand. There's also a sense here in Washington that Musk is becoming more of a political liability than otherwise for this White House. Voters in Wisconsin yesterday rejecting Musk's involvement in the Supreme Court election there, allowing liberals to maintain a majority on the court. So maybe sort of Musk's political magic starting to evaporate a little bit here as we get into the second quarter, Scott. I appreciate that from you as well. Eamon Javers in Washington, thank you. I did speak with Wedbush's Dan Ives earlier on the half-time report. He's been urging Musk to spend more time at Tesla or risk permanent damage.

It must continue to go down this path. It was the path of no return. And that's why him starting to make this move and we'll see as the news comes out, it's the best thing that ever could have happened for Tesla shareholders on the day that you have no rose card glasses, an absolute disaster train wreck, one cute delivery number.

He needs to get back home being CEO of Tesla and I think that's ultimately the path he takes. Okay, that was Dan Ives earlier today. Let's bring back our panel. Tom Lee, of course, Dan Greenhouse still with us. We showed you what Tesla shares are doing you've been watching these closely to deliveries weren't good deliveries around the world worse than not good what about this news well it's it's definitely welcome from shareholders

because I've had a lot of shareholders tell us they want to see Elon Musk go back to Tesla but I think it's very encouraging to see the stock price rise on a really bad delivery number because as you know, stocks rising on bad news is a sign that a lot of bad news is priced in and arguably the bottom. Yeah. It does raise not only this issue. You could take this as, okay, mag seven, this stock's done terrible. It's done a lot worse than many of the other mag seven names, which haven't done well on

their own, right? Dan, is that going to change anytime soon? You think the performance of these large cap tech stocks? Well, listen, I think they're down depending on your measure 20 to 25% from the highs on a lot of nothing. I think there's a lot of concern in the AI space on what this what deep seek means AI over capacity etc etc again I'm not a big tech investor and solace is not but I haven't seen too many headlines that suggest that that any any downside is coming in fact I've seen the opposite continued optimism around capex and

demand etc etc. Let me ask you this then, because you're not a big tech investor by not being one one could make the assumption that you're not a big tech investor. By not being one, one could make the assumption that you're trying to invest in the more broad areas of the market. Ones that have shown at times that they can pick up the slack for a lag in tech. Isn't that questionable now, just given the uncertainty we've been talking about related to tariffs? And then once we get any more definitive news around tariffs that they could have a more negative impact on those kinds of stocks? Yeah, that's fair.

Listen, I think there's been, not I think there's clearly been a big rotation. European defense companies, as I've mentioned repeatedly, we're pretty big in the energy space. Energy equities are obviously top of the list this year, so that's been encouraging. But any conversation around tariffs

has to get back to who knows. Because not only do we not know what's going to happen, how long it's going to happen for, to whom it's going to happen, we have no idea about the response. How does Europe respond? How does Canada respond? What happens to lumber prices? I think to that point, it just re-emphasizes how much uncertainty there is across the space. But I also want to make the point that what's happening comes on the heels of five consecutive quarters of strong gains for the S&P 500 cumulatively call it 30% top to bottom so if you tell me that after a 30% gain I'm gonna have one quarter where the S&P is down by 4% or so I think I'm gonna take that trade

every day and twice on Sundays. Where's the Tom Lee back up the truck note for international markets? I'm surprised I haven't seen that. Do you not like what a lot of other people do? Well, we do. Like for instance, if you're going to trade industrials and you want to be overweight Germany or financials the UK, but I do agree generally that if you're going to be buying international you are making essentially stock bets because these are highly concentrated markets, you know, much more concentrated than the U.S. I mean Samsung

essentially dominates Korea. So if we were making a trade away from AI, like AI was peaking, then the rest of the world is along. But we're still confident that AI has legs. All right, we'll leave it there. Guys, thanks so much for helping us lead up to this big event coming in a little more than 30 minutes now. Tom Lee, Dan Greenhouse. By the way, Tom's going to be part of our inaugural CNBC Pro Live event here at the New York Stock Exchange on June the 12th. Tickets are limited. You can scan the QR code on your screen and visit CNBCEvents.com slash Pro Live for more information there. Now let's send it to Christina Parts-Nevilos for for a look at the biggest names moving into this close. Hi Christina. Hi I'm actually gonna be the one interviewing Tom Lee at that event but let's talk about DoorDash. Shares are climbing today after announcing a major partnership with

Domino's Pizza. Soon hungry customers are gonna be able to order their favorite Domino's Pizza directly through the DoorDash app and what's interesting is that Domino's own delivery drivers will still be handling the deliveries. The Pizza Chain CEO views this collaboration really as a strategic move to boost sales. And that's why you're seeing shares up over 3% right now. Meanwhile, Uber's stock also gaining some ground following news of an expanded partnership with autonomous driving company WeRide. The two companies will now bring WeRide's RoboTaxis to Dubai through Uber's platform. This really builds on their previous collaboration from 2024 when they launched WeRide's RoboTaxis

in Abu Dhabi. And that's why you're seeing shares up almost 2% right now, Scott. All right, Christina, thanks for that, Christina, parts of Nebelos. We're just getting started here. Up next, former Deputy U.S. Trade Representative and the former Dallas Fed President Richard Fischer is back with us. He'll tell us what he is watching for from today's Trump tariff announcement

and what it might mean for the economy and the Fed. We're live at the New York Stock Exchange. You're watching Closing Bell on CNBC. ["The New York Stock Exchange"] We are less than an hour away now from President Trump's tariff event at the White House. It does come as many reads on the U.S. economy continue to show a pretty sharp slowdown, and that could put the Fed in a tough spot with inflation still elevated. For more on that, let's bring in former Dallas Fed president and the former deputy U.S. trade representative Richard Fisher.

It's great to have you today, welcome. Thank you, Scott. What a good time. Because of the experience you have in the trade arena, let's begin there. How do you view tariffs, generally speaking? Well, they are a tax. And if you're gonna protect your margins,

you're gonna have to figure out how to deal with them. And there are several ways to do it. One is to increase your margins, you're going to have to figure out how to deal with them. And there are several ways to do it. One is to increase your prices of the goods or service that you sell. By the way, you don't do it in one fell swoop. You do it to see how much your customer base will bear. So it takes time. Test that. The other way is to increase your productivity.

We have great tools for doing that now, AI, et cetera. But usually that reduces headcount. So it can be a real trap from the standpoint of having inflationary pressure on the one end and also a pressure on the employment picture for someone who's trying to deal with the increase in cost of their inputs. That's what a tariff is. employment picture for someone who's trying to deal with the increase in cost of their inputs. That's what a tariff is. I mean, if that's the case and you have such a clear cut view of the impact of tariffs,

the administration is clearly telling a different story that they think if it is a tax, it's not going to be a tax on U.S. consumers. And whatever tax there is, it's going to be worth it to reset, redo, and reshape the entire global trading and manufacturing economy. Well, that's true. I mean, they have a different view. They also believe, I think, that they will be able to offset this with tax cuts if they can get them through the legislature, through the Congress, and by deregulating as much as possible.

Now, Scott, I just came back. As you know, I'm senior adviser to Jeffries. I've just spent three weeks in Europe, on the continent and also in London, meeting with, thanks to Jeffrey's incredible posture over there, with the leading CEOs in England, in Italy, in Spain, and in Germany. And all of them are, frankly, apoplectic. They're waiting for some clarity of direction. We'll see if we get it this afternoon in less than an hour.

But they're also very upset. And they're all trying to figure out. All of them, by the way, have direct exposure, significant direct investment in the United States. Is this a place they can continue to have confidence in, as one of them put it, where their contracts will not be abrogated? So they want to be here. There are going to now be obstacles to what they export to the United States.

That'll be a tax on the people that consume those exports. And they're just waiting to see how that's likely to affect their production. I'll give you an example. The largest employer sector in all of Spain is the OEM business, small mom and pop businesses for the automobile parts industry. As you know, Spain's been driven by tourism, but that is the number one employment base in the entire country. And needless to say, those executives of the large companies that pull these things together are worried that this will dampen their economic potential.

So this is a—it is a reordering of the way the globe works. And there are consequences not just here, everywhere. And one last thing, Scott. They really do feel on the continent, but also in the U.K. I'm talking about businesses. I'm not talking about politicians, that we're kind of discerning them and we're penalizing them. And their biggest problem, particularly in Europe, in the mainland, in the continent,

is they're overburdened with their own regulatory structures in each of the countries I mentioned. And then on top of that, they have the EU regulators. So hopefully what they'll do is figure out a way to get their politicians and the regulators to liberate them, as we've done, for example, here in Texas in spades. But they're going to have to figure out a way to deal with this, because as far as they're concerned, it's an obstacle to what they sell to the United States. It's going to make it more difficult for them to sell. And secondly, their direct investments in the United States are now being lost until they get some clarity from this administration. And that's why I'm wondering, you know, what the

ultimate effect on the economy and GDP here is going to be I mean most of the forecast have been taken down to next to nothing you know you get a few tenths of a percent of Growth perhaps in the in the first quarter there are some who also suggests given where growth is heading and where inflation is Sticking that you already have a stagflation area environment, even if it's just a little, that it's here now. That's what Robert Kaplan, who you guys sat in the same chair in the Dallas Fed, he told me that the other day sitting on this very set that stagflation is here. Wouldn't that be the Fed's worst nightmare? Well, yes. But again, the Fed fans like any other business here until they get some clarity,

it's hard to model what the impacts are going to be or even think through what the impacts are going to be. So I can understand the fact they didn't do anything in the last meeting. They may not do anything at the next meeting. And until they get clarity and understand the impact of inflation, unemployment, what the probabilities are. Like any other business, they can't make a decision. And what we're seeing, we had a great, as far as the business community is concerned, we had enormous optimism in January and the economy was performing very well. Whether it's at the Dallas Fed, where Rob and I were, or anywhere else in the country now,

that has just dropped precipitously. And I think a lot of it has to do with the lack of clarity, on again, off again. Hopefully we'll get some clarity this afternoon. That'll have to be priced in. There is the question of the permanence of this. Is it a negotiating tool, or are we gonna just keep these things on

as long as possible? We need to have a better articulation from the president and his administration as to what they really are going to do and for how long it's going to last. But it's upsetting the entire world. It's not just a damper here. It's upsetting everybody until they get some clarity. Let's hope we get some this afternoon. It's upsetting everybody until they get some clarity. Let's hope we get some this afternoon. What does Chair Powell and company do if inflation remains where it is,

if not even perhaps tick even a little bit higher, but let's just say baseline, it stays where it is. And the labor market starts to deteriorate. Companies have held on as long as they can. Now there's so much uncertainty that job growth may not just slow, you may get rid of some of the positions that you have. What does the Fed do?

Well, the Fed will always, even though we have a dual mandate, I can't say we anymore, they have a dual mandate, you always err on the side of warding off inflation or deflation. Now, I would expect under the new tariff regime, whatever it is, already we're seeing it in some prices, that it will be a little bit of an inflationary bump. It could be a serious inflationary bump. Politicians, on the other hand, and particularly the White House, always worry about the employment picture even more than the Fed does. So we'll have to see what this administration has wrought or what they will create in terms

of the employment picture. And again, until you have that clarity, you can't make any decisions. So I think the Fed will always err, particularly on warning off not so much getting exactly to the 2% target. But if we see inflationary pressures rise here, that's gonna be their bias to offset it to the best that they can. Richard, we'll see you soon. I appreciate you as always being with us.

I know we'll see you again soon. Thank you, Scott. Richard Fisher. Up next, Citi's Lucy Baldwin. She'll tell us how she's navigating this imminent tariff news. We're back after this. ["The Daily Show Theme"]

Welcome back, President Trump's tariff announcements coming in less than an hour now. Our next guest says tariffs are just one piece of the puzzle this year. Lucy Baldwin's global head of city research and here at Post 9. It's nice to have you here. Thanks, Scott.

So how are you thinking about this in the big picture? I mean, you have a neutral rating on US equities, which tells me that you're not as optimistic as you once were. Yeah, Scott, you're absolutely right. And thanks for having me today on Liberation Day. You're absolutely right that we came into this year with a less risk on approach than we had had and we downgraded our view on equities from an asset allocation perspective really on a lot of the fears that we're seeing play out, right?

Growth coming in below expectations, a lot of the soft data starting to struggle, starting to see some challenges from an earnings perspective. Obviously, Q1 earnings expectations have been downgraded as well. We're expecting to see a tricky earnings season, but of course today the focus is on tariffs and for us again that expectation as to where that's gonna go. Is this gonna be the cathartic clearing moment for the market or not? Well I think the truth is it's unlikely that this is gonna answer all the questions today. I think what we're gonna see is probably a lot of

focus on a headline effective tariff number. I think broadly speaking if it's 10% that's probably good news now versus what's baked in. If it's above 15 towards 20 I think that's going to be a really difficult environment to see risk come back on because of the downgrade implications for equities, because of the implications for growth and the downgrades the US will see and that broader stagflationary risk will be a lot for people to digest. Baked in, baked in are the key words.

I mean, the markets come back a lot, right? It's come in a lot. And I think there's a debate as to whether it's come in enough. You know, we've already we already are assuming that earnings are not going to be as good as we once thought they would be for the quarter. But there's the other side of all of this that's that's part of this conversation it needs to be as well at what point do we look past this to get to the other side where we think it's going to be better yeah I think you're right I don't think markets are fully baking in the potential

extent of the downgrades you would see. If you saw, for example, a 20% effective tariff coming in, I think that is double digit downgrades to earnings really. So that's quite an, that's a lot for the market to absorb at the levels we still are. What if we start today at that, what if that's the 20% number starts today? Does that, you know, cause the hard thing is, is you have to model if it's 20 today,

it might not be 20 tomorrow. Exactly. And it might not be 15 next Thursday. And I think to your point, Scott, that's what the market's telling us. The assumption is even if it comes out at that level, it won't hold and there will be a sort of negotiating, rowing back as we've seen with Mexico, as we've seen with Canada. And so I think that is clearly what the market's expectation is, is that it's either going to be significantly reduced in scope or that you're going to see over time, you know, renegotiation on the back of that.

And actually that the earnings downgrade is nothing like that. In terms of what the market's pricing today, it's telling you that it doesn't think it's going to be that order of magnitude. And if it is, it's not going to last very long. You're based in a part of the world where there is a lot of optimism from people who've been coming on lately saying, better returns are gonna be in Europe

and elsewhere this year and not in the US. Do you believe that too? Yeah, we've taken the opportunity to upgrade Europe and to upgrade China within the equities mix, preferring that option here to the United States. And I think we feel that there is just a lot of opportunity for Europe to see better growth than is currently been priced in. So we, like others, have recently upgraded some growth expectations.

We think the earnings growth there might well prove to be more resilient than expected. And also we feel with China, we still feel there's an opportunity for that market with the stimulus to come so at these levels we would we would say diversification globally is really really important. All right we'll talk to you again soon thanks for being here on a very important day Lucy Baldwin of Citi we'll see you soon. Coming up next CoreWeave is ticking higher today on a new report we have the details we'll tell them next. We have a news alert on CoreWeave. Christina Parts-Nevilos has those details for us. What do we know here, Christina?

Well, Scott, Google's looking to rent Nvidia's latest Blackwell AI chips from CoreWeave as they just can't get enough computing power to meet the AI boom. This is according to the report from the information. And even though Google's already ordered, what, $10 billion worth of these chips, they're still struggling to set them up effectively. The deal would be smaller, should it go through, than what CoreWeave has with Microsoft as well as OpenAI, but would help Google serve cloud customers like Anthropic as well as Apple.

They're even talking about putting their own TPU chips, that would be Google's chips, in CoreWeave's facilities because they're running out of space. I've reached out to CoreWeave, didn't hear back in time, but it really shows how fierce the competition for AI resources has become and how CoreWeave is trying to transform itself into a crucial infrastructure provider in this market. Scott? All right, Christina, thank you.

Christina Partzanova, those Tesla, we told you about it. Ticking higher up next, we have more details in the road ahead for that stock just after this break. We're at the highs of the day, been really flatlining at the high levels of the day. Moments away now from President Trump's tariff announcement in the White House, top of the hour. We'll have full team coverage. We'll be back with the Market Zone next. We're now in the closing bell Market Zone. CBC Senior Markets commentator Mike Santoli is here to break down these crucial moments of the trading day. Plus Phil LeBeau on Tesla shares today, big mover. And potential buyers reportedly making their bids for TikTok. Kate Rooney with those

details. Phil, we kick it off with you. We've talked a little bit about this already today, this move in Tesla shares and why. The move higher, we'll talk about that at the end. It has to do with whether Elon Musk is stopping his work or nearing the end of his work in D.C. Let's start with the news earlier today. Q1 deliveries, these were ugly numbers, worse than expected. Just over 336,000 delivered worldwide. The street was expecting 377 lowest quarterly deliveries since Q2 of 22. And we've talked about this guy. A big part of this is the decline in sales not only here in the U. S. But around the world today, it was a report out of China that the sales or deliveries of vehicles built in China

in March were down 11.5%. And I want to show you shares of Tesla going back to the election of Donald Trump back in November. Why are we showing you this? Because earlier today, shares moved higher on a report that Elon Musk may be nearing the end of his work on Doge and with the Trump administration. Well, what happened after that? Carolyn Levitt, the press secretary, said it's a garbage report. And just a few minutes ago, Elon Musk tweeted out, yep, fake news.

Scott, I'll send it back to you. They call fake anything they don't like. NBC has matched that story, by the way, from Politico. So we'll see how that transpires. Phil, thank you. Kate Rooney on TikTok, what do we know here? Scott, so our David Faber now reporting that AppLovin is among those looking to bid for TikTok. And then earlier we had Amazon, the company declined to comment on reports that it's making a last minute play to buy the app.

Investors though, do see the move as strategic. Amazon shares moved higher on that. They've really tried to crack the code to social shopping for years. It is the way a lot of younger shoppers are searching before they go to buy and TikTok could integrate directly with Amazon's logistics and product listings. RBC pointing out the boost it could potentially bring to Amazon's $17 billion ad business, help increase its share of that digital ad market. And there are some possible synergies for Prime Video.

With short form content, investors may also view this one as defensive, if they can keep TikTok out of the hands of any major US competitors. But Scott, still a lot of regulatory hurdles there. Okay, Kate, thank you so much. We're about here at the end, but we're going to get the announcement. We're going to see what this market does. Yeah, and the market has shown its willingness to believe that there's room for relief here,

that the risk reward is tactically improved with that 10% correction. I don't think the level tells you anything specific about what the market is expecting for pricing in, but any message of flexibility or something that's enabled you to run those tariffs through your economic estimates and come out with something not so draconian, maybe the market can relax higher as treasury yale did from the early morning low. All right, so the crowds gathered in the rose garden. We will get those details market finishing green. I'll see you tomorrow.