Closing Bell - Stocks Finish Higher to Close Out One Of Wildest Weeks Ever On Wall Street 04/11/25

Episode Date: April 11, 2025

The major averages posted their best weeks in over a year, despite some major down days, after Wednesday’s historic rally. Bob Elliott of Unlimited and Charlie Bobrinskoy of Ariel Investments discuss the day’s equity action and investor positioning. Our Leslie Picker reports on developments in the banking sector. Krishna Guha of Evercore ISI joins to break down the Fed outlook, recession odds, and how tariffs and recent data are factoring into macro policy expectations. Angelo Zino of CFRA shares his view on Apple—and why he just raised his odds that the company gets a tariffs exemption. Bill Perkins of Skylar Capital weighs in on the latest moves in the energy complex. Our Diana Olick explains how China’s involvement in U.S. mortgage-backed securities could ripple through housing markets. 

That's the end of regulation. YPF bringing the closing bell at the New York Stock Exchange. Stack doing the honors at the NASDAQ. Happy Friday. A higher close to finish out this wild week as equities contend with the latest trade headlines and big moves for bonds and the dollar. That is the scorecard on Wall Street. But the action's just getting started.

Welcome to Closing Bell Overtime. I'm Morgan Brennan. John Fort is off today. Well, coming up this hour, Evercore ISI Vice Chairman Krishna Guha on the odds of a recession and the dislocations we've seen in the dollar and the bond market, why it's so unusual.

Plus, the energy sector getting some relief today, but still trading near its lowest level since 2022 as oil fell. We're gonna talk to a noted energy trader, Bill Perkins about those moves. And one firm says the odds of an Apple tariff exemption are rising. The analyst behind that call will join us to make his case.

But let's get straight to the market action with the major averages all logging big gains for the day, for the week, largely thanks to Wednesday's historic rally after the tariff pause enacted by President Trump on that day. But joining me now is Unlimited Fund CEO and CIO Bob Elliott and Ariel Investments Vice Chairman Charlie Babrinskwe along with CNBC's Leslie Picker watching the moves that we saw

today for the banks. It's great to have you all here. Bob, I'm going to start with you because there's been a lot of focus on technicals here in this market. Is this an S&P that is trying to find a bottom here? And if it is, do you buy the dips? Yeah, I think the market right now is getting a little bit of relief on the hope that this set of tariff policies are going to eventually and quickly be reversed.

If you look at surveys of investors right now, the expectation, 80% of them expect this tariff policy is to be wiped clean within the next three months. And I'd say that is a pretty aggressive expectation. It's a reason why the market is where it is today. If you expect any chance that these tariff policies are going to persist or there will be increasing conflict with the Chinese as a function of the extraordinary tariffs there? The S&P 500 at these levels is not at all close to pricing in the type of recessionary dynamic that will occur if these tariffs persist anywhere close to where they are now. Okay.

Charlie, want to get your thoughts on what we've seen, especially given the fact that so much of the action, so much of the volatility has not just been in stocks, despite massive intraday moves that we've seen for the major averages every single trading day this week, but in the bond market and also in the FX market, can we say that bond vigilantes are back? Oh, absolutely.

We have grown up taking for granted that the risk-free rate is the U.S. borrowing rate by the U.S. government. And if that gets called into question, it changes everything. It changes the discount rate on bonds. It changes the discount rate on a regular mortgage. It changes the discount rate the U.S. borrows at. We borrow about 30 trillion dollars, that's trillion with a T, and it's all based on a certain understanding of who the US government is, the fact that we're the most pro-business country in the world, the fact that we have rule of law and sanctity of contracts. If you start to change all that and say that we're going to be unpredictable and all of a sudden the Japanese and the Chinese

don't want to buy our $30 trillion, then everything changes and it doesn't change for the good. So this is a very important time. Frankly, I didn't sleep well Saturday and Sunday night thinking about the bond market because if the bond market starts to have trouble and people stop buying our bonds, everything changes. Yeah. I'm seeing the catchphrase out there right now, the sell America trade. Yeah, we did have investor Bill Ackman on X this morning and he talked about what he thinks we're seeing in the market and basically saying that investors are paying too much

attention to short-term market movements and rates, currencies, and equities, and basically pointing to highly leveraged market participants, Bob, being forced out of positions, that's more of what we're seeing in terms of dislocations, what's triggering these dislocations rather than fundamentals. He says, quote unquote, as a result, markets have become increasingly unreliable

as short-term indicators of the impact of policy changes. Do you see it the same way? We've been talking about margin calls and everything else. Well, of course, anytime you have stress in the financial markets, there's going to be some levered folks who are going to be short squeezed and take some losses, and that's going to create some volatility in the markets. But the big picture story in terms of whether the markets are functioning in a way that's sort of normal, maybe not what we've been used to the last couple of years,

but normal in any longer term context, they're still functioning totally normally. And I think the real question that people are having right now is, how big a deal are we gonna see, is this policy mix, this tight policy mix going to persist? Is it gonna persist for a long time or a short time? If it's gonna persist for a short time, then essentially time? If it's going to persist for a short time, then

essentially growth is totally mispriced. It should be stronger. If it's going to persist for a long time, then it moves back the other direction and things like bonds actually look like a pretty good deal at these levels. Yeah, I do want to get your thoughts on gold too, but first, Charlie, we got a lot of Fed speak this week too, and what was really gaining traction this afternoon were the comments to the FT by Boston Fed's Susan Collins, where she basically said the bank is prepared to stabilize markets, but that so far, she doesn't see Treasury liquidity concerns

and essentially no reason for the Fed to step in here. What do you think would change that? How do you think that dynamic continues to play out here now. Yeah so the one piece of good news we really got this week is we got a couple of signs that inflation is coming down to the

2% target that's gotten overshadowed by all the other news that we have but we do have falling energy prices. We do have some other factors that are putting downward pressure on inflation if the Fed sees that and we also got the purchasing manager's inflation today, which

was a soft number. So we are getting good inflation news. If that happens, then the Fed is more comfortable in cutting rates because it doesn't want to see a real downturn in the economy. So that was a very...if you want to say why was the market up today, it was that Fed comment more, I would say, than anything else. So I just teased it. Well, your thoughts on gold.

We're trading at record highs now. There's been debates about and again going back to this idea of a shift away from certain American assets here. Does that continue to propel the bull case for gold? Well, I think if you look at what's cheap in the market right now, it's bonds relative to where we were. What looks a bit expensive is stocks. And gold is really the great diversifier in this sort of moment.

The dollar in particular remains pretty high. We've had nearly 15 years of a ton of capital flow into the U.S. taking advantage of investing in U.S. financial assets. And if that starts to reverse, which it looks like it may, that could go on for a long way. In the way that there could be a Fed or administration put on the bond market, there probably isn't the tools available

to do that with the dollar. And if the dollar's weakening, the flip side of that is gold. And given that gold remains broadly under owned, it looks increasingly attractive in this environment. All right, Bob Elliott and Charlie Barinskoy, thanks for kicking off the hour with me. With all the major averages higher on the day

and higher on the week, despite some major moves in both directions every single day this week. Well, let's bring in Leslie Picker with a closer look at the action we've seen in financials as big bank earnings kicked off today and executives brought up the tariff uncertainty on all of their conference calls today, Leslie.

Yeah, Morgan, it was pretty unavoidable today. As you can imagine, questions about the repercussions from tariffs and the recent market fallout dominated the conference calls today. Broadly, the executives said consumers and credit trends are holding up fine for now. Commercial clients, on the other hand hand have paused big transactions and investment and no one was willing to make any predictions about the yield curve and what it will mean

for making profitability. Chairman and CEO Jamie Dimon saying many of the issues will be resolved for better or for worse in the next four months. But Dimon reiterating his belief that geopolitical risk is paramount. Most important thing to me is the Western world stays together economically, you know, when we get through all this and militarily to keep the world safe and free for democracy. That is the most important thing. I really almost don't care fundamentally about what the economy does in the next two quarters. That isn't that important. We'll get through that.

We've had recessions before and all that. It's the ultimate outcome. What's the goal? How can we get there? And it's literally that. Next week, we'll get fresh commentary from Goldman Sachs on Monday and Bank of America and Citigroup on Tuesday. Morgan.

Those Jamie Dimon comments really caught my attention, Leslie, because this is very much the message from the Trump administration that they're rethinking the global world order, essentially from a trade perspective. You could also argue from a foreign policy perspective, some of the steps we've seen taken in that direction too. And the consequence of that is going to be a change potentially in asset holdings for different investors including foreign investors across the globe. It perhaps goes back to some of what we were just talking about in terms of the moves we've

seen in the dollar this week. I just wonder how Jamie Dimon at a bank as large as JPM positions the institution for that moment and when he decides that it's actually moving in that direction? Yeah, no, it's a great question, Morgan. In his investor letter that was published this Monday, he did say geopolitical risk was the number one issue facing the firm.

I think he was mostly referring to a cyber risk there. That was one of the areas within geopolitical risk that he mentioned, this idea that foreign actors could penetrate or seek to penetrate the institution and the repercussions that that might have. Obviously, with trade and tariffs and, you know, the sanctity of the U.S. dollar, U.S. exceptionalism and all that, for a big global bank like J.P. Morgan has tremendous repercussions if it does, you know, if the world order is kind of reconfigured.

Now, he says that there are merits in having some trade agreements that benefit the U.S. national security, but he's obviously made a lot of comments about, you know, what trade policy and uncertainty might mean for the prospects of a recession as well. So it's clear that there is an important balance to strike. You can tell that the executives of the banks are being extremely careful with their words, so not to catch the ire of the administration and kind of coach them on specific policy initiatives,

but overall it's creating this kind of cloud of uncertainty that could impact their future outlooks. All right, Leslie Picker, thank you. Now let's bring in senior markets commentator Mike Santoli for a look at the technical damage done in recent weeks. Mike. Yeah, Morgan, in case there was any doubt, I mean, at least on a technical basis, by some lights,

we are now in a formal downturn or downtrend in the market when it comes to the S&P 500. So this is just about today, the 50-day moving average for the index curling down to touch its 200-day average, sometimes called a dark cross. The 200-day average, you can't really tell, but it's just slightly bent lower as well.

So the question is what this means. I think some people use it tactically to mean that the market is kind of guilty until proven innocent. You'd be more quick to sell rallies than to buy dips. On the other hand, you know, there are instances where this cross, if it happens, does not mean a prolonged period of further deep weakness. Take a look here at some examples.

This is the S&P from late 2018 into 2019. And you also did have this cross, right? And it wasn't right at the low because in December of 2018, you got that further plunge, that climactic low, and then it built back up from there. So it is possible to happen. Here you see that the 200-day average is pretty flat so it wasn't going down. One other example, 2011, this is the U.S. sovereign debt downgrade, that sort of euro sovereign crisis going on all the same time. And there was sort of a kind of a financial crisis kind of flashback happening.

Here you see the crust. This was a much longer period of time when you did spend underneath it. But it wasn't too long after that that the market was at a low and had to work its way through a bottom. Final point, I've made this point out there every time it's been relevant, which is there's an unusual history of S&P 500 declines peak to trough of 19%, not 20. It happened in 2011, 2018. It happened in 1998. It happened in 1990, more often than you would expect if it was just a random number. So the closing low for the S&P this time is like 18.9. Obviously, you can't count on that holding,

but it is interesting that sometimes there's a bid at that down 20% level. That's a key stat. I haven't heard that one before. And I'm not surprised that you're the person who's trotting it out, Mike Santoli. I am curious though. I got it written in pencil, you know, so.

I am curious though, because so much, when you see moves like this, so much of it is not even necessarily the move itself, but the velocity of the move. And look no further than the bond market. We've seen, for example, in the 10-year treasury over the past, call it week, week and a half, to find evidence of that,

which also to me raises the question, how closely should you be looking at stabilization in the bond market to sort of get a sense of whether we really, truly have found stabilization in equities? Yeah, the reduction in bond market volatility is probably a prerequisite for the rest of the markets truly settling down. I think usually they sort of lead

when it comes to those things, or their trends are a little more resolute as opposed to being as fickle as inequity. So yeah, everything operates along a spectrum. So all these asset classes are kind of influencing one another. We're in a high volatility regime across the board. That means that risk takers are taking less risk. They're putting less liquidity out into the market.

That's why the moves get very jumpy. So obviously we want fundamental certainty, we want policy certainty, but the markets need to kind of settle themselves, at least in some version of what we know right now. Quickly, do you think there's any merit to this notion that 5,000 for the S&P is a so-called Trump put? I mean, I would argue that somewhere in that vicinity, perhaps, I mean, we got to 4,800 almost the other day before it was activated. But you could argue that maybe reaching those lows. But what's interesting is the 10 year treasury yield traded today above the level at which it was said on Wednesday that the bond market had some influence in that tariff pause. So I think these are probably moving goalposts.

All right Mike. Thank you. We'll see you later this hour. Mike Santoli up next. We'll discuss how the tariff turmoil factors into the macro outlook and the moves for the dollar and bonds. We're going to dig into that more deeply with ever core ISI Vice Chairman Krishna Guha and energy trader Bill Perkins will join us with his thoughts on the weakness in oil and energy stocks. What we've seen in that gas, whether we're near bottom overtime

is back in two. Welcome back. Stocks finishing out one of the wildest weeks in memory and not just for equities. The dollar index has been sinking, falling to its lowest level since 2022 as yields move higher. Now it's a trend in the market. Minneapolis Fed President,el Kashkari pointed out this morning on Squawk Box. Normally when you see big tariff increases I would have expected the dollar to go up. The fact that the dollar is going down at the same time I think lends some more credibility to the story of investor preferences shifting. Well joining us now is Krishna Guha from Evercore ISI. Krishna it's great to have

you on. I'm gonna start right there because you actually wrote pretty extensively about this this week. The fact that we've seen yields up, the dollar down, how unusual is it to see that divergence and what does it signal? So it's really important to understand this is a highly,

highly abnormal state of affairs for the U.S. When U.S. yields go up, that means there is a higher return on risk free government bonds at the dollar almost always goes up. With that that's not what is happening over the

course of this week. Right up until you're at eleven or twelve o'clock trading today when things are to stabilize a bit. Over the course of this year this week we saw yields up dollar down. In fact over the four plus days one and a half days through to around

lunchtime today. We had the biggest move of yields higher dollar lower. That we've seen in the last thirty years with the sole exception. All the week right after Lehman brothers so this is not business as usual. When you see yields up

dollar down, there's only really one takeaway, which is that you're seeing capital outflows out of the U.S. into other markets as global investors are rebalancing their portfolios away from the U. S. Is this a temporary phenomenon

or is this beginning of a new structural one given what we're seeing from a trade policy perspective. So I think the honest answer is we can't be sure about that at this point- but I think this is my best guess is that this is neither a

you know one week wonder on the one hand, nor the cataclysmic loss of confidence and trust in the dollar and the treasuries, but rather something in between. A fundamentally driven and likely somewhat structural shift in preferences away from the US reflecting two things the first in the here and now is the evaporating U. S. growth exceptionalism. The part that is likely a little bit more

structural is the reduced relative attractiveness all risk free dollar assets as reserve assets in a world where U. S. decision making has become erratic, where the US is undermining the international economic and security order that the US itself created, where there are concerns about fiscal deficits going forward, particularly if we were to have a recession, perhaps then see the Trump administration and its allies in Congress try to double down on tax cuts

to get us out of that huge deficits in that scenario. And all of this made much worse by this wildly irresponsible talk of Mar-a-Lago accords or user fees on foreign investors in the U.S. bond market, which in the eyes of the rest of the world just sounds like cramming down your creditors. I think the Trump administration will argue that the dollar's been overvalued for a long time and we touched on this earlier in the show with Charlie Babrinskoy and I know David

Zervos and Steve Leesman touched on it on CNBC earlier in the day today too. If you look at how the Fed facilities are structured, they're built for strong dollar outcomes, not for strong dollar outcomes not for weak dollar outcomes so how does that speak to. I guess the way the dollar has historically been perceived and what that now means not just for

fiscal policy but also for monetary policy. So to be clear I would be quite relaxed if the dollar was depreciating based on evolving economic conditions and policy decisions that were leading to bond yields coming down. It's the combination of yields going up and the dollar going down that is highly abnormal, as Neil Kashgari Gary pointed out and troubling. Now with respect to

you know how this affects the Fed. You know the Fed it faces an increase in yields- that is quite pronounced this week. And will tighten financial. Conditions potentially pushing an already weak economy weaker increasing again- the risk that

instead of getting weak growth very weak growth slight baseline we end up tipping into recession. We're not seeing anything that looks like panic liquidation by the treasuries- all you know all the currency at this point in time so there's no need to go

to those more extreme conditions- but the fed needs to on the one hand. Be ready to backstop market liquidity in the one hand. Be ready to backstop market liquidity in the Treasury market. If that were to become necessary she's not the case today. And at the same time

continue to try to balance this incredibly difficult juggling act. Between growth risk on the one hand the likelihood that unemployment is going to rise a fair bit this year and it was skating at least very close to and maybe over the end of recession against this big wave of inflation that's coming as a direct result of the tariffs.

We're going to be busy. I look forward to having you back on to talk about it a little bit as it unfolds in real time. Krishna Guha, thank you. Thank you. After the break, could Apple score an exemption from tariffs and dodge a major bullet in the China trade war? Well, one analyst says the odds are rising of exactly that.

He's going to join us next to make the case. And later, an under-the-radar way that China could retaliate against the U.S. and it's something that should be on the minds of anyone looking to buy a home. Over time, we'll be right back. MUSIC Welcome back. Apple, one of the top performers in the Dow today and posting its best week since February.

But the stock's still shedding over $300 billion in market cap since President Trump's tariffs announcement. Our next guest just raised his odds for an Apple-specific exemption to the China tariffs. Joining us now is Angelo Zeno, Senior Equity Analyst at CFRA Research. Angelo, it's great to have you on. Why are you raising your odds that we could see a carve out for Apple? Yeah, so thanks for having me, Morgan. Obviously, the reason at hand is clearly the China tariffs are unsustainably high for any company to do business there.

But really, the biggest reason for us, and something that probably doesn't get enough attention out there, is the fact that after Wednesday, the competitive landscape really changed for Apple in a big way, kind of in the US. And the big reason for that is when you think about the reciprocal tariffs that were reduced down to 10% outside of everywhere, outside of China, and then increasing that of China now up to 145%. What essentially that does is it empowers Apple's biggest competitor in Samsung, right? If you think about where Samsung does most of their manufacturing, it's in regions like

Vietnam, India, South Korea, where you're talking about a 10% tariff now at hand versus that of Apple at 145%. So we all want to see a China-U.S. deal done at some point, hopefully this weekend. But the administration is really going to have a credibility issue, we think, if they don't grant Apple an exemption at some point here sooner than later. And especially, one, a company that is considered essentially our crown jewel and putting $500 billion in the US economy here over the next four years to help kind of prop the whole made in the USA theme.

But Apple has also expanding its manufacturing footprint in Vietnam and just earlier this week, there were reports that it was, you know, via air freight, shipping millions of iPhones ahead of these tariffs going into place to the US. So couldn't it just shift more of its supply chain there if you do start to see these negotiations towards a bilateral trade agreement with Vietnam? Yeah, I mean, you can.

And well, when you think about specifically on the phone side of things, I mean, their manufacturing on the iPhone side of things is in China and is in India. But yeah, I mean, to your point, they will shift essentially any type of demand needed within the US in terms of iPhone sales to India. But yeah, I mean, to your point, they will shift essentially any type of demand needed within the US in terms of iPhone sales to India, but that's not going to be enough, right? Especially I'd say over the next couple of months, maybe they're okay because they had built some inventory,

as well as the fact that you are talking about kind of from a seasonal perspective, the trough of the cycle here, the slower months going into the ending of the iPhone 16 cycle. But as we start approaching the holiday selling season, the iPhone 17 cycle, if something isn't done at that point in time, where you're going to need that capacity in China to meet the demand in the US, all of a sudden you are talking about being

at a competitive disadvantage relative to Samsung specifically out there. Do you buy Apple here? And if so, do you buy it regardless of what ends up happening with China? I wouldn't say regardless, but I mean, yeah, at this point in time where we're at, we do have a buy recommendation on the shares.

12 month target price is $235. From a valuation perspective, the fact that Apple probably probably better than anybody, can get through this situation, I think, warrants a buy recommendation, not to mention, we do think at some point in time here over the next nine to 12 months, this is going to settle itself out. Apple, of course, does have pricing power out there, where if need be, they will increase pricing successfully and be able to look at other options like extending loan payments and what have you in the US.

So at the end of the day, yeah, I mean, this is if you're a long-term investor out there, you take advantage of this pullback we think. OK. Angela Zeno, thanks for joining me. Thanks, man. Time now for a CNBC News Update with Pippa Stevens. Hi, Pippa. Morgan, an immigration judge in Louisiana has ruled that Columbia University activist

Moumed Khalil can be deported under an obscure provision in immigration law that gives the secretary of state the power to deport an individual who could be a national security risk. Khalil has until April 23rd to appeal the ruling, which he is expected to do. After the ruling, he addressed the court, saying that due process and fairness was not present at court today. At a news briefing just moments ago, federal investigators say they do not have

a preliminary cause yet for the Hudson River helicopter crash that killed the pilot and a family of five visiting from Spain yesterday. The NTSB said investigators are now examining the wreckage. And the TSA announcing today that it will start real ID enforcement at airports nationwide beginning May 7th. The agency said it will stop accepting non-real ID documents as proof of identity unless it's with other acceptable IDs such as a passport.

Morgan, back to you. All right. Pippa Stevens, thank you. Up next, losing confidence. We're going to break down the massive drop in consumer sentiment and why inflation expectations may have come untethered from reality. Also, the Nasdaq just closed out its best week since 2022.

Here's a look at the biggest winners in the Nasdaq 100. Broadcom, Constellation Energy, Palantir, Arm Holdings, and CrowdStrike. Welcome back. This morning's Consumer Sentiment Survey showed a jump in inflation expectations a year from now, but could consumers be too pessimistic? Well, let's ask Mike Santoli, he's back.

Well, Morgan, it certainly is extreme. So yes, within that consumer sentiment survey, the one year projected CPI was like 6.7%, well above where we hit, even in 2022, when actual inflation was running at 9%. I view this as kind of a consumer primal scream of anxiety about what the tariffs might bring. We know there's also a political skew

to the UMich data in either direction. So I would say against that, let's look at what the market is positioned for. Within the swaps market and the fixed income arena, you actually can get a implied inflation rate looking ahead, priced into securities. And what you see on the top here, this is one year from now, one year ahead,

it's down right in the 3% area now, and see that big drop recently after those tariff announcements came and then this is the one year forward expected 12 month forward. So in one year's time, what do we think people are going to expect for inflation? That's even lower, that's basically at the Fed's target. The point here is that the bond market sees an upward adjustment in price levels, but that's going to be swamped perhaps by slowdown effects and disinflation. You know Tom Lee has pointed that out to the fact that there are

political biases that infiltrate some of the soft data specifically when you're talking about University of Michigan consumer sentiment data. So I'm glad you did point that out too because it is an asterisk. That being said it seems to me all of this hinges on a much bigger, deeper debate, and that is if you see these tariffs lasting, however they ultimately shake out and what that ends up being, is higher prices versus dampened demand or a drop in consumption because at some point, the consumers or the marketplace more broadly rejects those higher prices and they have to fall again. Right, it's gonna be some combination of all those things and it seems right now, who knows, if anything like the current level stays in effect, the growth impact is considered to be more severe

than any self-sustaining inflation looking ahead so far. All right, Mike, thank you. Mike Santoli. Well, oil bouncing back a bit today. Up next, the top energy trader on whether there could be more upside for crude after WTI dipped below 60 bucks a barrel this week. And later, find out if China could turn the U.S. housing market into a house of horrors as part of its retaliation

against President Trump's tariffs. Stay with us. Welcome back. The energy sector bouncing back today. The third best performer led higher by Diamondback Energy and EOG, but the entire energy complex has been under pressure since President Trump's tariffs announcement. Oil on pace for its worst month since 2022, natural gas faring even worse over that time. Joining us now is Bill Perkins. He is founder and managing partner at Energy Hedge Fund Skyler Capital. And Bill, it's great

to have you back on. There might be bad news for investors who are long, but also potentially good news for consumers. What does the moves that we're seeing in energy right now signal about the state of the economy and everything we've been discussing regarding trade policy? Well, I think trade policy is pretty much driving the sentiment in both natural gas, energy, stocks, bonds, whatever there is. And it's quite difficult to understand what the, bonds, whatever there is. And it's quite difficult to understand

what the long-term end game is. Are these temporary tariffs? Will we have a war going on for a year, two years? Or will the administration cut a great deal and exports from the United States will go up and the world will be more balanced? Your guess is as good as mine on what that outcome is going to be,

but the market has decided that we're going to bring prices down and pause. Chaos doesn't lead to confidence. And so the market is concerned about decreasing GDP, global GDP, which is decreasing crude oil demand, decreasing power demand. And so those fuels that fuel the economy are much lower. There have been some speculation in part because as soon as we saw those tariff announcements from the Rose Garden with President Trump last week,

nat gas initially popped, or at least I'll say performed better than other commodities. And there had been some sense that maybe perhaps it could be one of those first bargaining chips in line if you do start to see some negotiations because LNG is something we can export and help reduce trade deficits with trading partners on.

Your thoughts. I think that could be a possibility. The natural gas fundamentals at that time, cash was very strong. Natural gas, we can have LNG type diplomacy. But overall, I think the macro picture of fear of global economic slowdown kind of just overtook the crude oil market, the natural gas market, and kind of this risk off environment. And so the prices when crude and Nat gas went to a price where they would induce some more demand, perhaps be a little bit safer from further down

swings just in case we have a protracted tariff war and lead us into a recession or depression for that matter. The pressure we see on prices right now, what does it do to production? At what point do you start to see that come in? It was interesting that WTI got right at the point where Permian would not grow and perhaps decline. And so that's a, you know, right around $60, you're kind of at a point where producers are gonna go,

well, okay, we're not gonna drill into this environment. And the crude curve is backwardated. So we saw further out the curve $58, $59 out there. And so that would definitely be no growth out of the Permian. And that would be less associated gas associated with that. And so that was a very, very bullish offset to the uncertainty going on in the world. And generally, when there are uncertain times are not necessarily good for business.

And so that wasn't necessarily an irrational move. How does this set us up? We're going into earnings season. And I know maybe you don't follow the equities specifically but what do you expect we're gonna be hearing in terms of commentary from some of the oil and gas executives as we do get results. I think the word you're going to hear a lot is caution.

Given that they probably don't have the predictive ability of what's going to happen with the global macro situation in terms of tariffs and what deals may or may not be cut, they're going to proceed cautiously and they're going to let market signals dictate whether they're going to ramp up their rig and drilling program or not. And at current prices, I would expect them to cut back on some of those programs and exercise extreme caution on a go-forward basis. Okay.

Bill Perkins, great to have you on and get your insights. Thank you. Thank you. Thanks for having me. Up next, find out why the U. the US housing market could become a huge casualty from the ongoing trade war with China. Plus, should you bank on the banks with another batch of earnings from that group

set to be released next week? We're gonna have all that in just a little bit right here on Overtime. Welcome back to Overtime. The interest rate on the average 30 year fixed mortgage spiking is 7% this week and the cost to borrow for a new home could head even higher if China steps up its retaliation against President Trump's tariffs. Well Diana Olek explains.

Hi Di. Hey Morgan. Yeah it has been a wild ride for rates this week. No question. After surging 40 basis points higher earlier this week, then pulling back a bit, the average rate on the 30-year fixed mortgage jumped again today to 7.1%, even higher than we were Wednesday. Now, there is another even bigger concern for rates and the housing market. That is, what if China, which is one of the largest holders of agency

mortgage-backed securities, or MBS, decides to sell those, either in retaliation or simply because of reduced trade flow? And what if other countries were to follow? Well, at the end of January, foreign countries owned $1.32 trillion of U.S. MBS outstanding, or 15 percent of the total. The top owners, Japan, China, Taiwan, and Canada. Now, China had already been selling off USMBS last year, with MBS holdings down 20 percent in December year over year. But they could accelerate that, which would cause mortgage rates to rise even more. One analyst I spoke with told me he had already been getting questions about this last week from concerned hedge funds and mortgage finance clients asking what would happen if China started to sell more. Under the circumstances, we feel like that could spook the market and the

lack of visibility for how much they could sell and their appetite for selling, I think that the lack of visibility for how much they could sell and their appetite for selling, I think that would scare investors. And again, that would push mortgage rates even higher. Now to add to the pain, the Federal Reserve, which is a major owner of MBS, is currently letting that MBS roll off its own portfolio. Whereas in other times of economic turmoil,

like during the pandemic, they were buying MBS to keep rates low. Morgan. The whole situation is really fascinating to me, and it's not that different from what we've been talking about in the Treasury market and kind of vulnerabilities to this geopolitical risk amid this trade war angst in Treasuries. For the last couple of years, we've already seen this historic divide between MBS and where mortgage rates have been trading versus the 10-year treasury yield.

So it sounds like this just widens from there. Is that how to think about it if this dynamic continues? I don't think you even need to focus on those spreads because frankly, mortgage rates do loosely follow the yield on the 10-year treasury. So whether they're selling MBS or whether they're just selling treasuries or 10-year treasuries, you would see mortgage rates rise on both of those. So I think it's really a factor of what they decide to sell or not, but it could just be based on cash flow. If they're not selling goods to the U.S., they're not getting money coming in from the U.S. that they might use to buy

treasuries or mortgage-backed bonds. All right. Diana Olic, great reporting. Something we have not paid enough attention to, and now I'm sure we will more of. Thank you. Another wave of bank earnings is on tap for next week. Up next, the top analyst on what he's expecting from those results. And don't forget, you can catch us on the go by following the Closing Bell Overtime podcast on your favorite podcast app.

We'll be right back. Welcome back. JP Morgan leading the banks today after kicking off earnings season this morning, beating estimates along with Morgan Stanley, while Wells Fargo turned in a mixed quarter. And early next week, we will get results from Goldman Sachs, Bank of America, and Citi. Joining me now is Gerard Cassidy, Managing Director at RBC Capital Markets.

Gerard, it's great to have you on. Mixed report, I would say, if you start to fold in the commentary we got on these conference calls too, from the big banks we heard from today, your takeaways. I think mixed is a good word because we certainly saw some very powerful numbers in the trading area.

Morgan Stanley and JP Morgan's equity trading numbers were up over 40% year over year. Investment banking numbers, believe it or not, on a year over year basis were good. They had a nice increase driven by DCM debt capital markets. ECM was weaker. On the traditional commercial banking businesses, net interest income was mixed as you point out. What was interesting also this quarter was that we started to see the banks build up reserves, loan loss reserves, not because of any credit deterioration, but for the

accounting methodology called CECIL, current expected credit loss accounting, which has to factor in the outlook for the economy. And as you can imagine, Morgan, the outlook today is a lot weaker than it was back in January. Are the big banks a good harbinger of what we can expect through the rest of earnings season from the financials? And I ask that knowing that we do have other large entities reporting next week, but we also get regionals, and you could make the argument that they're maybe more sensitive

to the U.S. economy specifically. No, that's a good point. And I would say that when you look at what's on tap for next week, we're definitely going to have the regional banks reporting in mass, as well as a couple of the big banks, as you already mentioned. And what's going to be interesting is what their take is on commercial lending, because that's where the real uncertainty is today. The consumers, you know, the credit card growth continues to be decent. Auto loan growth was

good as well. But that's not the real place where the regionals see their loans. Their loans are primarily dominated in the commercial space. So that will be a better reflection of the uncertainty out there. But that all being said, the steeper yield curve is positive for net interest income, and that's very positive for the regional banks. So what would you be buying right now if anything? Yeah, I think you know after today's results we still believe Wells Fargo is a place investors can go and the reason being as you might remember they have the asset cap with the cease and

desist order. We expect that to be lifted this year and it was very apparent today that with the cease and desist order. We expect that to be lifted this year. And it was very apparent today that with the growth that the other banks were able to show, it held back Wells's numbers. So once that asset cap is lifted, that should be very positive for them. We'd also look to own Bank of America, who's going to see some, I think, some of the numbers that JP Morgan saw today in capital markets, as well as in the commercial banking businesses. Should we be talking more about the promise of deregulation

despite the uncertainty in this environment, Gerard? I mean, I've had a number of conversations with folks in this industry, both on camera and off, who really believe some of the regulations that are in place, for example, maybe dynamics around SIFI could go away? Morgan, very good point.

That's one of the real bull arguments for the bank stocks is that this group of regulators or the nominees as they are appointed into their positions along with Treasury Secretary Besslett, I have made it very clear that the regulatory environment is very constrictive to the banks. Treasury Secretary Bissett wants to loosen up the corset, if you will, not remove it, but loosen it up. And that's going to be positive, I think, for the banking sector when it comes to the capital rules. We expect a big announcement later this year

on what they refer to as the Basel III end game. And we think that's gonna be a much easier hurdle for all the banks to overcome. And that should free up capital for buybacks and possibly acquisitions. Okay, Gerard Cassidy, thank you, appreciate it. You're welcome. And we do get more earnings next week.

We also get Fed Chair Powell speaking. Major rally here for the averages. That does it for us here for overtime. Fast money begins now.