Closing Bell - Stocks Rally, Tesla Earnings & Fed Fight Take Center Stage 4/22/25

Episode Date: April 22, 2025

Carson Group’s Ryan Detrick and Payne Capital’s Courtney Garcia break down today’s huge rally, with the major averages regaining all of Monday’s big losses. A packed slate of earnings led by Tesla. Wedbush’s Dan Ives and former Tesla President Jon McNeill give instant reaction to the EV-maker’s numbers. On the macro front, Jefferies' David Zervos discusses Fed policy and the latest Trump vs. Powell tensions. Other earnings include Enphase, Baker Hughes, Capital One, Intuitive Surgical and SAP. Plus, Morgan gives key takeaways from defense sector earnings. 

Well that's the end of regulation. NASA ringing the closing bell at the New York Stock Exchange. Avantis investors doing the honors at the Nasdaq. A solid rebound for stocks. The major averages all finishing up more than two and a half percent after hopeful headlines about easing trade tensions with China. Every sector closing firmly in the green. That is the scorecard on Wall Street but the action is just getting started. Welcome to Closing Bell Overtime. I'm Morgan Brennan, along with John Ford. Well, can Tesla keep this comeback momentum rolling? One of the most hotly anticipated reports of earnings season is about to drop

after a brutal start to the year for Tesla shareholders. And as questions swirl about Elon Musk, the polarizing figure at the head of the company. We're gonna have key numbers and reaction from analyst Dan Ives and former Tesla president, John McNeil. And also this hour, David Zervos from Jeffreys will be with us to talk about President Trump's criticism

of Fed Chair Powell and how the market would react if Powell were to be booted from his role. But first, breaking news on Sam Altman and nuclear energy company, Oklo. Pippa Stevens has the details. Pippa. Hey Morgan, well Sam Altman is stepping down as chairman of the board of nuclear company Oklo, giving Oklo more flexibility to pursue partnerships with OpenAI or other hyperscalers, which might not have been possible with Altman at the helm of both OpenAI and Oklo. Now Altman has been involved with the nuclear company, which makes small modular reactors.

For some time, Oklo went public in May of 2024 via a merger with a SPAC backed by Altman. Now last year, Oklo signed an agreement to provide power for data center developers Switch, but so far it has not inked a deal with a hyperscaler, and so this might change that. The stock down here is some 5%. Morgan? OK. Pippa Stevens, thank you. It looks like we're down about 6.5% now and falling. Now let's get

to today's market action and there was a lot of action as we await Tesla results. Let's bring in Carson Group Chief Market Strategist Ryan Dietrich and Payne Capital Management Senior Wealth Advisor Courtney Garcia along with CNBC's own Senior Markets commentator, Mike Santoli. Great to have you all here on a day where there's a lot of green on the screen. Ryan, I'm gonna kick this off with you. It looks like more than 1000 point gain here in the Dow.

Everything's up more than 2.6%, the NASDAQ, the Dow, the S&P. Are we testing and bouncing along bottoms here for stocks or is this really just a knee-jerk reaction after all the selling we've been seeing? Well first off thanks for having me back and thanks for having me today versus yesterday. It's a little more exciting to talk about today. You know we think we are trying to carve out that low you know I mean everyone I'm trying to think of some different things I could talk about you've got some great guests on today. One thing that's really caught our attention you look at like an advanced decline line,

a cumulative basis, how many stocks going up versus down. Keep this real simple. The advanced decline on the S&P 500 is virtually flat the last couple months, right? We know price broke down below the December lows and the January lows. So it's telling us under the surface, things are actually holding up good. And I get it. Well, of course, the market's not holding up Good, we're still down 10% on the year, but these are some positive things

You know nine of 11 sectors are outperforming the S&P 500 on the year. We get it right Tesla You know the technology some of those big names are really really lagging pulling the market down But honestly when you look at it, you know, the globe X US is up 6% on the year I mean if you have a diversified portfolio, last comment on this, we've said, this year is a big one about when in doubt, diversify it out. The models we run for our cars and partners,

we've really done, we were very heavy U.S. last couple of years. We've been definitely more diversified. We still have equities, yes, but around the Globe, things are doing okay. We're optimistic the U.S. is gonna play catch up with the rest of the Globe here before this year is all said and done, but we're been trying to carve out a load here.

Courtney, we know trade headlines are moving the markets in either direction today. It was reported headlines that CNBC helped report from Treasury Secretary Besant regarding China and trade dynamics there, but earnings season is also very much underway. And some of the biggest movers we've had, including today, I think about 3M, for example, multinational manufacturer that I think a lot of folks were nervous about going into the print because of trade dynamics,

putting up stronger than expected results. How much now hinges on earnings? Yeah, and I think tariffs have been moving markets more so than earnings, because all of these companies are really just in a standstill. They don't really know how to react to these tariffs yet because they've been put on hold for 90 days, but they don't know are they going to be the 10%, are they going to be

higher, are they going to come back on, for which industries is that going to come on for? There's still so much unknown. Naturally, when you're looking at guidance moving forward, there's a lot that's unexpected. It's really tariffs and if we do start to see some de-escalation with the US and China, and that's what you're seeing headlines on today, that is a much more positive for the markets

and any companies who are at risk of these tariffs more so than others. If we can start to put that capital to work, if we have some sort of certainty that we can start making some business decisions, that would be a much better thing for the markets moving forward. Mike Santoli, what does Tesla mean to the market,

both as an individual stock and sort of as an indicator of other things? I mean, as a stock itself, part of the Mag-7, it's about half where it was at its highs back in December. But then as you look at its correlation with some other things with risks assets How is it behaving and what might these results indicate about overall investor sentiment? Yeah, John and mostly what it does is it moves based on investors collective willingness to believe and willing to pay up

For a promised future. I really do believe that I mean, it's always been the case It had this massive increase in value, really five years ago. The stock is flat on a four year basis, but it's had these huge swings along the way, mostly based on whether risk appetites are compatible with wanting to capitalize it even more for whatever else it's going to be

aside from the here and now car company. So I do think it's interesting that we have this test, almost everybody, we have the deliveries, almost everybody expects a pretty poor quarter in an absolute basis, but then we'll see if the market is willing to say either that's the worst of it or it doesn't matter because we're willing to start to again, you know, sort of write checks for, you know,

the kind of happy future that is maybe envisioned and laid out. So that's mostly what it's always been. Earnings estimates have crashed for this year and next year over the last 12 months. That's been sort of the pattern here. So the stock hasn't gotten all that much cheaper, but I do think it is very valuable as a tell on investor priorities in the moment. Well, start your electric engines.

I'm told the results are out. We are going through them. Ryan, as we look at this, you say inventories and margins are perhaps more important than other metrics here. Why? Yeah, you know, Mike just summed up a lot of things. Stocks down 40%.

A lot of things we know are the issues. But when you look at margins, I mean, you know, what type of, well, tell us what type of cars are selling. Are they selling the autonomous cars, the more expensive cars? That'll be good. Also inventories. I mean, they've said they've kind of cut back because they've had some issues with creating the cars, but if inventories drop a little bit, maybe that's a subtle clue that the cars they had, they're actually selling. Cause we know they're probably going to take on

how many do they sell, but those are two things that we're watching that maybe aren't as well known. I guess we'll have to dive in and see, but expectations my oh my, about as low as you can get for a stock, so maybe we can get a little pop here. Okay, Courtney, I'm going to put a similar question to you here with full disclosure that we're probably going to interrupt you in any moment. That's fair. But I think really when you look at Tesla, their core business is autos, and that's really why there's been so much... Okay, I said I'd do it, I am.

Go for it. We're going to get to those Tesla results stay right there Courtney Phil LeBeau has the numbers hi Phil Morgan this is a miss on the top and the bottom line for Tesla and a miss by quite a wide bit when it comes to the bottom line company earning 27 cents a share well below the street expectation of earning 39 cents a share revenue light of expectations the street was expecting 21.11 billion. Tesla bringing in 19.34 billion in the first quarter. The release just came out,

we're gonna go through it right now, take a look at what we can find in terms of free cash flow, auto gross margins, the numbers within the numbers that are so important, as well as any guidance that the company gives with regard to things like future models, et cetera. But again, Tesla missing on the top and the bottom line. Not a huge surprise given how weak the first quarter was, but again, 27 cents a share versus

the street at 39 cents a share. Morgan and John, I'll send it back to you. Okay, Phil, we'll be coming back to you when you have more details to bring us. In the meantime, Courtney, I'm going to go back to you. We got a miss on the top and bottom line. Stock's fractionally lower here in overtime. We know there's been a lot of brand destruction. We know that sales have fallen.

Is the best in the rear view mirror now for Tesla? Or is there a possibility for improvement from here? Yeah, and I think this is where we really have to see what they say after earnings, because when it comes to Tesla, they're trading almost a hundred times forward earnings and compare that to any other car company. It is an extreme valuation. The reason it trades so much higher is because people are optimistic about their autonomous

vehicles and potentially any lower price vehicles that might come out later this year, but on any of their technology. After Trump was elected, there was a lot of optimism that that was more likely to go through under this administration. That's kind of gone out the window, but if you do get some sort of optimism that there's a light at the end of the tunnel that we could be seeing some of that later this year, that could potentially be a pop, especially after you've seen some over 50% from its highs. The bar has really been lowered here.

I think we really have to see what the next year is gonna look like for them. Huh, Ryan, really curious again to of course see the difference between of course production delivery. We got that actually a couple weeks ago, but really what the inventory numbers are. So let's go back to Phil LeBeau who's got some more on Tesla's quarter, Phil.

Hey guys, one update on the release from Tesla as we read through it. The company says it is revisiting its full year guidance and will do that here in the second quarter. Why? Not a big surprise here. Like so many other companies, the shifting trade tensions or shifting trade patterns around the world is forcing them to reassess exactly what's going to be happening in terms of their full year guidance. So again, Tesla says it will revisit its full year guidance here in the second quarter. A couple other notes coming up regarding the CyberCab. They're going to continue to pursue a revolutionary unboxed manufacturing strategy

and it's scheduled for volume production starting in 2026. We'll continue going through the release and have more in just a bit, back to you. Okay, Phil LeBeau, thank you. Ryan, I'm looking at the deck right now and global vehicle inventory days of supply looks to be at 22 days for Q1 versus 12 in Q4, 1918, 28 back in Q1 of 2024.

Is that about what you were expecting or no? No, it's pretty close to it. I mean, we expected to see some disappointing numbers, right? I mean, again, that's kind of what we're clearly seeing. I mean, like we said, the stock's cut in half. I mean, it's interesting. Look at my screen there. It's not really moving that much here. I know we're all waiting about guidance. So I don't think this was totally abnormal.

I know my friend Dan Ives is on later. I'm wearing a pink jacket honor of Dan here. But anxious to see what he has to say. But I don't think this is overly the top negative, over the top worst case scenario. Yeah, it wasn't good. But I mean, so much as negativity is priced in, it'll be interesting to see, you know,

kind of how we react tomorrow when you have a full day of trading. But I don't think this is too abnormal here. Mike, I'm gonna pick up on what Ryan just said. I mean, Tesla's down fractionally, about half a percent right now. We know it had a big pop today in the regular trading session.

We know that the stock has dropped like a rock over the last couple of months. Just the fact that we are seeing such a small move right now in Tesla says what? I wouldn't necessarily infer anything specific from it, to be honest, except for the fact that of course people were braced for a pretty poor print. I don't see a lot in the actual line items that would say, oh, this is a glimmer of hope relative to expectations.

It's much more about whatever pain's already been taken and maybe a little bit of reserve for what gets said on the call. You never know when one of those kind of promises about what's to come and the emphasis on the non-auto business might just catch a spark in terms of whether investors want to try that trade again. So that's what it would tell me basically.

I noticed CapEx down. So in other words, they've had this kind of modest positive free cash flow relative to past quarters. And obviously maybe declining CapEx is a part of that. So I don't know. I'm trying to find if there's something in here that actually gives something tangible as to why you'd have a bid in the stock, except of course, that it's lost hundreds of billions

of value in a few months. Ryan, I'm trying to look for your margin issue as well. It looks like total gap gross margin is down 104 basis points year over year to 16.3% and adjusted EBITDA margin is down 133 basis points to 14.6%. Is that within the range of what you expected as well? Well, it's probably a little bit worse to be honest. It's probably a little bit worse than what we were expecting, which again, I know the stock is green as of a second ago after hours.

So it seemed like they're really pushing some a little bit worse than was expected. But, you know, like we've been saying here, the so far it's hanging in there, but Mike's got some good points, I mean this is very short term, obviously we'll have to see the reaction, but I think that's a tad worse than what we were expecting here.

All right, Brian Dietrich, Courtney Garcia, thank you both, and Ryan, I'd note you are twinning with Dan Ives, so we've got more coming up on that in just a little bit. In the meantime, Enphase energy earnings are out in Pippa Stevens has the numbers. Hi, Pippa. Hey, Morgan.

The stock is sinking here after a top and bottom line miss during Q1. Enphase reporting EPS of 68 cents. That was two cents short of estimates. Revenue of 356 million, also short of the 360.9 million Wall Street was looking for. Gross margin also disappointing, 47.2% there. And guidance coming up short. They see Q2 revs at 340 to 380 million while Wall Street was looking for 376 million.

Now with the call kicking off momentarily, tariffs of course will be top of mind. The stock now down 10 1 1?%, John. All right, Pippa, thanks. European software giant SAP has earnings out, stocks popping, Steve Kovac, how do the numbers look? Yeah, they look pretty good here, John. The earnings out, stocks popping, Steve Kovach, how do the numbers look? Yeah, they look pretty good here, John, at earnings beat, euros coming,

this is all in euros, by the way, 144 adjusted, Street was looking for 1 euro 32 cents adjusted instead, and revenue is right in line at 9.01 billion euro, that is basically right in line, they were looking for 9.07 billion euro, and then cloud revenue, a slight miss here at 4.99 billion euro. Street wanted to see 5.04 billion.

Still, we see shares going up pretty healthily here, up about 5% there, John. All right, Steve, thanks. Intuitive surgical earnings out as well. Julia Borsten has those, Julia. John, intuitive surgical beating on the top and bottom line, but shares are down 7% on warnings about the impact of tariffs.

Just want to point out here the top and bottom line numbers, adjusted earnings of $1.81 per share, that is 9 cents better than expected, revenues of 2.25 billion, beating estimates of 2.1 billion. And procedure volume increased 17% versus the 14.3%, which was the expected number from the street account. Now, the company did project that its 2025 non-GAAP gross profit margin will be in a range of 65 to 66.5%. That's below the 69.1% that was the number in 2024, saying that this new estimate includes an estimated impact

from tariffs of 1.7% of revenue, plus or minus 30 basis points, saying, quote, additional tariffs, should they be implemented, would the adverse impact on the company's financial results in 2025 could be material. You see shares down about 7%. Back over to you, Morgan. OK. Julia Borson, thank you. We've got Capital One earnings out as well.

Hugh Son has the numbers. Hugh. Hey, Julia Borson, thank you. We've got capital one earnings out as well. Hugh Son has the numbers. Hugh. Hey Morgan, so it looks like a beat for capital one on EPS, but not revenue on better than expected loan loss provisions. EPS of $4.06 a share compares favorably with the $3.71 adjusted estimate. Revenue of 10 billion is a hair under the 10.06 billion dollar estimate. So that loan loss provision we talked about, for the quarter that was 2.4 billion, or roughly 370 million better than the analyst's estimate. Now as a reminder guys, last week Capital One announced it got regulatory approval for the acquisition of Discover Financial.

That deal will close next month. Back to you guys. Okay, Hussan, thank you. Shares up 1.5% for Capital One. Let's get back to Phil LeBeau now for more on Tesla's results. Phil. And Morgan, I heard Mike saying earlier up 1.5% for Capital One. Let's get back to Phil LeBeau now for more on Tesla's results. Phil? And Morgan, I heard Mike saying earlier who's looking for reasons within this report

why there might be a bit of a bid on Tesla shares. Well, this is one piece of news that people are going to be grabbing on to. The company says its plans for new vehicles, including more affordable models, remain on track for the start of production in the first half of 2025. Keep in mind, we haven't actually seen what those new, more affordable models will look like or what the pricing might be, but the fact that they say that they remain on track for the start of production within the next couple of months, that certainly is significant. All right.

Something to listen for, certainly on the call. Phil LeBeau, thank you. Well, after the break, Wedbush analyst Dan Ives, who called this quarter code red for Elon Musk, is gonna join us with his first reaction to Tesla's results. And former Tesla president John McNeil

will join us with his take on Tesla, how Musk is navigating his political role and CEO position, and what comes next for the company. Overtime is back in two. Welcome back to Overtime. Tesla's Q1 number's out just moments ago. The stock is about flat. Let's bring in Dan Eyes,

Global Head of Technology Research at Wedbush Securities. He has an outperform rating on the stock, but also a code red. Dan, margins not great in this report. Inventories, not great. Does it come down to the question of by summer, do they have production of these cheap vehicles and is Elon Musk to full attention?

Yeah, I mean, look, let's call it, I mean, this quarter was a disaster. And we, I mean, the delivery quarter, you know, that significantly missed the street and you look at margins and others, I mean, it's really about going forward in terms of 2Q, 3Q, I mean, the delivery quarter, you know, that significantly missed the street and you look at margins and others, I mean, it's really about going forward in terms of 2Q, 3Q, 4Q, but look, $100 overhang per share, if Musk stays in government,

doge even as an advisory, or leaves. So to me, the most important thing on this call, it's not numbers, it's Musk on the call, committing, recommitting to Tesla as a CEO, and ultimately saying that he is going to leave the Trump administration at, you know, we believe by the end of May. Is your outperform at stake on that issue? Yeah, look, I think if he stays,

and he doubles down and recommits, then I think it, you know, this starts to become an avalanche that you can't control because the brand damage, we've talked about, we think it's about 15, 20% brand damage. And the point is, if we weren't bullish, then we wouldn't care. My whole thing is you're talking about along with the video, one of the best disruptive technology companies in the world.

Talk about autonomous, robotics, but the big question here is, in terms of that lower-cost vehicle that you talked about, does that come? They did commit to it in the call, and we'll see in terms of the press release, do tariffs impact it? How do tariffs impact ultimately

when you look at CyberCab, RoboTaxi, and others? These are the keys as someone that's part of the administration. Couple of things there. The first I'm going to start with is if you've had brand damage to Tesla and that's tied to Elon Musk and how far he's waited into politics.

Does him coming back full time to Tesla actually help the brand? Well, I believe there'll be brand damage permanently and there's no doubt. But you could contain it. He could recommit. You talk about everything that's going on here in terms of the

opportunities around autonomous, lower cost vehicles, cyber cab, everything else. Musk needs to drive that. And I think the reality is that that brand damage will continue to be there, but that'll be contained. If he continues to go down this path over the coming months, years, that's where it starts to go down the very dark path.

And that's why we've talked about it loudly. As someone that's a it starts to go down the very dark path. And that's why we talked about it, you know, loudly as someone that's a huge supporter of Tesla, you have so much good ahead. But now leaders lead and at the end of the day, Musk needs to lead. Tesla is Musk and Musk is Tesla. How is Tesla directly impacted? I realize there's, you know, knock on effects and, you know, sales effects and retaliation in certain markets, et cetera, but how is Tesla directly impacted by tariffs? Is it these automaker tariffs?

Is it supply chain tariffs? I mean, Musk's companies, Tesla included, are sort of famously vertically integrated and homegrown supply chains. Well, I think the reality is, and we've talked about this, the view that Tesla or any other US car manufacturer has all their parts from the US, that's a fairy tale, right? And the reality is a lot of those parts come from abroad.

And when you think about these new vehicles that they're producing, as well as when you look at cyber cab, I mean, it depends on parts that come from China, where the materials come from. And we've talked a lot about that. I mean, where the raw materials come from. Are they come from New Jersey? They come from China. So the reality is that that's why this is very important.

Also, what's the hearts and lungs of Tesla? Where's the growth? It's China. Does retaliatory happen? And that's all part of it. Tesla's becoming political symbol. This is the time for Musk, draw the line in the

sand, in my opinion. I think you're saying there's a hundred dollar per share upside if Elon Musk focuses back on Tesla. What's the downside if he doesn't? It's a dark downside if he recommits because then you start to have something where brand damage becomes worse and worse, then you start to have something where brand damage becomes worse and worse, retaliatory in terms of China, because ultimately, at the end of the day, Tesla's become a political symbol around the world. So for Musk, this is a fork in the road movement. I mean, I believe, look, there's a lot of important

conference calls that he's had. I think it's the most important conference call he's ever had because of the political damage in terms of the brand damage that he's created as part of an administration where the tariffs are hurting Tesla. Dan Ives, it's great to have you on the heels of Tesla results. Get your popcorn out for that conference call I guess. All right don't miss our first ever CNBC Pro Live event on June 12th. Dan will be leading a pro clinic on the best ways to analyze stocks in this volatile market and if you want to meet the great Dan Ives and some other CNBC pros in person scan the

QR code on the screen visit CNBCents.com slash pro live for more information. Well, we'll have much more on Tesla's report ahead, including reaction from former Tesla president and current GM board member, John McNeil. And Jeffrey's chief market strategist, David Zerbos weighs in on President Trump's criticism of Fed Chair Powell and why he says he wouldn't be concerned if three other candidates took the top job and

Another check here on shares of Oklo They are falling sharply down about 12% in overtime on news that our Pippa Stevens Just brought us that Sam Altman is stepping down as the company's chairman. We'll be right back Welcome back we have breaking news on Bristol Myers Angelica Peebles has the details. Hi, Angelica Welcome back. We have breaking news on Bristol Myers. Angelica Peebles has the details. Hi Angelica. Hey Morgan, so Bristol Myers Squibb is saying that their drug, Cobenphi, failed to meet the main goal of a phase three trial that was looking at the drug for schizophrenia in combination with another drug for the disorder. And the thing here is that this is a drug that's already approved as a standalone treatment. However, in order to reach more patients,

the idea was that you'd want to use it in combination with existing therapies, and obviously that did not pan out. So the company is saying that the drug did show some benefit, but it wasn't enough to meet statistical significance. So you can see that stock down about almost 6% on the news. Morgan.

All right, Angelica, I'll take it. Thank you. Well, Mark, it's bouncing back today from yesterday's losses, but uncertainty still remains around Fed Chair Powell's future as President Trump ramps up his criticism. This morning, European Central Bank President Christine Lagarde weighed in on the topic on Squawk on the Street. We're both used to political pressure in one way or the other, but as I said, I have immense respect for the work that he does and for his loyalty to his job and to being

as diligent, disciplined as possible to deliver on his mandate. For him, I think, I'm sure, as it is for me, the mandate is our compass. We have to deliver on our mandate. If there is an attempt by the executive branch in this country to fire Chair Powell before the end of his term, do you see that as a material risk to markets? I very much hope not. Hope that doesn't happen. Hope that it is not a risk.

What would it mean for the markets? Look, I'm not going to comment on market reaction to hypotheticals that I hope are just not on the table. Joining us now is Jeffries Chief Market Strategist David Zervos. David, good to see you. So you've told us in the past you believe the Fed is already political. You've seen what's been happening in the news. You know what President Trump wants.

My question to you is, why shouldn't we just let U.S. presidents set interest rates directly? Well, I think we've learned that having too much power in the executive branch with a shorter horizon can lead to some trouble. We've seen it before. So we've tried to give some independence to our central banks, and that's the nature of central banking around the globe. There's an equilibrium, but it's a push and pull.

And John, I think if the central bank takes too much of an opposing view to the current administration it can be quite a negative on the economy. So I think we're looking for balance. And I think this president is pointing out that there may be some imbalances, maybe the September move of 50 basis points. Certainly what happened in 2018 with Chair Powell going quite aggressively against the agenda and many prolific speakers egging him on like his old colleague Bill Dudley asking him to create a recession to oust Trump.

We know the institution's political. We know that the political forces, as Christine Lagarde said very accurately, political forces shape monetary policy. It's just a question of finding a balance between the short-term gains that maybe an administration might want and sort of long-term good policy that comes from focusing on price stability

and full employment. Well, David, this is a Fed chair who President Trump appointed. So if he can fire Fed chairs at will and replace them with whom he chooses, how far are we from letting presidents set interest rates? Well, I think we're pretty far. At the end of the day, when the president appoints a Supreme Court justice, he doesn't sit there in a gown and rule on every case. And I think of the Fed very much like I think of the Supreme Court justice, he doesn't sit there in a gown and rule on every case. And I think of the Fed very much like I think of the Supreme Court.

It's 14-year terms. You're putting someone in there who has a political agenda, who has a political set of beliefs, and you're hoping that they coincide with the broad contours of what the administration is looking for. And I think when the president did put Jayell in the first time, he thought that. And I think based on his experience in 2018 and 2019, he probably regrets that. And I think he's been pushing back on Chair Powell

ever since. I mean, some of the wording he used back in 18 and 19 was far more aggressive than the Mr. Too Late or the Major Loser stuff. He used to call him a bonehead, and I think he was comparing him to an enemy of the state like Xi Xiaoping.

I mean, honestly, for me, it's toned down a little bit. I'm not sure why everybody's getting so hot and bothered. We've seen this movie over and over again from this president. David, I'm not sure folks are fully appreciating or talking

enough about just how large the U.S. debt load is, how much debt is coming due here over these next couple years, how much the U.S. is spending to service it, and just how much higher rates currently are than what's in the government's own forecast to do that as it looks to craft spending and budgets here over these next couple years. How much is that factoring into perhaps some of the rhetoric and

some of the debate that is coming from President Trump and the administration around this topic right now? Well, Morgan, I think Secretary Besson has been very clear that he wants to attack that problem. He's got his 3-3-3 plan.

And I would have actually thought Chair Powell would be very sympathetic to the administration's push toward fiscal parsimony. But it does seem like there's a clash. And they want a monetary cushion when they go through rebalancing on the fiscal side and rebalancing on the trade side. And they're not really getting that monetary cushion. It seems a little less cooperative than I would have thought, and probably the administration thinks. And I think that's why the rhetoric has amped up. And I would expect it to keep amping up if the confrontation and the aggressiveness on monetary policy and sticking a little too restrictive for a little too long,

whatever this Mr. Too Late means, starts to get in the way of trade negotiations or fiscal reductions and reducing the size of the federal footprint, which you rightly point out, has gotten out of control and is a worry as we move forward. So David, quickly, how important, how powerful is the bond market right now, especially as everybody talks about this sell America trade? It's powerful, but Morgan, we wrote a piece last week talking about twists in the market and ways that the administration can kind of usurp some of the power

that the monetary authorities have, and also some of the power that our foreign holders of Treasury securities have. The Treasury can do buybacks. The Treasury can twist and shout, but twist more about the way they want the debt maturity structure to move forward. And I think they have a lot of power to make sure that dislocations in the bond market

don't metastasize. They would hope, I think, that the Fed would help them, but I think the Treasury can do it really on their own if they really need to. David Zervos, great to get your thoughts today. Thanks for joining us. Good to be here. It's time now for a CNBC News Update with Bertha Coombs. Bertha.

Morgan, the FDA just announcing that it is phasing out the use of artificial food dyes by the end of the year for big companies. Change is going to hit the big major food companies, including PepsiCo, General Mills, Kellogg's and others. Among the products likely affected, foods such as those red flaming hot Cheetos, Mountain Dew, Baja Blast and rainbow colored Skittles. Last month, HHS Secretary Robert Kennedy Jr. told food executives that removing artificial

dyes is an urgent priority of the Trump administration. A federal jury in New York just found the New York Times did not libel former Alaska Governor Sarah Palin in an editorial eight years ago. Palin testified Monday that death threats against her rose after the Times published an editorial that falsely linked her campaign rhetoric to a mass shooting. And a federal judge has blocked the Trump administration from shutting down government-funded radio broadcasts of Voice of America, Radio

Free Asia, and Middle East broadcasting networks. The judge moments ago ordering the administration to, quote, take all necessary steps to resume broadcasts and restore the over 1,000 employees who were placed on leave. John, back over to you. Bertha, thank you. Coming up, former Tesla president John McNeil joins us with his first thoughts on Tesla's earnings and what he wants to hear from Elon Musk on the conference call. And much more on today's comeback is ahead, including a look at one part

of the market that's starting to appear expensive as investors chase safety. Over time. We'll be right back. Welcome back. If you take a look at your screen right now, you will see CNBC is newest subscription streaming product CNBC plus. What you're experiencing is the CNBC plus data feed featuring an enhanced data view and the latest business news headlines. You can stream over time and all of your other favorite CNBC shows anytime, anywhere, on the go, and also on demand. If you want Mike Santoli's columns, though, you still got to pay a little more for pro. But now let's get to Mike Santoli absolutely for free for a look at where investors are paying a premium for safety in this volatile market. Mike. Thank you, John.

And by the way, I think you just have to register with an email these days to get my column. I'm not going to promise that, but I think that might be the case. So try it. In any case, boring is beautiful in this market, John. That's shown by the low volatility ETF SPLV relative to the broad S&P 500. Since the day two months ago that the S&P peaked right here, you see basically flat performance by those stocks now. They're the ones that have the lowest displayed volatility, obviously consumer staples, utilities, some healthcare, things like that. However, now the market is paying more for that perceived stability. Take a look at the forward PE of that ETF, the low volatility one, relative to the S&P 500. It's now peaked back above the broad market index.

That also did happen here at the beginning of the 2022 bear market. Nothing was really spared the downside there, but it did outperform for a while. And now the question is, if you get some kind of outbreak of clarity or policy certainty, are people overpaying or maybe might they start overpaying for this stability? And are you going to find yourself under leveraged to some of the riskier parts of the market? That's always the tricky part

in these corrective phases, guys. Well, I guess by free I mean a sunk cost because we all know cable's not free. But Mike, is Low Vol the new leveraged ETF? You know, I wouldn't say that in the sense that I don't think there's really a frenzy for Low Vol, but it's definitely become the area where people feel like they can hide and they feel relatively confident trying to do so.

But I think that there's no real story attached to it except for safety. So it's not as if you can have this open-ended, you know, kind of thesis that says, oh, here's why low volatility stocks are going to work. Although some people did years ago believe that it did over the course of a cycle Or many cycles actually perform better on a risk versus reward basis, but I think that debate is still open I'm putting a request out there Mike for later this week for a part two on all of this with gold as we flash Right here on the screen gold at 3,500 new record high that might be the new lever GTF screen gold at 3,500 new record high.

That might be the new leverage. ETF Mike Santoli. Thank you. Up next. Former Tesla president John McNeil reacts to Tesla's earnings mess and later why aerospace and defense stocks sat out today's rally and what it could mean for Boeing's earnings tomorrow. We'll be right back. Welcome back.

Let's check on some more earnings movers intuitive surgicaluitive Surgical is falling down about 6.5% despite topping earnings and revenue estimates. Full-year profit margin guidance was down compared with 2024, hit in part by a tariff impact. SAP is moving higher by a little more than 6% after topping earnings estimates, though revenue was light. And Enphase Energy down 12 1 1 an hour when the earnings call gets underway as well. Joining us now, John McNeil, he is the former president of Tesla, current GM board member, and the co-founder of DVX Ventures. John, it's great to have you on. I want to get your takeaway here on the results we got.

Dan Ives called them, I think the word he used was a disaster, but they did reiterate plans to up new, more affordable vehicle production here in the coming months and this unboxing event for CyberCab as well. So your thoughts? Hi Morgan, I think like I've been digging through the numbers as have you and a lot of other folks. I think you know obviously the top line is a miss, the bottom line is a miss. But one thing stood out to me digging a little bit deeper, and that is the operating income was roughly $400 million for the quarter.

But that included $600 million of credit sales to other car manufacturers. So that means, in essence, the car business and the rest of the business is losing $200 million this quarter. And without the ability to sell those credits, the core business is losing. And I think that's maybe the first time in a long, long time that that has happened at Tesla. And like other car manufacturers, there's a lot that they're working through with tariffs, where you've got steel and aluminum tariffs that hit almost every parts producer.

And that increases the cost going into the car. But Tesla's got one extra layer of headwind there, and that is that a significant portion of their batteries come from China. And current tariff rates, the battery represents 20 to 30% of the cost of an EV. So that can be really substantial. I think I said unboxing event. What I meant was unboxed manufacturing strategy

around the cyber cab. So just to correct myself there. Okay, so we've got all the tariff uncertainty. We know there's been some brand destruction. How important is it for Elon Musk to get back at the helm full-time? Is that something that changes sentiment here, or does it matter? I think what really matters in any product company, but especially a car company, is that you've got fresh product.

And Tesla's been losing market share in an increasing EV market because there's so much fresh product coming onto the market with competitive cars that have really compelling features, and that's drawing consumers into those cars. If Elon is expert at one thing, it's product. I think Tesla is served well by having him back engaged because he's got such a keen eye for the product. John, other US brands over the past year plus have been pulling back from EV production commitments and plans, I guess, over uneven demand. And the perception among some was, boy, this puts Tesla in the catbird seat, but now we

see Tesla out with these results, and we have some Chinese manufacturers that seem to have some pretty darn affordable, if not downright cheap, vehicles that they're looking to sell or dump, depending on your perspective, throughout the rest of the world. How does this set up the whole EV landscape, including Tesla? It's a great question, John. I think in the US, you mentioned there are players that are leaning out and leaning in,

and I've got a front row seat at GM, and they're leaning in, and it's because they've got compelling product that's taking significant market share. They've gone from really back of the pack, now to number two in the US and growing. And they grew their share again against Tesla in the US. Your point on China though is a great one. It's a hyper competitive market in China, no question.

There may be some direction from the Chinese government to its own population to buy local, to buy their own homegrown brands. And then the real question is going to be in other markets. Europe as you know has a tariff on Chinese cars which makes it less affordable, but their tariff is less than the US tariff at 100%. But then when I go to Israel or I go to Mexico City, I'm seeing a lot of Chinese cars. I'm seeing a lot of BYD.

And so I think that has implications for Tesla's international business for sure. So for the non-Chinese manufacturers out there across the world, if we continue to see gas prices drop, and here in the US at least, government incentives perhaps go away, what's the impact on the relative price

of EVs versus ICE vehicles? I think the compelling reason to buy an EV is kind of two. One is the drive experience is much better. And anybody that's been an EV will tell you about the acceleration and the ride characteristics. And obviously the energy costs is much better. Anybody that's been an EV will tell you about the acceleration and the ride characteristics. Obviously, the energy costs are much different. To your point, the cost of ownership, the total cost of ownership calculation is dependent on less maintenance for EVs, but also less energy costs.

As the gap closes with gas prices coming down, that closes that total cost of ownership. But it doesn't negate it. I think the impact of incentives going away and markets where those have gone away, the demand has been impacted anywhere from 18% to 28%. So that's significant and is going to be one for EV manufacturers to keep a close eye on. John McNeil, thank you for joining us

with shares of Tesla fractionally right now. Up next, what today's soft reaction to earnings from the aerospace and defense sector could mean for Boeing when it reports tomorrow morning. 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.

Aerospace and Defense stocks underperforming today as earnings for the sector got underway. So far, the theme emerging, companies posting solid Q1s and reiterating full year guidance, but with a big asterisk. Take Lockheed Martin, it grew sales and margins across segments and once again reaffirmed its forecast. But that excludes tariff impacts, executive orders, and the F-47 fighter competition loss to Boeing.

There's a similar story at RTX which grew sales across commercial and defense. It reiterated guidance on paper, but it also laid out different scenarios on the conference call, which is really where you saw shares take a turn and start falling. RTX CEO Chris Calio used repeatedly the word, quote, mitigation, citing price increases, operational changes, existing trade programs, and shifts in suppliers and assembly sites as just some of the options to navigate tariffs. GE Aerospace, similar situation, reiterated most of its guidance for the full year. It also vocalized its own mitigation strategy. The outlier, Northrop Grumman, which plunged 14% today on a big earnings

miss that was tied to manufacturing changes and subsequent charges for the B 21 bomber program specifically on tariffs, though, Northrop CEO Kathy Warden saying she, quote, believes that most of the costs that we might incur due to trade policy are incorporated and covered under our contracts with the U.S. government. She basically said she doesn't see a lot of risk here at least as it currently stands. Other takeaways defense spending poised to grow here and abroad. Defense contractors are optimistic about executive orders reforming the acquisition and procurement process and the Golden Dome

Homeland Missile Defense opportunity could be big and broad. CEOs talked about it today. Bottom line, even these companies with largely US-based supply chains are not immune to economic uncertainty, but they're somewhat buffered. Hence, stock out performance so far this month,

particularly for the pure play defense primes. Now the next big test comes tomorrow when Boeing reports it's still struggling with issues in both the commercial and defense businesses, but because it is America's largest exporter, it is also on the trade war front lines and will be watched very closely because of that. You could see those shares popped 2%

ahead of those earnings, John. Yeah, interesting stuff. When it comes to smaller vehicles, though, Tesla, which reported right here in overtime minutes ago, has a conference call in a few minutes. And it's just about flat right here, like perfectly flat right here in overtime, on some pretty decent volume.

Dan Ive said it's very important what gets said on this call, particularly about Elon Musk's return of attention, perhaps, pretty decent volume. Dan Ive said it's very important what gets said on this call, particularly about Elon Musk's return of attention perhaps to this company and really what the details are with those lower cost vehicles. In the meantime, we did have a rally here in the market. The Dow finishing up more than a thousand points. The S&P 2.6 percent. But that's going to do it for us here at Overtime.