Power Lunch - Dow drops, S&P 500 hits lowest since early November on trade policy fatigue 3/6/25

Episode Date: March 6, 2025

Stocks are resuming their pullback, as the latest concessions from the White House on President Trump’s controversial tariff policies failed to calm rattled investors. We’ll tell you all you need to know. Hosted by Simplecast, an AdsWizz company. See pcm.adswizz.com for information about our collection and use of personal data for advertising.

And welcome to Power Lunch alongside Leslie Picker. I am Brian Sullivan. Good to see you again. Wow, another wild day for your money. Stocks down big as the administration stands by the tariffs and says more may be coming. Plus, you got job worries ahead of tomorrow's unemployment report. And if that is not enough, we could actually have another government shutdown, Leslie. There's a lot going on. Gosh, a lot going on. Checking in on markets right now. Stocks are sinking once again. Take a look at the Dow. Now down 1.2. percent, the S&P down 1.9 percent, and the NASDAQ, the big laggard here, down nearly two and a half percent. It's really a lot of this cyclical rotation out of cyclicals. Not that anything, any of the major sectors are in the green today. All the bag seven names are lower, Nvidia, Amazon, and Microsoft, which has now lost its three trillion dollar mark. And Tesla is on pace for its seventh weekly decline, wiping out nearly its entire post-election gain. It's now lost half a trillion dollars in market cap. That's more than the market value of 485 of the S&P 500.

I've also got my eyes on financials. It's been a really rough week for the financials so far. Citigroup down more than 10% JP Morgan, Goldman Sachs, down by similar magnitudes over the course of the week. And the credit card company is getting hit hard as well a week to date. Capital One Discover American Express significantly lower over the course of the last week. And financials, I may know somebody that knows something about them. Leslie Picker, thank you very much.

All right, so investors finding their collective backs against the Wall Street, thanks to multiple issues. All right, so let's use our big wall to highlight some of the big picture things that are happening right now. Number one, tariffs on CNBC earlier today, Commerce Secretary Howard Lutnik saying there will likely be a reprieve for products covered by the trade deals with Canada and Mexico, maybe not just automobile. That headline briefly helped stocks bounce off the lows. I mean, when I say briefly, I mean briefly, and then we lost steam again. But the Commerce Secretary also saying that some retaliatory tariffs would go into effect on April 2nd. If you're confused, so are we. We're going to find out how it plays out. Market hates confusion. The next big issue, jobs or maybe lack thereof. Layoff announcement, they are on the rise. Job search from Challenger Gray and Christmas

saying, we are at the highest level of job layoff announcements since the early days the pandemic reporting about 172,000 layoffs last month. One third of those were in the federal government, as the so-called doge spending cuts hit. By the way, the big monthly jobs number, that is out tomorrow morning, 8.30 am, Eastern Time, you'll see it on Squawk Box. And completing maybe the hat trick of concern, the looming potential government shutdown. The budget deal deadline, just next Friday at a possible shutdown, just adding to any uncertainty that is already out there kind of messing with the markets and your money right now. Let's talk about it all with Dory Wiley, the CEO and president at Commerce Street Holdings and get your take as well. We got Jay Woods

on set too, Dory. But first, to you, how this won't last? Nothing ever, this kind of uncertainty will not, cannot last forever. So what's kind of our, what's your therapy for investors, right now. Calm down. We've been in kind of a bull market. Look at the bits, right? The book is finally above 20, which is more of a normal range than it has been in the teens, which was this positive sentiment that we've had for a while. So I think we've just sort of entered some uncertainty here, certainly with GDP now being forecasted and negative in some of these things that you're talking about. And the market is taking everything literally, particularly on the tariff side, so it doesn't really know what to do.

And it's a little unsettling because we haven't had as much volatility in the market in a while. So, J. Sem have the luxury of being calm. Others need to be a little bit more attuned with the daily moves of the market. If that is you, how do you navigate just the constant barrage of headlines? This is something where you kind of need to close out your positions every day of 4 o'clock and go to sleep so that you can, you know, sleep a little more comfortably or how do you navigate this if you do need to be more? It's been insane, for lack of a better word. You know, the headline risk, you go to the bathroom, you come back. The markets rally 200 points, then we're down 200 points. And this headline.

Don't go to the bathroom. That's your answer. I apologize. Sometimes nature calls. But, yeah, we are now watching this market, which is clearly in a downtrend, and it's a risk-off environment. We've seen it, with the exception of last Friday, which was very odd that we had a rally. People taking risk off the table going into the weekends. People are selling first and waiting.

And then there are a lot of people with dry powder on the sidelines. We're getting to that opportunity where I think you've got to step into some of these bigger names. Bigger names, more stability, more downside protection in theory? Well, yeah, I think, no, I think this is an opportunity. We're watching the tape. The jobs number is going to be huge tomorrow. That could be the catalyst to have that washout that this market seems it's on the verge of. In a segment earlier, we talked about a death cross in the semiconductor index.

No, say it. Death cross. The death cross. You have to say it like that. As a technician, it's a lag. indicator, and usually when you hit the death cross, you want to buy. So the semis are actually starting to look like this may be the time to finally get into it NVIDIA, get into a broadcom that reports earnings.

These are opportunities that we've been waiting for. But when those opportunities come, people get a little nervous. I don't know, the headlines. No, this could be the opportunity. The jobs number could scare people, and we could have that washout. We're below the 200-day moving average in the S&P 500 for the first time if we close there, October 1st, 2023. Dori, I get it that tariffs are getting all the headlines.

They're getting all the attention. They're getting all the blame, right? It's tariffs and it's uncertainty. And it might be true. I don't know. But I will say this. If we throw up a MongoDB, an app love it, a Palantir, stocks that people have been buying without, I would say willy-nilly, but it's Dory Wiley. Who knows?

They're just buying the stocks because they made money the last time. I don't know what the heck a MongoDB has to do. with tariffs. What does a Palantir have to do with tariffs? What I'm getting at is I feel like a little bit this is jump in, hold on, jump in that this is the market that almost once, that's it, wants to sell off. You hit the nail on the head and Jay was hitting right at this. If you got some names you like fundamentally even, so let's go with Navidia. You had it on the screen there. Four piece, 20. And you're looking for a buy-in. Oh my God, the stock's been going on forever. And I don't want to pay as much. Do we have bad news on NVIDIA?

No, we don't. That's when you buy. Did you want to say? Yeah, and I want to add to that. I think you want to be ready to buy. I think you want to have some low-ball good-to-cancel order bids in there just in case this does accelerate because there is a little anxiety. There is that headline risk where we're moving dramatically.

And now that stocks have broken that 200-day moving average, we have the death-cross. People want to, you know, get into this market. This is the opportunity to do so. You get my point, though, like, what does Pallentier have to do with tariffs? I have the stock's getting destroyed. Let's throw that names back up. App Lovin. MongoDB is down 23%.

It has absolutely no connection to tariffs whatsoever. These are momentum names and the retail investor is scared. The market wanted to sell. It wanted to sell. It was looking for a reason. Yeah. And I feel like tariffs gave it the reason. Is it tariffs, though, or is some of the selling

due to concerns about the state of the economy and the potential slowing in the economy? I don't know. What does MongoDB have to do with that? The financial is definitely the state of the economy. The MongoDBs of the world. Did you do that because that's what she covers? That was like a softball to picker here.

Well, you were just talking about that a second ago. What I'm talking to are saying, it's a lot of the economy concerns that are weighing on some of these sectors. And if you are a MongoDB, if you are a Palantir, I mean, they have customers. If those customers are feeling stress, then that could affect them too. So look, okay, so let's bring out, how about we do this, then? Let's pick up the KBW Regional Bank ETF. Should we do that? Let's call this producing on the fly.

Because I think I would, you tell me, Leslie, are these the stocks that we're looking at if it's not a Palantir? Palantir's not reflective of the freaking economy, but maybe the Bank of the Ozarks is. Yeah, absolutely. M&T Bank, P&C Bank. I'll give you those two in the regionals as well. These are stocks that got beaten down, have finally recovered from the regional banking crisis. And now they got their legs under them. And this sell-off looks like a good opportunity because I love the big banks.

I think Goldman Sachs down 100 points. in two weeks. That's a little bit accelerated to the downside. Dory? So these are opportunities. Dory? Yes. Well, I like the banks here. You know, you get, particularly the small caps and even the microcaps, you're getting forward peas at 10 to 12. And, you know, these tariffs are not going to be a big issue, certainly not law term. They're short-term negotiating tools. And Trump's not going to, you know, clue everyone in on what a strategy is. It's not a negotiating tool if you tell them, hey, it's only on negotiating to it. Right? You've got to act serious about it.

Banks look very strong here. Credit's held up. They're coming along and adjusted to the 500 basis point. Raid hikes. Cost of funds are hanging in there. The deposits have been tough, but some banks are better at it than others. And now we have a more regulatory-friendly environment. You know, French Hill, the first banker to control the House Financial Services Committee in 100 years is in charge. And he knows that the economy gets driven by community banks because that small banks are the ones that provide the banking to small businesses. And that's where 80% of the jobs come from. So very helpful to have him in that committee. We'll have more startup banks, more de novo banks, more mergers, more activity, more growth, less restrictions.

A muzzle put on the CFPP should all be very positive for the banking sector going in. And it's under value. Jay, we have that all-important jobs report tomorrow. It seems like much of the kind of layoff measures that we've seen in D.C. would be more for the March report and beyond. But as you look at tomorrow, how do you think the market should be preparing for those numbers and how should they be preparing just for the overall kind of jobs picture in this? Yeah, if we get a hotter than expected number, I think that it will cause a little anxiety with this market,

seeing what we're doing, seeing we're teetering kind of on, you know, the edge of this precipice. You know, perspective, the S&P 500's down with 2.7% for the year. We're down 7.5% from the high. 10% corrections happen on average once a year. Usually average corrections 13% a year. So to put into perspective, I think is important. But when these banks do sell off, I think that's a great opportunity.

They rose on hope. And there is still hope that that regulatory environment will continue to be very, you know, that tailwind for them. But right now, you know, people are like no mergers, no acquisitions, no deals. It's, we're going to wait and see. I like it. A shutdown, too. Oh, my gosh.

Well, that's, we'll see what happens. That's, Dora Wiley. Thank you, Jay. I know we're going to see you later. I think of some good lessons there. Don't panic. Put in some low ball good to cancel orders and see if they get filled. And don't use the bathroom.

Those are three takeaways from this segment. All great real world advice, minus the third one. Maybe does, yeah, disregard the third one unless you want to be on constant phone calls with your doctor. After the break. oil turning positive, but on pace for its seventh straight weekly loss, inherently good for the consumer, lower gas prices, of course, but when do prices become too low for the market? Power lunch, we'll be right back. All right. Welcome back. There is a big selloff on Wall Street right now, and technology is

certainly getting the worst of it. The DA, the NASDAQ is down more than two and a half percent. The Dow's not about one and a half percent. Nobody watched the Dow. You all care about tech stocks. Tech down two and a half percent right now. Some big names that we just mentioned. The Palantiers, Applovens, MongoDBs, down 10, 15, or 20%. But so far this week, the worst performing sector is energy, down more than 5%. Oil falling on a lot of things. Economic concerns, expected production increase out of OPEC, and maybe more production right here in the United States.

But to your next guest, it's not just all energy and oil related. Energy is part of a huge cycle right now with AI and nuclear and everything else. And he's going to have arguably the biggest energy and most important energy conference in the world next week. We will be there. It is called the Sierra Week Energy Conference. And this year, some of the keynote speakers are a little different. Yeah, all the big energy names are there. Wow.

But look at that. Your buddy, Larry Fink, Leslie, he's going to be there. United Airlines CEO? Yep. CIA of Google, the CEO of Lazard, Peter Orszag, he'll be joining us on Monday or Tuesday, and Doug Bergam, the Secretary of Interior, along with the Secretary of Energy. Let's bring in the man who put this whole thing together. Joining us is Dan Yergan, Vice Chairman of S&B Global Dan.

I can't wait to come out and see you in this conference. It's always been maybe the preeminent energy conference in the world, but now you've got all these companies that we just showed, Microsoft, Amazon, and more. why has the conference expanded so much this year that Larry Fink is coming? Well, I think, Brian, it's partly what you're saying about the economy. It's also because infrastructure is such a big issue now. And I think it's also because this year we're going to be big tech meets the energy industry. And I mean, not only oil and gas, but renewables.

And even we have fusion on the agenda in a prominent way. I think there's a sense that it's a very consequential Sierra Week. It's a very consequential time for energy and a very big focus on it. Yeah, it is. You've got Amazon, like I said, Microsoft, they're the customers. They're some of the ones that want to. And what Ruth Porat, we showed there, because they're the ones that are buying up. A lot of the energy nuclear power plants that might or might not be sort of restarted.

They might be some of the customers as well. But at the same time, Dan, we can't ignore the political backdrop, and we won't. which is what happens to the Inflation Reduction Act. A lot of, let's remember, we could talk about wind and solar. They're critical parts of the energy mix because I've heard a guy named Dan Yergan say, we're going to need it all. Well, I think that's right. And the Inflation Reduction Act was agnostic or ecumenical.

It had something for everybody, including carbon capture, which is a big issue. So on top of everything else you've said, is their sense of uncertainty. So one of the big, I think that this Sarah Week will be an opportunity to say, well, what does this energy dominance mean? What does it mean in terms of implementation, in terms of what's there already, and what's going to be in the future? Because it's like the whole chess board is being rearranged. What do you think about the federal funding freeze? And I ask this because there was a story in the Denver Post, for example, and they talk about how the federal funding freeze is stalling energy-related. projects across Colorado, it's a policy aspect to energy that we don't normally think of as

having as much of an impact. But for a system that's already kind of struggling with some bureaucracy and getting permits approved, we hear that all the time from infrastructure investors. How is that playing a role? Well, I think it's still very early to answer that. But you've certainly pointed out that one of the other big issues that's there. And that's part of what that national energy emergency that President Trump declared is about, is about the the permitting in Broklio that it just takes too long or it takes forever to get things done. And that's true whether you're talking about oil and gas, whether you're talking about pipelines, whether you're talking about wind and solar.

And getting that fixed has to be a priority to ensure that we have the energy supply, particularly when we have this AI data center boom coming that has just changed the outlook for electric power needs in the United States. And I think that's the reason that we're seeing, the Microsofts and the Amazon's, the Googles and many, many others coming to Houston next week, for this conference, right, Dan, because they need to figure out the numbers are really staggering. And you literally wrote, I would say the book, but you've written multiple books on the topic. We can say things, Dan, like, well, Oracle's thinking about a one-gigawatt data center.

Okay, that doesn't mean anything. A gigawatt, but when I say Oracle's thinking about building a data center that would use as much power as 750,000 average-sized homes, now you got my attention. Yeah, well, we're looking at it, within five, years, data centers could be 10 or 12 percent of total U.S. electricity demand. And so when the Microsofts, when the tech companies came to Sierra Week before, it was mainly about what they could do to improve the productivity and efficiency of energy companies. Now they're coming because they're in a way really defining to a considerable degree the future of electric power in the United States,

and they have to figure out their cultures and their timeframes is very different from that of the energy industries. And so how do you get the power in place? and not stress out the system, and who's going to invest in which technologies, and what are the supply chain issues? So it's really a process of discovery for the tech companies, discovering that they're dealing, that they have to look at power in a very different way. I know you've got a lot of international contingencies that are coming as well. Adnak of Abu Dhabi, you've got Aramco, Amin Nassar. Hopefully we can speak with Mr. Nassar as well. What is OPEC's role in what happens, and what is Russia?

Russia's role. I think somebody once said that Russia was a gas station with nuclear bombs, right, because they provide so much commoditization for the world. We don't know what's going to happen with Ukraine and Russia, Dan, but what is Russia and OPEC's role in all of this? Well, Russia, you know, it continued to be a player in the world oil market. The sanctions or the price cap that was put in effect didn't really stop Russia. And that's, of course, where their revenues come from, much more so than from gas. I think one of the questions that will hang over the conference, though, will Russian gas return under what circumstances, and will Europeans ever want to be anywhere near as dependent on Russian gas as they were before? And that's very important

for the U.S. LNG companies, because LNG, liquefine natural gas, is going to be a big subject at the conference. I think OPEC is, you know, it's announced that it's going to start putting oil OPEC Plus back into the market, and that's one of the other reasons that prices are often the way they are. But I think a lot of eyes are really on Russia. And of course, that's not really an energy question in a fundamental way. It's a question of resolving the war that it launched against Ukraine. I cannot wait. I will be there on Sunday.

We're going to be live Monday and Tuesday. We've got guests, some surprises. A lot of, well, yeah, I've got my colleagues, Pippa Stevens, and Spencer Kimball will be there as well. Apparently, me and an oil rig. We'll be at the conference. You're going to interview an oil rig? I'm going to interview. Those are called pump jacks. I guess we're going to have, Dan, you're going to, can't wait to see you and your entire team. You guys do a great job and we'll see you next week. Thank you very much.

All right. Thank you. Well, I, for one, I'm looking forward to it. But up next, are regional banks holding a better than the big six amid this volatility? Market Navigator is next. Welcome back to Power Lunge. Let's get a quick check on the markets. You're seeing the S&P down now, more than 2%. The NASDAQ down nearly 3%, as declines have really accelerated over the course. of the first 26 minutes of the show. We did just talk about energy, the worst performing S&P sector this week. Now let's turn our attention to the second worst. This one hits close to home. It's the financials.

Domchew joining me now for Market Navigator. It's been an ugly week. It's been bad. And it's worse than technology, by the way, at this point right now. So it's been a rocky reek for Wall Street overall. But our next guest says that despite all that volatility that Leslie just mentioned, And he thinks that financials are still a safe place to put your money.

I'm going to drill into that a little bit here. They're still green for the year. They're outperforming tech stocks. So joining us now as Garav Malik, the chief investment officer over at Palace Capital Advisors. Garav, you're still basically saying that if it ain't broke, don't fix it. I don't understand how you feel that good about financials seeing the price section that we've seen this week. So take us through what you think is the good bull case for financials outperforming in 2025. The bulk case of financials is completely based on a bull case for the economy.

And my take on it right now is that a Republican administration is not going to leave the U.S. economy in a worse shape than they saw it in. So our forecast is that GDP growth will continue being near the two handle. Inflation will start coming down. And you can't expect inflation to fall in line with the Fed's mandate by, call it, 26 towards the middle to the end of that period. Remember, I mean, we were sitting here just a month ago, and everybody was in the steepening trade. And now we're talking about the opposite thing occurring.

You know, the 10-year is flattened out. So nymphs are in pressure. But the core case for banks relies on the fact that consumer is still in reasonable shape. We do think corporations are going to do well. Corporations are going to be able to bounce back. And you have a good situation in financials there. And valuations are not aggressive. It's still a sector that we can.

expect to have anything between, called a double-digit earnings growth as we look at 2025 and 2026. There's no doubt that those financials are a value-oriented sector, certainly not talking about the valuations of technology. But are there places within financials? I mean, they encompass everything from insurance companies to investment banks, to regional banks, to everything else. What exactly in your mind is going to be the outperforming part of the financial sector?

Is it the big money center banks or is it going to be some of those investment banks? I think both are in place. for different reasons. So we think that deregulation is one of the promises that Trump is likely to keep. Deregulation is going to unlock capital. When that capital gets unlocked, it can be used by the investment banks

to get into segments that have not been able to get into so far aggressively. We're seeing that this year with private credit. It's going to mean regionals will have some more money to put aside and return back to shareholders. So there is room for either dividend expansion or there's room for buybacks occurring in those sectors.

So that capital coming back is what we are really excited about. I think on balance, we do like the larger banks a bit more because the current volatile environment means trading revenues are likely to be stronger. And we do think that MNA is going to be a dominant place to be as you look at the rest of the year. All right. Garav Malik, thank you very much, at Palace Capital with the play in financials. Thank you very much for that. There's also kind of a flow story here with financials, Don, because we've now had time to sift through the 13F filings, which show what investors did in the fourth quarter. And financials were a big overweight for mutual funds, even more so relative.

to some of their hedge fund peers, specifically some of the money center banks. And so we know where they stood as of the end of the year. It's likely that because of just what we've seen with regard to momentum to the downside in the sector, that that has really shifted over the first two months of the year, really. But we saw, yeah, that momentum story was hugely positive for those financials, especially in the latter half of 2024, the issue now is whether or not that momentum trade is going to get caught up with those banks going to the downside. because they had such a nice run over the course of last year.

And they are, you know, very much levered to the state of the economy. And so, you know, whether or not there is a recession on the horizon, whether or not there would be one under a Republican administration remains to be seen. I mean, we had one in 2008. We had one in 2020 briefly. We had one in 2001 Republican administrations. But, of course, the deregulation aspect of all of this has investors very excited as well. Absolutely. So we'll see what happens from here.

You got it. All right, guys, I wish I had better news, but the NASDAQ is now down 3%. The NASDAQ 100 is down more. The NASDAQ itself is down 3%. Now, all the MAG 7, they are lower on the year. It is meta. That is the only one that is higher. But today, MongoDB, down 25%.

Marvell down 21, App Loven, Palantir, Atlassian, Netflix, and more. They're all down big. We've got much more in this market sell-off next. Welcome back to Power Lunch. I'm Julia Borson with your CNBC News update. a second federal judge extended a block on the Trump administration's attempts to freeze congressionally appropriated funds to 22 states in the District of Columbia. The judge said the White House was trying to put itself above Congress and undermine the

constitutional roles of each branch of government. Today's ruling builds on his previous order telling the government to keep dispersing the funds. President Trump's Middle East envoy Steve Whitkoff says he is in talks with Ukraine to come up with the framework of a peace agreement with Russia. He added that he is trying to coordinate a meeting with Kiev in Saudi Arabia. It comes after Ukrainian President Volodymyr Zelensky urged European leaders to back the idea of a partial truth at air and at sea. And the Vatican said today Pope Francis remains stable and has not suffered any news respiratory episodes. The 88-year-old has been hospitalized for nearly three weeks now.

According to the statement this afternoon, his prognosis still remains guarded. Leslie, back over to you. We're sending our best wishes to him and a full recovery there, Julia. Thank you. Let's check on the markets as concerns over the Trump tariffs continue to cause stocks to sell off. The tariffs on China and Mexico have only been in effect since Tuesday, but tariffs on China went into effect last month. Another 10% was added. Our next guest's business almost immediately felt the impact of the China tariffs. Joining us now is president of Deer Stags, Rick Muscat.

Deer Stags is a shoemaker which imports many of their shoes from China. They are raising the prices of their men's shoes from $50 to $60 to offset that tariff costs. Rick, thank you for coming on. Can you explain how your business was immediately impacted by this? Yeah, thank you for having me. It's impacted me twice in the past few weeks. First of all, the initial 10% tariff that was put in place on China imports. was based on or implemented or we were charged if goods were not on a vessel on or before February 1st.

We had placed orders for production before Chinese New Year when we typically bulk up and double our monthly orders because the factories then closed. So back in the end of October, early November, before the election, we placed large orders with our factories to ship by the end of January. Most of our goods were out of the factories by the end of January, originally scheduled on vessels by January 29th or 30th, but some of them got rolled over and sailed on February 2nd or 3rd, and therefore we got hit with the additional 10% tariff strictly because of the sailing vessel schedule. So you raise the price of your shoes. Is that a full pass-on of the extra costs to the customer? Are you seeing any of that in your margins, just given what sounds like already a pretty low price for shoes, which I'm sure is part of the bargain that you make with your customers? Yeah. So, Leslie, before we get to the price increase, if you don't mind, I'd just like to take you to the second phase with the second tariff that went into effect just this past Tuesday morning, which increased the tariffs an additional 10%.

So as an example, R, we buy relatively low-cost shoes from China that's. at a moderate price point, as you indicated. Our men shoes typically retail around $50 or less. Our boy shoes $40 or less. But the goods that didn't get out before Chinese New Year and shipped shortly thereafter and are on the water now, we're being charged an additional 20% tariff. So whereas the tariff would originally be 6%,

we're now paying 26%. Just on the goods in transit, we had budgeted $42,000 to pay the duty when these goods arrive, it'll now cost me $182,000. So before we talk about raising the price for the consumer, the impact on us and our budget and our cash projections has been extreme. The issue I have is on the way this tariff has been implemented.

It's a little bit arbitrary based on a sailing date or all of a sudden an announcement of a new tariff. It strikes me that I noticed in the news yesterday that the audio industry was granted a 30-day reprieve to try and figure out how to deal with the tariffs, but no one has come and helped the shoe industry where we import virtually all of the shoes sold in America and over 60% of the pairs of shoes sold in America are made in China. And our prices have gone up 20% with these new tariffs.

So yes, we have to pass these increases on its increases our cost of goods, so it'll increase our selling price with our retail partners and ultimately with what they sell to the consumer. But it's wreaked havoc for those of us that import, which all of us do, being hit with these cost increases literally out of the blue. How has it impacted your working capital? Because it sounds like those price increases would take place for consumers, but there's a mismatch from when, and if I'm hearing your story correctly, from when you have to pay the tariff versus, you know, how you kind of sell it into the marketplace. You have to immediately pay the tariff,

whereas you do need to wait for people to actually buy the product over time. Right. Thank you for that. So that's exactly my point. When we sat out our budget for the month of March, we had anticipated in our budget $42,000 of duty that we'd have to pay. Now I have to pay $182,000.

So that's $140,000 of cash flow that's taken out of my budget that was supposed to go for my... my vendors, my suppliers, my payroll, and I've got to pay it to Customs and Border Patrol. Yeah. I'm not to where I'm supposed to get that money from, but by the time we reflect the increased price to try and recover it, it's months down the road. These goods were bought to fill orders from customers on prices that we committed to them

back last fall. The production cycle for footwear is about a four-month lead time, from the time we place the orders till the time the goods arrive in our warehouse. and get distributed out to the stores. So that would have been right after the election there. We appreciate you taking then time to share your story, a real on-the-ground perspective, small business, generations later. You're here to tell the story.

Rick Muscat of Deer Stags, we appreciate your time today. Thank you for having me. All right, well, we continue to track the sell-off in stocks. The Dow's on pace for its worst week in two years. Two years. So what is the bond market doing in reaction? or maybe is the bond market leading this. Rick Santelli knows, and he's next.

All right, welcome back to NASDAQ down just about 3%. It is the worst week of the year so far. As stocks fall, the 10-year yield actually is moving a little bit higher. It's now at 4.28%. Let's find out what's going on. Bring in Rick Santelli for more because I, Rick, you know, normally you see the bond market moves, stock market moves, kind of everything moves.

It's a little bit of an odd time. Yeah, it is. But you know what? The best way to look at this is consider, okay? Look at the two's ten spread last seven sessions. It encapsulates the firm tenure, the soft two year, and look at words. It's gone from 15 to briefly trading 35 this morning. That's seven sessions. One of the reasons, tens minus boons. Close last year, Brian, the difference in yield at 220 basis points. Today it's closed at 146 basis points. So not only you have, have stubborn long rates here. You have Germany accentuating that fact around the globe. Everything's fungible. And the two years looking at growth because of the Fed and pricing in cuts. So this is all wild. You know what else is wild? Look at the VIX. VIX right now is just a whisker under 26. It's the most it's been. The highest has been in 20 months. Let's go talk to Jason about exactly that. Jason, what are you seeing with regard to the VIX approaching levels we haven't seen since mid-December. Yeah, volatility and the VIX itself are really high right now

from a long-term perspective. But if you look at the moves in the market and what's happening, it's high for a reason. We've had six consecutive days with 1% moves, let alone today. Six consecutive days, one-per-sum. That hasn't happened. This risk-off environment showing us things we haven't seen in quite a while, maybe going back to some of the volatility during COVID. That's correct. And for a long time, it's just been any dip has been bought by the dip. You know, it's been a policy and a plan that's worked for so long. Now we're seeing a little more hesitation on this, and it's almost like any rally we do have, people are selling it and reducing their global equity exposure, which we've seen in hedge funds. Hedge funds over the last two weeks have had their largest drawdown

on their global equity exposure over the last six years. So people are definitely in a risk-off kind of mode and mentality. Now, if we're in a risk-off mode and large players have reduced some of their positions from a global stock perspective, does that mean? mean we're going to see less volatility in your markets, in the option markets, even if we continue to see volatility, for example, in the S&P and the NASDAQ in the Dow? No, I think VAL is here for all of 2025 and, you know, the next few years. It seems like every tweet, every comment, every mention of tariff just brings a new restored, holy cow, what's happening. Let me reduce my exposure. So I think volatility is... You know, how could anybody be surprised by this? Okay. Here's

what I would say, trying to tune up your Corvac going 90 miles an hour down the Eisenhower Expressway. You can't. It's like trying to tweak trade and trying to tweak government programs while nothing ever shuts down. I think it's going to continue to be messy and you seem to agree. I couldn't agree more. Excellent. Leslie Picker and Sully back to you. Rick Santelli, thank you so much. We mentioned earlier that S&P Energy is the worst performing sector this week. But one oil giant is. bucking today's downtrend. Oh, I'm told we do have some breaking news. Let's get to Megan Casilla with that. Hey, Megan. Hey, Leslie, the president is in the Oval Office with reporters

right now signing some executive orders, and he has just signed one officially adjusting those tariffs that are in place against Canada and Mexico. What the president is doing here is adjusting those orders to say that tariffs will only apply to any goods that are not compliant with the U.S. MCA. And we just had a chance to talk with the White House official about this to get some details here. And the White House official told reporters that about 50% of goods coming in from Mexico and about 38% of goods coming in from Canada will now be exempt from tariffs. But that's a smaller number than we had originally been thinking. It means about half of Mexican imports will still see this 25% tariff and about two-thirds of Canadian imports will still see

a tariff. Some of those will be 25% tariffs, but I'm also told that a majority of those non-compliant goods from Canada are energy, which you guys will remember are subject to a lower 10% tariff. So it is progress forward here. We've gotten the official language now signed in via executive action just a few minutes ago from the president to officially remove some of those tariffs. But for 50% of goods from Mexico and almost two-thirds of goods from Canada, the tariffs will remain in place. And just one last note, guys, on timing, all of this, as before, is set to last until April

2nd. That's when we're supposed to get the reciprocal tariffs, which the administration. maintains will impact Canada and Mexico, so we are likely to see some movement before then. Guys. Megan Casella, thank you so much. Markets still firmly in the red today. We will be back after this break. Welcome back.

Time now for three-stock lunch. We do this segment to get you actionable advice on stocks, never more important than a day like today when stocks are selling off. Let's welcome back, Jay Woods of Freedom Capital for our trades today. We asked Jay for some trades to consider on this down day. First up, a MAG7 name. And you picked Amazon. I did. I did. Amazon's getting beaten down.

I don't know if you've seen the chart over the last few days, but the stock is in a bare market. Technically, when it's down 20% from its peak. What has changed? Okay, we're afraid of tariffs. We know that concern. But overall, you look at what they've done consistently over time. It's best in class.

And then technically, which has a CMT, I look at the charts, and this stock had broken out of long-term base above 200. It got up to 240, coming back to that 200 level. I want to put money to work here, and I want to get in the stock. If you've not been in Amazon, you have a time to get into it right now because 200 is a great level. And then if this market accelerates, I think anything cheaper, great opportunity. And Mahaney in the 1 o'clock hour, Eastern Time Hour, named it his top pick. Said it was a big value name now.

Amazon earlier on when you were on before. Yep. I think you mentioned Goldman Sags. Teased you a little with that. You said it was that a hundred bucks like this week or something? It's been like it, I don't know how this week seems forever. But yeah, it's down 100 points from its peak. It's down roughly 15%.

And when you want to look at names, we talked about Amazon, best in class, Goldman Sachs, JP Morgan, best in class. It's giving you an opportunity to buy. The stocks, JP Morgan and Goldman Sachs went up on hopes and dreams of this Trump administration, basically rolling back the red tape, mergers and acquisitions are going to happen, and now we're living through tariff season, which I didn't know was a season until just recently. And we are focused on that, and M&A has been pushed to the side. We haven't seen these deals come through, but I don't for a minute believe that this

is in a good place to enter the stock over the long term. Goldman Sachs best in class and trading, you know, this volatility is great for the traders. Yeah, today's move's turning Goldman Sachs negative. year to date. Yeah. Early in the year still. Finally, a name that has been bucking the downtrend today, Jay, your energy trade. Exxon Mobile.

It's weird to see a green chart today. It is. And Exxon got beaten down really hard in December after their earnings. And one of the concerns there was they were spending more on CAPEX than their peers like Chevron. And the stock got to a level where it's just too good not to look at it and say, here's an opportunity. It doesn't give you too many.

And I know, you know, the price at the pump. has been going down and the sector has been beaten down. But if you can stay long the stock above 102, 103, you can manage that risk. So for a trader, someone looking to get into this name, looking to diversify their portfolio to a beaten down sector, I think ExxonMobil is a great entry spot here at this 107 level, I believe. If it gets above 112, it should run to 120. Three interesting picks today, Jay Woods. Thank you so much, Freedom Capital Markets. Appreciate it. All right, as we had to break two very quick checks, kind of look at discretionary stocks, the SME consumer discretionary sector on pace for its worst day since December,

also on track for its worst week September of 2003. So remember, markets go down. They've gone down 5% a year, one time or more every year, pretty much forever. Just keep that in mind. Also, the NASDAQQQQETF on pace for its worst week of the year, set to close out its third negative week in a row. That's its longest losing streak since last August, which means it had a losing streak last August.

We're back right after this. All right, so quick check. Obviously, the markets, Leslie, 2.7% decline for the NASDAQ, one of the worst weeks of the year. Quick reminder, markets fall every year, 5 to 10% forever. It's happened. Don't know when it'll stop, but it does happen. Quickly, app-loving, that stock.

I'm only picking on it because trader favorites down 29% in a month. I don't know what the hell this company does or what it has to do with tariffs. Probably nobody else does either. but the stock is down big. Also, some alternative stocks down pretty big, especially week to date. KKR currently down more than 6%. And it's had a rough week as well, I believe down more than 14% week to date. Thanks for watching, Power Lunch.

Yep, I know Scott and the gang are going to pick up all the coverage into the final hour. We'll see tomorrow. Closing bell starts right now.