Power Lunch - Dow gains 400 points but is far off session highs as rally fades 4/23/25

Episode Date: April 23, 2025

Stocks surged on Wednesday on hopes that U.S.-China trade tensions could soon ease, while President Trump signaled he doesn’t plan to remove Federal Reserve Chairman Jerome Powell from his post as central bank leader. 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.

Stocks in your money higher today as Trump softens his stance on both China and Fed Chair Jerome Powell. Easy for me to say. But is this just a one-day bounce in a down market or has something really changed longer term? Welcome to Power Lunch, everybody, alongside Kelly. I'm Brian. And here's where we stand right now. All the mags of it, well, we'll start with the broader markets. The Dow's up 600 points. So the session highs, we're up about 1,000, but we're up a percent and a half right now on the Dow. 2% on the S&P, 3.2 on the NASDAQ, and all the Mag 7 names are higher. The biggest gainer is Tesla after its results last night, and especially Elon Musk's comments that he does plan to step back from his government role.

In the next, I think he said May was the time frame. That, of course, would be when his special service days are up. Meta, NVIDIA, Amazon, all-gating. Tesla is now up 8%, by the way, so it's actually kind of building a little bit on its rally. Meta up 4.5.5% up 4.5% as well. And keep an eye on shares of Palantir, which are back above $100 for the first time in two months. It's up nearly 50% from its intraday low on April 7th. And gold, Bitcoin in the 10-year, this has been kind of the Sell America trade lately.

But now we're selling gold today. In fact, it's down 3.5% for one of its biggest declines in recent years. Today's Buy America, I think. It was Sell America. Bring it on. Now it's Buy America. We back. If you don't like the weather, wait a minute.

All right. So there is obviously much to talk about today. but let us start at what I'll call the capital of capital. And, of course, Washington, D.C. and the White House. Because those comments we reference from President Trump are what is driving your money higher. But as we have seen, things can change very quickly from day to day with this president. So let's figure out exactly where we stand right now and where we may be going. Amon Javris at the White House speaking some of the power players.

And a lot of this move, I think, has to do with this ratcheting back, not only of tension with China, but maybe even the actual tariff rate with China. Yeah, we'll see about that, Brian. The president last night, when I was asking him questions in the Oval Office, was eager to suggest that the tariff rate on China was too high, would be coming back down. Also suggested that he had no intention of firing J. Powell. The market seemed to really embrace those comments from the president last night in the Oval Office. And then today, we've got a bit of a war of words now here between the U.S. side and the Chinese side.

Take a look at this statement released by the Chinese embassy in the United States earlier today. They say, if a negotiated solution is truly what the U.S. wants, it should stop threatening and blackmailing China and seek dialogue based on equality, respect, and mutual benefit. To keep asking for a deal while exerting extreme pressure is not the right way to deal with China and simply will not work. Now, that's from a spokesperson for the Chinese Ministry of Foreign Affairs. And we also had Treasury Secretary Besson make some comments in response to a Chinese trade minister who had implied that the tariff levels from the U.S. were just a joke. Here's what Besson said.

He said, I think the Chinese trade minister called it a joke. They must have a different sense of humor in China than we do. And I don't think any of this is funny. So a bit of a heated back and forth, guys. And we're trying to sort of get to the bottom of the idea of whether there are any talks at all at any meaningful level here between the U.S. and Chinese sides. Treasury Secretary Besson saying earlier to reporters that there are no talks just yet, guys. So, okay, outside of the actual language, Amon, and you and I kind of talked about this about a week ago.

Yeah. And I'm going to ask you to editorialize a little bit, if you don't mind, my friend, which is we have not seen Peter Navarro or heard from him as much as we have in the past. Scott Bessett has taken more of a leading role. Do you believe, or people you're talking to saying that Besson being a little more outfant, front might be a positive thing for the market, or at least he's getting more time out front leading the White House's, I'm trying to choose my words carefully, leading the White House's messaging because they recognize the market does value Besson, I think, a little bit more. Yeah, I think you're right, Brian. There's no question that Besson has been more in the

forefront here in recent days, and no question that the market sees Besson as the most sort of Wall Street friendly official on this White House economic team. And he was a very question. He was in the Oval Office last night with the president, as the president was making those comments that we were talking about that really boosted the market this morning. So I think all that is right, but there's a lot of behind-the-scenes stuff going on here. I want to just flag for you. There's a story that just popped on Axios. And we haven't had a chance to run this down yet. But what they're reporting is, is that Elon Musk and Treasury Secretary Scott Besant got into a heated shouting match in earshot of President Trump and other officials at the White House last week

during a dispute about the IRS. And there's a quote here from, a witness to the argument who said it was two billionaire middle-aged men thinking it was WWE in the halls of the West Wing. So clearly some tension behind the scenes, certainly, if you believe that Axios report, and we'll see what the White House has to say about that in terms of what the IRS's role is going forward. And obviously, there's some shifting, you know, if you're doing the Kremlin watching, there's some officials shifting to the forefront and some officials shifting to the background here as we watch all that play out. Amen, who was it in the shouting match?

It was Elon Musk and Treasury Secretary Bessent, according to the new Axios report. And the story says it was loud that it started in the Oval Office, President Trump saw it, the two men kind of dispersed, but then got back into it in the hallway. I'm not, I don't like arguing. I'm not a big arguer, Amon.

But I will say that the White House is kind of like a newsroom in some ways. I would believe that healthy debate is often welcome, but maybe not open shouting. There was no fisticuffs, apparently. Yeah, look, we'll see what the White House has to say about this report. But, look, clearly, you know, there have been shouting matches in the White House before. And there's huge stakes here and very high tensions and often very big egos.

And so that's sort of a cauldron for that kind of thing. But it is worth noting when it does happen that there's some flashpoint and some tension between some of these officials. At the same time that Elon Musk is saying on his conference call that, you know, he's getting ready to step back from Doge and their work is wrapping up and he's going to be spending more time on Tesla. So you wonder how much of that is Elon feeling that his influence is waning here as he's on his way out the door, at least as what he told investors yesterday. It's also interesting as you kind of read into the report like you said, Amen, that this dispute erupted over whose choice to lead the IRS the president would go with.

So it's not like this is an ideological dispute per se. Yeah, well, I mean, personality can be ideology. like who is in the seat really matters. But there were reports that the Treasury Secretary was upset that the head of the IRS was put in place at Elon Musk's behest and that he didn't have the appropriate oversight over that and wanted to switch out those personnel. And, you know, the old saying in Washington is personnel is policy, right?

If you pick somebody because you know they're a person who leans this particular way, you put them in place to do that thing. And so having the say over a very high office like that is hugely important. important and hugely meaningful. Feels like Besson is kind of flexing a little bit. Maybe against Navarro. Now maybe against Musk. And yes, Aiman, I did say fisticuffs.

Don't judge me for that. Amon Jaffers, I'm going to knock in the lungs. I'm going to get in the boxing ring with you, Brian. I don't know what year this is. You get that long reach. I'm stuck in the 50s. Amen Javers, thank you very much. The boxing ring, it's WWE.

Both of those have already been cited here. The Fed just released its beige book. Steve Leasman has been digging through. And Steve, what is it telling us about what's going on out there in the economy? Well, it's kind of a dark tariff-tinsed beige book, Kelly. The economy was little changed across most districts. There was a lot of uncertainty around trade policy.

It was pervasive across all the reports from the 12 Federal Reserve Bank districts. Five districts saw slight growth. Three were unchanged, and four actually saw modest declines. Consumer spending takeout autos was lower overall. But most districts saw a moderate, to moderate to robust gains in vehicle sales. Why? Because the Facebook says there was a rush to purchase ahead of tariff-related price increases, and that included a lot of durable and non-durable goods.

Leisure and business travel were both down with a decline noted in international visitors. Several districts saw deterioration for demand and services. So this is not looking good from the service side. How about manufacturing? Well, most districts say manufacturing was little changed or even declined. there was modest growth in the energy sector. On the overall outlook, it said it worsened due to economic uncertainty and especially tariffs. Employment, little change to up slightly.

Firms were taking a, quote, wait and see approach to employment until there was more clarity on the economy. There were scattered reports of firms preparing for layoffs. Again, due to all that uncertainty out there, labor availability improved. wages grew at a modest pace but slowed from the previous report. On the important part of prices from this report, there were price increases across districts, about half saw bigger than the others, but they were in all 12 districts. There were price increases.

Firms expected elevated input costs from the tariffs, and there were reports about margin compression amid the increased cost. Finally, firms reported adding tariff surcharges, guys. So how would you, so you're saying it's not beige, it's just, a little, like you said, darker than that. So how do we read it? Is this, it's not doom and gloom, but it's also a darker shade of, a darker shade of beige, I would say, Brian, if I could quote from the paraphrase the song. It's a, look, it's the kind of report you might get before you had a more pronounced slowdown. And you can see through the anecdotes here, Brian, the uncertainty in

the economy taking a toll on business. What's happening? businesses are talking to the Fed. The Fed puts all of this stuff in the reports. I haven't been through the individual bank reports. This is the summary that's been put together. And this uncertainty is taking a toll. It doesn't sound severe. I didn't say it was a black beige book, but it's just a darker shade here where it's the kind of thing that if this continues, you can imagine it beginning to show up in the harder data. Right now, it's in the sentiment data. right now. That one line that stood out to me, firms were scattered reports of firms planning layoffs.

Okay, that's okay for now. It may be some layoffs, but that can get worse and get worse in a hurry, Brian, as you know. It can, and I do appreciate the paraphrasing of Procol. Perlham, the band, Steve Leesman. And I don't want to fight about it, Brian. We won't, promise. No fisticuffs.

No fisticuffs. All right, so yes, stocks and bonds are off their best levels of the day. But there is still a lot going on because it appears that President Trump is softening somewhat. You just heard Damon talking about it. He not only made some niceties about China, but he also said that he will not try to fire Fed Chair Jerome Powell. Of course, just one day and anything, you know, everything could change tomorrow. But for now, the market finding a little calm in these comments. But even with all the headlines around Doge and job cuts, the U.S. debt and deficit level still going up.

So what exactly is the outlook for markets and credit and bonds? And does the Federal Reserve really even matter that much right now? Shri Kumar is president of Shri Kumar Global Strategies, one of our favorite people. Shri, it's great to have you back on. And I'm not taking anything away from the Federal Reserve and Jerome Powell. They run a balance sheet that's about 150% larger than the tax flow of the United States of America. I would say that's fairly big. that said, is there anything they can do about a trade war?

The Fed can do something about the trade war. If the trade war continues, and I don't think the trade war is over by any means, Brian, we can talk about it. But if the trade war continues, the Fed has to be vigilant. And because of the expected increase in prices, the pickup in inflation rate, the trade war would make the Fed, if anything, hike interest rates, which is what I have been recommending for a while. In terms of the last two days developments, see what has happened. The Chinese have made absolutely no concession in the last few days.

Trump, on the other hand, after a big talk about 145% tariffs, is now willing to come down without any concession on the Chinese part. And the Chinese are watching and saying that after threatening power essentially to fire him, he says now that he has no interest in firing him. So in other words, the rest of the world gets the idea that the way to deal with this person is not to make any concession, watch. And when his market's greater, he will in turn soften his approach. And that is a very bad negotiating strategy. Shri, are you concerned about it in a geopolitical sense? Or do you think, you know, someone say, well, you know, from a market pragmatic outcome, which doesn't seem to really favor the reshaping of international trade and manufacturing and so forth, they don't

care. They're fine with that outcome, that we haven't lost anything. What have we lost if that's the case? Is it more of a political problem than maybe an economic one? On the U.S. side, Kali, what we have lost is to make big threats and not carry them out. That's one that we have lost. And so on a negotiating point of view, political point of view, it has been a loser because I think the concessions are going to come with the Chinese. And as they have responded, essentially, that they want to be treated with respect, that they haven't made any statement indicating that they are climbing down at all. So that's the one thing about the political side that you asked about, Kelly. Second, look at what happens to manufacturers and others here.

The uncertainty that they face has not gone away. It is still there. The tariffs may again come back if the president decides that the Chinese have not been sufficiently good in dealing with him. And similarly, on the Powell side, the Federal Reserve, I don't think can easily cut interest rates. And if they are talking about hiking interest rates after inflation picks up, that is going to get the president very angry as well. So all of that is ahead. And keep in mind that the chairman has his job for one more year. So that's a long time to come.

And we'll be only a few months before the interim elections. Shri, I hear everything you're saying and who am I to dispute with you. But I would say this, not to devolve into fisticuffs. The Fed has two jobs. One is inflation. The other one is maximizing employment. Every firm on Wall Street has cut their forecast. Pretty much everyone, Steve Leasman, talked about.

We look at the Atlanta GDP Fed, now survey. Everything that we've shown indicates an expectation of a slowdown, the IMF, and the World Bank today. Warning about every single person that matters on Wall Street has said things are going to slow down. Except the Federal Reserve seems to be the one major institution that is not making changes, at least as far as interest rates go. Do you find that when they cut rates last year for, I would say no reason or less reason? Do you find that odd at all?

You hit the nail on the head, Brian. Now, I'm going to respond to you with a reference to history. And I'm going back to the late Nobel Prize winner, Jan Tinbergen from the Netherlands, who had something called a Tinbergin rule. And that says when you have won a one, instrument, namely moving interest rates up and down, you can only control one objective. It has to be inflation. You cannot control both inflation and economic growth. So there is a basic

inconsistency in the Fed's mandate, and that's something that I've been talking about, writing about, and he cannot do it. So what can the Fed do? It ought to be essentially saying they are going to fixate on the inflation rate and let the U.S. Treasury and Scott Besant take care of economic growth objectives. The Fed cannot do both. Yeah, you just wonder where this is going to go because there is a point in time, and I'm not accusing anybody of anything, Shri, but I know you know this. There's a point of time where we're all humans, right? Where we have egos, right? It doesn't matter if you say I'm a political or I'm not political or whatever it is. We all have different levels of hubris, narcissism, and egos.

And I say that as a TV news anchor, fully admit where I stand on that list. You get my point, though. I just don't want, I don't think the markets or investors or our viewers or listeners want this ever to become kind of a personal, you know, thing between the Fed chair and the president where either one of them doesn't do what's best for the country

because they don't want to be seen as humans, quote, losing. Does that make sense? Yeah, you're right. It makes a lot of sense. One, the markets don't want the Fed and the President to fight. And when the markets find that the president is bullying the Fed, as happened with Richard Nixon and Fed Chairman Arthur Burns, the markets take note of it and the result is that the markets don't like it.

But having said that, Brian, what needs to be done is some kind of a rules of the road that you decide that the president does not. interfere with monetary policy, he can occasionally make a comment, but not to call somebody a major loser. And if that is the case, the markets are going to go down again. And that's the point where you have to balance the market needs with what the leaders can say in public and how they say it. Yeah, I did not have stocks falling because somebody called somebody else a, quote, major loser in the press. But that's kind of where we are. Shri Kumar, Sri Kumar Global, Strategies, much appreciated a man with as little ego as there is out there, Kelly.

So smart. We love three. Thank you, Brian and Kelly. Always. Great to be with you. After the break, we're looking for some technical support. We're not talking about Doge. Our next guest went from bowl to bear memorably on this program. So what is he thinking now?

Dow's up 559 still. We'll be right back. Welcome back. We want to show you now CNBC's newest subscription streaming product, CNBC Plus. That's what you're currently experiencing. on our air right now, the CNBC Plus data feed displaying an enhanced view and the latest headlines during our live business news lineup, Brian. It's going to be great. There's the look. Beautiful. And it's green across the board today after President Trump softened his rhetoric toward both China and Fed Chair Jerome Powell. Our next guest has been sounding the alarm on U.S. stocks since the end of December when he called them tapped out. He advised viewers to take profits from equities the last time he was on with us in March. This call's been pretty spot on so far. So, joining us. us now is Bell Curve Trading, Chief Market Strategist, Bill Strasullo. So, Bill, you've called

the kind of bear move here. So what I want to, are you still bearish or not? And we're going to have to see is it, you know, it's hard to call turning points, but welcome. We've had a pretty good session the last couple days. Yeah. Look, Kelly, Bell Curve Trading, we're the only ones that had this. I was on your show, December 31st, last day of the year, and I said, look, equity markets are tapped out. People mocked me, ridiculed me. He said, look, about 20, we've got a tight labor market, strong economy, feds easing, more pro-business administration in the White House, and we're going to have a strong year. And I said, no way, it's done, it's over.

Because I knew the long-term trend off the March 2020 lows was basically done. And then fast forward to March 10th, I came on your show. I said, look, I'm the most bearish guest on the network. I said, we'll be lucky if we're only down 20% top to bottom across the major averages, and more than likely, we're going to be down 25%. fast forward, you look at the NASDAQ 100, top to bottom, down 25%, SMP 500, down 21 to 22%, and the Dow down 18 to 19%. So the key question is, where do we go from here? And in trying to broad brush terms, I still think it's not over. I think, you know, probably across the board,

it's another 15% to go to the downside. Look, the top wasn't that difficult to call. It really wasn't. And I think the bottom, typically on these major trends when they roll over, they do the same thing. They mean revert to fair value, which is a fancy way of saying that the market should drop down to where most of the trade activity has taken place on the major trend, which is a rally off the March 2020 lows. So in the S&P 500, what that equates with, it's 4,500 to 4,100. And the NASDAQ 100, it's 16,000 to 14.5. And then the Dow, it's 35,000 to 30,000. 33,000. So, you know, get your paper and pen. Again, S&P 500, 4,000 to 4,100, NASDAQ, $116,000 and $3,000, $3,000. That's ultimately where I think we bought them. You know, people come on these shows every day and tell you, you know, every 50, 100 point drop in the S&P to buy the dip, buy the dip. And what I want the people watching the show is number one, to be patient. Number two, the location is critical. all those levels, pay attention to those levels, because trading is a lot like real estate,

location, location, location. You can buy a great stock, a great company at a bad price, and it's still a bad trade. So keep your powder dry to the levels I mentioned, and just wait. I think you're going to have a better opportunity. How much of this market bill? I understand tariffs and trade and Trump and all the headlines are sort of driving. They're kind of the match that lit it. But I do not believe, and you tell me if I'm, If I'm wrong, that this was a market that was that healthy underlying to begin with. I tweeted as much back in August saying, you know, it's not for me to say buy or sell. It's not my job.

But I can notice things like valuations. How much of this market was kind of, if any, ready for a fall? And this was kind of the match that lit it. It's a really good question, Brian. I totally agree with that. Look, I was on CNBC Power Lunch months in advance saying, look at it. the S&P to top out at 6,000, NASDAQ 120,000 and 225, Dow Jones, 45, 46,000. That's exactly what happened.

And that was months before the tariffs, the Liberation Day fiasco. Why? Because the major trend, the rally off the March 2020 lows was tapped out. You know, look, I've done hundreds of these interviews over the course of my career. Everybody says they're a long-term investor. You want to stop an interview in its tracks? Ask them, what's the long term? Is it three years, five years, ten years?

is going back to 1929. 99 out of 100 people have no idea what the long term is. The key driver here was the rally off the March 2020 lows in the height of the pandemic, when we knew we were gonna get historic monetary and fiscal stimulus. If you knew that that was the right train, you could have known months in advance

when the market was gonna top out. I gave the targets months in advance. If you missed this fundamentally or technically, you were asleep at the switch. And you're right when you say, Brian, the accelerant of the lighter fluid was really, the tariffs and the liberation day. But the market was prime for some sort of a pullback to begin with. Bill, quick, at some point the market's going to start going higher. It's happening today,

happened yesterday. It happens in the long run. So like we just dollar cost average in every day. I don't have to worry about it. You're in a different situation than me, Kelly. most of us we we advise some of the biggest hedge funds mutual fund complexes pension funds all over the world so every basis point matters and i think even for the people watching the show it matters if you go back to my march 10th interview i said to i said to people watching the show we had great years in 2023 great year in 24 take some of those chips off the table and if you did that you save yourself a good a good deal of money i know so i figure out when to get back in just come on when you're ready to read ring the bell and say get back in, you better come on. I want it to happen here. Right, Bill?

Absolutely. I promise. All right. Thank you. Have a good one. Thank you, Sir. Bill Strzula with Bell Curve Trading. Ring the bell curve trading. Right there in the name. Coming up, while your next guest says inflation may have the Fed in a big old bind. So stocks, they are higher, but they are well off their highs today. I'm not taking anything away from it. It's kind of amazing. Dom Chu joining us now. The NASDAQ is up 3%. 490 points. Like, oh, the markets are well off their highs. That is a gigantic move and a weird market.

I told Kelly the same thing at the top of the last hour. I said on any other day, if I told you that the Dow was up a thousand points or that the NASDAQ was up by 3 to 4%. I'm saying, holy moly, my 401K is doing great. But in this environment, it doesn't seem like all that much because we see thousand points swing. And I want to... And he knows he used to run my... I want to say this for you at the market navigator.

I got a lot of friends that work on Wall Street, hedge funds, prop, and desks. They're happy right now. Okay, I want to be clear. You know who's winning on this? May not be mom and pop, but Wall Street, I think, is winning, right? If you're a trader and you bet on swings up and down and you profit on transactions and volatility, then you kind of like what's going on right now, I think. But I mean, listen to this guy.

Listen, so the other part that's weird about this is that the bond market hasn't been acting the way it should be in these kinds of volatimates. moments, right? We can say yields have gone higher and everything else. So the safe havens have not really been safe havens during this volatility. But our next guest actually says he thinks that treasuries can still be used as part of a strategy to safeguard your portfolio from possible economic threats down the road. So joining us now with the case is Manjou Baraya. He's the head of systematic edge fixed income at all spring global investments. And Manju, you're talking treasuries, but you're not just saying buy treasuries outright. You're talking about a dynamic that could be developing. What kind of a dynamic are you talking about?

Hey, Dom. Hey, Brian. Good to see you both. So, yeah, so the dynamic, as you pointed out, is really around this notion that the treasuries haven't actually played the safe haven't role that they typically play, especially the long end of the curve, right? So what you're seeing in the economy is the economy is going through a heightened uncertainty, and that uncertainty is actually means that there's upside risk to inflation and downside risk to growth and employment. And as the Fed chair recently stated last week, the Fed is actually going to, you know, is well positioned to kind of basically wait and watch, right? They're going to wait and watch to see if there's going to be uncertainty around the trade policy before they make any changes to the underlying,

monetary policy rate. So given that, I would say the dynamic is really, what is happening with the curve is that we have seen two factors. So one is the reprising of the term premium, right? So what you've seen is the events of the last few days have actually fundamentally changed the term premium across the curve. And term premium, as you know, is really the risk premium that the investors demand to hold long-term debt. And that has actually gone up. And that's actually gone up more in the long end of the curve. And that's actually acutely impacting the 30-year rate more than any of the other rates. And then on the policy front, with growth slowing and the inflation expectation still being elevated, right, the Fed will potentially be on

whole, which means that the five-year rate was going to be anchored compared to the rest of the curve. So given those two dynamics, I would say the best way to position is to bet on the 530-year curve steepener. And what that is is you essentially create a dollar-neutral basket, right? So you're, you know, dollar neutral or, you know, kind of dollar duration neutral, five year and third year, and you're essentially betting on that spread to widen over time. But I imagine you've thrown a lot at us here. So let's break this down very quickly. What you're betting on in essence is that the long bonds, like 10 and 30 years, 30 years specifically on your side of things, lose value and interest rates go higher on the 30 year bond,

and they stay either relatively stable or maybe even declined slightly on the short-term side of things, hence the yield curve between the 30-year and the five-year getting wider and bigger. That's also something that may play out in what you describe as a so-called stagflationary environment. Higher inflation, lower growth. Is that the thesis behind it? That's exactly right, Dom. So basically, there are two ways the spread can widen. So the spread can widen when rates go up as well, and the spreads can widen when the rates fall down as well. Or you can see a twist, right, one end of the curve going down and the other end of the curve going up. But the scenario that we are essentially highlighting is really the stackflation, which is really where five-year could potentially be anchored, right?

And then the third year could go up. Now, the risk to this trade is if the stackflation fear turns into recession, the low. the long end of the curve could potentially rally. Now, that doesn't mean that the third year is going to rally more. It's just that, because, again, because of the elevated term premium concept that we talked about, the third year could be anchored compared to the five-year, which means that you could still see what we call as bull-steatening, right? Meaning the rates are still falling, but the five-year might fall more than the third year,

which means that the five-thirty could steepen. All right. So there you go. That's the reason why. Manjubari at All Spring with the curve steepener trade. Thank you very much. We'll see you soon, sir. And I think, and we're going to go, but I think, I think Manu just dash the hopes of anybody out there hoping that we would see a significant drop in mortgage rates.

Anytime soon. Anytime soon. Maybe not down the road, but like anytime soon. That is if the inflationary threat is still a thing. So we got to watch. It wasn't two weeks ago, but now it is again. It's all volatility. This is the spring selling season, Kelly, as you know.

This is a critical time for the housing market. Just throwing that out there. There you go. The tulips are up. The House has got to be sold. They got to be listed, too. Markets up until this point have been reacting to the President's tariff plans, but could his powers be upended by the courts?

We'll speak to an expert about that next. Welcome back to Power Lunch. I'm Julia Borsden with your CNBC News update. House Majority Leader Steve Scalise announced today that the House plans to vote next week on a GOP plan to repeal the Biden administration approval of California's plan to end the sale of gas-powered vehicles by 2035, rules which have also been adopted by 11 other states. Scalese says the House also plans to vote on a waiver to block California from mandating new pollution standards. The FBI says online scams cost a record $16.6 billion last year,

according to a new report from the agency that's a sharp rise from the 12.5 billion reported in 23. And it found the biggest victims in these crimes were Americans 60 and older, who reportedly who reported nearly $4 billion lost. And renting is still cheaper than buying a home in all 50 of the largest U.S. metro areas, according to a new bank rate study, the average monthly mortgage payment for median priced home, roughly $425,000 rose to just less than $2,800 this year. Rents have remained relatively stable with the average at about $2,000 a month.

That's a nearly 40% difference. Kelly, back over to you. Wow. All right, Julia, thank you. Julia Borson. All right, as we've talked about on this show for a couple of weeks now, some believe that lawsuits could be a market buffer against tariffs. While the court just denied one's small business groups pushed to block tariffs, at least until a new hearing is held on May 13th. Others are still trying. For example, the aforementioned state of California just filed a lawsuit to try to block Trump's tariffs on foreign trading partners.

California lawyers argue that the American president has no authority to tax insubstance. imports on a whim or on a state. And while we don't know how specific judges may ultimately rule, your next guest has an idea. Andy LaPerey is head of U.S. policy at Piper Sandler. Always again a must read. Andy, it didn't get a lot of attention, but courts did just strike down one challenge, one group of, I think, five small businesses filed together and sued. That was pushed off to May 13th. But you believe there is still a chance that tariffs get stopped or delayed in a court. Why? Yeah, I do. I think it's a good chance. Well, because I think Congress gave the president a wide variety of tools to impose tariffs under various circumstances, and there's a lot

of different provisions of various statutes that allow him to do that. But I don't think any statute, including AEPA, the one the president has invoked, it gives the president unlimited authority, just complete carte blanche to impose tariffs any way he wants. And so that's essentially what he's done. I'm here with AIPA, and I don't think he can do that. So I'm not sure, you know, when that might be overturned, but I think the Supreme Court eventually is going to overturn what Trump has done. You think so? The Supreme Court, which is conservative leaning, will ultimately say no to the president?

Yeah, well, I think people misunderstand what conservative court means and what this court has been doing over the last several years. years. And what this court has been doing over the last several years is saying that the law is the law and the Constitution is the Constitution. And there's case after case, you know, from Biden's student loan to the eviction moratorium, to the West Virginia versus EPA case, even the Loperative decision last year, which is about this thing called Chevron deference. And case after case, the court has said, look, the law means what it means. You can't just take some old statute, pick it out, you know, in the case of Aipa, a almost 50-year statute, use it in a way that it's

never, Congress never envisioned. And it, and in the, and they, and they, and they, and they, you know, and that the law does not clearly give you the authority to do. And so in case after case, they've struck down presidents who are overstepping their legal authority. And I think they're going to do exactly that. I don't think they're going to put a red shirt on and say, oh, we like Trump, so we're going to go with him. I think they're going to go with the law. In that case, Andy, you know, you could say, well, the market has been overreacting to all these tariffs, but also has to just go with, you know, this is kind of unprecedented. We haven't been through it before. And we have to assume the tariffs are going to stick until the court

potentially overturns them. How long could that take? When might we get any clarity on whether that's really likely? Yeah, well, I think two points. Number one, I'm not sure the market is overreacting at all. But it could be, you know, the business hearing May 13th will be other cases. There could be a stay or injunction at any time. On the other hand, this could play out over many months. But I think it's important to point out that even though the president, I don't think, can do what he's done on Liberation Day through AEPA, there are a lot of of statutes that allow the president to impose tariffs under various circumstances. So if you think about these product tariffs like steel and aluminum and autos and some others

that are coming down the pike, he's using a different statute for that, Section 232, and he's claiming national security grounds for that. I think it's kind of a sort of a weak on the merits argument, but a stronger on the law argument. And so I think he's on probably pretty solid ground there. So if he were to lose Anaipa, I don't think he could do across-the-board tariffs, but then he could use other statutes to put some tariffs back into effect pretty quickly. So it's not saying that the president can't do a lot because he can.

Well, I think it's a great reminder that the story is far from over. Andy, thanks for joining us today. My pleasure. Piper Sandler's Andy La Perrier. And we'll drill further down on the bond market with Rick Santelli. Maybe we'll talk more about that steepener trade. 10 years at 4, almost 39. We're back after this.

Welcome back to Power Lunch, Rick Santelli here, live on the Cibol floor. And what a day. We see that the yield curve today's flattening a bit, but most of the yield curve action really has been on the short end. What do I mean? Here's a one-year chart of the two-stend spread on top of the S&P 500. And notice how much steeper it is. If you consider that on election day, November 5th, we're around nine basis points. Now it's hovering in the low 40s. It's been as high as the mid-60s. But here's the key. Look at the difference between twos and tens since the election. Two's were at 418. They're at 384. Tens are about 10 basis points higher. So all of what's going on in volatility in the marketplace has affected the short end because of the, please come and help me fed.

But the long end, that's all stagflation and risk premium. Like you were talking about earlier, let's bring in Jason. So Jason, we see that interest rates on the long end are fighting this. But the volatility in equities, whether it's back-to-back green days, if it's going to take a long time to get these terrifying, contracts done, should we be expecting a lot more of this type of trade? Yeah, we continue to see large intraday volatility day and day out. And in the past, a lot of this volatility has been, you know, company earnings, corporate earnings, which we have a lot of this week, 25% of the S&P reports this week. But in my opinion, a lot of this

is irrelevant. We are moving on social media posts about whether or not there's been some resolution on tariffs. And we're seeing these large moves intraday, 4 or 5%. And some of it is unsubstantiated. It's just someone put something out that says there's been a reduction or a reduced in the conflict that we have. Yes. And then all of a sudden, you know, someone will come out and say that's not the case and then we have these quick retracements.

You know, Jason, every morning when there's data, I'm on CNBC bringing out the data. But the data isn't going to be as relevant. We've pulled so much activity forward to get in front of tariffs. It's going to be hard to look at 8.30 or 10 o'clock data and garnered what's going on. What you're telling me, that's where the news is, whether it's accurate or not. That's what we're moving on. Yeah, it seems to be a lot of FOMO out there, too. I think people are in fear of missing out with this retrace that they're going to miss the rally.

Well, they say the big hedge funds liquidated. I haven't seen them buy. If we continue to see green, they're quants. They have to come right back in, don't they? You're right. They're going to have to chase the returns if they do start to come. So right now we've seen a lot of retail inflow and institutional and hedge funds are on the sideline. But if they decide to get involved, you know, they have a lot of capital to put into the market and we could see a rip.

That's the key of the trade. Is it going to rip or is it going to move down again? Volatility remains. And squawk on the street is in the morning and power lunches right now and it's going to return after a short break. We are very excited because tomorrow is the annual CNBC stock draft. We've got celebrities, athletes and a team of students, Kelly, competing to win this belt. Look at that sucker. It's huge. Can we tell you and I are big people. And this belt is like this is like

WWE size. Yeah. And it's fistic cuff size belt. It's heavy. Yeah. It would be fun to say who dropped out, who we almost, but I'm not going to go there. Each of our teams get to pick two stocks. We'll track them because tomorrow's NFL draft day.

So we'll track it from NFL draft day to the Super Bowl. So now until February, then we'll crown a champion. Last year owes one. Remember the mentalist? Because he knows everything. He knows all. How can he lose? This year's roster includes.

It's Carly Lloyd, celebrity chef Bobby Flay, Andre Iguodala, who, by the way, is the only person to ever win an NBA title and a stock draft. Also from the show Southern Charm is its star Austin Kroll and students from Wall Street bound. And last but not least, of course, comedian Sebastian Manus Calco. I got to wear something cool and sporty for this, I guess. What do we wear for this thing? Well, we can coordinate. We're going to coordinate. Yeah, it's going to be fun.

It'll be very special. And only one will wear the belt. Tune in. It's a nice lens into how people think about the stock market. I love it. It's very fun. Game theory. Thanks for watching.

Power Lunch, everybody.