Power Lunch - Dow surges 2,300 points for biggest rally in 5 years after Trump pauses some trade tariffs 04/09/25

Episode Date: April 9, 2025

Stocks surged Wednesday, after President rump announced a pause in some of the ‘reciprocal’ tariffs, causing a market that’s been under extreme pressure for the last week to explode higher. 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 we'll give Kelly a couple seconds to get over here as well because we are going to start with the market that is absolutely ripping higher. What is this? The face ripping rally that some have talked about. The NASDAQ 100. That is not a misprint. The NASDAQ is up 9%. The NASDAQ is up 10%. The Dow Jones Industrial Average is up 2,600 points. The 10-year bond yield at 4.38%. So what exactly just happened? Well, the market was fluctuating all day long this morning, and maybe we should have listened to him, President Trump putting out on his social media feed that we need to basically chill out and buy the stock market. Well, guess what? About an hour ago, the headlines came crossing that there is indeed going to be a 90-day pause on some, some, not all, tariffs. And that pause, this one's real.

Remember we had the kind of the pause head fake earlier in the week. This one is real. That sent the markets ripping higher. That pause, though, it's critical to note, not on China. So again, folks, that is not a misprint. You do not do rub your eyes, and let's hope you have not been drinking at this hour. But we, unless you're around the world, I guess. But we are seeing the market soaring right now.

What about the travel names? They're popping as well. All the Mag 7, the apples, the invidias, the stocks that got absolutely hammered, they're the ones that have come riproaring back. They're up more than 10% in some names. The chip stocks, they were market leaders prior all this tariff conversation. Well, again, AMD, Intel, microchip technologies, these are also names that are all soaring. It has been quite, I would say quite the day, but it's been quite the week.

So let us get back now to talk about these tariffs. We've got Megan Casella is in D.C. We've got a full guest panel. We got Steve in D.C. But Megan Cassell, I want to go to you first because we got this 90-day pause head fake earlier in the week. It appears that Scott Besson got what he wanted maybe. This is real and the markets are reacting. This is real, Brian.

And this is really a major step forward with some caveats that I'll get to. But for now, you can see the market reaction. And rightly so, as you mentioned, it's down to a universal 10% baseline tariff that does remain in place on everyone. But all of those country-specific tariff rates as high as 49% on some trading partners. Those are now on pause because of the ongoing negotiation. Treasury Secretary Scott Bessent just told us that more than 75 nations have reached out to the U.S. over the past week. The President wants to be involved in each of those. And while they're ongoing, they're putting everything else on pause, except, of course, with China where they're not happy about their retaliation.

And that's why that tariff, they say, will hike up to 125%. We'll keep an eye out for paperwork, making that official. But we would expect that to come in the next few hours. Just a couple of other headlines from the Treasury Secretary. He insisted this was the president's decision that it was not because of the market reaction. He said it was instead because, again, of those negotiations and the country's reaching out. He said also that the market understands that everything that came out over the past week, that was the ceiling, he says, on tariffs, and that now we're back to the floor, which for now is 10%.

I'll say, Brian, though, the caveats that I mentioned, yes, this is a very good step forward. And we are in a much better place than we were an hour ago. but we still have a universal baseline 10% tariff. We still have an exceedingly steep, 125% tariff against China. And now we have another 90 days of uncertainty, Brian. So still a lot more to come as each of these negotiations goes, as Besson says, country by country. Yeah, Besson appears for now to be the winner. Peter Navaral, maybe the loser as well.

Investors, at least for one day, today, still down, but maybe winners. We got a big panel to sort of kick all this off. Kelly has made a way to the set as well. We got Francis Donald, Chief Economist at RBC Capital Markets, David Waddell, Waddell and Associate CEO. We're joined also in D.C. by Steve Leasman, who was there to do the Fed Minutes. But Steve, this news, I think, pardon the pun,

trumping the Fed Minutes, at least for now. Rick Santelli's in Chicago. And Aiman Jabbers, who is at the White House. And, Amon, you were the one on Monday that sort of squashed this 90, day tariff talk by actually, you know, picking up the phone and calling the White House. You move markets on that. As you heard from Megan, this one is real.

This appears, it appears to be a wholesale change at least for three months by the president. And I think, and please, if I'm wrong, tell me, this is a big win for the Scott Besant wing of the White House. Yeah, that's exactly right, Brian. I can tell you I was in the West Wing when the social media post landed by the president. and it was a bit of a quiet afternoon until that moment. And then suddenly everybody's phones and screens lit up with this post. It's a long post.

So as people were reading it, it took a moment to digest exactly what the president was saying. And there was real surprise in the West Wing, at least among the people I was standing with, that this had happened. Now, those are not necessarily the people who would be in on the highest level conversations, to be sure. And what we just heard from the Treasury Secretary Scott Besson is that this was a strategy that dates back to Sunday night. He said he was with the president on Sunday night.

Remember, Besson traveled to Florida, traveled back with him after his weekend in Florida and was here spotted on the colonnade by reporters on Sunday evening. Besson says that's around the time when he spoke to Trump and they came up with a strategy of letting the tariffs go into effect and then putting a pause into place. So this has been a closely held secret, if that's the case here at the White House for some days right now, as the entire world was reacting

to the president's tariff policy, the president knew at all times that he was going to do this, according to the version that we just heard from Scott Besson. He also laid out sort of the rationale for this. Here's what he said. I think what we've seen, I think the willingness by more than 75 countries to come and negotiate, I think now the market understands that everything they saw last Wednesday was a ceiling. Now we have a 10% the temporary floor. And I think the market, my 35 years in the market, I always wanted certainty. So I think we've got more certainty.

So Brian, you see this relief rally happening in markets now since this post went up on social media. And you heard the Treasury Secretary there talking about the idea of getting more certainty. But the scenario he's laying out is not entirely certain, right? because what you're looking at now is 75 separate trade negotiations with what they say are 75 different countries. He said each one of these negotiations will be bespoke. The president wants to be involved individually in each one of these negotiations. And so that means there could be 75 different outcomes in terms of trade with individual countries around the world. And that sets up a future over the next 90 days where we could be getting announcements, status updates, and the like.

on as we go along here on all of those different negotiations. So for people in the global marketplace, that's going to be tricky to follow, and there's going to be a lot of ups and downs between here and there, Brian. Amen, appreciate it. Don't go too far. Amon Javers at the White House. We're stocks.

The NASDAQ's up almost 10%. We have individual parts like the airlines are up 20 percent, Robin Hood's up 20 percent. Some of the retailers are up 20 percent, absolutely levitating here. Let's turn it to Francis and David for some context. And Francis, maybe you can take it first. But what do you think is going to be the net impact as the dust settles from the announcements we've had the market reaction and now trying to still figure out the economic effect of 125% tariffs on China?

Well, look, the economist game in the past few weeks hasn't been point forecast. It's been scenarios. And when you ran those scenarios, when you saw something like Liberation Day, 20% average import, that was really consistent with a recession in the United States and some pretty high inflation. But we also ran a 10% across the board. That's not exactly what we have here. but it gives you a framework. And what you see in a 10% across the board, well, it's still problematic for growth and it's still higher for inflation, but it's not that same sort of deeper, formal recession type of call. So some relief, I think, in a lot of economists forecasts right here. But I have to tell you, Kelly, if you had told us last week that we were going to have a 10% across the board tariff wall around the United States, that still would have been a painful impact to growth. It still would have been material downgrades, a lot of inflation. I also have to say 90-day pauses are not an eradication of tariff risk. So companies are still going to be looking at uncertainty, and a lot of companies around the world waiting for what their individual negotiations will mean for the United States as well. Underlying all of this, we've still had stock market volatility. That might impact sentiment and some consumer behaviors as well. So it feels a little bit of a

relief here, but I have to say 10% tariff is still a massive reorderate of U.S. trade and global trade and certainly is not an eradication of the risks that we had seen in the past week. David, I've heard some sort of theorize, and there's going to be many theories about all of this, but that one of the president's rationales here may be to get the budget deal done, right? They have a very slim majority in Congress at the House. They have vulnerable Republicans running for re-election. They're up against a constituency who's clearly alarmed about some of these new policies. Does that give just enough breathing room to get that across the board?

And at least maybe then provide some ballast if they do come back to this policy. And who knows if they will at this point. Well, obviously, the tax cuts a huge deal. And we need that to occur. whether you can use the tariff revenues to offset and the budget reconciliation. I don't mean specifically. I just mean in terms of political. Yeah, well, majorities have their privileges, right?

And so the Republicans can use that, at least as a talking point. I think two major things were revealed to us in the last 15 minutes. One, Bessent does not like a four and a half percent 10-year treasury yield. Like, I'm sure at midnight he was sweating that, and that's probably what walked into the Oval Office and said, we've got to make it change. She wants lower. Yes. Much lower. I tweeted out this morning tomorrow, and I wasn't like.

like me just tweeting my feelings, the market was screaming for change. The market was going to push for change, David, no matter what. Correct. And when you see stocks move and bond yields move in the same direction, that was the leverage that Besson needed to convince the president that Navarro was wrong. That's what I think happened. And I think he walked into the Oval Office and said, we can't fund this thing at all if we're going to have these come unmoored because, what, $600 billion comes into the United States from foreign purchasers, they own eight and a half trillion in treasuries. If they go on a buyer's strike, then we just start having these yields levitate, and none of this stuff happened. So I think that was the panic button. Number two, China's the

problem, right? I mean, if you look at China's share of global manufacturing over the last 20 years, it's really coming out of the U.S., but it's also come out of Japan. It's also come out of Europe. And so we know that the 10-year is the leverage to get the deal done. We also know that China is the main focus of all of these negotiations, and rightfully so. So I think those are two huge bits of information and what had been a huge information vacuum. Steve Leasman in Washington, D.C., Steve, I know you were there to cover the Fed minutes. The Fed minutes are out, but obviously this is kind of superseding a lot of that. The Fed is looking at all this data, and kind of to Francis's point at the top of the show, it appears that the data now,

tomorrow and the next day will be different than the data we would have gotten earlier this morning or yesterday. How hard does this make an already nearly impossible Fed's job? Can I say more nearly impossible? Is that a good answer? I think that's correct, grammarly. I mean, not a laughing matter. Obviously, this is good news that the president backed off these tariffs. It's bad news as one of your earlier guests said that these 10% tariffs, remember, Brian, we were down trillions of dollars on the S&P going into that Rose Garden announcement because the market hated the tariffs.

And it's interesting to think where the market would have priced that day had the president announced just 10% across the board tariffs. Remember, that makes us one of the most highly tariffed countries in, or the highest tariffs in the developed world, higher than Europe. And of course, the president, as we know, made up those tariffs. And now he's increasing the Chinese tariff that he made up that they charge us,

which is obviously a separate issue. But let's talk about... But that's... It's not, because Steve, as I understand it, and by the way, please, if anybody out there knows that I'm wrong, let me know. Because, Kelly, I'm just winging it here.

The China tariff, as I understand, it is still there. I think the comment was the cause will be on tariffs for countries that don't reciprocate, but the EU just reciprocated. So I don't know. Steel and aluminum. The steel and aluminum, I don't know. That's where I was going to go, Brian, because here's the question I have.

If you're an investor right now, if you're a business person, what probability do you put on the idea that tomorrow there could be another tweet or another tweet after that? I think that business would feel, let me give you an example. I broke a story this morning that the Treasury was meeting with Wall Street, former Fed and Treasury officials to discuss the idea of a sovereign wealth fund. That's a process by which you can come to a policy that then can be understood by Wall Street. There was no such process in the tariffs here. He made up the tariffs on the day of the tariffs, or maybe the night before.

And so you still live with this fear that over the course of the next 90 days, it comes back, the tariffs come back, you still have this 10% tariff. Look, things are a whole lot better than they were with these other tariffs that were in place. But you just have to be careful. You will forever have this idea of the policy that can come on at any moment with any tweet, unless that process changes. And somebody like Scott Besson were to get control of the policy process in a way. way that is understandable and predictable. Do what you want, Mr. President. Just let us know that you've thought about it. Yeah. It's the right policy and it's going to stick around for a while so they can figure it out and invest on it. And I know we have Rick there as well. Rick, I'm not,

I'm not leaving you hanging, but I got to go back to Francis on Steve's point. I think Steve makes a great point as usual, Francis. Your job is not, you're not making political sides. You're just, you're there, you're there to model, as you said earlier. I'm there to model what I think is going to happen. Besson said, well, we're going to get more. businesses hate uncertainties right about that. I don't know if he's right about the more certainty now. As an economist, you're modeling. Does a 90-day anything give you a certainty in modeling? My physicist friends would say no, but they're crazy. Well, we can put a number in an Excel spreadsheet and now start it 90 days later. But what it does is it reduces the

probability of the most severe scenarios. And I think the most important thing that I heard in the last hour was when Besson said 10% is now the floor. We told you the prior situation was the ceiling, but this is the floor. So when you're modeling these types of exercises, you're now putting a different probability on these types of scenarios. Now, it's imperfect, and that's why you have to be transparent and have a lot of humility and understand the upsides and downside risks. Uncertainty is the biggest unmodelable downside risk to any economist forecast. We don't always know how it permeates through the system. We know higher income household America. and CEO uncertainty is probably more problematic for the economy than lower and middle.

But also, Brian, I've never had this level of uncertainty related to Washington politics in my forecast in my career. And for a lot of business owners and a lot of households, they haven't seen this level of uncertainty either. David, anything you'd add? No, I just think a lot of people, as you mentioned, had already discounted the fact that we probably would see a 10% tariff. And maybe that hangs on because we created the external revenue service. So I guess there'll be something there.

And then the negotiations with China are going to be fascinating. The only way for China to get out of the box is to increase the value of their currency by 30%. That's the only way to get outside the box. And by the way, the reason we run trade deficits is because we're richer and everybody else. And because we're exceptional, our currency value is higher. So I don't know how all those rip-off rates come back to the floor after all this. I think you're at 10%, you're at China. And we'll see what happens with these other negotiations.

But it's really about China at this point. Yeah. And what are the impacts of that? I mean, normally we'd still be talking about that's amazing. in an era where there's consumer exposure, could be a major source of inflation. I mean, it's all... Yeah, I think the inflation is there. I mean, you know, whatever I was getting ready to order to put on my wall to watch this in higher death,

I may have to put that decision off and see what actually happens. And I guess I don't know how many iPhones Apple shipped in yesterday via big airplanes. And so we're just going to have to work through that. You know, the play with the Chinese is never to do these things out in public. You've got to do them in private, whether those negotiations start progressing, or not, I don't really know, but I think the 10% tariffs are here to step. Well, Rick, with all due respect to David's television, a lot of people may be

looking for a place to put that TV, which would be a house. And for a brief moment of time, we saw mortgage rates collapse as bonds got bought, yields came down, mortgage rates collapsed. Not anymore. They didn't collapse. They didn't collapse. Okay, they declined. Would they go down?

Yeah, not much. They weren't ever below 6%. No, You could probably find a high five somewhere if you bought down the rate a little But my point is that now we're back to 7%. We got a 10 year. It's at 4-4-2. What's the bond market?

We have 37 trillion in debt. The last guest said, oh, my God, the capital account, we need that from foreigners. You know, we're just such a rich country. We're rich. We're the boiling fraud. You know what nobody talks about? Everybody's talking about the capital account. All this money that the trade deficit puts in the surplus countries that gets recycled and

buying our debt. that robs us of any feedback loop that, hey, you used to be rich, now you're beggaring everybody by borrowing so much money, but you don't feel the pain because the trade surpluses overseas in China and Japan. It keeps coming and recycling, and now we're in trouble. Listen, we've always been in a bit of trouble, and in my opinion, we can't let those that own our debt end up telling us what tune to play. So if you look at it from that point, perspective. Maybe what the president's doing isn't how you would do it, isn't how I would do it, but it really is more about results. And as far as companies and uncertainty, tough.

Yeah, it's well said. The bond market, though, David, is moving. The bond market appears to have been moving. Usually it sort of leads the stock market. Oil, we guys, let's throw oil up there as well, because oil was below 60. And I want to point something out that it's not getting as much attention because everyone focused on Trump and the U.S., and that is yields, the bond market moves, David, were the same around the world. I think Peter Bukfart said this to you, Kelly, right, in the exchange? At least if you look at the countries that they had, it was Japan,

it was the UK, it was Europe, it was Australia. So you can either read that as it's not just us, or as Dramatis kind of suggested you could read that as, well, that's a lot of the Western kind of trading block that China might or another, you know, might be upset about. So there's a couple different ways to read that. But it was fascinating because it shows it wasn't just the U.S. problem, David, But so I guess my genius question to you is simply, what the hell happened?

Like, what happened the last few days? Is there a way to explain to non? We got a lot of non-pros watching CNBC right now. Okay? You're scared. 401ks are down. 529s are down. What happened?

Well, I mean, I don't know. I'll tell you tomorrow when I have time to think it through. I think I don't know is probably the most honest answer we've ever gotten on C&BC. Right. Well, all right. So people have their long-term asset allocations. they should be set up. So strategically, the long-term asset allocation

always bake these things in. So the dollar was down, what, 70 basis points when I woke up this morning. So where was that in the linkage as well? I think it's going to take a while to do the autopsy and figure out, you know, yesterday I had lunch and I heard a couple of guys talking about a hedge fund pain and the basis trade, and I think that was part of it too.

But in terms of how to apportion responsibility for that move, I don't know. What I do know is that, as Rick said, we're 25% of the world economy, everybody else is 75%. If they go on a buyer strike because we do rely on their capital, it is going to create some upforce,

whether it's perceived upforce that generated selling or its actual upforce that leads to lack of buying. I don't know, but the perception was clearly that we were creating a large problem, and I do think that was the pain point

that sort of facilitated the press conference. Rick, what would you add? You know, here's what I'd like to add. Whether it was COVID crisis, credit crisis, tie-b bet, tech rack, long-term capital, and all those, you couldn't call a timeout. Say, okay, COVID, the markets are crazy. Let's do a timeout.

Let all the markets come back and regroup. But we did a timeout here. And the Dow is now up 2,500. The NASDAQ's up 1,500. My point is that this is really different this time. There's no timeouts in a real crisis. And technically, the economy really isn't much different than it was a month ago. I understand the uncertainty and the fact that,

that all the data might be different. But that's something to think about. The other thing is, you know where all the action's been the last hour and a half in two-year notes? At 118, a two-year note was at 368. It traded to 4%. Okay, that speaks volumes about how the Fed has a very small role in what's going on.

Well, Rick, wouldn't that tell you that they perceive a much stronger near-term economic outlook because the tariffs back, because he backed down? I just think it's people that were looking for. for the Fed to somewhat intervene. That's changed. I don't care what the Fed funds market says. It doesn't necessarily mean it's gonna come to fruition.

We've seen many false starts. I really do think it's readjusting that the Fed is not the salve here. This is all about what's going on in the West Wing, and it's about isolating China. I think the Treasury Secretary said a lot of things I might not necessarily 100% agree with, but one thing I agree with the 1,000%

is you can see who the bad and good actors are based the last several days and who is going along with trying to negotiate and who is it and Rick Francis Rick's making a very critical correct and important point and I want to say this to our audience I tweeted out earlier if you are seeing price hikes that people blame on the tariffs they're lying to you they're gouging tariffs have not they kicked in yesterday okay now we had we had solar panel tariffs from the Biden administration we had EV tariffs from the Biden administration we had Trump tariffs won and some steel and aluminum tariffs about a month ago so I guess you're building a pipeline or anything involving a lot of steel, your prices may have moved. But for anything else,

the retailers are gouging. I want to make that clear. That out of the way, now that we've done the public service, because I think it's important, Francis, to tell people the tariffs kicked in yesterday, right? Or at midnight. 10% tariff would have kicked in on Saturday, I believe. So, but there's no time for any goods that you're buying now. And that's a small, small number. So, Brian, this is the point, which is that you can have tariff policy. You can say it's a means to an end and that we've won a victory here. But there is damages in this economy because tariff

policy and the president doesn't control the economic actions of all agents across the entire country. We know from past experience that when prices go up, other companies take advantage of it. We know that when tariffs are put on and then taken off, the companies don't then remove those prices. So there

is actual change as has happened to this economy. Repeat that. That was critical what you just said. We know that when companies have tariffs applied and those are then removed, that not all companies then drop the prices after the fact. Why not? Because they're taking on opportunity in the economic environment. Oh, so you're saying that capitalistic organizations might act in a capitalistic manner. Absolutely. And if you're a capitalistic organization and you're in uncertainty and the

stock market has created this volatility, you may pause decision making. So we're looking at tariffs as a revenue generation, but we also have to remember that this uncertainty, if it weighs on growth, and by the way, it will, and 10% tariffs will lower growth, that your revenue from everything from employee taxes to business development, that's also going to fall. So to say that we've removed this risk now or we've lessened it and therefore we can all breathe a sigh of relief, I think we may be underestimating the impact that flows through in these tentacles for the economy. We're still better place now than we were last week. There's no question. But to say it was an on-off switch, I think is misrepresenting how this is going to go through. So there's no off-switch there.

Hold on for a second, David. Steve, I want to give you back in here because I know you've done extensive work on this, and we're going to go back to such shows as, you know, like a week ago, where the 10% tariff, because we're still trying to figure this out. So to Francis's point, is 10% blanket tariff? Do we have any idea how much of that will actually flow through? The price of stuff that Steve Leasman buys is not going up 10%. Somebody's going to eat it over here, somebody's going to eat it over there. Right. It's going to be a couple percent, right? What's really amusing, Brian, is you caught me. I was looking in my email file. for whatever modeling I might have had from the Wall Street economist about a 10% tariff.

I think Goldman, a few other folks, I can't find it right off the bat. My recollection is it's shaved something like 0.2 over GDP as opposed to say 0.8 or 0.9, which we saw was the modeling of the current tariffs, so quite a bit less in terms of economic impact, still negative. And I don't know if it was 0.2 or 0.3 on the upside when it came to prices, but much less than the current ones because the estimates I saw for the most recent tariff regime, the one of a few minutes ago, was like a percentage point on GDP down, almost two percentage points on GDP down and almost a full percentage point up on inflation.

So those seem to be gone now in terms of what's going to happen. We don't know if there's actually going to be any negotiation away from the tariff regimes that exist. for other countries right now, we don't know if the 10% tariff can come off or that's now a permanent regime. I guess Wall Street would breathe a sigh of relief. But I mean, here's the question. Did we have to go through what we went through to get where we are now? I guess we'll debate this. The stories will debate it for a long time. But I'm sure a lot of people are saying, what? Really? This is what we got? For what? Well, it creates a pretty amazing one-day move. I mean, the NASDAQ's up 10%. You know, you have

United up 25% Delta, one of the strongest names in the S&P 500, David, that's now, people are going to go, I didn't get in maybe on Thursday. And by the way, a lot of people did. And we talked about that a lot of retail investors got in when the market first started selling off. What do you do now? I mean, it was hold your nose and buy, right? And so it was a coiled spring. I mean, every single technical indicator, all the VIX, all the moving averages, everything said, you know, hold your nose and buy. And I've been at this for quite a long time. The best day to buy is the day when I can't tell you why you should buy anything, right? And that day was basically yesterday.

And then at midnight, it just got even worse. So it was a coiled spring. But one thing I'll add about that. Well, hold on. I want to stand that point, and I want you to add it. But I want to follow up on this. I think you may get a critical point. Okay.

The CNN Fear and Greed Index was at four out of 100. Correct. Okay. Everything was awful. And that's the lesson here. And the market, who knows, tomorrow it may fall 10%. I don't know. To Kelly's point, JPMorgan Chase is up 10%, Morgan Stanley up 12%, United Airlines, up 25%.

Today, Walmart, best day in five years, up 10%. But it's a good lesson that you never try to time the market, right? Because the people that sold yesterday are now, who knows what will happen tomorrow, but for today, they've missed it. And I think this is a critical lesson that the best single days in the stock market generally come in fearful and uncertain times. I don't know a lot, David, but 30 years of doing this tells me that. Well, and furthermore, if I have a client who calls and said, I can't take it anymore, I'm going to sell.

I say, fine, what's your buy strategy? Right? And that's where they typically get tripped up, because I feel bad, so I want to sell. But if you can't articulate why I would get back in, what the trigger would be to get back in, you should not sell. Right. And so you've got to do two decisions, not one. Fair enough. Let's bring in Bob Bassani as well for some more color here on what's moving, where, and Bob, where some of the biggest reaction really is here as we digest the news. Yeah, it's in cyclical sectors largely, but, you know, it's just talking to people down here. It's hard not to come to the conclusion that President Trump blinked here.

I mean, this vindicates people who are insisting that while the president has a much higher pain threshold than people anticipated, there is a pain threshold. It does exist. And recessions don't look good for your image. Stock market crashes don't look good for your image. So, Kelly, if you look here at the S&P 500, we have regained about half of the losses since the close on Friday. The closed Friday, I have 5670. We went all the way down to 4980 or so. And we're back up here to the 5,400 levels.

So that's regained even a little more than half of the losses that we've seen recently. That's quite a move to the upside. And if you look at the sectors, it's largely in the areas of growth and cyclicals where the biggest moves are. So there's tech, and that's moving up in the last 20 minutes or so. It was initially 9.5% gain in technology. Materials was initially 7 on the pop, and you see it. So it's getting higher here. Energy was 6, now 7.8, and consumer discretionary also moving to the upside.

Defensive sectors are up, but not nearly as much. So you see staples, for example, up about 4%, health care up 4%. And these, interestingly, have not moved in the last 20 or so minutes. So it's really the growth and cyclical sectors that have moved here. What there is not is any, as we like to say, any off switch for China. So if you look at MCHI, there's a number of ways you can look at China ETFs, but MCHI is one of the broadest ones. Since about 140, there has been a modest move up,

But this is largely on a technical bounce that began earlier in the afternoon. You see here it's really not up much at all since around 120 or 125 when the announcement was made. And, of course, that shows you how difficult it is for China stocks to be moving here. So, Steve Insleece-leasman asked, I think, the right question here, which is, is this worth more than just a one-day pop? I mean, considering this could all change with a tweet here. And 90 days is a long time. That's what encourages me. And that's what encouraged a lot of people as I was coming out of my meeting when this happened.

That that's a very good time period for people to sort of take their breath and figure out what's going on from here. So as of now, the market's coming to believe that this is a real break and that there is a potential for real negotiations with these 75 other countries that the president has said are calling. Kelly? Bob, thank you so much. The NASDAQ was just up about 11%. So huge one-day moves. Let's turn to your colleague across the floor, Jim Kramer, who joins us, I believe, also. from the New York. Are you at the exchange? Jim, where do we, thank you for joining it.

Where do we begin? Holy cow. What do you do? What does it mean? What do investors do? Well, we've heard a lot of good wisdom from the panel. I know that Brian was talking about how you have to be in there for the hard days, so to speak, to turn to good days. But, you know, a couple of things we've learned, went home last night and all the people who were short Apple, were short Nvidia, short the Meg, Mag 7, you know, anything. they were high-fiving and completely thrilled. I would say that when the market goes down this much day after day after day, that the shorts, well, they might just send me an invitation to your funeral.

I mean, honestly, and the other people besides the funeral crowd, the Get Out Now crowd, they're wrong too. The Get Out now a Monday morning crowd was wrong, and the shorts who were high-fiving were completely wrong. The shorts obviously playing a role even at this very moment because they still can't believe that this has happened, particularly led by stocks that they felt were kaput. I also want to point out that this is not best in victory

and all that stuff about, like, you know, Lutnik loser, and it's not Peter Navarro's turn to go. It's none of that stuff. The president makes a decision. He likes to pit people against each other. That's something I learned when I was a judge for the apprentice. I mean, he also is actually prone to some drama. But I'm sure right now they feel that they have an encirclement policy against China.

that they look like the good guy. An hour and a half of a guy is listening to everyone on air saying how China has us and that we look like idiots and we've done it wrong. You know, you can't count anybody out in this scenario. So, I mean, I don't like, I mean, look, Besson has 35 years. He likes to bring them up of being on Wall Street. But I think that this was more of a collaborative effort than people realize. Can it last for a long time?

Look, the president's mercurial. I don't think he wanted people. He said last night he was for Main Street, not for Wall Street. Wall Street. Main Street has 401ks and they have IRAs. And if he's for Main Street, well, then he's done pretty well. But I would just point out that the narrative change says you don't want to short a bad market with this president and you don't want to get out. You just stay the course. That's the right thing you do. Bulls make money, bears make money, and pigs get slaughtered. And in this case, the shorts with the pigs. They were, Jim. I mean, on the political side,

I might, the Besson thing, the Navarro thing, we'll move that. We don't know. I don't know, but I will say that there does appear to be some infighting at the top. And I don't care about the politics, Jim. I'm just curious about where this. Why don't we care? We want to make money and we don't want to lose money. You know, if it's Navarro, if it's a lot of it.

I mean, who cares? We're never going to know. We're not going to be in the room. Fair enough. I think it goes to where trade policy may end up. But let me ask you this, United Airlines, okay? I'm looking now on my screen. United Airlines is up 27% right now.

I mean, it's still up over six months. It collapsed and it's come back. Has the fundamental business case for people getting on an airplane changed that dramatically in a day? I don't. This is the kind of stuff I don't know. Delta had good numbers. I thought Delta was going to be awful. Delta had good numbers.

Their single biggest raw cost, fuel. So they're going to do much better. I mean, fuel's falling apart here. I know that Chevron bounced back and blah, blah, blah. But, I mean, so you have two big positives. One was the Delta was really good. And second is fuel goes down. Now, these are volatile trading vehicles, and they're very excitable.

And people get, you know, the United's been cut in half. But it is important for people to recognize that when fuel goes down, it makes up for some of the people who don't show up in planes. She's the oil companies. I mean, I guess people got short them at the end. You know what, Brian, there's so much money being made. made by the shorts that they've really, really decided that they had their way. And it turns out that that was a mistaken way to approach them making money. All right. On that note, Jim,

if you'll just stand by for just a second. Let's get back to Amon Javers. He's got more color about how exactly this all went down. Amen, what can you tell us? Yeah, Kelly, we're just trying to understand exactly the decision making here at the White House when all this was decided. You heard Scott Besson, just a short time ago, at the West Wing door. And what the Treasury Secretary said was, and this was driven by the president's strategy. He said he and I had a long talk on Sunday, and this was his strategy all along. To me, that indicated that the decision to reverse these tariffs was made on Sunday. But that is not the case, according to Caroline Levitt, the White House press secretary,

who I just spoke to just a couple of moments ago in the West Wing. What she says is the decision to reverse course on these tariffs happened in the Oval Office today during a meeting with high-level officials and the president of the United States, and they hammered out the language of this truth social post in that meeting. And there was no decision back on Sunday that this was going to be the playbook, that in fact it was all decided today shortly before that post went out to the world. So what we're looking at with that social media post is sort of a near real-time view into presidential decision-making.

She didn't offer any details on who was in the room with the president when he made that decision or sort of why this decision was made today. We did hear Scott Besson, the Treasury Secretary, saying that it wasn't due to the bond market, which moved dramatically overnight. But so we'll have to wait and see if the president offers any more explanation for that. We're going to see him possibly a couple of times today. There's an event with race car drivers here at the White House. He might take some time out to talk about.

it there. Caroline Leavitt telling me that the president is very excited to talk to the world about this. So we may hear from him shortly. And we heard from him this morning. We've heard from him a few times. He said buy this. I mean, Jim Kramer, the president this morning said, basically he told us, sort of tipped his hand on what to do. I think he said buy the market this morning. Yeah, well, it was very kind of contemporaneous when I was talking with David about how it would really be great if he would just say he'd buy the market, which, which, was good. I would tell you that he's attuned to the media, but what matters is that that's exactly, the press secretary, my understanding is that's exactly what happened. And it's, they were

very heartened about the number of people that came to the table. They felt that they did have the Chinese encircled. They decided to press their bet. They went from being, looking like they were off base to recognizing that maybe they had a pretty good situation going and they struck, I also think that there are enough people in that room who recognize that the shorts were having their way and actually think like that. Remember, these are people who are pretty seasoned. I mean, Secretary Luddick's pretty season. Secretary of Best is pretty season. They really get it. Look, I know Peter DeBorrow is a hundred people who's a volatile guy. I know Peter for a very, very long time. He gets it too. So it's entirely possible that what you're looking at was something

that came together when they realized that, wait a second, we have 75 countries that say, we see eye to eye and we've got one that doesn't. Well, let's just isolate the one that doesn't and make them look like they're just bad actors. And they succeeded. So, I don't know. I mean, it worked. Look, if you're a bull, this was a good day.

Don't outthink it. Stop thinking about the damn bomb market. Look, I love the bomb market. The bomb market has moved like a, you know, a couple of persons, a nano basis. And yet that's all we focused on. Come on, we got to focus on helping people make money. That's what we do.

We're not hedge-spun people talking about a, basis trade. We're trying to help people make money. And when help people make money, tell them to stay in the game when there's total despair, tell them not to quit, tell them not to short, tell them to get off leverage, and let it play out. But stop confusing people with the damn basis trade. We are not on a trading desk. That is not our goal. We are not trying to get a job with Stanley Trunk of Miller. Jim, that was not yet. It's all about Main Street. Main Street. At the least I looked, there's more people on Main Street than there

our hedge funds. You know? I mean, maybe that's why we're in niche. But you heard my comment earlier, Jim, and we got Michelle Crusher Cabrera joining us. Love her. Here as well. I love her too, but we got her, Jim. She's on our set. She's the best. She's common sense. You heard me say earlier. Whatever you take away from today, this is a lesson in not trying to time the fricking market. If you're talking about the Main Street trader, they're not a trader. They're an investor. There's seven days a year that make all the performance. We know that. We know that. That's it. Seven days. Seven days.

So you can get out now and you can send me an invitation of funeral, I'll just enjoy it by staying the course. And I got to run, but, you know, I've got to go try out, I'm trying to get a job with, I don't know, with Persian Circle, whatever. All right, let me go get that job. Bill Ackman is very pleased about this. He's, you know, sending, shouring praise all around. Jim, Jim, with the rhombus.

Dynamite guy. Pershing rhombus. It's a geometry. I got to get a job. I got to get a job with Zuckerberg. Let's see what he's up doing. I'm going to do Glock. And then, by the way, I'm using perplexity now.

It tells me that I should try to get, I can send my resume to David Solomon. Where's he? I'll talk to you guys later. We'll see on Mad Money tonight. Love you. Michelle just got back from China. Like literally came straight up in the airport.

I mean, and lost in all of this, all the euphoria today is that those China tariffs now get escalate. And let's even paint the bigger picture now of what everybody's talking about. The ocean. Federation that now we, did you hear what Mark Rowan said this morning on Squabox? He said the U.S. in Mexico could become the new U.S. and China, basically. I mean, people are thinking this through on a cosmic level now as trying to isolate the Chinese. So anyway, curious, your response to that. Yeah, so I was there for the last two and a half weeks. I was traveling

with a foreign policy delegation and we met with government officials, business leaders, students, journalists, et cetera. And look, I think the Chinese were extremely surprised at the ferocity that they faced in the terrorists, because leading up to the announcement, they had viewed Trump's second term as very different than the first term. In the first term, they were top of the list, day one, China, China, China. His second term, they're like, wait a minute, he's focused on the border, he's focused on immigration, he's putting tariffs on China, on Canada and Mexico. They kind of felt like they had faded into the background.

That was absolutely the narrative. So they were clearly very, very surprised. Economically, they know the best answer would be to do nothing. Politically, they cannot do that in their eyes. And so this is why we have this state of escalation that I'm not sure. Can they come up with nothing else? I mean, other than this continued escalation? They have been sent the message that the most important thing to the president when it comes to China

is them stopping the shipment of precursor chemicals of fentanyl to cartels in Mexico. And they claim that they have done what they can, that they've done a lot, that they'd like to work with the administration, but they are also not sure that that's what he really means. Maybe they, maybe the administration just wants to contain China, and this is the way it's going to be. I know we got DeWordrick McNeil of Longview Global is joining us as well. We still got David Waddell, Waddell and Associates here on set with us, kind of get that bird's eye view. DeWordwick, uh, your take on the last 24 hours, because I'm out of question. So where do we go from here?

Well, I think Michelle hit on some of this. I think there was a hope, Brian, that the Chinese and the U.S. could come together and try and negotiate a settlement, try to use the phase one trade deal as a baseline to come to a negotiated settlement. But I want to be clear here, Brian, the Chinese have actually been preparing for this eventual outcome if it were to be the way that it is today. So they have put in place a number of that they did not have in 2018 to try and fight back. As you know, it won't be symmetrical. They export about 500 billion to us, about 100 billion coming in from us to them. So there cannot be a tariff to tariff, dollar for dollar tit-for-tatt with China. But it's going to be a total economic war, as I call it, Brian. And our companies are going to be on the front lines here, many of them that's dependent on China. They will be targeted. DeWardric, you know, in our conversations with the government officials, you know,

this is a Chatham House rule, so I'm going to be partly vague here, but they tried to put on this face that they were ready for Trump 2. They had already been through Trump 1. You know, it's hard to believe because you bring up the key numbers, which are they're an export economy, and this country is going to tax their exports dramatically, and that's going to hurt them a lot. and it remains to be seen just how much they can take.

I think that's a good point, Michelle. I will say, though, that today's announcement to remove the reciprocal tariffs on places like Vietnam, quite frankly, may help China because depending on what the negotiations between the U.S. and Vietnam is over these next 90 days or so, that still leaves an open border where goods can flow south, and you can still try and gain this a little bit on just the trade side with China. But again, I want to stress there are going to be other things that's not based on just trade that the Chinese will try to do. But I think, Michelle, they would have liked to have negotiated, to be fair. I mean, they're going to fight back for as long as they can. But there is this deep asymmetry.

But I don't expect that China will fold quickly. You will recall, Michelle, it was 20 months during 2018 of a tit for tap before we finally got to the phase one trade deal. So I think we still have a lot left to play here over what I'm calling the Great Trade War of 2025. Is there any color you guys would add about what was happening in the Treasury market? And like the extent to which they could or would or might or ever, ever shall affect upwards our bond yields? So we got mixed messages on the currency. There was this talk that perhaps, you know, currency is the tool they have, right? We let the currency float very freely.

They control the currency. And there was some talks that maybe they wouldn't let the currency deprecrued. which would make the tariffs left's effective. Maybe they would actually keep the currency where it is or actually let it appreciate and therefore make the U.S. consumer actually feel the pain and try to force the hand of the president. But I think we've seen the action in the last few days as they've gone the path of least resistance, which is to allow the currency to depreciate and offset the impact of the taxes. That's what they did during Trump 1, by the way, almost entirely.

And I hear Jim's, David, I hear. Jim's points about don't try, you know, we're talking about the basis trade on CNBC and time value and value at risk and all this other stuff that we know because we live this and we talk about every day. I totally get that point. And I think, you know, CNBC stands for consumer news and business channel, not the stock market channel. So your clients, some of them, I think, might be looking to sell into this rally, right?

Like they're down. They've made a little bit of money back today. what's your advice on how to approach a day like today? Because I've got to take a break and I've got to call them. So for the clients, the way that I... Got 12 and a half minutes left in the show. Give us the 12 and a half minutes. We appreciate it.

Yeah, okay, I can do that. So my view of it is, again, the asset allocation has been set, right? We, at discretionary managers, de-risk the portfolios a little bit coming into this year because there was so much policy uncertainty, right? Then you get the down draft in the market. The question is, what do you do with that? The way you make lemonade out of the lemons is, you do a little tax trading, right? So if you've got positions that are down, you can sell them,

you can harvest the losses, but you reposition in the same asset allocation as you had otherwise. And again, a lot of our clients are still generating capital, right? So cash builds up in a little bit of a reservoir. The way that we've been telling them to deploy that capital is when we get to sentiment extremes, because this is a sentiment-driven market, not a fundamentals-driven market. So if the bullish sentiment on the AAI gets below 20 percent, we buy. We put some more. money to work and we use those sentiment extremes as opportunities. And, you know, this is a great snap back here and Jim mentioned it. This is longs coming in. This is also shorts covering. To what degree, to what proportion I don't really know. Is this over? It's not. It feels super good right now.

But there's going to be more back and forth. And China's going to have something to say either subtly or publicly. So the volatility is here. We have to figure out ways to use it until we get to claim. And Michelle, I'll call on your knowledge at not as someone who just got from China, but also somebody who sat on this side of the desk for years. I want to make something very clear, too. We're talking about tax losses and stuff. The S&B 500 is up 90% in the last five years. I just want to point that out. Like, it's been a rough week. But if you bought a year ago, you're probably flat the down. But if you bought five years ago, you're still way up. I just want to make that point because it's easy to forget. Michelle, we've lived through a lot of these

markets and turmoil specials. Yes. Right? And they're all very scary, but I think a guest we had on earlier this week, Peter Malook made this point. This is why you get paid in the stock market because there is risk. Things do go down. Oh, yeah, absolutely. All the time. Yeah. If you have been well diversified,

you've actually done okay. Yeah, if you're like 40% government bonds, you're probably breaking even right now. Exactly. I mean, if you were long in Vida and long the Mag 7, okay, you're feeling a lot of pain. But if you had discipline and you said, you know what, I'm never going to let one position get larger than one or two percent of my portfolio, and you were consistently trimming, even though it's painful to trim a winner, isn't it?

It's just, oh, you want to kill yourself, but you've got to do it because... I don't know. We're not allowed to own stocks. I am now. As you are now, but we're not, you get my point. I feel it much more viscerally now that I'm allowed to own a portfolio. It's fantastic. But someday.

Hold on, but it's important. How has that changed your thinking? We can't own stocks. Oh, I know. Our family doesn't own stocks. It's almost more interesting. It's much more interesting. It's so much more, every single day.

By the way, I also help manage an endowment for a nonprofit. And you think about these things all the time as well and how to balance. And then worrying about, okay, you know, stocks and bonds went up together for decades. They can go down together at the same time. So diversification gets tricky when you're worried about. those kind of things. Well, I think you're right, Brian, to zoom out a little bit. We are in the midst of a technological transformation.

So even if, and I know what the model say, if there's a 10% tariff, then we subtract 0.4% off of GDP. If productivity growth is going to be 2% or so, and we hold labor force somewhat constant, you're starting at a 2% level. So even if we deduct, you know, half a percent for tariffs, I'm not saying that's the case. Even if we do, there's still GDP growth there, and all of the, you know, that's the productivity coming into companies makes them more profitable. So we expected profit margins to rise. Now tariffs may offset some of that, but we are in a special period of time where technology

is the really big story. This stuff is, as sad as it may sound, I think nibbling around the edges. I think we're in a very prosperous period of time. We don't need policy to run amok, but the base case is prosperity here. There's still a lot of confusion as well about these actual tariff rates. DeWorchik, just to, as an example, if that's more about the U.S. and Canada, you know, is it 10%, is it 20? It just depend exactly on who's in and who's out.

But DeWerjerk, do you think there's something bigger going on here where the U.S. is trying to actually bring together a coalition, a coalition of nations contra China? I think that was certainly the clearly articulated plan during the Biden administration. I thought it was the right approach. You've heard me say that on air many, many times. I think starting it this way, meaning you would target everyone and then back off and say, well, now we're going to target China,

provides a lot of uncertainty and whiplash for our trading partners. And so I'm not sure that our trading partners over these next 90 days have been done any favors. They are now going to try and figure out how to hedge on both sides because I'm not sure they can trust the U.S. or the Chinese for that matter. So I don't think it's been made any easier on them in terms of negotiations. you know, think about Vietnam, for example, how do you close that back door? What's negotiable? What's not? And I think coming back to Michelle's point about China, you know, it is very important to make clear to the Chinese what your goals are. That's the only way we're going to figure out whether or not these things are negotiable.

Fentanol and the precursors there, I think that's absolutely something that China can do more on. And it's negotiable. Trying to change China structurally, I don't think so. I just worry. So I'm going to get my sense. I'm in trouble with this comment, Michelle, like, you know, there's a point of boy's life where maybe you have to get into a school yard fight, right? And your parents could say, son, don't fight. But if you do get into a fight, you know, hit back, right? Don't just take the punches. Xi Jinping has had a terrible life.

If you look at his life history, he lived in a cave at one point. The guy's had a wharf. He went through the cultural revolution. He went to a horrific. His parents were ripped away, egg and tomato. Yeah, he's, and I just worry, I do worry that between these two gentlemen, President Trump and President Xi Jinping, neither one of them is going to be the guy that walks away.

And if we get this schoolyard fight, you hit me, I hate you, I hate you harder, somebody picks up a chair. Where does this end? How does this? Is any one of these gentlemen able to walk away from a fight? Yeah, so now you're asking about human nature, right? Which is difficult. I would say the other side of that coin is you have two people who could actually talk to

other, right? This is, there is the potential here. I think one of the things that I discovered over there is that they're confused about the lack of structure. And I don't mean disorganization. I mean more that, you know, under the Biden administration, there's layers of people, there's teams set up to negotiate, there's all this stuff. And that's not how it is with the Trump administration. It's a very short way to the top. And so who is their counterpart? Who do they talk to? They're, you know, they're trying to figure this all out. And this is something that I think is going to be negotiated at much higher levels than we would have seen traditionally in the past with, you know, teams traveling here, there,

and everywhere, and lots of calls. It's just not that way under Donald Trump. He is a former businessman. He is not a longtime government employer or bureaucrat. What do you make of the people and some of the reaction, as this has escalated, this is why we're talking about, you know, using bond yields as one reaction function, the idea that the Chinese would move on Taiwan at a time like this, if they really feel like their backs are up against the wall and to the point about the schoolyard fight and they're looking to throw a punch. So that is a debate here and that is a debate there. There's the belief that maybe now would be the perfect opportunity, but there's also a discussion about the fact that President Trump has said repeatedly he wants to be a president

of peace and therefore that they could relax on Taiwan. Let's see what decision they make. But certainly that's something that we talked about that was talked about a lot. But the proxies came back online, right? So now it's a 10% tariff for Cambodia, it's a 10% tariff for Vietnam, it's a 10% tariff for Lao, right? And so there is also a saying in China, which is that the mountains are high and the emperor is far away, right? And so this is going to find a way. I don't think Trump is

going to go to Beijing and I doubt that Xi Jinping will come to D.C. or Mar-a-Lago. But let's say, David, as an investor, we get a headline that says Xi and Trump to meet in wherever it is. Positive. But that they're going to be, right? Does the market rip higher because now at least they're talking to Michelle's point?

Yeah, because that's the big game. That's what this is all about. And I think before with all these rip-off rates, they weren't really reciprocal tariff rates, it made it impossible for China to figure out how to route the water around the stones. Now, you know, they can. And so it just reveals that this was about China all the time, I think. Brian, I think it's important here.

And then China. To Warwick? Yeah, I think it's important here to know. that there is, to your point about the school yard fight, that's going to happen. There is a pain point for both of these countries. And the question is, what is that pain threshold? And I think looking at the news today, it may be read in Beijing that the bond markets brought Trump to Hill. And, you know, Xi Jinping doesn't have all of those immediate concerns. So I think he will play this out. We did get to the table in 2018. I want to be clear about that. But it took 20 months

and several rounds of back and forth and tit for tat. And so I think we should just ready ourselves for that. There's a pain point for both countries. Who reaches it first? I don't know. I think, quite frankly, China may be prepared to suffer a little bit more than we are giving the news overnight. That's how many people will read this.

To Wajik brings up a great point, which is the natural checks on power here in the United States versus the ones that do not exist in China. There's the potential for political blowback. if prices are too high, right? There are elections. There are markets that send signals. Donald Trump has to think about those things. Xi Jinping does not have to think about those things.

There are some who think the game theory here is create a window of opportunity to pass the budget bill. You know, they've got a couple of people in the House. They've got a lot of vulnerable Republicans, and they've got a short window to get this thing done. So just by imposing that 90-day delay, is it a political move here as much as anything?

I mean, who knows, right? That'd be great because he's got to have it. Otherwise, the question is, are the midterms important, right? Or is it about winning four years from now? Is it about the continuation of the Magway movement four years from now? This morning I woke up and thought, well, this really is all about reindustrialization. And maybe they're willing, a la Reagan, 1.0, to sacrifice the midterms to win the White House back. unclear, but even in that scenario, they had tax reform that was passed, right?

It has to pass. So if this levers that up a little bit more, then that's better for the agenda. Tesla's up 19%. Is that crazy? What did you, I heard you mutter. That's crazy. I'm looking at airlines up 25% these crazy moves. That was my point of Kramer.

Did United Airlines business prospects go up 25% today? Did they go down 30% the last week? I don't think so. It's been binary. It was either going to be the largest tax hike in history at 30% on the tariffs, or it's going to be the largest tax cut in history because now it's free and open trade all over the globe. And there's debate within the Republican Party, even Stephen Morris saying prioritize the tax cuts, do not prioritize the tariffs.

You know, it's gone in the wrong direction. So there's internal debate within the GOP. And it was the other way around in the first administration to your point about the differences. You know, that was done first. And I know Jim would disagree, but I think Scott Besson won today. I agree. I do believe there was an internal fight. DeWhorter, thank you.

Thank you. That was awesome. Michelle, thank you. Thank you. There's the Dow up 2,222 points with a nearly 10% pop in the NASDAQ today. Don't have days like this often. Closing bell starts now.