Power Lunch - Market sells off after historic rally 4/10/25

Episode Date: April 10, 2025

Stocks are lower today, giving back much of the gains from the historic rally seen in the previous session after President Trump announced a 90-day reprieve on some of his “reciprocal” tariffs. We’ll cover all of the market angles for you. Hosted by Simplecast, an AdsWizz company. See pcm.adswizz.com for information about our collection and use of personal data for advertising.

Hearing from the president, by the way, nearly every day, all this on a day where the stock market is giving back so much of what it gained yesterday. It's not giving back all of what it gained on yesterday's historic day, but we are down 1,081 points right now on the Dow. If you want to find any, I guess, silver-ish lining, we are off our lows, but you've still got tech stocks, the Dow and more, all down two, three, and even 4 percent coming off, of course, a 12 percent gain. for the NASDAQ yesterday. And I should note that we're still up this week. If you're just kind of doing the math on Monday to now, which feels like 52 days ago, by the way, we're actually up about one and a half to two percent on the S&P 500. That's today. NASDAQ still, even with that, higher for the week, but crazy times. We're going to get all into the markets. But right now, let's go to the White House. Amon Javvers was listening to the president in its entirety. And he joins us

now and for everything from buying a Tesla to tariffs to immigration, we heard it all. Yeah, that's right, Brian. The president here talking about the stock market saying he hasn't been watching the sell-off today, wasn't aware of it because he's been in the White House, but saying generally of the overall downturn that we've seen in the economic dislocation from his tariff actions, he says, well, we're going to have some transition problems, we're going to have some transition costs. But he said, ultimately, this is going to lead to a beautiful thing. The president here raising a couple of interesting ideas.

One is he floated the idea of an immigration pause for agriculture and for hospitality, for hotels. He said some of these industries really need these workers, and so he's floating the idea of agricultural farmers being able to submit letters to the government vouching for individual immigrants saying these people are working hard, therefore they shouldn't be thrown out of the country. That is an acknowledgement of the president of the economic impact that his immigration crackdown is having on certain industries. He also said something that, you know, I've never seen before, some of the big law firms that he has forced into settlements because they have employed people who he views as his political enemies, those law firms

have agreed to give the White House a certain number of pro bono hours of legal work. The president said he might take that legal work and deploy it on these trade negotiations. So you might have a situation where big law firms who are forced into these settlements with the president now find themselves working on trade negotiations on behalf of the U.S. government. So in fact, sort of a semi-nationalization of that big law firm labor there on behalf of the U.S. taxpayer. And the other interesting idea here that I heard, Brian, was you heard the Director of National Intelligence Tulsi Gabbard talking about how she's deploying the U.S. intelligence community. And one of the things she said they're going to be focusing on is these trade negotiations. Now that the United States government is engaging in negotiations with an unknown number of countries around the world, she said the U.S. intelligence community is going to be focused on that.

That's interesting, Brian, because you don't often hear the U.S. intelligence community talk about trade negotiations, but it has been assumed for a long time by countries around the world that the U.S. intelligence community is spying on trade negotiations. to hear it in a cabinet room, though. A little bit of eyebrow raising, Brian. Back over to you. Yeah, Aman, a few eyebrow raising comments in that room as the markets continue their slide. Yep.

All right, Ayn, we'll circle back. Amon Javers, we appreciate it. Megan Kassela has some breaking numbers from the Treasury and some more latest on the tariffs. Megan, what can you tell us? Hey, Kelly, that's right. So for all the talk of cutting government spending, it is still rising compared to a year ago,

up about 8% in March. That's according to the treasurer. Treasury Department's latest monthly statement out just now. Higher spending on Medicare and interest on the public debt, both showing some of the biggest increases for the month and on the debt. The U.S. spent $104 billion in interest last month. That's a reflection, of course, of higher rates and growing deficits. That helped drive a deficit for the month of March. And for the first six months of the fiscal year, the U.S. is now running a $1.3 trillion deficit. That's the second largest on record. I'll say, though, guys, it's not all bad news.

significantly for the month at a few agencies. That was departments of education, housing and urban development, homeland security, that last one because of lower FEMA spending on natural disasters and on the tariffs. We are starting to see some higher revenue because of them. The U.S. collected about $8 billion in customs duties in March. That's a big jump, about 32 percent from a year ago. Of course, this data lags a bit, so we do expect that figure to grow in months to come. Guys? Megan, thank you very much. Again, just to recap, and this is partly we just heard from Musk in that cabinet meeting talking about finding a 150 billion in cost savings, but these deficit

numbers are huge, to put it mildly. And when we look at the long end and the 10 year in the 30s that have been selling off this week, big part of that could be because without a meaningful change in the budget trajectory, we're seeing a lot of pressure still on there. So 437 on the 10 year after what you just told us. What can you out on the tariffs, Megan, especially on the China front? On the China front, one of the things that I think is pushing these markets a little bit lower today is that the White House clarified to me earlier today that the actual total effective tariff rate against China is 145 percent, not 125 percent. And this came not because of a change in policy, but because of a clarification, just to sort of recap the timeline briefly, the White

House told us yesterday that he was upping it from 104 percent to 125 percent. But when the executive order came out this morning, it showed that the effective rate jumped not to get too technical here from 84, which was the so-called reciprocal rate, all the way up to 125. I looked at that and said, we must have to add the 20 percent fentanyl rate that's already there on top of that, and when after some back and forth with the White House, an official confirmed to me they are added together. That gets us to 145 percent. So even without any further escalation today, guys, we know that this rate is even higher than it was. At some point, you could argue that maybe the rate doesn't matter anymore if it effectively cuts off all trade, but it does show.

show how fluid, for one, things are, how things are being hammered out in real time, and just how difficult it's going to be to really continue your business as is with these rates in place. Follow the ships, follow the goods, follow the money. Companies have no idea what's going on. Megan Casella, thank you very much. All right, so after Wednesday's historical move higher, stocks and your money giving back a lot of it today, as we just highlighted at the top, the major index is down about 2 to 5 percent, depending on which

one you're looking at. one of the biggest down days we've actually ever seen. But with Wednesday's massive gains, some of the biggest we've ever seen, we're actually still now higher for the week. So we did this, we've soared, we've come back down, not normal behavior at all for the stock market, but it is what it is. And as stock prices have come down, so evaluations.

And that is leading at least one firm to upgrade American stocks as a whole today. Citigroup raising U.S. and European stocks to overweight. suggesting the valuation is now more in line with earnings estimates. Let's talk about all of this and more with our lead off market panel today. Dan Greenhouse, managing director, chief market strategy, Solis Alternative Asset Management, Ali McArney, Managing Director at UBS Private Wealth Management. Allie. We just heard Megan do some math.

I know. Namaste. We just heard Megan do some math on the tariffs. I'm talking to business owners left and right, on air, off air. sure we all are. Nobody has any idea what their costs are. Tweeted out some tongue and cheek about it today. So as a strategist, our viewers are looking for guidance, what to do? So look, what is the guidance given that I don't think it's offensive to say. Nobody actually has any idea what the hell's going on. No, I mean, I'm asked in a day in this democracy, as you said, feels like a year, especially when the trading markets are open.

So look, in order to have the crystal ball or some idea, you have to have a few things. You have to have a view on what multiples should be, how valuable is this market, and you have to have a view on what earnings are going forward. Although... Do you have that view? We have a view, but it is fluid, right? And so the view on earnings has been, if we came into the year, we thought we were going to be up about seven. percent this year in 2020. On earnings. On earnings. To what? 260, effectively? About 260. Okay, so you put a 20 multiple on 260. That gets you to S&P 50, 200. That's the, forget about the

tariff math. Yeah. That's the basic market math on how you guys tend to work. Tend to work, but is a 20 multiple on earnings which are arguably, we have taken them with the past tariff math down to about zero. Right? Because a point of GDP is going to, off of GDP is going to take you there. So I think that the answer at this point is there are three things you can do when there is this much volatility in the market. You can manage it. That's largely diversification. You can look through it. That's the proverbial sit on your hands. The long term view. Maybe long term has changed from six months to three years, but that's a long term view. And the third is take advantage of it, right? I know your view.

is more about how you take advantage of it than my view, which is clients come to me. Often they're the business owners you're talking about, and they're saying there's a lot of volatility with my human capital. Can you please make sure there's much less volatility with my financial capital? And can I layer it, Dan, as we bring you into that, the thing that makes today a little bit weird and a little bit more queasy, even compared with the big Thursday Friday drop that we've seen is what's happening with the dollar in the long end. So more and more attention is kind of being drawn to this.

like why do people seem to be leaving dollar assets altogether? Stocks, they're leaving bonds. The dollar moves are, the declines are some of the biggest we've seen in a few years' time, and we're almost cracking back below 100 on the dollar index, which is, you know, we were at like 110, 112 just a couple months ago. How significant is that for you? It's all significant. And I think it's not that anybody is doing it,

but it would be foolish to look at what's going on right now and ignore both the currency and the rates market. So I think it's prudent for everybody to pay attention to all of it. That said, I think the overriding issue that Ali raised is there's a lot of uncertainty out there. Where I take issue with some of the talk that we have on the network and just in general is some of this uncertainty is just people aren't getting the outcomes they want, which is higher stock prices. And I think Ali laid out the math that a lot of people who are strategists, myself included, tend to think about markets. But this isn't purely a mathing story. There's a political and a policy impulse here.

Not that there isn't always a political and a policy impulse, but a greater one than usual. When you have any numbers of members of the administration saying, we're either not looking at the market, not paying attention to the market, they're telling you something, which is they acknowledge, and this has been the case for several weeks now, that there's going to be some short-term transition pain to quote Amin, quoting the president. And I think for a lot of investors out there, they're still saying to themselves some version of how could they be doing this. It's bad for stock prices. And I don't think that's entirely accurate. You have to look at this through the prism of the policy. And I want to, okay, and I'm not going after our own network here, Kelly, but see that graphics says treasury yields mostly lower.

That's not correct. Treasury yields are at their highs of the day. They're down off their highs. The 30-year treasuries at 4.82%. The 10-year treasuries are 4.32%. So I would just take that graphic off the show because we were at 3.8% a couple of days ago. The bond market has moved massively in the last couple days. And people in our viewers alley, they may not trade bonds. Maybe they own them. These are monster moves in bonds. They're not 12% for stocks. I get it. But for the bond market, it's the equivalent of a 12% move. What does it tell you?

That is super important. What it tells you is that this is not short-term pain only for long-term gain. There are long-term consequences in terms. of U.S. and non-U.S. investors assigning a risk premium to buying U.S. assets. That is, yes, it's partly the basis trade. Yes, it's the auctions that went off, but it is also a global geopolitical phenomenon that is happening and is probably, arguably, not as easy to reverse as the flip-flop we've seen on tariff policy. Or the flip-flops in the stock market, which is why I think it's just important. So, Mike Novogratz was tweeting, kind of drawing attention to this as well and just saying, you know, we're not out of the woods.

Today, the long-end trades week, to your point, the dollar could be starting a major move. Gold is flirting with all-time high. So, Dan, that's the concern is like, did we back down from this tariff policy only to have given the rest of the world enough of a queue to get out and diversify? And maybe that's for the best in long run. Maybe it's not, I don't know. You could say a strong dollar is more of a headwind to the economy than a weak one. But that's where we're just trying to figure out, like, is this still reverberating, even as we think the about faces happen?

Well, first of all, let's just keep this in perspective. The 10 year, for all the pain and, oh, I hate Trump and $36 trillion in debt, the 10 years 440. And we have it up on the screen right there. This is not like the 10 years yielding 9% and we can't finance our debt unless the Federal Reserve monetizes it and buys it all. That may be the steps that are. Bro, did you just predict the future? Because that's what we're, I think that's maybe where we're. we're going next. Everyone calm down. The Fed does not have to monetize the debt. I disagree.

Not that you were saying that, my friend, but just there are all these. It wasn't not saying it. Yeah, no, you weren't not saying it. That's right. There are a lot of well, this may be the start of this and this could be. Yes, and also, everything could work out perfectly fine. And I don't sell any newspapers or get any click saying. If you're right about that, then people should be buying. So 480 on a 30 year. You're saying is a gift. Well, hold on. We're a hedge fund. I'm not out here telling people, But I'm just saying if these moves don't make sense and the dust is going to settle and cooler heads are going to prevail, then that should be a buying. Well, first of all, I don't want to say the moves don't make sense or not because I believe in the market wisdom and the, so to speak, the wisdom of crowds, also the bandness of crowds, but whatever. But so I don't want to say what makes sense or not.

What I am saying is in the absence of positive news, other than the suspension yesterday, which obviously generated a tremendous rally, people are assuming the worst. They're assuming a global trade war. They're assuming that the 125, 145% tariffs on China stick forever, et cetera, et cetera. And all I'm saying is everyone just take a step back here. The market, as we all know, to quote, I forget, whether it's Kindleberger or whoever it was, has predicted eight of the last five recessions. There's a volatility inherent in the equity market. I was talking to somebody before we came on air.

Have you ever seen anything like this before? Yes, when the China devalued in 2015. Yes, when the debt was downgraded in 2011. We all of us have lived through these moments. moments of insanity, and not that this one doesn't have its unique characteristics. What I am saying is if you start to get some headlines that we've cut some deals with Thailand, with Israel, with Europe, perhaps, and then eventually Mexico and Canada, some of those worst-case outcomes are going to come off the table.

And again, getting back to the tenure being at 440, let's have some perspective, the equity market is off 15%, which is not great at all. Still up year-over-year, by the way. Still up year-over-year. It's not like we're down to 50%. We're up 92. We got to go to Rick. I know, Allie, we're up 92% on the S&P 500 over five years. We're actually higher year over year on the S&P 5. I mean, it seems impossible to believe, but we are actually up. If you just bought the S&P 500 one year ago and did nothing and fell asleep for a year and woke up, you're actually slightly higher.

And that's what the S&P does. That's what equity markets do. They protect, you know, against situations like this and they tend to grow between 7 and 8%. but we've had two years of 20%, and we now have an exogenous shock in a geopolitical one man in Washington. So, you know, this is the point at which you look at your portfolio, and if you're a hedge fund, it may look one place. If you owned only the queues, it's down 17%.

If you're one of our clients, you may be slightly up to slightly down, but if you manage volatility through this, stay the course, but be, I think the difference perhaps and what we are saying is that the long-term effect on assets, multiples, world order, interaction, everything macro, everything that Mike is going to be talking about, one of my mentors in the industry, then, you know, you have to be thoughtful and you have to be constantly iterating your views, and you have to remember that in the short term, everything converges to one, which is what we're seeing right now. It sounds like a Robert Redford movie, and a river runs through it.

guess my broader point. I'm not trying to be Pollyanna-ish here, and we can bring Rick Santelli into the conversation, is that you actually said it. The market's up 20 percent, two years in a row. We want everything in this country, right? We want to add $7 trillion in debt to our economy, just send out PPP money, stimulate, stimulate, monetized debt, buy bonds, the Fed stoke in the mortgage market, throwing gasoline on it, fire. Stocks. soar. And then when we normalize, I'm not saying there's nothing normal about today, but when the market goes to a normalized return over five years, everyone's out of their mind. And I'm listening on other networks that people are saying, oh, retirees are wiped out.

Okay, really? Yeah, if you put all your retirement money into like invidia five months ago, you're wiped out, you know, or you're down big. But that's not how it's supposed to be. I just want to add before we get out of the same. Yeah, they're all like, again, you talked about, We've talked about debt. We've talked about deficits. A lot of what's happening here is this administration, agree or disagree, is saying to the public, what's been happening, can't keep happening. We can't keep accumulating debt.

I think a lot of people would agree with that. Are they backing down from that? I don't think they're rhetorically they're not backing down. Listen, three months to negotiate 70 trade deals. Let's get out of the segment. There's also the budget. I mean, there's also the balanced budget and what that looks like and tax increases. This is so multifaccess.

And we have a congressman coming up later in the show to talk about those very things because we forget about taxes and tax rates and the salt deduction cap, right, Kelly? Dan, we appreciate it. Guys, thank you, Allie McCartney. Let's get to Rick Santelli. He's been patiently standing by. Rick, what can you tell us? Patient, I'm jumping up and down out here in Chicago.

Let's look at some charts and then let's weigh in on exactly where the fixed income treasury market is on the GPS scale. If you look at twos against S&Ps today, boy, they're correlating very nicely. The equity markets have moved down the yield curve. But if you look at a longer maturity like a 10 against the S&P, the correlations aren't the way they were. Almost inverse. Towards the end of this chart, it gets a little more link. But you could see the way it diverged. That is significant.

And maybe part of that is exactly the conversation you're all having about how long-dated treasuries, Gee, how many times have I said this? Debt and deficits matter. And even though we had cooler March, CPI today. Now, let's look at 2s, 10s, and 30s year to date. And this is what I find your last conversation may have gone a bit off the rails. Two year, closed at 424.

Well below it now. Tens closed at 457 were below it. It's 30-year that flirted with its exact close in its range today at 4.7. The only maturity at or above where it closed last year. But even more than that, okay, if we're all so worried about what Treasury yields are saying, why are they so far below the high yield of the year? 438 in a two-year, 4-79 in a 10-year, 498 in a 30-year.

If the end of the world is supposed to be reflected in what we're seeing in Treasury yields, they can't even make new high yields on the year. And only one maturity is even higher on the year. the year than it was at the close of last year. Those are important issues to remember. And tens and thirties in the auctions, boy, those were two back-to-back strong auctions. Now, I'm not sure if the Treasury Secretary made some phone calls, but those were good auctions. And I think we need to monitor them on a bi-weekly basis every other week. We will have supply, especially considering all the issues that are up in the air, all the plates that are spinning

on polls. Kelly, back to you. Appreciate it, Rick, Rick Santelli. After the break, is today's pullback a sign that tariff fears aren't quickly forgotten. We'll speak to the head of one firm that's already felt the pain of these tariffs firsthand. Lots more show ahead on Power Lunch. Welcome back. Let's quickly bring you up to speed on the market day because at the lows, the Dow was down more than 2,000 points, and that was only two hours ago.

We're down 887, so we've come a ways off of that. Perhaps the better 30-year auction at the top of the 1 p.m. helped sentiment somewhat. We also heard at length from the president and some of his cabinet members, during the cabinet meeting. The S&P's down 3% right now. The NASDAQ's down nearly 4%. This all, of course, even after the 90-day pause on duties for most U.S. goods, we were just talking about that. Back and forth, the big question is, will that be as damaging as the tariffs themselves? So, for instance, Chatham imports, a private business, an owner of multiple liquor brands, they've been facing this firsthand. Tariff covering Mexican spirits announced in March,

It lasted three days and then was rescinded. By chance, one container of their mescal, Los Siette Mysterios, arrived in the U.S. during that period. Easy for you to say. And we had to pay an additional $40,000 in duties for that container that you wouldn't have had to pay three days earlier or three days later. Joining us now to talk about it is the president of Chatham Imports. Joe Maglioco, welcome. Thank you so much, Kelly. So as everything swings around, we're trying to figure it out, just kind of recount for us your experience as a business owner.

You know, look, there are reasons why countries institute tariffs to protect domestic industries, but from the standpoint of like importing liquor or exporting liquor, you know, we export mictors whiskey to 80 countries. It makes life very difficult. And especially when things keep changing, you know, if, you know, once the rules are established and once they become steady, which I'm hoping will happen soon, it's, things are much more predictable and you can plan. But for example, the example that you just gave, you know, we import a high-end mescal from Mexico, Los Yete Mysterios. And there was actually a three-day

period, March 4th through March 6th when the tariffs changed. And, you know, there was a 25% tariff. And one load happened to come in on March 4th. If it came in on March 3rd, there would have been no duty. If it came in on March 7, three days later, there would have been no duty. Instead, we got hit with an unexpected, almost $43,000 tariff. Now, now, you know, that's on one container of goods. You know, American spirit importers bring in hundreds of thousands of containers a year. You know, so something like that, you know, can be quite difficult, especially if it continues, but fortunately it did not. So what do you do now? What are your plans for the remainder of the year? You're moving shipments around, timing of anything around, or doing nothing?

A mix of everything. Actually, we actually have encouraged our customers who import mixtures around the world. We've encouraged them to take their inventories from three months to minimum six months. In a lot of cases, they've actually brought in a year's worth of inventory, hopefully ahead of the tariffs that are applicable. But again, the unpredictability is a problem. You know, when the EU was going to institute a 50% tariff on American whiskey, our country responded by threatening a 200% tariff on imported alcoholic products from the EU. Now, we have a value for the money wine, Santa Maria that we import from Italy. We import a lot of it.

A 1.5-liter Pinagrigia bottle with a 200% tariff would have gone from $12 a bottle to $27 a bottle. So in other words, by trying to hurt the champagne or the European wine industry, it would have swept you into that because you import wine. Yeah, totally. And a lot of the companies in our industry don't just do spirits. They also do wines, too. But, you know, if we, so what we did was we literally paused, and there's still paused, imports of this wine. because, you know, if you bring in, you know, 100,000 cases of $12, a bottle, and then all of a sudden you have to sell it for $27 a bottle,

you're going to be stuck with a big, big, big financial loss. Do you have any idea what your products are going to cost in three to six months? Not really. And that's very different. And also, too. Multiply that by every business CEO in America now. It's very, very difficult. I mean, you know, we don't know.

what the tariffs are going to be. You know, but look, look, it was a positive thing yesterday when our government paused the tariffs for 90 days on the EU. It was a positive thing today when the EU paused their tariffs for 90 days on American stuff. So that, I'm hopeful about that. I'm hopeful things will get better in China.

But we really don't know what the costs are gonna be. For example, we make an organic gin farmers in Idaho. And even though it's an American product, you know, people talk about the automobile industry, the cork comes from France. The glass comes from Slovenia. The botanicals for the gin come from all these beautiful countries. So it's not even just like what's made in America.

We know what our cost is going to be. We don't know what the cost of the components is going to be. Where you've had people now ordering in advance. So what is now multiply that through the economy? So we could see a near-term boost to certain business sales. Yes. But then you spin that six, 12 months out, and there could be this drop-off. It's a mini version of what happened during the pandemic.

Yeah, there's a drop off. And then also, too, they'll look for extra terms. Yeah. You know, and maybe some margin help. So, you know, it's costly. Joe, thanks for joining us to detail it. Appreciate it. We really do. It may drive some viewers to drink. I just want to point that out. Hopefully they'll drink the right stuff. Only mixtors. Thanks. Joe, thank you. All right. So is that planned three-month delay that Joe just talked about in tariffs enough to re-inspire confidence long-term? Or was yesterday's move? Kind of just a one-day, one-hit wonder. We'll talk about that. that market navigator next. All right, welcome back to Power Lunch.

Markets are off their lows, but the Dow is down 976 points, down 2.4%. Nasdaq down almost 4%. Again, compared to yesterday, we're still up for the week, but nothing normal about what we're seeing here. These are huge moves to the downside. A lot of it has to do with so-called basis trade and value of risk and inside stuff. I don't want to go into. I'll post it on my social media, Domchu, a little bit later. The reality is a lot of stuff under the hood of the market. that is happening right now. That is probably a little bit wonky to go into on this segment. But you know what I'm talking about.

These are crazy moves in part because of the mechanics, the market are happening, right? Basis trade, value, at risk, all of those things are. But they are part of like the navigation, if you will, of the market. They are. And they're hard to talk about and they're weird and they're alsooteric and 99% of our viewers don't deal with them. But they are why in part we're seeing these massive. You don't do 30 billion shares yesterday because mom and pop are selling stuff. By the way, we can get into, and Kate Rooney's been doing this today, the surge and these levered and, you know, inverse levered ETFs and everything else.

So it's crazy. But all right, so let's talk about whether or not the other navigation points, because even with those 90-day pauses that we've announced yesterday from the president and in the White House, it's clear that tariff uncertainty is still rocking the market. So here to help make sense of it all is Todd Gordon, founder of Inside Edge Capital. Consumer discretionary is one of the worst performing sectors of the year so far. What I want to know is whether or not you're seeing anything in the market on the retail consumer discretionary spending side of things that would indicate that this is either a bottom or if the worst is yet to come. Yeah, hey Dom, one name that I'm seeing that's sticking out is how about one of the biggest travel hotel stocks out there booking.com. Consumer discretionary is massive. There's different areas they're doing well and others that are not.

But with all the volatility driving crude oil below 60, we're there now, we've got to think summer driving seasons here. I think, you know, with a little confidence that the tariffs aren't going to continue to send things into chaos, I think people hit the road. Booking is great, showing a lot of relative strength. It's only about 15, 16 percent from the highs. They're buying stock back. They're beating margin expectations. They're growing 17, 18 percent EPS.

I would say take a look at booking. I hold a good percent of it in the growth portfolio. I'm looking to add, again, with a little stability in this market. All right. And Todd, this is all important because for travel and lease, we're coming up on this big, all important summer driving and vacation season. What adds to the narrative either positively or negatively? What are you looking for for some of these stocks in the summer months?

Sure. I mean, again, we just, we need to know that the consumer needs to know that we're not headed for recession. The chaos that's been a reality isn't going to continue. I think the market, again, bringing some volatility in a little bit. I think getting some visibility on interest rates, what Rick was saying, the yield curve was just, you know, it broke out to new highs. Is that a good thing? Is that a bad thing? We're coming up an earnings season. You know, I just think we need to calm down a little bit. The consumer

needs to know we're not headed for recession. We are in a strong economy, stabilized once we can get through this 90-day pause. And then consumer discretionary technology, take a look at communications. I think the growth trade is still on if we can just stabilize here a little, Dom. All right. It's a consumer-driven economy. Todd Gordon, thank you very much. We'll see you again soon. So this is interesting now. Well, it's a tax cut on driving. I will say that. I filled up today for $48.

You and I are commuters. Fuel prices we see every week. I know. People will come at us, but you and I both have kind of long-ish commutes. We do. Yep. And you feel it in your purse. 80 bucks to fill up or 50.

That's 30 bucks every couple days. That you spend on something else. It matters. Kelly. Gentlemen, thanks. Time to move to my town. Coming up, tariffs are not the only thing out of Washington that could impact your money. The latest from the Capitol next.

Welcome back with stocks off session lows, and now it's just a garden variety, 900 point decline. What does it all mean for the rest of the Trump agenda? Emily Wilkins has the latest from Washington on the budget bill. Emily. Hey, Kelly, well, it was touch and go there for a while, but the House has now advanced that framework for Trump's agenda and a massive tax cut package. Now comes the hard part because look, at this point, all Congress has agreed to is the framework. And like the framework of a house, we have a sense of how big some of the rooms are going to be and where they're going to be located, but everything else needs to be filled in. All the policies we've been talking about, no tax on tips, if there's a higher tax rate on wealthiest Americans, if there's Medicaid cuts, everything we've been discussing now actually needs to be negotiated and agreed on by Republican lawmakers. And GOP leaders in Congress, they're hoping they can get this done before the end of May. said after the vote that he hopes it can wind up being a stabilizing influence on the markets.

You can talk to people in any walk of life in the private sector, in any industry. They will tell you there's trillions, four, five trillion dollars of money sitting on the sideline, not being invested in America now until they see what the tax code looks like. Everybody's talking about tariffs right now. Most businesses are waiting to see what the tax code will look like before they make major investments. A lot of the details are going to come together over the next month. And one thing to really keep an eye on here, you saw a lot of concerns the last week from fiscal hawks who were saying, hey, we need to make sure that we're seeing significant spending cuts. But you also saw Speaker Mike Johnson huddle today with a number of more moderate Republicans who say if the cuts are too big, if things like Medicaid really get hit, that's going to harm a lot of Americans.

And it could make it that much more difficult for Republicans to hold the House next year. Kelly? Emily, thanks very much. Emily Wilkins. We appreciate it on Capitol Hill today. All right, one key question. Still kind of floating around on the side is whether Congress can or will challenge the tariffs on a legal basis. Some people call tariffs a tax. And if that is technically accurate, many of you may disagree, but if it's proven to be accurate, then it's only Congress that can levy them because only Congress has the power to tax. Let's talk more about that and this budget bill and more with Congress from Mike Lawler. He is a Republican for the Empire State, the state of New York Congressman. Thank you for having, thank you for coming on the show. Do you think there is a legal basis to challenge the tariffs?

Well, look, obviously the president has imposed him. This is something he talked about during the campaign extensively. It's something he's talked about for 40 plus years. His view that other nations have barriers to entry in place, higher tariffs, price controls. We see what Europe and Japan and India, for instance, allies of ours have done when it comes to U.S. goods and products. So the president has implemented them. I support the effort here to actually renegotiate these trade agreements, actually bring about fair trade. I've said repeatedly as a short-term negotiating tool, I do believe it is effective.

and the reality is you can't threaten it unless you're actually willing to implement it. And so I think this has to play itself out. We saw yesterday, obviously, a positive reaction in the market. One day or two days or three days of volatility in the market are not going to determine the outcome of the U.S. economy. It is all of the things that we are doing together from trade renegotiation to the tax bill to increasing domestic production, of energy. All of that combined is going to be critical, along with deregulation, which you're seeing start to take effect. That is what is going to allow the economy to boom. And we will see over the next few weeks as we negotiate the tax bill, obviously all of this play out.

Well, let's talk about that. And, you know, it's interesting because Republicans are kind of saying, well, the stock market's going to go down. And now the Democrats are upset because the stock market's going down. I feel like everything's been flipped on its head. We'll see if this helps the the women and men of the 17th congressional districts, Spring Valley on up, whether or not that's going to benefit jobs. I know, and I can guarantee you, Congressman, a lot of people in your district, they may care about the salt deduction cap, what they're able to deduct off their federal taxes, because taxes in your district and around here are high, and it was a de facto tax increase, even with a top line cut, probably on some people in your district. Do you support a higher salt deduction

cap. Well, prior to the Tax Cuts and Jobs Act, 50% of households in my district itemized their federal income tax returns. Now it's about 20%, give or take. And so, you know, most people are using the standard deduction, which was doubled under the Tax Cuts and Jobs Act. And by the way, if we don't extend that, that would be a massive tax increase on Americans all across the country. So extending the standard deduction is critical. but equally as such is lifting the cap on salt president trump and i've spoken directly about this on numerous occasions he fully supports lifting the cap i've introduced a bill that would

raise it to a hundred thousand for individuals two hundred thousand for married couples we will negotiate through uh... the the reconciliation bill uh... to lift the cap on salt i've been very clear on that if we do not lift the cap there will be no tax bill because i will not support it so this is something that uh... ultimately congressman I'm sorry to jump in. Are there others like you?

There's more than enough. There's more than enough. Okay. There's more than enough of my colleagues that will stand with me, Andrew Garberino, Nicola Loda, Young Kim, Tom Kane, that will stand together to block any bill that does not lift the cap on salt here. So this is critical. You just said maybe it's going to make news it should, and I want you to reiterate it, Congress, and if we can, and listen closely to a lot of our viewers.

Even if you're in a Democratic district, this is going to impact you, certainly, which is you will not say. any tax deal and you've got enough backing to block one if there is not an increase in the salt state and local tax deduction cap correct i've been very clear about that for three years since i first ran for congress i've been very clear about that with leadership and the president the president again agrees with us about the need to do it chairman smith and speaker johnson i've spoken to a number of times they both agree on the need to negotiate this they're doing so in good faith. We will get it done because the reality is a failure to pass a tax bill will result

in the largest tax increase in American history, and I for one will not support that. So we will get it done. I'm confident of that as we work through the entirety of the reconciliation bill. And let me also be clear, because I know there's a lot of consternation about the issue of Medicaid. We are not cutting benefits to eligible recipients. The fact is that Medicaid is a critical life line for so many across this country. And it is something that I will absolutely protect, especially for our seniors, our IDD community, children, single mothers. But we also need to address the fact that you have able-bodied adults that need to get a job. Work requirements are critical. Preventing illegal immigrants from getting benefits is critical. New York State is

spending $1.2 billion on Medicaid for illegal immigrants. reversing the Biden administration's rules when it comes to eligibility verification and changing it from an annual basis to a quarterly basis. Those are things that are common sense and everyone should support. And those are the things that are on the table. I just want to quickly, could you quantify where the salt cap needs to go for your support? And do you have any passing comments on the deficit, which is on track for $2 trillion as all of this gets kind of lumped into the bill? Well, I'm not going to negotiate the number in the press. As I said, we introduced a bill to raise it to 100,000 for individuals, 200,000 for married

couples. We will work with our colleagues to get that done. The bottom line is, look, we have 36 trillion in debt. We're spending $7 trillion on an annual basis in federal spending, a trillion of which is interest payments. We're running $2 trillion deficits. Obviously, we need to rein in the size and scope of the federal government. over the next decade, we're talking about 86 trillion in spending and upwards of 1.5 trillion

in savings. No, I know, but it's only 1.7% of the federal spending. Salts is expensive. Medicaid is expensive. So I'm just saying we can't have all of it. We can't have the deficit reduction and keep salt and keep all the Medicaid. That's why we're negotiating. That's why we're going to negotiate over the coming weeks and come to a final bill that has

218 votes to get it across the finish line. Yeah, no, I appreciate. why it's so difficult because this is, there's something everybody wants in a very, very slim majority. Congressman Mike Lawler, thanks for joining us to talk about it. Appreciate it today. Thank you. Stocks are off their worst levels, but the NASDAQ is still down nearly 4% after its best day in more than 20 years. More after this. Welcome back. As we approach the final hour, we could see much more consequential action,

and we're seeing stocks losing a little bit more momentum already. Let's bring in C&BC contributor and I-Fi AI CEO Ron Ansana here on set with us, along with Rebecca Walzer, who is president at Walzer Wealth Management, just for a little bit more discussion about what we've seen today. Top of the hour, Ron, we had kind of a feisty chat with Dan and Allie about whether what we're witnessing, today in particular, is worth freaking out about, if I may, or not, the fact that the dollars down and that the long bond yields are up. Look at what we just learned about the deficit, the discussion we were just having about salt. You know how expensive that would be. So are there still reverberations from tariffs or to the other notes that we've been seeing today is the dust. going to settle and people realize, hey, we just learned this morning. CPI fell last month. We

had a 228,000 jobs, and the economy will be just fine. Well, CPI fell pre-tariff, really, for all intents and purposes. So that hasn't really been factored into the future inflation that may occur as a result of tariffs. I don't think we're out of the woods quite yet. I mean, we were down 2,000 points at one juncture today. I'm almost giving back two-thirds of yesterday's gains. So I think when you look at the tariffs overall, still the effective tariff rate, even with the rollback of the reciprocal tariffs is higher than it's been in decades. And in some cases, if you factor in China, apparently higher than it's been in the century. So I don't think we're out of the woods. I also think the market's underpricing some of the other changes yet to come, not just

on the budget front, but geopolitical realignment, military realignments and things like that, that are all part of the Trump administration's future policy plans. So I think the markets haven't fully priced those in either because they could lead to unintended consequences as well. Yeah, I guess the question, Rebecca, everyone's trying to answer is where does this go, And I know Ron's done the same. And Kelly, I was reporting during the internet boom and bust, the great financial crisis, subprime, 9-11, all those things. This doesn't feel like that. This feels like we have the ability to kind of control the outcome.

What do you think is going to happen? I mean, it's a good point. I agree with you. We've seen, obviously, consternations. And, you know, Fourth Industrial Revolution is really kind of where. where we're at the edge of and beginning. So I do think this is a big sea change. I agree 100% with Ron.

There is a lot of geopolitical and macroeconomic realignments that are happening globally. And that will absolutely have an impact on the U.S. stock market this year, especially as we implement trial policy, absolutely. Rebecca, what are, what moves are you making right now, if any? Yeah, I mean, we do have a couple buys. We do like, you know, if you're really concerned about tariffs,

you could look at like an Alibaba because that's very established inside of China and the Middle East, even in Europe. And obviously that would be potentially circumventing U.S. tariff policy. We also do like Merck. They just built a billion-dollar facility in North Carolina. And we think that if Trump goes after tariff policy or pharmaceutical policy with tariffs, which he said he will do, that it will be a great big production facility for Merck. So we like that.

And we still like the dollar stores because if we do get consumers like University of Michigan consumer sentiments still lower, lower, lower three months in a row, then we know consumers are going to be looking at dollar store alternatives, even to Walmart. So look at Dollar General. If you're looking for some short-term discounted price action, those were we're really looking at things that will do well if the tariff policy continues as it's been so volatile. Yeah, Ron. Well, since I work for an AI fintech, I don't make individual stock recommendations. We have a vehicle that does that. If AI is so smart, what moves there is AI making right now with all of this? Well, I think our S&P forecast for the next month is up

5%. So, yeah. And now, having said that, admittedly, we missed the downturn a little bit, It happened so swiftly and so severely that's going to happen that you don't have the type of anticipatory news. And you're reacting rather than anticipating at this juncture, as we saw yesterday. You can't catch that upside no matter what because it happened in the middle of the day. And it's just an unexpected outcome. So look, I think, you know, from the human intelligence side, I don't think volatility is going to slow down. I think we'll see more volatile. It may not be as dramatic as what we've seen in the last couple of days where, you know, you're getting a 12% move in the NASDAQ.

These are market moves. These are internal things that I don't want to, you know, that bore the audience with. Well, I mean, listen, I covered the 1987 stock market crash when we were down almost 23%. And, you know. But what people forget about that. And I want to remind me we'll say goodbye is that the year ended higher. Nominally so. 88 was a great year.

No recession. Recession came in 89. Yeah, but 88 was a good year. It was a good year. 1980? I sound like Biff from death of a salesman. 1980 was a very good year. Back to the future.

Rebecca Walzer, Ron and Sana. Thank you both very much. Really appreciate it. Really crazy couple of days. And thank you, everybody, for watching Power Lunch. Yeah, be sure to tune into our new show, airing across Asia 6am, Singapore time, hosted by whoever that guy is right there. Don't miss it. Closing bell starts right now.