Power Lunch - Sell-off on Wall Street gains steam 3/28/25

Episode Date: March 28, 2025

Stocks are selling off today, pressured by growing uncertainty around trade policy as well as a more grim outlook on inflation. We’ll tell you all you need to know to end the week. Hosted by Simplecast, an AdsWizz company. See pcm.adswizz.com for information about our collection and use of personal data for advertising.

Is the buzz coming out of the AI trade? One big new IPO says it might be. Welcome to Power Lunch, everybody. All magnificent seven stocks, less than magnificent, deflating again. Inflation shows it may be re-inflating. No doubt it's a nervous time. So we're happy. As always, the calm your nerves with our friend, Sarat Setti will be with us all out. That's your job. Now you know. Got to calm this down, Sarat. The Dow is down 700 points. Nearly. We're just off session lows. The S&P is down 1.9%, 2.6% drop for the NASDAQ, as Brian mentioned, the Mag 7 really kind of leading the way lower once again. Now, today's losses have all the major averages kind of back in the red for the week, including the Dow, the S&P, the NASDAQ.

For the S&P and NASDAQ, this makes five losing weeks in the last six. And there's just one trading day left in the month. So March will likely be the NASDAQ's worst month since December of 2022, about an 8% drop. But remember what happened following that cold December 2, two straight huge years for the market. So we'll leave it on that happy note. All right.

So we got a lot to do this hour. But let's start with about 75% of the American economy. And that is you, the consumer, because the American shopper continues to show they may be getting tapped out. Consumer sentiment at its lowest level in over two years. Inflation, it continues to stay warm, which will impact what the Federal Reserve does. And now you can layer on some of the AI hopes, maybe deflating, which could. it also hit stocks and then maybe hit consumer spending even more. All of that is putting pressure

on stocks to the Dow down as much as 700 points today. So let's talk about all of it with Aditya, is head of U.S. Economics at Bank of America's Securities. Surat Setti, as we noted, onset, managing partner at DCLA and a CNBC contributor. Surat, let's start with you. Is it tariffs? Is it AI? Is it C? all the above. It's all the above. And it's a Friday, and we're going into April 2nd where people don't know what's going to happen. And really after yesterday, when the 25% tariff came on, so really the uncertainty going into a weekend where you've got potential stagflation numbers, you've got potential tariffs coming down the road, you've got an IPO that doesn't really do that well. So it's a risk off. It's why put equities or why put money on risk right now.

And to your point before, you and I were talking, look, it's not like valuations. is really cheap across the market either. So let's look for opportunities. I think you're going to get some in the next four to six weeks. But in the meantime, you know, the path to least resistance is the market going down. I don't like to sound of that. I mean, we've had a number of people in recent weeks come on and say there are signs of it bottoming.

There's signs, you know, this and that and the other. Why do you still feel like the path of least resistance is lower? Because if we're going into earnings season in a couple weeks. And where you're going to hear from a lot of corporations is like we are, we can, can't move because we don't know what to do, whether it's, should we do an acquisition, should we go buy a factory, build a factory? We don't know what that's going to be, so what are we going to do? Nothing. And at that point, and you've got a consumer now and you're starting to see in some of the retail numbers as well. I don't think we're going off a cliff. I'm not trying

to say like, hey, this is going to be a 30% correction. It's just that the air is coming out of the balloon and kind of, it's very hard to, if you're going to be trading around these numbers and investing, look, I think there's some great companies out there that if you haven't bought them in the past, you can start buying them. Okay. But I think we're down 8%. And it feels a lot heavier than that because every day there's some piece of news that can get the market go up 2%, or now we're down 2%.

And, you know, as people, when you've had two years of great returns, it just, you get price bias, right? Yeah, Dee, I want to pick up on something as well that Kyle Bass said last hour when he basically said, yeah, I think the playbook is a recession from the administration and kind of making an analogy about why that might be good in the long run. run, but is that kind of to put differently what the Treasury Secretary is telling us when he says he wants a lower tenure? I'm sure he'd want that in a high productivity, you know, disinflationary way. But one way or the other, is that way, when we talk about the Trump put isn't there and so forth,

is that what you think is going on this year? So I can't really comment on whether the administration prefers a recession or not. But what I can say is that we don't have a recession in our forecasts. Obviously, you see the weakening in consumer spending. You're going to get a really soft quarter for consumer spending, right? But some of it might be asynchronous. There's two things going on. The first one is stagflation.

That's your word of the day. Nominal consumer spending actually looked fine. It's just that for the last two months, a lot of that has been eaten away by inflation, right? And then on the second thing, what I would say is good spending was okay. Services were really weak. services, food services were soft. So if you want to look for a silver lining here, maybe some of that is weather-related. If you look at kind of real-time indicators for March, I think things actually look okay. You see that in our card data, the data that cover folks that have BAC cards.

You see that in the tax refund data. You see that in air travel. So I don't think we're setting up for a disaster. I don't think we're setting up for a recession, but are we in a soft patch? Yes, we are. And the reason is stagflation. You know, Aditra, let me approach everything from kind of a different way. Is there, should there be any surprise from anyone if the consumer slows down? I wouldn't be surprised. 1.2 trillion in credit card debt. Home prices are still up, even as monthly payments are up.

The average car price is almost $60,000. I don't, I'm confused maybe more why anybody would think consumer spending would remain strong. I'm going to push back a little bit on that. I'm actually pretty optimistic about the consumer. Why? Because what we've learned over the last couple of years is that real income growth is the number one driver of consumer spending. And for all of the inflation that we've had, cumulatively wage growth has outpaced price growth. And if anything, that's happened more at the lower end of the spectrum.

We've also added a good number of jobs over the last five years. So in that sense, income growth has kept up and actually outpaced the issues that we've seen with prices and aggregate. So that's helpful. And then on the balance sheet, while there are concerns about credit card debt, that number is quite small compared to the biggest driver of consumer liabilities, which is mortgages. And folks are not defaulting on their mortgages because they're locked into low fixed rates. If you look at overall ratios of assets to liabilities, you look at delinquency rates across all types of debt, all of those indicators, quite benign, quite encouraging. And even in the last couple months, despite the weak spending data, you've actually had strong income growth.

So the saving rate has gone up. So I'm not worried about the consumer until the labor market cracks. Terrat, are you? He made a good case. That was the most polite pushback in TV history, by the way. You're wrong, and here's politely why. I'm not worried about it as much either, but I do think some of the things to watch for are as if inflation is

sticky and you've got these tariffs and you've got other companies keeping prices up, you're not going to get the Fed in the game. Right. So there's no Fed put at that point because they're going to be very careful as to what they want to do that because then if they do go, then the indication of the Fed going is, wow, things are going to be worse than what they really are, right? What is the Fed seeing that we're not? It's not going to be a positive, at least in the short term.

So I think you have to be really careful here. And look, and we have to kind of see what the jobs data is going because you are getting a lot of job cuts, especially in the government last. And right now- That was really where the jobs came from the last few years. Right. And you believe the data, not all the jobs were created at government level. Yes.

But if it wasn't government, it was healthcare. And then what are we going to do the private sector, right? The whole idea is the private sector picks up the slack of the government sector. But if you have uncertainty in the private sector, you're going to be frozen. So are you going to see CAP-X increase? Are you going to see M&A activity increase? You're going to see hiring increase. Right now, I would say, probably not.

I don't think you're going to see a lot of firings, but you're not going to see people going out there and saying, hey, this is what I want to do. You mentioned there are a couple of names you could pick up. Now I'm just curious what those would be. So I think if you look at, you know, in the consumer staple side, you get companies like Nestle that have really been taken to the word shed. I think they've got great global product company.

You want to be in some of the staple areas. I think a Coke and Pepsi will do really well of these areas. The valuations have come down for a lot of these companies as well. And then in the healthcare sector, you look at J&J, you look at some of those companies that have just really not done well. And the year-to-date, they have. And that's, again, J&J trades at 13 times earnings. You haven't had that valuation in a long time. Could they do some M&A activity?

Could they do more divestitures? Yes. So I think you... Well, they've got to do something. Right. Because there's no value with them or Bristol-Myers Squibb in their entire pipeline, effectively. Right. And you're...

Like you're valuing the company only on the cash flow generated by the current products, not on anything the company may or may not do. I say that in particular because I happen to live around a number of J&J and Bristam Myers people in New Jersey who have expressed, let's how we say, extreme frustration with said issue. And yet the investors are like, just give us the cash right now. We just want the cash.

That's it. Give me the cash. And it's option value in some of these companies, right? They're solid. I mean, J&J is one of the few AAA balance sheet companies out there. So you do have opportunities. You don't have to kind of hide out in the AI stories and all that, which, again, I think you can own for the long term, but some of that's come out.

Quickly, do you have a take on the Corweeve IPO? I think it's a tough time to do it, again, and the timing of where we are on a Friday before April 2nd, right? I mean, people are not allocating capital to the markets right now. They're kind of seeing in a wait and see. So, you know, why would you step in front of that right now? I know the public, the capital markets want to go, and I think they will be the right time for it. I just don't know if the timing was right.

I do think it's a good company. We're not participating, but I do think there's still growth there. It's just a tough time to do that with the environment that we're in. So, Aditya, what is the next most important biggest data every day? What is the next biggest, most important piece of data you and your team will be watching? It's going to be the April 2nd announcement, right? We need to understand what tariffs will be imposed on whom, across which sectors will be across the board, how much room is there really for negotiation? And that we're not going

to know on the second of April. But one thing that's important is will the tariffs be applied immediately? Will there be a little bit of runway, which would give countries a little more time to negotiate? So that's really important. And obviously, when you get to Friday next week, you have non-farm payrolls. We're above consensus. We're looking for 185,000 on job growth. Some of that is going to be payback for the weather issues we had the first two months. And a 4.1% unemployment rate, which should also be just fine. But just picking up on the comment, the conversation earlier around the Fed and the Fed put, I'm 100% in your camp. I don't think the Fed put is there right now. They're concerned about inflation. It keeps surprising to the upside. And don't forget

inflation expectations today. You mesh now at 4.1% on long-term expectations. That is a concern. Because inflation might remain hot. And therefore, there's like, I think Steve Leesman, didn't he talk about this talk of the top of the show? Yeah. How are they supposed to lower rates of inflation's up? Right. And I would say it all goes back to me. I mentioned this.

Go ahead, Adia, but I was going to say it probably goes all back to the labor market. Sorry, I was just going to say one thing to watch for is if you get that three handle on CorePC, we're still a few tents away from that. But if you get there maybe with tariffs, the optics around cutting get a lot more difficult, I think, for the Fed. Fair enough. Absolutely. Adia, thanks. Appreciate it today. Adia Bave, joining us from Bank of America's Security.

Sirot will stick around with us. Let's get a quick check on bond yields as well this hour following this morning's economic data. Yields are down across the curve, so it's a risk off day, as we like to call it, the 10 year. Look at that, down 10 basis points despite hotter inflation data. But the weaker consumer spending and consumer sentiment reports are trumping that today. All right, as we had to break, why one new AI-focused IPO may be casting a big cloud on this market and your investments. It's called CoreWeave. It's slightly higher right now, but it's been a shaky morning.

We'll give you the very latest coming up. All right, you've heard the term CoreWeave on CNBC a lot, no doubt, the last couple of days. It's a New Jersey-based cloud computing and AI-focused company, and Corweave going public today. And at least until, I don't know, a couple of minutes ago, it really did not have the reception that many had hoped, though it has turned higher now. Coreweave, maybe not the most important stock in the market, but certainly has the perception. of maybe hitting kind of the AR story or AI story, I should say, a little bit where it hurts. Christina Portsenebolis has been at the NASDAQ all day covering live this IPO, the stock. Christina, moments ago turning back positive.

I know you spoke with the CEO and got some exclusive comments. Yes, I did. So just to your point, it's trading above 40 bucks. So below initial expectations, the CEO acknowledged this on CNBC this morning, stating they needed to right-size the transaction based on buyer interest. So essentially that means they're adapting to tougher market conditions. But the concerning part that often comes up is debt, which I discussed with the CEO just within the last hour.

Mike and Trader, he emphasized me that Corweave's debt repayment is structured around customer contracts. So these long-term agreements are typically about four-plus years with enterprise clients like Microsoft, and they're supposed to create predictable revenue streams directly tied to debt repayment schedules. The payments automatically reduce both the principal and interest at the same time as GPU hardware is depreciating.

So it's creating a natural hedge against asset devaluation. He wanted me to know that because often right now a lot of people are talking about how GPUs are depreciating. And Kelly, that's exactly what we spoke about just in the last hour. CEO also challenged the notion that GPUs become worthless after newer models emerge, noting they can be repurposed and they can repurpose older hardware for less compute intensive tasks, something Jensen Wong has said. So overall, my takeaways from my conversation with the Corby's CEO was very informal standing up upstairs in the NASDAQ.

He said that the debt appears more manageable because it's systematically paid down through reliable revenue streams. The assets retain more value than critics suggest. And major partners like OpenAI are a vote of confidence in the company's long-term viability because they do due diligence. So they're aware of Corey's debt structure, and yet they're still signing that $12 billion contract over five years with the possible of one-year extensions. So there you have it. It's on the screen, too, as you can see that really... Great stuff, Christina. And what's interesting as well is to get the sense of his frustration about how this IPO has gone into the point Sarrat made earlier.

Could they have maybe waited a little while or kind of tested the market, maybe come back? You know, it just, for whatever reason, they were losing momentum throughout the week here. But if they waited, what is that going to solve? The debt issue is still the same problem. It's in their perspectives. The markets, yes, the temperament's going to change for AI plays. I don't really think it would have changed that much. If you said this maybe a year ago, if they decided to go early, then, yeah, maybe we'd see more of a stock pop.

But I don't know if waiting would solve anything at this point, given what's already out there in the market in terms of their financials. I think two things, Christia. I just think the timing with April 2nd, just in terms of capital being out. allocated to equity markets given, you know, you're going to a Friday, you just had some numbers. Not there, they didn't know if we're going to have a stackflation number today, but, you know, they do knew April 2nd was coming. It was coming. And then the other thing, and just in timing, when you think about it, the deep seek moment that came out, the questioning of how many GPUs are out there. Look, I'm speaking as one of our largest holdings is in VIDIA, but the question is,

do you need that many GPUs? And if you do, you know, at some point, is somebody overordering? I mean, I'm just giving me the bare case on this, right? And then you get the, hey, well, China now, you know, they talked about this week saying we're not going to take certain Nvidia GPUs because they're not environmentally friendly, etc. So I did China said that? Yeah. China said they're not going to take GPUs because they're not environmentally friendly?

Yeah. China, building 100 coal plants? The same China, yes. So, no, it's just interesting, right? So what is some of this thing? It's like an alternate world world. Are you talking down the price of GPUs ahead of, you know, the new production coming from in a video? Well, there was a note at the beginning of the week, Christina, and I don't have it in front of me, so I'm just going off the top of my noggin.

So if I'm wrong, don't come at me. T.D. Cowen, right? That's it. See, this is it? She nailed it. She had no idea. None of this is planned, by the way. It was a T.D. Cowan note about Microsoft, I guess, turning down, or deciding.

to cancel two investments in data center projects or not do them. I don't want to use the wrong word, but you get my point, Christina, and that note did not get nearly the attention I thought it should have gotten. Of course, I follow energy for a living, but because of this idea that if there is some kind of a top or a peak on all this stuff, and I'm a 35, 32 times earnings going forward, I need everything, and you can comments are up, but I need everything, Christina, to be chef's kiss, and it's not. But three quick points here.

You're talking about the TD Cowan report. Google and meta are supposed to step in and fill the void for Microsoft. So it's not a dead end game. Like all of a sudden there's going to be all of these leases. Supposed to. I'm supposed to be handsomer. Yes. Unfortunately.

No, but just talking. But just to the second points you're at that you mentioned, as a journalist, I have to weigh both sides. And the bullish case made today is with OpenAI that GPUs or maybe last night, you know, making the images now on chat GPUs. in general and that GPUs are melting from Sam Altman, his statement. So that's pretty much informing the market, hey, we actually really do need these GPUs, especially as we move from text to image in the near future. And then, darn it, now I forgot my third point, but it had to do with Corrieve.

I can't believe they're melting. Is that so, I mean, I was messing around with that. Now I feel bad about it, melting GPUs to make these silly images. I mean, the data centers get so hot, right? So that was part of the energy that they need. the whole super micro thing, which is you do it with water. Right. You do that. And then, you know, where do you get the energy from and the cost of the energy too?

But look, I think what's going to be very interesting, and these are stocks that have to, you know, six months ago, all these stocks were up and people were like, oh, the earnings will come. Now they have to execute. Invidia needs to execute. All of them have to say the demand is there because right now they're not going to bend for the doubt. On August 2nd, I tweeted about this just thing, standing exactly where Christina was standing, but in 1999 with Yahoo at $300 a share behind me and Commerce One and Ariba and Pets.com and names you, Christina doesn't even remember trading it 400 bucks a share.

MySpace. MySpace. Lycos. My fate. Lycos, excited home, you name it. And by the way, Christina, that was a chef's kiss of the comeback. That was perfect. That was epic.

Oh, about your looks? Okay. I didn't talk about my ears. I would go on. I could continue with my jokes. But this is a serious news program talking about core share price, which has increased. Very serious. Not your looks, though.

Christina, thank you. We had a whole conversation in Swapbox about my years earlier in the week. So, Christina, thank you. Thank you. You're welcome. I don't know how to say that in Canadian. Coming up, more on the market, sell off, a stock, small, and concerns around AI, the consumer inflation.

Dow, off its lows, down less than 1%. The NASDAQ, down 2.5%. Sixth worst day of the year. Wow. Put that in your pipe and smoke it. We're back right after this. All right. A lot going on. Markets down. Two and a half percent for the NASDAQ 100. But right now it's Friday. So let's hit two stocks that kind of stuck out to Kelly and I for the week All-Star. Mine is Lowe's Corporation, LOWS, the industrial hotel, whatever conglomerate, not the home improvement chain. Now, Lowe's down a little bit right now. But earlier today, this morning, it opened, hit a new 52-week high, up 4% this week. It's also been a quiet moneymaker this year. and over the past 12 months has almost no sell-side analysts. I think it has one covering the stock, but Lowe's LOWS. All it's done, Kelly, is double in the last five years.

Fascinating company, too, Surrott. You probably know the Tish family that runs it. That's right. 17 high-end hotels, but also a pipeline. They own a packaging company and have a controlling stake in CNA financial. Bingo insurance. And I don't want to go so far as to say it's in many Berkshire, but there are some similarities there.

Right. I mean, so you get the cash flow for the insurance. And by the way, hotels, the demand for the high-end hotels is still very, very strong. So you see that going on, and they can actually use their capital allocation. And it's not very followed because it's a conglomerate, right? No analysts can say, I'm going to mean an insurance company. So I do think you've got some natural kind of buyers there. All right. I was also looking at Jeffries, which is totally different kind of category. The stock had a brutal session yesterday. It's down 12 percent on the week. It's down 30. 33% now since Jan 1. The results showed a 53% drop in management fees and investment returns. CEO saying clients along the stock market are doing much worse than last year. Now, this stock, this is why this is so interesting, doubled, nearly doubled last year. All the investment banking stocks had these big run-ups, especially after the election, on the deal boom. That was supposed to be coming. Now you're seeing the other side of that as it looks like that boom is not coming at least anytime soon.

Right. So you have a couple of things going on there. M&A activity slowed down, if not almost zero. So there's very little. Jeffries is a big player in that. The other one is capital markets activity, right? I mean, you saw Corby, but Jeffries is a big lending machine. They're out there in the capital markets.

And look, everybody knows that the wealth management business is fine, but it's not going to cover it for Jeffries. It's not a Morgan Stanley. But all these financials, right, have been kind of taken to the woodshed. Because the other thing is, like, we're waiting for the regulatory moment to come. But what are we going to do with that if there's so much uncertainty? because you talk to companies, nobody's doing anything. So, yeah, we can take the regulation out of the banks

and you can get rid of a whole bunch of lawyers, but what's that going to lead to? So I think, again, this is a... All these stocks went up on the promise, you know, whether it was AI or financials, but now there are kind of monies coming out because it's a show me story. The other side of it, I mean, we were talking about other areas to invest it.

I still like some of the financials. Well, as Josh has made the point, but like CME, some of the places that are just pure trading toll takers, for lack of a better work, have done well. Or you do a Morgan Stanley that's 70% wealth management, so you're not really dependent on the capital markets. So I think you've got, you know, and even some of the private equity players. I mean, they've got billions of dollars now like a Blackstone that's just waiting to deploy it. And private credit is still full steam ahead as far as we can sell.

So you get all that, and I think the money's coming out of there and strong balance sheets, great dividends. So you can get some floor on those. But right now, there's no credit to it. It's like, now show me exactly how it's going to work versus in August. What about, we've got to talk about gold. It's now above 3,100. All gold does is go up every single day. You know, someone said that about the stock market a few years ago. Well, not lately.

Yeah. But just take that point, as everybody keeps saying, they just raise their price targets. They keep saying there's really no ceiling here as global central banks diversify, but we're two standard deviations above normal in terms of these returns. It's a classic hedge we have it in our portfolio, but it's not a huge percentage. But it's a hedge against uncertainty. It's a hedge against what currency is going to win. Where are we with the dollar?

Do you're getting weaker? Where else do you put money? You're not going to go buy the euro because they can't figure out what they're doing. You're not going to put it into other exchanges. So classic store value, you got a lot of money chasing gold. But, you know, it's there for a lot of people. But, hey, if we're six months from now and things settle down, you can see the money coming straight out of gold, right? because it's a store of value, but it doesn't have any special.

Is it quickly? I know we got to go. Bitcoin is down 4%. It's at 83,800 or something like that. Bitcoin is kind of supposed to be the digital gold. In fact, that was the name of a book, I think by Nathaniel Popper, about Bitcoin. Is there a relationship that you follow? I think the correlation is no longer there, especially when risk off moments, right?

Because people who are invested here, it's a very specific investor. And I think you're not going to have many money in the... the markets are doing well, people will put money into Bitcoin because, hey, this is an asset class that can go up. But today, with the uncertainty, at least in the next few weeks, I don't see Bitcoin coming out of its low. All right. We'll move along. And I get another check on the markets, broadly speaking, as we head to break. Dallas down 714 points just kind of sitting here. No one wants to be long into the weekend. I will be right back after this. Welcome back to Power Lunch. I'm Pippa Stevens with your CNBC News Update.

President Trump said the U.S. will be providing assistance after an earthquake. killed more than 140 people across Southeast Asia. The 7.7 magnitude quake centered in Myanmar prompted evacuations in the Thai capital of Bangkok and collapsed buildings across the region. Aftershocks were also felt in China and India. The U.S. Geological Survey warned today the death toll could reach in the thousands. Vice President J.D. Vance is on the ground in Greenland to meet with troops at a U.S. military base amid Trump's threats to take over the territory. Vance told service members there the president is interested in Arctic security, adding that the issue is only going to get bigger over the coming decade. The visit was originally scheduled for three days, but the plan was scrapped after criticism that it was scheduled without consulting Greenland.

And Washington, D.C.'s cherry blossoms reached peak bloom today several days earlier than the long-term average. It marks the sixth year in a row where the blossoms peaked earlier than normal. The period is expected to last about seven to ten days. Brian. It is absolutely stunningly gorgeous, Pippa. And if you want to talk about inflation, I would dare you. Anybody to look up the price of a hotel in Washington, D.C. this weekend. Might be worth it.

I just did it a couple days ago. I thought about going down to see them. This is why I'll see them through Pippa Stevens and the CNBC. And Central Park. They're in Bloom in Central Park as well. I've got one in my front yard, Brian. You can come on over. You have a cherry tree in your front yard?

I think so. Yeah. Who knew she was so fancy? I think it's a cherry tree. Thank you very much. All right, let's turn back now to the markets, which are definitely not in bloom. Stock selling off. The Dow is down 1.7%.

You got a lot of things. Inflation fears are out there still. Core PCE, one of the Fed's preferred inflation measures, coming in hotter than expected. You had the University of Michigan consumer sentiment number, the long-term inflation expectation, also rising to their highest level in 32 years. which is net negative for the equity market. And, of course, this core weave IPO, which Christina's talked about, which is throwing a little bit of cold water on this whole AI hype, hope, trade.

Again, it's Friday. A lot of people maybe want to be long. Let's talk about it all. Michael Farr, President and CEO of Farr, Miller, and Washington, a CNBC contributor. And apparently somebody that's known and been friends with Sarat Setti for about 30 years. so we've got the market wisdom that we need right now. Michael Farr... Don't hold that against me.

No, we won't. But listen, I would say Washington is the capital of capital right now. If the market is being moved, in part by tariff concerns, what President Trump is saying, whatever, what do we think is going to turn the market around from D.C.? I don't think anything turns it around from D.C., Brian. I mean, President Trump's strategy and his MO has been to keep things off balance, has to be a bit bombastic in his speechifying, even though when it comes to policymaking, you really see where the rubber hits the road, keeps everybody off a balance.

It might be working in terms of getting people to the table, but it doesn't work for Wall Street and its torture on investors. I don't think anything changes. I think Washington is now the money capital of the world, not New York. Sorry folks up there. I wish it were New York, clearly. But as long as he keeps changing the tariffs and keeps changing the numbers, Wall Street has to react, and so does the economy. So, Michael, I share your views on that. And, you know, you and I go way back many years through many investing cycles.

I mean, what are you thinking in terms of where to deploy, capital and also in terms of allocation these days? Sirot, it's more important than ever to look at balance sheets. There are opportunities out there. And this is when Warren Buffett's making his list. He's not panicking. He's not saying, oh, geez, I've got to sell everything. But if you're going to go through a period of uncertainty, we know that time in the market and not timing really makes money,

people who invested through the great financial crisis, who got through COVID and everything else. Those folks over time who've held makes money. But owning good balance sheets, cash flow, not too much debt, solid companies endure when others really have to scramble. You said earlier just before I came on, now investors are asking, show me exactly how it works. That's the question they should always ask. It is more important than ever. better understand earnings and the balance sheets are there. But the opportunities are presenting themselves.

Stocks, a lot of stocks down 10 and 20%. A lot of techs getting hammered a day down 4% and 5% alone. A lot of companies have nothing to do with tariffs. Let me give a different number to our viewers and listeners. It is a scary day. It's a scary time. I get it. Okay.

But let's also be perfectly honest. This market downturn, which right now, so far, is relatively normal. 8%. Happens. I've been doing this 30 years. Right. Almost every year this happens. So I'm not being sanguine about it.

But it's getting more attention than it would normally get on national news channels. I heard something the other day where they were saying retirees are being wiped out. That was literally it was a national news show, non-financial media, said retirees are being, quote, wiped out because the market was down 4% over a month. That's ridiculous. Okay. In 2022, the S&P 500 fell 18%. Okay, that was three, two and a half years ago. The market fell during the summer.

We lost 18%. Two and a half years ago. The market is up 54% since the lows, July lows of 2022. I'm not making light of this decline. This could turn in a multi-year decline. But what I'm saying, I think, Sarat is what Michael is getting at, which is this market downturn, while scary and annoying, we want everyone to make money, not lose it, is not the most unhealthy or abnormal thing that's ever happened. I want to be very direct about that.

And I would say 100%, right, because you actually want to invest. Investing means the market, it doesn't go straight up in one line, right? And to Michael's point of, it's time in the market, and you look for opportunities, and you look for good companies that are going to grow over a period of time. And you've got to get some of the air out of some of the ones that were overvalued. But is you got to be diversified, and you've got to stick within your allocation. And I think this is a reminder to a lot of people who are too concentrated in one area or just, were 100% equities and didn't have the risk for it. Well, it's a good lesson.

And Michael Ford, I don't know if you saw it earlier this week. We had Peter Malook on, and Peter founded Creative Planning, one of the top ranked, often the top ranked financial planning and advisory firm in the United States year after year after year. And he wasn't making light of the downturn. But what he said was, I thought, well taken. And I retweeted him out as well, Michael, which is that if a market downturn, if you can't stomach a market downturn of 10% or 5% or whatever it may be, maybe the stock market is not for you. The reason you get paid to own stocks is because you do take a risk. Nothing is risk-free in the equity market.

Nothing's risk-free. All markets go down. We go through these period where we forget that markets go down and that it's actually a painful thing to do to be an investor. It's a really painful thing to do to buy stocks at good prices because it's when they're down. It's when you're in a full-body sweat that you should be buying or selling. It shouldn't be easy on either end.

If you need help, you call Surratt, you call Peter, you call me. And you guys missed something earlier. I've got a house in Washington, D.C. guys. Call me. I got bedroom. Come and stay. All of you. You're welcome.

Come and stay. Cherry Blossens are beautiful. We can afford the hotels. I'm way cheaper than a hotel. Don't need to. And I'm making nice breakfast. Oh, tell me more about that. Old-fashioned grits, biscuits and gravy will do it up.

Come on. I'm there, Michael, that's all I'm going to say. It was a little bit less. I was a little preachy there, but I think the lesson I was trying to do is that stocks go down. They go down. They crashed in 2022. Exactly. I know because I hosted specials in opportunities.

And by way, in 2022, Invideo, Nvidia was down 50%. Wow. How much? 50%. Why don't you lead with that? You just buried the lead. No, but so the idea is if you're going to own some of these stocks, you have to be prepared. Invidio is down 5% in 2022.

I think we need a CNBC special. On that. Invidia and turmoil. Gentlemen thing. Two and a half years ago. Michael Farr, appreciate it. And as we had to break, check out the biggest S&P laggards of the week. Super Micro's down 18%.

Broadcom down 12% GE for Nova. Top three are all AI plays and Lulu Lemon after earnings yesterday. I'll be right back. Welcome back with stocks moving towards session lows. We've got some more news out of the White House this hour. Amin Javvers, what's the latest? latest. Hey there, Kelly. CNBC has learned that President Trump has issued pardons to the three co-founders of the Bitcoin Mercantile Exchange, or known as Bitmex. They had pled guilty to a range

of charges related to money laundering and failure to police the exchange. The three men issued pardons are Arthur Hayes, Benjamin Delo, and Samuel Reed. Now, Reed had pled guilty to violating the Bank Secrecy Act back in 2022 and agreed to pay a $10 million fine. And at the time, And prosecutors said the three men effectively operated Bitmex as a money laundering platform and that it's purported withdrawal from the United States market was a sham. No indication from the White House here on exactly why the president chose these three men for pardons. Nonetheless, I'm told these pardons were signed last night.

Meanwhile, we also heard the president just a short time ago here at the White House talking about a deal he is cut with the prominent law firm Skaden Arps. This is part of the president's campaign against law firms he feels have been doing business with his political enemies. The president said that Skadden will provide $100 million in pro bono legal services and that the firm is committing to what they're calling merit-based hiring, promotion and retention. That's around this question of DEI that this White House has been so focused on. And Skaden will not deny, the president said, representation to clients from politically

disenfranchised groups. The president calling this effectively a settlement with Scaden and suggesting that there might be more firms out there willing to cut a deal. So far, we know of two firms here who have cut deals either in response to an executive order or, as in Skadden's case, in an attempt to get ahead of a potential executive order from the president, these executive orders against the law firms guys have been potentially devastating to the business prospects and client prospects of a number of these law firms. Back over to you. Amen Javvers, definitely they're worried about government payments. Damon, thank you very much. All right, folks, tough out there in the markets. The NASDAQ on pay for its fifth down week in the past six.

It is on track for its worst month since that big decline that we just talked about in 2022. NASDAQ down 2.75 percent, six-force day of the year. We're back right after this. Welcome back. We can't go before doing some three-stock lunch. And with this sell-off, we've got to talk about if there's any potential buying opportunities out there right now. maybe we found a couple. I think we found one with our next guest. Gina Sanchez is Lido Advisors, Chief Market Strategist and a CNBC contributor. All right, let's start with Lulu Lemon.

And, I mean, they had a tough earnings report. They're down 15% today, Gina. Company had disappointing full-year guidance. What are you doing with this one? So this is one we own, and this is a hold for us. We think that the near term is going to be challenging. Three things, macroeconomic headwinds, inflation, and tariff concerns. All of those work against Lulu Lemon.

biggest sales are in China. That's not a good story. They have, you know, the potential to be opening stores in Italy and Turkey and Czech Republic, and that could be a bright spot, but that's a longer-term bright spot. We think that the near-term is going to be choppy, but they're still a long-term, and it's still a well-run company. So you're on the sidelines. Surat, do you have a point of view on Lulu or are the consumer stocks right now? Yeah, I'm very, I'm not, I'm sure retail in the sense that I don't own retail, and I think it's a very tough area to be in right now, given consumer inflation tariffs. And I think investable-wise, when these things become cheaper,

I think they'll become more interesting. And I also think Lou's got a lot of competition out there as well. Yeah, that leisure is at a tough moment here as well. All right, what about Oracle? Those shares are sliding today as the Defense Department said they'll terminate a plan to use Oracle's software to manage its civilian workforce. This is reportedly part of the Pentagon's cost-cutting efforts. Does this make you want to pick it up, Gina? So that's kind of a gut punch.

But if you look at the 2026-27 expectations for Oracle, it is very clear that there are still a secular story to be said for AI. But if you look at their infrastructure as a service performance just now, even without this kick, the near term looks really challenging for Oracle. But we do think there's a longer-term story here. So this is still a hold for us. Sometimes there's the playbooks or you want to own the stuff that has political influence. This would seem to be one of those names. And we own this one, and I haven't really bought it in a while, but I think as the price comes down,

I like what Oracle's doing, the turnaround, the inflection point to going for software as a service, and I think the multiple it gets today doesn't deserve that. So it is execution. I like the balance sheet. And I think, you know, if you're going to play technology, you want to play at growth at a reasonable price, more garpy than just for growth.

More garpy. Well, Gina's ruled out two of them so far, so I'm thinking the last one is going to be a buy- for you. And actually, we asked you to pick one that you're sticking with throughout the ongoing market and tariff uncertainty. Why do you pick Dollar General? You know, so Dollar General is one that that has gotten hit. It's trading at 15 times earning, so it's attractive. But if you look at sort of where the consumer is and where they're going, stocks like this tend to perform. This is a stock that has been doing its own turnaround. They still have some store remodeling costs

and some labor costs that they're going to have to run up against. But we think that they're moving in the right direction, and this is cheap, and we think the second half for the consumer is going to be particularly challenging, so we think we want to be defensive going into that. Trade down. That's part of the argument. I mean, look, I agree with what Gina said. We don't own it. I still wouldn't step in front of it. I just have a longer-term view that I think... Didn't Dollar Tree just sell family dollar last yesterday for a billion, but they bought it for like seven billion a couple years ago? And you're going to start... These were the hottest stocks 10 years ago, but they over-examended. And by the way, Dollar General is up for the

year. So, you know, quite a few to find something like that. I just think the competition with Walmart and, you know, Amazon and, but it's got a sweet spot. So I don't disagree, but it's not something. Well, you know, Gina, you're out there in Los Angeles, okay? Second biggest city in the United States. We get accused of East Coast bias all the time. By the way, fair criticism. What are you seeing from your West Coast bias? Well, so the West Coast bias here is there are malls out here that are absolutely dead and there are malls out here that are hopping. Not surprisingly, the ones that are hopping are frequented by tourists. The ones that are dead are sort of frequented by Main Street, you know, so that is what we're seeing out here as well. It is a challenging

environment for retail. I completely agree. But I also see that a lot of consumers are just trading down, are buying things cheaper. Surat, what would you add? I don't know, where's your bias, which coast, I guess, East Coast. No, I mean, I think you're absolutely right. In the malls, certain malls with the high end do well, depending on what people are doing. If the high-end consumer starts coming down, that's going to be a big hit for our economy.

What are we going to do with travel and tourism, given kind of the administration's views also? You're seeing 70% less traffic from Canada right now, right? So how's that all going to work globally too? So I think retail itself is a tough space to be for a trade. It can be really well, but investable is hard to do. Sirot, if we, if April 2nd comes and goes, and let's hope it will come, okay, and then it will go. And we don't get some major change or things get pulled back.

Do you think we're going to have a face-ripper rally? I think it's going to be tough because basically the administration said that whatever we say, we could change it any moment of time, right? So if that happens and we get a rally, it will give the administration the power to say, hey, we can do more because the market really likes what we're doing. So I think until we get clarity, it's going to be really hard, but you've got to invest around it and you've got to find good companies. And I think longer term, like, that's the idea.

This is giving us some great opportunities. We've got cash on the side or to kind of take companies that you own that have done well and put them into other areas as well. So I'm staying invested. You know, all the talk that we had today kind of could scare some people. But the idea is you invest for the long term. You look for opportunities. And at the end of the day, this is the best country.

U.S. exceptional is going to be there. for a long time. We might doubt it in the near future, but longer term, this is where capital will flow. Gina, do you think we get clarity on Wednesday, April 2nd? I completely agree that we will not. I think that even if it comes and goes, there's too many other moving parts right now. If you're a CEO trying to make purchasing decisions, if you're making KAPX decisions, these are decisions that are hard to make right now. And tariffs are only one component of many pieces that are moving. And I agree that actually a stock market rally would emboldened the ability to keep moving because it's seen as one of the many, you know, one of the many

metrics. Metrics. Yeah, metrics. It was fascinating what Gina said about the malls. Yeah, it is. I agree. I agree. Maybe we need to get out. Delamo Mall next time I'm in Torrance. Okay. Among other. Thanks, Gina. Appreciate it. Gina Sanchez. Sarat, thank you as well. It's been great to have you here today. Thank you. Sirat Setti. And thanks for watching Power Lunch, everybody. Closing bell starts right now.