Power Lunch - Stock market relief rally fizzles out 4/8/25

Episode Date: April 8, 2025

Stocks fell Tuesday afternoon, losing their gains from earlier in the day, as President Trump’s tariff deadline nears. We’ll tell you all you need to know. Hosted by Simplecast, an AdsWizz company. See pcm.adswizz.com for information about our collection and use of personal data for advertising.

And welcome to Power Lunch alongside Kelly. I am Brian. The market bounce is dead. Long live. The market bounce. Stock starting the day strong, only to see sellers come in. And then the buyers, I guess, come back in the last few minutes. Folks, you are in the middle of an incredible 10% swing in just 24 hours. And with the TerraFo awards heating up, it could just even worse. hurtling into the unknown and the Dow is hired today. Right now it's up about 282. It's been in the green all day long, but it was up 1,500 points from its lows yesterday morning. The NASDAQ, the S&P are higher. They're well off the best levels of the day and they briefly dipped negative. The high for the S&P today was 5267, were around 5,078. United Health is helping the Dow outperform today.

Nearly 200 points, it's contributing on its own, up nearly 6% as Medicare plans will get a bigger than expected increase. in payments from the government. And it's not just health insurance. You can see, by the way, Humana, CVS, also up on that news. We also have P&C insurers seeing gains today, and that's helping make financials a top sector. Let's start with the markets. Today's early rebound has been nearly completely wiped out,

but we're gyrating. Joining us now is Wilmington Trust chief investment strategist, Megan Shue, and Barclay's head of U.S. Equity Strategy, VNU Krishna. Welcome to you both. Megan, what do you do here? What do you make of it? What's going on? Yeah, this is tough.

I mean, it's a tough market, highly volatile. I think the answer that maybe nobody wants to hear because it's always tempting to want to do something is that you kind of have to buckle up and go along for the ride. We have basically two very distinct paths we could take here. One that could result in significant negotiations and much lower barriers to trade,

that could be a very strong, long-term positive. The other one could be a more difficult road if these tariffs stay on for any length of time, really. And so I think we're just watching to see what signals we get from the White House. For now, we are allocated neutral to equities. Thankfully, we took a little bit of risk off the table early this year, seeing valuations as having climbed. But at this point, I think you have to wait a little bit longer. Our base case is for at this point a recession, assuming that the tariffs stay on.

But obviously, that could go either way and we're sort of minute by minute with the headlines. Yeah, and Vino, I'm just watching, we're showing it a moment ago, watching that 10-year yield climb. We're almost at 4 and a quarter. Yeah, so I think we have the worst combination right now. In inflation expectations have gone up.

Recession probability has increased quite significantly. And the 10-year also has reversed quite sharply, right? Generally speaking, that's also not good. But we're in such an interesting dilemma that if the 10-year collapses as well, that's not good for the equity market. So I think any way you turn, it's safe to say that the next three to six months are going to be tough until ultimately this tariff policy issue gets resolved. And I think that takes time. So, Benu, it's Brian Sullivan. Are we at recession stock levels then?

And if not, what is the right metric valuation multiple for the S&P 500? A good question. So I think we have significantly derated. So if you look at the S&P aggregate multiple, it's come down about four handles. The nearest sort of comparable example you can see of a significant derating was in 22, which was a big tech led sell-off. So I would say compared to that, we are about roughly three quarters of the way. But in terms of recession, the probability has increased. But even now, you know, I think what we are looking at is a shallow, recession. I don't think we are priced for a very deep or aggressive recessionary environment. So I think if that were to happen, then you could argue that there's a lot more to go. So I would argue that pocket to the market do look interesting right now, but it could be choppy at this point in time. Yeah, you said, Megan, that you were neutral to equities, the base case, recession. What does that mean neutral to equities?

I would imagine your clients, our viewers, our listeners, just kind of wondering, what do I do now? Yeah, well, neutral to equities means you're fully invested. So we are recommending that you stay fully invested. Our clients are diversified. So getting some benefit from, certainly not today, as you point out, the tenure, but some benefit from defensive assets like fixed income and cash. I think that we're kind of caught in this middle ground. You posed a great question just now in terms of recession.

And I don't think that we are priced for either a mild recession or a more severe recession. But I do think that it's a little bit too late to sell at this point, assuming your time horizon is about a year. We've looked at recessions that are not associated with the popping of a bubble. And the drawdown is anywhere from 20 to 30 percent. But you tend to see a recovery from that trough level in less than a year. So I think it's just about being patient here, and we don't see signs of a bubble, not in credit, household balance sheets are pretty good. Corporate balance sheets are in good shape, certainly not enough to withstand the magnitude of the tariffs that we've gotten. And then I also reject the idea that tech is a bubble.

So I think that there is just a need to be really patient here as we wait to see if we are going to move into a recession, if it would be mild, and then hopefully recovering. in that typical time horizon. Vino, what do we do with kind of the wait and see on these headlines? And the markets hopes that we're going to get some kind of rollback or that the word negotiation when it comes from the White House means that the tariff rates are coming down, does it? Yeah. So I don't think you can expect much relief on the tariff issue in the near term

that we are convinced about. But I think to your point and how do you position, I do agree with Megan, that you stay invested. But within that, you know, more than a month ago, we changed our stance. So for example, we said clearly large over small in terms of exposure, clearly value over growth. And then most importantly, the factor which is working really well right now is yield, yield, which is really a combination of income and buybacks. I would say more specifically sustainable dividends. So you just have to be defensive in this market. On the tech side, though,

what I would argue is that the de-rating has been so dramatic that I think you are approaching levels, which have already hit the bottoms you saw in 22, I mean the big tech segment, which ultimately is still posting earnings number significantly higher than the rest of the market. And with the derating, I think you come to levels where, you know, you can start thinking about accumulating this portion of the market, recognizing that, you know, if you end up in a full-blown recessionary environment, then there is risk to every part of the market, including tech. But listen, there are multiples big tech has come down from 30. even times to already 22 times.

22 was the bottom you saw in the 2020 sell-off. So I do think that parts of the market are indeed pricing very sort of aggressive, you know, downturn. And you want to sit in pockets where there is better quality. So that's a better position. Yeah, Megan, you know, we traded on AI and big tech for two years. And that's all we heard about while the rest of the market lagged. I mean, the S&B 493 didn't move much, right?

We talked about it almost every single day. Seven or eight stocks drove everything. Now those stocks are down 20 to 50 percent, depending on which name you're looking at. Nothing has changed yet. The market is clearly pricing in some kind of derating, re-rating, or collapse in earnings and multiple. Are you of the camp that over the next couple weeks with earnings that Apple is going to cut its guys? guidance, Amazon's going to cut its sky. Because if it doesn't, I do wonder where the markets will go, because we're pricing as if they will. Yeah, I mean, this is a tricky time because valuations are not

all that helpful. And it's, you know, on the one hand, you look at the Magnificent 7 and we're back to valuations that are basically pre-chat GPT, which looks interesting and exciting. But when you think about the exposure of some of these stocks to China, which, you know, while we're getting a little bit of some support in the market from the idea of negotiations gaining traction. We're really not seeing that with China. That's going to be a harder battle to fight. And these tech companies do have a lot of supply chain exposure, especially any of the companies that are consumer facing, consumer durable type of hardware companies. So I think that is where we are. We're looking at maybe more attract evaluations, but if the earnings are going to come down, then that's a little bit of a head

fake and not something that we can trust right now. So I think we have to look at other things in the market to gauge whether we are getting kind of flushed out and panicky. I think we got some signs of that on Monday, but I also think this is going to play out a little bit longer, and you don't need to rush right in. Of course, some of our clients do have cash on the sidelines and have been waiting for a better opportunity. And we came into the year pretty expensive on the market. So this is looking like a good opportunity to get some of that money to work. Tech looks interesting. Some of the other parts of the market that maybe are more beaten down, financials. Those could be giving more attractive entry points as well. All right. Thank you both today.

We appreciate it. Megan Shoe of Wilmington Trust and Vinu Krishna with Barclays. All right. So why don't we stay in the markets and your money? Because as bonds go, so go stocks. And you may not be paying as close of attention. But bonds, they've had huge move the last few days with a nearly half percent. move in 10-year yields in just the last 24 hours. And folks, for bonds, that's a massive move. Let's talk more about this and more with Rick Santelli in Chicago. I think everybody, I was joking with our team that every time we said the word whipsaw yesterday, somebody had to put a dollar in a jar so we could buy some beer later, whatever it is. But yesterday, honestly, the bond yields, they moved around like a stock. Absolutely, absolutely. The stock, the stock.

market and interest rates are moving like commodities, like a corn market on a hot day in July. Yes. And I don't see that dissipating any time soon. Let's start at the beginning, shall we? Because today there's some big news on the yield curve. So as you look at three-year note yields on top of 10-year, and I pick three-year because we had the first of the auction series, three's tens and 30s, and the three-year auction was poor in terms of demand.

I gave it a Deez and dog in terms of demand. and you could clearly see right at 1 o'clock Eastern how everything changed. As yields were moving down and sort of following stocks, it went from green to much less green to red to back to green, we see that 10-year then turned around and started the lead. So a short maturity, most closely tied to the Fed, was leading on rates on the way down. Then the huge reversal in the long end, you could clearly see it there. Open the chart up, and what you really want to look at is we had a key low, in September. And since then, once we crossed over 4%, we're holding there. Deficits and tariffs,

curve steepening. We're over 50 basis points in twos to tens to steepness. The steepness has been in over three years real quickly. Here's the official wand currency. Right now, the dollar is the strongest in Cep of 23. But if you look at the offshore, which goes back on that chart to 2010, it's the strongest dollar, the weakest one ever for offshore. You want to mine. You want to monitor that. They're an export economy. They're getting tariffed. And they have a whole country full of things they need to export. We want to see where they go next. Kelly, back to you. Absolutely, Rick, hugely important. We'll keep an eye on it. 740 is the latest level there. Rick, thanks, Rick Santelli. Lots more to come. But first, some big moves in health care stocks.

President Trump giving Medicare a big surprise. Details next. All right, welcome back to Power Lunch. Are you looking for a place? to invest or in the tariff turmoil, maybe a safe haven. Well, if so, you might be looking at health care, the insurers, and things like Big Pharma. They are seen by some as being somewhat immune to the trade carnage. But your next cast is here to remind you not so fast. Jared Holes is Senior Healthcare Strategist at Mizzouho Securities America and joins us now. And Jared, I'm glad you came on.

You want to talk about the sector in general, but you just put out a note to clients that I think is fascinating. And you write that Pfizer, with the current decline that Pfizer's had, maybe we can throw up a one-year chart of PFE, that the dividend yield is now above the price to earnings multiple on next year's expected earnings. And you note that in your long illustrious career, you have never seen that happen. What does that in plain English, what does that mean for our audience? Brian, great to see you. It's happened. It's just been, it's been very sparing. I mean, essentially, the street is, is grading or voting out Pfizer as a near-distressed equity based on those characteristics of the dividend yield being ahead of its PE multiple, and that was on 2006 consensus numbers.

I just think it is a sign of the times. We're in a very tumultuous era as far as health care. pharmaceutical stocks and companies are fundamentally challenged. I think a lot of investors are aware of that. It does happen from time to time. There have been generic companies where the dividend yield has been above the PE ratio, but it's very uncommon. You almost have to go back to the financial crisis to see a scenario like the one we're in now. And what's going on with many of these names? And I have been very vocal, and I'm not going to go to it now, but everybody I know, I've talked a lot of people have been sick. I've posted this on Twitter. I know a lot of people that have had strokes, had cancer, currently have cancer, other serious things. Without going, we know that

America has, in some ways, a health crisis. These companies are there to help us essentially solve that crisis, not just Pfizer, but everybody. Why aren't they getting more investor respect, given that health care is 20% of the American economy. It's one-fifth of our entire national output. Yeah, it's confounding for sure. I mean, I think on one hand, like you said, and I agree, when you kind of boil it down, these are the companies that are saving us, you know, to go back to Pfizer earlier. You know, the vaccine, you know, was incredibly beneficial. you know, there would be few to argue that case. But when you look at the financial models, when you look at the businesses, the way that they're currently set up, you've got generic

patent cliffs over the next, call it five to seven years on the medium to long-term angle of the company. And then you've got price concessions with the IRA and some of the things that the Biden administration put into place. So you've got pricing degradation over the near term. And then over between those two, there's going to be competition, there are going to be other setbacks. So the models just never line up well enough for investors to really have a lot of confidence around, not to say that you're not going to be able to find a few good ideas here, but the business models themselves just do not lend themselves to long-term viability. I think that's why the sector and the stocks have been pressured for so long.

So, Jared, as people now look at this and say, okay, I wouldn't mind a port in the storm, tell them, like, and I'm wondering about some of the Medicaid names also. Those sold off on this idea that funding was going to be draining out of that space. I'm not sure if you think that's even likely to be the case now. So where's the kind of safe sledding? Well, I do think managed care to some extent, you know, the government, the government-centric names, like maybe United Healthcare Elevance, some of these are somewhat safe. I mean, you're insulated from tariffs as U.S.-based companies. An economic slowdown is actually somewhat beneficial.

You basically want less utilization. You want less patients through the system. That's how they typically beat numbers. So I do think managed care, even though it's having a good day, there are some companies here that you probably want to own. And it's totally a relative game. I mean, there are so many different variables at play. You're essentially playing a game of hopscotch trying to jump from one area to the other, whether

it's tariffs or drug pricing or other public policy. So I do think some of the, you know, stocks that you mentioned at the beginning of the segment are safer. Same with medical device stocks that are more U.S.-centric, maybe a Boston scientific, Edwards Life Sciences, names like that. Again, there's nothing with no hair on it. We're just trying to get to a place where we're selecting stocks with maybe a little bit less risk relative. Yeah, and going back, and I don't want to dive into the vaccine debate because I'm sure many people would disagree with what you said. There's a lot of skeptics. I get it. I don't want to go into that debate. But I will say this. The data tells the story. The worst performing stock in the S&P 500, the last 12 months, Jared, is Moderna.

It's out of 503 stocks, it's the worst, down 76%. Pfizer's lost half its value in three and a half years. So it does appear the market is making some kind of verdict about, forget about COVID maybe, but where vaccines go in general. How does that play into your math when you do, it's got to be impossible? It's very difficult. I mean, some of it is emotional. Some of it is just categorically being in the wrong place, whether it's Moderna or Pfizer or even Zoom, like these companies, Peloton, that dominated the conversation in 2020 and 2021. Those have been, you know, the worst performers when you stack them up against everything else. Yeah, I don't really know what the outlook is. Now we have RFK Jr. running HHS. You kind of don't really want to be around the vaccine complex at all. So I think there are a

multitude of reasons why they've been weak. You could also say, Jared, I've started to jump in. Are others asking you about this? I'm not, I don't think I'm crazy, maybe a little crazy, but I don't think I'm that crazy. No, you're not. You're not crazy at all. I mean, this comes up constantly. And the political environment, too, you know, not exactly knowing how vaccines are going to play out with respect to public policy is a big question. Jared Holtz, Mizzouho, always love your candor and your honesty. Come on, you say it just hasn't worked, and there's not a lot of places to hide, maybe with a few names, and we love having you on and the rare candor. Jared, thank you.

Thank you. And meanwhile, is there no end in sight for the market volatility? We'll get some help navigating through it all, and Market Navigator. That's next. All right, welcome back to Power Lunch. Give a check on the markets and your money. What a day it's been. Again, if you're just joining us now, that chart does not tell the story.

The Dow's up three-tenths of 1%. As being NASDAQ down a little bit. We opened up 4%. Yesterday we were down at 1.5%. So we have seen Dom Chu, who now joining us for Market Navigator, a nearly 10% or about a 10% intraday intrammarket swing between yesterday's highs. lows, highs, and lows today. At the highs, we were up 4, 160 some points, I think, at the highs for the Dow today.

We're up 205 for the S&P 500. The swings are bonkers. You've got to admit that. It's almost, you know, people on social media have been saying, you know, the S&P is trading like a meme stock these days just because of the moves that they've been seeing. But Brian, to that point, the navigator today is all about the swings that we're seeing and whether or not we can do anything with them. So volatility is the word of the day.

If you're wondering when that might actually end, our next guest says you're not actually going to like the answer to that question. So joining us now as Katie Stockton, you know her. She's the founder of managing partner at Fair Lead Strategy. She's been watching the back and forth, the up and down in the S&P 500 and elsewhere. Katie, a very simple question without a simple answer. Is this a market where you buy dips or sell rallies? The short answer is to sell the rallies. I mean, what we have is a pretty significant loss of long-term upside momentum.

So when you look at the monthly bar charts, they look pretty terrible. They look reminiscent of early 2022. I know it's hard to make comparisons. But, you know, the volatility has been such that we think there will be a contraction in volatility here near term, but that this is just going to remain a highly volatile year with a lot of choppiness. And with that in mind, we're more comfortable being reduced in a exposure. All right. Now, if that's the case, that's the stock market side of things. We've been talking about the wild swings in the S&P. We've also, I mentioned crude oil in the last

hour and how a lot of traders are using that as one of those kind of tea leaves or indicators. Energy is the worst performing sector in the S&P by a wide margin over the past week. Is there an opportunity to buy the bounce in crude? You know, what's wild is that energy was actually the best performer through the first quarter within the S&P 500. So that's a pretty abrupt reversal that we've seen there. And with that, we have a pretty major breakdown in the likes of the energy sector spider, ETFXLE.

These are big trading ranges that have now yielded breakdowns. And it's unfortunate because it does suggest that we'll see downside, more downside, for those energy stocks over the coming months. Maybe not near term. We should also see a bounce alongside most risk assets in here. But crude oil is obviously the culprit. We had a breakdown from a long-term triangle formation. Those triangles are neutral patterns. We had seen signs that it could break out to the upside, and of course, it abruptly reversed lower, took out support for WTI right around $65 to $67 per barrel.

That was a key level. You could go back years and find support there, and it just wasn't there anymore. So the next support is well below. It's not a near-term objective, but it's in the mid-40s per barrel in our work. So that does suggest that there is increased downside risk now for crude oil near-term or longer term. All right. Katie Stockton, that is, we love seeing you, but it's not really good news if you're long, any of those assets. Please keep us posted on those charts and we'll see you again soon, Katie. We'll do, Tom. Thanks, Katie. Very quickly, by the way, there is some news on the Secretary of Energy.

I know he's on our network earlier. That's right. Yep, sure. No, no, but there's some news that we did not hear in the interview that I will be bringing. Okay. We call this a tease. Oh, you're going to tease a future story. And also tomorrow we have a guest, an analyst on, who today dramatically took down his earnings estimates on one major oil company. He's our guest tomorrow, but in a few minutes, I've got some breaking news on the Secretary of Energy.

Not breaking, but exclusive, whatever we call it in this business. It's a good story, so you want to pay attention, Kelly. The tease. Thank you both. Well done. on deck a growing war of words in the White House getting pretty ugly. But who should the business community be listening and taking its cues from? We'll talk about that after a break.

Welcome back. Still seeing some big swings in the market today, especially the past hour or so as the big increases from earlier in the session have gone away. The S&P and NASDAQ dip briefly lower. The Dow was almost at the flat line. Then we jumped up 300 points. Now we're sitting at a gain of about 160 with the NASDAQ fractionally lower. Let's get to Bertha Coombs for the CNBC News Update. Telly, Defense Secretary Pete Hegeseth said today that the U.S. is committed to taking back the Panama Canal from Chinese influence.

He also accused China of weaponizing the crucial waterway. He held talks earlier today with Panama's government as the U.S. confronts concerns about Chinese commercial investments around the canal. Congo repatriated three Americans convicted on charges of participating in an attempted coup last year. The move came just days after the country commuted their death sentences to life in prison. The three will now serve out their terms in the U.S. Among them is 21-year-old Marcel Malanga, whose father led the coup attempt along with two of his associates. And the U.S. traffic deaths fell below 40,000 in 2024 for the first time since 2020. The National Highway Traffic Safety Administration found 39,345 people died in,

crashes last year, according to early estimates. Federal officials welcomed the decline, but warned that the figure is still significantly higher than it was a decade ago. Brian, back over to you. Yeah, I commute a lot, and I could tell you people are driving like idiots. A lot more distracted driving. People going 42 and you could smell the weed coming out of their car. Other people going 90 miles an hour, two feet off your bumper. It's crazy. Bertha, thank you. All right, meantime, you know what else is crazy? In fighting among the president's interstretched? Today, let's start with what triggered it. Here's Trade Advisor Peter Navarro on CNBC yesterday.

When it comes to tariffs and trade, we all understand in the White House and the American people understand that Elon's a car manufacturer, but he's not a car manufacturer. He's a car assembler. He wants the cheap foreign parts, and we understand that. But we want him home. We want him home for our national security and economic security, and everything's good with Elon. It's no problem.

Well, calling him a car assembler seemed to be a slight problem for Elon Musk. In response to that video on Twitter, Musk said, quote, Navarro is truly a moron. What he says here is demonstrably false, but he wasn't done, saying that Tesla has the most American-made cars, and Navarro is dumber than a sack of bricks. He still wasn't done. He had more insults that we will not show on the air because they are not appropriate. Frey family shows such as this one, but the reality is, and Navarro now kind of going after each other.

Joining us now to talk about this and what it means, because it does mean something. It's not just gossip and grown men, not acting like grown men. Mick Mulvaney, former White House chief of staff under President Trump and Heidi Hydecamp, former North Dakota senator and a CNBC contributor. Mick, you worked in the White House.

You know Peter Navarro. I do not. I have never met him. I will say this, so you don't have to. There are people I know that text me that you know that think that Navarro may have to go. Look, I think you hit the nail on the head earlier. This is more than just about an inter, sort of squabble inside the White House.

This is important, right? Why is that? Yeah, Peter is really tough to work with. There's no question about that. One of the thing that makes him so difficult to work with is that he pretends to speak for the president when he does not. All right? Peter was notorious back in Trump 1.0 to walk out of a meeting

when everybody would sort of assume we've got sort of a consensus about something, and he would go on TV and say the exact opposite. That has a tremendous demoralizing effect on the White House, and it does tend to mislead markets, for example, when people think that Peter Navarro is, when he says, we all know in the White House. That's not the White House speaking. That's Peter Navarro. And what I think is important for people to realize is that the only person who, does he need to be, does he need to be fired? I would have fired him a long time. I would have fired him when he got caught making up his academic sources for his papers with his Ron Vara imaginary friend.

But, I mean, that was Donald Trump's call then. It's Donald Trump's call now. I think folks watching this show are caring more about what is the policy of the White House? What is the policy on tariffs? What is the future hold on this? And Peter Navarro is not a reliable source for information about that. Senator. Yes.

Yes. I guess if the question is, to whom should the business community be taking its cues, right? To whom should the market be taking its cues? Is it Bessent? Is it everybody? Is it the president and only the president? Well, all of this, there's an audience of one, and that's the president in the United States. Peter Navarro is saying what the president believes, which is tariffs are good. Elon Musk is not. And so you got to balance that. But I would listen to what the president says as mixing. that a lot of people think that they speak for the president. They don't.

And this president is, he is going to stay the course. And all of the, you know, confusion last week and this week about whether he's negotiating or not negotiating, whether he's going to raise his money with tariffs or whether this is just a ploy. All of that, it seems to me, is sending a lot of mixed signals. But those mixed signals are actually coming out of the president. And so from a political standpoint, Democrats are just sitting back and watching the chaos. It's not just this. It was the kind of fight between Bill Ackerman and Ludnik and, in fact, accusing Ludnik of basically doing all this so that he could become wealthy. This is not a good look for the White House. And it's not a good look for the markets because we need stability right now more than anything.

But, you know, it is in many ways amusing for Democrats to watch. Megmalvania, the rubber kind of meets the road when we turn our attention to the budget bill and everything that the GOP has to do to keep this very fragile majority together on the House side of things. Are they going to be able to keep it together and get that legislation passed? You know, ordinarily I'd say no, but they've already surprised me a couple of times. The margins are just so narrow, Kelly, in the House that, you know, now I think four people can sort of derail any piece of legislation. I will tell you, I was just over there with a couple of my former colleagues having lunch today, and they're very disappointed with what the Senate has sent over to the House. in terms of the amount of money it saves and so forth. And you're hearing discussion now that there might be as many as 10 Republicans who are on record

as being against the Senate bill coming back to the House and so forth. It is going to be a challenge. There's no question about it. It's going to be a real test of whether or not they're interested in fiscal discipline or not. Everybody agrees on the taxes. That's not the issue. The issue is are there going to be spending reductions paired to it? And that is something that could divide the Republicans.

You know, and Senator Hydecamp, well, what's amazing, I guess, and I'm using the word amazing very loosely, is that you're coming off, you know, an election win by Donald Trump. I traveled the country. People were mad about inflation. They were mad about immigration. And let's be clear, it's not my opinion. There are books being written about it.

That we had a president that was probably not what we were told he was and people that may have propped them up in certain ways. Who knows? We had all that momentum. And then Donald Trump just comes in and wants to blow it all the smithereens, talking about tariffs. Nobody in America talked about tariffs. They talked about jobs,

but they didn't talk about this. Now it's handing the Democrats a giant golden goose on a silver platter, and it feels like such a stupid, unforced error. Well, sure, but the president did talk about tariffs.

No one should be surprised by any of this. But what's not getting covered because of what's happening with the markets and tariffs is that there were over 2 million people who organically took to the streets to say we've had enough, you know, hands off, the hands-off movement. That's not going to dwindle. And we had a very conservative person in North Dakota who wrote a Facebook post basically saying, ignore this at your peril. It feels a lot

like the Tea Party revolt. And so Donald Trump doesn't have a reverse. And that should worry a lot of people in the Republican Party. But I think that goes back. And just quickly, before we go, I think that goes back to what Ed Yardini, others in the market have said, which is they expect that either the graceful pivot will come because either the president decides to back down, Congress forces him to back down or the courts do. I think there's going to be a bifurcated response, Kelly. I think there are going to be some tariffs that are there for a different reason.

The tariffs on China are there for geopolitical reasons. The tariffs on the other countries are probably there for negotiations. So I think you're going to see a whole spectrum of responses. Yes, there will be negotiations. And Scott Bessent is right about that. On other ones, there will be no negotiations. and so forth. So I don't think you sort of say there's good, you can't pay with a broad brush and say all the tariffs are either going away or they're all staying forever. There's

going to be some nuance here. Right, but do you think that that pressure and Senator, go ahead, do you think that pressure is going to come, go ahead. This is going to take a while because had the market collapse again this week, I think you would have seen more pressure building up. Stability in the market really has, I think, slowed tariff reform down. Yeah, you guys will let you go. Market soared this morning in part because we were that Scott Besson, who's got the respect of Wall Street, was headed down who's going to take over negotiations. And it just seems like this fight between the president and Navarro and Besson is not ending well for investors. But we'll save that for another conversation. Heidi Hydecamp, former

North Dakota Senator Mick Mulvaney, former White House chief of staff. Great discussion. Feels like a bit like last call. It was a good call either way. Still ahead, China refusing to back down from the president's tariff war. We will get the latest details on their potential retaliation with the midnight deadline looming after this. Welcome back. The White House confirming a 104% tariff on Chinese goods goes into effect at midnight. And since that confirmation, we've seen the market trading much weaker than it had this morning. China seems ready with more retaliatory measures of its own. Let's bring in Eunice Yunn. Eunice, what's the latest?

Well, Kelly, China has refused to succumb to what it's inscribing as President Trump's tariff blackmail by removing the additional 34% tariff on American goods by now. Instead, it's been messaging what could come next through two influencers, one linked to the state news agency, Shinwa, and then the other one is a nationalistic blogger. So both of them had posted identical lists of possible steps, and they are to suspend cooperation on fentanyl, ramp up tariffs on farm imports and states friendly to President Trump,

ban the import of U.S. poultry, target U.S. services in China, so that's finance, law firms, consultancies, cut or ban U.S. film imports, and then to investigate U.S. companies' IP gains in China, and they were citing Ford CEOs' recent praise of the EV technology by Chinese companies. So in addition to that, China has guided lower the Chinese yuan to its weakest level in 18 months, And this was a move that was seen as a signal of a possible larger devaluation in order to offset the impact of these tariffs. Kelly? All right. Eunice, as we watch the currency, we wait for more word out of China. This has been the driver of markets. We really appreciate it tonight. Thank you for staying up for us.

Eunice Yun and Beijing. My Morgan Stanley says you should buy shares of this big name. That's next. Welcome back. As markets gyrate, let's do a little three-stock lunch today with Scott Nations. whose president at nation's indexes. Scott, we've got three stocks in the green, which is more impressive when markets are down than when they're up. But we'll talk through why and see if you would be a buyer here,

starting with Netflix. It was named the top pick at Morgan Stanley today in the media space. A lot of people saying it's a safe haven. Would you be a buyer here? I would be a buyer. And it makes a tremendous of a sense to consider it a safe haven. It's been very resilient, up 1 and a half percent over the last 90 days, down less than 1% year to date, despite all the other carnage. Why is it a safe haven,

Kelly? Because ad-supported percentage will increase if the economy is weak. That's a great thing for the company. It expects EPS to grow 8.7% year over year, and they report on April 17. Okay, that's yes. What about Wells Fargo? They get an upgrade to overweight at Piper Sandler today. Kind of a bold call. The stock's 20% off the highs or so. Stocks up also about 1% on the tape today. You go near it? This is a buy as well. The important thing is that they've made important changes over the past three years to have passed their account opening scandal.

They've streamlined some business functions to increase profitability. They've focused on fee-based products, which is a great thing. Price to book at 1.3 means it's not cheap, particularly in comparison to Citibank at 0.7. But it's cheap compared to J.P. Morgan. That price to book is 1.9. And Wells Fargo is the second best big bank in the country. They report on the 11th. All right. So that's two in a row. Let's see if we can make it three with a little bit different one today, which is Carvana. It's up about 9%. They've announced plans for this like refurbishing megasite in Phoenix.

The stock, of course, had been a big decliner amidst the market turmoil earlier on. You jump in here? No, I think this is a whole. Wall Street is very bullish on the stock as it recovers from a horrible. so off. 350 is shared a less than $5 to share in January of 23, as you pointed out, up a bunch today, up a bunch over the past 52 weeks, up 120% of the past 52 weeks. And for the last four cycles, nice, really nice EPS surprises to the upside. But the EPS expectations have grown by 20 cents to 72 cents a share over the last 60 days. I think it's going to be tough for the company to do that. PE is above 54, meaning it's twice as expensive as Nvidia. I'm not a big fan at this level.

I was just looking on the website the other day because the car is making weird sounds again. And I thought, wait a minute, we've got the tariffs coming. We've got all this drama. Do we need to go buy a use car now and get out of it? I bought a car on Carvana. Just recently? About three months ago? You know what?

I need you to listen to our car again. I told you. It's got a rear end probably. No, it's a different one. Okay, a different problem. I'll figure it. Scott, thanks. Appreciate it.

Scott Nations. Remember, you can recap every three-stock lunch anytime you want using that QR code on the screen or CnBC.com for more. All right, President Trump expecting a key executive order on energy at 3 o'clock Eastern time. We'll talk about that and where some are saying oil prices may go next. All right, welcome back. We are expecting to see President Trump for the Oval Office shortly where he will sign an executive order aimed at boosting coal. That's right, coal. as more energy is needed for AI coal stocks are rallying on the news.

Some other energy headlines. First off, sources tell me that U.S. Energy Secretary Christopher Wright is about to head off on a wide-ranging long Middle East trip. He's going to hit Saudi Arabia, UAE, Qatar, and maybe more, mostly to discuss oil and gas output. But the Secretary, I'm told, will also talk about investing in the U.S., investing in nuclear and more. Kelly, all this coming as oil prices hover right around below 60. at $59.11. And many Wall Street firms either cutting oil price targets or express a concern. Goldman Sachs, Kelly, saying that oil could, not will, but could fall into the low 40s

if we get a worst-case scenario. I guess the upside is that I saw gas under $3 a gallon twice yesterday in New Jersey. I filled up for $58. Also, interestingly, and to your point, it makes the EV versus kind of gas trade-off a little bit more. $0.25 cents per kilowatt hour at peak charging time, not at home, obviously. You're going to be paying almost as much to charge your car as fill up with gas. It does change as a former EV owner. I know people think that's strong views on them, but I've driven them and owned them.

By the way, before we go, we have heard from Mark Carney of Canada, saying at midnight, Canada's counter tariffs will come into force, 25% on vehicles that are non-deal compliant. And not from Canada. You know, he says President Trump causes trade crisis in Canada is responding with purpose and with force. So I think, again, all of these are drip-drip is why we're seeing pressure on the road. Yeah, and I wonder if we'll see a bum rush to people buying cars ahead of all this. Oh, I tuned in our new Asia show.

Yes. 6 a.m. in Singapore. With that guy. I don't know who that is. Looking forward to that. It'll be great. And thanks for watching Power Lunch, everybody. Closing bell now.