Power Lunch - Stocks rise ahead of Trump’s tariff announcement 4/2/25

Episode Date: April 2, 2025

Stocks climbed on Wednesday in yet another volatile session, as Wall Street readies for the expected rollout of President Trump’s tariffs. 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, everybody, alongside Kelly. I am Brian. All right, you've got a hat trick of headlines topping the tape right now. Here they are. First, President Trump set to announce sweeping tariffs in just two hours with the markets looking like they're betting they will not be as severe as once thought. We are higher across the board. Next up, could he soon be Elon gone? Talked that Musk may soon leave D.C. as Tesla stock popping. And also happening now reports that Amazon or App Lovin, may be Elon gone. may swoop into by TikTok's American operation. Oh, by the way, Kelly, apparently Facebook's boss, Mark Zuckerberg, reportedly at the White House as well today. I would say that's a lot going on. Yeah, and as we learn more about that, let's check it on the major averages, which are somewhat off the highs,

but again, an impressive turnaround from the red this morning. The Dow was up about 300 a little while ago. It's still up 150. The S&P's up nearly half a percent, three quarters of a percent higher for the NASDAQ as we continue to see some outperformance there. And shares of Tesla are higher. They're up about 5%.

This is extraordinary because it comes on these reports that Musk may be moving away from the White House and maybe back to focusing on Tesla. But remember this morning, the company reported global vehicle deliveries fell 13% in the first quarter, much worse than expected. We'll have more on Musk and Tesla coming up. Also, you knew it was bound to happen, but Newsmax coming back down to Earth. Losing now 60% of its value today, it's back down to 88. debuted at 10, and that was Friday. It's near 90 right now. Actually, the stock had been briefly

halted because there's been so much of this up and down volatility. So you have a stock that started at 10, went to 200, and is now back to 8750. Correct. So it's been a huge loss or huge gain depending on your time frame. Indeed. Wow. And it's only day three. All right, we're going to get to that, but let's begin with the developing story in the technology world. Amazon, sort of stunning the social media space. Amazon making a surprise bid to acquire TikTok that according to various reports. David Faber, who you heard on shows like The Exchange moments ago, also reporting that App Lovin is a bidder as well.

Now, the deadline for TikTok to make a sale and separate from its Chinese owner is approaching, but the company, remember, has not actually put itself up for sale. Now, separately, maybe, there are. reports out there that Mark Zuckerberg, the founder of Facebook and CEO of Meta, is visiting the White House today. Could he be there trying to secure TikTok for himself or maybe he just wanted a tour? Let's bring Alex Cantrowetz in. He is the founder of big technology. He is a CNBC contributor. It's like kind of a choose-your-own-adventure book from the 80s, Alex. If you're old enough to remember those, we can kind of pick any headline we want. Let's start with TikTok, App Lovin, and Amazon

maybe reportedly making bids, but is TikTok even for sale? I don't think so, Brian. I mean, we've been through this already 75 days ago or 70 days ago where TikTok was forced to sell. And instead of selling to anybody, it said, all right, we're just going to shut down. Remember, it should put this notification on. And then it said, okay, we're not selling to anybody. And then eventually Trump gave it the 75-day reprieve, which we're now on the backup.

So we could hear Amazon, Apploven. Some of these companies might make sense as potential acquires. to TikTok. I just don't see China going along with this, and I think we're going to end up in a similar situation where the app will either shut down or we'll get another extension. It just seems like this TikTok story is extension after extension after extension, and I don't expect that to change. Yeah, ultimately China will bite dance, Chinese company. We know the Chinese government is effectively kind of mini owners or macro owners of all companies in China. So you think that if there's a sale that is pushed, China, instead of selling the ball, would simply pop the ball and take it home.

They'd rather have no TikTok in America than be seen as being forced to sell it to an American company. Yeah, look, Brian, everybody that I've spoken with that's close to that company or has been inside that company tells me that they would rather shut down than sell. Now, if we do see a sale, I'm not saying it's entirely impossible, but if we do see a sale, I promise you, it's going to going to be a stripped down version of TikTok. It'll be basically selling the skeleton, whereby dance will say, okay, you want the app, we're going to take out the algorithm, you can figure it out on your own, you haven't been able to build an app as good in the U.S., that's why we're on top. And so, therefore, you go ahead and try to figure out on your own. But I don't think, I mean,

if you put yourself in the perspective of China, this is a move that is going to be seen as bullying by the U.S. to take a crown jewel of their consumer applications and say, listen, you know, we need this now in U.S. hands. Does China want to go along with that? I doubt it. And that's why we haven't seen them go along with the sale up till now. And there's nothing that gives me confidence that they are going to go along with it, even if Amazon steps in and offers a lot of money.

So I guess the question, Alex, is this a bigger story for Amazon? Like if they got that, okay, that's kind of a game changer for the business, right? Major revenue source, major advertising, major acquisition for them. But if it goes to a different company, if it's kind of orphaned, I mean, we just have to see. We just have to see what happens with the algorithm. Absolutely. And look, for Amazon, it would be a slam dunk deal, right? They made $56 billion in ad revenue last year.

They're expected to make $69 billion in ad revenue this year. We know that the signals that we get from commerce are the most valuable signals in advertising. That's how they've been able to basically make a third of the advertising business that META has in a very short amount of time. So they'd be able to apply that shopping data into tick. It would be slam-dug move for them. It'd also be well-suited on hosting with AWS. And the underrated part of this all is, of course, they could use TikTok to train their AI models and perhaps pass that on to AI partners like Anthropic.

So they would be a great partner. I actually think it would be good for TikTok to sell to them. I just don't see it happening in reality. But hey, I could be wrong, right? This is unpredictable stuff. But there's been no indications that TikTok is going to unload itself. Right. So why now?

As many sort of China commenters have said, if they end up just letting it go dark instead of letting it fall to someone else. That itself is pretty telling, so we'll see. Alex, the other major story today coming out of tech in the White House is Politico reporting that the president has told his inner circle, Elon Musk will be stepping back from his role as a governing partner soon. White House press secretary denying this is a scoop, saying Musk had always planned to leave eventually. The president on Monday did say that Musk is amazing but has a company to run and at some point would go back. That said, this comes after Musk lost a $25 million political bet on Wisconsin Supreme Court election, and Tesla shares are still down more than 30% since Trump took office despite today and yesterday's gains.

So I thought it was noteworthy that Dan Ives was very disappointed in the delivery numbers this morning. Tesla sales are truly taking a hit for whatever reason. Politics is part of that. And I wonder if that will catalyze his decision to ultimately step back. Yeah, but Dan's reaction was very forceful. Dan is usually, I would say, in favor of these companies. He called the returns in disaster on every metric. have Gene Munster also talking about the fact that 80,000 of the deliveries that Tesla didn't

make are likely due to brand issues. So you have this special window that Elon Musk is coming up against like 130 days or so where he's able to be a special government employee and not have to go through all the conflict of interest regulations that he would otherwise and he's about to come up to the end of that. So it's possible that they're just going to say he's out of government and then he stays and it's just like the way of talking around that. But if you look at Elon Musk track record up until this point, him leaving wouldn't be a terrible idea. Obviously, you saw what happened in Wisconsin. It's not like his political tailwinds have continued to push Trump and the Republican agenda forward. That was a very big loss. And then you look at Tesla and you are

seeing the brand hit. And of course, the stock has been crushed over the past couple months. So maybe it would be a good idea for Elon to say, all right, you know, I helped get Trump in office. That was goal number one. This governing thing doesn't really seem like an Elon Musk thing. you know, let the spirit continue on and go back and run Tesla and SpaceX and all the other companies. What do you think is going to happen with? I know people are dancing on Tesla's grave. They don't like Elon.

Tesla used to be kind of a big symbol of the left. Now they can't sell their cars fast enough to buy, I don't know, Volkswagen or something, whatever. But at the same time, you know, Musk, he'll probably lower the price of Tesla's to bring people back into them. He's already done it multiple times. Do you think there's enough people out there that are kind of, on the fence that are not political. They don't really care.

They just want the best car for the money. I'm not saying Tesla's the best car, but you get my point that they might step in and fill the void of other people not buying Teslas. Over time, maybe, Brian, but I think right now Tesla is simply a political symbol, right? And that's what we saw the sales drop. I mean, it's out there. It's clear.

Now, over time, that might change. But I do think the brand damage has been done, particularly outside of the United States. or seeing countries like Germany, for instance, sales go down even further than the U.S. The one thing I'll say, though, is this story gets reversed if Tesla can start to deliver on some of the long-term promises that has actually been behind the reason why the stock has been where it is. The big story, right? And I'm talking about autonomous driving.

I'm talking about humanoid robots. If we see Tesla be able to deliver on that promise, right? We're supposed to see robotaxies. That business is so big that it can make up for the declines that we're going to say. see in what will eventually become, if this story goes according to plan, Tesla's legacy business. I just think Tesla needs that long-term story to pay off now more than ever, especially after the way that Elon Musk has attached himself to a political party. Right. And so those headlines, I think you're right, that those headlines almost more than

anything drive the stock except for the huge run-up we saw post-election. And now, I don't know what we call it it. The honeymoon's over, I guess, Alex. Oh, without a doubt. That's true. Appreciate you joining us today. Alex Cantorwitz, founder of Big Tech. All right, the markets, they are holding up. All as we await President Trump's tariff announcement, stocks higher across the board and actually gaining steam. But maybe you're wondering, how do tariffs actually work? How are they collected? Who pays them? We're going to make you smarter about all this right after the break. Welcome back. Let's begin at the White House, as the president is expected to speak in a couple of hours. It's being billed as a make America wealthy again event. What can we expect to hear? Let's get the latest from Megan Kassella. Megan, what can you tell us? Hey, Kelly, less than two hours away now.

And what we know is that the Rose Garden is all set up for this event. The president is working on his speech. And I'm told he has now made his decision on exactly how he wants to proceed on the reciprocal tariff front. We only know a few things for sure at this point. One is that whatever the president announces today, they do expect these tariffs to be taking effect immediately, immediate impact for the countries that are going to be impacted and for the importers or the consumers that are going to be paying those prices. We also know the Treasury Secretary was telling lawmakers on Capitol Hill yesterday

that these tariffs are likely to be at the maximum level that we will only see them negotiated down from here. I will caution there is some skepticism around that as to whether the president would like to respond if countries do retaliate and likely the tariffs could go up, but we will have to wait and see. Now, as we get closer to 4 o'clock, though the decision has been made, what we don't know yet is exactly which one he went with, but there has been sort of this menu of options in front of the president that we've been talking about now. We know the blanket tariff of up to 20%

on nearly all imports is one of them. There's also been reporting about a lower than 20% tariff on a smaller subset of countries. I'm told that both of those two options appeared slightly less likely than the other two that have been on the table, one being these tiered rates of tariff, something like 10, 15, and 20% and countries could qualify for one rate or another, the final one being these customized country-by-country rates. All of those have been in front of the president for the last 24, 48 hours. He's been weighing the different elements as he's decided which way to go, guys. But I would sum it up this way. What we know the White House has been looking for is a way to sort of satisfy the president on tariffs. We know he wants to go big

and broad and simple on this, as simple as possible. But we also know that advisors have been pushing to try to minimize the economic and the market impact. So that's what they've been weighing, really, as they try to establish sort of a middle of the road option. Guys? Megan, I want to clear things up if we can. And I'm not sure anything is that. clear right now, but there are a lot of reports out there. One of our sister network, Sky News, in Europe, they're part of the NBC Universal family. They are reporting, now they're British, but they are reporting that their sources say that the tiered tariffs, 10, 20, 30, depending on country and industry, is what's going to happen. That's not what you are hearing, correct?

Or at least we don't know for sure what's going to happen. We don't know for sure yet. I saw that report. I have not been able to confirm it myself. Folks here are saying, they don't want to get ahead of the president. They want him to be the one to make that announcement at 4 p.m. What I can tell you though is that was definitely an option that was on the table and it was one that I've been told is seen as more likely than some of the others that have been seen as more extreme. And especially if you start to kind of read the tea leaves here, if we know the president wanted to go big, broad and simple, think about something like a customized country by country rate. That takes a long time to roll out. It's a long time to come

up with and it's not an easy sound bite to announce from the Rose Garden. So if you think about things this way and the way that this president in the past has liked to go about doing things, I would say it seems like a likely option when we're talking about sort of middle of the road, middle ground. Yeah, the market kind of caught a bid on those headlines. It's pulled back a little still higher, but pulled back off the hides. I guess, Megan, you and me and Kelly and everybody else will just have to wait until 4 o'clock when we get that actual news. Megan Gisela, thank you. All right, folks, so as we await President Trump's expected tariff announcement, But your next guest is worried about them.

Worryed about the potential economic and political damage. And he says you can expect maybe a dampening of consumer confidence and even a fractured relationship with our allies. Other than that, how is the play, Mrs. Lincoln? Stefan Selling is the former Under Secretary of Commerce under President Obama, also former executive vice president at Bank of America. Let me play the other. Let's play devil's advocate.

It's like the old McLaughlin group. If tariffs are, and we've been reporting that pretty much tariffs are universally negative. Why do so many other countries have them? Well, they don't have them to the extent that is being widely discussed, right? And so they have been coming down, obviously, over the course of the last 50 years. And the wisdom was that if you could protect your own developing market, that will allow it time to grow and develop to catch up, more developed markets. You see that in countries like India and Vietnam and where China was before it entered the WTO.

That is not where the United States is, and that's not where most of the developed world is. And so, Brian, there is very little to believe that exporting more than importing gets you rich. Is India richer than us? No. We agree on that. But I think we can also agree that income and wealth inequality in America is a problem, right? Whatever we've been doing hasn't been working. If it's been working, we wouldn't still, I think, have the problem. Maybe this is not the answer. Maybe this will make things worse.

I have no idea. But do you agree there is a part of it that we have to try something new? Because what we've been doing is not working. A hundred percent. And that's why Donald J. Trump is the president of the United States. So for sure, there is a potential tactical and strategic use. for tariffs to advance our country's interests. Sold.

The question is, what are we actually trying to do? We've heard that we're trying to narrow bilateral trade gaps. We've heard that we're trying to raise revenues to afford tax cuts. We've heard that we're trying to protect our southern border. We've heard that we're trying to keep fentanyl out of our country. We've heard that we're using it as a cudgel to have Europe pay for their own defense. We've heard that it may be useful in terms of territorial expansion in Greenland and the Panama Canal. All of those things can't happen at once because they're, in fact, many ways, mutually inconsistent with each other.

So what are we actually trying to do? And my concern is in doing some of those that may actually be beneficial for the United States, what are it going to be the ramifications? Is the light worth the candle? Will we have fractured so many relationships with our friends and allies that is going to come back to bite us? Well, and there's two interesting things there you could sort of pick up on. I mean, one is it's good if tariffs could do all of those things because we could use them in the future to get anything done that needed to be done. I see how they give you leverage over trading partners or friends or allies, as you called them.

But even if those friends and allies, if they're not spending enough on defense, if they're sort of saying one thing and being friendly as long as we go along with it but then not actually doing it, at some point do you have to allow the relationship to turn a little frosty to say, hey, you know, we're all going to get along as long as you actually step up to the table here. Okay, but in all fairness to the administration, the president, we did have Germany just approve a trillion dollar defense budget. It would never have happened but for that tough behavior and what this particular administration did. And if you talk to German politicians, I think what they'd say is the United States behavior gave us the political cover to do something that we would not have been able to do otherwise that is in the best interest of Germany. That's a good thing, right? That's a good thing. And it's a good thing for everybody. It's a good thing for Germany.

It's a good thing for Europe. And it's a good thing for the United States. The question is, with all this back and forth and haphazard and frankly chaotic way that the tariffs have been approached, it has created so much uncertainty. Uncertainty with the consumer and what I do, uncertainty with large corporations because they're having to sit here and wait to see if they can get some clarity because predictability, stability, and clarity is what company needs. I don't know what you're supposed to do if you're a GM, but I guess you go to the White House and you just say, what do you want? What do you want us to do? Or maybe it just becomes, but I don't. Yeah, but they also, but Detroit rolled over for Biden too, right? They pushed these EV mandates and cafe standards.

And Detroit said, okay, we'll lose $100,000 a car because it's politically expedient. I don't think Detroit wouldn't be wrong to maybe go to the White House and say, to your point, what do you want? What do you want? What do you want? They did it four years ago. the question is, what do you want today? Is that going to be the same thing as what do you want tomorrow? And how do you actually make an investment decision? How do you think about investing in a supply chain when tariff policies may change from day to day or hour to hour? So that would be my concern,

Brian, which is whatever we hear at four o'clock isn't something that is actually going to necessarily lay out a long-term... And here's my concern. And first off, to my cousin who's watching, My Canadian cousin, we love you. We love Canada. The whole Canada thing is a little weird with the oil. And maybe I can understand, and tell me what you think, Stephanie. Can you understand going against China? I get it.

They kind of got into the WTO. They're supposed to do all this stuff. They didn't sell a lot of cheap goods here. I get it. We want to go against China. Fine. Canada, a different story. You talk about corporations and planning.

That's what we talk about on CNBC. Biden administration had one. one thing. Trump looks to wildly have another thing, although Biden had tariffs on solar panels and Chinese made EVs too. In the net, let's say four years from now, it's politics switches again. And it goes back to whatever it was. That's a really hard way for the U.S. to win longer term. If macro policies, whether it's energy or tariffs, every four years, they change. That's not the way to win. Well, I think we're going to be lucky if we even have a four-year period of some stability.

But I think you're just making, is that a commercial for the Chinese Communist Party? That's exactly what they would say, which is, you know, democracy does exactly what you've just said, which is it doesn't allow you for long-term planning because it vacillates. It vacillates. No. The Canada thing I would just point out, Brian, is, you know, one that is kind of not obviously digestible to a lot of folks. We have some minor trade issues with Canada, like lumber and dairy. Yeah, dairy to protect, you know, their farmers at the expense of Wisconsin and other farmers in the United States.

But the fact is, is they're an important ally and a friend. And going back to your comment about China, if that is the real battle we are going to be fighting over the next generation, our strategic competitor. Wouldn't you want as many people going into battle with you? I'd want Mexico and Canada on our side as a blunt. Because China's been trying to get into Mexico and has gotten into Mexico for years. They're aggressively now, according to reports, trying to get more into Mexico to get around some of these tariffs.

If we made a deal, we need Mexico to say, yo, you want investment, get it from us, not from China, I think. that when you're going into a fight, having as many friends next to you is an important thing. All right. Stefan, thanks. Appreciate you joining us today. Good to see you guys. Stefan Seleck, former Undersecretary of Commerce. Coming up more on the tariffs, how they work, and how they'll hit your wallet. Further ahead will put the recent market volatility into a longer-term context.

In the grander scheme of things, how bad are things really? Power lunch. We'll be right back. All right, welcome back. We are just about an hour and a half away from the president's expected tariff. Stocks, they're higher, although they're off their highs. And of course, we on this network have been talking a lot about the possible macro impact of tariffs on the economy and your money. But let's get a little more micro now. For example, how might tariffs impact your grocery bill? Courtney Reagan going shopping at a Stu Leonard's and Yonkers, New York,

where we also happened to just have a camera and we followed her into her shopping cart. Courtney, obviously there to track the impact. It's amazing how it works out. What are you learning? Yeah, I mean, Brian, I walked around this morning, and I found a lot of items in the produce aisle that could be subject to tariffs. So these cucumbers, for example, these are from Canada. These tomatoes, these are from Canada.

I didn't stage this. They're all gathered together here. These also from Canada. As a matter of fact, this entire basket, all of it, all from Canada. And then this basket, this whole thing. If you can stay with me, I'll hold this up. That's all from Mexico. And Stu Leonard's here tells me there may be some items where prices are going to have to increase here if tariffs are applied to goods from Mexico and Canada.

It will try to switch salmon suppliers, though, from Canada to Faroe Islands. If necessary, it can try to source some vegetables from Florida instead of Mexico. But the fact is that 51% of fresh fruit sold in the U.S. is imported from Mexico, 2% from Canada. 69% of fresh vegetables sold here are imported for Mexico, 20% from. Canada. That's according to the latest data from the U.S. DA. Now, three quarters of U.S. beer imports also from Mexico, Medela makes up 8% of U.S. beer sales, but like 7%. Now, the country's largest grocers. We're not really detailing the impact for their businesses or their consumers, at least until they know a little bit more. 17 of the 18 grocers that I

reached out to either had no comment or simply referred me to the lobby groups. So here's what the Retail Industry Leaders Association, Vice President for International Trade, Blake Hardin says, Items like tomatoes, raspberries, cucumbers for Mexico, cooking oils, maple syrup from Canada, they'll be hit with hefty tariffs. President Trump promised to bring down inflation, but if these tariffs go into effect, they will raise costs for American families at the grocery checkout and when they die now. Now, grocers typically operate on very thin margins between 1 and 3%. So any cost increases are very often passed on to consumers. Kelly and Brian? Well, and Courtney, Courtney, I mean, this is where we've had so much.

headlines and yet so little actually to happen yet, right? Yes, exactly. That is the thing. And so when we had Target CEO, Brian Cornell on our air just about a month ago, a little less than a month ago, he said, look, if we get these increases, then we will likely have to increase prices. But what ends up happening, Kelly, is if you have a portfolio company, meaning a company that has lots of different items, some that are subject to tariffs and some that aren't, it may not be that easy to tell. He gave the example. or I should say Rick Gomez gave you the example, a number of member of Target C-suite,

saying if you have a Christmas ornament, we want to keep that at $3. We don't want it to be $3.60. So maybe we're going to take that 60 cents and move that price up somewhere else. So it may not be so easy for us to tell exactly where these prices are going to hit our bills. Great point.

I love Stu Leonard's. Does Stu himself have a comment on this, by the way? I think he supports, does he generally support what the president's doing? So, you know, it is interesting. I mean, the Sue Leonard sort of company gave us a number of talking points that they're working through and said, look, they're going to do what they can to try to keep the impact low for their customers. They said only 4% of their total store sales would be subject to tariffs from Mexico and Canada. China, there is some even in the packaging per se, not overly concerned about what it would mean for its customers.

So that at least is good news. As long as they don't get rid of the dancing avocados, you know, the kids are so entertained when they go through there. They're right over here. The dancing avocados. You know? No, I don't. I know the red-eye grill in Manhattan has the dancing shrimp. That's like a dish.

Courtney, we've got to take Brian through stew letters. I haven't been in a while, but yeah. There's so many buttons to push. There really are. They really are. And isn't that a metaphor? Courtney is from Dayton, Ohio originally. They just walk out in their backyard and they pick all their vegetables.

and then they get in their Wright brothers plane and they fly wherever they need to go Oakwood High School. Is this me? We don't know exactly what will come in the president's Rose Garden tariff event today, but whatever he does announce could go into effect immediately,

according to the White House Press Secretary. When they get announced, how are they actually collected? Well, joining us now is Aiken Senior Counsel Josh Tietelbaum. He was also involved in negotiating. I remember the TPP, the Trans-Pacific... Does that still...

Josh, does the TPP still exist? It gives me shutters to hear you say it. But yes, no, I was part of the negotiating team that helped negotiate the Trans-Pacific Partnership Agreement, and it does still exist. Unfortunately, the United States is not a part of it. I see. Okay. You know, and this goes back to this volatility we were talking about.

You have one administration. You're rowing hard in one direction. Then the next administration are a bad midterm result, and you're suddenly not going anywhere. So what would you say about the tariff-by-tariff areas where you would most be focused for impact when we get this actual announcement? Well, I think, like the basket of goods that we just saw Courtney talk about, you know, we're concerned about groceries. The kinds of products, if we were to have a universal tariff, where there are no alternative sources.

So some of the groceries that you talked about are in an example, Kelly, I have bad news for you about avocados. They primarily come from outside of the United States, along with other tropical fruits like bananas and grapes. Grapes primarily come from Chile, Mexico, and Peru. But aside from fruit, you also have products like toilet paper. Canadian softwood pulp primarily supports toilet paper production. You have tissues which primarily use Brazilian hardwood.

And these are because of the climactic conditions that create that wood pulp that's necessary for that product and creates a certain amount of absorbency. And we in the United States as a result have better toilet paper and tissues. clothes, of course, primarily come from outside the United States. We import more than 95% of the clothes that we buy here in the United States. Is it, okay, Josh, fair to say. And by the way, we want softwood toilet paper. We don't want hardwood toilet paper.

Let's make that clear. Here's where I guess I'm confused. And I asked, you probably heard the interview with Stefan Sele like just a moment ago, if tariffs are just a net negative and everything I hear just makes it sound like they are, Why do so many other countries use them? Is there some upside to tariffs that we are not seeing, or is it literally just a negative? I don't know. Yeah, so first of all, great to see Stefan on the show, my former boss at the Commerce Department.

Listen, there is an appropriate role for tariffs. I think that is a consensus position. when other countries unfairly subsidize their exports to the United States so that they are cheaper than the cost of production, then that is an appropriate role for using anti-dumping or countervailing duties tariffs to protect U.S. industry from unfair trade practices. If there is a surge in imports in a particular product, then ensuring that there's an orderly transition for U.S. domestic competition, that's an appropriate. of reduce of tariffs. Okay. So that said, so let me, let me then, by the way, who knew that that Stefan was your boss?

We had no idea, by the way. I just want to be clear. But good to know that. So let me ask you this. Courtney, and by the way, the audience is going crazy. Courtney featured Canadian cucumbers just moments ago. And now everybody wants to know where is Canada growing cucumbers when it's 40 degrees below zero up there.

But that aside, do you feel like there are, Josh, if you were entirely in charge of tariffs right now, you alone? Are there trade imbalances or trade fights that deserve tariffs? Sure, but listen, ultimately, that's up to Congress and the president to choose those fights. I think what's important and what you're hearing from the business community is, let's set a course, let's find some certainty. As you've described, we're about to get a tariff announcement in less than 90 minutes, and it's unclear which countries, which rate, which products. And ultimately, companies need to be able to figure out how they're going to pay tariffs on goods that are on their way to one of the 328 points of entry that the United States has right now. And that's a very difficult way to do business.

All right. Speaking of all of this, Josh, we have some news out of the White House. Appreciate you joining us, Josh Titlebaum with Aiken. Another news alert, this time another major law firm making an agreement with the president. Amon, what can you tell us? The law firm is Mill Bank, Kelly, and the business. White House has just posted a statement to the president's social media account saying that Millbank has now agreed to perform a total of $100 million in pro bono legal services during the Trump administration to initiatives that are supported by President Trump and Mill Bank, that the law firm's pro bono committee will also include partners at the firm with diverse political ideologies. excuse me, and that Millbank will not deny representation to clients who are representatives of what they call politically disenfranchised groups. They're also saying that Mill Bank is going to commit to what they're calling merit-based hiring and is not going to engage in what they call illegal DEI discrimination and preferences.

The White House says that Milbank approached President Trump and his administration, stating their resolve to help resolve the end of weaponization of the justice system. a statement here from the chairman of Milbank saying after a constructive dialogue with President Trump's administration, Milbank is pleased that we were able to quickly find common ground. He says our agreement is consistent with Milbank's core values. Now, why President Trump and Milbank were at odds in the first place is not entirely clear, but Milbank did hire Neil Catell, who's been a prominent Trump critic and who is participating in a lawsuit against the Trump administration right now. We'll get some clarity from the White House if that's what brought Milbank to the president's attention and into the president's crosshairs here, guys. Back over to you. All right. Amon Javvers, talking about Milbank. The law firm formerly known as Milbank Tweed Hadley and McCloy. Let's get over now to Angelica Peebles for an NBC news update. Hey, Brian, Nashville police issued their final report on a deadly 2023 attack at a private Christian school that killed six people.

Investigators concluded the shooter was primarily motivated by notoriety and bore no grudge toward the school or staff. Three children, all nine years old, and three adults died in the shooting. Denmark's prime minister pledged to support Greenland against President Donald Trump's interest in acquiring the semi-autonomous territory. She is in Greenland today for talks with its incoming government less than a week after Vice President J.D. Vance visited a U.S. airbase there and accused Denmark of underinvesting in the territory. The FAA announced this afternoon it will increase oversight and support for air traffic controllers at Reagan National Airport. It comes after the deadly mid-air collision in January between a military helicopter and a commercial jet approaching the runway at DCA. The FAA says it will evaluate staffing in arrival times at the airport, as well as increasing the number of operational supervisors.

Brian, back over to you. All right, Angelica, peoples, thank you very much. All right, now let's get back to your money, because you might have heard that tariff announcement is doing just about 90 minutes. Of course, the last few days, there has been a slight cooling off of some of that tariff and tax turmoil and markets firming up a bit, stopping their slide. And we say maybe slide with some trepidation, because despite all the panicky headlines and hot takes on other channels, the S&P 500 is only down about 3.5% this year. Remember, on average, markets tend to fall over 10% at least once every year. And as always, like any people,

piece of news or data you get, folks, context is key. Take a look at the exact same chart with different time frames. On your left is the S&P 500 one year. We're a little higher than we were, Kelly, but it looks like we've had a nice slide the last couple of weeks. But on the right side is a 20-year chart. Same S&P 500, and the decline that we see is that little tiny bit just at the very top. This is not only a good lesson for investing, but maybe a good lesson about what some call chart crimes and what you can do if you move the H or the Y axis. Either way, let's talk about it all with Brent Shudy. He is chief investment officer at Northwestern Mutual Wealth Management, Brent. And I'm not saying the markets can't fall more.

They could fall another 10%. They could stay down for years. I have no idea. But I'm just trying to put the current market in some sort of context for investors, because the amount of hand-wringing over the last couple of percent is unlike really anything I don't think I've seen in 20 years. Yeah, I agree with you. I think investors have become used to markets that go straight up into the right more so.

Yeah, it's like when stocks went down? What do you mean stocks go down? That's why you get paid to own stocks because they can and they will go down for a variety of reasons. That's why the return is supposed to be more than the bond. market. Absolutely. There's a risk premium with an owning them and not everyone can own them. And unfortunately, people who can't own them find out at the wrong time, they puked them up to which the gains that they give up pass on to someone else who can actually own them.

So the first thing we always encourage people to do is do what you're doing, which is think longer term. I do think that S&P 500 chart maybe hide some of the damage that's gone on beneath the surface and some of the leaders that people had concentrated in. And that's where to me, the S&P 500 still provides opportunities, but there are bigger opportunities outside of the S&P 500 that haven't performed well for years, that will possibly do so in the future because they are cheaper. And there is kind of a catalyst change going on right now in the environment, which this tariffs and these possible tariffs kind of weave into. You know, Brian, Brian's so right.

And when you watch anyone like Warren Buffett building their wealth over time, you know, it's, you know, build the wealth, stay in the market, just ignore the headline. But I'm always afraid that I'm going to get in or that it's going to be my, when it's like the loss decade, right? And every time someone comes on and says, you know, we see permanently lower returns from here, four percent a year, you know, count on it. I go, I try to, I try to just ignore them, la, la, la, la, la. But what? It's happened before? Maybe it could happen again. Sure, absolutely. And that's why you diversify. I mean, that lost decade that everybody refers to

is not lost universally across asset classes. And so I obviously lived through 2000 to 2007, 2008. And during the first part of that, international stocks did much better. Emerging markets did better. Those were the laggards in the prior economic cycle. If you think about 1999, it was much like it was today where people wanted to own tech stocks. They wanted to concentrate in a few stocks that were doing well at the end of that. And what you saw over the next five, six, seven years was that the market broadened back out to include small and mid-cap stocks, which did very well. It broadened out to include emerging market stocks international developed.

And that's the path that I think is most likely going forward, where you're going to see some of those laggards that haven't done well but are cheap. They now have a catalyst, which I think is in Europe, for example, increased spending on defense. It may be possibly an into a war. It may be the dollar weakening. You think about the U.S. Small and mid-capped stocks haven't done well for the past couple years. They've been impacted by the economy, which has been bifurcated.

But what if I was talking about, you know, and I don't remember it, to be honest, but I was talking about the 70s, you know. And if it's one of these situations where we have kind of sticky inflation and a little bit of this kind of like misery feeling out there. And, you know, to your point, small caps and some of these other things, Like, they just keep chronically underperforming. We have high interest rates. We didn't have that in the early, probably about where they were in the early 2000.

Didn't have that in the 2010. So what about that analogy? Look, I think the 70s are an interesting analogy. I was actually born in the 70s, 1973, to be exact, which was when we actually had a bare market. So I suppose I'm a bear market baby, which probably makes me a bit more cautious in my approach. But to me, there are still opportunities back then to invest. One of the things that I think people do wrong back then as they look at the S&P 500 price

return and not total return. certainly there were opportunities across the board. If you think about the 80s, that's when the international developed did very well, kind of buffeted by Japan actually entering the market. And so I think there are lots of opportunities that are out there. And so when you hear the word lost decade, to me, that doesn't mean across all asset classes. And there are opportunities today, even though I do think there are heightened valuations in some parts of the market. There are other parts that I think are primed to do well in the future.

And that's why we encourage going back to your opening comment, Brian, no one knows for certain what's going to happen. diversification is admitting that. And that's where I think the anecdote that people are looking for, or antidote that people are looking for the uncertainty that I think is going to exist, is not by selling out of the market. It's by staying diversified. If you sell out of the market, moving to cash, you to me are telling me that you know exactly what's going to happen, which no one does. Yeah, and the more market goes down, the longer it takes generally to come back, and the more money and higher percentage it takes, and I'm just told math tells us that. But the lesson I was just trying to tell, Brent, and the X and Y acts,

is simply that we need to put everything into perspective. Brent Shuddy, Northwestern Mutual wealth management, Brent, thank you very much. Thank you. I think he did that quite well. Treasury yields are rising today as investors braced for the rollout of the tariffs. We'll go back to Rick Santelli for a fuller bond report on that next. Welcome back to Power Lunch. Stocks are still higher this afternoon. They've been strengthening generally throughout the day. Same for bond yields. They've been rising with a 10-year back above 420 or so. Let's get more from Rick Santelli. Hi, Rick. Hi, you know, these are the easy things.

Look at the S&P 500 on top of two-year note yields and realized that stocks came out of the box at 9.30 swinging for green. And what happens, interest rates did a U-turn and followed them right up. And it doesn't end there. As a matter of fact, look at an intraday of tens and pay particularly close attention to the high and low. Now let's tack on yesterday, and what you'll notice, is we have a higher high than yesterday, we have a lower low than yesterday, and yesterday was

technically significant because it represented a six-month low yield close. All that changes, we now have what's called an outside day, and it usually means trend change. And we know the trend has been getting closer to 4%. So you want to pay attention to any potential upside that we may have, and I think that would be signaled by this week's close. Friday's always a higher priority technical close of anything above four and a quarter. Now, I don't know how tariffs are going to play out, but I will tell you this.

If all as you do is look at the markets today, it certainly seems as though they're not expecting dire news. Sully, back to you. Rick Santelli, well said. All right, thank you much. All right, coming up, it's a mystery chart. And does this beaten down stock have bite? B-I-T-E, not B-Y-T-E at this level. That's a hint.

It's a dad joke. We're back right after this. Welcome back. It's time for three-stock lunch. And amid today's tariff uncertainty, our trader has two stocks, investors should be buying and one area to avoid. Eric Clark is rational, Dynamic Brands Fund portfolio manager. Eric, it's great to have you here. Let's start with Amazon.

This one's up nicely today on a report that they're submitting a bid to the Veep to buy TikTok. It's off the highs. You like the stock for a different reason, though. Tell us about it. Yeah, sure. I mean, that is a new wrinkle, isn't it? You know, e-commerce is the largest part of retail from a growth perspective. Amazon is the largest company in that category.

They, you know, you have that core retail, which is, you know, 450 billion or so. Then you have the AWS and the AI as well as the advertising. So there's, you know, there's certainly a lot of ways to win. It's not more, it's not as stable in predict. at the core retail is like a Walmart or something, but we have such impressive potential growth across the retail side with the cost to serve, going down, which allows margins to go higher.

And then we have the continued growth in advertising. And certainly, gosh, TikTok would be an interesting jolt on the positive jolt on the advertising side. So, and then you have the AI. That AWS division obviously is where most of the profits live, much faster growing. You know, every quarter is sometimes can be lumpy across all the categories. But long term, we still think this is the company that has the first trillion dollar in top line revenue. And so it's two trillion today.

We think on its way to three and then five trillion. I don't know if Chipotle has a trillion dollars in top line revenue, but I know that Chipotle is a lot more delicious than Amazon is. and we just did a little lesson on stock chart timing, and we know that Chipotle is about 25% off. It's 52-week highs, but it's more than doubled in five years. It's been a longer-term moneymaker, not lately. What is our take? What is your take on Chipotle right now? Well, like you said, nice correction in a really high-quality, largest fast casual that's a growth-oriented brand.

And, you know, we've seen some tariff issues with input costs. They've already said that they're not going to push those costs to consumers because I think every brand realizes their ability to push price is probably pretty limited. So they'll deal with a lot of internal operating efficiencies to keep costs where they are and margins where they are. But you're getting a stock that's, you know, not cheap at 30 times or so, but has good growth is going to still double the store growth over time, still has wonderful operations. to expand around the globe. And, you know, you're just breaking a downtrend here today.

It will be interesting to see if it holds with, given the tariff news that we get over the next couple of days. But we really like that one. And it's paid to buy Chipotle and Amazon when is 20% or more off the highs. All right. Are your last trade, it's not a stock per se. But for a lot of people who are saying, this is the time for small caps to shine and they've been underperforming, you're not buying it. Why? I'm not. You know, I think there will be a time to buy small caps, probably when we're in the, you know, in the middle of the whatever slowdown we get, those tend to, small caps tend to do well coming out of slowdowns in particular. You know, it's just really stayed to stay up in quality and up in market cap.

You know, we're focused mostly on midcap and large cap because that's what's worked. That's where kind of the style factor momentum is. And if you do dip into small cap, just make sure you're focused on quality. You know, higher leverage, lower quality, lower market cap just has not worked for many, many years. And until we see some evidence of it working, we'll probably stay away. And within retail, obviously, you know, undifferentiated retail within the small and the midcap is something that we're not really focused on. Sure. You know, our age reports after the close. That'll be interesting. Yeah. There's a lot of leverage there. So I'm a little nervous about it. They're often quite pithy about the economic landscape, so I hope we get a little bit of that today.

Eric, thanks. Absolutely. Appreciate it. Thanks, Eric Clark. You can recap any three-stock lunch any time, by the way, just scan that QR code on your screen. Yeah, listen, we got about 20 seconds left in the show. Markets are higher, but S&B, about ready to turn negative up only 0.02%. Look at the Dow.

The tariff announcement coming in a couple of minutes, like about 60. Newsmax shares are also off the highs. In fact, the stock is down 70% today to about 60 a share. What a weird story, but for now, the focus all on tariffs. Yeah, we'll see what the market does. We'll see what happens at 4 p.m. Thanks for watching Power Lunge. Closing Bell, starting right now.