The Compound and Friends - Former Trump Trade Official Steve Pavlick on Tariffs, Negative Wealth Shock, Pulled Earnings Guidance

Episode Date: April 8, 2025

On this TCAF Tuesday, Downtown Josh Brown is joined by Steve Pavlick to discuss the latest on the trade war and the stock market's volatile reaction. Then, at 40:49, hear an all-new episode of What Are Your Thoughts with Josh Brown and Michael Batnick! They discuss the latest market action, how tariffs will impact American companies, recession proof stocks, and much more! This episode is sponsored by Betterment Advisor Solutions and Rocket Money. Grow your RIA, your way at: betterment.com/advisors Cancel your unwanted subscriptions and reach your financial goals faster with: rocketmoney.com/compound   Sign up for The Compound Newsletter and never miss out! Instagram: https://instagram.com/thecompoundnews Twitter: https://twitter.com/thecompoundnews LinkedIn: https://www.linkedin.com/company/the-compound-media/ TikTok: https://www.tiktok.com/@thecompoundnews Investing involves the risk of loss. This podcast is for informational purposes only and should not be or regarded as personalized investment advice or relied upon for investment decisions. Michael Batnick and Josh Brown are employees of Ritholtz Wealth Management and may maintain positions in the securities discussed in this video. All opinions expressed by them are solely their own opinion and do not reflect the opinion of Ritholtz Wealth Management. The Compound Media, Incorporated, an affiliate of Ritholtz Wealth Management, receives payment from various entities for advertisements in affiliated podcasts, blogs and emails. Inclusion of such advertisements does not constitute or imply endorsement, sponsorship or recommendation thereof, or any affiliation therewith, by the Content Creator or by Ritholtz Wealth Management or any of its employees. For additional advertisement disclaimers see here https://ritholtzwealth.com/advertising-disclaimers. Investments in securities involve the risk of loss. Any mention of a particular security and related performance data is not a recommendation to buy or sell that security. The information provided on this website (including any information that may be accessed through this website) is not directed at any investor or category of investors and is provided solely as general information. Obviously nothing on this channel should be considered as personalized financial advice or a solicitation to buy or sell any securities. See our disclosures here: https://ritholtzwealth.com/podcast-youtube-disclosures/ Learn more about your ad choices. Visit megaphone.fm/adchoices

Ladies and gentlemen, welcome to the compound and friends. I am your host downtown Josh Brown. Tonight's show is brought to you by Betterment Advisor Solutions. Tonight's show is also brought to you by our friends at Rocket Money. Rocket Money is a personal finance app that helps find and cancel your unwanted subscriptions, monitors your spending and helps you lower your bills so you can grow your savings. If ever there was a time when you wanted to get rid of unnecessary costs in your life, this is that time.

Rocket Money has over 5 million users, has saved users a total of $500 million in cancelled subscriptions. This is really easy. Go to rocketmoney.com slash compound and learn more. Tonight's show is path. We had Steve Pavlik. Steve is a principal at mindset and he is part of the Ren Mac crew and he serves as head of policy there. And he was in the first Trump White House. So Steve was on the Trump transition team in 2016. He then worked at Treasury under Steve Mnuchin and he was highly involved in the first trade

war and we got to pick his brain about what's actually happening right now. And I learned a lot and I think you will too, followed by an all new edition of What Are Your Thoughts with Michael Batnick and myself. We take a look at some of the carnage in the market over the last couple of days. It's pretty epic. We do some stuff on the tariffs and whether or not they will cause a large number of S&P 500 companies to decline to give guidance, which I think is pretty likely going into this earnings season.

Why would anyone say anything given the environment? We go deep into Apple and the Apple sell-off and whether or not that's an opportunity. We look at Netflix. We look at Microsoft. We do a whole bunch of stuff. And it's again, it's a jam-packed show. And how could it not be given what's going on? So I think you're going to love it. I want to send you there right now. Thank you for listening. Please enjoy. Welcome to The Compound and Friends. All opinions expressed by Josh Brown, Michael Batnick, and their castmates are solely their

own opinions and do not reflect the opinion of Ritholtz Wealth Management. This podcast is for informational purposes only and should not be relied upon for any investment decisions. Clients of Ritholtz Wealth Management may maintain positions in the securities discussed in this podcast. All right, if you're hearing that theme song, you know what you're here for. This is the Compound and Friends.

We're live from the compound. I don't even know what we call this, but I am super blessed today. And so are you because we have somebody who is going to really help us figure out exactly what's going on from the Washington DC perspective. We talk so much about markets from a wall street perspective, of course, but these two things are now hopelessly intertwined. What happens with policy is what happens on Wall Street. And of course, it's been that way before.

It is that way again. And today we're going to talk with Steve Pavlik, who is a principal at Mindset and the head of policy at RenMac. You guys who are loyal listeners and viewers, you know Neil Dutta, of course, you know Jeff DeGraaff. Now you get to meet Steve. Steve, thank you so much for joining us today. We really appreciate it.

Thank you for having me on. Okay. And you are in a bunker, a tariff bunker. Where are you located? What city? I'm in Potomac, Maryland. All right. DC.

All right. Stay there until it's until this is all sorted out. All right. So we're recording on a Monday afternoon and markets have been in flux. We had a massive down open today and then a little bit of a turnaround. It looks like they got the NASDAQ green first, followed by the S&P, but they're still red everywhere. And there are now fake headlines coming out about 90-day pauses before implementing tariffs.

And of course, those are being refuted relatively quickly. But Steve, why don't you set the table for us? What is the current state of the tariffs? My understanding is that everything is going to happen as scheduled on April 9th as of right this moment. And of course, depending on when you're watching or listening to this, that could change. But where are we today? Well, I think, Josh, you nailed it.

Right now, the reciprocal tariffs are supposed to take effect at 1201 after midnight Wednesday morning. We'll see whether or not they do actually go into effect. I think that's sort of mentioning the subject speculation earlier. And there's maybe reason for that speculation. You'll recall in February, Trump was going to put tariffs on Canada and Mexico and he granted a 30 day pause after that. So refuting the 90 day pause, maybe they're just refuting the 90 day portion. So I think that's probably the best case scenario. I don't know that I would say it's the most likely case scenario on Wednesday that maybe we do get an extension there, some additional time to negotiate. I think the worst case scenario is the tariffs go into effect. And I think we talked about this uncertainty right now. You know, if you're a trading partner, are you going to negotiate? Or are you going to retaliate? And I think that's sort of, you know, again, going back to this uncertainty thing that we're seeing right now, and it's different for different trading partners.

If you're relying on the US for national security reasons, you have a lot more to consider there. So then you get into, okay, probably what may be more likely, if we don't get the pause, then perhaps we have some short-term pain, I guess, as the Trump administration will say how long that short-term, I guess, remains to be seen. That's probably going to allow some additional time for negotiations. Maybe the other trading partners are sort of aware of the political theater aspect here, that the tariffs may have to go into effect,

again, for a very short period of time, with the hope that some negotiations to remove the tariffs and potentially get some other things that the administration might want, is probably the best case scenario. If you're China and Europe, and potentially get some other things that the administration might want. It's probably the best case scenario. If you're China and Europe, you understand that the Dow falling 9,000 points weakens the United States from a negotiating standpoint.

It's not as though these tariffs were put on and Americans universally agreed this is going to be awesome and bought the stock market. Even the 10-year treasury portion of this, which is, oh, the administration has publicly stated that we should look to a falling 10-year as evidence that this is working. Even that part of it is not exactly going according to plan. We dipped below 4% on the 10-year and then rocketed right back higher, which is a sign of either people losing confidence in the United States or more likely people having to sell bonds to cover margin calls

elsewhere. But one way or the other, there's a lot of havoc happening here and none of it necessarily strengthens the US negotiating stance. Would you agree with that? Sort of. The reason I'm saying sort of is I think everything you said is correct. I guess where maybe markets and potentially some trading partners maybe miscalculating President Trump's view is during Trump one, we sort of had the Trump put

and we had him also running for reelection. I know he sort of teases this idea of running a third term. I'm doubtful that he will. But because of that, he may not feel as bound by the political pressures. There's also a chance that he may be misinterpreting his mandate because he campaigned a lot on tariffs. He may, in his view, sort of be interpreting as, well, hey, I got reelected on this. Why are the polls not going this way? Well, in fact, maybe a lot of people were just sort of voting out of frustration over inflation and the reduced purchasing power. You saw that phenomenon worldwide, regardless of the political ideology of Justin Cummings, really stepping back.

I think from President Trump's perspective, it's about bilateral negotiations. From his standpoint, the US with large consumer base has more, I guess, to offer here and that the other side therefore has more to lose in bilateral negotiations. The other sides may not necessarily agree with that, but I think that's sort of where he approaches it fundamentally. From that standpoint, he sort of views it as they have more to lose, at some point they're going to come around and the time might be on this side. Well, to that point, the Chinese stock market crashed.

It was limit down. Hong Kong was down 9%. So it definitely appears to all the world that it's not just a falling US stock market. Everybody has something to lose, and that's manifesting itself in share prices all over the world. So that part, I guess I'd agree with you on. We've got multiple mouthpieces all saying different variations on the broader theme. So the broader theme is like restoring the United States to manufacturing competitiveness and trade competitiveness. And we're not going to

spend a lot of time debating the merits of that. We'll just say that's the broad theme that has the merits of that. We'll just say that's the broad theme that has instigated this thing to begin with from our side. But then you've got multiple people coming out with different versions of that. So I'm curious from you. So you've got Kevin Hassett out there. You've got Scott Besson out there. You've got Howard Lotnick.

They're doing all the shows, they're appearing everywhere. Sometimes they're talking about trade unfairness, sometimes they're talking about restoring the middle class here, sometimes they talk about national security and we need to build these manufacturing capabilities again because we need to be able to defend ourselves in a war. Sometimes they're talking about the border in Fentanyl being like a bargaining chip in this whole thing. What's the signal?

Because there's so much noise, there's multiple people talking on behalf of the administration. Is the signal just tune all of that out and listen to Trump because he's the only person in the end who can make a decision about whether or not this is going to change or go forward? Because that's the way that I'm trying to do this. But what are you telling people? Yeah, I mean, honestly, Josh, you're spot on. Trump is a decision maker here and various members in his administration will go out and say various things, but ultimately it's his decision. I mean, there are whole plans prepared for him and it's sort of how he, don't want to stir people,

but it's how he feels that day. I say this as somebody who worked in the last Trump administration to some, I guess, appreciation for the process. Look, when I think of tariffs, to your point, they sort of accomplish three things, but they sort of contradict each other. You can't have all three. So you can use tariffs to get revenue, which you may need to pay for some of the tax cut extension. You need tariffs, you can use them to get trading concessions, and you can use them to protect certain industries that you feel are really important for national security. And so I think what's sort of confusing and probably leading to a loss of confidence, candidly, is just that the justifications for what you're pursuing continue to change every day, sometimes multiple times during the day.

And I think that's probably contributing to, again, what we're experiencing right now. And when I think of Trump, I think of sort of two things that he feels very strongly about in his history, sort of a political seesaw. On the one hand, he feels very strongly about tariffs and that they can be used to sort of pursue some fair trade. He goes back to the 80s and one of the few issues he's been relatively consistent on. Then on the other hand, he's the consummate dealmaker. He's one day saying, yeah, we need to do these and really

date them in place to reorient the global trade system and increase manufacturing here. But the later day, sure, I'm up into negotiation. So I think if you're a business right now, just this uncertainty makes it very difficult to deploy capital. I assume that's why some of these recession odds are rising because not knowing whether the tariffs come on, whether the uncertainty over the application, the duration, I just don't really see how that's going to go away. And even if Trump tries to keep the tariffs in place for all four years, there's a very

good chance we're using executive authority that if we have a democratic administration, they'll simply undo them. And if you're taking a long time to sort of get some of that return on your investment, I just don't know the juice is worth the squeeze. Well, this is, yeah, this is one of the problems is even if you agree with the policy aims of sparking this building of modern manufacturing facilities and using robots and US workers and putting the unions back into some of these businesses, even if you completely agree with that, it's a stretch to imagine a scenario where businesses don't, instead of playing along, just kind of hang back and wait and see.

Because all of this stuff is going to be challenged in court. And to your point, the pendulum swings. And if you're building something because you think, okay, this is the new state of play, and we're going to commit billions of dollars in spending and multiple years in doing that, if you're the one that jumps and then the policy changes because a core challenge is successful or Trump just wakes up one day and changes his mind or he has a beautiful phone call with somebody in Europe, like, oh my God, I can't believe what we just, the amount of money we just spent and what we just committed to. And now the pendulum is already swinging back the other way and none of our competitors

are expending the amount of capital that we are. Like that's got to be the reason that things grind to a halt. Even if you agree with the ideas, the execution requires this huge leap of faith that it's going to be worth it. Absolutely. And I think you're putting the nail on the head there with just, will businesses really take that next step? So if I think about the negotiations going on now, we've seen these reports that other

countries are willing to reduce their trade restrictions, their tariffs and non-tariff measures. So on the surface, if that was really your own goal, it shouldn't take that long to reach a resolution. The issue, I think, to your point is what does Trump want beyond that? And that's where you get to, okay, maybe all this focus on the deficit, and there's been a lot of attention to the economics or maybe lack thereof on the calculations for the reciprocal tariffs. But if it's really communicating, hey, we're focused on the deficit, then Trump wants to increase some US exports. So does that become part of the negotiations with other countries? If you're trying to increase this foreign direct investment, understanding to your point that maybe there's some uncertainty amongst US companies, well, can we sort of incentivize, encourage, or force other countries

and companies to maybe make up the slack and get the ball going? So I guess if I have to look at the glass half full application of what's going on here, I guess that's how I would apply it. And then I think when you think of the trade, it's probably important to think of the tariffs in four different buckets. We have the reciprocal tariffs. We talked a lot about those. One thing I'd highlight this time that I think caught some people off guard, myself included, was the fact that he went with both the reciprocal rate and the universal baseline rate.

I think that's to prevent some of the jurisdiction hopping. Where, okay, now you can just move your manufacturing to another area of the world where you might not get the imports. Maybe we'll see all that walk back eventually. I think that's why- That's the baseline saying, I don't care where you move your manufacturing. If it's not here, this is the minimum tariff that you're going to have to deal with.

That's what you mean by that. Exactly. You articulated much better than I did. And so then you get into one of the challenges, I think, from before, that's where I have Canada and Mexico sorting another bucket there, is this idea of Chinese circumvention, where China is basically just rerouting products through other areas to avoid trade restrictions. You've seen Vietnam be a big beneficiary of that, Mexico obviously to some extent, Canada maybe to a lesser extent. I think that's sort of what's going on there. And there may be a political opportunity after the Canadian

election at the end of the month to eventually find an off ramp there. I think the sectoral tariffs, you know, we talk about things that are used for national security, probably a blurring distinction with respect to economic interests, candidly, things that, you know, maybe it's not in the U.S. financial interest to build these things here, but it's important that we do. And so you talk about steel and aluminum, autos, you're thinking like copper, gold, pharmaceutical pharmaceutical semiconductors. These things are areas that the Trump administration identified as important. We may be able to get them at low cost places outside the US, but it's in our national interest collectively to do these things here.

I think a lot of Americans actually would agree with that part of it, the sectoral tariffs. We should have a domestic steel and aluminum production industry. It should be stronger than it is now. And it's strategically important that we don't get into a conflict where we are begging other countries to provide us with material. I think Democrats, Republicans, I think they would all agree on that. Semiconductors, we saw the Biden administration push through the CHIPS Act. Number one, I think if this had gone that way and the argument was, hey, we actually understand that tariffs are a tax, but we're doing them anyway for these eight specific industries because we think it's in our national and defense best interest.

I think the response on Wall Street would have been way less chaotic, still think we would be down. I just don't think it would look like this. I don't think we'd be looking at $10 trillion in equity wiped out in a week if that had been the rationale. Do you think the policymakers, if they could do it again, would have gone sectoral rather than baseline and all over the world? I think you're right to point out that there's probably more, and the polling suggests this idea for the sectoral approach. And also, I think to take a tough

approach on China. I think where maybe the administration not so much is reading the polls, but definitely to have the public necessarily on their side, we start doing the tariffs with Canada and Mexico early on. Reciprocal rates were higher than people thought. Again, I think that was just sort of this idea of the Trump put. The only thing I would say this time versus last time,

I think to consider is one, when you're a lame duck, this is your last term, this idea of pulling forward the pain. So do it earlier during the administration, the idea that we're going to have time to build a recovery before we get to the midterms, before we get to the 2028 election. So I think there may be some political logic to doing that. And this, I mean, just let me stop you this idea. Let's cause the pain now and we'll fix it by the midterms

as if that's how it works. Like once things get out of hand, there are a lot of unforeseen consequences that could prolong a downturn far longer than you might hope for if you're running a political calculation based around elections in 18 months. Like it's, you know. I agree. I mean, I'm not saying if you had to sort of like back your way into this,

that's good. It's like 3D, 4D, you know, Trump chess theories where like, I do sort of understand, hey, look, trade was at the top of the agenda. We want to have these things. Let's have them earlier in the administration as opposed to later. We may not be able to have that runway if we're months out from the midterm election or we're getting too close to the 2020 midterm. But to your point, once these things start going, they're very difficult to get the arms around. The other thing I just point out this time, it's different than last time, but I think it's really hurting the administration that people may have missed is the sequencing.

Last time you had the tax cuts for you had to pay. First, end of 17 that passed. Right. Correct. And they were actual cuts. You were reducing the corporate rate from 28% to 21%. You were reducing the top marginal rate for individuals. Now we're talking about really just preserving

the status quo. I mean, essentially, if Republicans get around this. Extending the existing tax cuts that are gonna sunset at the end of this year. Exactly. Maybe you get some marginal things in addition to that, but really you're talking about avoiding a headwind as opposed to providing a tailwind, which you did the last time. So I think when people were sort of hoping like, oh, Trump 2 is going to be like Trump 1, they're going to do the tax cuts, you have to rely on Congress. When it comes to Congress, always take the underlying results, always take the over-on timing, and that's out of the administration's hands.

As a result, through this political calculus, it was, let's accelerate the trade portion and we are where we are. Yeah. So if this were simultaneously or sequenced differently, all right, we got the tax extension, but part of what's involved there, according to Congress, we have to find a certain amount of revenue to help pay for it. And we're going to do that via tariffs. That might've been more palatable or less shocking. Maybe. I mean, I think there's still a lot of just misunderstanding as to you talking about

tax cuts. I mean, you said we're just extending current policy. So really not going to have as much of a stimulative event as it appeared to last time where you were reducing the rates pretty considerably. Also last time the tariffs were more targeted. They weren't nearly as broad. They didn't hit nearly as many trading partners at one time. So I think there's an element to that too. That's just different this time compared to last time.

One of the parts of this that I think is so frustrating to Wall Street, so on Wall Street, we think of things in terms of expectations and then results, better than expected or worse than expected. And that's kind of like the rubric through which we forecast and make investing decisions and how we judge whether or not a company is doing well or a sector is doing well or an economic report was a good report or a bad report. It's always like here's the target or here's the whisper number or the expectation and then place your bet.

Is it better than or worse than or on the number? With this, I don't even know if you went to 10 economists at Wall Street banks and said, what's the target for this? Whether it's successful or not? So like, all right, the Trump tariffs, the initial response, obviously, stock markets hate it. Currency markets are in flux. Bond markets are in flux, like way outside of the realm of what we thought he was going to do. He was talking about 10%. And I think the market would not have loved that, but could have lived with it without this much volatility. All right.

Whatever it is, this is the policy now. Let's assume it sticks. What is the yardstick by which Wall Street can say this was successful or this was unsuccessful? Clearly it's not the stock market. They're going out of their way to tell us that they don't care. So what is it? Is it number of factories?

Is it number of manufacturing employees in the latest report added to payrolls? Like what are you hearing? What are people saying is the target here? Well, they say they don't follow the stock market. I think the truth is they're very much following what's going on. Yeah, sure they don't, right.

You raise a good point too about expectations. I mean, I think back when I was a kid playing football, kind of football coaches said, you know, the key to happiness is low expectations. I think it was the opposite for Trump coming in. He had a lot of enthusiasm in markets where at all time highs. We ran it up.

So like, you know, you're granted coming down from an all timetime high there, but, you know, I think to your point, now there's this question of this overall uncertainty and what are we trying to accomplish here? And I think from the Trump administration's perspective, you know, it's going to be the stock market at some point. You know, they're going to look to the jobs as well. They're going to look to economic growth.

But you've heard several administration folks say there's gonna be some short-term pain. How long that pain's going to be. Well, Steve, the reason I'm asking the question is it would be nice if we knew what the conditions are that would cause the administration to say, okay, we're accomplishing our goal. We can go play golf a little bit more now.

So nobody could tell you or me right now what Wall Street should look at in order to determine Trump is getting what he wants. Therefore things can calm down or normalize or it's working. So, if you say GDP growth, well, you're definitely not getting a good result there anytime this year. Even if they take the tariffs off tomorrow, the effect of this is going to be lasting. Okay, so that ain't going to be it.

Is it manufacturing employment numbers? Because I don't know is that a nuts a nine month to twelve month weed through So that's like very far into the future now if you tell me Actually, all he wants is these bilateral agreements that he can sit in the Oval Office and sign in front of the cameras and That in and of itself will be enough to lessen the level of tariff. All right, that I could understand. So does he want to just be able to tweet like Canada is back at the table and here's what we accomplished?

I think the street could live with that, but it doesn't sound like that's the main thing anymore. I think what they want to do to point out is how do you quantify this is you get these other countries to the negotiating table and then you have to point to here's why it was worth it. And from that's what we got. Here's what we got. So we got them to reduce their trade restrictions.

You could look at here's what the rates were before on tariffs. Here's what they are now. Here's the deficit. You can bubble whether or not that's the right metric to use, but Trump likes it, the trade restrictions. You could look at here's what the rates were before on tariffs. Here's what they are now. Here's the deficit. You can bubble whether or not that's the right metric to use, but Trump likes it, the trade deficit. So it was this number before. Now it's gone down to this number and we are exporting this many more products here. Okay. So we got, okay. So we got Zimbabwe to the table. Big step. They have agreed to take the tariffs off what we ship there, like as part of a negotiation and we'll take, okay. So is there any chance in hell that we're going to have a positive trade deficit with

Zimbabwe? Is it even? Probably not, but can we get it better? Look, this is where I get to the last thing. So we talked about like the three- Even Vietnam, like I'm joking with Zimbabwe, but even Vietnam, we're not gonna have a positive trade deficit with Vietnam ever.

We're not gonna sell them more than they sell us, period. It's never gonna happen. I agree, and this is where I was gonna say at the last, we did three of the four buckets. We did reciprocal, we did sectoral, we did Canada, Mexico, and the fourth bucket all to itself is China. And if you're looking for right now,

it's difficult to wrap your head as to why are we doing this? And if behind the scenes, part of the negotiations is can we isolate China? Are you getting some of these trade partners to pull away from them and actually work with us? Then I think there's probably a longer negotiation, could be more pain in the head with China. But ultimately, that's probably in our, the US national interest to do that. And so you mentioned Vietnam. I thought, and I could be over reading this, it was very interesting to me when Trump singled them out Friday saying, hey, they want to negotiate a deal here.

Because I sort of mentioned Vietnam has probably been the worst offender in terms of basically letting China come in and reroute their products there. So that message is being communicated now because all these other countries are watching how their peers are responding here. I think we see Vietnam starting to pull more towards the US and say, well, wait a minute. Maybe we ought to start doing that too and consider that. So I think you may see some sequencing here as to announce the deals. And there's also probably an element of, do you want to hold some of these deals back and announce them in a batch? And the reason

for that maybe is if you announce, we made one big deal early on, does that become the template for everybody else? Where it's like, okay, the Trump administration was able to reach a deal with, you said, Zimbabwe. Okay, we'll just try to strike something similar. Does that hurt your process and your negotiations moving forward? That issue with China, I think, is going to be the dominant topic of our time. And if there's some larger aspect reason behind why are we doing all this now, if it turns out that it was, hey, all along these conversations, it was about getting these other countries

away from China, then I think that might, in the end, history may be kinder to Trump. Okay. Did Mexico and Canada get carved out of this particular wave because those are much more politically fraught negotiations for both Republicans and Democrats and maybe just too messy to tackle in the earliest stages of this? You know, I actually see it a little differently because last time, and I was still there when this was going on, we talked about sequencing. Last time the first block Trump focused on was Canada and Mexico. That was the negotiation of USMCA.

It was repealing NAFTA effectively and redoing NAFTA, right? It was, but also going back to, he did that before he pivoted to China. The idea is like, you need to secure, fortify your relations with your neighbors to the north and south, make sure China can't infiltrate them. One of the unforeseen, in hindsight, probably should have saw this coming was China rerouting products in Mexico. That's something that they need to close down. And so I think this is about, okay, how do we accelerate these USMCA renegotiations ahead of July 2026? Can you sort of get put that North American block on firmer footing to allow Trump to pivot a little more aggressively towards China?

I think there's something with that. Look, I think you're right too. I mean, just because of the nature of our borders, we rely so much more on trade. You have congressional interests there. So I think that's why I have them sort of in a separate block there. And again, I think a lot of this political stuff is just theater,

just be honest, and they have their own issues there in Canada. So I'm more optimistic that beyond the April 28 election that eventually we'll sort of reach an agreement. I think Mexico has done a great job. I mean, Claudia Scheinbaum, the president down there, has really, I think, done a master class of other world leaders when you look at how do you deal with President Trump, I think she's really head and shoulders above the rest. Do you think that, so you must know this, the world leaders, they have to play their role in making Trump look good.

And maybe Claudia is a great example of this, where she understands exactly what he needs in order to not overly attack Mexico in a trade war. And she's willing to give it to him and that's political theater on her end. Like it's almost like, well, this is a play and I already know what role he picked for himself. And I already know how he wants the third act to go.

And therefore I should write my role around his role. And we can get through this quicker. You think that when you say political theater, it's not one sided. It's not just us blustering. It's the other side understanding what they need to do in order for us to all get a happy ending to the play. Right. I mean, for everybody has their own domestic political interest. And in some ways, Trump may actually help Shinebomb in the sense that he gives her some political cover to maybe be more aggressive on the border, do some things that maybe she probably wanted to, but may not have been in her domestic. And now she can say, this is part of what

I had to do. You know, and it's maybe, candidly with Mexican government needs her to do. It think it's for Trump, and it's maybe, candidly, with Mexican government needs her to do. It was just going to be very difficult with domestic politics there. So she's able to sort of, I think, triangulate that stuff. And with Carney, it's a little bit different. I mean, Trump has sent the Liberal Party in Canada through the roof. I mean, they were facing obliteration with Justin Trudeau. But there's other political dynamics too,

where it's like, okay, if you are in a country and you're opposing Trump as a world leader, in some cases, that's politically the popular thing. So it's important to watch these effective dates for when you come out for some of these retaliations that these other world leaders are- Yeah, it's a really good point. Resisting Trump in Canada is politically, it's great. Like it's, it's right. It's a great side to be on and he makes it easier for you.

Uh, like, like the political theater that you describe, he's, he's putting you in a starring role. I mean, it wouldn't surprise me if like behind the scenes we find out, you know, Carney and Trump been talking this whole time and Carney's like, thank you for getting me elected to prime minister by coming out and doing all this stuff. I say that cheat but there's a lot of that I think more going on than people realize. And to that point, it's like, okay, elections behind us sort of said what I had to on the campaign trail. Carney knows

it's not in Canada's interest to escalate things further. Let's find a resolution. All right. I got a few more for you. So what was your term? What years were you a part of this? Sure. So I was on the Trump transition team back in August of 16, I guess.

Interesting times there at Trump Tower. Joined the Treasury Department, day one employee, January 2017, and then left in October of 18 to join RenMac. So that was my experience there. And then my role was as a legislative liaison for the international portfolio. So working as administration sort of spokesman with Capitol Hill on issues related to trade for an investment, particularly China. Okay. So if you had to guess, or maybe you know, it seems to me that there were a lot more rifts among the people involved in the trade discussions in 2018. It felt like within the same day, In 2018, it felt like within the same day, you could see headlines saying the exact opposite things were being discussed between the various parties. And of course, Representative Lighthizer was sort of the face of this.

This time around, it seems like while they're all saying variations of the same thing, there don't seem to be rifts. There seems to be higher message discipline. I'm not sure if that's just an accident or that's on purpose. And maybe that could change. And also, this time around, it seems like Scott Besson at Treasury is the face of this thing, along with Lotnik. Whereas I don't remember the Treasury being as heavily featured in the media defending the tariffs as they are this time. So I'm just like giving you my perspective of this as somebody who's consuming the news

and doesn't know anything about what's happening internally. But like, what's your interpretation of what we're seeing? I think your analysis is spot on and that's somebody who was sitting there before. And there's some reasons for this. I mean, look, I don't know. Like Mnuchin was not doing what Besant is doing now. You would agree with that. Yeah.

What I will say is I think Mnuchin was probably more aligned with Gary Cohn, Larry Kudlow, more as free traders and sort of pushing back against more of the Navarro's the tariff enthusiasts that like and United States trade representative, you know, Bob Lighthizer, accomplished trade attorney strong views. I guess he'd be more in the pro-tariff camp. But you know, the president in my experience always like healthy debate and sort of was sort of okay, let's team of rivals. Like, you know, let's go ahead and let's duke it out. I mean, kind of Lee too, like that role was new to him versus now you're sort of in this interesting situation where he had four years out of office, a lot of time to think about what is this team going to be like, and try to get maybe he was a more cohesive group. And so I think

that's the difference now, at least in the treasury secretary position is, you know, best in sort of, I think, reading the room is like, this is direction Trump was to go in here. If there's a reason he's pulling forward, it's clearly a priority for him, something he feels strongly about. And so even if he maybe not necessarily agrees with all the philosophy that's been going on, I don't know, it's just an interest if you want to keep your job to sort of come out and try to push back against these things. So I think you're right where there's probably sort of come out and try to push back against these things. So I think you're right where there's probably less public dissension, but I still think privately there's a lot of conversation, shall we say, behind the scenes as to the best approach.

Okay. So on that topic, and we'll end here, the calculations themselves have been the subject of a great deal of ridicule, the formulas, the Greek letters, where these numbers came from, the fact that they're trying to factor in the trade deficits themselves to come up with what the appropriate level of tariffs would be, the fact that there are some territories that were thrown in here where no humans live. It's all polar bears. It's all penguins. Okay.

Great memes. We all got a lot of, that was like almost like a little bit of gallows humor. We all got out of this situation as we watched our 401ks crash. As you're looking at this, somebody that was once on the inside of this. What's your take on just the general amount of derision that's greeted the execution of these tariffs, including the rollout, the big cardboard poster? Without getting yourself into trouble, how do you think about the response to this stuff generally from the cognoscenti on social media? Well, I mean, people are going to-

Where do you stand on penguin tariffs, I guess is what I really want to know. Pro penguin, yeah, I guess I'm pro penguin. I don't know if these are the tariffs, but- Penguins are stealing all our good egg hatching jobs. Exactly, we were low on eggs for a while, so you know, don't rule that out. Substitute, right.

Yeah, I guess where I come down on it is, we talked before about how President Trump's the ultimate decision maker. We also mentioned that you have competing interests there presenting a lot of different plans. My sense is he probably had a variety of plans presented to him up until the very last minute. And at that point it was sort of like,

let's do the reciprocal rate, but let's also do this universal tariff rate. And then sort of like, let's find a way to back into some analysis to support the direction we wanna go. And I think, perhaps that explains why they chose the approach it did with the math. My guess is that the White House, President publicly would say, the trade deficit captures both the tariff and non-tariff measures. That's

why they decided to use that as their currency manipulation, the barriers to entry, the regulation that only applies to us. Yeah, I get that. And Trump from his, you know, hey, I want to be able to market this is the visual. It's like, you know, here's what they're charging us and here's what we're gonna charge them. Now, again, a lot of people probably will follow the math and economic logic sort of, or lack thereof behind it, but to most- Well, that's why the market, I mean, that's the,

the proximate cause, I think the market was weak going into it and would have fallen either way. The crashiness of the market is directly correlated to that moment where they held up the board and people just said, whoa, whoa, whoa, whoa, that don't look like 10%. That's not what our expectations, which were already bearish. That's like way out of control versus what we thought. That's what I think happened there. Right.

And to your point about expectations because Trump had been messaging, hey, I'm going to be very, very generous. I'm going to bring much lower than them. You're sort of looking at it and go, okay, well, you know, Europe tariffs, 10% on our cars were two and a half. So maybe wound up at five, like, you know, okay.

35. You're like, whoa, whoa. All right. You busy these days? You're inundated at that? Yeah. I mean, when I'm not doing work and there's a lot of work to be done, I got my oldest is going to be four in August and the youngest is going to be two in July. All right.

So you got your work cut off you. All right. Hey, Steve, I just want to say thank you so much for joining us. We really appreciate you kind of giving us an idea from the inside what's happening and what you see now from the outside being in Washington and talking to people. So this is super helpful to us. Thank you.

Where should people follow you to get more of those insights? Of course, Ren Mac is the easiest place to go. Anywhere else? Yeah, I would say. Got a signal chat cooking somewhere or? I do not. I have not put on social media. Ren Mac podcast on Friday. All right. Awesome. You're the man. Thank you so much, Steve. We'll talk to you soon. Thanks for watching. Thanks for listening, yeah. All right.

So what are your thoughts, guys? It's five o'clock East Coast time. Michael Batnick and I are live tonight. We're so excited to be here. We got a full chat. Looks like Jay Luther is back. We haven't seen him in a bit, in a minute. Todd Dennis is here.

Bob Sacramento, six foot six 26 is here. He said Josh was calming on TV today. Thank you. Maybe I shouldn't have been. Let's see. Matthew Stavick says Josh called today's bear market rally perfectly on CNBC with confidence. I appreciate that, Matthew. You know, it's tough because so many people are in this mode that it's always going to be a V-shaped recovery.

And the problem is they just don't know what time it is. When you're in a bear market, it's sell the rip. It's not buy the dip. So this is just situational awareness. I'm buying the crash. Heather McFarland is here. Rachel Fentwit, we see you. Roger, Mark Schevlin, James Sykes, Cliff. Love you guys. Great to be with you all tonight. We have a sponsor. Let's give Betterment Advisor Solutions a shout out before we get right into the show. That's our sponsor today.

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Yeah. All right. We're starting with stock market damage. Michael, take it away. Okay. Well, before we how are you feeling? I'm fine. I think we're like all over this.

Like honestly, I think we, I think from the start we said this is not just a dip. Then we said this is not just a correction. Like I think we're giving people the truth. It's not, it's not what we want to say. Like it's not what we want to have happen, but look, the number one thing here is that they're going to wipe out a year's worth of earnings gains and they're telling you they're going to do it and it's happening.

And I don't know how you really avoid that. So once you know that that's what's happening, then the only place you could pivot to is, okay, well, what's the multiple? And when this bullshit started, it was 21. And now it's still 18. And the long-term average is 16 and a half. So you're still statistically expensive. The Fed is in the penalty box. They can't come out onto the ice just yet.

Ain't going to be no fiscal stimulus this time. The last time we had a massive recession threat, COVID, right? That ain't happening. And so you have an expensive stock market. You have a huge earnings wipeout potentially the longer this goes. You have all kinds of geopolitical shit thrown into the mix too. You got problems in the bond market. It's just, it's a catastrophe. Why tell people it's not has been my attitude.

Other than that, it's pretty good. So you don't speak to me. Hold on. Why tell people that this is one in the mill and totally ordinary when it's clearly not? I don't think anybody's saying that. No, I disagree with you. I think people are putting these f** fucking charts up. They're saying the average entry year drawdown is 14%. We're way past that. No, I am, but not everyone is. And I think whether or not you're way past that probably is a function of what your investment

strategy is. If you're a Vanguard only, stay the course, never do anything, then you're still putting those charts up. And if you have a brain in your head and that's your strategy, you shut your mouth. If you can't stop talking and you're a chimpanzee crashing your cymbals together on f***ing LinkedIn or on Twitter all day, you're telling people this is normal and it totally isn't. It's completely abnormal. So I don't want to pretend that I saw this coming because I definitely didn't.

I was not like this. This is going to pass. I was the opposite. I was in the Bill Ackman camp. Somebody tweet. So Bill's been tweeting and somebody said, good job speaking out, but it seems like you should have foreseen the chaos. And he said, I don't think this was foreseeable.

I assumed economic rationality would be paramount. My bad. And that's where I was. I don't want to pretend like I saw that I thought that he was going to- It's not about being foreseeable. It's acknowledging the current situation as it unfolds. So it's different than saying, oh, on January 1st, everybody should have known that this guy was going to take the economy off the cliff to make a point or something. Like that's not foreseeable, of course, because who would do this? But even before Liberation Day, I didn't think that he was going to pull the trigger. Like there was the analogy that I gave is there was a red button on his desk that said, push to detonate the economy, and he did it. I didn't think he was going to push it.

Still time, 5.06 East Coast. Still time for what? Midnight. Midnight, the reciprocal tariffs take effect. So we can say two things. Number one, this is not normal. This is not fun. This is not cool. It can also...

Hold on, let me address something. Tyler Dredd. Dude, could you f***ing listen to me? This is important. Trump has been talking about tariffs all during the campaign trail. Correct. And the number being floated was 10% tariffs and geographic carve outs and sectoral carve outs. That's not the same as 38% tariffs on you.

What about 104? John, can we play that video? T that up. Thank you. Awesome. Okay, so he was not running out of when does she write her when does she write her tell all but he was not running on 104% tariffs to China. I mean, obviously, nobody would have voted for obvious. So okay, so we could say two things. Number one.

This is all shitty. It can also be with a benefit of hindsight, a wonderful opportunity, not to minimize the carnage, for people that have the intestinal fortitude to stay sober because this is a panic moment. People are panicking. Chart on, please. Over the past four days, the S&P 500 lost 12% and it could have been way worse if we didn't have that bounce yesterday.

So there is full on liquidation bespoke tweeted just the fourth time. This was last week, just the fourth time since 1952 when the five day trading week began that we had a 10% two day drop so far for the S&P. 87.08 2020 2025. This shit is serious. It's one for the record books. Yeah. And what's so insane about it is this is before the economy really exhibits any of the effects

of this. We just got a jobs report for March. That was all things considered a pretty good report. The only layoffs of note were government. This is not a situation where things went bad and then the market reacted. This is totally the opposite. And the best way I heard it put today was Goldman Sachs says, right now we're in an event-driven bear market that is soon to tip into a cyclical bear market. They mean cyclical in the sense that the economic cycle. So it's not yet an economic bear market.

All of this is happening. You come in. No worries. I'm just talking to my friends. So that's the difference between this and those other episodes you cite. The stuff from, or outside of 87, the stuff from November 2008, economy was already in a massive recession. And then that crash coincided with Congress failing to act in October and then all the after effects of that, even once they finally passed TARP.

The damage was already done, it was too late. Nothing's happened yet. For people who hear that and say, well then why in the world would I own stocks today, I would say two things. Number one, the stock market on average bottoms five months before GDP does. Stocks are a discounting mechanism, so five months before GDP does, right? Stocks are a discounting mechanism. So five months before GDP does. To the point about we haven't even seen

the hard data start to roll. We're gonna see lower earnings. There's almost no doubt about that. The S&P also bottoms on average, and we have a chart that we'll use in TCAF, nine months before earnings per share does. Nine full months. So think back to 2020.

And that's an average, meaning it could be even earlier. Think back to 2020, the stock market bottomed in 12 trading sessions. And on the way up, and when we made new highs and names like Hyatt and Hilton, or whatever the names were, I can't even remember at this point, you were like, or I was like, this doesn't make any fucking sense.

Am I smoking dust? You're telling me that these companies are better today in a better position today than they were in 2019? How? And the whole way up people were fighting it because the market fell 35%. It saw it coming. We knew.

So the question now is how much has the market discounted? We don't know. Obviously we'll find that but Nvidia is down 40%. There was wipeouts everywhere. So throw these charts on. This is like, this is stale stuff. This is S&P 500 new lows. I think I pulled this on on Friday. So new lows are spiking, whether you look at 1, 3, 6, 12 month. It's worse today.

It's way worse. Breath, forget about it. No stocks are above any moving average. This is all zero. So we know the market gets the memo very quickly. And this idea that you are going to wait for the economic dust to settle. Again, think about 2020. It's not to say it's going to play out exactly the same, but it doesn't wait. It doesn't let you back in. Yeah. And what will end up happening, and we've talked about this before, and this is what the bears hate the most, as things are getting worse, the stock market begins to look through it. And that's the moment where you're like, wait, am I taking crazy pills? Did they see that jobs report this morning? Did they see that PMI?

Yeah, that's how it happens. So it's very frustrating when you get out and then the market runs away from you and then you're forced to buy back and hire and it's really hard for people to do. Because the news is getting worse. That's a really good argument for not throwing out all your stock exposure, of course. Another really good argument is that it's not a guarantee that in a recession, all sectors in the market will be treated equally. And we've seen the consumer staples get to a 21 forward multiple.

Consumer staples are now more expensive than almost any other sector of stock. The other phenomenon that's worth discussing, and I suppose it's possible, is that some of the things that are happening now could really easily be undone because it doesn't require an act of Congress. It's the mind of one man. It's a tweet. Who decides he's made his point or he wants to move on to the next step.

Yesterday was a dress rehearsal. We saw what happens. On the fake headline, there was a 7% rally in 20 minutes. So we saw how that's gonna play out. All right, here's a great data point from Jonathan Harrier. 62% of S&P 500 holders are at a 50 day low. This is a wipeout. Crossing above the 60 level is rare, happening only 15 times in the past 20 years. Then he goes on to show this is not

by any stretch of the imagination a good thing that forward returns are all of a sudden going to rise. He says volatility is here to stay. When you see this type of action, it's mixed in the short term. How are investors behaving? Well, it depends which investors you're talking about. Vanguard investors, Josh, who you just mentioned earlier, VOL, which is Vanguard's S&P 500 ETF. This is from Balchunas.

Took in cash every day last week, every day, for a total of $3.3 billion, which is almost double its record pay set last year. Not necessarily surprising enough because this is what happens every sell off, but still amazing. You simply can't scare them. Well, these people who are making these purchases, assuming they're not day trading VLO, which I doubt they are, these people will be very rewarded someday.

And the key is you have to not care when that someday is. You have to be okay with that someday being next January. 20% lower or worse. Right. It's, you know, it's, it's if that's the route that you're going down, I'm dollar cost averaging, I'm adding even more to my account when markets fall. I have a long time horizon and I simply don't care. You will win.

There's no question. The only question is how much pain you have to go through and how much time. So I am one of those people. I had some money in fixed income for this very purpose. Whenever there was an opportunity and am I early? Yeah, probably. But I don't care. This is my rule. When there's a Yeah, probably, but I don't care.

This is my rule. When there's a panic, I buy. I have no choice. That is like my, that is- I saw that email you sent to your fixed income manager. That was really funny. You're like, give me my cash. No, what I said was, when there's a market crash, I buy.

That's my policy in reference to naked gun, but I needed the cash. I'm out. Is the 10 year falling because everybody's pulling money out of bonds so they can buy stocks? You mean rising. Excuse me. Is the 10 year rate falling and the 10 year- No, no, no. Rising and the 10 year bond falling because sellers want a dollar cost average into stocks

all like you? I think that's wishful thinking. Okay. So check this out. This is from Jay Cable. This is a chart that shows all the dates when the fear and greed model was at three or lower. I don't know what's in there exactly, but this is panic. And three months later, the win rate, meaning higher prices is 84%. Six months- Wait, what's the blue stochastic? It's a fear and greed model.

I'm sure it's proprietary. Oh, okay. I see. Six months later, higher 63% of the time, one year later, actually not that great, so interesting. But you know what? You have a long-term time horizon. You're able to withstand pain

because I'm not making like a call that this is down, that today is the bottom, who the hell knows. But when I see fire, I have to run in. Sorry, that's just how I roll. All right, back to back, let's look at Todd's own. Back to back days of record inverse volume, $30 billion in Friday and over $35 billion yesterday. The massive spike from inverse ETF suggests downside is overcooked in the near term. Again, the key word being the near term, because can we get a relief ladder that ultimately fails?

100%. That's what a bear market is. You get all these rallies that fail, wearing people down. market is. You get all these rallies that fail, wearing people down. Next chart. Who's doing this $35 billion in volume on inverse ETFs? So ETFs that bet against the market. I mean- That can't just be like day traders. No, it's got to be hedge funds, right? Because these are great vehicles for them if they're trying to accomplish something and not sell long holdings but hedge themselves. These things work.

If this morning you were like, stocks are 4%, I call bullshit. I want to hedge my portfolio. Boom, you nailed that. All right. We shared this from Todd a bunch. Last week it was 12 to 1. I'm sorry, it's a couple of weeks ago. Then last week on the show we shared it was 7 to 1.

When I say 7 to 1, now it's 4.5 to 1. What I'm talking about is the AUM of levered trades that go up with the market versus the inverse. So at the peak, just a couple of weeks ago when it was all animal spirits, it was 12 to 1. Now it's down to 4 and 1 half to 1. My point is in the short term, as Tom mentioned, sentiment is all the way washed out. He has another chart showing flows into-

Whoa, whoa, whoa showing flows into back. Back. This is the mother of all buy signals. If we get it, if they cross when that, yeah, if, if, if, if we have more ETF assets in invert levered inverse short levered inverse ETFs versus levered long, if we even get, I'm going to say, if we even get within spitting distance, you don't need another signal. Only watch this. So yeah, I will sell my kids and put the money into the market. That's all you need.

Like literally, that's all you need. You don't need to see anything else. So I will also say, listen, this is everyone has their own risk tolerance. Okay. Like this is not, I'm not telling you to pile in because I don't know if the next 20% is lower or higher. But for me, when I see panic, I just, I have to buy and, and, and we'll see how it works out. All right. Uh, people are rushing to cash. He has a chart showing the treasury bill ETF flows, 10 day sum, uh, and 65 day sum.

And we are seeing very elevated readings. And this is what happens in a, in a, in a panic. People panic. Um, yeah, I'm not sure if there's any real takeaway from like treasury bill ETF flows, because as we've learned over the last few years, like people put money into T-bills or into money markets for reasons that are indifferent. Now I know this time there's an obvious correlation,

stocks are crashing, people buying T-bills. But people aren't necessarily gonna pull money out of those to chase a stock market rally. We've seen that money be really sticky. Yeah. Right? So that's one of the big lessons everybody has learned from the recent past.

But the rush is real, obviously. The rush is definitely real. And I think over the weekend I was like, I'm a little bit nervous and not feeling nervous Sunday. Now I was feeling nervous. Like you got the Sundays, you got the Sunday. I got the Sunday scaries. They closed and they closed the NASDAQ green yesterday. Not the S and P, not the Dow. I thought that was interesting. Today was one of the all time worst. I was on the, I was on CNBC today. The market was up a thousand by the time the show ended, the market was up 700. And I looked over at judge and I said, this thing's cooked.

Like they couldn't hold a thousand point rally for more than three hours. It's, it's like super, that's like super telling, um, that they're still hanging on these headlines and these breathless breaking news reports. So this is, this is what a bear market does, by the way, it tricks you and fools you so many times. There's so many mirages and false Oasis. Oasis.

Oh, what's a plural of Oasis? Is there one? Oasis? No. All right. So let's talk of Oasis? Is there one? Oasis? No. Alright, so let's talk about Oasis. Anyway, it's always a mirage. The point is it's a mirage.

Don't stop. Step one, you're in the hole. Stop chasing the mirage. It's not going well. It's not going well. Alright, go ahead. Alright, let's talk about well. It's not going well. All right, go ahead. All right. Let's talk about tariffs. Like why?

So I think this is the thing. And tariffs were never a like partisan issue. It was always an agreement from economists on both sides of the aisle that tariffs are a negative sum game. They lead to less demand. They lead to trade wars. You tariff me. I'm going to tariff you. It is a tax. It is simply a tax. In a prior episode, I very clearly explained the first time Trump ever on record in the media was talking about tariffs was on the

heels of losing an auction for the piano from Casablanca. And the buyer, in this late 80s, the buyer was a Japanese billionaire who swooped in at the last minute and outbid him. And he went on with Diane Sawyer and he did this entire rant about how Japan is kicking our ass and we need to tariff, tariff, tariff, tariff. This is a 40 year obsession. He does not hide that. He said, I've been obsessed with this for 40 years.

So to the answer why tariffs, it's because tariffs. That's it. You were talking with Steve yesterday, I think you made a good point that if there was a more targeted measured approach for our national security, vital interests that we need, that we can't be reliant on the rest of the world in the event of a COVID type shutdown, I think most people would say, yeah, fine. Everybody, Biden passed the Chips Act.

Both parties, every age group, every demographic, we need to make semiconductors here and we need to write policies that stop other countries from undercutting us. Everybody would say you're right. It's the you're right. Can you say the same for Air Force ones? Probably not. So I totally agree. It's the blanks the blanket tariff.

It's just it's terrible. So Roger Lowenstein said in his sub stack, using tariffs to eliminate the trade deficit will risk undermining American strengths. Talk about a cure that is worse than the disease. Far from being ripped off, Americans benefit from importing cheaper and or better goods,

which enhance our quality of life in myriad ways. Moreover, trade is part of a circular movement, not only of goods, but also of money. The US trade deficit of $918 billion last year was the mirror image of a $918 billion capital surplus or infusion from investors. Sooner or later, all of the net $918 billion that Americans spent on foreign goods was invested in American capital assets, such as stocks, real estate, bonds, or short term assets, such as treasury bills. Alas, Trump has not read Updike.

Neither have I, for the record. You're talking to the wall. I know. There's no point. Look, I come from the school where nobody ever learns anything the easy way. And you know that. I've said that many times about a whole range of subjects. This is just one of those examples where, unfortunately, you're not going to get through

to anyone until they learn. And they'll learn. I don't think the majority of Trump voters are excited to go work in factories and mines. I don't believe it. I think the rural Trump voter that is not a farmer, but maybe lives in a community that's sustained by agriculture, they're gonna have to go through this. I really don't know how else to put it,

but I can promise you this, people from Wall Street are not gonna have any impact on this dialogue. So like now you've heard from Larry Fink, he's a New York Jew that manages money, nobody's listening. Ken Langone, he's an Italian guy with a New York accent, nobody gives a shit. Like it's just this is the reality of the situation and we all unfortunately going to have to go through this lesson together. And listen, it's America.

54% of American adults between the age of 16 and 75 are reading at a sixth grade level or below. That's more than half the country effectively is not going to bother to spend any time trying to actually understand or figure anything out. And that's both parties. That's not like a, that's not a north south thing. It's not a red blue thing. This is just the state of, of where we are.

And so it's a lot of people flicking their phones up and down, scrolling TikTok and just they're going to have to learn. And we have to sit here and watch. And I don't know, look, the only way this ends is if Congress decides that they're going to step in and say, this is unconstitutional and we're putting a stop to it. But you need people from both parties and not just Rand Paul, who nobody listens to. You need influential Republican Congress people to listen to their constituents who are feeling the pain from this, Republican and Democrat, and just decide, you know what?

We're going to block this. This is not legal. It's not constitutional. It's not productive, but it's not enough pain yet. So we were looking at $280 a share for the S&P 500. Let's say that falls, I don't know, 15%. All right. So $280 a share for the S&P 500. Let's say that falls, I don't know, 15%. All right, so 280, doing math, it's dangerous. So that gets you to 240-ish.

And let's say we were trading at what, 22 times earnings? Let's say we say, all right, you know what, not feeling too groovy about these earnings. 16 times, that gets you to $3, or $3,800 on the S&P. It's not inconceivable if this doesn't, if this shit doesn't relent. Typical recession, you wipe out between 20 and 30% of earnings and- No, I don't think it's that high.

I saw it different numbers. 20 to 30% of earnings? In a recession. And not in an earnings recession, in an actual recession. You wipe out 20 to 30% of earnings, but the worst news is what happens to the multiple. recession, and not in an earnings recession, in an actual recession. You wipe out 20 to 30% of earnings, but the worst news is what happens to the multiple. You bottom it 14 times earnings. If I told you what a 30% earnings wipeout from today's estimates for the next four quarters

combined with a 14 multiple looks like, you would not want to know where the S&P is. And this idea that it's only the rich that care about the market, it couldn't be further from the truth. It's literally backward. These people are acting like it's only the rich that own stocks. 60% of the country own stocks. Who do you think could weather a storm? 100% of the country has a job where they work for someone who is very much guided by how stocks are doing. So maybe I'm in the denial phase of grief, but this idea that people are not just going to that we're going to just let this happen, that the wraps aren't going to scar you off the ship, that we're just going to tank earnings 30%.

I just I don't buy it. I don't think it has to get that bad because again, it's not a natural disaster. It's not a war. I mean, it's a metaphorically, it's not correct. This is not people on the battlefield blowing each other up. This is not an earthquake just took out a major US city. Like I trade dude, I manage money through the twin towers being blown up like three miles from where I was sitting. I've been through way worse than this. So I agree with you.

I don't actually think that we're going to have to go through a massive recession just to make the stop. I do think Congress will step in soon. I think he's going to make a deal. And they're the only ones that can. And they're the only ones that can. So in order to avoid sounding like a broken record, I don't, what would I have to see? What would you have to see?

What would I have to see to change my mind in that? Oh, he's not looking to negotiate. Well, no, they're saying he wants to negotiate. He's saying that to us. So I just, I think he's negotiating. I think this is a terrible execution. Everyone agrees. So anything else? Everyone agrees. So, anything else? Everyone agrees. Even these red-pilled venture capitalists that have spent the last six months cheering

him on, they've all turned. Elon Musk has turned. His brother Kimball Musk is just lacerating Peter Navarro right now. Again, Larry Fink spoke out, Ken Langone, Jamie Dimon will be on the JP Morgan earnings call on Friday. I highly doubt he's going to be able to make it through that call without having some stuff to say about this. That part of it has already started to turn.

The thing that has to take place to end this, Congress has to be more afraid of their voters than they are of Trump. Right now, Republicans in the Senate and in the House are terrified of Trump and somewhat scared of their voters. When that flips and they realize they have more to lose by pissing their voters off longer, and they're no longer afraid of the White House to the extent they are today, then you're going to see this stuff end up in the courts and get blocked and get halted. But I think we're far away from that.

So his approval rating, I think it's not there yet. It's not crashing. It's early. I mean, the tires haven't even started. They start tomorrow. Dude, it hasn't even started. Anything else to say on this topic? What's this iPhone stuff that you want to do?

The screen is freezing. All right, let me jump over here. OK. Put this up. Here we go, John. Forgive me. OK, this is from the Wall Street Journal. Take a look at this iPhone 16 Pro.

Your cost for the 256 gig version is $1,100. The cost of all the hardware inside, the bill of materials was about $550 to Apple when the iPhone was introduced. Now they're saying that the new tariffs are going to take that from $550 up to $846. Apple is not just going to absorb all of that and see their margins on hardware go from 45% down to whatever percentage it would be. It's just, it doesn't work like that. Yeah, so the argument coming from the tariff camp

is this is the problem, this is the root of the problem. It's not a symptom of the problem. We should be able to make these things more efficiently than we are. Just do it. But we gave up trying. We don't have people in this country working on this. We don't have the modern factories

and we're not even trying to make the iPhone cheaper. But if we hadn't given up on manufacturing and outsourced it to Asia for the last 30 years, we would be able to make an iPhone for cheaper. I'm not saying they're totally wrong or that I'm totally, I'm just saying that's what they would say back to this idea of the $3,000 iPhone. So this afternoon, what really got the reversal underway and Apple's been under pressure this entire week, rightfully so. White House, Trump believes US has capability to make iPhones, and this just destroyed the stock that was already getting destroyed. Over the last four days,

Apple has lost 23%. This chart is a bit stale. It's 23%. So 23% of the last four days, that is worse than the great financial crisis. It is worse than anything since the dot com bubble. The stock is in a 34% drawdown. So to the point that I made earlier about stocks being forward looking, does Apple deserve to be down 34%? Yeah, probably. It happens in two seconds.

And so I actually bought Apple at the close. I can't tell you the lesson I've owned the stock, but it is pure panic. Pure panic. Here's Gene Munster. He said, over the past five trading days, Apple investors have slid into panic mode, shares are down 23% since April 2nd. It's going to get ugly with China over the next month, which will intensify the panic. My eyes are on the horizon looking out three months from now. I believe Apple will be largely spared from the impact of tariffs, giving Cook's favorable relationship with Trump and Xi. The biggest wild card is a broader consumer, which could weaken in a recession. That risk, in my view, is already priced in.

Apple's in the eye of the storm, though. We did this on a show a few months ago. We talked about how of all the large cap tech stocks, this one in Tesla would be the most susceptible to a trade war with China. And that ended up being exactly how it played out. They are easily the two worst of the of the- Everything that they do, not everything, I'm not an Apple expert, but most of it is manufactured in China. So yes, they move things to India, but that's just cobbling the pieces together. All of their manufacturing components are done for the most part in China. Ben Thompson wrote this last fall. Go ahead.

Well, I was going to say it's their second largest iPhone market. And unlike 2018, yes, there were competitor phone companies, but nowhere near as powerful phones and nowhere near as good at reaching the consumer as the domestic phone competitors are today. So that's their number two market that they sell into, not for long, I would tell you. And then manufacturing there. So not only do they rely on the Chinese consumer not going all jingoistic and boycotting American products and responding to Trump by saying, F you to the next iPhone upgrade. But we also need to have so many of the components to come from that.

So my thesis is that there will be a resolution somewhere. And if I'm wrong and this shit lasts, Apple would be down 60% from its highs. Do you agree? Yeah, here's well. If this stays on, Apple is going- It was so expensive. It was so expensive in January. It was one of the most expensive large cap stocks. I think it was 38 times earnings at one point. And itself was never traded like that. And it had zero growth. And then it had zero sales growth. It was a replacement value business.

The stock had been rallying on improving margins as more and more of the revenue was on the services and not the device. They were getting the benefit of see how they're actually not spending that much on AI. That was part of the story. All right. Here's Wall Street. Apple price target cut today to 170 from 200. We iterated underweighted key bank, lower valuation, multiple data points paired with weaker commentary on upgrades from 200 reiterated underweighted key bank.

Lower valuation multiple. Data points paired with weaker commentary on upgrades from the carriers suggest a miss on iPhone while we also expect a miss on iPad and a beat on Mac. The impacts of higher costs could be offset by higher average selling prices, but that would impact demand. This is almost no way out. Here's Goldman. Apple price target cut 242 from 294.

We iterated buy at Goldman. We reduced estimates for Apple to better reflect the net impact of the US reciprocal tariffs through lower margins and lower revenue. In the near term, we expect these costs to be primarily borne by company margins and as a result, now forecast fiscal year earnings estimates that are below guidance. Last one. That's it.

That's enough. This stock's in the hurricane. They're in the eye of the storm. There's no way around it. I do agree with you. If in one, there's some sort of resolution, you're going to want to be long this stock. Here's what Ben Thompson wrote. This is really important because it's not just about Apple. He said, Apple cannot only not manufacture an iPhone

in the US because of cost. It also can't do so because of capability. That capability is downstream of an ecosystem that has developed in Asia and the long learning curve that China has traveled and that the US has abandoned. Ultimately though, the benefit to Apple has been profound. The company has the best supply chain in the world, centered in China, that gives it the capability to build computers on an unimaginable scale with maximum quality for not that much money at all. Lastly, here's the coup de grace. This benefit has extended to every tech company, whether they make their own hardware or not. Software has to run on something, whether that be servers or computers or phones, hardware is software's most essential component.

And so if Apple goes down, everybody goes down. That's me not him. And Foxconn, which is a huge manufacturing concern in Asia, they rely very heavily on Apple for their own revenue and they are a huge employer there. So it's not like nobody gets hurt here on the other side. And I think, look I don't know if this transcends the Trump situation, but I think Tim Cook has a great relationship with the Chinese. He's keeping his mouth shut right now.

I think he has no choice. If you had to be any CEO in the world, I think he's the one that you would least rather have his cards because the needle that he has to thread is, it seems almost impossible. Look, they can't raise prices on all their products because that's politically fraught also. You think that will escape the eye of Sauron if they start selling iPhones for $1,900? That might actually be an even worse situation. Do you think Buffett's boys are buying again? No. All right. Here's what I think is the biggest risk to the market going forward from here.

Imagine there is no guidance. And I don't mean to paraphrase John Lennon. So we're going to get earnings reports starting Thursday for the season. We're going to get the banks first. And just think about an environment where everybody pulls their earnings guidance. Now paradoxically, I think the banks are the least likely to pull their guidance because I think they have a pretty firm handle on what they'll earn given prevailing rates where

they are. They can't forecast the economy better than anyone else. But the big question mark with the banks is how much do they start reserving against potential losses? They're all in the credit card business, they're all in the home loan business, the auto loan business. That'll be interesting. But I think just generally speaking, this is the next shoe to drop for stocks. If you get 100 S&P 500 conference calls and the net result is they're all pulling their guidance, they refuse to give anyone an outlook, and by the way, how could they?

This is problematic for both the multiple and for just the day-to-day trade as that process plays out. And we really haven't seen a big wave of companies pull their guidance together in a really long time. Here's Ed Yardeni. Industry analysts have been lowering their S&P 500 earnings per share estimates, but they remain high at $268.85 and $307 for 2025 and 2026.

That 268 would be 9.2% growth and 14.2% for 2026. Those estimates are likely to fall over time as estimates typically do since analysts tend to be too optimistic initially. They will fall a lot if Trump tariff turmoil causes a recession. Let's put this first chart up. So basically, it's a really big stretch to believe that estimates can stay where they are and the only real question is by how much do they have to fall throughout the course of the next year. Ed is saying that forward earnings per share has been flattening out at a current record

high of $279 that puts the forward PE at $18.1 based on this is yesterday's close. So that's pretty high PE given the potential for downside risk here. Look at that. Just to reiterate, we were at an all-time high in earnings. All-time high in earnings. Next chart, earnings season. The analyst consensus expected growth rate for Q1 S&P 500 earnings has dropped sharply since the start of the year. So that would be that blue line at the bottom. That's a really steep drop for Q1, which we're about to get. But he notes, the actual results will be better. However, the forward guidance that company managements give analysts is likely to weigh on estimates for the remaining three quarters of the year.

So it's the uncertainty. What do you think about my idea that that is the next shoe to drop? I don't know. I don't hate it. I think the problem is you just mentioned it's the uncertainty. This is a confidence game and in, so pulling the earnings guidance is, is at the start of what causes more confidence in the future. And when, when the leaders of these companies have no clarity on what the

rules of the game are going to be, they pull back. They go to the silence. They stop playing. And if they stop investing, how do you not see a head to earnings? Here's Sam Rowe. He's worried about this too. Companies could decline to provide guidance. He's citing David Costin at Goldman Sachs who wrote on Friday, quote, we expect during

upcoming quarterly earnings calls, fewer companies than usual will provide forward guidance for both Q2 and full year 2025. Typically, 20% of companies provide quarter ahead guidance, while 43% of companies provide full year guidance. So I don't know, does the 20% go to 15%? Does the 43 go to 30? This is the problem. And if we were selling it 15 times earnings, I would say, okay, the market could live with

that. Hold on. A lot of the rest of the market is. The S&P 493 are, I think it is close to 15. So we have this catalyzed shit. Now if they pull guidance, the only response you could have as a rational investor is to say good idea. Because you know the only thing that's worse than pulling guidance is giving guidance and

then looking like an asshole when you disappoint everybody on the next report. Well, they also have the opportunity to kitchen sink it. So not only they not pull guidance, they might substantially lower their guidance. Put up this B of A chart, John. This is also from Sam. It's Bank of America. The number of S&P 500 companies providing guidance plunged in the 2020 period. And that made sense.

Why wouldn't they pull their guidance? How could you? You see that drop off? So that's like kind of what's at risk here is a COVID style plunge in companies wanting to give anybody any idea of what next quarter will look like. And I think during the pandemic, it was understandable. I think now it's also understandable, but maybe less forgivable. And institutions will just react by saying, okay, trim. I think what they're going to do, if I had to guess, is they would say based on current

policies as we understand it, this is what would happen if the tariffs stay on. This is what happens if they go down to 10%. You think they will? I think they will. You think they'll do like best case, worst case? Yeah. And if they don't, the sell side certainly will. The straight well. All right.

Last thing on earnings, this is Nick Colas. He wrote this today. Our friend Nick Colas from Datatreq. Investor confidence in future corporate earnings is more than twice as important to stock prices as whatever the companies in the S&P 500 actually deliver, which is why volatility is so high right now. And he says we have a 30% range of possible 2025 earnings between 189 at the low end, 270 at the high end.

That creates a 65 percentage point band of S&P fair values because PE multiples could be anywhere from as low as 14 to as high as 22. So this is how you rip the confidence out of the market. And he notes, it took the S&P 500 eight years to go from an eight times forward earnings multiple in March of 2009, the bottom to 18 times in 2017 as investors gradually regained faith in the system. The Fed screwed that up and in 2018, multiples fell back to 14 times. Then the Fed pivoted in 2019, we got back up to 18 or 19 times.

So it's this seesaw, right? It's this, so it took two years since Russia invaded Ukraine for the P and the feds rate hiking cycle for the PE to get from 15 up to 21 where it started this year. And now we're watching that confidence erosion on multiples in reverse. And it probably doesn't honestly, it probably doesn't stop at 18.

So that's, you know, why are you bearish? I don't think companies are gonna give forward guidance and I don't think we're as low as we need to be on the multiple to say that we're discounting all the risk. Yeah. It's like, it's not that complicated. It's also a stock by stock basis. No, it's not.

What do you mean? Not in the short term, it's not. No, agreed, agreed. It's not that complicated. It's also a stock by stock basis. No, it's not. What do you mean? Not in the short term, it's not. Agreed, agreed. It's not. It should be and it will ultimately be. The market's a weighing machine over time, but in the short term, it's a panic machine. But I think the market investors are doing a good job of differentiating the massive risk in Apple versus Netflix. On some days, you see dispersion and you see them buying things like mortgage companies.

I talked about Rocket, which is a recent purchase I made. You see them buying utilities. Then on other days, they just sell everything. Today, we sell everything. All right. Let's talk about this. Tweet on from Zuccardi. Johnson Red Book retail sales soared 7% year over year, nearly the highest since December

2022. He said, tariff front running question mark. I think that you are going to see some really funky shit in the data over the next couple of weeks and months. Oh, I agree. You're going to see some distortions. You might even see some positive distortions and he might claim victory. Man, that's going to be a stretch. All right, so people racing to build inventory ahead of the tariffs could make it look like the manufacturing renaissance is already at hand. What if we see a

booming iPhone sales because people are buying an iPhone before the tariffs get slapped on? I think that's like rational. There was an article about that. People racing to buy their iPhones ahead of the tariff. I called bullshit. No one did that. What do you mean? Is there anyone in your life that ran to an Apple store to buy a phone? Robin literally asked me, what should we be buying?

She told me we should be selling. She has the wrong instinct. She has the wrong instinct. So the ultimate question is, or maybe not the ultimate question, she has the wrong instinct. She has the wrong instinct. So the ultimate question is, or maybe not the ultimate question, one of the questions that I have is what breaks the back of investors who have learned for 15 years to buy the dip? What does it? Time. More days like today.

So like a really heartbreaking thing would be like a three-day rally that then rolls back over onto itself. We haven't really had that yet. I think it's going to be hard to do it. We've been straight down, dude. It's happening. It's just, it's, there's a look, there's a lot of, there's a lot of investors who weren't around through 2000 and 2002.

There are a lot of investors who weren't around from 07 to 09. They really don't know what it's like to be down six months straight. It is so debilitating mentally and it causes a change in behavior and it just hasn't gone on long enough. It's not the depth of the correction. That's not the thing. It's the amount of times the rallies fail that change investor behavior and it's too early. I agree. But that's going to take, I think, maybe longer than you think.

In 2022, remember there was a stat like we have never seen a 20% decline retrace 50% of that and then roll over to make new lows? Well, we did make new lows. And then of course, we did. We did. And in 2022, there was small outflows on net, but it was all from mutual funds. ETFs buyers did not relent. So I think it's going to take, it's not just going to be one quarter. Now this is different, it's politically driven and people are like really scared, but I think they're going to be more resilient than I think people might think. Like if you're

looking for the retail washout to mark the bottom, I don't know if we get that. No. Yeah. Well, yeah, I'm not sure if I could say yes or no on that. Let's do some flow stuff because I thought this was interesting. Bank of America said every single type of client bought last week. Huge inflows. Last week, the S&P 500 fell 9%. That was the biggest one-week sell-off since October of 2008. Clients were net buyers of $8 billion of US equities. This is just at Merrill Lynch Bank of America. That's the fourth largest weekly inflow in the history they've been keeping data back to

08. Clients bought both single stocks and ETFs with inflows across all three size segments. So when they say all client groups, institutional investors had their first inflows in three weeks, biggest since December. Private clients, that's regular rich people, have been buyers for 17 weeks straight, had their sixth largest weekly inflow on record, hedge funds were small net buyers the first time since early February, and even corporate client buybacks came in and started to track above typical seasonal levels

for the first time in five weeks. We were talking about that and you're like, no way, and I was with you, no way is any CFO buying stocks now. I guess they were. Well, they are, but very tepidly considering the damage to their share price. That should have been a record and it wasn't. And that tells you how cautious CFOs and treasurers are being. Barclay says that we've seen a significant de-levering by Quants, not yet by retail.

Systematic funds are in the process of substantial de-leveraging. The bulk of it is likely done. In contrast, direct retail may have started reducing their equity exposure, but they haven't capitulated. And then last, JP Morgan says, massive selling Monday. After historic dip buying by individuals last week and overall bullish activity, retail investors are now net sellers. This is yesterday.

They turned bearish on Nvidia, along with Tesla, and the rest of the Mag 7 except for Alphabet. So maybe that's a sign that retail is beginning to capitulate. I bet you today looked a lot like Monday. Not to be too cute, but I'm sorry, I can't help myself. Speaking of JP Morgan, the famous quote, in a bear market stocks return to the rightful owners. I really do believe that to be the case. Okay. So I guess that's Vanguard. I guess that's their rightful owners because that's

where the buying is coming from. All right, we're going to wrap. We're going to make the case and then I'm told you have a mystery chart for me tonight. I do. You're not going to get this one. Okay. All right. I think you'll agree with this. You could find safety in Microsoft and Netflix right now.

Not like pure safety, like they're not going to go down at all. But if you are long only, and you must be invested in stocks, I think those are two smart places you can go. Why do you say Microsoft? Netflix, I would agree with that. Why Microsoft? It's rolling over pretty hard. Here's Martin Pierce. Let's do the charts on each, and then I'll explain. It looks terrible, but this drawdown is nowhere near the drawdowns that we've seen in other stocks of its ilk, and it didn't really have the run up. Next one.

Hold on, just to pause on that, Josh, you're 100% right. Microsoft hasn't done crap in a while, despite the open AI and all that sort of stuff. This is no big deal, dude. Well, it's in a 25% drawdown. So not nearly as bad as Nvidia, of course, but not nothing. No, not nothing, which is why I think it could be viable here. Netflix. Let's do Netflix. Aside from the fact that this is a head and shoulders and should be avoided at all

costs, I think it's a consumer staple. It's in the telecom and it's in the tech, excuse me, the communication services sector. But I honestly think this is the last thing people cut. You're a hundred percent right. Nobody's canceling Netflix unless it gets, unless we get a depression. I don't know that this matters. It still trades at 35 times forward earnings. So Morgan Stanley called Netflix its top pick, replacing Disney in the sector for this year. We iterate overweight $1,150 target. Quote, we expect Netflix to demonstrate relative resilience

in a weaker global macro. Momentum in its core subscription business, combined with recent dollar weakness, should de-risk 2025 estimates, even in a softer ad market. It's only down 2% this year. Yeah. The analyst said advertising growth is expected to double in 2025. Ads still remain a small part of the overall business to only 10% to 15% of revenue growth and only 5% of total revenue. But the ad-supported tier strategically will keep people from abandoning their Netflix subscription.

Two hours of daily viewing per member. The engagement is really strong. That's why nobody cancels. Over 94 billion hours were streamed in the second half of 2024. Plus they have sports now, which keeps it even more defensive. So I like that idea. Here's Martin Pierce on Microsoft. What does he say?

Doesn't matter. These are, look, these are, Microsoft is not caught in the eye of the storm in terms of tariffs. They're not selling iPhones. It's not quite as fraught a political situation as you have with Apple. And it's like a hugely steady cashflow business. It's very heavily reliant on businesses. Businesses are not like throwing away their Microsoft subscriptions just because they

have a couple of tough earnings quarters. So I think both of these places are places that you could hide out. What do you think? Netflix. Yeah. I mean, it's all dependent on whether the market melts down, everything's going down. Yeah, no, it's all relative. I'm saying if you have to own stocks, these are stocks you could wrap your head around right now. Netflix for sure. It's a consumer stable. Nobody's canceling it. I think the earnings are going to be less volatile than the overall market. What a week, man. It's Tuesday. It is Tuesday. Okay. Listen, this sucks.

It's not fun. But if you are the type of person, and we all are at some point in our lives, have looked at a stock chart and said, I can't believe I didn't buy it. I had the chance, I missed it. Now listen, this might be different. Maybe this is not one of those times. I don't know, I can't see the future. You're gonna show me a stock that you think people are gonna turn around in the future?

No, just in general. Like if you've ever said that to yourself, and we all have, and you're not buying today, then you never get to say that to yourself ever again. I'm sorry. Okay. I think that's fair. Like let me get this straight.

There's nothing you want to buy? Right. That's totally great. Yeah. And you could say that like, yeah, this might not be the optimal price to buy and everybody's got a different risk tolerance, but like there's opportunities. I bought some stuff Friday. These are core forever holdings. I bought Chevron. I bought some stuff Friday. These are core forever holdings.

I bought Chevron, I bought Amazon. I know you bought some Amazon too. I added to Uber. These are stocks that I'll be in years from now. If you think that cybersecurity, I bought CrowdStrike, is a secular growth story. Of course it is. All right, enough of that. Okay, it on. Josh, this is,

I'm showing you the best performing stock in the S and P 500 year to date. Now this is a great, great, is that this is a stock. The reason why is because it got just kneecapped. I don't know if it's down 70% or what it's been a secular loser. Um, but you actually made the case for the stock and then it got kneecapped. I don't know if it's down 70% or what. It's been a secular loser. But you actually made the case for the stock and then it got kneecapped again. But nevertheless, you made the case. You're wrong on the short term. Right in the long term. I need one more clue. Oh, shit. I forgot to make this chart. Do we have the chart of the best 10 stocks and the worst 10 stocks? John, do you have that? I think I sent it to you. Maybe I didn't. There we go. It's in this

group. So that's a bit too easy, but't. There we go. It's in this group. So that's a bit too easy, but. Oh, it's in the blue in this group. Yeah. Sankora. Nope. No. Huh. Okay. Sankora sounds like the whiskey that Bill Murray drank. Lockheed? No. I don't even know what you're talking about. It's CVS. I made the case for CVS. Was I smoking crack? Remember one of the big hedge fund managers took a long position in there? A big position.

Yeah. Oh, all right. Maybe. I mean, I definitely didn't buy it and I don't want any credit for it. Well, nevertheless, it's the best performing stock in the S&P company. What is this? An $11 stock? I don't even know what.

All right. That thing's still publicly traded. That's a miracle. Oh, yeah. It was an activist in it or something. Right. I didn't buy it. All right.

What's the worst stock in the S&P 500? Do we know? Year to date? I think it's Decker's. I would have guessed either Tech or apparel or something consumer discretionary. What are these? These are the 10 worst stocks since Liberation Day. I don't want to buy any of these.

Bear with me one second. No, these are not for me. The worst stock year to date, wide charts, wide charts, wide charts. It's Western Digital down 48% and then actually the same exact amount, Decker's Outdoors. So yeah, nobody's buying Uggs, why would you? Yeah, later for that. All right. Hey guys, thanks so much for joining us for the live.

We really appreciate it. If you're listening on the podcast, please go ahead and leave us a rating and review. It goes a long way and it helps signal to everyone else that there's quality here and we love you for it. I wanted to mention tomorrow is Wednesday, which means an all new edition of my favorite podcast, Animal Spirits with Ben Carlson and Michael Batnick. Ben needs a hug. Ben is living in Michigan, which is unfortunately going to be like an epicenter of this trade war stuff. And I think it's affecting a lot of people around him. And least you could do is tune in and listen to him bitch and moan.

So that's tomorrow morning. We'll have Ask the Compound later this week and an all new edition of the Compound and Friends. Plus we're doing a surprise drop on Thursday and and I think you guys will be super excited about it. So all right. That's it from us. Have a great night.

Stay alive through 25 in the game. Talk to you soon. Whether you're just getting started as an investor or you're managing a multi-million dollar portfolio Ridholtz wealth management has the solution for you It all starts with building the right financial plan to speak with a certified financial planner today Visit ridholtzwealth.com Don't forget to check us out at youtube.com

Slash the compound RWM make sure to leave a rating and review on your favorite podcasting app. If you love investing podcasts, check out Michael and Ben every Wednesday morning on Animal Spirits. Thanks for listening.