Worldwide Exchange 3/31/25
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Global markets hitting the sell button following yet another rough session for Wall Street that saw the Nasdaq close deeper in correction. Investors are weighing weakening consumer sentiment, a possible AI bubble, President Trump's Liberation Day, and what all this could mean as broader tariffs could be coming bigger than initially expected. We're generous in those countries where they rip us off like countries have a metric.

All this as futures point to more selling to close out the stock's worst quarter in years. It is Monday, March 31st, 2025. You're watching Worldwide Exchange right here on CNBC.

Good Monday morning. Thanks so much for being here with us. I am Frank Collins. Get you ready for the trading day ahead. We begin with U.S. stock futures after another sell-off on Friday. The NASDAQ now, the NASDAQ 100 now 13% below its 52-week high. The Dow and the S&P 7% and 9% off their highs, respectively. Take a look at right here. You can see we're looking like we're on track to open up

in the red. Taking a look, the S&P down nearly 1%, 55 points. The Nasdaq down 270 points, more than 1%. The Dow looks like it would open down 275 points, down over a half a percent right now. So of course, investors, they continue to react to last week's hotter than expected PCE report. They're also preparing for reciprocal tariffs later this week. We're going to take a look at the S&P 500 pre-market laggards. Taking a look right now, you're seeing Palantir right here at the top of the list.

Those shares moving back almost five and a half percent. Supermicro, Tesla, G, Vrnova and NVIDIA running out the worst performers in the S&P. You see a lot of these AI focused stocks having a lot of pressure on them right now in the pre-market. The other side of the corn, the gainers in the pre-market on the S&P. Taking a look at those. Well, we're showing a headline we're going to get to in just a second. But take a look at the gainers on the S&P right now. You're seeing those names that are moving higher. We're going to show them to you in just one second.

And here you go. KLA Corp. Those shares moving up just about 4%, followed by Analog Devices, PTC, Autodesk, and Intuit running out the best performers on the S&P in the pre-market. So a closer look at the weakness in tech this morning after a report from the information that some large card companies

Cloud customers are slowing down their AI spending. Also weighing on the market, some comments from Palo Alto Network CEO Nikesh Arora that open source models from Deepsea could cut their costs by as much as 95% compared to their open AI counterparts. Also taking a look at Palo Alto shares.

year to date actually in the red pulling back more than six percent we're gonna look at big tech more broadly right now taking a look at big tech this morning uh we just hit on nvidia those shares pulling back just about three and a half percent three and a third percent right now microsoft pulling back about one and a half percent salesforce those shares under pressure as well down about one and a quarter percent

Also, as we close out the first quarter, a look at the sector laggards. Taking a look. We just talked about tech. That's one of your laggards. You see it right here pulling back about 13% for the quarter. Consumer discretionary, the hardest hit. A lot of concerns about the consumer, consumer spending, and also consumer confidence.

Com services, we're going to talk more about that in a minute. Industrials and materials running out your worst performing sectors this quarter. We want to take a look at the leaders as well. Energy right there at the top of the list. Energy kind of a rebound after last year. One of the worst performing sectors this year up 8%. You see some other ones. Defensive trades, utilities, consumer staples, also health care. These are all defensive sectors. Some of the best gainers in this quarter. Financial still holding on to gains for the quarter as well. And as we approach Trump's so-called Liberation Day, there are multiple reports.

The president is pushing to go bigger and even broader on tariffs, even considering an across-the-board tariff of up to 20%. We're going to take a look at the ETFs that track the nations that are in active tariff negotiations with the U.S. You're seeing the MCHI that tracks China pulling back about a half a percent, even deeper pullback for the Canadian ETF, the EWC, pulling back over half a percent.

Almost one and a half percent. No movement for the EWW that tracks Mexico. And we want to check metals as well. Remember, the administration also considering new tariffs on copper in addition to tariffs on aluminum and steel. Taking a look, gold, that safety trade moving up just about one and a third percent. Silver moving up a half a percent. Copper after actually after pulling back a bit, pulling back more than one percent. Aluminum also pulling back.

just about a half a percent. And a look at Treasuries, we've actually seen yields move to the downside following that hotter-than-expected PCE report. Taking a look at the benchmark, the benchmark pulling back about 15 basis points from the levels that we were at before PCE. Also important note, the two-year, well below 4% right now. Okay, that is your setup. Now we want to turn to the global markets. Red arrows all around the world. Europe kicking off the week deep in the red. And a number of markets in Asia also sinking into correction. Our Juliana Tattlebaum is in London with a look at the very latest. Juliana, good morning.

That's right, Frank. Good morning. We are seeing red across the board here in Europe. You're seeing every major region move lower. And this after the Stock 600 posted its worst week since December last week, pulling back about 1.4 percent. Still for the quarter, it has been a strong period for the European market. As we've talked about many times before, the index far outperforming outperforming the U.S. The index on pace for its best quarter in two years led by defense. But

But today, the selling continues. You got the FTSE 100 down 1 percent, the CAC 40 over in France down by about 1.3 percent, the Zetra DAX pulling back by about 1.2 percent. And if you look at the sector breakdown, you can see it is a risk-off trade. Investors are fleeing those more cyclical parts of the market, basic resources, travel and leisure, autos and

banks underperforming while the more defensive parts of the market are holding up better. So you've got a more defensive tilt to trade today. The gainers or the outperformers in the market this morning, we can switch on, show you that telcos, the only sector in the green,

Utilities also holding up OK, trading about a quarter of a percent lower. Very similar action in Asia overnight, but even heavier selling there. You've got the Nikkei 225 dropping 4 percent. The Kospi over in South Korea dropping 3 percent. Those two regions exposed heavily to the auto sector. And clearly investors around the world are bracing for April 2nd and waiting to see what comes out of the Trump administration when it comes to these reciprocal tariffs. Frank.

Juliana, thank you very much. Juliana Tetelbaum, live in London. Turn our attention back to the U.S. markets and a possibly market-moving note from Goldman Sachs. The bank now sees the Fed cutting rates three times this year as tariffs sway on the economy. A new note from Chief Economist Jan Hatzius is forecasting cuts in July, September, and November. Previously, he just saw two cuts this year and one in 2026.

Goldman also increasing its tariff forecast to an average rate of 15% across the board. And they also see that driving up inflation. Goldman also adding they see core PCE at 3.5% by year end. And that'll push GDP down 1% according to their estimates. Also raising recession odds from 20% up to 35%. Joining me now, Thomas Martin, Senior Portfolio Manager at Global Investments. Thomas, good morning. Good to see you.

Good morning. Thanks for having me on your program, Frank. Yeah, I mean, we just hit the audience with a lot of information, but basically, new note, raising the odds of recession from 20 to 35 percent. I think the more interesting thing is that Goldman sees the number of cuts this year going from two, possibly up to three, with the first one coming in July. Do you agree with this thesis, even after that hotter-than-expected PCE report? Well, it really all depends on what happens with the economy and with inflation.

um employment uh and that depends on what happens with the tariffs which is just the uncertainty that we don't know about but they have to be focused on inflation first and foremost and they can't cut rates at this point given the inflation data and since they are so data dependent they are going to wait for recession to start flashing and employment to get poor if we get up to that 4.4 unemployment rate

then those projections may actually be less than what they have to do. All right, so we saw one of the factors that hit investor sentiment was the five-year outlook in the University of Michigan consumer sentiment read 4.1%, highest reading since February of 1993, more than 30 years.

So I want to ask you, is inflation what's weighing on the market or is it sentiment that seems to be weighing on the market and concerns about what's coming up? Are you actually seeing in your mind just direct impact of tariffs on the market? And are there sectors that you would invest in right now and won't invest in right now due to these tariffs?

Well, tariffs and the anticipation of tariffs are definitely having some impact on the market, but nobody knows what they're really going to do. So we're making estimates. If this, then that. It's very difficult to know what to invest in at this point, because in technology, as you pointed out, that those

Those shares are down a lot. There's been a big correction. Staples, health care have all been up. And so to the extent that that trade has to reverse, it's not like you want to chase those trades. So being closer to market weight and pulling in risky bets, which is what the market's doing, that's what we think you need to do. Hunker down.

Thomas Martin, we've got to leave the conversation there. Thank you very much. Great to see you. Great. Thanks a lot. We're now turning our attention overseas to a developing story following Friday's massive earthquake in Southeast Asia. The number of people killed continues to rise as rescue workers continue searching. CNBC's Linh Linh joins us now from Bangkok with the very latest. Linh.

Hey Frank, in Thailand's capital, the focus is very much contained to the rubble behind me after a 33-storey partially built building did collapse off the back of those tremors on Friday. And even though we are now past that 72-hour window, authorities say this afternoon that they still hold out hope that there would be survivors

from this rubble. There have been international crews, including from the US, joining local crews in the midst of this very, very painstaking search and rescue effort. There are also been concerns raised about building safety here. We know that Thai markets resumed after

halting trading Friday afternoon off the back of this earthquake. The Thai markets are under pressure, much like the rest of Asia, off the back of a number of headwinds. But there are concerns about what the impact of this quake will have

on the tourism industry here, which is such a key driver of growth. Now, about 600 miles from here, where the epicenter was, this was in Myanmar. The situation there is much, much more dire. State media saying that there's at least 1,700 deaths

still missing here as well. Keep in mind that in Myanmar, it's in the midst of an ongoing civil war, which has been going on for about four years now. So you have the US Geological Survey estimating that deaths could go up

to 10,000 and also estimating that the economic toll could exceed the country's annual GDP. And certainly there has been that international assistance that has been pouring through there as well. But we've been hearing from the United Nations, from various rights groups that say that simply it is not enough and that there needs to be more done in the coming days and weeks as well. Frank. All right. CNBC's Lin Lin live from Bangkok. Lin Lin, thank you very much. Have a great day.

A lot more to come here at Worldwide Exchange, including a number of top stock picks. But first, there's always a bull market somewhere. We look at one stock that ended Friday in the green, and the technicals are showing it could have some more room to run. Plus, Liberation Day and what tariffs could mean for investors putting money to work overseas. And then later, we see if Milken chief economist Bill Lee is changing his tune when it comes to tariffs. We have a very busy hour still ahead when Worldwide Exchange returns. Stay with us.

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And welcome back to Worldwide Exchange. Stocks are set to close out what's been kind of a tough first quarter. The S&P 500 down more than 5% on pace to break a five-quarter win streak and notching its worst quarter in more than two years. The index also remains below its 200-day moving average after very briefly climbing back above that level earlier this month. For

For much more on the key technical levels, let's bring in Frank Capillari, founder and president of CapThesis, also a CNBC Pro contributor. Frank, good morning. Frank and Frank. Robert Frank's going to be jealous. That's right. Great to have you here. All right, we're going to hit the charts right now. The first thing we're going to talk about is the S&P 500, actually below its 200-day moving average. We're showing it right here. So you saw not too long ago, back in February 19th, we hit our all-time high on the S&P. Now we're down here. I mean, it seems kind of obvious, but tell me, what are the trends that you're seeing here?

Thanks for having me. Well, I think we should look back at the last two times the S&P went underneath the line to get an idea of what was going on here. So that was October 2023. S&P was down about 11% over three months, this time over three weeks. So that led to, of course, a very strong rally, which lasted for many months. So not too similar just yet. Before that...

January 2022. As we know, market was coming back from the COVID lows, almost two years of uptrending action, just like we have here. And the first time that the S&P went below that line led to a strong rally, which failed. Failed here, failed here, failed here many times. And then we had to wait all the way until March 2023 to see a change. And what happened back then was that we finally saw volatility come in.

bullish patterns start to work. So in terms of what we can expect now, it's tough to make a decision when it's going to happen. We need those same characteristics and then start to develop again. If we're talking technicals, these are areas where the markets saw resistance, these different areas right here. So up here, where's the area of resistance for the market? What level should we be watching?

Well, right now, 200-day moving average is right around, we see here, 5,700-ish or so. The concern is this, is that if the market continues to roll over, that moving average will roll over as well. So the worst-case scenario is having an index, for this matter, trade underneath a declining 200-day moving average, as we saw here, which was really resistant the whole way down during that bear market. All right.

All right, we're going to move on. Frank, clear that screen for us. We're going to get communication services. Meta is a big part of that right now. What trends are you seeing when we come to communication services? Like a lot of other parts of the market hit that high over here, and now we're down here.

Right. So this now, to me, it looks like a bearish pattern. This is a classic head and shoulders pattern, right? Okay. What do you mean by head and shoulders? For the audience that's not into technicals. I'll show you right here. Okay. This is the left shoulder, head, right shoulder, bearish pattern, right? And so as we go through this, this looks like it's about to roll over. So you take a measure move from the top of the head down to here, gets it down to about 85. So a pretty strong move. This would be about 20% from the high. So a clear bearish signal in your mind.

Right. Now, sometimes the biggest patterns don't play out all the way. So a best case scenario, if we see a downside break, which then fails here, comes back up, this is a bear trap.

So that means going higher. Now, worst case scenario, of course, go here, fail on this level. So one scenario to keep in mind is that Meta and some other names, of course, reporting in three weeks or so. So if we do end up, say, around 90 or so, the rubber band can be pretty stretched to the downside and it's going to have a pretty strong rebound.

bear market rally at that point so it'd be a bear market rally but it wouldn't be a clear uptrend no we still have to wait for the card races to change the volatility is still fierce that some of these bullish patterns we're looking at up until the end of 2024 have been wrecked at this point so it had to be rebuilt frank go ahead and clear that we're going to get to one part of the market or at least one name in the market that seems to be working uh tell us what you're seeing when it comes to this chart we're going to show it right now it's actually ebay

We're showing it right here. So we're actually tracking it from all the way back in February 1st of 2024. So a year plus. So what are you seeing when it comes to this name? Sure. Well, this is an uptrend as much as we can see going back here. I was looking more to this side because think about what's happened here. The rest of the market is rolling over. X, Y, consumer discretionary ETF, which this is a part of.

getting hurt as well. eBay really stands out. You can tell that it's getting closer to potentially testing its highs. But I think the key part about this is we know that gold and silver, for instance, safe havens are doing well. But if you look closely, we can find areas that are outperforming even in the worst performing sectors. So eBay is one to watch over the next few weeks.

Very quickly, clear it one more time for me. Very quickly, though, we've got to get going, Frank. Why isn't this that head and shoulders you were talking about? Why isn't this area right here the same thing? It could be close, but I'm looking at, of course, the longer-term trend at the same time. So if you go, say, below 61, 62, this uptrend, right, and this has more of an uptrend as opposed to the XLC, that would be...

Something to keep in mind. Another Frank and Frank. Frank Capillari, it is always a pleasure to have you here. Thank you so much. To read a lot more of Frank's work, we're a big fan of yours. Be sure to go to cnbc.com slash pro. You get all that technical insight. All right, as we head to break, a look at the worst and best performing stocks in the S&P 500 for the quarter. We're talking names like Tesla, Decker's Outdoors, and OnSemi, all down between 45% and 35% this year. CVS, Neumann, and Philip Morris, yeah, the cigarette maker, leading the charge higher. We are back right after this. Stay with us. We'll be right back.

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Welcome back to Worldwide Exchange. We're going to start with a market flash on Apple. France's antitrust regulator fighting the tech giant $162 million. It says Apple abused its dominant position in the distribution of mobile apps. Taking a look at Apple shares this morning in the pre-market, pulling back just about 1%.

We're also counting down to President Trump's Liberation Day as he pushes back against reports. His Wednesday tariffs will only target 10 to 15 countries at the start. But regardless of the actual tariff targets, there's one group of countries at higher risk than the rest, some of which they've enjoyed some pretty strong equity rallies to start the year. Joining me now is Vivian Lynn Thurston, portfolio manager at William Blair, responsible for the firm's emerging market growth strategies. Vivian, good morning. It is good to see you.

Good morning, Frank. Vivian, why don't we start off with China? When we see tariffs come into play, what does this mean for China and Chinese equities? By the way, today, factory orders hitting a 12-month high. How should investors view that news coming out of China?

First, I think the biggest concern in rest of China equities is about risk premium. And this we have seen across the board, not just for China, also for a lot of EM equities, given that the tariff U.S. trade war tend to raise the risk of mentality. And that also lead to weaker, potentially weaker currency of those emerging countries.

So I would say the biggest impact in the near term for Chinese equities are the risk premium. But if you look at the fundamentals impact in terms of the tariff, near term, I would say that it's still kind of manageable from China perspective, given that they already prepared for this trade war even before, I think, the U.S. administration changed the tariff.

So in addition, China also has quite a bit import from United States. So they could have some risk management from that perspective. And then secondly, Chinese fundamentals from domestic side also start to see some gradual improvement.

And that actually start to show through some corporate earnings. And therefore, we see some year-to-day rally of Chinese equities. There was a complex kind of situation right now. All right, Vivian, let me ask you another very quick question. We're going to move on to some other nations and other emerging markets. Chinese stimulus, do you think that's fully priced into Chinese equities, or is there more upside from that stimulus going forward? Mm-hmm.

I think at this point, market probably expect pretty moderate stimulus. We have seen that in the past couple of years that Chinese government tried to do more gradual, more kind of a measured stimulus. So for example, we see recently some support to consumption, whether it's appliances, whether smartphone. So I think this will be same kind of step or measure going forward.

But as I said that we have seen some gradual improvement of some corporate fundamentals, especially for some Internet companies in the recent times. So going forward, I think the corporate earnings will be the key to watch. All right. This is some of the other emerging markets that a lot of people are focused on right now. Vietnam is one that's very interesting. I cover logistics. I know a lot of logistics companies have moved hubs to Vietnam because they expect a production to move to Vietnam.

How do the tariffs change the investability of a country like a Vietnam and some of the other areas where production has moved to, like in Indonesia, like a Bangladesh? Yeah.

And this is a very interesting point given that Vietnam is one of the largest trade partners of the United States. And more importantly, there's a big trade imbalance between U.S. and Vietnam. And then export to the U.S. accounted for nearly 30 percent of Vietnam GDP. Therefore, the impact on Vietnam will be very high. But on the investment perspective, this is a relatively small equity market. For instance, we don't have direct investment in Vietnam equities

as of now. So I think the impact from global equity market perspective will be a little bit limited. Okay. What about these so-called dirty 15 that the administration has been talking about? One name that really sticks out to mind in me is India. Obviously, again, a growing hub of production, you know, a nation that's not only tried to attract production, but has also tried to attract services businesses, especially in tech. What is being added to this so-called dirty 15 potentially mean for people that want to invest in India?

Yeah, those dirty 15 names actually including both emerging countries and also developed markets are basically a top 15 trading partners of the United States and with also a pretty large trade imbalance and also more importantly, the tariff differential. So India is one example. It has a trade deficit from the U.S. perspective and also the tariff differential is probably one of the largest

among all the top 15 countries. So it is kind of at risk. But on the other hand, the exports to the United States and total export of India

account for about two to three percent of the country GDP therefore from the fundamental impact on the GDP perspective on India is not very substantial this is again back to what I talked about earlier is about more about risk premium especially India equities it's a pretty high valuation and therefore tend to be

at a higher risk. And we've seen that yet today, as you show on the screen. All right, Vivian, thank you very much for that look at emerging markets. Really appreciate your time and your insight. Have a great day. You too. Thank you. All right, coming up here on Worldwide Exchange, the S&P may be on pace to snap a five-quarter winning streak with its worst three-month stretch in more than two years. But one group of investors, they've been very busy buying that pullback. We have the full story when Worldwide Exchange returns. Stay with us.

-Start with all countries, so let's see what happens. There are many countries. I haven't heard a rumor about 15 countries.

So that was President Trump aboard Air Force One last night, standing firm on his tariff plans ahead of his reciprocal tariffs that are supposed to take effect on Wednesday. Take a look at futures. They're in the red this morning as the S&P and the Nasdaq, they prepare to close out their worst quarters in more than two years. Welcome back to Worldwide Exchange. I'm Frank Collin. Coming up this half an hour, we have Milken's bill, Bill Lee. He's here. He's going to talk about why the market's declines are being unfairly attributed to President Trump's tariff policies. That's his perspective. We're going to talk a whole lot more about it.

We'll be right back.

in the red across the board. The NASDAQ down just about 1%. Similar story for the S&P. The Dow looks like it would open up about 250 points lower. Investors, they just continue to react to last week's hotter than expected PCE report. They're also preparing for reciprocal tariffs later this week. We want to take a look at the NASDAQ.

100 in the pre-market. We're going to start off with the laggers. You can see right here, Applovin, those shares pulling back more than 5.5%. Stock's been under a lot of scrutiny after a short-seller report. Palantir pulling back more than 5% as well. Arm, Tesla, and MicroStrategy, or just Strategy now, your worst performers. Important to note, we're expecting delivery numbers from Tesla this week. That could be one factor weighing on the

EV maker. Then the other side of the coin, the NASDAQ 100 leaders, taking a look at those right now in the pre-market. Analog devices leading up about three and a half percent. Autodesk, Intuit, Roper Technologies and CDW running out your best performers on the NASDAQ 100. We're going to stick for tech for just a bit and the weakness in that sector. This morning, a report from the information says that some large cloud customers are slowing down their AI spend. Highlighting comments from Palo Alto Network CEO Nikesh Arora,

that open source models from DeepSea could cut the company's costs by as much as 95% compared to their OpenAI counterparts. Quick look at Palo Alto. Shares pulling back about 6.5% year to date. Also ahead of what President Trump is calling Liberation Day and this Wednesday's tariffs, multiple reports this morning the president is pushing to go bigger and broader on tariffs.

and a possible across-the-board hike of up to 20%, tracking a number of sectors this morning. We're going to start off with autos. You can see autos under some pressure right now in the pre-market. Ford pulling back about 1%. We already talked to you about Tesla. GM almost 1% as well. Stellantis pulling back 2.75%. Toyota, a big Japanese automaker, of course, pulling back more than 3%. Want to take a look at chips as well. We were hitting NVIDIA earlier. NVIDIA shares under quite a bit of pressure, pulling back 3.75%. Broadcom, Intel, Arm Holdings and ASML.

All of them in the red arm pulling back more than 4% right now. We also look at pharma. That's another area we could possibly see those new tariffs as well. Take a look at pharma. Merck, very interesting to note here, up about a quarter of a percent. But pressure across the board when looking at the rest of these names. Novo Nordisk pulling back about 1.5%. Pfizer, a third of a percent. Eli Lilly, just about a quarter of a percent right now. And we want to take a look at Treasury's yields pulling back as well. Some concerns about economic growth going forward helping Democrats.

to move those yields lower. Right now, the benchmark at 4.2, falling about 15, almost 20 basis points from the levels we saw just last week before the PCE report. Also, the two-year pulling very measurably below 4% right now at 3.85%.

OK, that is your setup. Now we want to turn back to the president and his comments to reporters on Air Force One. They appear to be diminishing hopes that the planned tariffs would be more limited. As previously thought, the president is expected to get recommendations on those tariffs tomorrow, announce the tariffs on Wednesday and then start those auto tariffs on Thursday. Many economists are worried the tariffs will hit the economy and raise inflation in the short term, limiting the Fed's ability to cut rates.

J.P. Morgan raising recession odds up to 40 percent with core inflation pushing above 4 percent next quarter. Goldman, as we had earlier, now sees a 35 percent chance of recession. That's up from 20 percent. Let's bring in Bill Lee, chief economist at the Milken Institute. Bill, good morning. Always good to see you.

Hi, Frank. A lot of tariff talk here. We're going to talk a lot more about it with you. Let's just start off with this bill. You're a believer that tariffs don't actually raise inflation. I want to ask you, where are you getting that from now? We continue to see these economic reports, whether it's ISM manufacturing, a number of others where prices are going up, inputs are going up as well. How do you not see tariffs causing inflation?

A lot of the tariff inflation talk really is based on surveys and surveys are showing people's anxiety as more and more people talk about tariffs and how they might raise prices. Let's take a look at how big imports are relative to GDP. It's only 14% of GDP. So we're not talking a big chunk of GDP that's going to be affected by tariffs, even if they are large tariffs and very extensive tariffs. And then we now have tariffs putting recession calls

And again, at 14% of GDP, that's not a big lever on which to hold back GDP growth. Now, the one thing that I would say is causing a lot of uncertainty out there is whether or not President Trump is really going to make his MAGA agenda successful.

a reality or not, or whether it's going to be delayed. That, I think, is a true source of uncertainty. But in terms of tariffs and the fact that the U.S. is a relatively closed economy, these are not the ingredients of high recession pressures or high inflation pressures. You know, Bill, I really wish we had more time because, I mean, we're seeing tariffs. We're also seeing DOGE. So it feels like his MAGA agenda is already being put in place. But I really want to go to what we're actually certain about.

We're certain that the auto tariffs are going to raise the cost of autos. In fact, some new numbers out from Cox, the tariffs could raise Canadian and Mexican made vehicles by the cost by as much as six thousand. And it's especially going to hit lower cost vehicles that impact lower end consumers. So when we're getting this data right here, we're pretty certain this is going to raise costs right on a very important part of the economy, the auto sector.

Frank, how often do you buy a car? I mean, the car, auto expenditures are only 3% of consumer expenditures overall. So it's not a big take, it's a big ticket item when you buy the car, but it's not a big chunk of consumption right now. We spend more on food and insurance and healthcare costs. But those are higher too, Bill. But those are higher, like pharmaceuticals would get higher if there's tariffs potentially. Oh, absolutely.

food. We heard the target CEO come out and say right away that the tariffs are going to raise the cost of food like almost immediately.

That's the source of inflation, right, that we have been worried about. The core inflation has been pushed up by the domestic services, not international services, not international goods. Now, Frank, if you're a tequila drinker or a big fan of avocados, I absolutely guarantee you your cost of living is going to go up. But most of us can switch from tequila to bourbon. So I think we have the possibility of switching from these high-cost imports to lower-cost domestically-approved goods, and that's exactly what President Trump is trying to do.

Well, I got to say, tequila is a bad example because you can only get tequila from one place. So if you're a tequila drinker, you're not going to change. But that's an aside note, Bill. You might be revealing some of the things you like to do in your off time right there. I want to get back to something very serious. We saw over a month ago that University of Michigan consumer sentiment number, the five-year outlook, led to a sell-off. We got another number that seems to really be concerning investors. The five-year outlook, highest read since February of 1993 at 4.1%.

So whether this is a survey or not a survey, the sentiment seems to be really spot on, Bill, is that people are pulling back on spending because they're worried about a slowdown in the economy and they're worried about rising prices, I should say. That's very real.

So, no, that's soft data. The real data shows that consumer spending is slowing down, but not as much as people might expect, given those surveys. I think the source of real sentiment decline is that the Michigan survey is highly correlated with the stock market.

And I think that's the feedback you're starting to see. And also the conference board survey is very correlated with the ability to get jobs easily. And that is getting more difficult because hiring has slowed down. So I think the other correlations that are messing up the soft data and until we actually see the hard data start to react badly, I think you need to chill out a bit. And even the GDP numbers that

that the first quarter, a lot of Fed is projecting. If you take out gold anomalies, again, you'll see a flat first quarter and that's with all of this anticipatory imports coming in. So we have a mechanical slowdown in GDP caused by a lot of imports

caused by the fact that people want to bring in imports sooner rather than later. In all fairness, Bill, we're not talking about GDP. We're talking about consumer sentiment, and we're hearing from a lot of companies. You can call that soft data if you want. A lot of companies saying the consumer is slowing down in real time. Reports, of course, are backwards looking. One last thing before we go, Bill, because we're out of time. Goldman raising its outlook for Fed cuts this year from two up to three. Do you agree with that, that a slowdown in the economy is going to lead the Fed to cut?

If we get a serious slowdown, unemployment rate reaches above 4.5%, we'll add an extra rate cut in there. But I don't think that's going to happen until into next year at best. Bill, I feel like we've got to check in with you after this jobs report. I think this jobs report is going to tell us a whole lot of things about the economy and also will give us insight on what the Fed might do. Bill Lee, it is always a pleasure to have you on, man. Have a great day.

Thank you. All right. Coming up here on Worldwide Exchange, much more on the president's tariffs as one ally reportedly tries to make moves to soften the blow as Liberation Day looms. We have the full details when Worldwide Exchange returns. Stay with us.

Welcome back to Worldwide Exchange. Quick check of a few big stories that we're following this morning. President Trump telling NBC News this weekend he doesn't care if the automakers hike prices because of his tariffs and is even encouraging them to do so. The president arguing the move would encourage people to buy American-made cars. The White House later saying the president was referring specifically to foreign car prices.

This coming as Bloomberg reports the EU is identifying concessions it is willing to make to remove portions of the president's tariffs. The report says potential moves could include lowering its own tariffs, mutual investments with the U.S., and easing certain regulations. Elon Musk revealing he's combining XAI and X into one single company. Musk says his AI company will buy the social platform in a deal that values X at $33 billion. That's compared to the $44 billion he paid for the platform back in 2022.

Bloomberg reporting Apple is preparing its biggest push into the health space yet with a revamped health app, which would include a new AI doctor. The report says the tool, which can make lifestyle recommendations based on users' health data, could come by spring or summer of next year.

And Reuters is reporting that Blackstone is weighing taking a small stake in TikTok's U.S. operations. The app's parent company ByteDance has until Saturday to divest TikTok or face a complete ban here in the U.S. President Trump suggesting last night a deal will get done before that deadline. All right, coming up, a double dose of the top investment ideas as we look ahead to the second quarter. Plus, not sweating the selling. The group of investors that have been very busy buying the dip. We have all the details and Worldwide Exchange returns. Stay with us.

All right, welcome back to Worldwide Exchange. Taking a look at futures right now. Taking a look at the S&P and the futures.

Down just about 1% right now. The Nasdaq, the hardest hit, down about 1.3%. The Dow down over 0.5%. Looks like it would open up about 260 points lower. I'll take a look at some big-name stocks that are well off their 52-week high. Nvidia pulling back more than 30% from its 52-week high. AMD about 46%. Intel 50%. Broadcom pulling back about 35% as well. A number of chip names there.

All right, turning back to the broader markets, the S&P, it may be on pace to snap a five-quarter winning streak with its worst three-month stretch in more than two years. But one group of investors, they've been very busy buying that pullback. Our Pippa Stevens has more on that story. Pippa, good morning.

Good morning, Frank. So despite the tariff uncertainty that sent stocks lower, retail investors are buying the dip, betting that there will ultimately be a relatively benign resolution to the tariff showdown. Since the S&P's late February record high, retail investors have poured $32.9 billion into U.S. markets, according to new research from Vandatrack.

The firm said, quote, individual traders are putting real money to work, noting that the buying is within the 97th percentile of any 24 trading day stretch in the last decade.

Despite dropping consumer sentiment, Vandertrack also found that individual investors are putting more money into stocks rather than ETFs, again showing a glass-half-full view of the market since higher ETF purchases typically signals growing fear across market participants. Now, this is in stark contrast to other investors, with Bank of America's latest fund manager survey showing the largest drop in U.S. equity allocation ever, with cash levels also jumping.

Now in terms of what retail investors are buying, tech tops the list with $1.4 billion worth of Nvidia bought, followed by Tesla and Palantir. Amazon and AMD round out the top five with roughly $100 million allocated according to Vanda.

Finally, Ford becoming a top tactical pick for retail investors after Tesla to bet against the worst outcomes of auto tariffs with retail investors picking up about $57 million worth of the stock. So, Frank, a little bit of some alternative data here this morning. All right. Our Pippa Stevens live from the Nasdaq. Pippa, thank you very much.

All right, coming up here on Worldwide Exchange, a double dose of top ideas for Q2, including the MAG7. Remember, our next guest says is setting the stage for success. Also, if you haven't already, you should follow our podcast. If you miss Worldwide Exchange, check us out on Apple, Spotify, other podcast apps. Much more coming up right after this break. Stay with us.

We'll be right back.

For much more, let's bring in Keith Lerner, co-chief investment officer at Truist Wealth and Kevin Simpson, founder and CEO of Capital Wealth Planning. Gentlemen, good morning. Great to have you both here. Good morning. Keith, I'm going to start off with you. Just give me a sense. How do you see today shaping up? Obviously, we have, quote unquote, Liberation Day or the tariff day coming up on Wednesday. Do you believe all the tariffs and the risk there, is that priced into the market? Are we going to see more volatility going forward?

Well, I don't think it's all priced in. As you know, Frank, we downgraded equities back in February when there was a lot of complacency in the market. I think there's just a lot of uncertainty related not only to the tariffs, but really to the slowdown we're seeing in the economy. And also what you alluded to earlier in the show is on technology as well. So, listen, we could see a relief rally when we get the news. I just think that this market on a short term basis, as we look over the next couple of months,

just has some some work to do, some choppiness. And I think it's going to be it's going to be very difficult to get back to new highs anytime soon. So, Kevin, similar question for you. I'm looking at the VIX. The VIX at about 24. Is that a concerning level? Do you see, you know, the quote unquote fear engage moving higher from here? What is your expectation when it comes to volatility?

Well, volatility has been so muted, Frank, for seemingly years that when we see it jump up above 20, we start to get a little concerned. And I think that we should expect volatility to continue. I'm not expecting Wednesday to be a complete resolution where we've got a clear path to the future regarding tariffs.

To Keith's point, I think we can see volatility continue, maybe not just for the next few weeks, but possibly for the next few years. So as a covered call seller, seeing the VIX at 24 isn't a scary thing. It gives us something to do. But yes, as an investor, I would expect volatility to continue for the foreseeable future.

You know, also as an investor, when you hear the news from that Goldman note that they're seeing the number of Fed cuts this year, Kevin, I'm talking to you, by the way, see the number of Fed cuts go from two up to three this year. What does that tell you just about, you know, the sentiment when it comes to the markets right now? Also, the sentiment when it comes to the economy?

Yeah, I'm not sure I'm in that camp of three cuts, but I love how you've covered sentiment throughout the whole show, Frank, not just consumer sentiment, but also investor sentiment. And usually it's something that we could kind of shrug off a little bit, but I'm worried that there's a chance for a self-fulfilling prophecy, at least with the consumer sentiment, because even though the data remains good in retail sales, you made a point earlier that it's backward looking. If the U.S. consumer tightens their belt, they're concerned about tariffs.

They stop spending. That's a problem because it's going to be reflected in growth. It's going to be reflected in earnings. And that's the fear that I have. So I think we have to pay attention to sentiment a lot more than we perhaps have in the past. You know, Keith, coming back over to you, we had Bill Lee from Milken on earlier. He said...

I'm paraphrasing, by the way. That's exactly what he said. But he basically said those surveys don't always accurately portray the real situation right now. But I'm going back to that University of Michigan survey. Five-year outlook for inflation at 4.1 percent. Highest read since 1993. That's a long time ago. What does that say to you, not only about consumer sentiment, but also investor sentiment? Investors often look at these numbers as well.

Yeah, well, one caveat, Frank, is if you look below the surface in those sentiment surveys, they're somewhat polluted because there's a big difference between political affiliation on those surveys. So if you look at it, you're seeing Republicans expecting inflation to be almost like 1%, and you're seeing Democrats expect inflation to be almost 4% or 5%. Good point.

keep that in mind. But more importantly, if you look at the GDP estimates, something's changing right now. We're seeing GDP estimate cuts for the first time in several years. And at this point, S&P forward earning estimates continue to move higher. We think there's downside risk to those earnings moving forward because of that GDP slowdown and also because of profit margins dealing with tariffs as well. So again, with market valuation somewhat elevated and you have an

earnings now at risk. We just think that the upside is likely going to be capped. You know, one caveat, Frank, when you when you see 10 percent pullbacks a year later, you you have a positive skew. I just think the next few months is going to be somewhat more challenging. All right. So I think it's going to be more challenging. So let's get to your the top sector that you're looking at right now is utilities. That's kind of a safety trade. Is that a dividend play right now or do you actually think that the equities themselves are going to move higher in this environment?

It's a relative play, Frank. I think they're going to hold up better on a relative basis because of what you said there. They tend to be more stable, less economic sensitive. They're not being really impacted by the terrorists as much. They have a 3 percent dividend relative to about 1.4 for the S&P. And they're trading at about a 12 percent discount to the overall market overall.

while relative price trends are moving higher. So in an environment where this is going to be somewhat, you know, continued periods of choppiness, we think this is a good relative play, the least to hide out for the time being. All right, Kevin, I want to come over to your pick. It's Meta. So I know you're mainly focused on being a dividend investor. Obviously, Meta does have a dividend, a relatively small one. I do want to ask you, are you concerned that we're going to see an economic slowdown, that their primary business, which is ads, is going to slow down as well?

yeah absolutely frank i'm very concerned about that but our base of our portfolio like keith mentioned is in great dividend paying stocks low beta so when we see a stock like meta that's come down 23 from its mid-february highs to your point it pays a modest dividend just gave a fractional dividend bump recently they've been buying back shares for three years p e ratios are getting closer to 20. could this go down another 10 15 20 on ad revenue declines yeah i think it could

But as far as trying to time a stock like this, we're taking a position in it here, adding to it. And if it pulls back, nothing to be scared of. We'll add to it further. Chart looks a little ugly. So could you get it cheaper? Yes, perhaps. But if you get a surprise on Wednesday where the tariffs aren't that bad and you get a little bit of a relief rally, even if it's only temporary, you can look back on this opportunity and be happy that you at least put a little bit of money to work on the more speculative side. We think this is a nice name within the MAG7 space. All right.

Keith and Kevin, we're almost out of time. I want to ask you very quickly about bonds. Keith, you go first. We're seeing yields actually decline on concerns about economic growth. Are bonds attractive right here? And if so, what part? Yeah, bonds are acting like bonds again. So we do think within a portfolio context, they will act as a hedge for the stock market volatility. And we would keep it simple at high quality fixed income. Keep it simple. Kevin, same question for you. I know this is in your wheelhouse, but seeing any opportunities in bonds?

No, just buy dividend paying stocks. Who needs bonds? All right, there we go. We'll leave it there. Keith Lerner, Kevin Simpson, always a pleasure. Great to see you both. That's going to do it for Worldwide Exchange. You've been listening to CNBC's Worldwide Exchange. You can always catch us live weekdays at 5 a.m. Eastern.

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