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The U.S. and China are competing for global leadership. The country who wins will define the world we live in. U.S. international assistance is vital to our national security. It helps prevent terrorism and avoid costly wars. It fights diseases and saves lives. It helps keep America as the number one economy in the world.
U.S. international assistance protects our interests at home and abroad. If America doesn't lead, China will. A rich life isn't a straight line to a destination on the horizon. Sometimes it takes an unexpected turn with detours, new possibilities.
and even another passenger. We're three. And with 100 years of navigating ups and downs, you can count on Edward Jones to help guide you through it all. Because life is a winding path made rich by the people you walk it with. Let's find your rich together. Edward Jones, member SIPC. I'm Frank Holland, and you're listening to CNBC's Worldwide Exchange. Our show is live weekdays at 5 a.m. Eastern. Listen in.
China firing back, slapping the U.S. with more tariffs as the trade war between the world's two biggest economies, it escalates further. You can see futures are lower. Buckle up. It's Friday, April the 11th, 2025. And this is Worldwide Exchange right here on CNBC.
Good morning. Welcome to Worldwide Exchange. Thanks so much for being here with us. I am Frank Holland. We're going to take a quick look at U.S. stock futures right now. Take a look. You see we're in the red across the board right now. Looks like the Dow would open up more than 250 points lower. The S&P and the Nasdaq both down more than a half a percent. A really big change in futures from earlier, moving from positive to negative. Now we want to get to this morning's breaking news.
China upping the ante against President Trump's tariffs. It's a story we're going to be talking about all morning long, the implications for the U.S. equity markets, the bond markets, and even the commodity markets, things like gold. With that, we're going to go to our Eunice Yun live in Beijing. Eunice, good morning.
Hey, Frank. Well, China has decided to up the ante, raising the additional tariff to match President Trump's 145 percent tariff. So it's raising this additional tariff on all American goods that come here from 84 percent to 125 percent. Again, this would cover all American goods and it would start on April 12th. Now, the other interesting part of this announcement is this
sentence given that at the current tariff level there's no market acceptance of US imports if the US continues to impose tariffs on Chinese exports China will ignore it in other words they're saying that they don't believe that Chinese people will actually buy American goods because they would be so expensive with this additional tariffs so they said that if President Trump does continue to impose tariffs on
then China is just going to ignore that. In fact, the Commerce Ministry also echoed that, saying today that China will ignore President Trump's, quote, numbers game. Now, while all of this is going on, China's President Xi Jinping has been courting all different sorts of countries. Today, he met with the Spanish prime minister and he actually invited the EU through the Spanish prime minister to help
China resist what he described as a unilateral bullying. In addition to that, we've been hearing more reports the EU is going to be sending leaders here to plan a summit with Beijing potentially in July. Now, in addition to that, President Xi is also looking towards Southeast Asia. In fact, the government here announced that President Xi is going to visit Cambodia, Malaysia, as well as Vietnam. Frank?
So, Eunice, again, we're following this breaking news. China raising its tariffs on all U.S. goods up to 125 percent starting on April the 2nd for people that are just catching up. I want to ask you, so the Chinese government, they talked about American goods, but what about American financial products? Is there the potential for this to escalate, to go from a trade war to, for lack of a better way to say it, a financial war? Yesterday, we had the 30-year bond auction.
Demand was strong, but there were a lot of concerns that foreign buyers were pulled back. Also, some new information from Bank of America this morning that foreign investors, they dumped about $6.5 billion worth of U.S. equities in the five trading sessions ending on Wednesday.
Yeah, well, we haven't so far heard of the Chinese deciding to make any moves within the financial markets to potentially dump U.S. treasuries or do anything else like that. At the same time, there has been hints that China is willing to take some action against the services trade. So we're very closely watching that. And of course, that would include financial services. Yeah, absolutely. Our Eunice Yun live in Beijing. Eunice, please let us know if any other developments come up. Great reporting as always. Good to see you.
All right, we're going to turn to the markets right now. We're going to start off with the currency markets right now. We're seeing an immediate reaction in the dollar yuan. Take a look right now. We were talking about this earlier this week, that the dollar has raised to its highest level against the yuan since about 2007 earlier this week. Right now, we're taking a look. You can see the dollar weakening against the yuan following this news report.
We have Rebecca Patterson, formerly of Bridgewater, on our air yesterday saying generally the dollar strengthens during a trade war. So this move kind of counterintuitive for many investors. But again, the dollar weakening against the yuan against this news. Still dollar up about 50 or half a percent against the yuan this week. We also want to take a look at treasuries. The treasury market has become more and more important.
seen by many, even the president, as one reason to pause his tariffs on many other countries. Right now, taking a look, the benchmark sitting at 4.40. That has yielded. That yield has risen about 40 basis points over the last week. Again, we had an auction of the 30-year Treasury yesterday. Demand was said to be strong that the 30-year, the long bond,
Still pretty close to 5%. It almost touched 5% earlier right now at 4.85. And we want to take a look at the VIX again. The fear and anxiety gauge of Wall Street right now, you can see it's at 44. It peaked even higher yesterday. You see it up higher yesterday, but still elevated historically right now. The VIX sitting at 44. And we want to turn our attention back to U.S. stock futures in the red across the board. As we mentioned earlier, they were positive earlier in the morning. Now in the red across the board, it looks like the Dow would open up more than 200 points lower.
Let's now see how Europe is reacting to this news. Our Juliana Tattlebaum has the trade in London. Juliana, good morning.
Hey, Frank. Good morning. Well, it's been a similar story here to what you just described in U.S. Futures. We started out the session on the front foot after what's been an incredibly volatile week for European equities. But since that news from China came out about an hour ago, we have taken a turn for the worse. And now every region in Europe is trading lower. The Zetra DAX now off 1.7 percent, the CAC 40 off more than 1 percent, FTSE MIB off more than one and a half
percent and the FTSE 100 faring a little bit better, but still down as well. From a sector perspective, we are seeing investors flee the riskier part of equity markets. So selling those cyclical stocks, you've got industrials, travel and leisure financial services, the worst hit. Industrials down 2.7 percent. On the flip side, we are seeing more favor for those defensive parts of the market. Clearly, this is a risk off trade this morning. You've got utilities in the green still up half
Food and health care were trading higher, but even those two sectors are in the red now in the wake of this escalation from China for the week. Overall, I think we're just taking a second to look at where we've traveled for the week right now. The Zetra Dax down 2.2 percent, the CAC 40 down more than 3 percent. So we had a temporary
sigh of relief on the back of that major announcement from the president midweek, rolling back the tariffs for 90 days at least. But that relief has proven short-lived over here in Europe, Frank. Yeah, certainly, Juliana. You weren't a lot of green this week. It seems like you have the right color on today. Our Juliana Tattlebaum, live in London. Good to see you. All right, joining me now is Philip Strahl, Chief Investment Officer for the Americas at Morningstar Wealth. Phil, good morning. Good to see you.
Good morning, Frank. All right. So we mentioned a considerable change of sentiment. We're looking at the futures market. It was higher earlier now in the red. I want to ask you, what does this mean? One hundred and twenty five percent tariffs on U.S. goods after the U.S. bumped up its tariffs on Chinese goods yesterday. What does this all mean for the equity market as investors are really trying to digest this trade war?
Yeah, great question, Frank. And, you know, I think it's just a continuation of the escalation in the trade war between China and the U.S. I think we have seen that tit for tat behavior in recent days. And in some ways, it was not surprising that China was going to come back and basically match that the rate that the U.S. had put on or
moving in that same direction. Wait, Phil, let me interrupt you. Not surprising. I think it seems like investors are surprised. Aren't you a bit surprised? I mean, this continual, what seems like an escalation and a tit for tat, that's not surprising at all? I tell you,
The communication from Chinese officials was that they were not going to back down. We know that once that sort of one country increases tariffs, the other one will kind of retaliate. And I think we've seen that behavior. I think the good news in the announcement today was that they said that we're not going to continue that pattern. And if you look at the magnitude of where tariffs are now, both in terms of
what the U.S. has on in terms of tariffs as well as China, it comes close to sort of almost an embargo, you know, of both sides. And so, you know, hopefully, you know, that will make it more likely that, you know,
And ultimately, cooler heads will prevail. And perhaps there was going to be some negotiation down the line. All right. So your embargo comments, they really mirror some of the comments from our Jim Cramer as well. I want to ask you about the bond market. We've seen the bond market get very active, the so-called bond vigilantes. The president seems to be paying attention to that market. His cabinet seems to be paying attention to that market. As I mentioned earlier, bond yields have sharply moved higher over the last week. Are you expecting to see a reaction from the bond market? And then again, how does that impact the equity markets?
Look, it's been one of the areas of concern, as you mentioned, this week. I think the bond market not acting defensively in significant moves we've seen on Tuesday and Wednesday in particular. So I think it's going to be a focus. And my expectation would be that hopefully we've found some sort of equilibrium, but it's certainly been unsettling
investors, the fact that long-term Treasury bonds as well as the dollar hasn't acted more defensively in recent days here. All right, let me talk to you about a very influential part of the market. Of course, that's mega cap tech. Dan Eyes from Wedbush out with a note a short time ago saying, in part, it was a pretty lengthy note with the 145% tariffs now in place. The self-inflicted uncertainty from the China tariffs has turned the corporate capital expenditure world upside down.
Do you agree with that take? The idea of CapEx spending for mega cap tech pulling back, a lot of people think that could actually lead to a significant decline in the equities and unwind that whole trade. Do you agree with Dan Ives' take here?
I think it's early to tell. We have seen significant capex by many of the Mac 7 stocks, the AI trade that was really the focus over the past couple of years. So I think it's too early to tell, but I'm sympathetic to the view that if you look at the companies that have been doing the capex, whether it's the Amazons, the Apples, the Googles, these are cyclical businesses. And so if there are
is a downturn in the economy, I think you can see a knock-on effect. So it's, I think, too soon to tell, but it's certainly an area to watch. You know, Phil, it's hard to imagine. We haven't really talked about the president yet so far in this conversation. I want to play a soundbite from the president yesterday and get your take. I also want to hear what you think, how you think investors are going to digest this. There'll be a transition cost.
and transition problems. But in the end, it's going to be a beautiful thing. So, Phil, transition, that seems to be the word from the president right there. What's your take on that? How do you think the equity market and investors there digest this? Look,
So any sort of clarity that the president can provide in terms of what the end goal is and what that sort of transition looks like, I think will be welcome. And I think we've made a step in the right direction in terms of the president acknowledging the impact that the uncertainty had on financial markets earlier in the week. And there was a willingness to kind of pull back.
But it's not clear what that transition looks like and is 10% sort of the floor for all countries? Are there going to be more tariffs in 90 days on top of the 10%? And so I think if there's one lesson I think from recent days is that the financial markets need more clarity, need better forward guidance to be able to digest.
uh the the trade policy that uh has been the focus here in recent in recent weeks yeah we're seeing that that digestion uh happen in real time uh pulling back just a bit from their lows right now but still in the red the futures phillips trail great to see you thank you very much thanks frank
And this morning, we're tracking ETF flows, ETF net inflows topping $338 billion year to date. We're also tracking the moves above and below the 30-day moving averages for the popular index funds, the SPY and the QQQs. You can see here huge spikes earlier this week as investors look for ways to play the sell-off bond ETFs.
They saw net outflows this week, but two bond ETFs were among the highest inflows, both the IEF and the SPTI. They tracked bonds in the middle of the curve. Northern Trust also says it saw rising inflows in the QLV low volatility ETF.
You'll outperform on the downside. You'll perform competitively when markets are flat to sort of up small. And then on the upside, you're going to underperform a little bit. And I think about that as payment for that protection on the downside. Very similar to the way you might think of like the way a buffer ETF works, but without the complicated derivatives exposure.
The QLV underpoured the S&P on this very volatile week. But if you look at a longer horizon, it is lower year to date. But those losses, they're just about half of the S&P 500. We have a lot more to come here on Worldwide Exchange, including big banks kicking off a critical earnings season ahead. While the outlooks may be more important than the actual results, plus a real world look at President Trump's tariffs, their impact on global manufacturing and how one California company is trying to adapt. We have a very busy hour still ahead when Worldwide Exchange returns. Stay with us.
The U.S. and China are competing for global leadership. The country who wins will define the world we live in. U.S. international assistance is vital to our national security. It helps prevent terrorism and avoid costly wars. It fights diseases and saves lives. It helps keep America as the number one economy in the world. U.S. international assistance protects our interests at home and abroad. If America doesn't lead, China will.
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Welcome back to Worldwide Exchange. Earnings season, it really gets underway today with the numbers from the big banks. We're going to hear from J.P. Morgan, Morgan Stanley, Wells Fargo, BlackRock and BNY Mellon before the open with Goldman, B of A, Citi and several regional banks coming out next week. Investors, they actually may care more about the outlook than the real results with tariffs still in place that could lead to higher inflation and a higher risk of recession. With that, let's bring in Stephen Biggar, Director of Financial Institutions Research at Argus. Good morning. Good to see you as always.
Good morning, Frank. Well, let's get into it. The outlook. What are you expecting to hear from these banks? The risk of recession has been elevated quite a bit right now. Obviously, a lot of consumer confidence has been impacted. What are your expectations? What are we going to hear from these CEOs? Yeah, I think certainly the expectations are going to overshadow what is probably a decent first quarter results. So
Yeah, we've had some data out more recently from the Fed, for example, with weaker lending growth. In fact, we had a drawdown in revolving credit, which is hardly ever heard of. It just goes up month after month. So that's of concern. Credit quality also, I think we're looking at a softer environment moving through the year.
Banks were sort of benign with credit quality last quarter and likely to be more pressure on lost reserves going forward. Well, I was going to ask you that next question. What are you expecting to hear when it comes to reserves from these banks? Do you think they're going to increase their reserves? And then how do investors respond to that?
Yeah. So, you know, banks are typically pretty cautious. If you go back a quarter, they were mostly expecting unemployment to rise this year to kind of the five to five and a half percent on a on a worst case scenario. And that's up from four point two percent recently. So so that's that's a they do have a buffer in there. But we've seen delinquencies, the 60 to 90 day delinquency.
Passed due on credit cards is now at a 12-year high. So the consumer is more stressed, and that is likely to lead to expectations for higher loss provisions as the year goes by. Okay, let's talk about the recession risk and how that could potentially impact the financials.
So Goldman came out with its recession forecast at the beginning of the year. 15% is like the base case. They start the year with 15% no matter what. Just a few days ago, they upped it to 65%. That rang a lot of alarms. And then they rescinded it. And a lot of people read the sigh of relief. But they rescinded it back down to 45%. Let me ask you, what banks do you see as the most sensitive to a significant economic slowdown or possible recession? Are you expecting to hear any direct commentary about that in these calls coming up?
Oh, I think they'll talk much more liberally about recession this year. And, you know, Jamie Dimon, this goes back before the Wednesday pause on tariffs, was saying that a recession was much more likely this year. So, yeah, we'll see that in terms of banks. Really quick, Stephen, before we let you go, but with China announcing its retaliation today, do you think that changes the math for a lot of these bank CEOs? I mean, we just had significant news from China responding to the U.S. tariffs just a few minutes ago.
No, I think the tit for tat on tariffs is a worry. Import, export, lending, letters of credit, trade finance, I mean, that is all banks are in those areas of business. And that will be weaker opportunities for banks as the year goes by. So yeah, there's a lot of negatives for banks, no doubt, whether it's on credit quality, reduced loan growth, and
And we haven't talked about the capital markets environment, but, you know, clearly on hold until the environment improves. So there's, you know, triple negatives there. I would imagine M&A and IPO is going to be slowed down for quite a bit from here. Stephen Bigger, great to see you. Thank you very much. Thank you. Still on deck here at Worldwide Exchange, a new report on the rising cost of tariffs for automakers still facing that steep 25 percent tariff and what industry CEOs could say that could convince the president to ease. We're back right after this.
The U.S. and China are competing for global leadership. The country who wins will define the world we live in. U.S. international assistance is vital to our national security. It helps prevent terrorism and avoid costly wars. It fights diseases and saves lives. It helps keep America as the number one economy in the world. U.S. international assistance protects our interests at home and abroad. If America doesn't lead, China will.
McDonald's meets the Minecraft universe and Grimace, Birdie and Hamburglar just spawned in the overworld. Now for a limited time you can get one of six McDonald's collectibles when you order a Minecraft movie meal. With your choice of Big Mac or 10-piece McNuggets with spicy netherflame sauce.
Now available at McDonald's. And participating McDonald's for a limited time. A Minecraft movie only in theaters. It's hard to know what's really going to happen. You know, there's a lot of flux right now and...
You know, we're going to spend time on where we spent all our cycles trying to figure out how we have the right customer experience. So we know customers care a ton about selection. We're going to try and do everything we can to keep prices as low as possible for customers. And we're going to ship things as quickly as possible as we can for our customers. And that's what we're going to spend our time focused on.
That was Amazon CEO Andy Jassy on CNBC yesterday on the uncertain road ahead in the face of President Trump's new tariffs. Amazon is, of course, one of many companies navigating the changing trade landscape for multi-billion and multi-million dollar businesses. Our Courtney Reagan takes a closer look.
I'm at say Texas Los Angeles Denim and Knit Factory where it manufactures goods for brands like Levi and Ralph Lauren, J. Crew, Madewell, New Balance, Bass Pro Shops and many others. Currently 12% of its production is done here, 88% in Vietnam. The goal is for 20% of its production to happen here.
Founder and CEO Sanjeev Ball started building this Los Angeles facility during COVID. It took around three years and $25 million to get it up and running. This factory makes mostly higher price points, small batch or test runs of denim and knit garments. The average retail price consumers pay for a pair of jeans made at this facility is $250. The same pair made in Vietnam is $100.
State Texas starting hourly wage here in LA is $16.50. It's $1.50 in Vietnam. There are 250 workers here, 550 in Vietnam. It takes 20 minutes to make a pair of jeans here, 16 minutes in Vietnam because of piece rate incentives, which are banned in the US.
All in, it's three and a half times more expensive to make the same pair of denim in the U.S. compared to Vietnam at $70 versus $20. But Ball says the 80-20 hybrid production model brings the average cost down to 30 bucks.
He believes his model makes financial sense and can be scaled and replicated by others, but not at the April 2nd announced 46% tariff rate. What I was asking the administration for is create a preferential system where companies like us get incentivized with the preferential rate of tariff.
so probably it would just be that 18% and 10, whereas other companies would be at 18 plus 10 and maybe another 10 or 15, whatever the administration decides. Ball says he hasn't made any major changes to production or deals with clients since the April 2nd announcement. Just like everyone else, he's waiting to see what happens next. Frank.
All right, coming up here on Worldwide Exchange, China ups the ante in the global trade war. We're tracking the pre-market reaction when Worldwide Exchange returns. Stay with us. Breaking news this morning, China firing back at the White House in the trade war between the world's two biggest economies, announcing additional tariffs on U.S. goods. Futures are pointing to another volatile session. Welcome back to Worldwide Exchange. I'm Frank Holland. Coming up this half an hour, we have the latest on all this tariff turbulence that's hitting the markets, plus what it means for two key sectors that are caught in the middle.
We began with U.S. stock futures as the volatility over tariffs. It really just continues to dominate the market action. Take a look at futures. You can see they're in the red across the board. But again, off of their lows of earlier this morning when this news was first announced, right now it looks like the Dow would open up almost 150 points lower. Again, we're going to get back to that breaking news from this morning. China saying it will raise tariffs on all U.S. goods
from 84 percent up to 125 percent starting tomorrow adding it plans to just ignore any further increases announced by washington of course this move coming after the white house yesterday clarified that its actual tariff rate on u.s goods it's actually 145 that includes the 20 tariff
that Trump announced several weeks ago. More market reaction this morning, taking a look at small cap futures. Small cap futures pulling back just about a quarter of a percent, but remember yesterday they were down just about 4%, also lower in five of the last six trading sessions, so a lot of pressure on the small caps.
We also look at the VIX, the fear and anxiety gauge for Wall Street right now. Take a look. It's sitting at just about 44 right now. You're seeing some big spikes here, some big spikes over here easing back just a bit. We'll have to see how it responds to this breaking news this morning. We also want to look at bond yields this morning. We've seen bond yields steadily climb higher. Again, bond yields reportedly one of the factors that made the president pause his tariffs on most countries. Right now, the benchmark at four point four one. Yesterday, we had a 30 year bond auction.
Reportedly, pretty strong demand. E-some concerns about a pullback by foreign buyers. Again, we'll continue to watch the Treasury market throughout the morning. We also want to look at the currency market this morning. The yuan compared to the dollar. Take a look. The yuan actually gaining just a bit on the dollar. You're seeing a sharp decline in the dollar right here.
after that news was announced but the yuan pretty much at a low since 2007 against the dollar a lot of talk about uh devaluation the chinese yuan by the chinese government we also look at equities in china right now taking a look you can see they're higher across the board by the way ev stocks in china also higher but taking a look at the mchi up over two percent similar story for the k-web and the fxi right now chinese equities
moving higher and a look at oil. We've seen a lot of pressure on the oil market throughout this trade war, a lot of concerns about demand destruction. Right now, oil pulling back, WTI pulling back a quarter of a percent. Brent crude, similar story. Natural gas pulling back just about 1%. And we're getting some reaction from Beijing this morning. We're going to get to that right away. Our Eunice Yun standing by. Eunice.
Frank, you mentioned the retaliatory tariffs and how China was lifting them to match President Trump's 145% tariffs. What I thought was interesting was the commentary around it. And that is from the Commerce Ministry, them saying that given that at the current tariff level, there's no market acceptance of U.S. imports.
If the U.S. continues to impose tariffs on Chinese exports, China will ignore it. In fact, the Commerce Ministry said that China will ignore what it described as Trump's numbers game. In other words, they're saying that at these levels, that they didn't believe that the Chinese public would be interested in buying American goods. And so for that reason, China will not engage, they say, in this numbers game. What was also interesting is, as we've heard yesterday, and the Chinese government trying to help
Chinese exporters. In fact, we're starting to see some signs of help from the private sector. Alibaba supermarket chain Hema had said that it's opened the fast track path for export companies to look at the domestic market. Also, China's JD.com said it's spending 200 billion yuan to help exporters go domestic. And this is, of course, because of the trade war.
Another interesting development was an announcement by the Semiconductor Industry Association here in China, where they were trying to clarify exactly what a U.S. chip would be. And they're saying, Frank, that a U.S. chip, as long as it's processed somewhere else, even if it's designed in the U.S.,
the U.S. can still come into China without these additional tariffs, obviously showing that the Chinese companies still very much want those U.S. chips. Our Eunice Yun live in Beijing. Eunice, thank you very much. Good to see you. So this morning's tariff escalation adding to the already heightened uncertainty facing business leaders across all sectors. And of course, that includes autos. Joining me now with more is Karim Busta, partner and co-founder of DVX Ventures, also a former executive at Tesla and head of operations at Lyft. Karim, good morning. Thank you so much for joining us.
Good morning, Frank. Thanks for having me. So we got a lot to talk to you about. I want to start off with a headline that just crossed this morning. Tesla actually suspending new orders for its Model S and Model X in China. Those are vehicles that are made in the U.S. They have to be imported into China. What do you make of this tariff escalation? What does this mean for the EV maker? I think that's a great that's a really great question.
In general, we always see businesses being able to adapt to competition, to new constraints, to new problems that arise. The real issue for everybody is the uncertainty, the lack of clarity. That prevents manufacturers from planning, from anticipating, from preparing for these big shifts that are on their way.
So the real thing that automakers need is the clarity, predictability and time to be able to plan and invest and undertake these big initiatives that they need to take. Moreover, I think this whole discussion on tariffs and the uncertainty that we're seeing today is really hiding a bigger issue that the auto industry has been dealing with for many years.
And that is the increasing supply chain complexity that they've built in. They're dealing with very complex products, tens of thousands of parts, very complex supply chain, multiple suppliers that as a result, parts have to move back and forth between suppliers, between vendors, crossing borders multiple times. And that has made the supply chain very vulnerable. So as a result,
What we see is the need to simplify this supply chain, simplify the product, go back to more vertically integrated solutions. You know, Corinne, that's a great point, if you don't mind me interrupting you, but that's obviously a lot easier said than done when we're talking about supply chain.
decomplicating supply chains, making supply chains better. I want to go to one issue that a lot of people say Tesla's been facing, a lack of new models. And also a lot of investors were disappointed that they didn't come out with its lower cost model. That was kind of teased for a while by Elon Musk and other people watching the company. How does this terrify? How does this impact the company's ability to innovate and also really make good on its promise of precision manufacturing, new models, innovation and things like that?
I think when you look at what is needed to create these new models that Tesla needs to work on and to launch,
I don't think the short-term impact of tariffs really impact that. Planning for a new model, building the vision for it, working on the R&D, these are long-term projects that the company has been working on for a while. I think, again, going back to the uncertainty and the sudden shifts in tariffs and policies, that's really what is impacting.
So I think the long-term plans for Tesla that Elon and the team have been working on are not changing as a result of that. There's really two clear priorities, the lower-cost product and then the robot taxi product.
initiative that is going to launch in a few months. I want to talk to you about another business that you know very well. You're also formerly an executive at Lyft. These auto tariffs and the tariffs on auto parts and also just on commodities in general, how does that impact the rideshare business? Are we going to see rideshare inflation, do you think? Or are these companies, are they able to kind of eat some of this additional cost?
So a lot of the cost associated with running a rideshare operation is not necessarily on the acquisition of new vehicles, it's on the operation, day-to-day operation, maintenance, and more important, ensuring that all the rides are safe and deliver a great customer experience.
So on the short term, I don't see a major impact on the rideshare business of the increase of tariffs. But by that time, the companies will have time to adapt and adjust. But if car owners have to pay more for the cars, don't the rideshare companies have to pay the drivers more money? I mean, how do you make money as a rideshare driver unless you're getting more money from the company when your car costs more money? That is correct. But the...
The fleet that supports the rice is already in place. We're not seeing a huge increase in number of cars being acquired. And a lot of the cars that are used in Rideshare are actually cars that are in operation for many, many years. We see very few new cars being added to the Rideshare fleet every year. All right. Karim Busta. The impact is minimal for now. Cool.
Corinne Buster, great to see you. Thank you very much. We really appreciate your time. We've got to have you back. A lot more we could talk to you about. Have a great day. Thank you. Have a great day. Thanks for having me. All right. Coming up here on Worldwide Exchange, big tech potentially getting caught in the middle of a global trade war. The report it moves one U.S. ally is Wang. That's coming up next.
Welcome back to Worldwide Exchange. Take a look at futures right now. You can see we're well off of our lows of earlier right now. The Nasdaq actually just kind of peaking into positive territory. The Dow fractionally lower, the S&P essentially flat. Coming up here on the show, we have an exclusive with the CEO of Rhythm Pharma, what President Trump's tariffs could mean for his company's drugs that have fueled the stock's recent rise. We're going to be right back after this break and see Rhythm Pharmaceutical stock up more than 20% week to date. Stay with us.
Welcome back to Worldwide Exchange. President Trump has promised to roll out tariffs targeting specific sectors, and the pharmaceutical sector is expected to be one of the first. Here to discuss in a CNBC exclusive, Dr. David Meeker, CEO of Rhythm Pharma, which focuses on rare diseases. The stock's up more than 20 percent this week following positive late-stage trial results of its lead drug, MKIVRI, which treats a rare form of obesity. Dr. Meeker, it is great to see you. Thank you very much for joining us today.
Thank you, Frank. Let's start off with that late stage trial. Investors obviously responded very positively to it. As I want to ask you, when it comes to these rare diseases and genetic disorders that you really focus on, how big of a market is that here in the U.S. and globally?
Yeah, rare disease market. So we're approved now for three rare genetic causes, the largest of which is about 4,000 to 5,000 patients here in the United States. You can build a very good business around that. The recent results we released is for a slightly larger population, 5,000 to 10,000 patients who
have a different form. It's caused by injury to the hypothalamus. And those patients are largely diagnosed and treated by endocrinologists today. So the challenge for rare diseases often is that the numbers may be okay, but many or most of those patients are not diagnosed. And what a rare disease company does is works hard to help those patients get to a diagnosis.
All right. So, I mean, of course, the availability of that drug is very important for your patients. On a day like this, I do have to ask you quite a bit about tariffs. So China announcing it's escalating its tariffs against the U.S. The U.S. clarified its tariff stance against China yesterday. Both tariffs above 100 percent. What does that mean for your business? How much do you manufacture outside the U.S.? I see you get about 27 percent of your revenues outside the U.S., but how much manufacturing?
Yeah, so we are manufacturing is based in Europe. Again, a rare disease, our volumes are relatively low. So to be honest, the impact of tariffs to rhythm today will be relatively small. My much greater concern, I think, is for one, the sector as a whole, and it hits at multiple levels.
Pharmaceutical manufacturing is incredibly complex and highly regulated. So you don't easily just shift in addition to the capital expense of building a new plant. It's not as easy to just shift your process to a new location. So that's going to be one barrier to this. It takes about five years to build a new plant.
The vast majority of small biotechnology companies in the U.S., like Rhythm, don't own their own manufacturing. They work through contract manufacturers, and supply and capacity is an issue. And so how that all evolves, this may put additional pressure in terms of capacity and where people are looking to manufacture their products.
One last thing, Frank. Of course. On the generic side, if we think writ large, I mean, the branded products may have more margin to work with, but 90% of the pharmaceuticals, biopharmaceuticals that we consume in the U.S. are generic.
And those are working on much thinner margins. Okay, I want to go back to that. I was going to ask you about that. So according to the latest data from the FDA, it's actually about 91%. So you're pretty much spot on there. But you also say that the majority of the production of those generics, it comes from China. So how big of a risk is this trade war for the availability and the affordability of some of these generic drugs? Yeah, I think it's going to hit both of those.
And I mean, the China impact, one, is just to the extent that drugs are made there and being shipped to the US, of course, both availability and price is going to be an issue. But just in terms of the whole sector, I mean, China is investing heavily. And I think the US, which has had a major advantage in terms of our position, this biopharmaceutical industry is an incredible strategic asset. And China is rapidly advancing and caught up if they're not there already. So I think this is impacting multiple aspects of this industry.
you know, part of our world. I also want to ask you about what's going on here in the United States, HHS, specifically the FDA. I'm looking at a headline from the AP from yesterday. FDA reverses course on telework after layoffs and resignations threaten basic operations. How big of a deal is this? A couple thousand people laid off from the FDA when it comes to drug approvals, trials like the one that you just had, and also availability of the drugs that people need for rare diseases and other diseases.
Yeah, it's a huge deal. I mean, I'm a huge fan of the FDA. I mean, I think it's an incredibly hard job. They do it fantastic.
job doing what they do. And we're extremely lucky to have an agency like that, that gives us confidence that the drugs we take are safe and effective. And historically, they're under-resourced. So when you lay off a large number of people from an organization like that, you're going to put it under increased stress. And yes, I think it is going to put at risk some of the reviews and potentially slow down the rate at which
New medicines are being brought to patients. Now that said, I think they have good leadership and my hope is both for the FDA and the NIH that the leadership is left alone and allowed to manage their organizations.
uh dr david meeker great to see you thank you very much for sharing your time with us uh congrats on a big week in the uh late stage uh trial that you had that investors are really responding positively to your stock up more than 20 this week thanks again all right coming up here on worldwide exchange the top pick our next guest said
could provide some protection in the terror-fueled turbulence. We're going to reveal that name up more than 20% this year as well, coming up after this break. Also, if you haven't already, you should follow our podcast. If you miss Worldwide Exchange, check us out on Apple, Spotify, or other apps. We'll be right back after this.
Welcome back to Worldwide Exchange. We close on the 6 a.m. hour. Here's a check of a few big stories this morning. Boston Fed President Susan Collins says tariff driven inflation could force the central bank to delay rate cuts. Collins says keeping rates steady is the best approach for the time being.
The head of the EU's tech sovereignty says the bloc won't rip up its tech rules in a push to reach a trade deal with President Trump. The comments coming after the EU President Ursula von der Leyen told the Financial Times the EU could tax U.S. big tech if talks with President Trump on tariffs fail to reach an agreement.
Nintendo and Sony warning they're likely going to have to raise prices on game consoles like their Switch 2 and the PlayStation 5 as a result of tariffs. Under the best case scenario, American consumers, they could pay as much as 30 percent more for those devices. The information reports Alphabet's Google is laying off hundreds of employees. The reported job cuts coming in the company's devices unit, which works on Android software, Pixel phones and the Chrome browser.
The Wall Street Journal reports more large law firms are in talks with the White House to reach agreements to avoid restrictions in their business. The journal says that may include promising to do pro bono work that the president supports. And Jack Ma warning that A.I. shouldn't replace humans, but instead work to meet their every need. The Alibaba co-founder telling employees in a rare appearance it is the responsibility of the technologists to ensure that A.I. knows and supports humankind.
Turn our attention back to the markets. Investors digesting those fresh tariff moves out of China. Also preparing for big bank results. Taking a look. Actually, futures back positive right now. They were lower, now positive across the board right now. The Dow looks like it would open up just about 80 points higher. For much more on the trading day ahead, let's bring in Mark Smith, Senior Vice President at Wells Fargo Advisors. Mark, good morning. Good to see you.
Hey, good morning, Frank. All right, so Mark, I'm going to front on you a bit. Your word for us today was volatility. But after this announcement from China, they're upping their tariffs, even though they said they won't escalate anymore. Surprised to see futures actually in the green.
Yeah, Frank, again, the word volatility is because none of my clients know, and I think most of the folks you hear on this broadcast won't know what's going on next. I mean, you've got a 90-day pause. You've got many of the countries that the pause has affected saying that they may raise tariffs as talks break down. So it's really hard to invest in this market with this uncertainty. And so you're going to have volatility persist for the near future. So you say it's kind of hard to invest. We're going to get to your pick right now, which is actually at an all-time high. I'm going to let you say it.
Yeah, gold. You know, President Trump's been talking a lot about the golden age of America. I think he might be talking about buy GLD because I have clients that have positions in GLD that are up 40, 50 percent in the last three years. And it was started because of all the debt we got into the pandemic. But now it's rolling nicely into trade wars and our deficits. So, you know, gold is definitely a safe haven. It's been thought about a long
place to of a store of value but gold is out before the s p 500 on the year to date and the one year so i i suggest everyone uh at least have a position in ngld yeah you know it's a very interesting pick for today especially with the trade war escalating today at the chinese central bank has been one of the biggest buyers of gold do you think that escalates after this and is that something that you see pushing gold even higher are we starting to get to peak gold
Until this uncertainty stops, I would say that you have to have GLDS position because of all the uncertainty with the trade wars, for sure, Frank. And this is something that I don't think is going to stop anytime soon. I mean, you look at Costco, one of their number one selling products is gold, believe it or not, in the U.S. Yeah, I don't know where people store it, Mark.
I want to turn back to the equity markets. New information from Bank of America this morning. Foreign buyers, they sold $6.5 billion of U.S. equities in the five trading sessions ending on Wednesday. How do you see that impact in the market?
I don't see it being a great thing. And I'm also looking at, Frank, besides that, you have some major banks reporting earnings today. And I think they're going to have a great earnings report. The problem is it's going to be guidance. I think that the guidance coming out of the banks is going to be something they can't really predict. And it's not going to be something that investors are going to want to hear because of these tariffs. So I think that even though our banks are going to do pretty well, other banks are going to do pretty well, I think that going forward, investors are going to have a
kind of murky waters going forward with next quarter's earnings. All right. How concerned are you about a possible recession? We were talking about this earlier. Goldman starts the year 15%. That's the base case. They always start every year at 15% risk of recession. A couple of days ago, they jumped it up to 65%. A lot of people got very concerned. Then they said they rescinded it. A lot of people breathe a sigh of relief, but they rescinded it back to 45%. Still elevated just below what their base case would be. How concerned are you about that? Are there safe haven plays when it comes to the equity market?
I'm concerned about a recession, Frank, but I'm a lot less concerned than I was two days ago because now we have this 90-day pause. And so a lot of clients are feeling that if good negotiations can come out of it, we might be able to thwart a recession. But I do think there are some recession-free places. I think you have—
Obviously I mentioned gold I think the financials are kind of terror proof so I like large cap financials and I also like communication services because again another big part of the economy that has nothing to do with terrorists I think you can hide out until all this works out in those 3 sectors. I think a lot of people are looking for places to hide out right now Mark Smith it is always a pleasure to see you thank you very much. We're following some breaking news this morning just crossing the wires just a short time ago.
The EU's trade commissioners expected to head to Washington on Sunday for talks with the Trump administration. This just crossed the wire. The trade commission is going to go to Washington and, quote unquote, try to sign some deals. That's what a European Commission trade spokesperson is saying, that they're going to try to sign some deals here in the U.S. Again, the trade commissioner coming to the U.S. to D.C. on Sunday.
Right now, we also want to turn our attention to U.S. stock futures. We just mentioned earlier U.S. stock futures. They're positive now. They were lower earlier. Actually, they were higher earlier than they turned lower after that breaking news about China retaliating to U.S. tariffs, setting their tariff rates starting tomorrow at 125 percent. Right now, it looks like the Dow would open up about
100 points higher. We also want to take a look at the Treasury market. We've seen a lot of response in the Treasury market to some of this trade activity. The benchmark, the 10-year right now at 4.42. We also look at the currency market this morning. This is the U.S. dollar compared to the Chinese yuan.
You can see that the dollar is weakening a bit against the yuan following this news, pulling back a bit. And we want to take a look at Chinese equities, Chinese ETFs right now. We saw them moving higher earlier today. They moved even higher since we last checked the MCHI up over 3 percent. That does 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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