Trading the Volatility 4/10/25
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Hello, I'm Ben Rizzuto, Wealth Strategist at Janus Henderson Investors. Is a brighter future possible? At Janus Henderson, we think it is. We've worked to help clients achieve superior financial outcomes and fulfill our purpose of investing in a brighter future together. We never forget that this means our thinking and our investments are helping to shape millions of futures. At Janus Henderson, we're committed to helping you invest in a brighter future. To learn more, go to JanusHenderson.com.

I'm Scott Wapner, and you're listening to CNBC's Halftime Report, the podcast, the most profitable hour of the trading day. We record this live weekdays at 12 Eastern. Listen in.

All right, Sarah, thank you very much. Welcome to the Halftime Report. I'm Scott Wapner, front and center this hour for right here at Post 9 at the New York Stock Exchange, the markets and what to do with stocks now following the president's pivot on tariffs. We'll ask the investment committee, of course, joining me for the hour today. Josh Brown, Stephanie Link, Bryn Talkington and Brenda Vangelo is back with us. You know, by now we are down sharply. We're at the lows of the day. I also want to let you know that there is an expected cabinet meeting at the White House tomorrow.

Could happen at any moment. And we are going to go there. We are told a White House official telling NBC News that Elon Musk is expected to attend that. So we will go to the White House when we do see the president convene his cabinet to hear what he has to say about where we are now. And that's what I want to talk to you about to start here, Josh, where we are now.

because the damage that the president and the administration have caused to all of this doesn't just reverse in a day. And I think you're starting to see some of that. We still have tariffs, big ones on China. They're going to hurt growth. And that's why recession possibilities are still as elevated as they are.

What do you see? I think this is like the aftermath of yet another bear market bounce. And these things are mentally debilitating for investors precisely because of how quickly they slip away. Yesterday is the 10th best day of all time for the S&P 500. I heard that breathlessly reported everywhere. I saw the tables, all the graphs, all the charts, all

What didn't necessarily accompany that commentary was the context in which we've seen the other nine best days of all time. And I'll spoil it for you. Typically, they take place in years like 1933 and 2008 and 1931. And they happen when the market is in a 75% drawdown, a 48% in October 13th of 2008.

was the sixth best day ever. We had a huge 11.6% run. We were already down 35.9% from the high. Yesterday is peculiar in that it didn't take place in a statistical bear market down 20% or worse, a little bit shallower than that. But from my perspective,

close enough horseshoes and hand grenades the median stock was in its own bear market most sectors that matter with market cap on their own bear market so what happened yesterday while it was exhilarating and remarkable and a lot of fun and a lot of back slapping and a lot of a lot of rich kids who uh are really proud of themselves because they grew up insulated from the consequences of their own actions the end result today is oh wait a minute

Maybe we put the financial crisis on hold, but we still get to have a recession. So that's how I feel. And I don't want to get too negative. I'm not outshorting the market. I'm not a hedge fund. But I just want to give people a really accurate picture that this feels more to me like a classic bear market than it does a correction or a dip or a quote unquote healthy pullback. Yeah. So.

Steph, the VIX, which was at 50 yesterday and then got a lot of air taken out of that balloon, is on the rise again by a lot.

It's at 42 and a half. It underscores, you know, where we are. I thought Sarah's point was important too at the end of the prior hour. It's the dollar's worst day since 2022. The typical safe havens have not been such. Dollar bonds, munis, for example, which a lot of our viewers, I'm sure, are invested in. I'm wondering what you do in an environment, as I said, the damage that was caused here

the self-inflicted damage that was caused on these markets doesn't reverse in a day. It definitely does not. There are still a lot of skeptics out there. I didn't see anyone really reverse course that was negative, that went too positive. Numbers are coming down. Estimates are being reduced. They have been for a while. Target prices are getting cut. This kind of aft

the fact scott to be honest with you look it's not often and in fact in 33 years of doing this i've never been up nine and a half percent in a day we know the long-term total return in general for each year is 7.7 percent so yesterday was great um i'm not

Not in the recession camp. I'm just not. Not with the weekly jobless claims where they are, and you're at 220,000 on a three, six-month basis. Recession is 350 to 375. Inflation is coming down, not to the 2% we need it to, but it's coming down. CPI report was really good. And on any other day, at any other time, we'd be like, this is exactly what we've been waiting for. Maybe, just maybe, we start to make good progress on inflation, and then maybe you get the

Fed conversation back. I don't know. I don't think we're going to see 100 basis points of cuts, but maybe if we keep getting inflation down, that is a good sign. So I am just not in the camp of recession. I'm in the camp of slowdown. I'm in the camp of are we flat? Are we up 1%? Okay. Now I want to hear what companies have to say in terms of earnings.

numbers again have been reduced dramatically. The stocks are down dramatically. I want to see how they respond tomorrow, starting tomorrow. You can't expect... If they cut, how do the stocks react? That'll be very telling to me. I know, but you can't expect, can you? I should ask you rather than make a declarative statement. Can you really expect that these companies who have absolutely no visibility whatsoever are going to give any kind of guidance on any level that sounds good?

If they even are able to give guidance at all. No, but I got stocks down. They're at 25, 30 percent into that. I know, but if you're having a recession, they may not be down enough. But I'm not in that camp. I'm not in that camp. I just told you why. I'm just not. But I have stocks that are down a lot into the print. So the expectations are very, very low. And what is very clear is that Trump and Besant are watching the bond market. You lose the bond market, you're going to lose everything. And that's why they actually reversed course yesterday in my mind.

Oh, it's clear that, I mean, the bond market, you know, ruling the day. We learned the lesson of how powerful the bond market actually is yesterday. Some comments from Jamie Dimon talking about recession apparently swayed the president as well. But again, just look where we are at the screen. This is, you can't normalize in any way what's taking place. Yesterday's rebound wasn't normal. And this activity today, down as sharply as you are today,

uh... as i said you got a lot of problems to deal with that were self inflicted business has no confidence in their ability to see anything the fog may have dissipated just a little bit yesterday but still nasty out consumers

You think they're looking at their investment accounts, their 401ks, 529s, pension funds, and feeling great about going out and spending money now? Yeah. So, I mean, we all know we're a consumption economy. That's two-thirds of GDP. And so consumer sentiment, you can say it flips on a dime, which it can. But it definitely, especially with the unrest...

can become a self-fulfilling prophecy on top of CEO sentiment. And it's just hard to believe that we're on the precipice of earnings seasons.

And I think every company is going to come out like Delta and say, I don't know. I don't know guidance. How can you say that with a straight face as a CEO? I think the banks will be really interesting because they're at the epicenter because they have how much are they going to spend, M&A, et cetera. And so I think we're going to continue to be in this, I still think this 2018 environment on steroids.

and if you go back to twenty eighteen you had a drawdowns between eight and fifteen percent half of those drawdowns from between ten and fifteen percent i think what other you know now that you have to sprinkle into this is the fed is not going to come in there's no fed put here unless it's a something breaks but there's no fed book is they're not going to be contra to a strategy or tactics they're not aware of nobody you know that they you know people were speculating yesterday

uh... who just watch markets well you know like muhammad el-aryan for example join me on closing bell that in his mind the fed wasn't that far away from having to do something not whatever the some whatever the whole thing is right now that's not a bullish environment realizing the treasury market is is historically not bullish i would also point out that forty five basis points when in the ten-year is maniacal

Like, this is not, again, I want to say, oh, it's a pullback. Just pick your favorite names and load up. I think you should be a buyer if you have a really long-term time horizon. You should not expect the buys you make today will necessarily be rewarded a week from now. It's just a different environment. A 45 basis point swing in three days is the most that we've seen since 2022, which is another legit bear market. We

We've only seen that seven other times going back to the year 2000. And on every single instance, the S&P was down 25 percent or worse that we've seen that. So, again, that is a classic feature of when the S&P is down big. You get those huge swings in the 10 year. Now, I want to take a step further and say, OK, great. We have the carnage. Yeah.

I just don't know if it's gone on long enough to really register. You've got the market down 15% from highs, 18% for the NASDAQ. You've got stocks that are down 30, 40, 50% from their highs. So I would say, yeah, there's things to be concerned about. But you've got to look at opportunities for the long term. But here's the problem. So you buy a stock 35% in the hole, close.

come out with earnings, earnings not as bad as feared, maybe they even give guidance. 43% of companies in the S&P 500 give sequential guidance, so that would be great. And then the stock rallies by 10%, you say, "I made a great buy." And then a week later, it's rolling back over, lower lows. This is the main concern right now, I think, amongst Wall Street strategists. It's not, are these stocks compelling values? It's,

Is there a trap door in what looks like it should be the low? - Brenda. - I do think though, from our perspective, you have to look beyond what the next couple of months are gonna bring. - Totally agree. - And think about a year from now, is that gonna be a good entry point into that particular stock? And that's the tact that we have taken.

And we added to equity on Tuesday. It didn't feel good that day. The market was up a lot. We added when it was flat and then it went down. But we felt that at that moment, it made sense to add a little bit on an incremental basis. And I think from our perspective, again, being incremental about what you do is important in this kind of environment and kind of picking your spots. And as bad as it feels on those down days, I think it's worthwhile.

to go ahead and add a little bit. - I like that approach 'cause there's a lot of humility there. And you were saying like, I wanna own the stock at this price. I acknowledge the possibility it'll sell at a lower price in three weeks and I don't care. And if you end up being,

At the bottom, great. And your biggest regret is I should have bought more. Maybe that's kind of your Nike. Does your Nike move fall into that category of, you know, the stock's down a lot. It obviously has the China exposure. Everything, by the way, I mean, almost everything's down. Okay. We know that today. But

stuff with China exposures down a bunch. Starbucks, Apple's down a lot, Nike. I don't think you thought you were necessarily going to pick the bottom, but to... No, I bought it right around here. Yeah, but the points made here are apropos at least to that. Right, so if you look at a Nike, a Restoration Hardware...

I'm quite sure that the goals of the administration, and then ultimately we'll see what happens with Congress, are not to have Restoration Hardware, Nike, Lulu, Gap, those products built here. It doesn't make any sense. It's nonsensical.

And so I just said, hey, I think in six to seven months, the world can look different. And I think Nike trading at 2016 levels, which has 53% of its sales outside of the US, which actually we have to start looking at because what's going to happen here? I thought that was a good risk-reward trade. So once again, you've got to be able to step in. I do think on this recession camp,

Understand, there's a lot of smart people in the administration. The recession derails the whole thing, okay? It derails the whole thing because if you look at, there was a study done that says if there's a 2% decline in yields, and let's say we only get the decline in yields 'cause we're in this recession, when you refinance the debt, they save about like $580 billion. But guess what happens?

They go into a massive fiscal deficit of about $1.5 trillion in a recession. And so the recession camp does not work for this administration. I'm not so sure about that. I frankly am not so sure about that.

And I think they've intimated the fact that if you got a recession out of the policies they think are needed now and are important for the long term, you can live with it. I don't believe that. I don't believe that. Play that through. How does that help mainstream? Didn't Howard Lutnick, the Commerce Secretary, when asked that question a few weeks ago, said it'd be worth it? It'd be worth it? That's bluster. I don't care what it is. I don't think he really thinks that. It's not for me to decide whether it's bluster or not. He said it. And you talk about a detox and a little disturbance and all.

all those things that you've heard from the administration. Respectfully, he's a billionaire. His lifestyle won't change whatsoever, whether there's a recession or not, whether it's a deep recession or not. Literally nothing about Ludnick or his family's lives will change. And it's very nice to see that in front of a camera. But I think when Donald Trump spent yesterday, number one, listening to Jamie Dimon on television, effectively do a podcast for one, and tell him, yes, you're probably right about trade, but...

but this is risking a recession. - And then how does the recession help the middle class? How does the recession help good? - It decimates middle class. And then he sits with Gretchen Whitmer, who is, the way to think about her is she's from Michigan,

Her big constituency is Detroit. Effectively, she's the mayor of Radiator Springs. And the car people are in her ear for the last three weeks. What the hell is he doing? And then right after that, he has lunch with Charles Schwab, who effectively is the advocate for the mainstream American investor. Large spoken term. Not one of these people are giving Donald Trump the impression, yeah, it's worth risking a recession.

to get your way with China. Nobody is saying that. So I do not agree that they are willing to risk a recession. I get that they're willing to say that they are. But then you have to go into Steph's camp of like these stocks are down. So I am in Steph's camp. I think where Steph and I disagree is just timing. Timing. Absolutely. 100% agree. I'm with you on the timing. It's so hard to time because how do you know, especially in this environment where the headline changes

And it's impossible to buy in this situation. You feel horrible. But that's usually the time when it's the right time to be adding to. You're not going to wait until you have another 10 percent rally. Who the heck was buying yesterday up 9 percent?

That's crazy. Well, people were buying yesterday. They were short covering, too. And I think that gets to the heart of the behavioral part of this business, how hard it is. Which is why we do tactical and a rules-based play, because I'm not good enough to resist. I see NVIDIA up 16%, and I'm like, oh, the crisis is over. I can't wait to buy.

I don't allow myself to do that because I've been doing this for almost 30 years. Tom Lee says that yesterday confirmed, at least in his mind, and he's been wrong and he's been really contrite and apologetic when he has been wrong. He says the Trump put was confirmed and that now because of that you have the potential to morph into a V-shaped recovery. Those are Tom Lee's words.

has upgraded U.S. and EU equities to overweight. For now, the Trump put reduces U.S. recession risks. Truist, potential for some more upside, given how stretched the markets had become to the downside. Morgan Stanley, they say this reduces the immediate downside risk. It does, in their words, prolong the uncertainty, though, and that the economy's still living on the edge. Watch the 10-year. Watch oil, right? Oil is saying, uh-oh,

you know, demand's going to get crushed because you're back down a lot today in oil, which has already been at a four-year low. I don't know, you know, what you guys do with all of that and the advice that you give to people and the...

Things you do yourselves in this market in times like this. I don't see a lot of people coming on today and saying, you know what, I'm buying a lot because I believe more in yesterday than today. Steph's already been putting so much money to work recently. She might not have any cash left to put to work. That's right. But I mean, if you look at if you go back to 2018 with all the volatility, you're down four.

And in 2019, you're up 30. And so it's like if we have a version of 2018, at the end of the day, you were down four through all of that volatility. And it was a wonderful time. You could have gotten Nvidia there because something happened with Ethereum, went from like staking to point of stake. I don't remember. There were so many great opportunities to dollar cost average into that. And if you were already fully invested, just to sit still. Where are the biggest opportunities? That's a great example from 2018. There's a crypto crash.

and they crushed Nvidia. Where are those opportunities today? I was thinking oil, energy. Those are probably the worst stocks in the last couple of weeks. But what do you guys think? Why wouldn't you go to Mag7? Just go right back to Mag7? I don't hate that. I bought Amazon. I started adding Meta back.

again recently because it's down 33%. It's trading at 19 times earnings. Okay, so let's haircut the earnings. Is it at 21 times earnings for a 20% grower with 40% operating margins and a 3.3 billion people user base? So maybe not the biggest opportunity because it hasn't gotten killed the most, but one of the better opportunities because... It has a solid business case. Period. It's not trying to import phones from China. I'll see your mega cap

and I'll raise you the semis, which have gotten obliterated, right? I mean, it's not just Nvidia, and it's not just Broadcom down 26%. It's AMD down 48. These are all from the highs, 52-week highs. Skyworks down 50, Corvo 52, Marvell 52, NXP 37, Micron 50. Those stocks weren't working before Liberation. Right, but part of the belief I heard from people was first in, first out.

maybe as it pertains to Microsoft. - Got dumped so bad that now they can come out on the other side of that better. - I do think during earnings season though, and we heard this from Andy Jassy this morning, he's not planning to stop spending on building out AI infrastructure. So I think we will potentially hear that from several companies.

And that could be supportive for this group, especially for an Nvidia that's now cheap relative to its growth rate. So I do think there are some opportunities presenting themselves. What do we do? What do we do with travel and airlines? These stocks are down an average of 30 to 50 percent. You can't even make money in airlines, even in good times. No way. So skip that. What do you do with the travel bookers? What do you do with Airbnb? What do you do with the hotel chains?

I mean, these stocks are the most, I'm looking for the most damage. You see United and Delta today and American Airlines, 12%, 11%, 13% respectively down. That's the consumer market.

in my opinion. Well, they were also up 12% yesterday, Scott. Yeah, I know. But before that, they've been getting killed. It was a relief. It was a momentary relief rally. But it's also that those airlines are also global economic slowdown, U.S. economic slowdown. We overspent on traveling for years after COVID. And so I feel like you do have a mean reversion trade with those airlines, which I always felt were more rentable.

than investable. And they've done very good if you've rented them in the right periods of time. But I do think it's more of a gauge on an economic slowdown and also this narrative, which I know there's some data points about foreigners are not going to travel to the U.S. It's like in real life,

We love European people and they love Americans, the individual people. It's at the government level, at the White House and that where you're seeing farms being burned. I don't know. I would only take issue with that based on only anecdotal stuff from things that I've heard directly from some of the people on this program who travel in

stay in hotels that are popular with international travel travelers and you have the managers telling them directly we're seeing far few visitors now from Europe or a person who manages a restaurant in New York City where you get a ton of international clientele at the higher end saying you know we're slower we're slower than we normally are so I think what I

you might not expect could actually come to fruition. Only adding and accentuating the fact that, you know, consumers are going to be skittish. And they were already skittish by sentiment

by virtue of where sentiment has been recently. The argument was, well, soft data doesn't necessarily bleed into hard data. We'll believe it when we see it. Okay, you take the stock market down 20% on the NASDAQ and you do what you're doing in the market now and you think that boosts consumer confidence, really? It's a negative wealth shock.

By the way, the Dow right now is down 1,900 points. Yeah. 4.7%. The S&P is down 5.75%.

It's a give back of 313 points. Now, after yesterday's historic move, you looked at the numbers this week and they were so skewed green that you're like, OK, this maybe is something to build on. Technicians looked at the market, said, you know what, I think there's some more room to go.

Given what happened yesterday and then if you cancel out part of that with today's move, for example, the S&P week to date is only up 1.3%. The Russell's negative by 1%. The Dow's almost flat. And the Nasdaq is only, only for the week. I know it's only, what is it, Thursday? Up 2.4%. So you've erased a lot of what you got yesterday when it felt so euphoric.

and so good, like we were back. People patting each other on the back in D.C., but here we are. Because you still have 10% universal tariffs, which is going to slow down growth 1.5%. I am not in the camp that the tariffs are going to lead to inflation. I think actually you could see deflation, and I also think productivity actually will also help, but that's going to help the inflation story in general and the Fed.

right so i mean to me two thousand point decline on the dow sorry yeah no i mean look i mean we're going to be volatile for a while because we don't have answers on china 125 percent tariffs on china like we don't even know how that's going to resolve itself 145 you downplayed it sorry 145 145 but you get my point like that's the big elephant in the room we got to fix that well that's not and we have 90 days that's not just an elephant that's like a herd of elephants in the room scott but that's

But that's the point. That's the reason why the market's not up again today, because the realization that we're not out of the woods and we still have 10 percent universal tariffs to deal with as well. So, yes, this 90 day end right now, like pause is good, but there's still a lot of questions to be answered. And that's why we have to get through that 90 days, China and earnings. And that's why the market's all over the place. One of the things I came on on Tuesday and

And one of the points that I was trying to bring out is like, we really haven't gone through an earnings season with a massive number of CEOs pulling guidance for the next quarter of the full year.

That's like my concern. Now, we actually saw something interesting. Delta pulled guidance the next day after I said it. Sort of Walmart. Both of those stocks traded up. Right. So I don't really know that that's definitely a negative catalyst, but it's something. And if you're expecting to hear guidance from the Fortune 500 and you don't get it or you get...

all right, here's our base case, here's our worst case. Like, I don't know what that does to, I don't know what that does to the mentality of the investor who's looking to buy dips. It's like, well, if this guy has no idea what's gonna happen this year, why would I place my next buy order thinking that I do? - But if you think about the cap light companies, like a Google, a Meta,

Apple, definitely not. Why would they pull guidance? Why would Nvidia pull guidance, right? - Great question. They're advertising businesses. - Right? They've been exempt from the export controls. There may be a deal between the US and China on one of the H numbers to let them come in. And so I do think there's companies that will be very strong, will have strong guidance,

I promise you, like Instagram, Facebook, those things are so addictive. People are going to continue to advertise on those. And so I think that's where you pick your spots. And everyone was so negative on the big tech stocks. I think that's going to be a place that you have cheap stocks that are growing and that are cap-like companies that I think people will look to. Like to Steph's point on Amedda, it looks pretty good here. So calls on it because it's on a premium. Christina Partsenevelos, I think she's at the NASDAQ. Speaking of, hi.

I mean, you're right there and you have a front row seat to this reversal today, which is just downright ugly. I mean, the Nasdaq's down six and a half percent as we speak.

And you guys really just laid on all of the reasons spot on. I'm saying that this rally is masking underlying vulnerabilities. You know about the minimum 10% baseline, the 145% tariff on Chinese goods still in play. As you said, Scott, those herd of elephants are going to hit OEMs hard. Dell, HPE, think of those stocks. They're down over 7% right now. We're also facing semiconductor tariffs that

could still be coming in the next few months, even if they're on hold now. You have the AI diffusion export controls coming in mid-May. Remember Biden put those in place? That's a big impact for NVIDIA. They're going to create supply chain disruptions, lead to unpredictable business results, and then that's causing companies to rush their orders in, pulling forward, which would artificially inflate earnings this season. So this

uncertain environment is really making it tough for companies to plan ahead. You guys talked about it, and Scott, you questioned about guidance. Well, Jeffries points out this morning that management teams will probably guide with, quote, extra conservatism in the upcoming earnings season. And then you've got the, let's add another vulnerability, a 10-year treasury hitting a seven-year high yesterday, signaling higher debt for a lot of these companies, specifically the Nasdaq.

AI spending sustainability is another huge theme. Yes, Google's sticking with their $75 billion in 2025 CapEx commitment. Amazon CEO, I know you guys talked about it, Andy Jassy, told CNBC this morning they're not going to cut back on data center spending right now. But he did hint that AI won't be as expensive in the future. So what does that suggest? NVIDIA either needs to get cheaper or face viable alternatives. And then let's not

Don't forget Microsoft, they already started pulling back on some data center spending. We had that news yesterday specifically with Ohio. So you put all of those vulnerabilities together and we're looking at a potential growth slowdown and that is troubling for the big tech companies that have been bankrolling on AI's expansion guys.

Christina, thank you very much for that. Just helping us layer in what's really happening. Let's show the 10-year yield as well, because an intraday, if you could, please. Because as you see the 10-year yield elevate to the highs of the session, you're seeing stocks move to the lows of the session.

Same sort of move you had yesterday. The 10-year is still green. It's at

435. It may not be as high as I think the 451 it got to yesterday, but it is significantly higher than it was pre so-called Liberation Day. So that's worth keeping an eye on because that is not an optimal thing to have happen. I should also, you know, we should have this conversation of what really changed yesterday. They reduced

the numbers in terms of tariffs down to 10% from numbers that most people thought to begin with were absurd.

uh that were gained through a formula that nobody believed in or thought was valid okay seriously so we took numbers down to 10 from numbers that people thought were already ridiculous okay at the same time we raised the number to 145 on china and we're surprised that the market is reacting the way it is now

What do we do with that? I think we want to start thinking about the two things that matter most to stocks. Once all the Rose Garden meetings and all the rhetoric, once that becomes a little bit more background noise, I know it's been front and center, we're going to get back to the two things that matter most, which are earnings and interest rates. The good news on interest rates is that we put a floor in the trade war downturn in stocks when the Fed finally woke up.

It took them until Christmas Eve 2018. They were still saying insane things as late in the year as November, like we're nowhere near normal or nowhere near neutral on the Fed funds rate. And then Christmas Eve, they were like, just kidding. And then by January, they embarked on the first of three rate cuts. And the rest is history. 2019 was a wonderful year. Stocks have been very cheap going into it.

multiple expanded earnings grew, we all lived happily ever after. That is a possible outcome to all of this. And we should just remember, once the Fed does decide that it's needed, it does provide a huge tailwind to stocks. And that's why it's hard to get too negative here.

I wanted to go there. Let me do this real quick. Because when you say it's hard to get too negative from here, I think people learn their lesson, Steph, to some degree yesterday of trying to get too negative with a president who thinks he can flip the switch, so to speak, at a moment's notice. And

You know, the pivot that he did. What happens if President Trump comes out at some point today, tomorrow, who knows when, if it ever happens, and says, I just had a productive call with President Xi and we agreed to have negotiations and whatever, whatever and whatever. What does this market do?

- Explodes higher, explodes higher. You have to get resolution. - All it takes is that, you won't be able to buy it. - You need resolution. You need some sort of resolution and clarity with China so that at least we could figure out what the numbers are going to mean to companies and to earnings. Right now, we just don't have that at all. But I'm not good enough to time, Scott. I'm looking at what you guys tend to look at more than me.

The relative strength on the S&P 500 got to 23. Yeah. 23. That's the 12th lowest in 20 years. This guy's Mr. RSI over here. He is. I know.

- Preach. - The fear and greed index got to two. You know the last time it was a two? COVID. And the great financial crisis, it was 12. So to me, and the VIX, you mentioned the VIX, it had the third best week ever last week. So me, I'm looking at investing and I'm thinking long-term like Brenda, like all of us pretty much, right?

the bottom stop but when i see these best-in-class companies go on sale across every sector every sector right you can pick and choose i'm not going to catch the bottom i mean i feel horrible on a day like today cuz the stocks that were up a lot yesterday are now down a lot funny i have a lot of stocks so if i have a lot on my screen

The only thing I have green on my screen. Gold. No, well, I don't have gold like in front of me. By the way, gold's been down too. Speaking of no place to hide is the VIX. The VIX. Every single other stock on my screen is red. You don't even need an agreement with China. An announcement. I didn't even say an agreement. An announcement. I just said we had a productive call. Yeah. What does this market do? That's it. I'm going to meet with President Xi, who I love very much.

We have a great relationship. We have a great friendship. That's all you really need. And that's why it's really dangerous to be like, oh, the market's down 18%. Let me get super negative now. Right, right. Like, I get it. We could go lower. The best cars for the money are Hondas. Save big with 0% financing.

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And, you know, again, I'm the first to say, technically, this market's in a really bad place. But because it's so event-driven, and because it's not yet a full-blown cyclical recession, we're not there. And we could get there, but it's not guaranteed. So while it's event-driven, I think staying nimble

and accepting that there are going to be horrible days like this, incredible days like yesterday, you either want to be a day-to-day participant in that swing trade, or you want to think long term and just say, I don't know if this is the right time, but this is the right valuation. What about speaking of valuations of things like the financials, which are going to start reporting tomorrow, Bren? You own JP Morgan. It's down a bunch with everything else.

And you have to believe that the commentary is only going to be negative or cautious or uncertain. How could it be anything but? But what do we do with those stocks here? Do we buy those on this really tremendous weakness that we've seen of late? I mean, I think there are a ton of buying opportunities, to Stephanie's point, across all kinds of industries. And JP Morgan, in our view, is best in class financial. So, yes, you know, I think it is viable where it's at today. But I think one thing we're going to hear, and there was so much hope

hopefulness about the IPO market coming back, about M&A activity picking up. And that, unfortunately, in this current here and now is dead, that business. So that's not coming back. But I think we will also hear a little bit about the consumer, probably, from Jamie Dimon. And the message over the last many quarters has been the consumer is still pretty healthy, still have a lot of deposits. So that's a positive. But I do think that we're likely to hear about

uncertainty, especially when it comes to capital markets activity and lending and how that factors into their businesses. I think what will be also really interesting on the consumer is Brian Moynihan because whereas Jamie's Debbie Downer. He has a front row seat. Brian Moynihan last quarter was like the consumer spending quarter over quarter, year over year, the consumer is still very strong. And so I think Bank of America has a very important read

on if he's seen any pivots within that consumption and the consumer, because he goes into a lot of detail about how much they're spending. But that to me is going to be a really important earnings report. But I do want to go back to the White House administration. Besson has talked about it every time he can. This is about Main Street, the next four years, not Wall Street, a recession, tariffs.

All of those immediately, the lower income, like 38% of their salary is spent on goods. The upper 10%, it's like 10% on goods. They are not going to derail the base that got them elected. And that's where I think level ones need to prevail and say, hey, the recession camp, I think it's just too loud. It's too presumptive. I'm just going to go back to the, I think there's a disconnect that exists somewhere

in thinking the way you're talking now. That somehow this is to take care of Main Street and they don't care about Wall Street. The relationship, I don't know how many times we have to say this, don't believe me, go read the Wall Street Journal today. Or listen to people like Richard Clarida, the former Fed Vice Governor, Vice Chair, excuse me, who was with me yesterday on Closing Bell.

The relationship between the two have never been closer. Right. Have never been more intertwined. Confidence on Wall Street goes down to Main Street. You're going to sink these companies' share prices. We know that. I agree with you. I 100% agree. But Bryn, this might not have fully dawned on them what you and I already know. I hope so. There was a Navigator poll that came out Tuesday, coincided with the bond market blowing up that night. Navigator's very respected poll. And one of the findings was...

he is losing favor among every group obviously democrats of course but also republicans and independents specifically on the economy and in fact

The reading said this is the most unpopular President Trump has been just on the economy alone ever in the 10 years that they've been polling voters about him. When he was in office, when he was out of office, there is a sense that this is just not good for him. And if we know anything about him, it's that he doesn't do things in the end that are not good for him. So I think you are going to be vindicated. However,

to Scott's point, it may be a while before they figure out what we all already know. My point was I agree, and yesterday I talked about it, the economy and the real GDP and the stock market going back to 1990 have like a perfect correlation. The magnitude is different. So I'm just saying common sense wise, that would be insane

to cause a recession. It would be insane to have tariffs because that affects Main Street, not Wall Street. It would not be common sense. So my point is that I feel that everyone assuming a recession is going to happen would fly in the face of common sense economics 101. I got you. I got you. If I misunderstood you, that's my bad.

I'm glad you clarified that or at least helped me understand your point of view better. It's more on me than you, obviously. Also to say that the time horizon, if we do have a slowdown that ends in a mild recession, the time horizon has to be pretty quick to repair things ahead of the midterm elections. So that's one thing we haven't talked about. They floated a trial balloon via the Wall Street Journal yesterday. Something about like White House officials mulling agriculture bailout. Yeah. Okay.

So we did that already. It wasn't popular. It didn't help. Uh,

Thankfully, we didn't have a full-blown recession, '28. Did have a manufacturing recession. Definitely felt like a recession in rural communities. We sell $12.5 billion worth of agriculture to China each year. Most of that is soybeans, hyper-concentrated in the upper Midwest. They float that trial balloon via the WSJ, it's almost like, to their base, like, don't worry, we're still looking out for you, we're still taking care of you. I don't know that that helps the stock market at all.

And I don't think it helps the favorability numbers in the polls. Speaking of, you know, things that have, you know, but obviously been really volatile or places that you have not been able to hide that you once thought you could, like Muniz, which I already mentioned. You had some moves on Tuesday, which are still relevant to the conversation today. Normally, if someone comes and says, well, I did these moves on Tuesday and it's now Thursday and we've had...

These kind of markets, I'd be like, ah, that's so like last year. But you did sell Munis, which I'd like to hear more about, and the core aggregate Bond ETF, the AGG. You have some other stuff, but tell me about those first. Why you sold Munis rather than buy on what was the couple days ago, the worst day in some 31 years.

It was, but so munis are very specific and ours are California munis that we own for mostly California client base. But when we looked in aggregate at how they'd held up year to date, they had held up remarkably better versus the broader stock market. And so they had grown as a percentage of our clients' portfolios. And so when we looked at what could we transition to add a little bit more to our equity allocation, what we felt was a really interesting moment

With a long-term perspective, we trimmed some of the bond exposure, which had grown. It was bigger than we wanted it, bigger than our targets, and added a little bit to stocks. I can't tell you that that was going to be the bottom on Tuesday. No, we discussed that. It was an interesting time from our perspective for a long-term investor. But you bought both the S&P and the equal weight. We did. Correct? Just tell me more about the psychology behind that.

Yeah, so psychology behind that, we still think there's a case for broadening beyond the MAG7. But given how much the MAG7 has fallen and really, especially in the first quarter, was the worst performing part of the equity market, we do think there's opportunity there too. So we added to both.

a small addition to both. But as I said, from what we're looking at is if we do get another leg lower, we may add more to our equity exposure. But for now, we're happy to just add a little bit to both of those vehicles. Okay. I know one big question throughout all of this was where is the psyche of the retail investor? People who are not necessarily used to seeing this level

of volatility. Now, certainly if they were around in COVID, they remember it then. But you've also had new products introduced to retail, things like leveraged ETFs. They've been very popular. Kate Rooney is following that money for us with an update on what you might be hearing, what you might be seeing as you follow that money for us, because this is your space too.

Scott, yeah, you're absolutely right. There's been a lot of dip buying, but retail investors have also been pouring into leveraged ETFs, especially the ones that offer amplified exposure to some of their favorite tech stocks. So these funds, they magnify both the gains and then the losses. They are meant to be used for short-term strategies or hedging. They're traditionally used more by hedge funds. But yesterday, so two of the funds that were among the most traded names by retail investors, if you look at Fidelity's leaderboard at least,

It tends to be a barometer for some of the retail action. A fund that gives three times a return on both the up and downside of the Nasdaq 100, the TQQQ. It was the fourth most popular trade out there. And then an ETF that delivers twice the daily performance of a Bitcoin proxy. MicroStrategy, a very risky move there. At one point yesterday, they were up 30 and 50 percent respectively. Today, they're down, last I checked, around 20 percent each.

Varies there a little bit. Todd Stone over at Strategas telling me he saw an explosion and has seen an explosion in levered long volume over recent days. You can see the chart there on the right side. $45 billion worth of action amid some of the recent volatility. The boom had been slowly building last year when assets jumped higher.

51% in this space. That's according to Morningstar. Brian Armour over there telling me the allure of some of the big returns is a siren song, as he described it. Some investors cannot shut that out, despite the unlikelihood of long-term profits playing out with these games. And then Faxit analysts telling me that retail seems to be attracted to these exceptionally risky and very hard-to-time products, holding them well beyond a single day, and that is well beyond the period for which they were designed, Scott.

Okay. Kate, thank you very much. You got a thought on this? So there's two retail investors. The investor that's doing the leveraged inverse ETF stuff, first of all, it's a lot of Robinhood traders on the retail side, but I think most of the volume taking place in those products is hedge funds. I just...

It's hard for me to imagine $50 billion worth of volume in those products, and it's like people trading from their houses. I just don't believe it. But that's fine. Put that aside. If you really want to know what retail is doing, pay attention to Vanguard, and they're buying.

They're buying. J.P. Morgan confirmed it, and Bank of America confirmed it. Bank of America said last week every single one of its client types, including corporates, institutions, hedge funds, and what they call private client, but that's rich retail, all net buyers,

and Vanguard flows continued unabated. That's like, from my perspective, that's the mainstream retail investor. And they are taking advantage of this because to your point, they have muscle memory from COVID and they were rewarded really quickly for buying panicky markets then

And I think they're doing the same thing right now. But these things make it seem like options, zero-date options are bonds. These things are so risky. They're weapons of destruction. It's like 200,000 people in the country that are responsible for 90% of that volume. And it's a sideshow. It's not the main event. Let me take a quick break. We'll obviously keep following the market activity today. We're off the lows. But the S&P is still down about 4.75%. Mike Santoli is going to give us his perspective next.

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I'm going to welcome you back to Breaking News. I said stocks were off the lows. I told you the cabinet meeting with the president is about to begin any second. They're actually in the room sitting at the table, and we're just waiting for the audio. And here it is. We're talking about a lot of different things. Consumer prices have actually dropped. There's very little inflation. Everybody predicted a lot of inflation, very little inflation.

Energy costs are down. Interest rates are probably down. They scatter, but they're probably down. Prescription drug prices are even to down. We're doing very well. It's been amazing. We had a big day yesterday. There will always be transition difficulty, but we had a... In history, it was the biggest day in history.

the markets. So we're very, very happy with the way the country is running. We're trying to get the world to treat us fairly. This is something that should have been done 25 years ago, and it wasn't. Should have been done 40 years ago, and it wasn't. But no president was willing to take it on. But you had to. It's not sustainable. It wasn't sustainable. And as you know, without

a lot of money being added. This is a lot of money that we could add. The country is making approximately $2 billion a day. And when you think of it, that's we've never done that before. Never come close to it. And the number is probably $3.5 billion a day. And that makes us a very strong country.

But we have Scott here and Howard and some of the people that are working on deals. And the biggest problem they have is they don't have enough time in the day. Everybody wants to come and make a deal. And we're working with a lot of different countries. And it's all going to work out very well. I think it's going to work out really very well. But we're in good shape. There's no inflation. There's very little inflation. And I went four years without inflation. And I...

I took in hundreds of billions of dollars from China and others taxes in China. But we took in hundreds of billions of dollars a year from China and we had no inflation, essentially. So we think we're in very good shape. We think we're doing very well. Again, there'll be a transition cost and transition problems. But in the end, it's going to be it's going to be a beautiful thing. We're doing again what we should have done.

Many years ago, we let it get out of control and we allowed some countries to get very big and very rich at our expense. And I'm not going to, can't let that happen. It's not a sustainable formula. So I wanted to just thank everybody at the table and maybe I'll go around and ask some of you a little short couple of answers. Pete just got back from Panama.

And he's been all over the place. And you want to give us a little report on that and whatever else you might have to say. Everyone at this table is doing an incredible job, by the way, I have to say. Incredible. And the relationships are it's like they're friends. They're really the relationships are very strong, really good, really strong. And these meetings are very good. And I think, you know, having I don't believe there's any other president that allowed the press to come into a meeting.

meetings such as this. These are very sacred meetings. These are very private meetings, but we have nothing to hide. And I think it's good. I think it's a good, we want to be, a word you like to use, Jeff, is transparent. So we want to be transparent and we'll do that by starting with Pete. Go ahead, Pete. Yes, Mr. President, we just got back from Panama last night. We were at the Panama Canal with their SELFCOM commander ships, F-18s, troops. I

and signed a couple of historic deals, one which is with the Panama Canal Authority, a framework for U.S. vessels, first and free through the Panama Canal, and then also a memorandum of understanding. We'll take you out of the Cabinet meeting, obviously continue to monitor that, anything substantial regarding tariffs from here. Of course, we will bring that to you as we continue to watch the markets here.

Off the lows, as I said, S&P 500 still down by 4.3%. The president, in the commentary you just heard, quote, it's all going to work out very well, he said, but did add, and I think this is important to discuss here on the desk, there are going to be transition costs and transition problems, is what the president said. Direct quotes there. I guess my question to all of you is,

is to what degree are investors going to have to face the reality that the transition costs, what does that mean? Is that the trillions of dollars that has been wiped from the stock market? Are those part of the transition costs that investors are going to have to tolerate?

Transition problems. Is this part of transition problems to what the administration is trying to do? How do you guys think about that statement? Again, if you put it in total with what we've already heard over the last many weeks, detox, little disturbance. There's been some other commentary, too, but now transition costs and transition problems. So those continue to be vagaries. Those are not...

telling us what the tactics around the strategy is. I think until we, the collective, understand the strategy, I guess we're seeing the tactics, but the actual strategy, I think we're going to stay in this environment and you're going to still have weak CEO guidance, weak consumer confidence, because we're still unclear what does that actually mean.

And so what does detox mean? What does transition mean? I have no, I follow this stuff. I have zero idea. Does it mean $10 trillion wiped out from the stock market? Is that what that means? Yeah. And I think maybe, but I think it's more about, I would assume you're talking to Main Street. I assume you're talking to Main Street and CEOs. And I just think if you think about

the port of LA. Houston has a big port, the port of LA. They get like two-thirds of their goods from Asia, a lot from China. So what, is the port of LA going to start laying people off because nothing's coming in from China? That's Main Street. And so I just think this is so complicated. And this is where the markets, I think, are going to stay in this kind of Wednesday, Thursday environment until there's some clarity around the transition. That's the word, clarity. You just need some answers. That's it. Even if you just get incremental answers.

that would be good enough i think given where the sentiment is that one piece of good news though on the tax like the extending the tax card the democratic opposition is completely enfeebled almost to the point of parity if the republicans want their help to work on extending the tax cut some of this tariff madness might be like the first casualty of those negotiations they might they're they're not there's probably might be a path where the fed is coming in

as soon as this spring. And then this summer, all of a sudden there's a little bit of a break in the log jam with the trade stuff because they want to extend the tax cuts. Like it, it,

it doesn't have to go down into worst case scenario which too early finally rasta all agree yet this is as bad as it gets let me tell and so on but the consumer ultimately ends up doing but i think that's even going to be muddied up because then there's probably a lot of buying of large-ticket items right now ahead of what people are hearing are going to be higher price hold forward yeah pulling forward of demand that but i do think at the end of the day

given our economy is so reliant on consumption, if that starts to slow, then that is when the rubber really hits the road. Let me bring in Mike Santoli, our senior markets commentator, who's standing by for us, too. As you watch the way the markets have been trading today, are you watching the

the movement in the 10-year Treasury yield more than anything because as it goes up, stocks go down. Yeah, Scott, I mean, what I really, and it includes that, watching is signs of capital flight, portfolio stress, forced repositioning. That's what you care about.

It's not surprising after a 9.5% pop in one day, you're going to spill lower and try to test the range ruin yesterday in the S&P 500. The issue does come when you do have these signs, you know, dollar cracking, yields going up again, of, you know, in the effort to reduce the trade deficit, our financial surplus is going down. And

I know that doesn't happen in just that's not all the whole story of one day. But I think that's what spooks people and that's what gets the VIX above 50 again, which it takes a lot of anxiety to do after you've had a nine and a half percent pop in the index. So I'm watching all of that. The 10 year is absolutely part of that as well. You don't want to necessarily say we're out.

you know, some kind of maximum alert level on this stuff. But I do think this is the overhang here. If the stock market was just about reacting to what it's been doing, then yeah, those oversaw washout conditions in yesterday's massive 97% up volume day and a huge rally should insulate us from further new lows for this move for a little while. That's the kind of stuff where you say, okay, that gives credence to this 4800 level or so in the S&P 500. But it doesn't really

resolve or give people conviction about betting on an immediate upside. I don't think in a sustainable way. It's like the only place it looks to hide today, aside obviously from cash, and you're getting a better yield than maybe you thought you would, is gold is back green, but Bitcoin's down. The dollar's just getting hammered. I mean, the euro touched 112.

No, exactly. And, you know, Swiss franc is flying. So, I mean, I think that's what people look at and say, OK, this is something a little bigger than, you know, what are we going to have to revise U.S. GDP down to based on the frictional cost of the tariffs? And obviously the China piece of it is kind of massive. And now you have this environment where I think, you know, as we said yesterday afternoon,

What the president did by his turnabout was cut off maybe the extreme negative tail scenario. You just don't know how close to the tip it was cut off and what potential downside remains and whether the market's going to have to keep testing the administration and vice versa.

We don't know either, let's be honest, what sort of damage was caused within the turmoil within the bond market. Who got on the really wrong side of that?

You don't learn that in an hour or three or five or a couple of days. Sometimes it takes a while to see who had some maximum pain, and then you have to clean up the mess after the fact. Sure. Although a lot of times, you know, a body floating to the surface, it kind of does mark the end of it, or at least we can quantify or have a sense that maybe the damage has been done. And it doesn't always happen that way. Honestly, if it could just be a real, like, tidal turn,

in people's preferences of what they want to own and what they don't want to own globally, then maybe we're not necessarily going to have to find an absolute victim on all this stuff. Saying all this, within the equity market, you had this massive reset. I'm really eager to see how stocks react to what's going to probably be lousy earnings and outlooks, because that's going to give you much more of a hint of what we've discounted already with what we've done here with a

you know, near 20% move in a pretty short period of time. Good points. And thanks for being with us. And I'll see you a little bit in a little bit on Closing Bell. Mike Santoli. Let's wrap it up here on the desk. Let's do some final trades. You guys have final trades for viewers today? I mean, good luck with that. Bren, you're first. I'm going to do Vertex. First non-opioid pain medication. We think it's going to be a game changer. Okay.

Robinhood, sell them a 20, 45 calls, get three bucks. Okay, Steph. Palo Alto, cybersecurity on fire. Okay. Same sector, crowd strike, super defensive within tech. This is an area I don't think you have to worry about earnings outlooks. Okay, I'll see you in a couple hours. You've been listening to CNBC's Halftime Report, the podcast. You can always catch us live weekdays at 12 Eastern, only on CNBC.

Thank you.

Thank you.

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