Dow Heads for Worst April since 1932 4/22/25
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Welcome to the Halftime Report. I'm Scott Wapner front and center this hour. The rebound for stocks. The Dow, though, still pacing for its worst April since 32. We'll discuss and debate the road ahead for this market with the investment committee. Joining me for the hour today, Josh Brown, Stephanie Link, Rob Steech and Jim Labenthal show you the markets here. We do have.

very nice bounce and you do have the dollar up you have yields down so the backdrop feels better today not a lot of news other than that and I guess that's the kind of market that we're in right now where those items bonds and the dollar having as much to do with the market direction as anything Rob I guess I go to you first what stems the selling in this market what

gets us out of this current environment. JP Morgan's trading desk today says, "We feel a completed trade deal is the only catalyst that can break the market out to the upside, and we'd still need resilient macro data and solid earnings." And we really aren't able to check any of those boxes at the moment.

Not at the moment, but I do think that clarity is ultimately going to come. It's just a question of when. And right now we reside in that space in between where we're all kind of waiting for Godot to figure out what's going to happen.

On the one end, you also have kind of a cap, not only a technical cap at $5,500, but a valuation cap, right? There is not a lot of room from a valuation standpoint. Earnings and GDP growth are still expected to be higher than maybe many of us think they will be. And so,

Any positive news is going to be met with some resistance. On the lower side of things, we do know that we're going to get through this. I'm going to take it from you just for a second, because there's a story that's moving from Bloomberg. And if you see the movement in the market,

This could be exactly why you're seeing the direction that we're seeing at the very moment, that the Treasury Secretary, Scott Besson, this is according to Bloomberg, I'm reading directly from their report, has told a closed-door investor summit that the tariff standoff with China is unsustainable and that he expects the situation to de-escalate.

that negotiations haven't yet started but that a deal is possible. That is according to people who attended that session at an event hosted by JP Morgan in DC. It wasn't open to the public.

it wasn't open to the media. Those are the reports that are coming out. If that coincides with what you're seeing on the screen, then it would make some sense. We'll do our best, obviously, to get more out of that, to clarify it even further. But nonetheless, perhaps a little bit of optimism about de-escalating the situation with China.

would have a benefit on the market. I mean, that's one of the things you need. Yeah, and by the way, we're hanging on every headline for that. And what that does is when you have...

sentiment, you have positioning so washed out, you're going to get moves like we're getting today, right? And when we get a little overbought on the bounce and you kind of get some negativity, you're going to get the other. So I think we're caught in this highly volatile range for a bit until something comes along, brings us clarity, and breaks us out of this. And I think it'll happen. I really do think it'll happen. It's just a question of when. I go back, Steph, to this JP Morgan trading desk, right? We need a completed trade deal.

We need a resilient macro and we need solid earnings. The problem is the macro looks ugly. Everybody knows that. Latest evidence, Chicago Fed survey of economic conditions was terrible. Both services and manufacturing worked into that report. So you can't say, well, one's good, the other, they're both,

kind of ugly. Almost everybody at this point thinks that earnings estimates are too high. JP Morgan today says more downside. Strategists most striking, they say, is the decline in the percentage of companies beating estimates. Just 68% of those that have reported so far have exceeded. That's the lowest rate in some time. And calls for a more significant slowdown are seemingly everywhere. The latest from David Solomon, chairman and CEO of Goldman Sachs. Listen.

There's no question the trade policy that's been articulated, or the direction of travel, has changed the perspective on forward growth. So consensus on forward growth was 2%. It's obviously much lower now. All right, so that's Solomon, but you get the picture, right? Everything that you need, completed deals,

X you don't have that a resilient macro X you don't have that and earnings just aren't that great and they're not expected to be very much at all and that's why the S&P is down 10% on the year and that's why the Nasdaq hit down 18% yesterday right expectations are very very low sentiment is very negative yeah I'll give you some of the data that is really weak or weakening but as long as the labor market stays strong that's the thing that I'm watching if that starts to fall in a big way then

Katie, bar the door, because that is the most important piece, because that's the most important piece for the consumer. And not only but for the consumer, they need jobs. They have wage growth. Inflation is certainly coming down. So there are some positives out there in terms of earnings. Only 25 percent of the companies in the S&P 500 have reported so far. It's way too early to call the game at this point in time. And I actually would say 68 percent.

beat rate is not so bad given what we're going through. And I will say, I will also say some things that we've learned today and we're going to get to earnings later, but

currency. The weak dollar is actually helping to offset some of the pressures and the commentary that we're hearing about tariffs and the tariff hit to earnings. So there are going to be a lot of puts and takes this earnings season. I think expectations are very, very low. So it's a low bar. But I think

but I think they will be better. I think margins are going to hang in. I mean, jeez, look at 3M and GE today and their margins. So you have to just take each day by day. It is very volatile. It's very challenging. We've all been doing this for 30 plus years. This is probably the hardest year ever.

But the sentiment is extremely negative, and it won't take much for this market to bounce like we're seeing this afternoon. Yann Hatzias, by the way, follows up Solomon. And just before we came on the air today, Josh cuts his GDP forecast for this year to 0.5 for the obvious reasons, tariffs, tighter financial conditions, policy uncertainty. But what do you make of what you've heard already on the desk and then what the street

is making the focus of its commentary today. - Stephanie and I agree that sentiment is extremely washed out, and it's so washed out that these 800-point intraday DAO rallies are exactly what you should expect in that environment. The problem is the presence of washed-out sentiment alone doesn't really give you a longer-term respite from the things that everyone is worried about. So we have these bear market rallies. They're fast.

They're sharp, they're furious. You see people covering short positions. You see people...

chasing after stocks because they think maybe they missed the bottom. They don't, historically at least, and maybe this time will be different, they don't often lead to a sustainable bottom while we're still talking about washed out sentiment. Like it has to get to the point where we don't even bother talking about sentiment because it just becomes a given that everybody's bearish.

I would love to tell you that I think we're there, but I just don't. As to what Rob was saying, I want to take his metaphor of waiting for Godot one step further. A lot of people are unaware of the provenance of that idea. Waiting for Godot is a play by Samuel Beckett, and it has no point. It's what they coined at the time the term theater of the absurd. There is no resolution.

It's two characters basically talking themselves in circles for three acts and it never goes anywhere. Spoiler alert: Godot never shows up.

at the end of the play. And I think that that's what's starting to set in here, which is that we might get resolution with one country, but continue to battle with rhetoric another country. And this just might be like the permanent condition of the rest of the year. That's a worst case scenario. I'm not rooting for it. I certainly am not expecting it, but that's what's starting to set in here. It's like, oh,

Oh, wait a minute. The negotiations are the point, not the resolution. So Godot might not come. As far as Jan Hatzias, I could have told you he was about to cut his estimate because he put out a piece of research on April 6th where he quantifies the effect of uncertainty on hiring

on business investment, on consumer spending. It's a really good report. You should try to get your hands on it. There are real numbers here. He's talking about a $25,000 to $30,000 per month drag on hiring every month for the rest of this year. He's talking about consumer spending, the wealth effect,

going from positive to negative, shifting that from a quarter point boost to GDP last year to a quarter point drag. These are really big numbers in dollar terms. He's talking about a 45% probability of a decline in capex this year. There are real impacts that transcend whether or not sentiment is washed out when you consider the gravity of what those numbers mean

And that's why I think this is not an environment where you want to go chasing bear market rallies. Yeah, that's really what I think many people think this is, right? It's the bear market rally. You look at the S&P, like two thirds of the S&P constituents are down well more than 20 percent. So, you know, it.

Walks like a duck. It talks like a duck. It's a duck. Right. Totally agree. I mean, what do I do? You know, we've long said when the market steps point is partly this, I think markets already down a bunch. Is it?

I mean, unless I guess you think we are going into a recession, which I know you don't. Well, no, no, no, no, no. The odds of a recession have definitely increased. I don't want to come across as some permabull who's got who's been taking nitrous oxide here, Scott. You can't you know, Scott Besson said it correctly. The trade situation with China is unsustainable.

Unequivocally so. Trade flows have basically gone to zero with tariffs where they are. Any company, and there's a lot of them, that rely on China for raw materials is going to run out of raw materials. My point is, because the market's down a bunch, it's hard for some to get all bared up now. I would agree with that. Because of a kind of headline that I read you, and the market was already up a lot, obviously, but it took another leg up.

It doesn't take much. So people are afraid to get too negative now unless you have more conviction that you think a recession is more likely because then

You can easily make the argument that even at these levels, even with this pullback, that the market's still too high, that it's still overpriced, if you think we're going to have a recession. I might even make the argument, not strongly, but I might make it that you could get a short, shallow recession and with the trade issues at least partially resolved, go higher from here to year end.

I think there's a blend between what I'm saying and what Josh just said. Let me start by saying this is, in my opinion, all about the trade war. That's entirely it. And we see it in today's move higher on Scott Besson comments. To Josh's well-made points that the negotiations may well be what the whole point of this is,

I think I agree, but I would also point out that the markets and the economy can adjust to that. Companies can adjust to a lower, albeit still high, but a lower level of uncertainty. I think they did that in the first Trump administration. When you look at how bad 2018 was, 2019 surged higher. But the sine qua non here is you have to get some resolution. You got bailed out by the Fed. Okay, well, that's fine, Josh. I'm going to continue on with what I'm saying here is that the markets and...

It could. I mean, the Fed thinks it's restrictive. I don't think we're going to disagree on that. And the Fed funds futures market, whether it's right or wrong, does expect more cuts. Let me ask you this question, since you're talking about that. What happens just for argument's sake and for the sake of this conversation? What happens if the Fed cuts rates tomorrow? I hate that idea. No, I'm just saying. I hate that. What happens if that happens? The market goes down. I'll tell you what happens. The market initially goes up for about 10 minutes.

For about 10 minutes, it goes up. And then after that, it says, what the heck does the Fed know that we don't know? The last thing you want right now is an emergency rate cut. No, I'm not. I don't mean like tomorrow in an emergency. I mean, figuratively, if let's just say there was a meeting tomorrow and the Fed cut now, they cut now.

is my point. Not like thinking, you know what I'm saying? So I think I said this last week, is that what we really want, or at least I want, is no surprises from the Fed. Right now, the Fed is expected to cut in the meeting after this. OK, if they were to cut in a, if it were a regular scheduled meeting tomorrow and they cut, what the market would say is it goes back to Powell's comments last week where he said, we're going to look if both gold

are in tension, we're going to look at how far we are from each of them and the path to restore them. And if they were to cut at the next meeting, that would be the Fed's way of saying we're worried about growth. You're making it too complicated. If the Fed cuts...

If the Fed cuts, is that just unequivocally positive for the market? That's all I want to know. It would be negative because they shouldn't. They should not cut. When you look at the hard data, it's totally disconnected from the soft data. And it's going to stay disconnected from the soft data because of the pull forward in demand, everybody trying to beat the tariffs on spend. So you're going to have this hard data lag that is not going to permit the Fed to cut.

period. So if they cut, it'd be idiotic. And I think that would be viewed as negative. They don't need to be restrictive, though. They can be neutral. They don't need to be restrictive. And they think they are restrictive. And they are, actually. And by the way, we are making progress on inflation. It's not to their target, but I'm not saying they're going to go 100 basis points. 25 basis points would be an indication that they're not ignoring it. Steph, they said they're watching the jobs number. They're not ignoring it.

They're not. They're watching jobs. That's the only thing that they're looking at. May 2nd. They're not looking at inflation and the progress on inflation. They're not looking at productivity, and that's actually been better than expected. But which jobs, Steph? Which jobs? Hard data.

I am the one that has been a bull on the labor market. That's the first thing that I said. My point is, inflation has come down substantially. Growth has come down substantially. We grew 3.4% in GDP last year. We're going to grow 1% this year. And the mood's bad, so we cut. If they were to cut 25 basis points, that's not 100%.

It's not emergency. It's them saying, you know what? We kind of see what's going on. Will they do it? Will they do it? I don't think that they will do it. So you agree with the president that they should do a preemptive cut because that's what you're arguing for. I don't know if it's a preemptive cut. That's what you just made the argument for. Because I'm saying that inflation has come down. You just made that case. You just didn't use the word. Inflation has come down and growth has come down. The only thing that hasn't come down is the labor market. Yeah, but you're arguing for a cut.

I'm arguing in case the labor market does worse. It's not going to matter. Not in case. Not labor. It's on inflation. They have a dual mandate. Labor has been strong. I've been saying that for months and years now. It's the inflation thing that went from 9 percent to something like two and a half percent. You're making the argument, though, that you think the Fed should cut. I think they should. OK. Yes, I do. It's not going to matter if ships aren't flowing between America and China. Josh.

unemployment is a lagging indicator respectfully I agree with Stephanie here that is not the metric that should that should determine the entirety of what the Fed is dealing with right now the Fed is stayed at this moment not by the labor market but by the concern of reigniting

animal spirits at a time with high prices, high prices that are being caused artificially by trade wars. If I understand correctly the Fed's dilemma, I think that's where they are.

Absent this tariff stuff, if we were just looking at the data itself, Rob is right. The data is strong, but it's probably not a 4.5% Fed funds rate economy. So absent concerns about price spikes, this is not a 4.5% Fed funds rate environment. It just isn't. And what the Fed should be looking at is spreads blowing out.

not not last month's non-farm payrolls and by the way go back and look at two thousand seven the labor market was uh... the unemployment rate was under five percent the entire year and meanwhile the recession magically snuck up on everyone when when they went back and actually dated the start of the recession it was december of '07

I think it was pretty clear to all of us in August, in September, in October, there was absolutely no reason why the Fed's worried about inflation right now. Things are falling apart. So I don't think we need emergency rate cuts. Rob is right. The labor market data is strong. But Stephanie's right. There's a lot more happening beyond the labor market. And the uncertainty itself is what's going to underpin.

to undo that labor market strength the longer it persists. We should be getting easier. Now, Europe cut seven times. I'm not saying Europe is the paragon of central banking, okay? They're flawed too. But I don't know why we're sitting on our hands here when all of the sentiment and all of the trends are going in the wrong direction.

I agree with that, but the question was what would happen immediately if there was a cut. And I don't think there's going to be some ripper rally if that happens. I think it's implied that if the Fed cuts, it's automatically positive for stocks. I just want to know what you guys think. That's all. You suggest maybe for a second.

but not in the bigger picture. In the bigger picture, what really matters is the clarity on the tariffs and what ultimately happens when do we look through to the other side of this. So we could have a scenario, a very easy scenario to see where we get the hard data starting to roll over

you get the cuts at the right time, you have clarity on tariffs, and all of a sudden that was a speed bump and we're looking through it. So we had this deceleration and we're looking through it as transitional. That's a very possible outcome, which is why all of us stay invested the whole time, positive or negative. If you look at stocks that would be moving, for example, on a Besant headline like the one we got, let's see an intraday of Tesla, which I think is at the highs of the day.

because it's got all sorts of issues. The tariffs are certainly one of them. And the company reports earnings today after the bell, stocks up 6%. I think it's just a good place to look to see an immediate reaction for an individual name that I can't remember

To be honest, guys, another company or stock with this much noise around it, like this one, tariffs, brand damage, doge, sales declines, price declines, gross margins, all of the things that have been talked about are going to come to a head tonight.

Nobody owns this stock. I'm kind of surprised that maybe you wouldn't take a look at this in any sense. Let me just say this. Is it because of my political leanings or why do you say that? I just I don't know. I just have a feeling that you've maybe kicked the tires apart in the front on something like this. And it's down so substantially, down 50 percent, down 40 percent year to date.

I don't even know what P.E. it's trading at right now, but it's still expensive. We color within the lines, and everything else we own is properly valued in the MAG-7, which is a lot of it, but we're underweight the MAG-7 relative to the S&P. We're underweight the MAG-7, and we're underweight because of Tesla. Josh, you remember a stock earlier

a company that has this much hair on it going into an earnings report like this one with a market cap the size of this one, at least what it was, still is large, but not as large as it was.

So, historically, I have missed out on a huge run in Tesla because I never believed in it. I'm not in the cult and I was wrong. What I would tell you now, this is a company where we're being told, the shareholder base is being told, ignore the fundamentals of the business and focus on robots. Like, flat out, don't worry about how many car deliveries last month. That's not relevant to the story. 90% of Tesla's revenue comes from auto.

And we're being told the cyber taxi is going to be such a monumental growth driver and completely transform the transportation grid of the United States and elsewhere, that that is the reason to bet on the stock in the intermediate term. And then in the long term, everyone's going to have a Tesla robot in their place of work or in their home or both.

and that's the reason to buy the stock. And those things might actually be true. I mean, the CEO is one of the most innovative human beings who's ever lived. But that's not the type of investment that I typically make. So like if I'm being told, oh yeah, yeah, yeah, 90% of the business is cars, but don't worry about that. That's not what's exciting. Be excited for autonomous taxi, be excited for robots.

All right, I guess, but probably not with a stock that's 50% off its high and falling. So it's not for me, but there might be an opportunity here if people get too negative or if the auto sales picture from Europe and Asia is not as dire as the street thinks it is. The stock could probably bounce 20, 30 points. I wouldn't tell you it can't.

Throw up Apple too, guys, if you wouldn't mind intraday too. I feel like that looks to me like it's highs of the day also, just because of the China relevance that it has in all of this and maybe just the optimism that's trying to be reflected in names like that. Back at 200 bucks. And a really interesting report today from Eric Woodring. He's the top analyst over at Morgan Stanley who covers that stock. Has some positive survey data out today about upgrade cycle, which surprised many people.

He reiterates his overweight today because of that. $220 is the price target. Then you have the Wall Street Journal today talking about Buffett and timing his Apple sales just perfectly. Arguably, they say one of the most lucrative single stock investments of all time. They made, I don't know, a paper gain of $110 billion when they began selling it. I'll just give me a quick comment on that because you own Buffett.

Apple and Berkshire, right? Yeah. Well, and just remember, Scott, as you do, I was very small in Apple until about two weeks ago when the deluge happened, and then I picked up a meaningful amount of it. And what you didn't add to that list is the sentiment around this stock, which is to say retail investors love this stock. And Josh, Stephanie, Rob probably see this as well, that when you go and you trim Apple from a client's portfolio because you think it's too big, oh,

almost invariably you get a call from the client saying, why did you do that? Don't ever do that again. And this may sound like something ephemeral, but it actually matters. There is a strong amount of sentiment. It may not be as big as, say, Tesla, and Josh was just discussing that a minute ago, but it is vibrant. And if you add to that some fundamental drivers like you were just talking about, Scott, I think it's easy for the stock to go 10%, 15%, 20% higher from here. All right, let's take a quick break. We come back. Stephanie Link mentioned 3M, albeit briefly, best

performing stock in the Dow today. And we have ownership in multiple places here on the desk. So we'll trade that. FTC's taking aim at Uber. Obviously got to get Josh's take there as well. And later, we have a halftime exclusive interview coming up with the Disney chairman, James Gorman. Excited about that one. We're back in two.

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Let's get to 3M now, because it's a big mover today. It is the best performing stock in the Dow. Rob, you own it. Stephanie Link owns it. You love it.

And you love, you bought this for a turnaround. I bought it in March when they announced that Bill Brown would start the company. He didn't start until May. It started working as it should because the company is really focused on changing everything at the company and he's doing a really good job. So they beat on revenues. It was organic growth was very mixed. Electronics were good. Autos, not so much. Kind of expected, but it was the operating margin story that was so exciting.

170 basis points better than expected, up 220 basis points year over year. I think they're in the second or third inning in terms of margin expansion. They also, by the way, increased their buyback.

And they did talk about currency helping them to offset tariffs. Tariffs are going to hurt them 20 to 40 cents. So now we know at least we can model it, but you have the weak dollar that's also helping. So I think the story is really exciting. It remains one of my largest industrials. All right. Wanted to get, Josh, your take on the FTC suing Uber, alleging that they charged for Uber One without consent. What's your take on this name right here?

it's not true um i'm a i'm a member i could cancel right now if i want to so i think uh i i think look the the they want they want big headlines they want to score wins and i understand it and if what they were alleging was true and then the product changed that's possible um but i i i don't think that the marketing practices here were deceptive my opinion and i don't think it's hard to cancel

So I'm not 100% sure where this goes or how it ends or if it's a settlement. But I think Uber looks like they're going to stand their ground and they think they have a winning case. This is just like when you own large cap tech, this comes with the territory. There's litigation, there's lawsuits, there's regulatory actions. You just have to prepare for that mentally and not react to every headline. Okay.

Let's talk UnitedHealth. Steph, you first. Sure. Just because the stock has gotten hammered in a really short period of time. It's surprised a lot of people. Downgraded today at HSBC. That's a new 52-week low for UNH.

You trimmed it a while ago, but still, what do you do now? Well, so I bought it in February when the DOJ coding issues were out there and the stock had fallen so substantially. It rallied 16% off those lows. That's why I trimmed a little bit. I didn't trim at all. I should have probably in retrospect. But actually, this was the first miss that this company has had in a decade.

That's to speak to its consistency, strong execution, strong management team. They're going to find a way to fix this. It's going to take time. A lot of it has to do with Medicare Advantage and utilization rates going up. That's because they price this stuff so high, and so people wanted to get their money's worth.

Good for the consumer for sure not good for the company that has to pay for that So this is still the number one managed care company in the industry with a very strong balance sheet with 10 billion in buybacks to come I think the medical loss ratio the margin story is at its worst at this point in time and that's what they guided to So I think from here, I think you can see an improvement in medical law the medical loss ratio margins and the story It's gonna take time though. Why no love for McDonald's on this desk Rob Jim

It was reiterated a top idea today at Wells. We can take a look at the stock. That's why I wanted to look at it today. 350 is the price target. They say trends are digested, shares are defensive, FX now is a plus, and sentiment's starting to improve. It's up 7% year to date in what's been a really tough take. Why no takers?

I'm not going to hate on it at all. It's on my best stocks list. And so I'll make this quick so Josh can come in. Look, it's more of a defensive name as far as I'm concerned. At this point in the market, and this goes back to what Steph was saying at the very beginning, at these levels, I want to be more aggressive with the things I own. But I don't have any hate for this stock. It's just defensive. You want to be more aggressive in what's been a very defensive market? Yes.

Yeah, again, and I'm going to quote Steph. She had the numbers. I think we're down 15% from the high of just two months ago, down 12% year-to-date. Yes, this is the time I want to be more aggressive. I don't think, and I understand people disagree with me, that I don't think this is the time to hunker down. Josh?

On February 25th, my birthday, I told you McDonald's got added to my best stocks in the market list. It's acted extraordinarily well since then. Another very similar name that's already broken out is Coca-Cola. This is a new all-time record high price.

The Wall Street Journal is talking about maybe Berkshire taking the whole thing private and buying the rest of it that they don't own. McDonald's is a similar category. I think when people talk about the end of American exceptionalism, they should pull up some stock charts because McDonald's is like one of America's greatest exports to the rest of the world in terms of financial success at least.

over the last 50 years and this stock is about to break out so it's been a strong stock all year um it is on my best stocks list i'm not in it i should have taken the trade i didn't uh hopefully some other people that were watching the show that that day did all right we hope

Let's get the news now with Silvana Henao. Hi, Silvana. Hey, Scott. Good afternoon. Defense Secretary Pete Hegseth says he didn't do anything wrong in the second signal chat involving military plans. In an interview on Fox News, Hegseth doubled down on his argument, saying that the information was informal and not classified. Earlier this week, sources told NBC News Hegseth had sent information ahead of the strikes in Yemen to a chat group that included his wife and brother.

The EPA has started to lay off its environmental justice staffers. It affects about 280 workers, and the agency said their work no longer aligns with the EPA's mission. According to the memo obtained by NBC News, the reduction in force will take effect on July 31st. The agency previously announced major rollbacks of environmental regulation, probationary worker cuts, and put other workers on administrative leave.

And the Washington Post is joining forces with OpenAI. The Post said today as part of the deal, it will be able to make summaries, quotes and links to its stories with ChatGPT. It is the latest major news organization to sign a deal with the AI giant following News Corp and CondeNASCA.

I'll send it back to you. All right, Silvana, thank you very much for that. Silvana, and now up next, that halftime exclusive we told you about, our Leslie Picker standing by with the Disney chairman, the former Morgan Stanley chairman and CEO, James Gorman. We get his take on everything going on right now next.

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All right, we are back. We'll send it to our Leslie Picker now at the General Atlantic Investor Summit with a CNBC exclusive interview. Leslie, take it away.

Thank you so much. I'm here with James Gorman, who is a recently added advisor to General Atlantic, the growth equity firm, and of course, chair of Disney as well. Thank you so much for taking the time today. Really appreciate it. Sure. Great to be here, Leslie. Great to be back with you. Been a long time. Likewise. It sure has. And we have so much to catch up on because a lot has changed since we have heard your perspective.

First of all, the market is jumping today because of some headlines from Bloomberg about Secretary Vesant discussing the situation with China being unsustainable as it pertains to this trade war. Do you agree with that? And do you think that the way things are going are unsustainable as it pertains to the economy?

Well, I think the tariff trade wars, if you will, have clearly been a shock. I mean, it's reflected in the US dollar, it's reflected in rates in the bond market, and it's reflected in the equities market. So I think the job of the Treasury Secretary, if you will, an additional title would be Chief Marketing Officer for USA.

And I didn't see his comments this morning. I don't know if they're in a public forum or not, but I think bringing some sense to investors of what is the end game plan here? Where are we actually heading with this and what do we expect the outcome to be? Because clearly tariffs have an inflationary aspect to it and that's going to affect how the Fed behaves going forward.

In the meantime, in your role as chair of Disney, a large multinational company, as well as General Atlantic, you see all the portfolio companies and kind of how they're weathering all of this uncertainty.

Do you foresee a recession here, some sort of growth slowdown? What do you think the overall impact of this tariff uncertainty will be on these multinational companies and entities? It's really hard to predict. I heard this morning that two of my former peers, bank CEOs,

One projected rates will be, Treasuries will be around 6% a year from now, the other 3.5%. It's too unpredictable, I think. And that's what you look at the VIX. That's why the VIX is where it is. We're in a world of a lot of unknowns. So predicting whether we end up in a recession or not, it's too early to say that. But certain things are true.

One is tariffs are generally inflationary. Two is the Fed is reluctant to cut rates in times of inflation when they have a dual mandate of employment and inflation to control.

And three is it's very difficult to know the impact on global trade and what that does to the global economy during this very dramatic shift in tariffs. It's certainly more likely recessionary bent than not, but it's too early to say. More recessionary than not. And that range that you gave of the interest rates was notable as well. Speaking of rates, one...

area that's kind of caused some volatility lately is this concern that the Fed's independence could be in question, that its credibility could be in question. Is that something that you're concerned about? This isn't the first time an administration in this country has disagreed with the Fed. The Fed's job, it's still mandated, as I said before, is unemployment and inflation. It's

It's not to manage the economy. They remain independent and the role of the Fed chair is an independent role. And I expect that will continue. They'll always be, not in every administration, not in every time, but certainly in times of high economic volatility and uncertainty, there will be different points of view. But the Fed has proven itself to be very patient, absent clear evidence of what to do.

As chair of Disney, Succession has been in the spotlight here and you were brought on because of your experience with Succession at Morgan Stanley, which is largely seen as a pretty painless, bloodless Succession, which can be pretty rare on Wall Street and Morgan Stanley in particular. How is that Succession search going and do you think that you'll be able to meet or even exceed the timeline in the sense of pulling it forward, the timeline for finding a new CEO?

Well, given you raised Morgan Stanley first, I'll just say how thrilled I am at the job Ted Picker's doing. Working with his great presidents, Dan Simkowitz and Andy Saperstein, they had an extraordinary first quarter and the company's in great shape, which is...

One of the reasons I can go off and do the other things I want to do. For Disney, I can't really talk about the succession. We've said publicly we'll have an answer by early 2026. That will happen. The exact date is obviously for the board to figure out working with

with Bob Iger. But we have a clear process. I think we're in good shape in that process. And, you know, we've laid out a plan and we'll stick to the plan. It's not very complicated. I was just actually, ironically, at Disney Parks yesterday. It was extremely crowded, lots of people.

Do you see any effects from kind of the geopolitical situation playing out on consumer spending and people's appetites for travel, particularly as it pertains to maybe some international tourists? Something I anecdotally didn't hear much of was foreign languages at the parks. Well, first, I have to, I was there two weeks ago. You're in Orlando? Yes. What was your favorite ride? My favorite was

favorite was Guardians of the Galaxy. It was a new one and really enjoyed that. And your favorite park? Epcot. Okay. Epcot was my favorite. I loved them all, but I loved Animal Kingdom and I loved the Avatar ride. You know, I think, listen, Disney is, parks are

I think about 40% of the company now in revenues. They're very global. There are several parks outside the US and in greater China and in Japan and Paris. So it's a very global company and maybe, it's too early to say, maybe the flow of people visiting parks changes as to which parks they go to. Obviously can't talk about the present environment because Disney's going to announce its earnings in a couple of weeks.

I've been a fan and involved with consuming Disney products for almost all of my life, going back to when I was a kid in Melbourne, Australia. And that will endure, whatever this economic cycle is. The diversification of its footprint, absolutely. James Gorman, thank you so much for taking the time today to speak with us. Thanks for having us. Really good to catch up with you and get your perspective. Scott, I'll send it back to you. All right, Leslie, thanks so much for that, Leslie Picker. Coming up, we get the committee's take on the defense space today. Those stocks...

are certainly worth trading. They are down in a very big tape. Back after this.

Let's talk defense stocks because Northrop today did not have a good earnings report or forecast. And a lot of stocks in that universe today are down. That decline right there for Northrop, 13 and a little more than 13 and a third percent. The worst day since October 08. You added this stock to your best stocks in the market list, Josh, around April 11th, 11 or so days ago.

What do you do with something like it now if it's on the list and then does what it did? Well, we'll have to see how it closes Friday. But if I had to guess, it is not going to be able to reclaim the 200-day. And it's going to be a stock that will no longer be a best stock in the market. They had a really big miss, but it's attributable to the stealth bomber, one specific product. But just to go through the actual numbers, revenue was $9.47 billion and the street wanted $9.95 billion.

Earnings were $332. The street was looking for $626. That's a massive, massive earnings miss. So it's very highly doubtful that this stock will be able to stay on. But effectively, this is happening in the context of other names in the group holding up a little bit better.

But then RTX, which most people remember as Raytheon, also said there would be a bigger than expected tariff hit. So it's a tough name. I'm not personally in the stock. And I don't think by the close of this week, it'll still be on my list. Yeah, sympathy declines for sure. Lockheed, we showed you that it would not be a pretty picture either. Lockheed's up.

Lockheed's up. Oh, my bad. Why is Lockheed up then? Lockheed's up because F-35s are in the picture for India to acquire them as Vice President Vance is over there right now. That's why it's up. That's the story on Lockheed Martin exports. Oh, I got you. I'm glad you corrected me on that. Thank you, Jim. Sustained. Santoli's next. He's back. We get his midday word next.

All right. We are back. Our senior markets commentator, Mike Santoli, here at the desk with us for his midday word. You went away. You came back. Markets are pretty much still in this thing. No, still grappling with the same snarl of issues and also in the similar mode. And it's kind of telling the way the market did react to all the headlines you're talking about. One, you know, the immediate conclusion is either what Treasury Secretary Besant

said or is said to have said is either a statement of the obvious or a reiteration of what the administration's tariff dove would have otherwise said. So it was empty, but then why is the market up 2.7%?

because everyone knows there's upside risk if you get de-escalation and the market really was leaning hard to the downside or got oversold again. And so when you're in this mode, I think the market can trade very fast and loose in this range. I mean, 4850 up to 5500, it's almost just kind of a random number generator and you have to be careful not to just press your bets on one side or the other. And look, there's a reality to the fact that if things do ease up a little bit on the tariff front,

and the hard data holds up, then you're not in a terrible place. And we still, meanwhile, after this rally, have another, you know, 40 S&P points to go to get to Thursday's high, right? Just for perspective in terms of where this has taken us. Yeah, all right. We'll see what happens over this final stretch, too. And you'll be with me on closing bell. So I'll look forward to that. Mike Santoli, final trades after this break. Final trades. Josh Brown, what do you got? Staying long 3M. M.V.

Salesforce. Intuitive Surgical. All right. See you on Closing Bell. The exchange is now. 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.

as an expression of an opinion. Such opinions are based upon information the Halftime Report participants consider reliable, but neither CNBC nor its affiliates and or subsidiaries warrant its completeness or accuracy, and it should not be relied upon as such. To view the full Halftime Report disclaimer, please visit cnbc.com forward slash Halftime Report disclaimer.

As a business owner, you wear a lot of hats. One minute you're ordering today's inventory and the next you're planning tomorrow's expansion. It's complicated, but your business credit card should be simple. With the Signify Business Cash Card by Wells Fargo, you earn unlimited 2% cash rewards on purchases for your business with no caps or categories to track. Signify Business Cash, the deliberately simple business credit card. Learn more at wellsfargo.com slash signify. Terms apply.