Navigating the Market Turbulence 4/9/25
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All right, Sarah, thank you very much. Welcome to the Halftime Report. I'm Scott Wapner. Front and center this hour, navigating this turbulence, another volatile day underway. We're debating all of it with the Investment Committee, as usual, joining us for the hour. Joe Terranova, Kerry Firestone, Bryn Talkington, and Steve Weiss. We will take you to the very latest market picture where it's, of course, already been another volatile session, not even three hours into it, but

I'll show you the picture here. The Dow's red, obviously, and you know what the other of the major averages have been doing. There's your Dow currently down 124. All right. Let's just discuss kind of where we are and what people are suggesting that

our viewers and investors at large are supposed to do. Piper Sandler today says now's the time to scale into equities. Wolf Research, we like the chances of a strong counter trend rally. The president himself posts twice this morning, be cool, everything's going to work out well. This is a great time to buy.

UBS says tariffs to eventually fall stocks to then rise into year end. So you take that into your own thoughts and you come out with what? Well, bear markets clearly have vicious counter-trend rallies. We know that. And I think clearly, and Stephen and I spoke about this before the show, I think clearly you could have that. I think

The indicators that you want to watch for, for that, I talked about this on Monday, continue to look at how semis are trading. They were first in. I expect them to be first out. Focus on some of the Magnificent Seven. Obviously, you have some strength today as it relates to Apple. And I do think as Treasury yields push higher, that really places the administration in a position of where the pressure is on them.

pressure is on them to deliver some comforting news to the market. And that could be the fuel for that counter trend rally. - All right, Weiss. Joe, it's a good point about yield. So the equity moves are obviously unsettling, okay? To everybody.

It's what's happening in the bond market that's unnerving. Unsettling stocks unnerving in the bond market because of what the implications of all of that could be. You have a 10-year yield that has been spiking to as high as 451 today. Just four days ago, it was at 386. 386 to 451 in a blink.

Everybody, everybody that I'm talking to from banking executive types to hedge fund managers that we all know are talking about that. Ed Yardeni, is something about to blow up in the credit markets, he asks. What do you think?

I think that's the biggest fear. Let's not forget you've got this what was a cottage industry, which is private credit that now has been one of the fastest growth cycles we've seen in any fund or strategy. And so who knows what happens then? So as the banks have faced this tighter regulation,

You've created this industry. So that industry has just grown at all costs. So what will happen? So my view is, and the view of the market right now is the credit market, is that you will see, you know, you will see a basic expansion, a wider gap in credit,

So the spreads are just going to, they haven't blown out. They've been relatively tame. But the spreads, I believe, have no choice but to widen. Let's also just talk about that for another minute because it's relevant. It's relevant to our viewers. More investors than ever before have had access to those more illiquid markets than ever.

private equity and the things that private equity invests in. Alternative investments, we've done segments on the program, we've gone to conferences where it is all the rage. People have had access to private credit and things like that and other products where they never have before. So the exposure to the quote-unquote regular person out there, the you, the me, the everybody, has had access to these markets. And now, if you have an unwind, it's not just equity pain,

It's other pain. Yeah, well, first of all, private credit is about a $2 trillion market. And a lot of private credit, a lot of private credit, not even remotely all of it, backs private equity. Okay, so if private credit is going to have a problem, private equity is going to have a problem first. That's my point. Let's be clear.

That's part of my point. Right. Is that investors have been had the ability to buy into this in a way that they never had before. So they're more exposed to it than they otherwise might be. I think the bigger area, though, private investment, private retail clients.

have had exposure to are levered ETFs. Two times Nvidia long short, two times Tesla. I think that's a much, much bigger risk. And going back to the treasury markets, we have to understand, because we don't know yet, why are yields rising? Is it this hedge fund basis trade? Sure. That's what everybody's obviously talking about. I don't want to go through the whole intricacies of that because...

The guys on the previous programs did a great job taking you through what that is and how an unwind because of tremendous leverage behind those trades could be causing or accentuating what is already a difficult situation

But credit credit spreads have not even remotely become unhinged. High yield has moved higher, but it's not even remotely at the stress levels that you would see in the equity VIX market with a VIX 50, et cetera. The credit markets are still trading very normal. So I don't I

I think that's a leap to say that there's this like impending private credit because it's a heterogeneous asset class. You can't just say private credit. They don't all trade the same. They're all incredibly different how their underwriting standards are. I think the bigger issue is in with

Treasuries in the long end, because the Besant and the whole administration's been going on and on about refinancing the debt. Well, that's certainly not happening. That is certainly not happening. And so that to me is where stuff starts to break a little bit and it goes against their narrative is no one's refinancing debt with a 10-year at 450. That's why everybody's talking about it. Because when you have the credit markets going against you,

then you raise the specter of things breaking and things becoming worse than they look now. And that's why everybody has their guard up. Not saying that things will, but that's where the guard is up, I can tell you, because that's what they're telling me. Right. Well, exactly. And if we think about this on a broader macro sense, if the government doesn't

come up with the revenue from taxes, whether it's corporations or individuals, because we're in a recession and people are earning less money and companies are earning less profit, then they cannot pay what we owe on the debt. And therefore, they have to start borrowing like crazy. And that's raising the interest rates. But if you think about what is really affecting the whole market, both sides of the debt and equity, it's that

companies aren't going to be earning the numbers that Wall Street is expecting them to earn. And if that's true, then the multiples that have come down, if you've gone from 22 to 18, well, maybe that 18 isn't really 18. Maybe the 18 is 20 times, you know, next 12 months because we've got to take all those numbers down. So there's worry all around. What you have to think is that there will be some breaking point at which we have a

reset on the tariffs and there's something about this that isn't going to turn into a catastrophe because we're already down, you know, 21%. Okay. So just, of course you have to assume that there are going to be deals. There's going to be some deals, but

you know, if the arsonist becomes the firefighter who saves the day and gets a win, but half the house is burned down in the process of this whole thing, what are you left with? You pick, investors are left to pick through the rubble. But you've already burned, in some sense, the trustworthiness and the credibility of the U.S. You've burned trillions in value from the markets. You've burned the corporate sector.

not to mention what you've done with consumer confidence and the like, and it's impossible to quantify that. Yeah, so let's look, you know, let's deal with the issue directly, which is that you've got China and you've got the U.S.,

So you have on one side complete totalitarianism as a rule, that it's either their way or the highway, a seemingly lack of interest in supporting the working people, oppressing them with policies, etc., and also cozying up to or has relationships with people

the biggest enemies of the of the u_s_ uh... being russian north korea and then you have president she and president she on the other side of that uh... i have a lot of the same characteristics so so you've got to moveable objects there and uh... and who's being sacrificed the u_s_ people right now so the question is let me just finish so the question is as i said last week

hearing what we've heard with the territory tariffs from China and from Europe, the U.S. has turned from hunter into prey because we've got an economy that we knew was on its last legs and the longest expansion ever, number one. We knew it was overvalued. So I see the market potentially going down to 4,000. If you do the 25-year average multiple of 16 times,

and you take just David Kostin's last numbers of 250, 3255, you're already at 4,500 or below. So why wouldn't you get there in this environment? It's not an accommodated, straight environment. Sure, it's not a foregone conclusion that you're going to have a recession. However...

But you only have to go in that direction. You're careening towards that. Exactly. As Jamie Dimon said on TV this morning, the likely outcome. And he's not the only one, obviously, who is suggestive of that. Right. Even though the Treasury Secretary himself says of the economy, I think we're in pretty good shape. And he talked about the jobs report. Let me just finish. OK, sorry. Look, jobs are a lagging indicator. And...

I haven't heard a CEO come on and say that things are great. OK, and the guidance that you're going to hear from earnings season is going to be far from great. We know that. And that's the companies that are even giving guidance. It's Ed Bastian at Delta this morning. It's Walmart. It's Bastian. And it's going to be a parade of others who have zero visibility. Because it's a confidence shock in the moment. That's what this is. This is more than anything else. It's not a supply chain shock because tariffs are inflationary. It's a shock.

to confidence. And what's happening is in the moment, consumer and corporate behavior is going to begin to pivot as if there is a recession. But that's my point about, you know, through all this, even if you get your deal, you've burned down half the house. Right. You've burned the corporate sector already. You've disenfranchised and alienated your traditional trading partners. So eventually what comes out of that, as we saw with deep seek in China, you made them stronger. It'd be

Give me two seconds. I have a news alert I have to get to Deirdre Bosa for. Dee, what do we know out in San Francisco?

Hey, Scott. So at Google's annual cloud event, Google CEO Sundar Pichai, just moments ago, he reiterated $75 billion in CapEx at the mega cap this year amid all of the looming tariff uncertainty. The real question I hear, though, is regarding 2026 spending. He didn't say anything about that. Another question, how much does $75 billion get you if input costs are rising like construction, chips, raw materials? It does underscore the importance of AI as a strategy,

even amid macro uncertainty. But I will say as well, it does contrast with some of the noise that we're hearing out of Microsoft, another hyperscaler, which just yesterday said it would be delaying a billion dollar plan for data centers in Ohio. Scott, so there you have it. Sunder Pichai reiterating CapEx.

- Dee, thank you very much. And the story that Deirdre is referencing, I'll just give you the headline from the Columbus Dispatch as many are reporting this from Microsoft within the last 12 to 15 hours or so, that Microsoft, the word they're using is abandoned its $1 billion data center project

in Licking County, Ohio, they cite a strategic investment review. Yeah. Well, I think... Because the point of this corporate uncertainty is starting to have real impacts. So last week, was it Andrew Ross-Rogland interviewed Satya... Bill Gates...

All three of them. And he said the CapEx is dependent on economic strength. That's right. And so I think that, and I think he even made that comment in this most recent one about the economic uncertainty. And so I think with Microsoft, we know they have a big spend. It's not a cheap stock, but they're going to take their cues from the economy. And on that same point, I know everyone's unhinged and thinking that we're going to go into a recession, but I do think it's important to listen to like the best sense and listen to the people that do have market experience because, you know,

If you look at his commentary, like this is time for Main Street, Wall Street, have their day, blah, blah, blah. You know, that commentary, the reality is if you overlay real GDP since 1990 to the S&P 500, the correlation is one. The beta, the magnitude's a little bit different. They are right on top of each other. Never will you have a good U.S. economy and then the stock market's off the rails. That's just not right.

That's just not there. We've been saying that the relationship between the stock market and the real economy have never been closer or more.

intertwined. The notion that this is somehow only hurting people who have investments in the stock market and it's such a smaller piece of the overall American pie, I don't know about that. Pension funds, firefighters, police officers, teachers, and on and on. 401Ks, 529s, IRAs, and go down the list. Let me just address something that I think people are also thinking about today. We'll get back to this in a second. What the Fed might do.

what it can do, what it's even thinking about. Steve Leisman, our senior economics correspondent from Washington, joins us now. I mean, we heard today from Kashkari, but let me ask you specifically if the turmoil in the bond market, let's just stay there for a minute, because that's what everybody's talking about. And I know that because you're having conversations, too, with big investors who are telling you the same stuff.

They're worried about what's happening in the bond market. And if you have issues that get more dramatic there, what can the Fed do? Would they? Would they buy treasuries? Would they stop QT altogether? Remember, they just recently said that they would slow it. Would they stop it? You know more about this than me, so I'd love to hear from you.

Well, I think the operative thing, Scott, is right now what we're hearing is it's not a situation where the Fed would come in. There's obviously dislocation out there. There are some big moves in the bond market. There's a big concern, Scott, that bonds are selling off. The dollar is weaker at a time when you might expect to see a flight to safety trade. I'll leave that aside for a moment.

The Fed will tell you that they have many existing liquidity facilities for market participants to use if there is dislocation. If you get to a point where the Fed believes that existing facilities are not sufficient,

the fed could clearly come come in it could do a morning repo operation it could do all sorts of things it could buy bonds directly what i'm hearing scott is we are not at that moment yet but there's a bigger broader question which you guys were i think talking around the edges about here which is why would the fed come in would it come in because it sees a dislocation from a prior equilibrium

or should it stop the movement of the market to a new place? If we're going to be a country that has 104% tariffs on China, if we're going to tariff Japan, if we are essentially going to stop the flow of dollars from trade that goes out, we pay them, and then they come back into our market. If we're going to stop that process, Scott,

Where is the right equilibrium for the 10-year interest rate? What is the right value of the dollar? The Fed will come in to stop dislocation and from an equilibrium that it thinks it's right. But right now what I'm hearing is, among other things, a lack of confidence in U.S. assets globally, a lack of confidence in U.S. leadership, and the idea that some of these countries that hold U.S. bonds

are just likely natural sellers here, Scott, because of the change taking place in U.S. policy and in the global trading system. So you can smooth over the bumps on the road, but you can't regrade the road. Yeah, I mean, look, everybody's wondering...

Would China or Japan sell treasuries? From what I understand from those I'm talking to who see the flows, the flows don't suggest that that's actually happening now. Could it? Anything can happen. But at least now it doesn't appear to be one of the issues. You, Joe, I want to bring Joe into the conversation too. One of your trades of late has been to buy the TLT. Correct. Three different times, if I recall correctly. Yep.

Assuming, like most, that rates were going to continue to come down. Correct. Now, the other day, again, if I recall right, you trimmed that a little bit.

Trimmed it a little bit. Anticipating what's happening in the bond market, and now you've trimmed it again. Have to. You have to react to what you're seeing in price. Price is not correlating with your expectation on what economic conditions ultimately are going to look like as we move into the future from the effect of what we're seeing right now. So you have to cover up that TLT. You also, I still have a little bit remaining position. I'm losing on that position. And we have a $39 billion 10-year auction here at 1 o'clock. So I

I'm listening to Steve and it sounds as if there really is no Fed put. I think the put- Not yet. It's lower. The Trump put is lower. But everyone's looking for the put in the equity market. To me, the put is clearly in the bond market and that's through higher yields. So 39 billion in tens at 1:00 PM. I mean, Steve, you tell me if that's going to be good.

At what point does the Federal Reserve ultimately have to step in and at a minimum use the balance sheet? Cutting interest rates, to me, does nothing. It's the balance sheet that would be the effective tool. Well, that's why I suggested maneuvering around QT. But Steve, go ahead. The Fed steps in at levels that knock these levels right here. There are other things we're watching, the overnight repo rate, those sorts of things. If that kind of plumbing gets clogged up, perhaps the Fed acts. But I want to make one note, which is,

I didn't talk about rates. I don't think rates are in play here right now, at least at this point. Barkin talked about the idea that inflation will come in the summer.

Powell talked about the idea, the coming quarters of inflation. And then you take the idea that the Fed needs to be sure that whatever inflation is caused by tariffs does not spread and become more than a one-time rise in the price level. That means I think the Fed maybe in the summer would react with rates, but maybe in a while. If you take a look at Fed Fund futures, I'll give you some of the recent quotes we have.

There's some toying with a May move, but more confidence in June, again in July. That's where the market is right now. But the market could be too aggressive here, Joe, because I think the Fed's actions, if they're needed, and I'm not saying they're needed at these levels here, would come in terms of what they call market-functioning asset purchases more than they would policy.

You referenced Barkin, Tom Barkin, of course, the Richmond Fed president who sat with us, what, a week ago, trying to game out how this might all play out. He's given, and I think this is what you were directly referencing today, Steve, an exclusive interview to Axios in which he does say that price hikes could start by June. It's likely to cause the trade war is fewer jobs and higher prices.

but that it all might not show up until the summer. That's why we suggest it's kind of hard for everybody, Fed officials, CEOs, investors, almost anybody who has any interest in or doing business within the U.S. economy or markets are having such a hard time figuring out what's what. That's what you're referring to, correct?

Exactly. And I think that what the Fed is saying is this is not our problem in the sense of we didn't cause it. This is not an issue of at the moment, the Fed funds rate being too restrictive or too easy or anything. They have to sit back and they have to take the cards that have been dealt to them from the White House, from the tariff policy. But the

key is and we talked about this going back a week or so scott is that how to react is not entirely clear it is very rare for the fed to have equal challenges on both side of its both sides of its mandate that's the stagflationary challenge that's a challenge that would come from a decline or a slowdown in growth on the one hand and a surge of inflation on the other and what the fed has said is we'll address the one that looks the worst

Yeah. Steve, thank you. I appreciate all of that. Our senior economics correspondent, Steve Leisman. I'll see you throughout the day and certainly later on closing bell with us, I hope as well. The other ramification from this dramatic move in yields is a dramatic move in mortgage rates. Certainly the opposite of what was happening just, what, a week ago. Diana Olick joining us now with a news alert about a bit of a different story.

Absolutely, Scott. The average rate on the 30-year fixed hit 7% today, according to Mortgage News Daily, which runs this rate usually once a day, sometimes twice in a particularly volatile market. We have seen mortgage rates just in three days rise 5%.

basis points and we haven't seen a seven handle since February 19th now as you said it's a complete switch from last week where we did see rates drop not as much as we're seeing them rise this week but even just a basically around 10% 10 basis point drop last week cause mortgage demand in refinances and purchase applications to jump 20% last week now you've got not just the opposite but a considerable opposite

that is really gonna hit mortgage demand going forward in, of course, the all-important spring housing market.

Yeah. Yeah, no doubt. Diana, thank you very much for that update. Diana Olick talking about mortgage rates, 7% yet again. We've had numerous strategists take down their expectations, take down their calls in the U.S. markets. Brian Belsky was with us the other day and he had a 6,700 target.

target on the S&P 500, which he has now revised. Excuse me. I have the note in front of me, but better than that, Brian Belsky joins us now on the phone of BMO Capital Markets, of course. Brian, it's great to have you on. These markets and the speed and the severity, you say, of the drawdown has surprised you, and this is the result, correct?

It is, and thank you so much for having us. And that's why we started off our note here today with that very same sentence. As we kind of watched this attempt to kind of settle out, Scott, we really wanted to look at historical patterns in terms of what happens

if we hit a bear market. And as we said on Monday, and as we said in our piece that we published on Sunday, it almost doesn't matter whether or not it's a 10% correction or 20% correction. Historically, when you go back to 1950, we have these violent rebounds. But in the midst of that, we also have to really be very thoughtful in terms of how we're looking at the fundamental conditions of stocks, because our mantra has always been stocks lead earnings, which lead the economy. And there's been a lot of

rhetoric out there that the market can't possibly start going up until a rebound until earnings bottom. Well, again, our work and our research that we spent the last three days kind of working through is that is that

earnings bottom nine months nine months into any kind of bear market now again we're not calling for a bear market we're just we need to be thoughtful in terms of the downside and we need to also be press the end in terms of what's gonna get us there so under the premise again a stock leader need to flee the economy

We think that it's a very good chance that earnings kind of bottom six to nine months from now, if indeed this is the bottom. And I think, you know, again, any time you try to make very short-term calls, it's dangerous. But we still believe that if and when we get a rebound, that rebound will be vital.

violent, it'll be strong, and U.S. markets are going to lead the rest of the world. Are we already in a bear market? I mean, it's almost irrelevant at this point as to looking at a textbook to decide what we are or what we're not. The fact of the matter is that there are too many stocks within the S&P 500 that are and have been in a bear market.

I think that's a valid point, and thank you for making it. Again, we want to go look at history. History is not necessarily predictive of future events, but we also need a guidepost. And as I said on Monday, and we've also lived by this rule, it's never different this time. And we do think the market obviously has been driven by these headline-driven trends

almost hourly changes in what's happening out of Washington. And we kind of put that to the side and kind of look at how much stocks have gone down and where we've been stating, really, Scott, for the last couple of years in terms of this notion of don't be so concentrated with respect to particular sectors and positions. We want you to own a little bit of everything in the U.S. And that's why our theme of underweighting the Mag 7 in those sectors that represent the Mag 7, namely stocks,

technology, consumer discretionary, and communication services, owning the other stocks in those areas in terms of overweighting them in U.S. portfolios. And the money that we run, we have the good fortune of running in both Canada and the United States, that has helped our portfolios outperform during this downturn. And we do believe that that's going to position portfolios accordingly across most disciplines, whether or not you're value, dividend growth, core, or even more defensive properties. So

We're very, very comfortable with the $6,100 number, and we're comfortable with the $250 earnings number for the S&P, and that's where we are right now on a trailing 12-month basis. All right. I appreciate you calling in and bringing our viewers up to the minute on what you're thinking and doing. Brian Belsky of BMO. We'll see you soon. I have no doubt about that. Scott, can I make a few very quick points? Real quick, because I want to get Kerry in. Yeah, a few quick points. Number one,

China's selling bond treasuries is not a foreign thought. In 2019, they were 1.3 trillion. Their holdings now are 760 billion. And keep in mind, we kept issuing. So less important to more. Japan owns more than they do. Number two, you

You can't put aside, as Brian suggests, the tweets and all that, because that is the problem. That's what we're seeing. So this is not a single event like when Buffett came in during the financial crisis and bought Goldman and when the Fed injected massive liquidity. This uncertainty is going to survive for the entire presidency. And that's why CEOs are uncomfortable. Third and final point. I was at a conference in Vegas last two days. Dealmax, 2,000 dealmakers, bankers, investors.

private equity firms, large LPs, everything is frozen. And the fact that credit spreads haven't blown out doesn't mean they won't. In fact, they will one. Sure. There also is the perspective, as we laid out at the very top of the program, that this is a tremendous buying opportunity. I read the notes of those who suggest it is. If you believe the president,

when he posts today, buy, great time to buy. A lot of stocks are down a lot. We know that, including Microsoft and some of these mega cap tech names. And you bought that. Let's be clear. I'm not taking my cues from the president. It doesn't matter. Microsoft. Yes. The idea that, you know, as bad as it feels,

Sort of to Bryn's point, I'm going to get to a move of hers too after you, but you bought Microsoft now. Exactly. So Microsoft is a stock that has been in a bear market. It was not doing well. If you looked at the magazine, it was way underperforming. Mission critical software. It is not a company that's very exposed to tariffs.

And they have a huge balance sheet. They're in the storage business and on the data side that's continuing to grow. Enterprise software is not something that

that really scales back unless we're in a very, very severe recession. So we think of Microsoft perhaps as, in a way, the new safe haven, the way Apple has been for years. Apple now has the big manufacturing problems, which Microsoft does not have. Its multiple has gone from 33 to 24. And we thought at this price, we would buy it. Yeah, I mean, you know, look, Apple's up today by 4%. Microsoft's 2.5%.

So there are those who say, you know what, 30% off the high, too much. And I believe that things are going to be better. They may get and feel worse, but they're going to get better. So I'm going to buy now. I'm going to get to one of Bryn's moves on that note in a really hard hit stock in a very hard hit area. But we're going to take a break. When we come back, we're going to be joined by one of the top financial advisors in this country. Richard Saperstein is standing by with his strategy amid these swings. We'll talk about everything next.

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- All right, welcome back. Sometimes we've talked about this too and I know all of you are feeling it. Sometimes the hardest time to buy is when a stock looks horrific on your screen like RH has.

Tell me more. You bought the stock? I did. I did. So I bought the stock $145, right really where it is. But what I did, and this is what I'm doing this year as I'm buying securities, is I'm selling calls against it. And I'll walk through why I bought Restoration. But I was able to sell the May $180 calls. They expire in a month from now and received $20. So let's say it doesn't go to $180. I just reduced my cost basis by $20 and collected huge premiums.

Retro region hardware goes to the high end. They have big expansion plans. I'm sure Gary Friedman will alter some of those, but they did what they were supposed to do. They've been moving out of China, moved into Vietnam. They're doing their upholstery in North Carolina. This is a great American company that's getting caught up

with the Vietnam tariffs, which I do think they're going to resolve those. And I think the stock was at $440 in January. It's at, what, $145 today. I think the stock could easily move back up to $200 when you get any reprieve from Vietnam. But I did a call against it to hedge that, and that's what I would recommend. As you always do.

Right. But 20 bucks for a month, $20. I'm not saying there's anything wrong with it. I mean, that's like the bread and butter strategy that you always do. Well, not always, but 99% of the time. Right, because I think Trump's going to continue to give this volatility. It's 2018 2.0. And so I think it's a good year to buy names, but sell calls against them because the volatility is here to stay. Okay. I can't imagine the call volume that financial advisors are dealing with right now from their

nervous clients to say the least richard saperstein is with high tower one of this country's highest ranked wealth managers it's good to hear from you uh... thanks for joining us it's my pleasure scott you know i thought of you when i saw what happened in the muni market and uh...

We just had the worst day in 31 years for munis. Part of the point being, there has been no place to hide. Typical safe haven trades haven't worked. Bonds, the dollar, and for many munis. And you have talked about munis since we began speaking on this program, I feel like. What's your thought about this as many investors are exposed here?

Well, as you know, we've been a buyer of munis and moving asset allocations to include fixed income for about two years now, which sets us up into a great position to actually start buying equities

when we need dry powder. Now in terms of the muni market, it's very surprising that interest rates are moving higher at the same time as stocks moving lower because typically you'll see a flight to quality from equities into bonds driving yields lower. The only explanation I could find on this would be we have some leverage sellers being forced to liquidate what they can get a bid on. Now this week

For our clients, we've been able to add munis at 5% tax-free, which is outstanding. So instead of buying equities and taking advantage of the equity markets, we're actually able to still add some munis and take advantage of the muni bond market.

What else are you looking to take advantage of in the, you know, the upset of many stocks? I think, you know, the last time that we spoke and I think it was on closing bell, you had mentioned to me that you were buying some of the mega cap tech names in the pullback. Have you been doing the same or where else in the equity market do you think there actually is opportunity here?

so broadly speaking we're checking out a couple of things before we think the coast will be clear to really aggressively at equities are current cash position is about twenty two percent and now is coming into this whole thing so are we looking at credit spreads both investment grade and high-yield they've gone up but they're not close to where we think they could get obviously the vixen moved up it's in them

50-60 range, but remember in 08-09 and in 2020, it actually was up in the 80 range, so the VIX could move higher. We're seeing a lot of upside down volume where 35 and 50 down stocks versus one up stock. That's a good sign. But we're also not ready to commit based on these factors in a broad way to the stock market.

There are three things that will get us to start buying. Number one will be a change in the trigger point mechanism.

The mechanism is obviously the tariffs that have caused this market to go down. If we start seeing some moderation by foreign countries in agreeing to tariff reduction or trade dispute reductions, that would be the start of a moderation of that trigger point. The second thing would be where we start seeing fundamentals improve, where let's say interest rates go down,

Fed might cut rates, or if we see P/E ratios get to a level that historically have been attractive. And the final thing, and the most important for us, is really the individual stock valuation. And here we're starting to get very interesting because if you look at different industries and sectors, you're starting to see on an operating cash flow basis

these stocks becoming very attractive. I'll give you a few examples. If you look at large cap tech, some of the large companies now are trading at operating cash flows based on the next 12 months of close to 10%.

Now, we haven't seen that in six years. So you do have some opportunity in large cap tech. As you know, I've been an owner of the independent power producers. Some of those are trading at operating cash flows of close to 15% right now. So what does all this mean? It means on a fundamental basis, when you look at the valuation of individual stocks and not the broad stock market as a whole,

Some of these names are becoming very attractive on an OCF basis where they can start buying back stock and returning capital to shareholders. Rich, thanks for coming on. I appreciate you. Thank you. We'll see you soon. Richard Sackerson with Hightower as everybody tries to navigate their way through this market. Silvana now has the headlines for us. Hi, Silvana. Hey,

Hey, Scott, good afternoon to you. The Trump administration has frozen additional federal funding for two more elite universities, more than a billion for Cornell University, and about 790 million slated for Northwestern are now on hold as the White House pushes major universities to comply with President Trump's political agenda and investigates alleged civil rights violations at the schools.

The acting commissioner of the IRS is stepping down after the federal government struck a deal with the agency to share immigrants tax data with ICE. Melanie Krause has served as the acting chief of the agency since February. The agreement allows ICE to submit names and addresses of immigrants inside the U.S. illegally to the IRS for cross verification against tax records.

And Universal, which also is owned by CNBC's parent company Comcast, unveiled plans today for a multi-billion dollar theme park and resort in the UK. The project will be about 60 miles north of London with construction set to begin next year. It will be Universal's

first park in Europe and will seek to compete with Disneyland in Paris, Scott. I'll send it back to you. Okay, Silvana, thank you so much. Silvana, and now coming up, we're digging deeper into the bond market sell-off today. Our Bob Pizzani following the action in today's ETF Edge. He'll do that next. At Eisner Amper, we are creative problem solvers that take a 360-degree approach focusing on you. We're an award-winning firm with decades of experience. Eisner Amper, let's get you ready.

And now, a next-level moment from AT&T business. Say you've sent out a gigantic shipment of pillows, and they need to be there in time for International Sleep Day. You've got AT&T 5G, so you're fully confident. But the vendor isn't responding, and International Sleep Day is tomorrow. Luckily, AT&T 5G lets you deal with any issues with ease, so the pillows will get delivered and everyone can sleep soundly, especially you. AT&T 5G requires a compatible plan and device. Coverage not available everywhere. Learn more at att.com slash 5G network.

We're back with a news alert on NVIDIA. Christina Partsenevelos has that for us. What do we know? Well, Scott, last Friday, NVIDIA CEO Jensen Wong was spotted dining at Mar-a-Lago with President Trump. Following their conversation, NPR is now reporting the Trump administration is reconsidering plans to not

Ben, NVIDIA's H20 AI chips to China. These are specialized chips that have been under regulatory scrutiny for months of a lot of concerns that they were going to get banned, creating uncertainty with a lot of analysts. This also explains why many Chinese cloud service providers have been aggressively placing orders in anticipation of these potential restrictions.

This situation does present a challenge for NVIDIA because you have tech giants like Alibaba rushing to spend billions of dollars and specifically H20 chips during the first quarter alone, essentially stockpiling inventory before any restrictions. And so what we're hearing today is that those restrictions are not going to come anytime soon. This is according to NPR. NVIDIA is declining to comment. Keep in mind, though, this front running will help earnings for NVIDIA. The problem is, is it sustainable? And if

the United States is not going to ban these chips. China can still ban these chips, right? Because Huawei is stepping up with their game in the chip world as well.

All right, Christina, thank you. Christina Partsenevelos, we'll keep our eyes there, of course. Bob Pizzani has today's ETF Edge. Hey, Bob. Good to see you, Scotty. Inflows into bond funds have been strong all year and have been accelerating since the big market drop. The ETF industry is developing new products to help investors generate steady income from their bond portfolio. Let's talk with Nate Conrad. He's the head of LIFX, and LIFX ETFs is a suite of longevity income ETFs. Nate, I know you follow bond flows very carefully.

big inflows from investors seeking a safe haven, but it

but investors have been confounded by this recent rise in yields. What is your take on what's happening right now in bonds? So there are two big things on the bond market's mind right now. One is inflation. What are we going to see in terms of the long-term impact on inflation from the tariffs? And the second one really is about foreign government investment into government bonds. If the tariff policy is successful in reducing our trade deficit, how is that going to impact investment from foreign governments in the future?

These are hard questions, big questions. Part of the reason I'm such a big advocate of bond laddering as a way to access cash flow, but without the volatility we're seeing in the market right now. Right. Now, you've got a suite of bond ETFs. They're bond ladder ETFs. You call them longevity income ETFs. What do they do and why are they right for investors that are nervous about the turmoil in the equity market right now? So they're a really simple way to create reliable monthly income.

low cost, tax efficient, buy and sell. And it's built on the idea of buying bonds and holding them to maturity so that you know exactly the coupon on principal income you're gonna get and you're not exposed to these market swings. - So you can buy them in different maturities. We're showing here, that's the 2035. This is the 10 year one. They go out 10, 15, 20, 25, 30 years.

But looking at the 10-year maturity, for a $100,000 investment, you get an annual payout of roughly 10%. That's consisting of 4% from the yield and about 6% from the distribution of principal for the next 10 years. So right now, this pans out, I'm looking at your website, to $950 a month for 10 years. And what happens here if interest rates change? I mean, are you actually getting the same amount every month? That

That's exactly the goal. We're going to go out and we're going to try and lock in the current interest rate market. We're going to turn that into reliable monthly cash flows for you and let you enjoy the benefits of both the interest and the principal in that reliable monthly cadence for the next decade in that

L.D.R. ticker. And of course, people need to understand that after 10 years, the principal is distributed. So essentially, the $100,000 goes away because you're collecting the principal, right? Exactly. That's why we're able to offer such a high level of cash flow, because it's interest and principal.

and that's a great way to do it if you're investing in a taxable account because the principal's tax-free very interesting new idea here we're going to have a lot more coming up on how to get a steady stream of income amidst all this market uncertainty that's coming up on etf edge 1 10 p.m eastern time date will be joined by dave nautic independent etf expert that's etf edge.cnbc.com scott back to you okay bob thank you bapazani we're gonna do our calls of the day next got a big one on energy you know what's been happening with oil four-year low

We have a lot of exposure here. We'll give you the trades next.

Guys, let's talk energy, if we could. Oil, obviously, has gotten just crushed. Four-year low for crude. The energy sector lowest level since September of 2022. Citi has a note out today on what they say is how to position an energy portfolio during a trade war. Bryn, I'll go to you first on this. They say they prefer Diamondback. Both you and Joe own that. They prefer EQT. Joe has that. Baker Hughes, Joe T., and First Solar. But

You know, look, you're down in the epicenter of this, as I say to you almost every time we see you on remote. And we're so happy to have you here on the desk.

What do you do? What do you do? These E&P companies, like a Diamondback, all the, especially Diamondback, they have a great C-suite, great executive team. They're going to continue to drill, but I will say with Saudi and OPEC increasing production, and don't forget, we haven't talked about it, there's a lot of potential Iranian talks this weekend. That would actually put further pressure, downward pressure, if something were to occur with Iran. I don't have a high probability that that would happen. But

But I just think this is one of these years you want to stay high quality companies with free cash flow. And so there's a bunch of them to own. So I don't think give up on the trade. But if you do go into a weakening economy, oil is not going to do well.

Well, first of all, the administration's happy about this for sure because they've indicated they wanted lower oil prices. I do think oil is very susceptible to a further decline. And I think a lot of that is because OPEC's making it clear they want to have tension as it relates to market share. And they want to ensure that they protect that market share. So that...

output hike last week was far more aggressive than the street expected and i think it's you seeing it's reflected here in the price of the spot crude oil itself but you have energy equities down nearly 20 so i think again you've got a little bit of being on the wrong foot as it relates to positioning because i've heard a lot about in the last eight to 12 weeks that energy is the place that you want to be over maybe technology or communication services yeah

Anybody else on this area of the market? Look, it's obviously extremely depressed, but again, I'm not an energy investor. Can't control OPEC. They say we're going to have print for market share. And look, the economy slows, they get it too. Having said that, could go a little...

lower but I think actually the pain trade for everything right now is up because everybody knows what's going on so the next move will be up and then we revisit it as earnings come out it goes lower. And what's leading that pain trade up

is names like the Mag 7, the places where over the last 8 to 12 weeks, people have said, don't be there. That's so interesting you say that. This is the first day we're not seeing Netflix and Meta lead that rally. They're basically flat. And the S&P Equal 8 is basically flat on the day while you're seeing the Mag 7 and the QQQs move higher. Let's do a couple other calls.

travelers upgraded today looking at upgrades i mean there's a lot of reiterations of calls uh travelers got upgraded to equal weight uh at wells that's yours yeah so in the financial sector you know i believe the insurance industry is is an area of tremendous strength obviously they have clear pricing power uh progressive chubb those are the names that i really like yes we own travelers uh

to me not as strong as maybe a progressive. Okay. Let's also do Dell reiterated by a Bank of America brand new on that. That's been just brutal. You know, they're in the crossroads, crosshairs of this trade because of the server components they need to buy. And so this is a tough one right now because especially of Microsoft,

purportedly pulling back, or they said they pulled back. So we'll see what I do with this trade. I don't have to make it back the same way I lost it. Michael Dell's buying back stock. He owns a bunch. But I just think this is kind of a tough trade right here that may not get the pickup if we do get a big short covering. So we'll see what I do with the stock. All right. Let's do finals next.

All right. We are going to surround it this last hour at three o'clock on closing bell today. Ed Yardeni, Richard Clarida, Jeff DeGraff, Cameron Dawson, Mohamed El-Erian and you know, I don't know who else could join us. You just don't know. So I hope you'll join me for that last hour. Let's do final trades. Steve Weiss, what you got?

Meta. Meta right now is selling at a discount to the market, which it should never do. So the growth is still there. They're least affected by tariffs and consumer sentiment, I'd say. So Meta. Okay. Bryn? Take Steve's Meta and you can sell the 550 May calls at six weeks out and collect $27, which equals 5.2% for six weeks. Okay. Kara?

UnitedHealthcare has been in its own bear market, starting to improve, not affected by tariffs. Joe T. If we are going to bounce, maybe buy some calls in the QQQ. All right. Well, we are bouncing in the NASDAQ and the Qs for that matter. The Qs are up almost 2%. I'll see you on Closing Bell. 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.

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