Trade Wars and Treasury Yields: The Domino Effect on Global Markets
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All right, welcome to the Risk Reversal Podcast. I'm Dan Nathan, joined by Guy Adami. Guy, how are you? A fired up Guy Adami. How are you, Dan? I think we're both a little fired up here. It's right on the opening. It's Wednesday morning. It's been a seesaw action with the futures and the S&P. I think at one point overnight, we're down nearly 3% after being up a couple percent.

here on the opening. They're basically flat-ish. The Nasdaq's outperforming. I definitely see a bunch of green guy in tech. We're going to hit a bunch of stock stuff. The real story is the bond market. U.S. Treasury yields have been all over the place. We're going to talk a little bit about, there was a

Pre-announcement, Walmart, and we'll talk a little bit about what they had to say. Delta released earnings. They pulled their full year guidance. They're talking about the adverse effects of the trade war. Really, the lack of clarity they have. Jamie Dimon, CEO of JP Morgan, who was sitting a few rows behind me at the Knicks game last night. Guy was on TV this morning. Not too many great things to say about the trade war and the U.S. economy. But let's start here. Before we get to the stock market,

You've been speaking about something, I want to say, for more than a year. You've been contrarian on this because most folks thought that yields in the 10-year treasury or across the treasury curve in general were going lower. What's going on here? Because the big story over the last few trading days is the opposite effect of yields despite

The Treasury Secretary, despite the White House being very fixated on the 10-year yield going lower, they thought this was the salve for all the problems that we have here. Yeah, so the bond market is all about confidence, right? And what people, what institutions, what countries are willing to pay to buy another country's debt is predicated, is built upon confidence.

the confidence in those people in the country that they're buying from. And when that confidence wanes for whatever reason, the market's going to sort of demand a high rate of interest to buy said debt. On top of which, you know, when you have the second largest holder in the world of U.S. treasuries, which is China, you know, when you start escalating things with them, what do you think they're going to do in retaliation? Well, one of those things potentially is to dump U.S. bonds. And last night, so Tuesday night,

at one point, we saw 10-year yields go north of 4.5%. Now, a lot of people listening to this or watching this will say, wait a second, we've seen yields at these levels before. It's not that big a deal. But when you're talking about yields that were 3.8%-ish a week or so ago or less than a week or so ago, ratcheting up in that way, there's obviously something going on. And my concern all along was,

Once the stock market starts to go and people catch wind of really what's going on here in the United States, as much as there's a slowdown, when you have a debt problem, the size of which we have, and we have other countries owning your debt, you become sort of basically at their mercy if they're going to do things like what I think is happening now. So that's why I think yields are moving the way they are. Now, can they do something to stem the tide? Well, one of the other things that I tweeted over...

overnight was the Fed could come in with an emergency rate cut right now and 10-year yields would probably go higher. The Fed does not control the bond market. They control the front end of the curve. We've said that 100 times over the years. The bond market controls everything else. So there's clearly...

something going on. And it's something that the market should really start paying closer attention to. And at least for the last 24 or 48 hours, Dan, they are. All right. Let's talk about that debt and how it's financed. You just mentioned the holders. It's Japan. It's China. You know, when you're threatening them with a protracted trade war, they do have some options other than just retaliatory tariffs and the like. And we're seeing that right now. A lot of folks have been saying, whether it be on CNBC, whether it's been on our podcast, suggesting that

Japan doesn't hold the cards. China doesn't hold the cards, right, as it relates to this. And, you know, the front that they're all putting up, and we haven't even mentioned Canada or Mexico or the EU right now, you know, kind of tells you that we actually don't hold all the cards. And when you think about this and you just mention, you know,

The rates on the 10-year, you know, we have a debt pile of $36 trillion. You've been saying this also for a year, that there is about $9 trillion of U.S. debt that needs to be rolled this year in 2025. We spend more on debt service than we spend on debt service.

than we do on our entire national security budget or military spending and the like. So with yields going higher, what does that mean? Right. Because a lot of that debt is at much lower yields. Like this is a real problem. It's a real problem. Higher interest rates obviously are not what we want right now. And, you know, when you hear it,

President Trump, Treasury Secretary Besant talking about the needs for lower yields, what it'll do for the housing market. Yeah, that's part of the equation. But when you have the debt problem that we have and the amount of roles that we have to do and the amount of issuances that need to be done this year, you obviously want to be doing it against a backdrop of lower yields. And that's just not, it's not cooperating right now. And you just said it. I mean, it's probably 37 trillion or so

of debt that we have. That debt needs to be serviced at a higher rate of interest. That doesn't do anybody any good. And the higher interest rates go, the more difficult this becomes. Now, what Janet Yellen tried to do for a long time and some of these other Treasury secretaries is issue short-term paper to sort of basically try to give yourself a bridge to when things sort of slow down a little bit or at least calm down a little bit. And that works sort of until it doesn't work.

Because at some point, you got to pay the piper. You can't do that in perpetuity. And we're going to start to learn more about the world's appetite for U.S. debt over the next couple of months. And my sense is it's not going to be great given what's going on. And again, it's not about politics. It's just given what's going on with the administration and all the noise around it. And I'll say this as well quickly.

you know, be careful what you wish for out there, you know, lower rates, lower rates. Well, you saw what happened when the market sold off, you got those lower rates. And then the market woke up to the fact that, wait a second, you know, maybe the U S has some issues that we're not seeing in nor these rating agencies out there. I mean, one has to wonder, you know, if S and P and Moody's, uh,

is out there is there a debt downgrade coming in the foreseeable future and again i'm not trying to be too dramatic here not to be too hyperbolic but those are all the things that the market starts to need to think about well they're really um not great things to start to think about right here with the s p down nearly 20 from those recent all-time highs because things are precarious we have a vix obviously that's trading at levels we haven't seen in a very long time but really like elevated

for a long time. You know what I mean? Like when you go back the last time we saw VIX above 50, that was in that late July, early August period. It really only lasted for a few days and all the uncertainty that we have around policy is likely to keep it elevated. So we've been saying this for a couple of weeks. Once you expand those volatility bands like we've done in the last couple of weeks, it doesn't just melt. You know what I mean? From here on out. And you

You know, when you say it's not politics, right? It's both. It's politics and policy because I believe Trump, who has very little understanding of all of this and the interplay of it, that's his politics, okay? He's a strong man, a wannabe strong man, right? And he thinks the ability to

to kind of come at our allies this way and to come at our adversaries this way and not really understand what the levers that they can pull. He just thinks it's, and you've been talking about it, he sees things as very binary, wins and losses. But when you think about how interconnected

our, you know, our economies are globally. You can't just throw 100% tariff on China and expect them just to eat it. And that's what's happened overnight. They've come back with an 84% tariff. How do you ratchet that down? What if we both go to 50 and 40%? It still sucks for the U.S. economy. And I was walking out of my building this morning and one of my neighbors

She does, what do you call them? Gardening boxes, you know, for people, their homes, right? And these are metal steel boxes and she plants flowers in them. And this is going to be go time, right? Because April showers bring what guy? I made flowers. Right. And you know what she told me? Her supplier of the metal boxes told her that the cost of these are going to go up 40%.

40%. Just think about that. And you can, you can, this goes, that's a small business, but think all the way across the U S economy. Right? And so there's some main issues. So going back to that's Trump's politics, but the policy side, when you have secretary Besant of the treasury, you have the secretary of commerce, Lutnik, these guys are either absolute morons and, or

just intellectually totally dishonest because all of their peers in the CEO and billionaire class and the hedge fund class, all this sort of stuff are telling them publicly now over the last week that the math is wrong and the way in which you are going about this is wrong. So we're in a really difficult situation here. And I think, do you think it's more important that we watch the bond market than the stock market? Because it's what's the tail wagging which dog here?

I think the bond market is far more important. You know, if you have this sort of global upheaval in bond markets, and this is not just the United States, this is all around the world, and then you throw on top of that some of these currency moves, I mean, those markets dwarf markets.

the U.S. equity market. So I think it's vitally important to continue to watch this. And that's one of the reasons I'm sure I bore the shit out of people from time to time. But that's why I'm constantly harping on these currency moves and I'm constantly harping on these bond moves. And, you know, it's you bring up an excellent point. You know, I don't think Scott Besson is a moron. I think he's very bright. I think he's bought into by a

probably because he's had to, a lot of the policies put forth, I don't necessarily know that it agrees with them all. Howard Lutnick is a little bit of a different story. But I'll say this as well. I think to your point, the whole notion about tariffs and these trade deficits, they were flawed from the start. And I want to be clear here. Trade

Trade deficits could be a bad thing. It could mean we're getting ripped off. But by definition, it's not necessarily a bad thing or that we're getting ripped off. I mean, sometimes in global trade, you're going to import more than you export to different countries. That's just the way it works.

It doesn't mean those countries are ripping us off. But this administration looks at everything, as you said, in a binary way, wins and losses. And when they hear deficit, they assume that means we must be losing. And that's just not the case. So when you try to overlay policy on top of that belief system, you create this sort of, and I'll use the word, uncertainty now that's permeated the entire global economy. Right.

Yeah, you know, and again, we talk about things in these kind of big terms, these grand terms, you know what I mean? The stock market, the global market, the bond market, the global economy, you know, all this sort of stuff, right?

But, you know, I had a friend of mine who's not in the markets at all, but he watches it probably more so than a lot of my friends, again, who are not in markets. And he texted me this morning. He said, imagine being a millennial or older in any other country twice in less than 20 years. The U.S. has destroyed the global economy. Now, that might be hyperbolic. And who knows how this is going to shake out. Right. But when you think about that.

You know, 2008, the lead up to that, there's a lot of folks that are to blame. And you and I have been talking about this for a long time. I think one of the big takeaways that you had was the income inequality that came out of that and just how it was made so much worse, right? Socializing the losses, right? And we privatized the gains again and again. You know, so a lot of people to blame there. Predominantly, in my opinion, two things, deregulation and then some of the biggest financial institutions, not just here in the U.S.,

but around the world. This time around, and we've been talking about this, this is kind of self-imposed. Now you could say, well, it goes back to our debt, which, you know, and the deficit spending and all that sort of stuff. But that has been going on no matter what administration, what party held the White House or the House or, you know what I mean, that sort of thing. But this way in which to try to fix that, and we just went through this off of, you know,

funky math and weirdo like sort of like like processes and this and that or whatever and underestimating both our allies and our adversaries. This seems a lot like an own goal. And, you know, once you kind of do this, once you and we've been saying this, once you start playing chicken with the economy and the global economy and the ways in which you think you can manage it, it's really hard to turn things around.

Well, you know, it's interesting. You said a lot of interesting things there, as you typically do. But, you know, you said your friend said the U.S. twice now in 20 years or 25 years has tanked the global economy. The reality is the U.S. is sort of the global economy. I think the United States represents either side of 30 percent of global GDP. So just think about that for a second. By the way.

as i said on fast money the other night we're 30 percent of global gdp we're five percent of the global population so it's hard for me to sort of reconcile us getting vastly ripped off by the entire world when we basically are out kicking our coverage to the extent of like a six to one if you want to do simple math so there's that now we could be getting ripped off i mean without question i'm sure we're being taken advantage of but

not to the extent that this administration thinks. And when you want to sort of break it all down on the back of effectively winning, because through those numbers, Dan, we are winning, you really have to sort of take a step back and say,

all right, how is this going to play out? Because to your earlier point, this does not fix itself overnight. I mean, it's just not the way it works. Yeah, you know, Tim Seymour has done a really nice job about this on Fast Money over the last week or so. And, you know, when you talk about taking advantage, and I'm not suggesting that you say you think we are being taken advantage of because, you know, there's a couple of things going on. You just gave us a bunch of stats about our GDP as it relates to the world. You know, China is 30 some percent of the world's manufacturing.

right? And that's not just us. That's the rest of the planet. That's a deal that we have made, right? It started with our companies who wanted lower cost manufacturing. Our consumers kind of got hooked on it. This is one of the issues that I had when Treasury Secretary Besant said to some fancy group of folks at the New York Economic Club or something like that a month ago that the American dream is not cheap flat screen TVs. It was to me like a let them eat cake sort of situation here and take your medicine. We've just been hearing all of this

stuff coming out of the White House. And, you know, you look around and people's 401ks are getting murdered. Their job security is getting murdered. You know, there's a whole host of other things. And, you know, consumer confidence is falling off a cliff. Small business confidence is falling off a cliff. All these sorts of things. So it goes back to

It's really hard to turn these things around. But going back to what Tim has been saying is like, okay, this kind of American exceptionalism that's going away and we've been getting ripped off, so let's kind of flex our muscles a little bit. But when we have these trade deficits, right? And let's say specifically with China and Japan, which you just mentioned are the two largest holders of our debt. Well, what do they do when we have this deficit? They take the cash.

They invest it in treasury bonds because they think it's the safest asset in the world. They're using dollars to do it, right? So you have upward pressure on the dollar, the reserve currency of the world. We get tremendous benefits of all that, that the rest of the globe wants to buy our treasury debt. They want to fund it with dollars, right? Because again, if they're not doing that, that's exactly what we're seeing right here in the bond market, guys.

And that's how we're not getting ripped off. The fact that we can finance our economy through the purchases of other countries. I mean, if you think about it, you know, we're in a position now where other countries, other investors, other instance, whatever word you want to use, have confidence enough that they'll allow us to continue to run up these debt piles and finance that debt at relatively low rates.

That happens until it doesn't happen, until somebody upsets the apple cart, which is what's going on now. Now people are questioning that. Should we be doing this? Should we be allowing them to finance their debt at these levels? We will at a certain rate, but not at the current rates, which is why as much as you want to sort of take yourself out and be independent in the protectionist things,

That's not the way the global economy works right now. And I don't believe you can put that genie back in the bottle as much as you would want to, especially when you're in a situation where you're in a situation where you're in a situation where you're in a situation where you're in a situation where you're in a situation where you're in a situation where you're in a situation where you're in a situation where you're in a situation where you're in a situation where you're in a situation where you're in a situation where you're in a situation where you're in a situation where you're in a situation where you're in a situation where you're in a situation where you're in a situation where you're in a situation where you're in a situation where you're in a situation where you're in a situation where you're in a situation where you're in a situation where you're in a situation where you're in a situation where you're in a situation where you're in a situation where you're in a situation where you're in a situation where you're in a situation where you're in a situation where you're in a situation where you're in a situation where you're in a situation where you're in a situation where you're in a situation where you're in a situation where you're in a situation where you're in a situation where you're in a situation where you're in a situation where you're in a situation where you're in a situation where you're in a situation where you're in a situation where you're in a situation where you're in a situation where you're in a situation where you're in a situation where you're in a situation where you're in a situation where you're in a situation where you're in a situation where you're in a situation where you're in a situation where you're in a situation where you're in a situation where you're in a situation where you're in a situation where you're in a situation where you're in a situation where you're in a situation where you're in a situation where you're in a situation where you're in a situation where you're in a situation where you're in

When you've created the debt levels that you have, that you're beholden to so many of these countries that you're basically fighting against right now. Yeah. And, you know, before we get to the stock market, I just want to say one thing. I mean, I think a lot of our listeners kind of know where I stand on the politics of this stuff. But it brings me back to I don't know if you are a Dave Chappelle fan guy. Are you Dave Chappelle fan?

fan. He's the comedic. Did he play for the Yankees in the 70s? He did not. He did not. But, you know, the weekend on the Saturday night before inauguration, I think it was January 18th, he had this really long monologue. Most of the monologues, I want to say, are five or six minutes. SNL gave him 18 minutes.

18 minutes he was up there he was kind of uh you know crushing lung darts and he was just you know he was a little funny but he got a really a little serious at the end and you know this is one thing that i thought it kind of really stuck with me you know at the very end of this long monologue there was a lot of humor in it but then he said the presidency is no place for petty people remember whether people voted for you or not they're all counting on you and he had a like a really strong emphasis they're all counting on you the whole world

is counting on you. Please do better next time, which is really interesting, which brings me back to that whole idea of politics versus policy. And I think we've talked about this a lot. I believe, given everything that we've seen since November six or really since the campaign trail, that for Trump, it is all about politics.

He doesn't care about policy unless it's a means to an end. And we've seen the way in which he's kind of wielded power, not just from the first time around, but the second time around, it was an absolute frenzy. They weren't prepared for it the first time around. And they had a clear agenda this time around

And it's just odd to me that the first thing that they really wanted to imprint their administration's self on was really this idea of reorienting global trade for the next hundred years, which was going to basically put them in a massive hole, both with the people that voted for them and the people that didn't vote for them, the allies that they would like to, you'd think, curry

favor with given the first experience go around and then obviously have a you know singular front versus our adversaries and it just seems like we're really screwing things up right here and so a lot of it has to do with what I believe is a very petty person who has no shortage of you know folks lining up to just be sycophants and no one really opposing him

Yeah, well, you know, it all comes down to, and I think you would agree with this. I know I feel the same way. I mean, it breaks my heart that there, and I mean this sincerely, that the wealth gap in this country is what it is and seemingly continues to grow. And that's for a myriad of different reasons. I don't want to see...

people losing their jobs. And, you know, there was a time when we were the manufacturing capital of the world. But again, we gave that up for a myriad of different reasons, 30, 40, 50 or so years ago. And that was an order for us, as you said earlier, when Secretary Besson said the American dream is not buying cheap goods. I sort of understand what he's saying there. You know, we made that deal

Now you're trying to sort of not back out of that deal, but to create sort of this new reality. And I just don't think it's as clean as people want to believe that it is, or it's as easy to do. And quite frankly, you know, this is an administration that in three and a half years will be turning over a new leaf to somebody else. And one has to wonder, what will the policies be there? Which is one of the reasons I think manufacturing is probably reticent to make that move under the fear that this could all change dramatically.

four or five years from now. And that's not an easy way to run a business or an easy way to sort of reorient your, your, um, your, your trade. What's, what's the word I'm looking for? Your supply lines and supply chains and those things. Yeah. And it goes to what you just started this conversation about is the confidence in the U S uh,

you know, leadership, the confidence in our economy, the con, you know, and so when you think about all of a sudden, and, you know, Tim was talking about this last night, there's, there's now, um, for some reason, well, it's an obvious reason there's competition to old holding us debt. It's maybe it's buns, maybe it's guilt, you know, that sort of thing. And that's a real problem, right? And you started out by saying this whole thing is built on confidence, which is one of the reasons that we'll get to the stock market right now, this whole idea of cognitive dissonance.

Okay. The fact that, you know what I mean? You're operating one way despite knowing the opposite way is, is true. And, you know, it brings me, you're, you're a, um,

You're a literature aficionado, aren't you, a little bit? I like to think that I am. And this sounds hyperbolic, right? But one of the most memorable lines from George Orwell's 1984 is, the party told you to reject the evidence of your eyes and ears. It was their final, most essential command. And it really feels like that's what's going on here. Well, no, they've made... I've heard comments over the last few years to that extent. And people bringing up...

George Orwell hundreds of different times over the last few years, and people are comparing it to 1984 and the different books that he's written. And it's somewhat, it's actually sort of scary to see it sort of playing out. You know, don't believe your eyes, don't believe your ears, listen to what we're saying. You've heard that rhetoric before. And again,

listen we started this with confidence we'll sort of end it with confidence because that's what this entire thing is built out of people are confident they will spend money and our economy is driven by people feeling good about things and then subsequently spending their money that's what drives the united states economy now maybe we're trying to sort of reorient that and become more of a manufacturing type of economy but again that doesn't happen overnight so in the here and now

people are clearly scared about what's going on. And I've said it dozens of times. People get scared, in my opinion, for one reason. And that reason is when the evening news starts with stock market down 2%, 3% for a series of days and or weeks,

People look up and they say, what is going on? Regardless of whether or not they own stocks, that's what scares them. And you've seen it over and over again. When people are scared, they stop spending money. And that's when things start to go pear-shaped. No doubt. I mean, the last thing I promise I'll say about this is like when the administration...

trots out Navarro, who's the architect of this tariff trade policy, a man who served four months in jail last year for contempt of court because he refuses to acknowledge that Trump

lost the 2020 election. I mean, think about that from a confidence standpoint. If you are one of our allies, you're negotiating this trade stuff. This is the architect of that plan. A guy who is unwilling to believe something that 90% of the globe believes that's really scary stuff.

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Betterment, they're building innovative technology all for anyone who's ever said, I think I can do better. So grow your RIA your way with Betterment Advisor Solutions. Learn more at Betterment.com slash advisors. Investing involves risk, performance not guaranteed. All right, let's talk about Jamie Dimon here for a second. He was on, I don't know, with the Money Honey this morning, I guess, and

They report earnings on Friday morning. It sounds like the fact that he is on business news like two days before that, I think is very curious. Is he trying to get some of the stuff out of the way? You know what I mean? In front of their conference call. But let me just read you a couple things that Diamond was saying this morning. He said the economy is likely headed to a recession as Donald Trump's tariffs, royal financial markets. I think it's probably that's a likely outcome because markets,

when you see a 2,000 point decline in the Dow Jones, it sort of feeds on itself. It makes you feel like you're losing money in your 401k, you're losing money in your pension, and you've got to cut back. So he's talking about exactly what you've saying. Markets aren't always right, but sometimes they're right. I think this time they're right because they're just pricing uncertainty at the macro level and uncertainty at the micro level, at the actual

company level and then how it affects consumer sentiment. It's hard to tell. Now, nothing genius there, let's be clear, but it's really the words of a man that I think are pretty impactful.

Yeah, listen, and when somebody like him speaks, you don't have to agree with him, but you have to listen to what he has to say. And, you know, this is somebody, by the way, that for the last couple of years has had concerns around various different issues, and he's voiced them, I think, pretty clearly. I think he's trying to be a calming voice here. I think he's pointing out somewhat the obvious, but I think he's trying to remain somewhat optimistic as well. I don't think my sense is this Friday he's not going to be nearly as calm

robust or hyperbolic in some of the commentary because I think he understands the seat that he sits in and he's not looking to sort of add to the flames, right? And sort of stoke those fires. So I think you're going to see a more subdued Jamie Diamond. But in terms of JP Morgan, the bank, and we've said this

a number of different times. You know, for all the people that love banks out there, the move lower has been, in a word, dramatic. And, you know, it was all in the hopes, the rallies were all in the hopes of deregulation, all the optimism, animal spirits, all the different things, yield curve working in their favor. I mean, I could...

rattle off a litany of reasons why people were bullish in banks but as i've said as well banks are cyclical and if we are in the midst of a downturn as he just said he thinks we are banks are not insulated from that they're not inoculated from that and they're not protected from that so that's why this movement banks actually makes a lot of sense to me yeah another thing that i think is interesting on the sector front guy um pharma is down today across the board um

This was a Bloomberg article this morning talking about Trump at a fundraising gala. Can you imagine being at a fundraising gala in this environment? But he's talking about they're announcing pharma tariffs. They're going to come out in a couple of days or so. And, you know, listen, there's plenty of ideas that you and I agree with reorienting our supply chains. We just got a really good look at what happened during COVID, right, of having too much

reliance, you know what I mean? China in particular, but a lot of other countries for really critical sort of, you know, whether they be final products or components and the like, but also the logistics of the supply chain. You know, the idea to your point that we are this nation that obviously is very dependent on things like pharmaceuticals that are made critically overseas and like that makes sense. But there are probably better ways to slap massive tariffs where, you

First, it's going to disrupt the supply chains overseas. It's going to make pharma that much more expensive in a country where how much do we spend on drugs and health care and the like here? It's massive. The idea of fixing that, the idea of fixing chips and all that,

Makes sense. But what do you do in the meantime if you're a holder of these pharma stocks, many of which have already been beaten up? Yeah, look, I mean, obviously this feels like in my opinion, some of the names that you're talking about, you could Merck, look at Eli Lilly, Eli Lilly trading either side of $700. I mean, I think this is the low we've seen, I think, in quite some time. So with that said, I mean, this is still a stock that's done extraordinarily well, but I think you're starting to see some of the news generated capitulation

So if you want to be in a sector, I mean, market's $78 or wherever it's traded right now. Eli Lilly, either side of $700. Even the biotech space to me is seemingly interesting because now the rhetoric, I think, is sort of creating the capitulation in a sector, at least for the longest time, that seemingly was impervious to any of the bad news that was out there in the broader market.

Yeah, let's talk a little bit about, you know, we've kind of been previewing, you know, earnings season and what we're likely to hear. And I think there's a couple examples this morning where, you know, the lack of visibility, it almost gives companies a bit of a mulligan in a way, you know, like as far as, you know, if your quarter was pretty decent in Q1 and maybe you weren't feeling a lot of the adverse effects of the

consumer sentiment and corporate trepidation about spending. So you might be able to kind of put together or you might have been able to put together a good quarter that's backward looking and then the visibility going forward. So one example, let's just talk about Delta for a second here, reported decent numbers. I want to say three months ago and then a month and a half ago, they guided down and based on they were one of the first companies talking about a weaker consumer and lack of visibility. So they report today, they pull some forward guidance. The stock's up 8%.

Okay, now obviously the stock had gotten murdered from its recent highs. How do you think about that? Because you and I talk about this all the time. The mood into earnings season, which we obviously get four times a year, you know, often dictates how the stock market trades on the way out, right? If you're really bearish or the market's trading really poorly on the way in, the bar to beat those expectations is much lower and maybe the sentiment shifts a little bit if the news isn't worse than expected.

Well, for me, the airlines come down to, you know, and as you mentioned, Tim Seymour, I'll mention him here. When you're seeing the height of good news in terms of the rhetoric around it, historically, that's been sort of the time to say, wait a second, maybe we should be sort of taking the other side now.

if I'm being honest, I mean, if you had done that with some of these names and the run-ups they've had, you would have lost a lot. But conversely, on the downside, when it's seemingly as bad as it could get, when you're hearing some of the negative rhetoric, it's typically the time to sort of close your eyes and say, okay, here's where the bounce is coming. And you're seeing it today in Delta, quite frankly.

We traded down the levels we probably saw in August of last year. I think everybody remembers what happened on August 5th. So the level that we traded down to in Delta specifically makes a little bit of sense, but

So airlines are one of those sectors where when you're getting, when all the good news is out there and all the analysts are running to upgrade the names, that's typically the time to pull the ripcord. And conversely, when you hear some of the chatter the other way, it's typically the time to sort of close your eyes and get in. And that's playing out right before our eyes today, specifically in Delta.

Yeah, let's talk about Walmart really quickly. They put a statement out. This is a company I think probably reported, Guy, I want to say in mid-February. The stock was trading at all-time highs. At its lows on Monday, it was down 24% or so. At the time, they had some cautious, at least, data. Maybe it wasn't commentary. Maybe it was a little commentary and some of the stuff under the hood was suggesting that the consumer was weakening a bit. We've been talking about this for two years. They've been benefiting from a trade down by a higher-end consumer company.

Coming to Walmart stores and the like here, valuation was really expensive. I just saw something this morning that for the first time ever, Walmart is more expensive than Amazon, which is pretty fascinating if you think about that. But here's some of the commentary here. They are prepping.

for a worsening economy, but they're keeping prices low and hunting for ways to take market share. The company still sees net sales growing 3% to 4% this year, despite accounting for tariffs and the forecast. Walmart plans to absorb potential price hikes fueled by the trade war. This is the really important thing to me.

This is the thing that we are going to be debating for hundreds of different stocks, right? Is who is willing to eat these price increases? Because in the near term, you may say, we're going to do that to keep market share because maybe we don't think the trade war is going to go on as long as it, you know, we're not going to, we're going to avoid a recession, all the like here. But this is what's going to play out if there's a company in the entire U.S. economy that's probably in the best position in the near term to weather that storm, it's probably Walmart.

yeah i agree with that and you mentioned i think they reported on the 13th the 14th of february and at the time the stock was trading at its all-time high i remember having the conversation in the earnings that at the valuation that it got itself up to the prudent thing to do would be some taking money off the table because it's going to be hard for them to sort of say enough to get the stock continuing that move now that was around 105. i did not think it was going to get sub 80 but we basically got there so here we are now

But your point is well taken. I think probably one of the best suited companies to handle everything we're hearing out there is Walmart, which is one of the reasons I think they got the valuation that they got. And one of the reasons why I think they can, to a certain extent, grow back into that valuation. And again, I'll say this, you throw on top of that their ability to sort of harness AI and lever it in terms of their margins. I mean, to me, Walmart's the best in breed in this space.

All right. Before we get out of here, crude oil guys trading 57.5, down nearly 4%. Energy stocks are getting murdered. Housing stocks with the rates going higher, getting murdered. I mean, not murdered. Pharma is getting hit hard. Regional banks are having a tough day. They're all red. Since we've been talking, JP Morgan is down in the day nearly 1%. Bank of America is down 3.5%. Wells Fargo is down 2.5%. Citi is down 2.5%. So a lot of weakness. I guess it's

crude oil stocks, um, you know, financials, whether they be regionals, whether it be big caps, those are obviously some of the most, um, you know, we can call them economically sensitive and like, so those are areas. Let's see if they can firm up on the flip side. You know, yesterday after the market opened up a lot, we saw tech kind of leading the way it's doing the same thing right now. I see Apple up nearly 3% and video up three and a half percent. Uh,

uh you know tesla up four percent interestingly though meta's about to go down in the day google's about to go down on the day and those were some of the ones that really led to the downside yesterday before we get out of here what's most important to you on the trading day today well i mean you mentioned all those things by the way you know the crude oil crude oil below 65 as much as people are going to say that's a great thing it's a terrible thing

for the energy sector here in the United States and to a certain extent I think what's going on is OPEC sort of giving a giant middle finger uh to the U.S flooding the market with oil understanding what that will do it's just a matter of time by the way if oil would continue this move lower before we start hearing that the chorus of oil is too low believe it or not we've heard that before

But all those things that you mentioned are important, which sticks out to me. And we've talked about this and I've said it. One day you're going to walk in and gold's up $100. Well, take a look at gold because that to me is the winner of all this stuff. So, you know, the market has been sniffing out what's going on vis-a-vis the gold market. And I think that will continue to be the case. All right.

I just want to expand on that. We get lots of questions about gold. Why is it up $100 today? Because of this kind of lack of confidence. That's it. It's how we started the show. I mean, it's exactly how we started the show. The lack of confidence in global bond markets, the move that we're seeing here in yields. We've talked about an environment where gold can go up with yields going higher. That's what we're seeing. I mean, and by the way, central banks continue to buy gold hand over fist. They understand...

at least the ones that are buying it understand what's going on here. And, you know, the gold...

I don't know if I can be any clearer in terms of my view in gold. I mean, gold is the winner with what's going on globally, and that will continue to sort of acquit itself, I think. All right, man. Big week here. Tomorrow, you have a drop with Peter Bookvar of Bleakly Advisors. Peter, in my opinion, I know you agree with this, a brilliant macro mind. So you guys are going to be breaking down a lot of that. Also a gold bug. And then on Friday,

Thursday, I have a conversation with Dan Ives of Wedbush. He is a staunch bull on most things tech. I think he's got a bit more bearish of late on Tesla. So we're going to go through a lot of those kind of fateful eight names. So a lot of good stuff going on here. Appreciate you guys being here. Guy Adami. I'll see you later on the market call.