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The U.S. and China are competing for global leadership. The country who wins will define the world we live in. U.S. international assistance is vital to our national security. It helps prevent terrorism and avoid costly wars. It fights diseases and saves lives. It helps keep America as the number one economy in the world.
U.S. international assistance protects our interests at home and abroad. If America doesn't lead, China will. What counts most to you? Maybe it's spending more time with the ones you love. Or maybe doing more of what you love to do. The key to being rich is knowing what counts.
At Edward Jones, our dedicated financial advisors are people you can count on for financial strategies to help support what truly matters to you. Let's find your rich. Edward Jones, member SIPC. I'm Frank Holland, and you're listening to CNBC's Worldwide Exchange. Our show is live weekdays at 5 a.m. Eastern. Listen in. Global stocks melt as President Trump's tariffs go into effect, including 104% on China. You
U.S. futures, they're a bit mixed, but honestly moving all over the place this morning. Right now, actually, they're higher across the board, seeing the S&P up just about a quarter of a percent, the Nasdaq up about three quarters of one percent. As the world's two biggest economies, they engage in a high stakes game of chicken and pharma stocks. They're getting hit this morning as President Trump promises tariffs on that sector. They're coming. It is Wednesday, April the 9th, 2025, and you're watching Worldwide Exchange right here on CNBC.
Good morning. Thanks so much for being here with us. I am Frank Holland. Let's get you ready for this critical day for the markets and for your money. We're going to start off with our top story. U.S. stock futures pointing to another volatile session with President Trump raising tariffs on China to now 104 percent. China this morning saying they'll be resolute and forceful in response. Custom tariffs on 86 other countries. They also go into effect today. Take a look at futures. We mentioned they've been moving all over the place this morning. Just to be honest with you right now, the S&P up about nine points today.
The Dow looks like it would open about 250 points higher. The Nasdaq also moving up over 100 points higher. So the president speaking last night, really remaining adamant about his tariff strategy and the fact that it's working. Also pushing back on Congress taking the lead in trade talks, despite bipartisan efforts in both houses of Congress. I'm telling you, these countries are calling us up, kissing my. They are. They are dying to make a deal. Please, please make a deal. I'll do anything. I'll do anything, sir.
And then I'll see some rebel Republican, you know, some guy that wants to grandstand, say, I think that Congress should take over negotiations. Let me tell you, you don't negotiate like I negotiate.
All right. Again, that was the president last night. So today's action coming after another wild ride for stocks yesterday with the rally at the open, but then lower closes across the board. Take a look right here. So the S&P at its highs, it was up 4 percent at its lows, down 3 percent. You can see here it closed down just over one and a half percent. Similar story for the Nasdaq, up over four and a half percent, down as much as three and a half percent, closing down more than 2 percent. The Dow again, another multi-thousand point ride up as much as
Over 1,400 percent down as much as 800 points. You can see it close 320 points lower right there. So this morning, the Nasdaq's more than 20 percent from its all-time high. The S&P, it's approaching bear market territory with its first close below 5,000 in over a year. Taking a look right now, you can see the S&P on the precipice of hitting bear market territory.
This morning, we also want to look at Chinese stocks, of course, with the administration imposing 104% tariffs on Chinese imports. Taking a look, you're actually seeing Chinese equities higher for the most part. The MCHI that we track very often up almost 6%. Similar story for the FXI and also the KWIB.
the Chinese Internet ETF. But down here, you can see the ETF that tracks all Chinese equities pulling back more than 1.5%. We're going to take a look at currency as well. The Chinese yuan also hitting its all-time low against the dollar. You see here, we're actually showing the dollar rising against the yuan. It's up about 1% over this week so far. Week to date, I should say. We'll continue to watch the currency moves when we see
As we continue to talk about tariffs here this morning, we also want to look at retailers and seeing how their stocks are moving following those import tariffs. Right now, taking a look, you're actually seeing retail stocks moving higher. Walmart shares are fractionally target shares are fractionally Nike shares, very surprisingly, up over 2 percent higher in the pre-market, despite its reliance on China and production there. Lululemon shares also up a third of a percent. And we want to take a look at pharma. Last night, the president saying that tariffs for the pharma sector are coming. Taking a look at pharma stocks this morning.
A bit of a mixed picture. If you look at AbbVie up about a half a percent, but the rest of these stocks moving lower right now. Johnson & Johnson down three quarters of one percent. Pfizer down more than one percent. Similar story when it comes to Merck. And we're going to look at the energy sector as well. Oil at a three year low at levels not seen since the pandemic. A lot of concerns about demand due to tariffs slowing down global economies. WTI crude right now down three percent. Similar story for Brent crude. Natural gas actually up, up, up.
almost a half a percent right now. And we take a look at the bond market, a lot of action in the bond market. We're going to talk a lot about that just a short time later coming up in the show. Take a look at this. The benchmark at four point three three. Big upside move. A lot of concerns about economic growth here in the U.S. Broad sell off when it comes to the bond market. Again, we're going to talk much more about this. Also, the long bond, it approached five percent yesterday. Remember, this is a read on inflation expectations.
Okay, that is your setup now. We want to turn our attention over to the global markets. Red arrows all around the world as Europe opens another day deep in the red. Our Juliana Tattlebaum has the trade and a very unusual spot of green this morning. Juliana.
Frank, good morning. Well, let's kick off with Asian markets where we did see stocks move lower in parts of the region. You had a pullback in the Japanese market. You can see here the Nikkei 225 lost nearly 4%. The Kospi, not on the board here, but the South Korean market also sold off, entering bear market territory. You do have a bit of green, though, in the Hong Kong market.
the Hang Seng trading seven tenths of a percent higher and the Shanghai Composite gaining about one point three percent. Why is that? Well, Beijing has stepped up its efforts to support the domestic Chinese economy and stepped up its efforts to support the market. And that's feeding through to the market action that we've seen overnight. Now, in Europe, it is
all red. Every sector trading sharply lower this morning. Every region is under heavy selling pressure. The Zetra DAX was down more than 3% at one stage. Now it's down about 2.7%. The CAC 40 in France down 2.4%. So reversing all of yesterday's gains, European markets are
closed up before the U.S. took a turn for the worse yesterday. So we actually closed higher, more than 2% for the stock 600, but all of that has gone by the wayside today. In terms of sectors, you're seeing heavy selling in the healthcare space as pharma investors brace for those tariffs from the Trump administration. These are the best performers in the market and the best performers are still in the red, but these are the worst ones. Healthcare down 4.5%, the worst of the bunch. Frank?
All right, Juliana, thank you very much. Our Juliana Tattlebaum, live in London.
We're going to turn our attention back to China. Markets there, you can see, they're actually holding firm in the face of new 104% tariffs from the U.S. Take a look at some of the major markets right here. The CSI up just about 1% right now. The Shanghai Composite up over 1.3% or right around 1.3%. The Shenzhen Composite up about 1.75% of 1%. Some of the biggest names in China also higher in the pre-market. We're going to take a look at those right now. You see Alibaba shares, they're up over 6.5%. JD.com up just about 6%. PDD up
almost three and a half percent. So this is government officials meet this morning. Also, some new comments from President Xi Jinping. Our Eunice Yun joins us now from Beijing with the very latest. Eunice.
Thanks, Frank. Well, in about seven hours, the Chinese 34 percent additional retaliatory tariff is set to go into effect. And so far, it doesn't appear that there's any change of heart at all to call those off. In his first speech since the escalation, President Xi Jinping had painted himself as a defender of multilateralism. He said that he would pledge to strengthen ties
with neighboring countries. The People's Daily, which is the voice of the Communist Party, also ran an editorial, an op-ed, where they quoted President Xi as saying that the best way to weather the storm is to focus with, quote, unwavering determination. Now, the Commerce Ministry today also has been arguing that
China has abundant means to retaliate. At the same time, they said that the Chinese are open to negotiations. But a lot of the messaging, not only in official commentary, but also in the state media, has been that the method and the way and the conditions
of these discussions are also very important in fact one of the social media accounts that is linked to state media cctv and has been used as a messaging um a message a messenger i should say for beijing uh said that we are willing to talk but quote definitely not in the way the us is doing um this is despite frank of the um the the impact
economically that this could have a lot of the suppliers that we've been talking to here. I've said that they feel that at this level that business is getting really, really, really difficult to do. And capital economics came up with an estimate saying that the exports to the US will more than half.
even if the renminbi weakens to eight to the U.S. dollar. So it seems like there's some conflicting messages coming out of China this morning, willing to talk, but under these circumstances, the president's remained pretty adamant the circumstances aren't changing. He wants to see negotiations. I'm curious about some of the communication inside of China right now. Is there any push by the local government to have people buy goods there in China or support local brands as opposed to U.S. brands?
Not specifically in terms of like a nationalism to not buy U.S. brands, but definitely there already has been a push to buy Chinese products. And that's been going on for quite some time. Also, people, a lot of officials are trying to get Chinese to buy goods more broadly because that's also seen as one way to protect the country by relying more on consumption here in China. Our Eunice Shun live in Beijing. Eunice, always great to see you. Thank you very much.
We're going to turn our attention back stateside now and some of that whipsaw action for U.S. stock futures after the major indices that closed down for a fourth straight session. The S&P set to open up below 5,000 for the first time since April of last year. We've been all over the place this morning. You can kind of see the moves right here. Right now, the S&P futures essentially 4%.
flat. So volatility, that remains elevated. The VIX, it's higher again this morning. Taking a look at the VIX, you can see it's at 48, just above 48 right now. But you're seeing the big spike right here. Tariffs obviously raising a lot of the anxiety on Wall Street. And just to show just how volatile things have been since April the 2nd, the Dow is down almost 4,600 points from Wednesday's close. But if you take into account the whipsaw action that we've seen from day to day, session highs to session lows, especially in the last two sessions, take a look right here. The Dow has actually traveled more than
13,000 points. You're seeing valleys right here. You're seeing peaks over here. You're seeing rallies here. So a lot of action when it comes to the Dow. So big question right now, what should investors be doing in this environment? Joining me right now is Rianne Mitrione, investment management partner at the Callen Family Office.
with about $4 billion under management. Also here with me is Victoria Green, G-Square Private Wealth founding partner and chief investment officer. She's also a CNBC contributor. Ladies, good morning. It's great to have you here. Vicki, I'm going to begin with you. What should investors do? We're seeing so much headline risk, so much volatility in the markets. Is there any safe haven any longer?
I mean, the safe haven is short T-bills. That's about it. As we saw, the intermediate and long end certainly sold off hard and did not provide the haven people thought. And gold has also been a little more volatile. So if you want absolute security, you're going the one year and under T-bills, your money markets. But for me, it's don't panic. We want to look at this market and say, over time, buying bear markets, buying this volatility has been a great way to make money in the long term. So for me, it's don't panic. Don't knee-jerk panic sell.
that's probably not ending. It does feel really terrible to be a human being. We're getting so many mixed messages. We're having, you know, 8% intraday moves the last two days. So be patient. Don't get tricked into thinking that the last two days we've had these kind of false rallies, right? That, oh my gosh,
It's all in. We're going to have tariffs rolled back. You know, I got to hop on board. So be a little bit patient. We're getting jerked around. We are holding right now and we're buying very slowly. I don't think we've seen the bottom yet, but we're starting to buy some of these things that have sold off hard that we still think have value, have potential.
protective earnings and really strong balance sheets to overcome volatility. Yeah, I think everybody's kind of over trying to call a bottom at this point. Rianne, I'm going to come over to you. We had a lot of people come on our air and say when the tariffs were first announced, that board that a lot of people are making fun of now because of the formula, a lot of people said, well, this is worse than the worst case scenario. It seems like we've gone a well-traveled past that point. Right now, where can you put money to work outside of treasuries and short-term treasury? We had a number of people saying that. Is there anywhere to go in the equity markets?
Absolutely. I mean, we've seen a really substantial reset in valuations in a really short amount of time. And so if you've rebalanced late last year coming into this year and reduced some of that
growth areas now we've seen really significant pullbacks in technology and consumer discretionary even in financials in small caps. I mean all of those now especially you know you look at small caps they're trading you know close to a thirty year lows from a valuation perspective. It's you know there are places that make sense to shift rebalance back from the
from fixed income, which has had a positive return this year, and shift incrementally into equities, just in standard rebalancing, buying into those hardest hit areas. So, Rhian, I do have to ask you, I'm looking at the small caps right now. They're more than 25 percent off their 52-week high. They're obviously very economically sensitive to a potential U.S. slowdown or maybe even a recession. Why would you get into the small caps now with, I think, elevated recession risk?
It could take some time for this to play out, of course. And recession risk, our view is we're coming from a very strong place in the economy. With where we are with these tariffs, if they stay in effect, we could easily see a mild recession. But we don't anticipate seeing anything too significant. And once right now the market's hyper-focused on trade war risks,
But when we move past that, we'll start to hear the narrative turn back towards deregulation and tax cuts. And that will all be supportive for small caps. But just it's just hard when they're trading at levels like this. They are very attractive. And that is one area where we still want to add. All right. You're not the only person making that argument or has made that argument over the last year. But it seems like the thesis is unwinding a bit. Vicki, I'm going to come back over to you. You gave us some potential safe haven plays.
Walmart and Costco. I want to ask you, you don't see China risk in those two stocks? I mean, we've had a lot of people come on and say, well, Walmart and Costco, they aren't that exposed, but they certainly do have some exposure. They also have exposure to consumer sentiment and economic slowdown. Look, you're looking for an anchor to wayward and everything's on fire, right? We're the little dog with the mug saying everything is fine right now as the world's on fire. They are going to weather things better than most. You're still going to have to buy groceries. You're still going to have to buy clothes. You're still going to have to buy.
basic necessities, and I think both of those provide the most value in bang for their buck. And they have diversified their supply chains. Walmart does claim two-thirds of their goods that they sell are made, manufactured, or put together in the United States or grown. And so I look at Walmart, I look at Costco, they're very strong in grocery, which I think, again, provides them this defensive posturing because, yes, we are worried about consumer spending. We may not see the big ticket items fly off
the shelves and televisions and electronics, but you still got to eat. You're still going to have to buy clothes that they're falling apart. And those two, for me, are best positioned. You are trying to find something that right now there's not a lot of safety. And so for me, those two provide what I think is a historically defensive posturing in an area that has to have spending in grocery. All right. Coming up later today, we get Delta Earnings.
We've already had an earnings warning from Ed Bash, and he's already warned about the consumer. What impact, potentially, do you see these earnings having on the market? And, of course, you have banks coming up as well.
Yeah, I'm a little bearish on earnings coming into it. I think Delta is just going to rip the bandaid off and say, hey, we're really worried and reset expectations and lower growth once again. I don't think that would surprise anybody. You know, I think nobody's going to care about Q1. Honestly, we're all going to be focused, hyper focused on what's the outlook, what's the guidance? Are we going to see it? And I'm a little bit worried that earnings are going to be, you know, we call it taking out the trash, that their stocks are down. So let's go ahead and reset expectations extremely lower so we can beat it down the road. I don't
I don't think airlines are going to have anything good to say. And Delta has a lot of international routes. They've got a lot to China and Europe. I see them a little bit more more exposed there. They're great. They're my top pick in the airline sector. I just wouldn't touch them right now because they're very exposed to consumer sending and currency. So I'm gonna give you the last word. We have some economic reports coming up later this week. Probably most importantly, CPI. Is that still a market mover or is it the president and tariffs that have control of the markets?
I think the narrative right now is really focused on president and tariffs. The tariff narrative is so important. There will be some movement around CPI likely, but a lot of that is backward looking and we're not seeing the effects of the tariffs really weighing in yet. So I think some of that may be just kind of glossed over and it'll depend more on what's really going on with tariff negotiations. And hopefully, you know, I think the market is looking for a reason to rebound. So if we start to see some trade deals materialize, I think that would be a positive.
You know, to your point, we are seeing the futures higher right now. Rian Mitrione of Victoria Green, great to have you both here. Thank you very much.
Thanks, Frank. All right, we have a lot more to come here on Worldwide Exchange, including historic swings in the bond market and the urgent message my next guest has for J-PAL and the Federal Reserve. Plus chips, pharma, lumber, and much more. President Trump, he repeats his willingness for more sector-specific tariffs. We're going to dig into one. And later, the rising cost of the president's tax agenda and some issues in Congress. A very busy hour still ahead when Worldwide Exchange returns. Stay with us.
The U.S. and China are competing for global leadership. The country who wins will define the world we live in. U.S. international assistance is vital to our national security. It helps prevent terrorism and avoid costly wars. It fights diseases and saves lives. It helps keep America as the number one economy in the world.
U.S. international assistance protects our interests at home and abroad. If America doesn't lead, China will. Catch the Spring and Bloom event at Whole Foods Market with savings for Easter, casual gatherings, and more. Save on no antibiotics ever meet, best of season spring produce, brunch favorites, sweets, and more through April 22nd.
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Now available at McDonald's. And participating McDonald's for a limited time. A Minecraft movie only in theaters. Welcome back to Worldwide Exchange. Take a look at U.S. stock futures right now. You can see we're in the green across the board. The S&P up about a third of a percent. The Dow up about three quarters of one percent. Same for the NASDAQ.
All right, turn our attention now to the Treasury market. Yields are spiking as investors, they may be selling on expectations of weaker foreign demand for U.S. bonds as tariffs take effect. The 10-year yield hitting 4.51% in the overnight session. That's the highest level since late February. The 30-year touching getting very close to 5%.
Market watchers are speculating that hedge funds and not foreign buyers like China and Japan, they're largely behind the selling. There are two key auctions coming up as a test of demand with the sale of 39 billion in 10-year notes today and 22 billion of 30-year bonds tomorrow. Joining me now is Gilbert Garcia, managing partner at Garcia, Hamilton, and Associates. Gilbert, good morning. It's great to have you here. Thank you for having me. Very exciting times. All right, so let's start here. What's your take on the bond sell-off? Do you agree with the idea that it's hedge funds selling and that's what's leading to this bond sell-off or are there other factors? I think it's...
unclear, but I know one thing. Those that are selling are going to wish they did not because we see the economy continuing to slow down with or without the tariffs. And we think that right now bond yields at four plus percent are a bargain, especially for pension funds that are, of course, they finally have some yield in their fixed income. This is the place to be. U.S. Treasuries. So you think U.S. Treasuries are the place to be. We kind of tease you saying that you have a warning for Jay Powell and the Fed. What is that warning? My warning is this.
By the time you see the whites in the eyes, it's too late. The whole concept of being data dependent is too late. They should be cutting rates right now. It is clear that this is one of those events. And I've been around. I've seen the stock market crashes in the 80s, the dock
Com, Lehman Brothers, COVID. This is another one of those things. They're going to call it the Trump trade wars. So this is the time to give confidence back into the market so things will settle down. They should cut rates now. You think they should cut rates now? So in your mind, I just want to be clear. So you think that would reduce yields, raise prices, it would make the bonds more attractive?
That's correct. But most importantly, what it would do is settle down world markets. All the fear and uncertainty that's out there. Because remember, the economy is already on a trajectory for much lower inflation and much weaker growth. That's already happening. We're already in a recession, whether it's real estate, whether it's commercial real estate, whether it's a home mortgage. This is the time to be cutting rates and to get ahead of the curve. Bobby, you can't see us behind you. We're just showing some of the previous Federal Reserve emergency rate cuts. They were...
Very big events. It wasn't necessarily the actions of a president, but we don't want to get too jammed up with that right there. I want to go back to where you see opportunities in the bond market right now outside of treasuries. What about municipals? A lot of people talking about municipal bonds. Also, we've had a number of guests come on and talk about high-yield corporate bonds. What's your take on those two? I would not be buying high-yield corporate bonds at all. In fact, if you look, corporate bonds are still rich. What do I mean by that? If you look at the beginning of the year, high-yield bonds,
The corporate bond high yield index was out yielding about 230, somewhere in that range. And the high grade, somewhere around 80 basis points. We've now widened. High grade is now somewhere around 125. That's still below the average, the 30-year average. If you look at high yield, it's now somewhere around 4-ish, just over 4%. That's also still below the average. There's a lot more room to go for those spreads to out yield.
to widen and those areas to underperform. All right, municipal bonds. Is that safety? Is that the safe place to go? That's a good place to go. And they now are attractive for a while there. They had been overvalued, whether it's taxable versus tax exempt or whether it's versus corporate bonds. But now they're very well valued. That's a good place to go, especially for individual investors.
All right, Gilbert Garcia, it is great to see you. Thanks for coming in the studio. Thank you for having me. All right, still on deck here on Worldwide Exchange, the role the bond market, speaking of the bond market, could play when it comes to the president's tax plan. Robert Frank, he's here to break it all down. Also, a historic slide for one MAG7 member hit especially hard by President Trump's tariffs. We have the full details when Worldwide Exchange returns. We're obviously talking about Apple. Those shares actually up in the pre-market, up about one and three quarters of 1%. Stay with us.
Apple, great company, is spending $500 billion because of tariffs. $500 billion. Not $500 million. That's a lot. $500 million. You know, when I first heard the number, I said, you mean $500 million. You can build a lot of plants. No, sir. $500 billion. $500 billion?
The U.S. and China are competing for global leadership. The country who wins will define the world we live in. U.S. international assistance is vital to our national security. It helps prevent terrorism and avoid costly wars. It fights diseases and saves lives. It helps keep America as the number one economy in the world. U.S. international assistance protects our interests at home and abroad. If America doesn't lead, China will.
McDonald's meets the Minecraft universe and Grimace, Birdie and Hamburglar just spawned in the overworld. Now for a limited time you can get one of six McDonald's collectibles when you order a Minecraft movie meal. With your choice of Big Mac or 10-piece McNuggets with spicy Netherflame sauce.
Now available at McDonald's. And participating McDonald's for a limited time. A Minecraft movie only in theaters. And welcome back to Worldwide Exchange. House Republicans, they're divided over a budget blueprint that would pave the way for Congress to pass President Trump's economic plan. Some lawmakers are opposed to the tax outline recently passed by the Senate because of its impact on the deficit. But there's an even bigger risk to the future of this bill. It's the bond market. Robert Frank joins us now with much more on this story. Robert, good morning.
Frank, great to see you. Well, the potential costs of the new tax bill have soared from about $4 trillion to over $8 trillion. Now, extending the 2017 tax cuts itself would cost about $4.5 to $5 trillion over the next 10 years. You add to that President Trump's new plan, so no taxes on Social Security, that's about $1.4 trillion, no taxes on overtime pay, about $900 billion, no taxes on tips, that's $100 to $500 billion, and of course, raising the SALT cap,
from 10,000 to $25,000. That could be billions more. You add all that up,
And that could cost between seven and eight trillion dollars. That money will not only raise the debt, but also the interest costs, of course, on the debt. So without an offset in cost, the Peterson Institute estimates that the interest on the debt plus the cost would raise the total to over nine trillion dollars. Now, to fund all that, the government will need to issue more debt and that more supply could bring higher rates. You add to that
Bond investors will demand higher yields for that added risk. The CBO estimates that every 1% increase in debt to GDP
adds two basis points to long-term rates. So debt to GDP expected to rise by 34 percentage points over the next 10 years, given this scenario. So that would add 68 basis points in higher rates just from the tax change. Now, Frank, as you mentioned at the top, a lot of potential reasons for why yields could be rising here over the past 24 hours. Maybe it's foreign buyers, maybe it's hedge fund sellers.
But I think taxes are certainly as we see these bills proceed through the Senate and the House could be other upward pressure on yields right now. It's probably a number of factors, Robert. So I want to bounce something off you, Robert. Some reports crossing over the last couple of hours that the president may be open to raising taxes on the highest earners. How could that potentially impact just the view of the bond market for investors?
Well, it's certainly going to impact high earners because remember in 2016, Trump said the same thing. Then we had the salt cap, which hurt the high earners in the blue states. That was offset by those top rates coming down from 39.6 to 37%. If they raise that,
that will really hit, especially the high earners in blue states. But as we said at the top, they need some way to pay for at least offset some of these other tax cuts. So I'd say it's a real possibility. You know, a lot of people in our audience and a lot of people you talk to on The Wealth Beat, they fall under that category of high income earners. I'm just the messenger, everybody. I'm just the messenger. Hopefully they don't take it out on us. Robert Frank, it is always a pleasure to see some very interesting reporting on the impact of the bond market on the tax plan. Thanks again.
All right, as we head to break, watching shares of Apple after it fell to the second most valuable U.S. company yesterday behind Microsoft. Shares higher this morning, but coming off their worst three-day stretch in history, down 19% through Monday, and over the past four sessions, down 23%. That's Apple's worst four-day stretch since all the way back in 2008 during the great financial crisis. Worldwide Exchange, we are back right after this. It's very simple. We're making deals and trading.
People are paying tariffs. Countries are paying tariffs. They've ripped us off left and right. But now it's our turn to do the ripping. That's okay. We're going to make our country even stronger, stronger than it ever was.
That was President Trump last night, remaining confident on the effectiveness of his global trade war. I see it right around the world this morning as those new tariffs take hold. However, U.S. futures pointing to another volatile day shaping up. You can see they're in the green right now. But to be honest, they've been moving all over the place this morning.
Welcome back to Worldwide Exchange. I'm Frank Holland. Coming up this half an hour, much, much more in another critical trading day taking shape. We also have former Commerce Secretary Carlos Gutierrez standing by laying out what he calls the real consequences from these tariffs. And David Zervos from Jeffries, we're going to ask him if he's still optimistic on the Trump administration policies given the recent sell-off we've seen in the U.S. markets. But first,
Back to our top story, U.S. stock futures pointing to another very volatile session with President Trump raising tariffs on China to now 104 percent. China this morning saying it will be resolute and forceful in response. Custom tariffs on 86 other countries also go into effect today. Taking a look at the action we mentioned in the green across the board, the Dow looks like it would open up about 200 points higher than NASDAQ actually off of its highs of earlier today. Similar story for the S&P pulling back just a few points.
All right, this action coming after another wild ride for stocks yesterday with a rally at the open, then a lower close. You can just see the moves right here. S&P at its highs up over 4%, at its lows down 3%. NASDAQ at its highs up 4.5%, at its lows down 3.5%. The Dow, this is just...
It's crazy. Dow up at its highs, up over 1,400 points. At its lows, down 800 points. You can see it closed down 320 points. Really a roller coaster. So this morning, here's where we're at. The Nasdaq is more than 20% from its all-time high. The S&P, it is approaching bear market territory. Also, with its first close below 5%.
$5,000 in a year. This morning, I want to take a look at the S&P pre-market gainers. Taking a look at those this morning, we're seeing Marshall McLennan up here right at the top of the list. Those shares up over 17%. Caesars, Cummins, Alliant Energy, and West Pharma rounding out the best performers. Then the other side of the coin, the S&P pre-market laggards. Taking a look at those this morning. Solventum, those shares pulling back about 8%. Regency, Raymond James, KKR, and Veralto Corp rounding out the worst performers on the S&P in the pre-market.
We also want to look at Chinese stocks as the president, he escalates his trade war with that country. Seeing here Chinese equities in the green right now, the MCHI, one that we follow very closely, up over five and a half percent, just a bit off of its highs of earlier. The FXI up just about five and a half percent. The K-Web that tracks Chinese Internet stocks also up nearly six percent right now.
The Chinese yuan also hitting an all-time low against the dollar. We're going to show it to you here at kind of the inverse, the dollar rising against the yuan. A lot of worries about China devaluing its currency. You can see week to date the dollar's risen about 1% against the yuan. We also want to look at the pharma sector after the president said that sector would face tariffs last night. Taking a look at those stocks this morning. These are treasuries. We're going to show you the pharma stocks today.
in just a second, but we're going to move on, actually. We're going to move on to the Treasury market right now. Take a look at Treasury. We've seen a spike in Treasury yields. The benchmark right now at 4.36, a sell-off. A lot of people believe that could be hedge funds selling their Treasuries to try to get some liquidity going. We've also seen the long bond. It just kind of touched 5%. Remember, this is a read on inflation expectations.
And we want to take a look at the energy market right now. Oil at a three-year low at levels not seen since the pandemic. You see WTI pulling back more than 3.5%. Similar story for Brent Crude. Natural gas actually up off of its highs of earlier, but up about a quarter of a percent. We had Vicky Green on the show earlier. She told me during the break that this may be on the idea that some of these Asian countries that are facing tariffs may try to buy some of our natural gas to try to reduce their trade deficit. We're going to continue to look at that throughout the show. And
That's where actually we're going to leave this whole situation. That's your setup for this morning. Now, we're going to get back to our top story more on the president's Trump's his trade war. We're going to bring in Carlos Gutierrez, former Commerce Secretary, former CEO of Kellogg's and a CNBC contributor. Carlos, thank you so much for joining us once again. It seems like we're doing this every week, talking about tariffs and the impact on the economy and the market. You say there's some real consequences to these tariffs. Are you talking about the 104 percent tariffs on China or is it just generally all the countries facing tariffs today?
Yeah, you know, both. We are now, Frank, in a territory that no one expected. You know, a few days ago, we thought we were looking at this analytically, but no one expected things to get this far. And the thing we have to realize is that it's not over. You know, the president is doubling down. So as far as they've gotten, as dramatic as it's gotten, there's still more to come.
You know, we used to ask before, is this permanent or is this a negotiating tool? I think the real question is, how long will this last? Because it's all a matter of time. The president needs time to bring back manufacturing, to raise revenues, to do whatever it is he wants to do. But the more time goes by, the more damage will be done. So it really is, it's a contest of time.
Who gives in? Does time impact the economy to such a point where he has to give in? Or does he continue to insist on bringing back manufacturing, on doing the things he wants to do in the time that that will take? It's interesting that the European Union offered zero tariffs and very importantly within that was taking down tariffs to zero on automobiles.
This has been a big issue for the U.S., especially coming out of Germany. It's 10 percent coming out of the European Union, especially Germany, taking it down to zero. That's a big victory for the president.
but he wasn't willing to take that. You're saying that's a big victory. You also came on our air and you said you believe these tariffs, they're going to be either reduced or taken away on the back end of the year. Do you still feel this way that the tariffs are going to be short-lived? And then what happens if just the U.S. economy gives out first? What happens then? That's what I'm saying. This is a matter, this is a competition with time. The longer we wait, the more difficult the impacts will be. So I still believe that
that these tariffs will eventually come down. Maybe not all of them, but the trend will be downwards. The point is, how long? When will that happen? Because we can't live with these tariffs for a year, two years, whatever it is. It's a matter of time. But this is different than last week, Frank. What I'm saying today is the president is not done yet.
You know, it would be easy to say, I think he's gone far enough and now he's going to start reducing. No, everything indicates that he's going to keep going. Look, again, the example of the European Union, it's a big win, but he's not taking it. He wants more. Carlos, very quickly, I just want to point out to the audience, the S&P futures, they turned very fractionally lower right now before all the futures were in the green. I want to come back to you. Coming up later today, I know you're not a bond trader, but we have a bond auction later today. We have another one tomorrow.
Is that something that potentially a commerce secretary, U.S. trade rep, the president himself may look at if we see less demand from foreign buyers? Is that something? If not, what is the president looking at? Because we're going to get some earnings later today from Delta. It's a very good chance they're going to signal the consumer is considerably weaker. We're going to hear from banks. There's a good chance we're going to hear that the economy is slowing down quite dramatically. What do you think this president would listen to? Well, no question. All those things that have been looked at and the Treasury secretary will be all over it.
I think what the president is relying on right now and the information that's giving him inertia, that's giving him motivation, is all of the calls he's getting from countries to negotiate. That tells him that this is working. So the numbers may be down in the short term. They may look a bit shaky, but frankly,
In his point of view, this is working because everyone wants a deal. So he's got the upper hand. So right now he's I don't think it'll be about the numbers. It's about how he's feeling and he's feeling that he's in a strong position.
All right, Carlos, we've got to leave the conversation there. It is great to see you. Thank you very much. Thank you. Good to see you, Frank. All right, coming up here on Worldwide Exchange, President Trump turning his attention to the world's largest chipmaker pushing to bring production to the U.S., plus pharma stocks pulling back as the president sets his sights on that sector. We're going to be right back. Stay with us.
And welcome back to Worldwide Exchange. Taking a look at U.S. futures right now. We've seen a bit of a shift right now. So the S&P now lower down about a tenth of a percent right now. The Dow also lower. Both of these were higher earlier, down about a third of a percent. The Nasdaq still holding on in the green, up just about one third of one percent. Stay with us.
We're going to be announcing very shortly a major tariff on pharmaceuticals. And when you and when they hear that, they will leave China. They will leave other places because they have to sell most of their product is sold here. And they're going to be opening up their plants all over the place in our country.
That was President Trump last night suggesting his long-promised tariffs on pharmaceuticals would be coming any day. A number of names in that space you can see right here in the red. Merck down about one and a quarter percent. Pfizer down about one and a half percent. Our Angelica Peebles has more on the challenges tariffs could present to the pharma sector.
Sweeping tariffs on pharmaceuticals could take away some of the complexity and mean that if the main ingredient of a drug is made overseas, that drug would be subject to a tariff. The U.S. imported about one-third of our prescription drugs, or $200 billion worth of medicine, in 2023. That's according to economists at ING Bank.
Lyric analyst David Reisinger says every large pharma company he covers would be affected. One lawyer told me she couldn't find a single client with a fully U.S. supply chain. But calculating individual companies' exposure is impossible with how little they disclose.
Two key variables are where the main ingredient of a drug is manufactured and who pays for the intellectual property for the imported drugs. That latter detail significantly affects the price that's ultimately tariffed. On its own, a drug might only be worth the cost to make it, and that's much less than what drug makers charge for it. But with the IP factored in, it's valued much closer to the list price, and that would result in a far bigger hit to earnings, Reisinger says.
But before we get there, the Trump administration needs to launch a Section 232 investigation. They would have to wrap that up within 270 days, but no one expects it to take that long. Until then, one lawyer tells me that companies are scrambling to sort through their supply chains, figure out what's made where and what the impact would be. But another says he doesn't expect to see companies make any meaningful changes to their supply chains anytime soon.
soon because there's just so much uncertainty that they don't want to make changes at this point. Frank. All right. Coming up on Worldwide Exchange, Jeffrey's chief market strategist, David Zervos. He's standing by on what's shaping up to be another volatile trading day and the world's two biggest economies dig in further in the global trade war. We're going to be right back after this. Stay with us.
Welcome back to Worldwide Exchange. Time now for a check of some big stories that we're following this morning. CNBC learning that Trump administration officials tasked with creating a strategic wealth fund are moving forward with its establishment. The president signing an executive order on the matter back in February, even suggesting it could buy TikTok. Meanwhile, the Trump administration is freezing more than a billion dollars in funding for Cornell University and nearly 800 million for Northwestern. The White House says it's looking at both schools over allegations of civil rights violations.
President Trump says he told Taiwan Semiconductor it could potentially pay a tax of up to 100% if the world's largest chipmaker didn't build its plants in the U.S. Canada officially putting a 25% retaliatory tariff on U.S.-made autos that goes into effect today. The move means that even if a vehicle made by GM, Ford or Stellantis in the U.S. is compliant with USMCA trade, the USMCA trade agreement, parts that are not from Canada or from Mexico will be taxed.
and a German regulator has edited its probe into Google and into its auto services unit, including maps. This after the tech giant agreed to address Germany's competition concerns.
All right, looking ahead to the trading day ahead is President Trump's reciprocal tariffs. They take effect in China as releasing a white paper on U.S. trade and economic ties. Beijing reiterating it would take countermeasures on the 104 percent tariffs imposed by the president. But Chinese leaders say they're willing to communicate with Washington to resolve differences. Let's bring in David Zervos, chief market strategist at Jefferies, also a CNBC contributor. David, good morning. Good to see you.
Morning, Frank. You're looking very calm. I don't think investors are calm this morning. A lot of swings in the futures. I mean, what are you seeing right now? What do you think about all this? You've been very, I'm going to call it, bullish on the Trump administration policies. Are you maintaining that stance? I am, and I think the strategy has been laid out fairly...
in a very straightforward manner. They want to end up in a cooperative place. They want lower tariffs all around. They want people to come to the table, and they are coming to the table. You have to threaten the sort of ugly, ugly outcome of being very uncooperative all around. And that gets people to the table. That's happening. Excited to see that happen in Japan quickly. Sounds like last night, as you reported, Frank,
that the Chinese want to talk. That's actually a pretty big deal. I woke up to that one. The market doesn't seem to be as excited about that as I am, but we'll see how the day goes. Everything moves very quickly these days, so we'll see. But I think we're ending up, I think we're going to end up in a more cooperative, fairer trading environment. The process to get there is threatening. David, a more cooperative trading environment. You're talking about what the president's saying. Again, the president administration saying about 70 countries have come
trying to negotiate. But what about what investors are saying in the equity market right now? We have the S&P approaching bear market territory and also the bond market. We've seen a broad sell off there. What about what they're saying? Well, you're not going to get a resetting of the global trading arrangement or a resetting of our fiscal policies and lower deficits and lower debt without some pain up front to get the gain in the future. That's the no pain, no gain strategy. Again, I think there's been a lot of clarity on that, that
bottle that they're pushing. So, yes, that's a painful process to unwind mercantilism. And really, Frank, I want to say this because I think it's important and I've been, you know,
pushing this through my brain for the last few days. I really think the strategy here is to unwind decades of mercantilist behavior by our trading partners, whereby there's export subsidies, import blockages, accumulations of assets, and a vendor finance, effectively, of the U.S. consumer. And I think it's worked out for some big companies. It's worked out to get some cheap goods, but it's really
hollowed out the country and caused huge imbalances in financial markets through trade and budget deficits. David, you're very focused on the potential of a long-term economic benefit, and clearly the administration is as well, but what about the short-term pain for investors? I mentioned some of the areas in near bear market territory, incorrection, et cetera, but in general, sentiment is very low, and I think it's also low not only for the consumer, but for companies. CapEx spending is slowing down. Consumer spending is slowing down. How do the markets recover from that?
Look, this is tough. And there's a lot of ways it can go off the rails. It's not an obvious win. Even in the long run, you could have this derail. So I'm not trying to be too Pollyannish here. I'm trying to explain where I think they're headed and why they're doing it. And I think it's a relatively admirable goal, but it's a difficult goal. It's like taking a
patient off a drug that they've been on for decades. You've been on this drug of fiscal largesse. You've been on this drug of imbalanced trade that has benefited a few but hurt many. And I think it's tricky to pull that out of the system. They're doing it. And there's a lot of people screaming about it, which means it probably has been very imbalanced. But
Let me bounce something off you because we're almost out of time. I want to bounce something off you. So we got some news right now about an Apple supplier called LuxShare. You already know about this. So they're in talks to possibly bring some of their operations outside of China, I guess, in response to these tariffs. So let's say we continue to see that. Countries coming to negotiate, companies themselves complying with what the president wants. Then where do you put money? What benefits? We often talk about the stock market being a long-term discounting mechanism of what's going on. Who's going to benefit and
And where does the money go in anticipation of that if you really believe that's going to work?
You know, I think at the end of the day, you're still going to see returns on capital in the United States be some of the highest anywhere in the world. We are the place that treats capital the best. We have the best returns for human capital and physical capital on the planet. It's why we had the exceptionalism we did. And I don't buy that it's over. I think it's the end of mercantilism, not the end of exceptionalism. One last quick question, David. We got to go. Ten year auction coming up. If we see fewer foreign buyers, does that shake up your view of all this?
it gets messy fast. Frank, that is really the linchpin. This is a trade war. And if countries can use their stock
of U.S. financial assets that they've accumulated during this mercantilist activity, then they can create some problems. David, we've got to watch it. It's great to see you as always. David Zerber from Jefferies. Thank you very much. Good to see you, Frank. All right. I want to take one more look at U.S. stock futures. We mentioned all morning long U.S. stock futures have moved quite a bit right now. Take a look at the picture right now. We're seeing the Nasdaq still in the green, holding on to gains. The Dow looks like it would open about 200 points lower. The S&P fractionally lower right now.
We were mentioning all morning long some of the movements when we're looking at retail and also stocks like Apple. Apple actually higher despite those 104 percent tariffs. That's going to do it for Worldwide Exchange. You've been listening to CNBC's Worldwide Exchange. You can always catch us live weekdays at 5 a.m. Eastern.
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