Markets on edge as tariff deadline looms & the future of vaccine development in the FDA 3/31/25

0:03Live from the Nasdaq MarketSite in the heart of New York City's Times Square. This is Fast Money. Here's what's on tap tonight. Three months to forget from tech to airlines to housing and beyond. Stocks finishing Q1 in the red and with tariffs set to take hold this week. Do traders need to brace for some of the same? Plus, biotech blues, a key FDA official, resigning in protest over RK Jr.'s views on immunizations and vaccines. The sector falling on fears that politics will trump medical science. Should investors worry? We'll debate that. And later, the crumble of core weave shares continues. Gold hits another all-time high.

0:35Can it keep climbing? And we will break down why one tech analyst is mentioning Google and Eastman Kodak in the same sentence. Yikes. Ouch. I'm Melissa Lee. Coming to you live from CEO of B at the NASDAQ. On the desk tonight, Tim Seymour, Karen Feinemann, Dan Nathan, and Dai Adami. And we start off with a countdown to so-called Liberation Day, Wednesday, April 2nd, when a 25 % tariff on autos and imports from any country that buys oil from Venezuela go into effect. We're also expecting announcements of reciprocal tariffs, Markets on edge as the date approaches. While the S &P and Dow both managed to post solid gains today, all three major indices are sharply lower so far this year.

1:11The S &P and Nasdaq both notching their worst first quarter since 2020. Uncertainty around the impact of tariffs on the economy weighing particularly hard on the consumer. Discretionary names the biggest drag on the markets this year, followed by tech and communication services. Meanwhile, defense has been the best offense with energy, health care and staples leading the pack in 2025. But if we get clarity on trade in the coming days, could that allow markets to put in a bottom, start to rally? Or is there more pain and volatility to come? What I heard today in terms of the conversation is there is no clearing event.

1:44April 2nd will come and go, and there will not be clarity still. Yeah, I agree with that. And I still think the path of least resistance is lower. I think the good news, and this is something that Tim said on the call today, that 5 ,500 level S &P, which is where we traded down to on March 13th and bounced from, which is where we traded down to today and bounced from. That seems to be, at least in the short term, sort of this administration's short term put on the downside. We'll see if that holds. So today's bounce, I guess, in terms of that level, in terms of quarter end, I guess it made sense.

2:13But I don't think you're going to get the clarity that the market needs in order to sort of grind higher again. I think it's going to stall out pretty quickly. I agree with that. I mean, I've looked last night at the futures. I saw down 50 handles. I'm like, all right, well, this is not going to be great. But you know that Friday closed. Friday was just an awful day. So that wasn't surprising. Where we ended up was actually a little bit surprising to me for the reasons you said. And you said, I don't think there's any clarity that's going to come out of that. I think that it will just be the beginning of more uncertainty, right?

2:43The tit for tat. We don't know where it'll end up. That's the part that sort of confuses me. Even if one accepts tariffs. Let's just say we think, OK, we understand why we want to do that. I'm not sure how the methodology is helpful to business confidence. It seems to be very damaging, right? So I don't really get that, which makes me think that the policies could change, right? It's not a lot of time before we get there. You'd think that they would know where it is already, but I think it could end up being in flux to the very end. Yeah, I'll echo that. I'll just say that I think today, you know, the 2.4 % off the bottom rallied at the close.

3:21I mean, that's a massive move. And some of this is quarter end. Some of this is also just sentiment. Look, sentiment this morning felt about as bad as I felt it in a while, even though there wasn't this clearing event. There wasn't really an event. And I think that's something to be said. I think it does set up for another one of these rallies. The problem often that we've had when we've had these periods of market downdraft is that earnings seasons come along and you've been able to focus on fundamentals. But we know this is going to be an earnings season where I actually think the numbers are going to be better than people are probably pricing in.

3:49but there's going to be zero about the guide that's going to be helpful. There's going to be a C-suite, almost every sector, pointing out the uncertainty that we're talking about relative to their daily life. So I think that's part of where we go. I would get back to today's tape where stuff that's defensive, whether that's an Altria, whether that's an AT &T, those had huge days. But you also, it was strange. Defense won, but also those oversold stocks won. And I think you could see some stocks back in the soup tomorrow. Yeah, and there's defense that's coming back into the mix, too. Look at Walmart closed up 3 % today.

4:20I thought Apple was really interesting because, again, if you go back to the playbook from 2018, Apple iPhones got an exclusion from some of these. And when I think about this, the sort of clarity that we might get over the next couple of weeks or so is like what products, what companies are going to be carved out of some of these sorts of tariffs as we think about the ones at least with our allies, which are our biggest trading partners, Canada, Mexico. And maybe they're kind of dropping a little bit by the wayside. And, you know, listen, I think the guide, like you said, is really important.

4:50And we can just go back a few weeks to the end of earnings season. What did we hear from Walmart? What did we hear from Costco? We heard about a consumer that they can't exactly put their finger on. Well, then you'd say to me, all right, well, why was Walmart today? What do you say, Guy? What's their little logo? Everyday low prices. Everyday low prices. So we've been talking about this trade down for like two years or so. So, again, there's going to be pockets of opportunities. Maybe it's sectors. Did you see like Pharma today? XLV had a nice rally back, that sort of thing. And so, you know, like as the silver lining guy on the desk, I just think there's opportunities here when we get down 10 percent or so that, you know, on an individual basis or on a second.

5:23An additional 10 percent from here. Well, I don't know. No, I mean, we're down 10 percent. I do think it's interesting that, you know, we're still looking at S &P that's down a little less than 5 percent of the year. The Nasdaq's down about 10 and a half percent or so. Not a disaster. Can I ask silver lining a question? You're in charge. OK, so so NVIDIA is trading around 22 times forward. And even before we knew about their AI exposure, really, this was a stock that generally traded at 40 times. At 22 times, you're pretty buffered. In other words, this isn't a stock that's necessarily priced to have the kind of growth that it's had.

5:53Do you think that that's interesting? And it's not rhetorical. It's truly not. Well, I'll just say this. We've been talking about this for a year and maybe a bit early. We're talking about the overbill, the overcapacity, the double ordering because of export bans. It goes on and on. Now all I do is read stories and very reputable, you know, kind of print stuff, I guess, digital now. They're just talking about this overcapacity bill. They're talking about pricing coming down dramatically for the compute. There's going to be pricing pressure, not because there's competition for NVIDIA, because there's not the demand, right?

6:22And there was this overbuild and this overdemand, like, you know, the last six months. That's here. That's happening. That's why that stock is trading at 22 times. That's why Broadcom, which was really late to the party late last year after they gave this guidance for custom silicon. Remember this in mid-December? The stock moved up. Yeah, it's down 38 % from that point. That's how it made it into Karen's fateful eight because it got over that trillion-dollar market cap. I didn't know she had her own. And since then, it's been down about 35%. It's barely seen an uptick in the last few weeks since it's reported.

6:49So that trade is done. The fever is broken. The hyperscalers, I don't think they come back anytime soon. So you guys better find some new leadership, I mean, you know, to kind of take this thing back towards those prior highs. OK, so you're back to being the number. There's no silver lining. Everything's in its place now. But Dan, as the silver lining's got, you did bring up a good point in terms of like peak pessimism about tariffs being priced into the market. And so over the next couple of weeks with carve outs, exemptions, et cetera, the upside, there could be upside that we are not anticipating in terms of the tariff situation.

7:19There could be upside. But one thing it tells me there is still pain to go is the VIX. The VIX will not stay around here. Right. We're going to see it higher before we see it lower. And so this is sort of no man's land. And I don't think it just drifts down. I think we start to. I'm with Karen on that. But if you think the only reason the market is sold off is because of tariffs and you think there's potential for them to acquiesce in some way and do something that's going to calm the markets. And yes, but I think tariffs is just part of the reason the market's going lower. There are other things that they have no control of, not least of which is slowing economy, which, you know, maybe they're sort of helping that along.

7:55but it's clearly been in place for a lot of time before this, I believe, as well. I don't think we've seen the kind of labor weakness that would warrant real concern about recession yet. I think there's some dynamics with the services part of the economy that have been very mixed. But I'm going to agree with that. I'm going to say I look at airlines and I look at some of the discretionary spend. These are trades that were under pressure on a combination of cyclicality in their core business, also in pent-up demand that was more than met, more than satiated. And we've seen this. And you can't tell me that the move lower in some of these discretionary names, we talk about them all the time, so I won't mention the names.

8:31You know them. It's not about tariffs. It wasn't about tariffs. I do think there's a part of this marketplace that was weak and vulnerable. All right. Meanwhile, our Steve Leisman sat down with the Richmond Fed President Tom Barkin this afternoon. He joins us now with all the headlines. And all the clarity that a Fed president can give these days. Unfortunately, Tom Barkin mostly emphasizing the uncertainty over policymaking, given the uncertainty over fiscal policy, which y 'all are just talking about. But he also suggests it's perhaps not wise for markets to be certain about rate cuts this year.

9:03To cut rates, you'd have to get confidence on inflation. You'd have to get confidence that inflation is settling. You could get that confidence because it actually continues to settle. You could get that confidence because the economy is in such tough shape that you feel that whatever downturn you have will also settle inflation. OK, y 'all can put these numbers in your pipe and trade them. The CNBC rapid update averaging the outlook for 14 Wall Street economists sees inflation remaining stuck near 3 percent for most of this year, which would, I think, make it tough for the Fed to cut. Rapid update also showed expected growth just 0.3 percent this quarter before rising gradually to 2 percent by year.

9:42And Barkin said he would be watching carefully the desire of importers to pass along the tariffs, keep their margins high and the unwillingness of consumers to pay more. Guys, we're not even at the right point of uncertainty here. The point of uncertainty that we sort of look for is not what the policy is going to be, but it's the effects of the policy. So we can't even get to that place where we could debate what are the tariffs going to be and then what's the inflationary impact. You guys all have to do margin calculations, right? Who's going to kick the hit on the margin? Who's going to pass along?

10:14Who has pricing power? Who doesn't? Those are the things that's going to make Tim right or wrong about the earnings numbers. And the things that are not modelable, the impact on the consumer. I mean, you can put in various tariff rates on various companies and try and turn that out, but you can't do that for the consumer necessarily in terms of the hit to their psychology and their hit to their intended spending. Tom Barkin has actually been, I think, one of the smartest guys on the Fed about this issue because he comes out, not from an economic theory point of view, but really a business point of view.

10:41And it's about the kind of culture of raising prices. He points out the last time we did this in 2018, they would laugh at you if you said here's higher prices. Now, post the pandemic, when there was this round of raising prices, you know, it's a different situation where the psychology is out there that business will try to get it those prices along. Now, you also have the situation where several years on, consumers are sick and tired of these higher prices. So he called of the kind of immovable object meeting the unstoppable force, you know. So that's kind of where we're at. And nobody knows how all this shakes out.

11:15How does he view the employment picture as it relates to whatever's going on in the economy in general, but tariffs specifically? I can do a little Socratic reasoning with you guys at the table here. All right. Go for it. If you're a company and you can't pass along your tariff increases and you're cutting into your margin, what are you doing? Firing people. There you go. Nice job. That's exactly what Barkin said is going to happen. You cut the margins, you're going to find them. If you're able to pass them along, then you have, okay, the other side of that, which is a worrisome side of it, is you have people asking for higher wages.

11:52You could have a wage price spiral. Or all of this could work out just fine. I'm waiting for somebody to send me the report that says, Steve, everything's going to work out just fine. Let me just throw one maybe silver lining in there. Good. I'll take one. Productivity increases. OK, so we have experienced a pretty nice run of productivity over the past several years. I think it results from the pandemic and right sizing people getting into the best possible job. I think work from home was a piece of it. We could argue about that. But the trouble you have is that tariffs. What's the right word?

12:26I'm going to make one up here. De-optimize the supply chain. And most people who try to figure out the impact on this, They say it's a productivity killer. Now, you still have AI. You still have all this other stuff. Now, it's going to stop that. I don't think AI is even in the productivity numbers at all yet. I think we're still getting pandemic business process productivity, if nothing else. But when you have to look, what's Mary Barr doing right now? Is she thinking about the next car? Is she thinking about how to, you know, make GM more profitable? Or is she trying to figure out where my seatbelts are coming from?

13:04And how much am I going to pay for them? So I think there's a de-optimization. Can I use that word? You did. I would have sub-optimized. Sub-optimized. That's fine. No, but actually sub-optimized means less optimization. De-optimized means you're going in the other direction. I think you are going in the other direction. Yeah. Do you think the Fed is trying to manage the message of this? When we were both on Squawk Walks a couple of weeks ago with Austin Goolsbee. Yeah. He mentioned the S word, stagflation word. We didn't bring it up in that conversation. But it feels like they're moving. I'm not saying that they're embracing that scenario at all, but they're sort of acknowledging that that is a scenario on the table.

13:41There's no doubt you look at I was just having a conversation. I think the Fed's forecast today would be different from the one when they just came out with. Yeah, we know a little bit more about the extent of the tariffs. We've had a lot more research done on this. Somebody did one that said 150 years of tariffs show unavoidably or incontrovertibly that it reduces growth. So I think they would have a more stagflationary forecast now. I think the Fed has been more open about talking about this than they were before. I still think they prefer that none of this was happening. Ex-Fed members are saying it.

14:19I mean, Robert Kaplan used it on Friday, and he's not afraid to say stagflation. Look at Muslim from Kansas City. You know, the New Kansas City, he's saying, sorry, St. Louis, he's going to have an incident here. But the St. Louis Fed, he said, look, if this thing comes out a certain way, we could be hiking rates. He's the one guy who said it. I'll bet it's on some other people's minds. Yeah, I want to make one point. You just talked about the car stuff. What do they have to do? You have to fire people. There was an article in the Wall Street Journal. I don't know if you guys saw it today. In the A section, it was about Harley Davidson.

14:47They're in Milwaukee. OK, so in 2018, the EU put a 25 percent tariff on their bikes. OK, they ate one hundred and sixty six million dollars to keep the pricing down of their bikes. What did they do, though? They moved some production to Thailand. So if you're talking about these tariffs as a dead bang winner to bring manufacturing back here, it just doesn't work that way. This is a great American company that actually doesn't buy into what the president's selling. Do you know I can tell you that there are CEOs right now who thought they were doing the right and patriotic thing and moved their production from China to Vietnam to Thailand to other places that are about to get slapped with tariffs?

15:27It's not a good thing. Steve, thank you. Pleasure. Nice to see you in person. Steve Leisman. Meantime, Evercore ISI sees market uncertainty peaking around the Wednesday tariff deadline. Julian Emanuel is the firm's senior managing director. You heard the conversation, Julian. But we're going to still be in a bull market. The trend is still going to be a bull market trend. Whatever pullback we see. That's our view. So a couple of things to think about. We've all seen that chart of trade policy uncertainty literally to highs that were unimaginable, certainly even when you think about the 2018, 2019 trade war.

16:03But I would suggest that, and Tim hit this earlier, the mood this morning and over the weekend talking with clients and talking with colleagues was as negative as I can remember going back to when Silicon Valley Bank blew up and we didn't know the Fed was going to, quote, unquote, take care of business. And so from that perspective, we don't think you need a material clarity. We just think that you need and we're likely to see just at the edges, the very, very extreme scenarios becoming less possible, i.e. we get some sort of view that there's going to be negotiation. And that to us, combined with, you know, we don't see a recession here.

16:51Our view is for 1.7 percent growth this year. And the market can deal with inflation in the high twos. 3 percent is a breakpoint. 3 percent to us if it's going to be over that. You know, the S word, stagflation, it certainly becomes a possibility. But we would argue that the market's already pricing it. So how important is this jobs number on Friday? Because that's the final piece, potentially, of the stagflation equation. It's really important, not just from what the number is. And, you know, in the parlance of Wall Street, what's interesting is the whisper number is 100 and the official number is 140.

17:30So there's wiggle room there. A five digit number is likely going to be problematic. It's also how the administration between now and Friday spins all of this. You know, if it is something where we are committed to, you know, reconstructing the U.S. economy, we understand there's pain, we know there's going to be more pain, that's not going to be the message that the market's going to want to hear, almost regardless of what the number is. But as I said, I think there's likely to be nuance in the message. So where do you think the Fed comes out on, you know, the dual mandate? If we start to see unemployment really pick up and we start to see inflation, do they do nothing?

18:15What do they do? So it's our view that Jay Powell is likely to be replaced next year. I think that's kind of obvious to most observers. and that when he thinks about his historical legacy, he rescued us from the pandemic by doing a lot. And then he raised rates and didn't destroy the economy in the doing that. And you put it all together. His legacy is tied up in keeping the soft landing going and passing it on to whoever is the next person. So from that perspective, we really don't see a world where the Fed is going to hike. And if you think about how the market has responded the last couple of years, if they don't cut, it'll be a function of the fact that the economy is judged as being OK enough to do so.

19:08Just quickly, you do recommend to clients to accumulate stocks right now. So which sectors have priced in peak uncertainty and which have not? I mean, we were talking about defensive sectors like a Walmart. That's not pricing in. Well, I guess it is pricing in uncertainty in terms of multiple expansion. But how about the others? So so what's interesting about today is that everyone basically moved their sectors in the direction of how the entire quarter was going. So you saw, you know, consumer staples outperform. You saw health care very strong. In our view, those are probably the places where defense has been hiding, where, again, all you need is a little less uncertainty.

19:49We think you go back to the prior bull market winners in general. Technology, communication services, discretionary. Julian, thank you. Good to see you. Thank you. Julian Emanuel, Evercore ISI. That's your fateful eight, Dan. Yeah, I mean, listen, it was my view. I don't know if you guys remember this. I kept on saying Qs and 2s. This is back in 2022 when people would ask, what do you buy? And people didn't think that the prior leadership was going to do the latest leadership. My view was like, you've got to take them on the way out. They're the only ones who could actually really drive it. And then the 2s was like two years, right?

20:18So if the Fed was going to lower interest rates eventually after raising, that's probably still the case. And that's the only way, in my opinion, you get back to prior highs if you do have the fateful eight participating. Because none of those other sectors, it's not financials, it's not energy, it's not a whole host of other things that even combined can do that. And I just want to make one point, listening to Julian and Steve, and they all make a lot of great points. Go back to 2018. The Fed was raising interest rates. And then all of a sudden we had this trade war kick in. And then all of a sudden we did have a global growth scare.

20:48The S &P 500 sold off 20 % in Q4 of that year. And what did the Fed do? They had to lower interest rates. And we got all that back in 2019. But I guess the question you have to ask yourself is if the Fed were starting to raise rates or lower rates, excuse me, under the same exact circumstances that exist right now, I don't think it does the thing that a lot of folks think it's going to do for the economy and thus the markets like it did in 2019. If you look at everything from staples to even XLV or health care, those charts, those relative underperformance charts to the S &P look a lot even like those international mega stocks.

21:21I mean, in other words, you had multiple years. What are those? That would be make international great again. Of course, everybody knows that. But I just I think be careful about rushing into staples here because I think the valuations here aren't terribly interesting either. Coming up, a core we've crushed. The stock tumbling well below its IPO price in its second day of trading. Why shares are off to a rocky start and what it says about the AI trade next and later. Going for gold, the precious metal just notching its best month since August 2011. But can bullion's bull run continue? We'll debate that straight ahead.

21:51More Fast Money in two.

21:55This is Fast Money with Melissa Lee right here on CNBC.