Markets Rattled By Tariff Latest… And If There’s More Downside Ahead 4/7/25

0:02Live from the Nasdaq market side in the heart of New York City's Times Square. This is Fast mood swings, a good or bad sign for the formation of a market bottom. Plus, to the penny, the chartmaster set to join us with what the technicals have to say about where the S &P could be headed from here. And later, Apple taking it on the chin hard in this market sell-off. The stock already down 18 % this month. Is this an overreaction or a true sign of how bad things are in U.S.-China relations? I'm Melissa Lee. Coming to you live from Studio Viet Thanazac, I'm the best tonight. Tim Seymour, Courtney Garcia, Dan Nathan, and Guy Adami.

0:45And we start off with that rollercoaster Yesterday on Wall Street, markets opening the day with another big loss as the Trump administration doubled down over the weekend on their tariff plans. Reports the White House was considering a pause, though, sending stocks rallying into late morning with the S &P climbing as much as 3.4 percent. But it gave up those gains when officials called those rumors fake news, seesawing the rest of the session to end the day basically flat. The other major indices saw similar swings with the tech-heavy Nasdaq whipsawing nearly 10 percent from low to high. The Dow's 2 ,600-point range today was its biggest on record.

1:16Meanwhile, yields on the 10-year Treasury spiking sharply higher, climbing back over the 4 percent mark, seeing their biggest basis point jump in almost three years. And the VIX, the volatility index, briefly topping 60 for the first time since last August. Does the bounce off today's low suggest we've made a bottom, or is there more pain to come? Are we closer to a bottom, maybe, forming a bottom? Guy, what do you think? Well, Carter, we'll talk about the trend line. I'll talk about that prior high back in December of 2021, January of 2022. to 4 ,800 and change. What we traded down to was a test of that prior all-time high.

1:51So that is a good sign. Obviously, the VIX cascading higher is maybe a good sign. Maybe we'll get some sort of capitulation. And I think, yeah, short-term bottom is absolutely feasible. I don't think all the damage is done yet, but you've got something to trade against. The valuation concerns that we had have been abated a little bit. But if you look at, like, a CAPE ratio, it's still probably twice the norm. the Buffett indicator, although off its highs, it's still high. So valuation-wise, there's still some room to the downside. Yeah. And to the downside, I mean, it is that level this morning, 48.35 or something like that.

2:23That was the all-time high going back in 2021 before the market topped out. You know, this takes me back a little bit to Q4 2018. You know, the stock market sold off 20 % from really in Q4, from the start to the end. And, you know, to change that tide there, the Fed really did have to pivot. They were raising interest rates. The Fed funds got to about 2.5 % or so. And then they went really easy. And the stock market rallied pretty hard. I think we closed up more than 20-some percent or so in 2019. It's just not that easy of a fix right here, right? And so if you think about there were growth scares back there, there's a couple other things going on.

2:57But if you're telling me that the White House is going to keep doubling down on this sort of stuff, the sort of damage done to this economy and the global economy is really going to be hard to turn around. And the market's going to sniff that out a little bit. So again, not a good press here, especially when you consider how negative everybody is and the lack of good news right here, because I keep hearing this and I can't imagine this happens. The scenario in which we are back towards those prior highs at 6 ,100, the S &P 500, I can't envision it right now. I can't envision it for 2025. Well, that's why I don't think you have to rush into anything here.

3:28I mean, I think that, you know, as we're all talking about, there's some important levels. The market is absolutely respecting. I mean, if you think about the level Dan's talking about in the middle of the night, those of us that were awake, I mean, it was really it was it was it was almost within two percent of the 200 week moving average, which is, again, a really important level to have respected and held. And then you have an intraday rally all the way up nine and almost nine and a half percent. It tells you what was going on to at least to those intraday highs. What's constructive for the market.

3:56And this is what we're all saying after this kind of a move in the the oversold nature of the market. It's really tough to press lower in the short term. And in fact, I actually think I'm kind of happy that markets didn't really finish in the green. I think in terms of establishing even a legitimate trading bottom, I think the dynamic around where you want to see certain things. And as we say all the time, markets stop panicking when policymakers start panicking. And the White House isn't panicking. The Trump administration is saying this is what we're doing. They're not moving off of what they said.

4:27And in fact, they've had to reaffirm throughout the day when wherever the news flow starts that there's a 90 day reprieve coming, which was very clearly refuted. It's it's interesting for price action that that actually the markets didn't lose it on that. In other words, you've got China retaliation. You got no, we're not thinking about 90 days. So, you know, all in all, today was a better day than I thought we could have had at, you know, forty eight hundred in the middle of the night. But I think it's very hard to believe that based upon the policy, the reason why people are so freaked out is it appears as if there's a structural shift in the approach to the economy.

5:02I don't think this is very different than what the Trump administration said they were going to do. But I do think restructuring the U.S. economy, to me, is something that market participants are having trouble with. And that's where you've gotten a lot of this volume. I would add, though, that there's an element of trying to restructure other people's economies here. because, you know, because, you know, it's not enough for Vietnam, for instance, to say we're going to go to zero percent. It's like, no, we want the VAT to be pulled back, too. So the Trump administration is asking other countries to change their tax policy domestically in order to meet their demands.

5:34And that seems like something that you really cannot control. Yeah. And that's where investors are really trying to wrap their minds around what is changing in the global trade order here. And that's really why they're pricing this in. But I do think a lot of this is pricing in the worst case scenario right now. And you said this brings you back to 2018. I would actually say a lot of this intraday trading activity is a lot like what we saw in March of 2020, where you saw these huge intraday swings. So I don't know if we're at the end of this here, but seeing the VIX above 50, seeing the investor sentiment above bearishness above 60, or it's been like that the last couple of weeks, is probably a better sign that we're getting closer to a bottom here.

6:07When you look at this, historically speaking, you typically get your best days in the stock market within a month of your worst days. And seeing some of these really big swings here and these kind of bearishness levels probably are going to be more of an opportunity. So are we at the end of it? I don't know. But I think you want to make sure you stay invested here. You don't panic out. And if you have cash, you probably want to start to get some of that to work. What's with the climate yields today? Makes perfect sense to me. You know, I mean, maybe I'm in the minority here. Tim probably agrees somewhat.

6:33But, you know, if there's a concern about what we're doing here in the United States and the credit quality and all those different things, I mean, the bond market is not where people are going to go. They're actually going to sort of flee the bond market. I'm surprised it didn't happen faster, but it's happening now. And, you know, I'll say again, I think rates are going to continue to go high for the wrong reasons. That's sort of the next chapter in this book. Well, there's the element also of the rating agencies looking at what is going on in D.C. because they have cited turmoil and chaos and the process as a reason for a downgrade.

7:02But we also touched on this last week, and that is what if at the next auction, China or Japan or whoever else just says, you know what, we're not going to sell. We're just not going to participate right now. That can cause real concern. I don't think this administration is not aware that we have financed our deficit to the rest of the world for a long time. Part of the tradeoff for that is the dollar as a reserve currency. If the agenda is also to push the dollar substantially lower, you've got structural problems. I would just speak to, in terms, I agree with what Guy's saying about the market for sure.

7:36I'm more concerned about credit. And what we're starting to see, you saw CDX, high yield CDX. It's had a nasty three days in a row. We're at 17 month wide in terms of where spreads have gone. And that's something that hasn't really even begun to fight. So, yeah, the environment where actually you're starting to see maybe yields go lower, spreads widen, stocks sell off. That's kind of the story that I think you should be most concerned about. Again, though, I thought the risk markets were a little more constructive today. I thought the fact that commodities traded a little bit better. I just think you had massive positioning changes by some of the biggest houses in the street, some of the best well-known hedge funds that run very tight books.

8:14They went from net long to net short very quickly. And I think that's part of where we sit today. Your point about credit is really important. And, you know, Boaz Weinstein at Saba Capital, really smart credit investor. He was talking about this morning on another network that that Wall Street aspect, getting to Main Street, means bankruptcies. Like when you start seeing credit. And so we haven't even brought up the term about unemployment right now. And then you think about what you were talking about with yields. If yields are going higher and the market is priced for five cuts, you know what I mean, the Fed funds rate, that's a disaster for stocks.

8:45Like it's an outright disaster. It's probably really bad for the economy, too, because if that's what the administration has been targeting, the 10-year yield, because they have this odd notion that if you can loosen up the housing market in the midst of a recession, that that's going to do something for the economy. I just don't see it. Now, obviously, if you're locked into a low mortgage, you know what I mean? There's not a whole heck of a lot you're going to do. You're not going to do a HELOC or anything like that. So I just think they kind of got themselves turned around. I think they have themselves backed into a corner.

9:13And to your point about COVID, that's a really bad analogy because what did the Fed do? They went to zero interest rates and then they put trillions of dollars of fiscal stimulus in. And they can't do that right now. I think you have to go back to the last two recessions prior to COVID. That is the financial crisis. And it's the post.com. And in each instance, the S &P got cut in half. And I'm not saying that's going to happen, but we could easily get down 35 percent or something like that. Because, again, if the S &P earnings have not meaningfully come down so far from Q1, I think we're expecting 13 percent year over year growth.

9:45We go into recession. You'll be lucky to get like mid single digits. You're mentioning recession and this is the conversation that we're all mentioning. And so people that are tuning in to our show who aren't necessarily watching financial news all day, you know, the idea that over the weekend you were reading the press and you were seeing Besson on Fox, you were seeing him on Channel 4 and you're seeing the dynamics. I guess it's NBC. Sorry. Local New York Channel 4. But the idea of recession as a policy maneuver is something that, look, I think is something that people are addressing and trying to understand if this is truly in the cards.

10:23Is this truly a policy pathway? And that's something that if you think about where stocks are priced for, I just want to get back to the S &P. I mean, we can test. We can hold$4 ,800. We can go down to$4 ,500. We've got earnings season starting this week, and we're not going to hear anything good. Do you really think that the earnings profile right now for the S &P at anywhere, even with the downgrades, we're probably somewhere low 270s, high 260s on the street in terms of the stock market's not cheap. And if you're pricing for recession, and that's really where the administration is also trying to point out, not a lot of people own stocks.

10:55Not a lot of people really care that much about the market in Main Street. Well, it's not. But that's the messaging. And that's part of where Wall Street is. I've got to get in here for one second. So if the administration is doing recession as a policy, that's the dumbest you-know-what thing I've ever heard in my life. Because wouldn't it be a lot easier to reorient global trade and to deal with your debt and your deficits in a strong economy and strong financial markets? It's so dumb. I keep hearing this. It's so dumb. Well, you know, the last time there were major reversals in the trade balance was great financial crisis and the 1991 recession.

11:26Yeah, have a ball. I'm not saying – I'm not advocating. I'm just saying there is a result that lines up with some of the goals that they have. Well, supply side doesn't I mean, you can't blow out the revenue side of your balance sheet of your income statement. Excuse me. It's not your balance sheet. And it doesn't really work. Having said that, I'm not I'm actually not here to assess it. I'm trying to talk about what the market is digesting. And that's what the market digested over the weekend. All right. Well, President Trump clearly not backing down from his stance on tariffs, indicating there are once in a generation opportunity to reset global trade.

11:56Eamon Javers is the latest from the White House. Eamon. Hey, Melissa. Well, in that session with reporters in the Oval Office earlier today, the president doubled down on his tariffs, doubled down on his threat to China that was made earlier today to increase tariffs by 50 percent if China doesn't remove its retaliatory tariffs of 34 percent. But then the president also said this. Take a listen.

12:20I have a great relationship with presidency. I hope it's going to stay that way. I have great respect for China. but they can't do this. We're going to have one shot at this and no other president's going to do this, what I'm doing. And I'll tell you what, it's an honor to do it. So asked whether or not this was about a negotiation or whether this was about permanent tariffs, the president said it's about both, really. He does want the tariffs to be in place to restructure the global economy, but he also wants to hear from other countries. We saw the Treasury Secretary Scott Bessent say earlier today that he is in negotiations with the Japanese.

12:59And we saw Benjamin Netanyahu there in the Oval Office with the president saying that Israel is committed to lowering its trade deficit with the United States to zero. Didn't put exactly a timeline on that, but said he's serious about that and said Israel is going to do it. That might be just a couple of billion dollars of purchases of American products, but it gives you a sense of what this White House is looking for from foreign countries around the world in terms of negotiation. Melissa, back over to you. Amen, though, it seems like I don't want to get into that formula from last week because there was a lot of debate about that.

13:31But right now, it seems that the target seems to be moving constantly because the administration is demanding also VAT taxes or VAT, I should say, to be removed, which is something different. Yeah, look, I mean, right. And you saw Peter Navarro say that on CNBC earlier this morning, which is like that even if Vietnam, for example, were to approach the United States and say, we'll lower our tariffs to zero, Navarro says that's not good enough because you have to also take away all these additional what they call non-tariff barriers. They see a VAT, that tax as a non-tariff barrier. They see currency manipulation.

14:06They see product dumping. They see all sorts of things as non-tariff barriers. They want all of that removed as well to the betterment of the U.S. position in trade. So countries are going to have to go much farther than just going to zero in order to achieve what the White House says they're asking for here. Whether that's realistic politically or economically for those countries, we'll find out. But the White House is setting a very high bar for what it wants in any negotiations. They feel like they've got the cards here in this negotiation, and they're pressing their advantage. And you saw the president just there saying he feels this is a once in a generation opportunity to reset this.

14:45And he's a unique figure in American politics to be able to do it. Sometimes you've got to take your medicine, as the president has said. Eamon, thank you. Eamon Javers, an investor known for the big short, says it's all about politics right now. Steve Eisman is former senior portfolio manager at Neuberger Berman. He just launched the Eisman Playbook podcast, which has dropped. It's a good listen, Steve. I listened to your first episode. Thank you. What do you make of this market here? You're saying don't be a hero. What I make of it is that I think part of the problem, and I'm watching your show, everybody else's show, and people are getting on the show.

15:19They're almost in hysterics. And I think the issue is that everybody of our social class took Econ 101, and we were all taught the same thing. Trade good, tariffs bad, trade war terrible. And that jumped into everybody's heads with such force that it's a paradigm that now you have a president of the United States who doesn't seem to accept that paradigm. And people find that extremely jarring. So what I try and do in situations like this is try and step in the shoes of the other person, see the world through their eyes, and try not just to understand what they think, but why they think it. And I think what's going on here is you have to go back to the 90s when Clinton was pushing NAFTA and China entering the WTO.

16:02And he basically made two arguments, that free trade would improve GDP growth and would create a lot of jobs. And he was right on the former, and he was dead wrong on the latter. And if you travel this country, there are parts of this country that would have been devastated over the last 25 years because of free trade, because they didn't just lose their jobs, they lost their towns. So I think President Trump has taken the attitude, you know, free trade is great, but GDP isn't just a number, it's people. And there are whole parts of this country that have suffered terribly. And we have the freest markets in the world, and he wants to reorder it.

16:41And I have a lot of sympathy with that. And I think one thing that isn't said enough is that the United States, if that's your goal, the United States is in the best possible position to negotiate towards that goal because the percentage of U.S. GDP that is composed of exports is only 11 percent. It's the lowest percentage pretty much of any country on planet Earth. Europe, every country is in excess of 30, except for Germany, which is over 40. Mexico and Canada are over 35 percent. China, if you factor in all the stuff that they do through Vietnam and Cambodia, is probably 30 percent. So what's going to happen over the next several months are negotiations and what's going to become very.

17:25So if people are rational, this is where I don't know what's going to happen. If countries are rational, they would Canada and Mexico would come to the United States and basically beg. We'll do what you want, because of the 35 percent that Mexico and Canada have of their GDP from exports, 25 points of that 35 percent is just exports to the United States. Those two countries hold no cards. Now, Europe is not much better. And so I think if everybody's rational, they'll lower their barriers. Now, that doesn't mean everybody's rational. You know, there's politics. People might be, you know, some of the politicians might be afraid if we give in, we're going to lose our jobs.

18:05That's the wild card. If reasonable heads prevail, Trump will get pretty much what he wants. Let's say the truth is somewhere in between. Which truth? in terms of countries caving on one end or politicians being afraid of losing their jobs so they don't cave. Let's say they agree to some and not others. Is it worth the pain? In your view, is it worth the pain that we're going through in the markets? To whom? To our country. To the markets. Well, there's the people in the markets who are upset that they've lost money. And I'm not going to kid you. I'm one of those people. I'm long only. I've lost plenty.

18:42But then the rest, everybody else in the country who lost their jobs in their towns, they're cheering. So who voted for the president? They did. So, I mean, look, you can agree with President Trump. You can disagree with President Trump. One thing I actually find extremely admirable about him is one of the few politicians in my lifetime who actually does what he says he's going to do. He has told you that he was going to do this for years, and now he's gone and done it. And everybody's shocked that he fulfilled his promise. They didn't take him seriously. But he's doing what he said he was going to do.

19:16All right. So here's my take on this. I don't think trade deficits, by definition, are a bad thing. I think they can be. But I don't think it's just a binary thing, wins and losses. And I'll say this. He talks about us getting ripped off. I'm sure the United States is being taken advantage of by different countries. But we are 5 % of the global population. We're 30 % of the global economy. It's hard to say we're getting ripped off when you look at numbers like that. Just thoughts. Again, who's getting ripped off? GDP is not just a number. It's people. I agree. If you've traveled parts of this country like I have and you go to the Midwest and parts of the South, it doesn't look so good.

19:57If you're on the coast and Texas and New York and Florida, it looks great. You know, Clinton ushered in with NAFTA and the WTO a massive bull market that everybody around this table, table including me, has benefited enormously from. But not everybody in the country benefited. And what is being proposed here is to benefit those people. And, you know, what's going to happen? Like I said, are politicians going to be rational or not? I mean, I find it amusing that the new prime minister of Canada has been so belligerent. When you have 25 percent of your GDP in the form of exports to the United States, you should act a little more kindly because you're not holding too many cards.

20:45But is this about kissing the ring and doing deals? Because the other side of that would then imply there isn't really structural change that's intended, that there are tariffs to clean up. There are strategic industries we want to support. And I guess I would just get back to, while there are towns that have been ravaged around this country, I would support that the standard of living in the United States that comes from a reserve currency and that the rest of the world finances our deficit is a privilege and something that won't continue indefinitely. It's not going to change overnight. I don't agree with that at all.

21:18I think the idea that the U.S. is going to lose its reserve currency. No, I'm not suggesting that. I don't agree with that at all. But there's no question that we have been given the ability to really finance whatever we want to do. And you think that's going to hold on indefinitely? I don't think that. Trade terms are being cut country to country, bilaterally, all over the world right now. So you don't think that that changes over time? I think ending the U.S. as a reserve currency of the world would take so much. It's unimaginable to me. I mean, one thing that I think people don't realize is the entire global financial system operates on treasuries.

21:56Overnight repos operate on treasuries. For the reserve currency of the United States to end, you need an alternative. And there is no alternative. It's not crypto. It's not China bonds. It's not European bonds. It's not Italian bonds. At this point, there's no alternative. If there was an alternative, I'd worry. Until there's an alternative, I'm not so worried. So, Steve, going back to the early 90s, you know, NAFTA and WTO for China, if you think about this, and again, we all are sympathetic to the fact that U.S. manufacturing has been hollowed out by a lot of those policies. But think about the flip side of that.

22:29In that time period, we have some of the most successful companies that the world has ever seen. And they've all been built here. And they've had this ability to innovate and they've had this ability to export this technology around the world, which has put us in this situation. to kind of talk about all this. It's reinforced the idea of American exceptionalism and the access to being the reserve currency of the world, and everyone else holds our debt. And I guess my point is, is like, there are gives and takes here. You know what I mean? And so at this point, it just seems, if Apple, one of the largest market, it is the largest market cap company in the world, if they build 95 % of their products overseas, and therefore the world benefits from that to some degree, How can you force them to come back and make iPhones here that are going to cost$2 ,000 versus$1 ,000?