Murky Monday For Stocks… And Tariff Impact On Automakers 4/14/25

0:02All right, thank you very much, David, live from the Nasdaq market site right in the heart of New York City's Times Square. This is Fast Money, and here's what's on tap tonight. Here we go again. That was a song, right? Another up, down, down, down, down, day, up, day, day on Wall Street as tariff headlines continue to rile up markets. Boy, one of our guests thinks we are setting up for a dramatic asset allocation shift with a major impact on the king U.S. dollar. Plus, a check on China. New data shows a rush of shipments out of the country before Trump's tariffs took effect. Can it continue or is it the last breath before a trade war plunge?

0:38We'll debate that. And later on, the real reason the U.S. does not export cars to Europe. Why one volatility expert says we're not out of the woods just yet. And by the way, here comes the earnings flood. I'm Dominic Chew and from Melissa Lee tonight coming to you live from Studio B at the Nasdaq market site. On the desk tonight, Courtney Garcia, Karen Finerman, Dan Nathan and Guy Adami. And we're going to start with another roller coaster ride for the markets overall as the S &P rose as much as almost 1.8 % in early trading before falling briefly into the red at midday action. But the benchmark index then rebounded and nearly recaptured its best levels, but then ended the day up less than 1%.

1:22But it's still up. The Nasdaq and the Dow also finishing off their highest levels of the session, but still managing to hold onto those gains, as you can see there. Apple is one of the notable winners today, rising more than 2 % after the Trump administration said that smartphones would be exempt from reciprocal tariffs. The move helping the stock climb back above the$3 trillion market cap level, though it still closed well off its highs of the day. But with continued uncertainty over Trump's tariff policy, can today's gains hold? And that is kind of where we talk about the desk here, guys. Is this something where we are still in a regime of buying dips or selling rallies?

2:01Or can you even generalize that? Karen, I'll start with you. So what I did today is, I mean, Friday we thought, oh, maybe there'll be a really nice rally. And then it sort of faded over the weekend. And what I did today was look to, I'm always long, but I look to color some of my positions, right? So we've had a lot of volatility. And still, the color is skewed to the upside, meaning you can sell a call and buy a put. and for flat, but have the put be a lot closer to the money. So it's sort of a way of taking off some risk. So I did that. It was so that the reality wasn't shocking that it was sort of faded and ended up.

2:38I mean, I was actually a little bit surprised that it ended up as well as it did. I'm not quite sure if anything happened in the last half hour to make it fade or just sort of the weight of it. I don't know. But it is a tremendous time of uncertainty. I'm not I'm not a buyer or a seller with the VIX right here. Guy, I've spoken to a number of folks who characterize this market as trading, quote unquote, heavy. That's a term that a lot of traders use oftentimes in this business to kind of denote this idea that things may feel like they can drift lower. Is that your feeling right now or do you feel this is a balance that we can say, hey, maybe there's constructive elements to it?

3:15Well, being heavy myself, Tom. Welcome, by the way. Thanks for being here. Thanks for being here with us. I agree with that. Listen, the recent low was 48.35, let's say. The all-time high was made in February, 61.47. 5 ,500-ish is a 50 % retracement of that range. We've talked about the potential to go there, and basically here we are now. But to Karen's point with the VIX North of 30, you're going to see action like this. And I get everybody wants to talk about the tariffs. Megan's going to come on and talk about it, I'm sure, in a couple minutes. But the reality is the market doesn't really have any valuation support.

3:48and that$270 of earnings that the street was looking for is a pipe dream. And if you get$250, you might be lucky. And then you say, in that type of environment, if things are slowing down, what's the right multiple? So you can play the math game, and I still think the market is expensive here, despite the sell-off over the last couple weeks. Yeah, you know, listen, just look at Apple and look at NVIDIA, right? So they gapped up, you know, and they just got faded from the get-go. I mean, the high of the day, you know, was the open, and that's not particularly good price action. And, you know, especially on a day you saw the 10-year yield come in at one point, like eight or nine bips.

4:20It was trading 440 or something like that. We got up to 460 at one point last week. The dollar has no bounce to it. And, you know, the other thing that I found kind of concerning today is that you had the staples, utilities, and telcos. They outperformed the S &P 500 today. So what does that tell you about the way investors feel about how heavy this market is, if they're willing to kind of plow into those groups after they've shown relative strength over the last few weeks or so. And there just doesn't seem to be a lot of commitment to the prior leadership. Now, one thing I will say, as a silver lining guy on the desk, I thought the money center banks traded pretty well today.

4:57I think J.P. Morgan, you know, took a little digestion after a big day on Friday. The thing that I would worry about is if one or two, if Citi or Bank of America put up numbers or the sort of, you know, commentary that Wells Fargo did, I think the banks are done. I mean, I don't mean done done. I mean, but I think they probably come in and at some point they test the lows over the last two weeks. So if you're searching for new leadership and you liked what acted well today, again, telcos, utilities and staples, you're probably not getting what you want. All right. So, Courtney, this is a very fun point to bring up, because in the past, in the course of the last maybe six to 12 months, Anytime we've seen that quote unquote diversification into other parts of the market as leadership that are not necessarily MAG7 related sectors, it has been called or billed as the broadening out of the rally.

5:45This idea that it could be healthier to see other companies besides, you know, Apple and Microsoft and NVIDIA and meta platforms do the heavy lifting. Now it's like, oh, that's defensive sectors leading the way. That's not good, is it? So in your mind, what is it? Is it positive or negative? Yeah, and I think it's just showing how much uncertainty there still is, right? So we're seeing this on the business front, where businesses are just really not willing to put capital to work. And it's not so much the tariffs themselves, the fact that they keep changing. And how are you supposed to go on with business when you don't know what it's going to look like in the next few months?

6:16And it's like that with consumers, and it's like that with investors, where, yes, I think people are hopeful that we're getting towards an end of this rally. But they're not calling an end to this. They're not saying, oh, there could be some new tweet and some new uncertainty coming down the line. And that's why you're seeing these defensive sectors play out. So, yes, I do still think you want to stay diversified here. You are still seeing a diversified portfolio has been holding up a lot better than the S &P 500 this year. So whether it's going to broaden out or not, it's still important to do that as a longer term investor.

6:41Do you feel as though, just to follow up on that, that you want to see a certain leadership? If you could take your pick in your own playbook, what's the sector or two that you would love to see lead the next leg of the rally? Well, quite honestly, if we did actually see this broadening, if you see entire markets going up, not just seven companies, I think that's a much better sign that you're seeing this healthy rally come out than just a few companies that are doing well. So will it happen or not? I don't know. But I do think that would be a healthy sign if we saw that. All right. So in the meantime, some of the new headlines from the Commerce Department are looking into semiconductors and pharma imports as well.

7:16And our Megan Kinsella is in Washington, D.C. with the details there. There is a lot of, I guess, lack of transparency in all of this. So can you break down what we actually do know and what we don't know, Megan? Lack of transparency, Dom, is one way to put it. You could also say a number of conflicting headlines coming out day after day. But just in the last hour, the Commerce Department now officially launching investigations into whether imports of semiconductors and pharmaceuticals, whether they pose a threat to national security. Now, we've long heard that this was coming, but this is the formal first step, and this paves the way, ultimately, for some tariffs to be coming.

7:53I will note they outlined in the formal order that there is going to be a 21-day comment period. That means at least at a minimum three weeks for companies to write in to request exclusions and that sort of thing. We wouldn't see any tariffs until after that, but it could be much longer than that as well. They have up to about nine months if they wanted to to investigate this. But a White House official did tell me earlier today that commerce officials have been working on this in the background even without this formal order. So I would expect it to be much faster than that. On the semiconductors, I'll also note that in this formal order, they also told us they're not going to be looking just at semiconductors.

8:28They're looking upstream and downstream as well. The upshot there is that tariffs ultimately could impact the entire electronic supply chain. Anything that uses a semiconductor, that's not definite, but it paves the way for that if they want to do that. And Dom, of course, this move now comes after those tech exemptions over the weekend, mostly smartphones, laptops, things like that. Now, today, the president also hinting that there could be further relief. He specified on autos as well. In the Oval Office, he was asked about this and said that he was asked about what exemptions he might be considering.

9:01And he said he's looking at doing something for the car companies, which are, of course, still subject to that 25 percent auto tariff on parts and cars that is still in place. So, Dom, lots more to watch in the coming days and weeks, both on the tariff side and on the relief side as well. And specific industry groups that they affect. Megan Casella, thank you very much for breaking it down as much as we know for this time. Karen, let's turn to you on this. I don't know. I don't know. I don't know. This is so broad and so vague, I really don't even know what to make of it. I mean, we're talking about the idea of semiconductors.

9:34Semiconductor is so pervasive in everything. Everything. So I don't really know how to figure this into what's going to happen. Does that mean that you are not making investment decisions based solely on what's coming out of the White House right now? Yes. Yes. It's hard. I think you make an argument that it's it's just a bunch of B.S. I mean, when you think about this, Jensen Wang goes down to Mar-a-Lago. He leaves there. He gets an occlusion on his H2 H20 chip to sell to China. The Chinese like they've already bought 16 billion dollars of H20s, like stockpiling them in front of this in the last three months.

10:10That was equal to all that was sold last year. So if the idea is that this is a matter of national security, not just them getting our best technology. Now, granted, the H20s are not their best technology, but they're good enough right now. And replace, you know, like for data centers to go in there and say we're going to bid hundreds of billions of dollars of data centers here. It's going to take them a very long time to do that. So I guess the question is, is like, who's getting what here? I think the Chinese are kind of getting a better deal because we know that NVIDIA is not going to spend a half a trillion dollars here over the next, you know what I mean?

10:42in a few years or so to do that. And so, again, back and forth with this sort of stuff. It's not helping anybody. To Courtney's point, if you are a buyer of this technology, if you are a construction, you know, like if you're in the business of making data centers and the like, it's not good. And the other thing is these companies need to build these data centers outside the U.S. They built a lot here. You know what I mean? So that's one of the biggest issues, I think, going forward. So I think this, you know, legislature, whatever they want to call it, is clear as mine. All right, let's turn to another part of the market.

11:09We got a news alert right now on Netflix. That stuck us higher after hours. As you can see, Julia Borson has more on what's behind the move higher. Julia. Hey, Dom, that's right. The stock seems to be popping on a report that Netflix aims to reach a$1 trillion market cap and double its revenue by 2030. That's according to a Wall Street Journal report citing executives at the company, who also reportedly said that the company aims to earn about$9 billion in global ad sales by 2030. Now, the streamer has not yet disclosed its ad revenue yet, but eMarketer estimates it will top about$2 billion in ad sales this year.

11:44We have reached out to Netflix for comment, have not heard back yet. But to put this all in context, the company's marketing cap is now about$400 billion. And shares are up more than 50 % in the past year, and now they're up about 2 % in after hours. Back over to you. All right, not MAG7, but it used to be part of the FAANG regime back in the day. Julia Borson, thank you very much for the Netflix update. Let's turn now back towards the trade discussion. The U.S. dollar is down again today, now off almost 3.5 % over the course of this past week. Former Fed Chair Janet Yellen, who also served as Treasury Secretary under President Biden, was delivering a warning on Squawk Box this morning about the state of play.

12:25Both the dollar declined and U.S. Treasury yields rose. And what that suggests is that investors are beginning to shun dollar based assets and that calling into question the safety of what is the bedrock of the global financial system, namely U.S. treasuries. OK, so let's bring in currency expert Jens Nordvig, Exante Data's founder and CEO. He's also co-founder and CEO of Market Reader, a Wall Street analysis platform. Jens, you and I both have backgrounds, you much more so than I, in foreign exchange, currencies, commodities, rates, and everything else. What do you think is the real situation with the dollar right now?

13:13Is the shine coming off, or is this just something technical to watch out for? A lot of investors were very optimistic about the United States going into this year. A lot of people had very, very elevated U.S. equity exposure in their international portfolio. happy with owning New York's treasuries that had higher yields than most other bonds, right? And now we are suddenly facing just an accumulation of shocks, trade shocks, shocks to foreign policy that people didn't expect. And people are getting very uncomfortable having these very big U.S. exposures in their European portfolios, Canadian portfolios, Australian portfolios that could go on.

13:52And we saw it in the price action last week. very, very dramatic, and it's continuing this week, right, with some of the biggest dollar moves we've seen for decades as these asset allocation shifts get in motion, people reducing U.S. exposure. And we don't have to talk about is this the reserve currency status that is in question, but people just have too much exposure. We've been used to talking about U.S. exceptionalism, right, and certainly from a cyclical perspective, we have a lot weaker growth outlook. That's one part of it, but also structurally, there are some question marks about how safe U.S.

14:30assets are, and those two things together is a problem. So how about this? How about if I ask you whether or not you are seeing evidence of this when you speak to your clients? You talk to a lot of real money managers, asset managers, not just hedge funds, but mutual fund managers, pension fund investors. What are they saying? Is this something where you are hearing conversations about this as opposed to just saying, I think it's this? Yeah, so we speak to chief investment officers around the world all the time. And I think it's very clear that they are in the middle of an asset allocation shift.

15:03This is not like a hedge fund where it changes their decision from one day to the other and positions change very quickly. This is something that's going to go on for multiple months. They have big portfolios. They have investment committees that need to be consulted, right? But it's a shift that is in motion. We can also see in our data, like we spent a lot of time tracking flow data over the last couple of weeks. Big shift in terms of the attractiveness of European bonds versus U.S. bonds, something that's very rare. Normally they move together, but not in the last couple of weeks. Let's get a little granular because the move in dollar yen last August, that triggered that whole sell off in the equities market on August 5th.

15:40Very quietly, dollar yen is 143. I'm sure there are light bulbs and flashing red right now. Thoughts on the weakness in the dollar against the yen? So last night we had some headlines that came across that said Scott Besson was going to talk with Japanese counterparts about dollar policy, right? So a part of the uncertainty around the dollar has to do with dollar policy. We've been used to for many decades that we had some kind of strong dollar policy. And with this administration, we don't know exactly what the dollar policy is yet, but there's a lot of concerns that it could be a weaker dollar policy.

16:16doing accords with Japan and around the yen would be something that structures an orderly decline of the dollar against the yen. And that's part of the thing we can see in the price action right now. All right. This is a crazy conversation that it could go on for another three hours, I think, about the king dollar and everything else. Jens Nordvig, Exante, thank you very much. We'll see you soon, sir. Thank you. All right. Meanwhile, we have an issue here with everything that Jens said, because there is a debate about whether or not U.S.-based assets are facing some kind of a lack of at least a little bit of lost luster in this.

16:51Do we feel, Courtney, I'll go to you first. Do you feel as though the U.S. Treasury market and the dollar are still those assets that people would want to have reserve status or otherwise? I'm not ready to throw out the towel on that yet. I know that's really the big conversation right now. But I think what it does lead to, and there was a lot of talk about this with Yen's points, which I think he brought up very smartly, is there are a lot of people who are finally realizing, OK, U.S. might not be the only place to be. And we talk a lot about diversification of small caps, mid caps. You don't want to forget that investing abroad is part of that.

17:24That's where we have for decades. Our clients have been saying, why invest in Europe? Why invest in China? And this is the first year where people are happy to have that in their portfolio because it's actually been a good diversifier. We do continue to see the dollar weaken. then that's where you want to make sure that you have some of those hedges in your portfolio, kind of regardless of the reasoning behind that is. All right. Well, meanwhile, NVIDIA is also making another major AI investment here in America. And CNBC's Christian Parts of Nevelis has the details behind this next chapter of what could be the American exceptionalism trade.

17:54Yeah, it could. And NVIDIA is pretty much saying that they're going to be spending$500 billion in four years. They did announce this, though, about a month ago. What we're hearing today is additional information. They're partnering and they're going to be securing over a million square feet of manufacturing space with Foxconn, for example. They're going to be building and testing Blackwell chips on U.S. soil. We don't know how much. We also don't know how much they're going to reallocate their manufacturing to the United States because you have to keep in mind Foxconn, based off of NVIDIA's website, they put the servers together.

18:27They don't necessarily make the chips from scratch. That's something TSMC back in Taiwan does. So I think that that's really important to keep in mind. But this is just showcasing how it's a win underneath Trump. And it's validating, according to him, President Trump validating his tariff strategy. You had Apple committing an amount of money, TSMC an additional$100 billion. And now you have NVIDIA as well. So these are all considered wins under him. What do you think, Dan? Well, I was just saying this. And Kate Parts, when I think about this, it's like, what's a win in this day and age, right?

18:59Because we saw a lot of these announcements, you know, going back to 2018, 2019. I think it's fantastic if they can get Taiwan Semi in Phoenix, right, to kind of make these chips. And they're talking about doing one in Texas. But what is the goal, in your opinion, what do you think is more important, not to actually send our best technology over to China or diversify our supply chains? Because I think there's probably some sort of combination that makes the most sense, but they're not giving us, the administration, a whole heck of a lot of clarity on that. You would want them not to send their technology to China.

19:28But when you put restrictions in place, what's happening is it's further strengthening the chip space over there. Look at how Huawei has really advanced. It may not be up to par with NVIDIA, but the fact that the U.S. government has threatened to ban, sorry, the Chinese government has threatened to ban the H20s. I know you guys spoke about, you know, Trump backing down and not banning it here, but that doesn't stop China from doing so. And China is only able to say that now because they're that confident in the chips that they have on Chinese soil, which says a lot for Huawei right now. And I think we're underestimating the strength over there.

20:00So I think in terms of importance, it's really about advancing our technology. So we're always at least a decade ahead of any other country in the world. And that discrepancy is just shrinking. I don't think any American patriot is going to disagree with that, by the way. So anyway, Christina, there you go from the Canadian. Christina, thank you very much for the update on NVIDIA there. All right. Coming up, we've got big bank earnings filtering in Goldman Sachs, topping expectations, and there's even more financial results on deck. That trade is coming up next. Plus, a luxury letdown. Shares of LVMH drop in today's session, the results hitting that retailer ahead on the show as well.

20:33Don't go anywhere fast is back in two.

20:40Welcome back to Fast Money. As you're seeing there, Goldman Sachs shares popping nearly 2 % today after a top and bottom line beat for its first quarter. The investment banking giant posting a 15 % rise in profits and a surge in trading revenues. But CEO David Solomon did not did note that some clients are pressing pause on deal making until guess what? There's more clarity on trade. We're going to hear more from the banks tomorrow with Citigroup and Bank of America reporting as well. Courtney, what is the bank trade so far? Tell you about the health of the American financial system. Yeah, and there was a lot of optimism at the beginning of this year that you were going to see a lot more deal making with the Trump administration coming in.

21:17You were going to see corporate tax cuts. This should be really good for the banking industry. and then tariffs came, which meant everybody was putting a pause on decision making. And that's really what you saw reflected in Goldman's numbers, where you saw that their deal making revenue was actually down year over year. It's really the trading revenue that really is why they beat expectations because of all the volatility. And I think what you want to look at is it's great that they're holding up. Does that come down the pipeline, though, however? Is that deal making still going to happen? Is there still going to be less regulation and tax cuts once we get past these tariffs?

21:47I don't know when it'll happen, but eventually that will be a good thing for them. I think it's going to be really interesting to see, too, some of the more consumer-facing banks, what they're saying about the consumer. I think that's really what people want to see is how is the economy actually holding up right now. Guy, we have consumer-facing banks on deck, right? I mean, Citi and B of A, those are two bigger consumer-facing banks. What are you looking for from them? Well, throw up a Bank of America chart. I'm sure our crack staff can go back a few years. And we just traded up to 48 and failed.

22:12That was a prior high. So major double top technically. and they're not going to be protected, they being Bank of America, from some of the things that we've been talking about for a while. J.P. Morgan, I'm sure Karen brought it up last week, the loan loss provision that they took I think was a little eye-opening to me, and there's more to come for some of these banks. So I'm hard-pressed to believe that Bank of America can sort of sidestep all these problems I think these other banks are facing now. What do you think, Karen? So, I mean, he brings up a good point. We'll see. They both, Citi and Bank of America, very big credit card portfolios.