Stocks Drop On Canada, Mexico Tariff Update… And Impact Of A Crypto Reserve 3/3/25

0:02Live from the Nasdaq market site in the heart of New York City's Times Square this is fast money Here's what's on tap tonight. Stocks sinking as President Trump's tariffs get ready to go live. The Nasdaq officially erasing all of its post-election gains for the first time. Volatility hitting its highest levels of the year. How should investors protect themselves in this market? We'll look for some answers. And shares of Nvidia sinking another 9 percent, hitting levels not seen since September. It's now lost a quarter of its value since hitting an all-time high. Does this mark the end of the red-hot AI trade?

0:32Plus, what a crypto reserve could mean for Bitcoin prices. Could Europe be the place to put your money as Germany trades at records and target on deck what the retail giant might say about the impact of tariffs tomorrow? I'm Melissa Lee. Come to you live from Studio B at the NASDAQ. On the desk tonight, Tim Seymour, Karen Feynman, Courtney Garcia and Steve Grasso. We start off with that late day's market sell-off, the Dow dropping 650 points. The S &P posting its worst loss of the year. The Nasdaq closing below its 200-day moving average for the first time since October of 2023. It is now at its lowest level since before the election.

1:07The moves triggered by President Trump's promise that tariffs against Mexico and Canada would go into effect at midnight. For more, let's get to our Megan Casella in Washington with the very latest. Megan. Melissa, given the way last month went when we did see these tariffs delayed against Canada and Mexico, there was a lot of hope and I would say even expectation earlier today that we would see that play out again. But I had the opportunity earlier this afternoon to ask the president directly whether there was going to be any possibility of a last minute deal with Canada and Mexico. Here's what he said.

1:37Is there any room left for Canada and Mexico to make a deal before midnight? And should we expect those Chinese tariffs, the extra 10 percent? No room left for Mexico or for Canada. No, the tariffs, you know, they're all set. They go into effect tomorrow. AMNA NAWAZ, The Vice President of the United States, that said, Melissa, we do know that the President Trump, just in the last hour, has signed an executive order making the 10 percent tariff official against China. That's the additional 10 percent that goes into effect at midnight tonight, on top of the 10 percent that took effect last month.

2:06He has yet to sign any paperwork making the Canadian and Mexican tariffs official. So anyone in the business of reading the tea leaves, there is a little bit of room left there while we still await this official paperwork, even in spite of what the president said earlier today, though I am told it is the expectation. that he will move forward and sign those. And in the meantime, I should also note that both Mexico and Canada are preparing to retaliate. The Canadian foreign minister says that they are ready to go, that they will retaliate as necessary. They've already laid out a list of$155 billion worth of U.S.

2:37exports. That'll take a hit if these tariffs take effect. Melissa? Justin Trudeau has mused that perhaps if they impose an energy tariff of their own in order to exact some pain on U.S. drivers, that that could be a retaliation. Is that at all serious? Is that at all in the cards? It's something in their arsenal. If they want to make a splash, that is there. I should say also that we also had a chance earlier today on CNBC to talk to the Canadian energy minister. That's Jonathan Wilkinson. He said that it's definitely something they've considered. He didn't think it would be in the first round, the first line of retaliation.

3:08But if they want to make a statement here, want to feel some consumer impact, it's definitely something that Canada at least is thinking about. All right, Megan, thank you. Megan Costello reporting from the White House today. It's amazing. We all knew that this is looming. We all knew that March 4th was going to be the deadline. And I guess there was always that hope that a deal would be struck, that this was, in fact, a negotiating ploy. And yet we are here at the 11th hour almost virtually and we have nothing. Yeah. And it comes after a slew of kind of a slow drip of negative U.S. data over the last couple of weeks.

3:37I think people are a lot less concerned about tariff implications on inflation than they are really on growth. And I think that's that's where we've come to. And the market has been telling stories or giving you signals about this, you know, for the last, I would say, three weeks to a month. And the volatility, we're going to talk to Amanda Chu later on in the show. I mean, it's fascinating. If you're meatloaf, two out of three ain't bad. It's one of your favorite songs. If you're the market, two out of three is really bad. And you think in two of the last three days, we've had big, big sell-offs.

4:03Friday looks a little bit like a mirage. And it sets you up for a payroll number on Friday that suddenly looms really large. That, you know, if you see some deterioration in the job market that looks material, people will put it together with the concurrent jobless claims number that we got last week. So be careful. Well, that gets to the if you knew what it was going to say. Right. I don't even know. Let's say we get a number that's weak for jobs. Then you start to think, all right, well, the Fed is really back in play again. And it goes from actually was up today, I guess, to two and change cuts.

4:35Rather, we go up higher. That has historically, the last couple of years, been somewhat of a floor, but maybe bad news becomes bad news. I don't know. So I think something sort of right up the fairway is better than a weaker number that would allow for cuts. I mean, it's interesting. The argument that the Fed put will be back in play if the jobs number is a disaster seems interesting, given so many Fed officials have said that we look through tariffs. They wouldn't be reactionary necessarily to policy. And so therefore— But you say, wait, then we look through tariffs. Like it's a transitory sort of, you know, they wouldn't adjust policy just on the fact that tariffs are in place.

5:12I thought they were saying last time, we're going to wait to see what tariffs do and what effect that has. That's what I've heard. Because having the transitory thing. I think it was 50-50. I think 50 % of them said that they were going to preload it and say that it was going to be inflationary. And the other 50 % said, we'll wait and see what it looks like once they're imposed. But either way, when you look at it, is it a carrot, is it a stick? We don't know, but you kind of lose the stick if you just always say no. That's why he said there's no way they can avoid it. Because if he says there's a way to avoid it, the market's never going to trade on it.

5:53Is that clear or no? Why does he want the market to trade on it, though? Why does he want to invoke a sell-off? I don't think he wants the market to. That's better. I could say it better. I think he wants Canada and Mexico to react. This is about immigration and this is about fentanyl. It has nothing to do with the market right now. Mary Barra has avoided 50 percent of the tariffs. Ford can't. And she said that without deploying any capital, they can avoid 50 percent of the tariffs. I don't know how she's doing it, but maybe she should call Farley. So there's some companies that are going to be able to avoid it.

6:33Some companies are going to have to bring their plants here. Other companies are going to have to soft shoe it. She's figured out a way. Well, okay. Well, bringing companies, bringing manufacturing facilities here or this whole near-shoring thing, that's inflationary. I mean, there are many scenarios in which the end result is higher prices. So that's what we're digesting now. And that's what markets are trying to figure out. And even the Fed, right, I think in theory they're saying, yeah, we can look through this. We're just going to see how it plays out. But how do you actually weed that out from the data, I think, is the other question, right?

7:05And so I think when it comes to the Fed, there is still that realistic possibility that they're going to look at some of these jobs prints or whatever the numbers are, and they might still be able to react to that. And that's why you're starting to see there's a higher chance of rate cuts happening later this year. And, you know, I think when it comes to this, too, it's really affecting consumer sentiment. Like you're looking at those AI investor sentiment levels. Bearish levels are above 60 percent, which is what it was a couple of years ago. So you're just getting whether it's investors, whether it's consumers, like people are just not willing to put their money where their mouth is.

7:33And that, I think, is a bigger concern than the tariffs themselves is what is it doing to the consumer sentiment right now? And that's really what you're seeing. I mean, we saw that in the sentiment numbers in terms of inflation expectations. But there's another sentiment number that I think is important, which is, you know, the animal spirits were released not just among investors, but CEOs and companies. Right. And I think that this flip flop back and forth. weighs on that, right? It weighs on that ability to say, all right, I'm really optimistic. Let's spend, let's grow. The flip-flop with tariffs.

8:03There's not tariffs. Now there are tariffs, right? I think that weighs. So like Amari Barra, right? How do we think about running our business, complicated business between Mexico, Canada, and General Motors? That's sort of a decent example. That can't be a positive for sentiment. So I feel like it's an additional tax. Yeah, I think the biggest concern here is not about inflation, though. The biggest concern here is about growth. And this is where if I was in charge of the show, I would suggest a would you rather between five and a quarter, three and a quarter tenure. What would you rather have?

8:37If I was doing it, I mean. You would rather five and a quarter. I would much rather five and a quarter. And, again, think about that. Five and a quarter tenure, if we were thinking about this a few weeks ago, we were 480 on the tenure and people were losing it. And three and a quarter is not a good sign. I think the bond market is telling us a lot. I think the data profile that we've had tells us a lot. And companies like GM, I think they are nervous. What they told us last week is they want to buy back as much of their stock as they can because they think that's the best way to handle the current environment.

9:04I think if you look at – I would choose the lower yield because if you look at the investment – I'm sorry that I started this game that you didn't. No, I like that game. She went on right – she would have stopped you. She would have stopped you if you like it. So I think you get the investment in AI. You get the investment in quantum's way off, but you get the investment in the United States or you get the investment everywhere. People, you have clarity, right? So if you know what rates are going to be, you know, in theory, what you can buy. So are you going to buy real estate? The real estate market is locked up.

9:36Commercial real estate has been a safety bet. But if I get what Tim's saying, that if rates are coming down out of weakness, then there's an issue. then there's an issue. But you don't think that this is a growth scare? A growth scare driving yields lower? No, I think it's because if you think about it, even if tariffs get put into place, I don't think anyone thinks that they're going to be in for very long. I think they're supposedly going to be, let's even the playing field. Germany taxes our car, our car's at 10%. We tax theirs at 2.5%. I think it's just leveling the playing field. But that seems to run counter to your view that he has to go through this and he has to really go through it.

10:20Oh, he has to go. He has to go through it temporarily. So he can't just put tariffs out there temporarily. No, no. He's not pulling them back unless he gets some type of reciprocity on the other side. Unless Canada says we're going to do more to stop the flow of fentanyl, unless Mexico says we're going to do more to stop illegals from coming across the border. Those tariffs will be put out there and they will stay until he gets the result he wants. OK, well, I mean, the bottom line is look at the Nasdaq, which is about which could. I don't know that it's going to, but it's it's very close to breaching the 200 day, the moving average, the long term essentially trend for the market for the first time since March of 2023.

10:55It hasn't done that. And that's that's that tells me growth scare. Growth stocks are telling you they are very worried about where we are. So let's get to the epicenter of that Nasdaq plunge. Nvidia plunging more than 8 % to close at its lowest level since September. The stock has erased nearly a trillion dollars in market cap since hitting a record in early January. The move taking the rest of the chips along with it, the SMH down nearly 4 % today, nearly 7 % so far this year. It already didn't recover the losses pre-DeepSeek, from pre-DeepSeek. And now we're even lower than that DeepSeek sell-off that day.

11:30What do you make of this move on heavy volume, by the way? Two bucks off the lows of the session. When we had the audience here that night, I look back in February 3rd, you could look at a 113 low in NVIDIA. On a technical basis, that's the first challenge. It dipped below that today, but closed above that on a closing basis. So I had posed, do I think 90 or 140 or 150, whatever it was, 130, I went with 90 first. And it's because if DeepSeek can do it cheaper, everyone could do it cheaper. Whether or not they're getting chips, whether or not they're smuggling in chips, it doesn't matter. The progression is they can do it cheaper.

12:07So that means that we don't need an H100. We don't need a Blackwell. We don't need a sophisticated large language model. Others can do it just as good and a lot cheaper than NVIDIA. That has to put in question the buyer's remorse or future buyers of NVIDIA right now going forward for what they supply. I think the larger question, I don't want to move away from NVIDIA too quickly, But the larger question is, can the tech trade continue without Nvidia? Can your meta position and your Google position be OK without Nvidia participating? I think so, although they're correlated for sure. Right. They're very closely correlated.

12:46And money flows, even if the story and the underlying earnings are there, the money flows will leave them highly correlated still. But so, you know, I'm looking at, all right, well, what can I buy? What's really gotten hurt before I would buy? And I'm long. I'm always long. So, you know, a day like today or last few days, really not delightful at all. But now I'm looking, what can I buy? And Alphabet is very near the top of the list. Right. The valuation is very low, which doesn't even take into account the massive cash hoard. So you're looking at something that trades well below the market multiple.

13:18That is, in my opinion, a extremely value, extraordinary company. And so that's something I'm going to be looking to buy. I met a I already have a lot. But if I own none, absolutely looking to buy here as well. Look, and I think we pointed out that that one 13 level, which is, I think, where we are in the after hours market. I mean, you know, the dynamic around video is this is a company is a great company, seemingly firing on all cylinders to quote the journal. And they had an article out there, too. But but it doesn't mean it can't it can't be a bad stock. And arguably, that's the dynamic here.

13:49I think if you own NVIDIA here or if you go in there and buy it here, I think you can ride through this. But I don't doubt that isn't going to continue to be choppy. And remember, Meta's part of the launch of Meta really, and I mean the shares, was also they were kind of catalyzed by some of that NVIDIA capex spend. They're the first mega cap tech company to really start to price a lot of that in. So I do think that the market needs some of this strength. And as we've said for years now, semis have led the NASDAQ, which have led the S &P. Without that leadership, you're in trouble. If NVIDIA fails, it's better for the other Mag7 because they don't have to make the investment.

14:31So if NVIDIA fails, it's based on lower investment needed by other companies to achieve the same goal. They're saying the other company is not spending as much as a positive for those companies. That doesn't have to spend$65 billion. Google doesn't have to spend$85 billion. Amazon doesn't have to spend$105 billion. So if you can do it for a lot cheaper, that CapEx gets put to work somewhere else or maybe doesn't get put to work. So now you have a lot more efficiencies for the shareholder. So I see a dynamic where NVIDIA failing is better for the Mag7 ultimately. Acibo's volatility expert sees a trend that points to more market weakness.

15:04Mandy Hsu is a firm's head of derivatives market intelligence. Mandy, great to have you with us on a day like today. Thanks, Melissa. Great to be here. Huge spike in the VIX. What is going on in your view? Yeah, so I would agree with what Tim was saying earlier, that there's definitely been a shift in the market over the past couple of weeks where initially I would say investors across both equity and bond markets were treating tariffs purely as a supply-size shock, looking at the inflationary impact of higher prices over the past two to three weeks. Particularly in the bond market, we're starting to see that growth concern really come through in the form of lower yields, in the form of more Fed rate cuts being priced in.

15:39Now, what's interesting to me is right now volatility, yes, is higher, but I think there's scope for it to go even higher because the way the options market is still pricing tariffs is as a stock-specific catalyst, not as a macro catalyst. So it's still trying to pick out the winners and losers of the tariff policy. But what the bond market is signaling is that we could be in for weaker growth, potentially recession, and that, as we know, is bad for all stocks. So, Virch, thanks for being here. So, OK, so we see volatility take up a lot. To me, it doesn't feel panicky yet. What is a number that starts to reflect to you panic?

16:15Sure. I would say it doesn't feel panicky because investors have actually been hedging. So one of the things we've been highlighting, I think last time I was on the show, we were highlighting that we were seeing elevated hedging activity all throughout the past couple of months going into this. So I think that partly is the reason why we haven't seen panic. What I would look for is correlation in the market, implied correlation. And we have an index, Core 1N, which goes hand-in-hand with the VIX. And when that index really starts spiking higher, that tells you that the options market is pricing for a macro sell-off.

16:47That usually is when the panic sets in. Where are we right now on that? It's about 20. Historical average 40. And periods of crisis can go up to 80 to 90. So we are well below average. What was it, for instance, over the summer when we saw the VIX spike to 40 and we saw that major sell-off? That was up above 40. Okay. Yeah, for sure. Yeah. Mandy, how about three-day moves that we've had in the S &P? I mean, there's a lot of different stats out there, but you can make an argument the kind of volatility we've had over the last three days, up 2%, down 2%, up 2%. We haven't seen this really since almost the market was trying to find a bottom in COVID.

17:19And I just wonder whether this should tell us that the psychology of the market has changed. Three days don't make a trend change, but the correlations you're talking about seem to me to be starting to take place on the index level. Yeah, I think the higher levels of intraday volatility, exactly to your point, right? Part of it, I think, is because of all this headline risk and the flip-flopping, which you guys have talked about, how can investors trade this? So one of the things that we're really seeing is just increased volume in the options market as a way to manage risk in this environment where, you know, whenever a headline comes through, you don't know how long it's going to last, right?

17:51You know, the tariff's going to get walked back the next day, the next month. We talked about that. So I think that's why we're seeing just, you know, record volumes, not just in S &P options, but across the board. And actually record volumes, particularly with zero-day options, as a way to play that intraday volatility in the market. Now, Mary, speaking of all the headlines, I think we've all gotten very used to seeing all these crazy headlines. But you're starting to see the markets actually maybe reacting a little less to them, right? Like the first time tariffs were announced, big moves in volatility, big moves in the market.

18:19But then as each level of tariffs was announced, markets are starting to kind of, you know, say it's the boy who cried wolf. of not sure if they should be worried about that. Is there some sort of correlation with, like, initially when Trump got in office versus now, are markets moving any less on those headlines? I would almost say, in my view, at least it feels the opposite. I feel like when Trump first got elected, people didn't really know how seriously to take the tariff risk, right? Because they looked at the first term. Look, the first term wasn't so bad. Is Trump 2.0 going to be like 1.0?

18:46And one of the things that we've been highlighting is that we think this time is actually going to be a lot different. And I think people are starting to realize that this time tariff is a much bigger risk to markets and a much more serious part of the Trump agenda. And in terms of market reaction, I think the really big reaction is going to come once we see the economic fallout or the economic impact. Right. And keep in mind, this is happening the same time as we're seeing large scale reductions in the federal workforce. What does that mean in terms of consumer spending? I think that's, you know, that's going to be key to watch.

19:13Mandy, thanks for coming by. I appreciate it. manager of SIBO. We've got a news alert here on an AI cloud computing startup planning an IPO. Let's get to Steve Kovac for the details. Steve. Hey there, Melissa. This is CoreWeave. They just filed their S1 to go public. This is the company that takes NVIDIA GPUs and other GPUs and sells that computing power for AI applications. They actually started out as a crypto mining company using those GPUs before pivoting amid that AI boom. And I'll rattle off a few of the superlatives here in the S1,$1.9 billion in revenue for 2024. They say that's up 37 % year over year.

19:51They also say they have more than 250 ,000 of those GPUs online to run these AI applications. But I will note, so many of the hyperscalers we talk about from Microsoft to XAI from Elon Musk, they're buying way more GPUs than that. But they do have 32 data centers, they say, that they can used to rent out this space. And they will be going public on the NASDAQ. And we will see what they're trying to raise right now. But this is just coming in here, Corrie filing under CRWV on the NASDAQ. Mel? All right, Steve, thanks, Steve Kovach. We have much more on today's market sell-off, including the impact on crypto, retail, and more.

20:28Coming up, though, overseas, but underinvested, while European markets could be the place to invest as U.S. big tech struggles here at home. the global trade next. Plus, weekend news of President Trump's crypto reserve losing its appeal come Monday as the tokens pull back in a major way. We'll dig into what is behind this reversal. Don't go anywhere. Fast Money's back in two.

20:54Welcome back to Fast Money's U.S. stock struggle and big tech pulls back. European markets are showing some strength. Germany's benchmark closing at new records today and European defense stocks surging after Friday's Oval Office clash between President Trump, Vice President J.D. Vance and Ukrainian President Vladimir Zelensky. The European aerospace and defense ETF hitting record highs here. We've been talking a lot about this, the industry makeup of the European indices favor XTech, which is doing better. It's amazing. And again, some of this really is rotation that I think was happening. And it was a dynamic because European bourses are certainly underexposed to getting that technology exposure.

21:30Some of this truly are the events that have been going around. If you look at the Fez ETF, so FEZ, that covers the Euro stocks 50. That's outperformed the S &P by 18 % since all the way back in November. 18%. So, I mean, you look at companies like Siemens. It's a large position in Nidevo, which is an international ETF I manage. I mean, this is a story where they're exposed to defense. They're exposed across the manufacturing space. We had a manufacturing number in Germany that's still somewhat contracting, but it's the best in 25 months. So economies across Europe weren't counted for anything.