Stocks drop,Tesla tumbles, and gold shines as investors get defensive 4/21/25

0:00Live 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. Another Monday sell-off. The major averages slump while the dollar continues its slide. And with the president ramping up his attacks on the Fed chair and the bite of tariffs taking hold, is there a catalyst out there that can kickstart a rebound? We'll debate that. Plus, is the record-breaking running gold the ultimate sell America signal? Should investors be more and more worried as gold rises higher and higher? We'll go inside the numbers. And later, the options action on Tesla ahead of tomorrow's results.

0:30Ugh, that's what shareholders of deckers are saying about the stock right now. And why is one Wall Street firm actually bullish on Disney right now? I'm Melissa Lee coming to you live from the studio via the Nasdaq. On the desk tonight, Tim Seymour, Karen Feinerman, Dan Nathan and Guy Adami. We start off with stocks going back into sell-off mode to start the week. The S &P dropping 2.4%, touching its lowest level since April 9th and back down 12 % for the year. The Dow dropping more than 1 ,300 points at its lows of the day and the tech-heavy Nasdaq leading the losses with more than a 2.5 percent decline.

1:00But major indices all closed off their worst levels of the session. Meanwhile, Treasury yields headed higher with a 10-year yield back above 4.4 percent, the dollar touching its lowest in more than three years, and gold hitting its 24th record of the year, above 3 ,400 for the first time. All this is tariff policy, and the president's attacks on Fed Chair Jerome Powell throw the economic outlook into more uncertainty. But even with all the recent volatility, we're just about where we were a year ago. So what does this action tell you, Guy? Well, the stock market's definitely the star of the show.

1:33But behind the scenes, it's what's going on. Tim's talking about Karen. Dan, it's the weakness in the U.S. dollar, which, by the way, should be alarming a lot of people out there. I mean, the move the dollar's had over the last couple weeks has been historic. Dollar yen below 141 should be flashing red lights the same way they flashed over the summer, August specifically. And the bond market is clearly a story because people, I think, are starting to question the whatever of our U.S. debt. in our U.S. dollar, and I think they're fleeing it, and you're seeing it. People now are trying to get short the U.S.

2:02dollar through any vehicle they can, and they're selling their treasuries like yields are headed back to 5%, which, by the way, I think they are. All of this was in place for weeks, maybe even months, in terms of the downward pressure on the dollar, as well as downward pressure on bonds and sales yields higher. But with this call, the repeated calls for Fed Chair Powell to leave or be kicked out, that puts more uncertainty under this whole thing. Absolutely, for sure. I think that more than anything else, I mean, the tariff stuff we've worked with, that's been in the place for, you know, since Liberation Day or even before Liberation Day.

2:35But this rhetoric being ratcheted up significantly to get rid of Powell, I think, is very destabilizing, counterproductive. And so it's interesting. We think, where were we a year ago? Bonds weren't that different from here. Maybe we were entering about the stage where the Fed had stopped tightening. They were on neutral for a little while, heading to cuts. soon. And it seemed like, you know, AI was very different then. So this is a lot of the things the same, but it feels very, very different. Yes. Well, it feels like emerging markets. And to me, again, I'd take stocks, bonds and the dollar all going down in the same day.

3:14This is the stuff that I did for years. We had Steve Leesman on Friday and he kind of stole my metaphor to, are we Turkey? And with all due respect to a fantastic country with great food and a great part of the world, but we don't want to be seen as having the same economic, political, and really, unfortunately, conflicted central bank dynamic. And that's kind of the story. I mean, an independent Fed is one of the tenets of our capital market system, frankly. And even those that feel, and I think many of us do, and certainly there have been times it's obvious, the Fed has overstayed their welcome in our markets since the financial crisis.

3:48And I think Scott Besson's one of these guys. I think, yeah, these are also, I think, times to point out just how important it is for the central bank to be where it is. Back to the equity market, you know, we're within 3 percent of the closing low on the S &P. So we've we've come down last week. You had those bear crosses everywhere on the Nasdaq and on the S &P. And they're real. And again, that downtrend from February 21 is is one that I think until proven otherwise is is the trend that you're following. And we're just getting into earnings season. So we've had 15 percent of the S &P. And while I think we can all say that probably that first quarter, especially with some pull forward was pretty decent.

4:22I think this is the part of this that really could possibly, usually you wait for earnings season to give you that backstop to get back to fundamentals, but we know we're not going to hear anything great out of guidance. Yeah, so it's not just to me about the economy and what's going on in the markets right now. It's anything. Just pull open the Wall Street Journal, you know, the Washington Post, the New York Times, Bloomberg.com, CNBC. It's like a deluge of stories that actually don't all have to do with the markets and the economy, right? There's just no shortage of things, that there is an attack on the norms.

4:52And, you know, you could say that's political, but it's not. Look at the Washington or the Wall Street Journal. It's owned by Rupert Murdoch. You know, there was 10 stories over the weekend that are really attacking the processes in which this government is kind of like looking at things. And, you know, there's an article that really hit me today. It said Trump is everywhere except in the economic data. And it's talking about how the data is not reflecting what's going on just yet. And so what Tim just said about the quarter, it's baked in the cake, right? And then the guidance, It's just as clear as mud.

5:20And then when you think about just what is the sort of headline that could cause some sort of ease in the economy or the markets? I'm hard pressed to see what it is right now. I really don't like it. You know, aside from them saying, hey, you know, we're just kidding. There's going to be no trade war and we're not putting tariffs to the extent that you think. But I actually think that would be really bad at this point to be bad for our credibility. You know, it'd be bad for our standing in the global order here. And so it's a really bad place because all of the sorts of plays in the Fed's playbook that he's being attacked for actually may not work in this environment right now.

5:53You know what I mean? Like, usually if you have an economic crisis or whatever, you lower interest rates. And I think that's what you're suggesting about, you know, like third world or Turkey or that sort of thing. So I think we're in a really tough spot here. And the market, I think, is yet to really reflect that. If you think about an S &P, it's only down 15 percent of the year. And then you later on, you mentioned the AI story was very different compared to a year ago. Morgan Stanley had a report saying that hedge funds de-risked to the lowest exposure to the MAG-7 in two years. I mean, they were selling Monday through Wednesday of last week$60 billion.

6:24Well, I'm always long, so I have MAG-7 exposure. You know, some collars in place. I have less, some because it's self-hedging when it goes down. And then I have some collars. I have no Apple. It's all collared. NVIDIA is 40 % collared. But then the rest is down. I like Amazon. I like Meta. Google, I like as a valuation, but I am concerned about the antitrust situation there. So, you know, I'm always looking for things to buy. And with the VIX here, we talked about it a lot over the last few weeks, between 30 and 40 is really limbo. It's no man's land for me. So I think we were, I don't know where we ended up the day, maybe 32 something or other, but hit 36 maybe.

7:06Still limbo there. I like to have, I mean, as you said, clear as mud. I'd like to have some clarity, which we will not get during earnings. But I do think, though, a reversal on tariffs would be a big benefit to the market. It did feel like a very peaceful vol day on a day that wasn't a peaceful vol day. And yet it really I think the market is in a mode here where I think people are accepting of the uncertainty and the drift lower. And Mel, your comments on positioning around the MAG-7, normally I would respond to that and say that's actually kind of bullish, right? If you think about the market and positioning, if you've seen all the big hedge funds, de-risk, take those positions down.

7:45CTAs, which usually follow or trend followers, have done the same thing. But I think the question we came into all this was, what are the multiples on these companies and what should they be trading at? And I think it's going to be very important to hear about that AI CapEx. But I do think we're at a place here where the S &P is certainly not priced for recession. a recession that I'll say is not happening tomorrow, was reading a great report by Bruce Kasman of J.P. Morgan, who I think is one of the best. And he said, you know, coming out of the first quarter, you have a dynamic here where, look, the data and the outlook was very resilient, very solid.

8:16And there was some pull forward nature to March for sure. But the recession dynamic that now I don't know where we are in probability and depending on who we're asking, strategists, economists, market players, but but it's not going to happen immediately. And that's the thing about this that's a little bit troubling to me. This all plays out over time. And it'd be one thing if we just stuck a stick in the bicycle spokes guy. But she probably did as a kid laugh when people flew off their bike. Yeah. Well, I mean, I never did that. I mean, I was the guy that helped the person up off the ground after you put the stick in the spokes.

8:48But so, I mean, and at a certain point it comes math. Right. And what's the right multiple for the environment that I think we're in or going into? Historically, an 18 multiple for the market is not unreasonable. I mean, that's probably a little bit actually north of historic norm. I mean, what about our earnings are we going to have? It's not 274. I think we all probably agree on that. It's probably something closer to 250. Now, there are people watching that and saying, you know what, guy, it's not that simple a math problem. And you're probably right. But to a certain extent, it's going to be that simple.

9:15And that gets us down to 4 ,500. So you can make an argument that fair value is probably still about 600 or so S &P points away. If you're assuming that the multiple is 18. You can make an argument that the multiple can be lower than that. I mean, we've seen in the low teens as well. Well, let's just go back to 2021 to 2022. By no means you can compare these sorts of situations because that's like a very orderly sort of sell-off. There was a lot of excess in the market and you had, you know, NFTs and crypto and SPACs and all that sort of stuff. So at one point, the S &P was down 30 % of the year, closed down about 20%.

9:51The Nasdaq was down about 40%, closed down about 33%. So here we are right now. Guy just mentioned that 4850 level. That was the high in 2021. Take 1500 points, go down to your 4500. What's the E going to be like? You know, like at some point the stock market is going to discount essentially what you know, where we bottom out. I just don't think a P.E. is a reasonable way to kind of think about what's going on in the market. So this feels like really bad relative to me to 2022. Now, I don't think you press it here. I think you sell rallies. I think it's one step forward, two steps back. And I don't think we're going to get any clarity on the tariff stuff, probably for about, you know, four or five, six months.

10:28Well, executives from some of the country's biggest retailers, Walmart, Target and Home Depot, meeting with the president this afternoon about tariffs for the very latest out of Washington. Let's get to Megan Costello at the White House. Megan. Hey, Mel, that's absolutely right. The CEOs of all three of those companies here this afternoon to meet with the president. And I am told that tariffs were on the agenda just in the last couple of minutes. I got this readout from the president via a White House official, the president saying that it was a good meeting with the biggest retailers in the world, confirming that the discussion included tariffs.

10:57The president also says the meeting went very well and that it was an honor to have them in the Oval Office this afternoon. Now, all three statements, all three companies, I should say, also put out statements as well, mostly calling it a productive and a constructive meeting. And Target specifically also said that they discussed, quote, the path forward on trade. Now, Melissa, remember, this does come as the president has said in the past that he'd be willing to talk with companies about tariffs. That's, of course, as negotiations with foreign countries are ongoing as well. The president in the past had said he might not be so rigid when he talks to companies, suggesting there that maybe there was some discussion about exclusions or exemptions in the Oval Office.

11:35So that's what we'll have to be watching over the next few days or weeks. We'll see if there's anything more specific to come out of this meeting, whether any of these companies might get some sort of wins on the trade front in terms of some of their products being exempt. Melissa? All right, Megan, thank you. Megan Casella at the White House for us. I mean, it is positive that they are talking with the president as to whether or not anything actually comes out of this. Who knows? But in terms of the tariff exposure retailers, I mean, that's undeniable. No, undeniable. Communication is always a good thing.

12:03Right. But I mean, to your point, is it going to fall on deaf ears or will something come of it? Maybe. I mean, listen, President Trump watched Jamie Dimon speak to Maria Bartiromo a week and a half or so ago, and he made a decision to sort of ratchet things back based on that interview and based on what happened in the bond market the night before. So if somebody says something compelling to him in this round of talks, I mean, maybe you'll get a little acquiescence on the back end over the next couple of days. It's interesting. I don't know if, you know, we avoided the shutdown of the government.

12:33The Democrats sort of caved and sort of are in this interesting strategic position of anything that goes wrong now with the economy is on the Republicans. So that, I think, adds a bit of extra pressure for them to come to some resolution, I think, somewhat quickly. And then also, I guess that will allow them to move on to the other parts of their agenda a little bit later in the year. Tax cuts. Yes. Let's get more on President Trump's attacks against Jerome Powell. In a post on Truth Social, the president called the Fed chair Mr. Too Late and a, quote-unquote, major loser, saying that, quote, there can almost be no inflation and calling on him to lower interest rates.

13:13For more on what it could mean for Powell's future and the independence of the Fed, former Cleveland Fed President Loretta Mester joins us now. She's also a CNBC contributor. Loretta, great to have you. Great to get your perspective on this. I mean, nobody in the economic world says that this is a good thing, and certainly we're seeing the reaction to the markets. But in terms of what this could lead to, I mean, we got a flavor of it in terms of what we're seeing in the bond market in terms of the dollar. Is it too much of a leap to say that we would be on the path to becoming Turkey? I know there's a difference because they had four central bankers in two years, but this is the United States of America, the world's reserve currency, the world's safe haven in terms of the treasury market, and we're acting like this.

13:53Well, I think the president's comments on firing Jay Powell before his term is over certainly are on helping in terms of clearing up any uncertainty. It's adding uncertainty on top of uncertainty that we had with the tariffs. So it's not helpful for the economy. And you see the reaction in the financial markets, as you just pointed out. But it's also not helpful for the president's own legacy. And I have to believe that at some point, he'll understand that his advisors will tell him that and that he can sort of complain about policy, but not threaten to do things that really upend the institution and the institutional underpinnings of the Fed, because everyone who's ever researched this, if you look at other countries, you really want to have a Fed or a central bank that is setting monetary policy that is really focused on the goals that their legislator has given them.

14:53And in the Fed case, it's the Congressional Congress has given them its goals. So you really want that to be the focus. And I am 100 % confident that Jay and the Fed are going to look past and look through all this, you know, what the president is doing in terms of saying that he wants to fire and really stick to the minuting of promoting price stability and maximum employment. That's their job. That's what they do. That's what they work hard to do. And that's really what their focus is going to be. And all this other stuff is adding a lot of uncertainty to the economic outlook, which makes their job harder.

15:34But I also think that it's undermining the Fed, the president's own economic agenda and his own credibility in terms of his economic agenda. And at some point, I think that'll be realized by the administration. And they'll understand that this kind of attack on Powell is not helpful in any case to any agenda. And so I think that is where it's going to be. But in terms of what the Fed is going to do and what Jay is going to do leading the Fed, they're going to stick to their job. And their job is to take into account what's going on in the economy. And that includes what's happening in financial markets, of course, but also the bigger picture in terms of what's coming in terms of policy.

16:19and really focus in on what's the right monetary policy settings to make sure that we have inflation coming back down to 2 % and we have as much as they can do with an interest rate tool cushion this big, pretty traumatic change in the regime, right? So this isn't just a little bit like we're going to have some cyclical stuff going on. It's really a fundamental change in the trade policy and the way the U.S. trade policy interacts with the global trade system. So the Fed has some tools that it might be able to cushion against some of that. But right now, it's trying to balance both of those goals.

17:02And that's what they're going to be focused on. They're not going to let this stuff distract them from their really important mission. Hey, Loretta, it's Karen. Thanks so much for being on. Obviously, we know you have your dual mandate of maximum employment and price stability. But does the market volatility ever weigh in on that to the extent that it can destabilize the labor market or the economy more broadly? I mean, there's two parts of that. One is, are the markets actually functioning? Right. Are they finding prices? Are there trades being done? Right. And so far from what we can tell, right, that the markets are functioning.

17:40We may not like the way they're going, but there's trades being done. And so there isn't a market functioning issue at this point from what we can see. But you're right in terms of financial conditions, if they're sustained and long enough and, you know, in a particular direction, they will influence the outlook for the economy. And so, you know, we've already seen how uncertainty can influence the economy, right? People are pulling back on investment. If you're a business, people are pulling back on discretionary spending and getting prepared a little bit more savings and spending. Same thing can happen if you see that your wealth has gone down, your 401k, and you look at the statements and you see, oh, wow, I have less there than I thought.

18:23I better start saving up again for a rainy day. That can affect the economy. And that'll be all that'll be taken into account when the Fed sits down and thinks about, you know, their outlook for the real side of the economy, as well as what's going on in the inflation side. Loretta, thanks for your time. Great to see you. Loretta Mester. Thanks, Melissa. Well, what I heard Loretta say is in a world of an independent Fed, and that's the world we live in, inflation is so much more important and staying anchored long term towards that means you are going to run the risk of, again, if being late means supporting the economy or supporting markets, I think this is a good place for the Fed to be.

19:03And again, I think this is a place that a lot of market participants want the Fed to be. Yeah. It feels as though if President Trump wanted him out, I mean, we'd be in the works right now. So I think he understands enough people probably told him that would be catastrophic. So I think he'll just sort of resign himself to browbeating him and trying to embarrass him on social media. I think that's what we're up against right now. But I think he understands the ramifications for going down that road. Yeah, I just think the administration has to make a better case why lower rates fixes anything that's going on right now, because they have not done that just yet.

19:34And so to me, you know, you can compare us to what's going on in Europe. It's a very different situation in Europe. We are picking a fight with all of our major allies and our biggest adversaries. And I don't know how you get this thing fixed. I think it's weird that we don't have a deal with Canada or Mexico or EU right now. I think they're all waiting to see just how much we will blink. And going forward, you know, if he can't get this thing done with Fed Chair Powell, then he's going to try some other tactics here. They're just not going to cave. And really quickly, short term is a short end is where the Fed controls rates.

20:05Long end, by the way, that 10-year is within a whisper of the intraday close on the day we were all fearful of that 10-year auction. So rates didn't have a good day. Coming up, the countdown to Tesla earnings is on, and the action in the options market is revving up around the EV maker. How those trades are playing the results next, plus Uber hitting the brakes as the FTC cracks down on the rideshare company's billing practices. What the latest blow to big tech could mean right after this.

20:32This is Fast Money with Melissa Lee, right here on CNBC. Welcome back to Fast Money. Tesla tumbling as investors prep for earnings tomorrow. Barclay is cutting its price target on the stock to 275 from 325, citing a confusing setup ahead of the report, weak fundamentals, but potential positives from a more engaged Elon Musk in its full self-driving event. Options traders are getting creative with how they are playing the results. Mike Coe joins us now with the action there. Mike. Yeah, creative. I wouldn't say overly optimistic, at least not when we're talking about the options on Tesla's underlying shares.

21:08So we saw put volume outpacing call volume pretty considerably today. The most active options where we saw the most premium spent were the weekly 225 puts. There was, you know, over 48 ,000 ultimately by the end of the day of those trading around$12 a contract. That's a lot of bearish premium. Usually, over the last 20 days, we see calls outpacing puts, and that actually, that trend has been dwindling over time. Now, there's also a two-times levered ETF that trades on Tesla. And here, this thing is down over 80 % off of its highs. But here, there is a little bit more optimism, probably a function of the instrument itself just being levered to the upside.

21:46There, we saw buyers of the seven strike calls paying about$0.53. That was the most active contract there. But in general, I would say that there's a lot of skepticism and some concern maybe looking into earnings. Yep. Mike, thank you. Mike Coe with the action there. One of the biggest bulls on the street, Wedbush's Dan Ives says Musk needs to resign from Doge or at least provide a firm timeline as to when that will happen. He needs to disengage from there because there's been brand damage. We've been talking about this brand damage aspect for quite some time. He said something interesting on the last call.

22:16I guess he got a lot of questions about, you know, all the time that he's spending on all these different things. He wasn't at Doge just yet. And he says, I go to where the problems are. Well, let me tell you where the problems are in their auto gross margins. They're expected to be like 12 and a half percent. That's in line with General Motors. This is down from 30 percent or so three years ago. So they got the brand degradation. They got a whole host of other issues here. And a lot of folks who are bullish on the story, they're kind of throwing out 2025. If you want to throw out 2025, then the stock shouldn't be trading here because you're looking forward to RoboTaxi and Optimus and all that exciting stuff where we know that you have to take the over.

22:49So, again, I don't know how they get out of this hole because the brand degradation is not just here. It's also in Europe. And they're going to have some problems in China because he's got a lot of issues in China as it relates to, you know, all these different levers that they could pull with him one way or another. And the competition there is extremely fierce. Throw on top of that a slowing economy, higher interest rates. Which, by the way, when rates were at their zenith a month and a year and a half or so ago, Elon Musk actually talked about how high rates were hurting Tesla. And it all adds up to me to a stock that's challenged.