Stocks Wrap Up Volatile Week… And Dissecting The Tech Wreck 3/7/25

0:03Live 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. A major market reversal. The S &P hitting nearly six month lows before staging a sharp midday turnaround. What sparked the comeback? And can markets keep the momentum coming next week? And a meta meltdown. The stock getting precipitously close to erasing all its gains since that historic 20 day winning streak. We make sense of the move and what it says about the state of big tech. Plus, a big box bust for Costco after earnings. Well, came out of the White House's first crypto summit and opportunities overseas.

0:34How traders are playing the rallies in markets outside the U.S. I'm Melissa Lee coming to you live from Studio B at the NASDAQ. On the desk tonight, Tim Seymour, Bono and Eisen. Welcome back. Steve Grasso and Mike Coe. We start off with that midday reversal, which capped off a wild week for stocks. The S &P dropping more than a percent at its lows of the session before rebounding to end more than a half a percent higher. Still, it was the index's worst week since September. The initial Friday sell-off coming as investors digested a weaker than expected jobs report. The U.S. economy expanding payrolls by 151 ,000 in February, less than the 170 ,000 expected.

1:09The unemployment rate edging higher while wages rose less than expected. But comments from Jerome Powell seem to turn things around midday. The Fed chair saying the central bank can wait to see how President Trump's aggressive policy actions play out before it moves again on interest rates. The president weighing in again earlier today saying reciprocal tariffs on Canada and Mexico could come as soon as today and calling the CHIPS Act a waste of money. What a wild week. Economic data, trade war escalations, Fed commentary was all there. What's your setup going into next week, Tim? Well, your setup is that markets are still, I think, nervous and possibly not buying the bounce.

1:46I think you're in a case where sentiment remains very, very low. You've had extraordinary volatility. I mean, this was a week that it's a week to remember. Enjoy yourself this weekend and relax a bit because you've had 2 % intraday vol almost every day, in fact, going all the way back to last Thursday, I think, whether it's a recovery up or closing on the lows. And if you look at indices that technically, I'm sure Steve's got a view, I bet Bonham has a view, you know, there's a dynamic in terms of where we are relative to the 200-day moving average, so longer-term support, where we've been dancing really at support or below it.

2:17So the NASDAQ today finished really kind of back up near the 200-day, but if you think about where it was intraday, and it really looked like we were going to close at fresh new lows. You haven't seen the Nasdaq as an index move to the downside through the 200-day really since March of 2023. So it was an extraordinary week. And you noted Powell, he was really the white knight today because on a payroll number that was somewhat mixed, I would say at best, but it wasn't a disaster. So therefore, it could have been worse. You had Scott Besson, the Treasury Secretary, who was out there talking about a detox for, you know, essentially the economy or the markets or people that are expecting the kind of fiscal full plate that we've gotten over the last 10 years.

3:00And I think that's fair. I think there are a lot of people that are ready to listen to that and acknowledge it. But the Treasury, excuse me, the Fed chairman was really the big deal today. Yeah, the economy is fine. We can afford to wait. We'll see how policies net out. All good things that markets wanted to hear. I think, yeah, especially given the context. So leading up to that, you had seen early parts of the day being much more positive and then rolling over into the later hour trading session. So I think, you know, that reversal today was relatively positive. To Tim's point, though, I still think testing that 200-day moving average across the major indices is a bit concerning.

3:35And you want to see a floor kind of put in before jumping in with both feet. To the Besson comments, I think there's a lot of logic there. Essentially, we have had this fiscal stimulus. You're starting to see some of that now in Germany that has fueled this market that along with interest rates for the better part of, you know, a decade, a decade and a half. And so kind of moving from fiscal stimulus to corporate spending with the tariff overhang, which makes capital budgeting a bit more difficult in that context, I think is why you're starting to see things roll over. The last thing is that we simply were just kind of price to perfection in terms of multiples, 22, 23 times.

4:09And now, you know, you're starting to see what we thought was going to be strength within some of the smaller caps. That really hasn't held up because those are supposed to be somewhat insulated from tariffs. I think that uncertainty still continues to loom as a macro overhang. You know, when Tim talked about the S &P and technical levels, when you go back, he mentioned March of 2023. If you go back to October of 2023, that's where we fell off a cliff. And we were down below the 200-day moving average throughout six days. Then we rallied pretty much to where we're at, to all-time highs. It had the same setup.

4:44And what created the rally? Powell. Powell creates this rally. Now, I don't know if it's going to be that type of a rally that we saw from October of 2023. There's a lot of things that have changed. But you do, I don't want to say you have a Powell put, but maybe you do have a softer stance. They're up to three cuts this year. Maybe we do get four. But the fact is they're cutting. They're not raising. Right. So you have a softer stance by the Fed. You have tariffs. The key letters in tariffs are the ifs. We don't know if if and when they're going to happen. Do that again. That was nice. Are you ready for it now?

5:24The key letters in tariffs are the ifs. Nice. That was more than that. It was a big setup. So you do have the ability for him to back off and put his foot on the gas. And if you get some reciprocity, not just reciprocal, if you get some reciprocity from Canada or Mexico, he's got a reason to back off. But he's got to feel like he wins because you still have that U.S., Mexico, Canada agreement coming up. So do we have a more positive flow going forward? Yes, I think we have a positive flow. So is all the money going to go back into the tech to the mega cap tech stocks? Probably not. To Bono's point, is it going to go into the Russell?

6:06I don't think the Russell can can outperform. I think you're going to get some sort of rotation, but not necessarily into the Russell. I think you'll get a wider tech spread than the mega cap names. I like the ifs in tariffs, because what you all said, what you said to me basically equates to more volatility across asset classes, which is what we've seen. It's not just in equities, Mike. I mean, the volatility that we've seen in the FX market in terms of the dollar index and the dollar's fall, in terms of the swings in the Treasury market, in terms of the swings in German bun yields on the back of its stimulus announcement.

6:41I mean, just extraordinary moves in a single week. Yeah. I mean, you can sort of get a sense for the volatility that you're going to see across risk assets, even just by looking at a simple barometer like the VIX index, for example, because what's going on, of course, is that in a risk-off atmosphere, generally you're going to see correlations in risk assets tend, if not to one, they're going to rise. And looking at the VIX index and putting it into context with a couple other factors, we get some interesting things coming out of it. So going back to when the beginning of the VIX took place, which was January of 1990, the average 30-day return for the S &P is about 80 basis points or so.

7:21It's interesting that if you take a look at the environment where we are right now, eighth, ninth decile for the VIX during that time, slightly above average forward earnings multiples, and the fact that the VIX is still basically in an uptrend. If you look at the 30-day moving average for the VIX, it's much lower than this. And what happens is that 30-day forward-looking returns for the S &P drops from about 80 basis points to the upside to about 20 basis points to the downside. And that's not a usual circumstance. It's hard to compile a bunch of factors like that and get a big data set where the forward look for the S &P isn't positive.

7:56But until we start to see the VIX meaningfully decline, and I think the late day move we saw today was a positive, but until we see that, I think there's still some significant risks ahead. What do you think happens next week? I mean, it seems like you have all this uncertainty, you have all this volatility sort of baked into equities, whatever asset you name it. And then there's the fundamental backdrop for a lot of the major drivers that drove the markets last year, it's weakened tremendously. It has weakened, but we've blown off a lot of steam. I mean, I really, and if you look at the move in Meta, which we now know has taken out the 20 straight days higher in a short amount of time, and if you look at Google and some of the moves in stocks people have wanted to own at lower prices, I do think there are people, and I believe investors should be, really going through their list and their watch list and trying to figure out which names.

8:47There's no question policy will continue to drive uncertainty. There's no question that the administration is now not afraid to say we've heard it from the president. We've heard it from the Treasury secretary. Be prepared for a little pain. That's something that I think actually markets also, though, will get comfortable with. And I think that's something that we had not heard or maybe even expected to hear from a president that we thought at times was really so focused. I think what happened in Europe is is is real. In other words, I think fiscal Germany, higher bond yields, lower dollar. These are big deals.

9:16I think oil will stay lower. I think at least the headlines today around Russia are that there's maybe a chance for Russian oil to no longer have a cap on it, for Russian oil to be flowing. We know that there's a dynamic with the Saudis right now. It does seem like this administration is going to get their lower oil prices, which will on some level be also stimulative to the consumer. A lot of cross currents. Next week is, I think, a chance for markets to actually catch their breath. But I don't think that there's necessarily people ready to come in and buy. Yeah. A key inflation report, though, is on deck for next week.

9:44So February CPI due out on Wednesday. Economists expecting a 2.9 percent rise in prices year on year, according to Faxet. That would mark a slight deceleration from January. For more in the macro environment, Apollo's chief economist, Torsten Slock, joins us here on set. Torsten, welcome to you. Great to have you here on set. What do you make of the jobs report? How does that set up the CPI report for next week? Well, I do think that the soft data going into today's number has been deteriorating, both when it comes to consumer confidence we had on Wednesday last week, and also when it comes to corporate confidence.

10:14We're seeing the CapEx plans from the regional Fed districts are beginning to roll over. So the worry you can have is that the soft data is saying that both consumers and corporates are beginning to worry about the outlook. The issue is in the data today is, of course, that that was measured in the 12th of the month, meaning the 12th of February that week. And that was just before things really started to begin to become more intense on the trade war front and also on the dose front. So from that perspective, the data today at 151 ,000, it was relatively strong, but it is, of course, very importantly, something that now is the rearview mirror compared to some of these risks that we've been talking about in the last few weeks.

10:48So you're expecting the data will deteriorate. Just, I mean, just factoring in those things, more layoffs from the federal government, plus the impact, the ding in consumer confidence. Because I think Scott Besson is absolutely right when he's saying that there is some detox period or there is some adjustment costs in going from an economy that looks like what it does today to the economy that the administration is trying to achieve, both with a lower level of federal government, but also with changes very fundamentally in how big is the manufacturing sector, what's going on with imports that also have to be lower.

11:19And that adjustment period can potentially take some time and it can potentially be painful. And it could, in the very worst case, also involve the recession, in particular, if all the sentiment data begins to reflect, to be reflected in the hard data in the form of weaker economic numbers. Torsten, there's been a lot of focus on government jobs. And to Melissa's point, if there's going to be more layoffs, put it in perspective for us. the total government jobs as a percentage of all the jobs. And what would that unemployment rate get to if they canceled all government jobs, which they know they're not going to do, but you have to have the ancillary ones for every government job.

11:58There's another person that's higher in the private sector because of that government entity. Absolutely. So if you look at total employment in the federal government, it's about three million people. And if you look then at studies from Brookings and others show that for every federal employee, there are two contractors. So that means that if you have three million and you add six million contractors, you get up to nine million people who basically is the true number for what is total federal employment. Total employment in the U.S. is about 160 million. So now you have in very round numbers, nine million people out of 160.

12:28But if you then also take into account that you live in a household with someone who might be in the private sector, the total number of households is 130 million. And therefore, if you now say that roughly 10 percent of all households, meaning between 10 and 15 million, are impacted in some way or another, it's not so much the direct effect of layoffs from federal workers. It's really more the sentiment effect that you begin to say, maybe I should not be going on vacation, which the conference board indicators have already been suggesting. Maybe I should not be buying that car. Maybe we should not be buying that new iPhone.

12:57Maybe we shouldn't be buying that new washer and dryer. So the fear is not so much the direct hit from those. Even the direct hit from tariffs could also be somewhat limited. It's more the spreading of the sentiment that people begin to pull back and in the worst case say, well, maybe we shouldn't be spent so much in the household sector. And maybe corporates also say, well, maybe we shouldn't hire if there's such an elevated level of uncertainty. That could be the real risk where things could really begin to accelerate. That's not the scenario that we think is the baseline. We still think we will not get a recession.

13:24We think it will only be a modest negative impact. But we do worry about the sentiment effect, especially if uncertainty persists at this elevated level. It's one thing to have a growth scare, Torsten. It's another thing to think that stagflation is a possibility, which is sort of gaining some steam these days. Is that in your scenario at all or is that unlikely? Well, I think also I was at the event where Jay Powell spoke today at the USMPF forum. And exactly the question was also asked to him, well, how would the Fed deal with and how should we generally think about if there is this somewhat unusual scenario of inflation going up a little bit and GDP going down a little bit?

13:57because inflation going up says the Fed should be hiking, and GDP going down says the Fed should be cutting. So that's why what would the Fed in a dual mandate put a weight on? I do think that as long as inflation expectations are well anchored, which they absolutely are, this was a very important part of the debate at the conference, if inflation expectations are under control, the Fed will absolutely focus on the slowing economy and therefore begin to cut, especially if the unemployment rate begins to go up. So the Fed put is more in play? I do think the Fed put is in play. Even in a sacrificial area environment?

14:25Next week we get the CPI number, But if we do get also the GDP numbers slow down and even, of course, the most important thing for the Fed, the unemployment rate going up, then the Fed will begin to say the unemployment rate going up, that's not good, and we'll put weight on that as long as inflation expectations are well anchored, which they absolutely are. In your view, is that why the market's turned? So I do think that the turbulence and all the downside we're seeing in markets at the moment, because the sentiment indicators that have eroded so much, markets is looking at that and saying, well, is this a leading indicator for actual people holding back among consumers and also holding back among hiring and capex spending for companies.

14:59And therefore, from a risk management perspective, it makes sense that the market is saying, well, if this uncertainty persists and if that's the reason why the sentiment indicators are deteriorating, well, then we should expect to see some more holding back in the hard data eventually coming when it comes to consumers and firms and ultimately the unemployment rate. Torsten, thank you. Torsten Slok of Apollo. Mike Coe. Yeah, I mean, I think it's pretty clear when we take a look at what happened after that meeting that people are sort of seeing, I think, what Torsten was just talking about. I mean, look, consumer pressures are, you know, we're 70 % of the economy.

15:35So obviously, if you feel like consumer sentiment is deteriorating, then that means that the demand pressure that could cause some inflation is going to be deteriorating. And, you know, all of the things that he was just talking about on the employment side, I think we all recognize that it's not just the government jobs being lost necessarily, but, you know, it's a combination of other things. And finally, You know, we had, you know, modest$690 billion year on year GDP growth, I think, between 23 and 24. And we were running a$2 trillion deficit. If you go along with Besant's argument that we should be looking at 3 percent of GDP in terms of fiscal debt, then you're going to deal with some economic contraction.

16:12And that obviously helps keep a lid on inflation as well. I think what's interesting about this week, first of all, Torsten Reston just referenced the travel industry, what people are willing to do. I mean, tough, tough week for airlines, tough, tough week for hotels and travel stocks. But, you know, J.P. Morgan's Bruce Kasman, who I really respect, their chief economist, sounds like they're kind of reassessing their view on U.S. exceptionalism. And that may not seem extraordinary now, but that's not something I think the entire market has done. And I think this is something that is going to play out over the next couple of weeks.

16:42Weaker U.S. GDP, higher global GDP. How do you trade that? President Trump warning that some reciprocal tariffs could take effect as soon as today, capping a tumultuous week of trade policy. Megan Casella has been on top of it all. She's got the latest. Hey, Megan. Hey, Melissa. Another day, another tariff threat. And this time it was the president himself really sowing some confusion about that tariff timeline, suggesting it could be as soon as today or early next week for those reciprocal tariffs. Take a listen here to exactly what the president said. They'll be met with the exact same tariff unless they drop it.

17:15And that's what reciprocal means. And we may do it as early as today or we'll wait till Monday or Tuesday. But that's what we're going to do. We're going to charge the same thing. Melissa, he went on to say in that same set of Oval Office remarks earlier today that he reiterated the April 2nd date, saying that was the date for reciprocal tariffs. I've asked White House officials for clarity on this. One told me that the only definitive thing on the schedule next week on the tariff front continues to be the steel and aluminum tariffs. set for March 12th. That's Wednesday. So we don't think the reciprocal tariffs are moving up, but it does show you just how fluid things are right now and how top of mind it is for the president.

17:54We also heard from the president about the jobs report in that same Oval Office appearance. And while it was a mixed report, as you guys have been talking about, he really celebrated it. He was specifically focused on manufacturing numbers. He called it a manufacturing turnaround that was coming ahead of schedule. And the report itself, it was about 10 ,000 manufacturing jobs created, not particularly hot in that department. But the White House does see this as a way that they're going to really boost job growth. Kevin Hassett acknowledged to me in a separate conversation that they do expect to see some doge cuts showing up in the jobs report later in future months, the next two months.

18:27But he also said that they think manufacturing is the way to offset that and that tariffs are the reason that's going to grow. So it shows you a little bit about just where this White House is focused right now. Melissa. All right, Megan, thank you, Megan Casella, it's funny that Megan said that the one next date that is set is next week, when we thought April 2nd was also a firm date, and obviously that's not the case either. But that goes back to just how crazy things have been, and there's no anything that this administration sticks to in terms of playbook. Well, fluid was the term used, and I think that's about as polite as one can, fluid or pragmatic.

19:04Yeah, again, it just really reflects the uncertainty, and that's what you're seeing in the market here. Again, if we are going to be de-escalating or taking out the fiscal stimulus, it is going to be on the corporate side. And with their inability to set budgets because they have various inputs around their input costs, I think that makes it difficult. And that's what essentially the market is bearing out. There will be an opportunity for you to step in, but I think it's tough at best with a murky picture. This is the looming issue. Until you have clarity on that, us buying stocks is going to be delayed.

19:37And then because corporates setting their budgets and capex expenditures are also going to be delayed. Coming up, a markdown on Costco. Shares seeing their worst day in a year after earnings last night. Why investors are running away from one of the biggest names in the defensive sector. Next. Plus, rough waters for the cruise stocks this week. What the move lower says about the state of the travel trade. More fast money right after this.

20:09Breaking news on some new additions to the S &P 500. Kate Rooney's got the details. Hey, Kate. Hey, Mel. So we have a list for you. There are some changes to the S &P 100, the 500, and the MIG cap group as well. For the S &P 100, we've got Palantir Intuitive Surgical, ServiceNow. Those companies are going to replace Dow Inc., Kraft Heinz Company, and the Ford Motor Company. This is in the S &P 100. These companies will remain in the S &P 500. And then moving down the list here, you've got DoorDash getting added to the mid-cap group as well. You also have Williams-Sonoma, Expand Company, BorgWarner in the group that is getting replaced, Teleflex, and Celanese Corp finally here on this list.

20:56That was for the S &P 500, Meanwhile, but HIMSS is going to be added to that mid-cap group. So all of this is going to be effective March 24th. That is a Monday. It will come inside with some of the quarterly rebalancing. Mel, back over to you. All right, Kate, thanks. Kate Rooney, we should note that there had been some anticipation that Coin Strategy, formerly known as MicroStrategy, and or Hood would be added to the S &P 500. Those stocks are trading lower in the after-hour session, partly on this sort of burst expectation here. But it's a good day for the purveyor of Dutch ovens, Tim, in terms of William Sonoma being added.

21:30Yeah, I'm almost even choking on the news. I mean, it really, it was, no, and it's interesting here because William Sonoma is the name. He's not going to make it. He's not going to make it. I feel your pain. Yeah. Let's just say, I don't think the valuation here is that expensive. This is a story that if you've seen actually some of the home improvement, also some of the home furnishing stores, it's been a very rough couple weeks. William Sonoma has been probably the exception, given the fact that I think some people were expecting this move. All right, let's get to Costco now, finishing their worst day in a year.

22:00After missing Wall Street's earnings expectations, the wholesaler being on revenue reported an increase, Comstore sales number and strong e-commerce numbers. But the CEO warning investors on the conference call that President Trump's tariffs will make grocery margins much tighter. Mike, this is an interesting case where the, well, maybe a not so unusual case, where the animals community come out afterwards, defend the stock and say they are actually much better poised to deal with tariffs than a lot of their competitors simply because they can just pull the trigger on the mix of goods that they sell in their store.

22:30Yeah, that's one of the strengths that Costco has, obviously, that, you know, they have sort of negotiated goods and they base, you know, they focus on the things where they can offer the best value and they can, as you point out, they can adjust their product mix. I think one of the big issues, though, with Costco, and this is faced by, frankly, a lot of companies that have performed very, very well. This is 13.5 % CAGR over the last 10 years in terms of EPS growth. But the fact is, this thing is trading at such a rich forward multiple. It just creates a huge sort of air gap that can exist underneath on any kind of a disappointment.