Trump’s Tariff Takeoff with Altimeter Capital’s Brad Gerstner 3/12/25

0:00Bring in show music, please. Hi, I'm CNBC producer Katie Kramer. Here's what's coming up today on Squawk Pod. Altimeter Capital's Brad Gerstner, he manages about$15 billion in tech investments, and he's not worried about tariff uncertainty stalling the markets. If you think we're heading in the direction of high structural, permanent, McKinley-style tariffs, then we have further to go down. Gerstner weighs in on market turmoil, growth fears. The first 10 % is just digesting the fact that there is more uncertainty. This week was the first week where I saw a banner on CNBC that says fears of recession.

0:41And the method to the tariff madness. This is the fog of war. Fog of a trade war. Every company has pulled their M &A teams off the beach. They haven't done anything for three years and they're all back to work. Plus, are the floodgates really open for deals? Are Eamon Javers with the latest on White House policy? In a weird way, they're ending up in a similar place to where the Biden people ended up, but for a very, very different reason. And is Walmart pressuring suppliers in China to cover the cost of tariffs? Are Eunice Yun. There's this frantic negotiation process going on among U.S. retailers, U.S.

1:15distributors, U.S. suppliers, as well as here in China. All that today in a supersized podcast. What is our job? Is it to be half empty or half full? It is Wednesday, March 12th, 2025. Squawk Pod begins right now. Stand Becky by in 3, 2, 1. Cue it, please. Good morning, everybody. Welcome to Squawk Box right here on CNBC. We're live from the Nasdaq market site in Times Square. I'm Becky Quick, along with Joe Kernan and Andrew Ross Sorkin. At the lows of the session yesterday, the S &P was down by about 10 percent. So we were You're looking at correction territory before the close. A total of 10 percent.

1:55Yeah. Yeah. And then NASDAQ. A total of 10 percent from the highs. From the highs. Not down yesterday. 10 percent. Watching it all day long, I was at one point. Swings up and down. Well, I was at one point thinking, wow, this is pretty good. Because it got back to the Dow. It was 700 or 800 down. And mid-afternoon, it was down 100, trying to actually turn positive. but then more, I think there was more talk, developments in the tariff situation. Back and forth, right. But I don't know. What is our job? Look, there you can see the ups and downs. Is our job to be, I'm not going to be a cheerleader, but is it to be half empty or half full?

2:34You could do both. You could argue from both sides. I would say on a half full basis that maybe we're trying to make a stand here, depending on news and depending on other things that happen. And Tom Lee could be dead wrong or he could just be a couple of days late on terms of whether we get a tradable bounce. That you're probably not going to know for a while. Maybe not. But yesterday, I thought that overall, it certainly wasn't as bad as it could have been, although it was still, what, 400 and something by the end of the day. Somehow the S &P stayed out of correction. Do we want it to do 10 %?

3:09What's the technical if you bounce off of that? I think that's the closing low, but it's all just, but what is it, 9.6? Something like that down about 9.6? Yeah, it is now, let me tell you exactly, because I didn't get the number on it. It's 9., actually 9.39%. Oh, 9.39%. So 9.4%, basically. And Treasury rose a little bit. It rose a little bit. Those yields rose yesterday, if you were watching. But there have been a lot of questions that have been raised about whether the administration, The Trump administration is actually trying to bring growth down to the point where you're playing this chicken and egg game with with it now.

3:47Right. Early in the do it now. Try and get the Fed. Recalibrate. Yeah. The half empty, I guess, side of things would be this. We're at a weigh station, you know, and just headed since we get a chance. We're just headed back. Ron Barron said that yesterday on our set. You know, he speaks with Elon Musk. Obviously, he said yesterday on the set that this was a little bit of an attempt to bring down growth, to try and, I don't know, maybe lure the Fed back into this. It seems like a very strange idea. It's like a chess game that I don't think is actually being played, is sort of my view. It's weird.

4:17The people who talk to this administration have these ideas about these things, or talk to people in this administration, have ideas about this. I'm not sure it's an accurate representation of things, but we're going to talk a lot about it. A new U.S. 25 % tariff on steel and aluminum. Imports are in effect today on Canada, Australia and the European Union and others. The EU moving quickly to retaliate, saying it's going to impose counter tariffs on 26 billion euros worth of U.S. goods starting next month. Canada and Great Britain considering economic responses as well, though Australia said it would not respond in kind to the U.S.

4:54tariffs. This is following some fast moving developments just yesterday in response to some new electricity tariffs from Canada's province of Ontario on three U.S. states, including New York. President Trump said that he would double today's 25 percent tariffs on Canadian steel and aluminum. Ontario Premier Doug Ford later walked back the electricity surcharge and the White House withdrew its threat. Now, Ford said he would fly to Washington tomorrow for talks with Commerce Secretary Howard Lutnick on potentially trying to revise the U.S.-Mexico Canada trade agreement President Trump signed in his first term.

5:30We are here in an economic war. That's the reality of what's happening. You didn't take anything positive from what you just said. So the electricity rates are not doubled. He says, I'm coming down now. We hope to revise the USMCA before these tariffs go on on April 2nd. And I'm looking forward to a positive discussion. I mean, you could, we don't know how it's going to play out, but you could argue that's exactly that that would fit into a playbook if there's a method to the madness that you're doing all this and it could it could result in some of the inequities that were still in the USMCA being worked out I mean Doug Ford was talking very tough Trump was talking very tough suddenly he's coming down and its quote was I'm looking forward to very constructive discussions did you hear Peter Navarro yesterday well I don't know if that's where I'd go well no it was just feel good about No, it was interesting from the perspective that Peter was talking pretty positively about things, but it also sounded like the Trump administration had blinked with some of these things, too.

6:35It was clearly a step down. That could still happen. The U.S. blinking. But it's not just the U.S. blinking. Well, not just the U.S., but actually something good coming from all this in terms of things that still, you know, where we still might be getting the short end of the stick. But Europe, I think I worry about more because this is a time with the whole Ukraine situation. I just think there's a whole different issue at play with all of this stuff, which is you may get what you want in the short term and may look like you're the winner in the short term of these negotiations. But the way they're being conducted, not what's happening, just the way it's all going down.

7:14Well, we said that to Besson on Friday. makes it very challenging for foreign investment in this country in the future. Full stop. And from business leaders, I think, too. Business leaders in terms of putting a freeze on anything. Yeah, I mean, business leaders. I'm saying everybody. Consumers, you can argue that it extends to consumers being a little concerned about things, which is why you maybe saw the airlines. All of that. But I'm hearing from folks in the travel business who are saying foreigners are not going to want to come to the United States. So, you know, a great place like New York or Florida, Disney World, all these places where we have been a great beneficiary of being a place that people want to come, people want to like the U.S.

7:57I'm not arguing with you. You sound like you're arguing with me. No, no, no. I'm not arguing with you. I think I'm arguing with Joe. I'm saying you could argue that these sort of trade agreements may get improved in some way, but I'm just not sure whether long term it's going to be a win. Also yesterday, a message of caution from the Trump administration to business leaders who had been expecting a much smoother M &A environment. Eamon Javers joins us right now. He's got more on that front. And this has been interesting to watch, Eamon, the messaging and what he was saying to those corporate leaders.

8:30Yeah, it's not what a lot of people on Wall Street expected, Becky. President Trump's new FTC chair, Andrew Ferguson, went to the Yale CEO conference in D.C. yesterday and delivered a bracing message to CEOs, many of whom had largely assumed that the Trump era guarantees an M &A boom to come. Now, the comments were off the record and they were in a closed door session. But I was in the room and CNBC obtained permission from the FTC to report on the comments on the record after Axios obtained a recording of these comments from a source behind closed doors yesterday. Now, Ferguson told the CEOs that, yes, the FTC will quickly approve deals that are legal.

9:07And he wants the FTC to get, as he said, out of the way in those cases. But he also cautioned them that this will not be the wide open FTC of the past. This isn't the Bush administration, and it's not the FTC of the 90s, he said. And he told a story about how he arrived at his view on antitrust. He said that as a staffer for Mitch McConnell back in 2020, he got calls from companies complaining that police were racist and urging McConnell to do something about that. And here's what he said. He said, I sat there and said, why are you calling me about policing? And then I watched in 2020, businesses started to censor Americans because they wanted to talk about how masks weren't working or ask questions about whether vaccines were effective.

9:50And for the first time, I really started to understand the real connection between large economic power and the transfer and leveraging of that power for social and political impact. Now, guys, that's a pretty clear distillation of the conservative populist position that large corporations are to be distrusted because of their social agenda. And Ferguson is signaling there that the Trump FTC is going to use its antitrust power to try to disrupt that dynamic. So that's something that I think a lot of folks on Wall Street weren't expecting from Trump 2.0, but it fits in exactly with this conservative populist theme that we've been seeing from this administration.

10:29Eamon, I'm not sure if I'm a business leader that that gives me any more clarity on what types of deals would be allowed and what wouldn't other than are you on my side or are you not? And is that anything more than corporate cronyism? Yeah. And I think, you know, one thing to look at is, you know, where do you stand on social issues? And do you want to do M &A in this environment if you are, say, a Disney, right, which has been, you know, pilloried by the right over trans issues and that sort of thing over the past couple of years? I think that, you know, that social agenda is one that conservative populists see as not in their interest, not in the best interest of the country, at odds with their political base.

11:10And therefore, they're going to do what they can to disrupt that. And they don't see this is not like other, you know, Republican officials in the past, you know, who were sort of chamber of commerce, corporate friendly, who saw big big companies as their natural ally. This administration looks at them, I think it's fair to say, skeptically and says, wait a second, these are big coastal elites who are jamming values down the throats of our voters that we don't necessarily love. OK, so if you're the if you are the big companies and you are therefore the job creators, obviously, small businesses create a ton of jobs, too.

11:44But big businesses create a lot of them. We are cutting back on government jobs because we want corporations to be the ones that really pick up the heavy lifting. That sounds like a complicated mix of things, too, if we don't trust big corporations either. It does, except you could argue that this is a worker-friendly approach, right? I mean, if you're stopping M &A, what you're doing is stopping all the layoffs of all the redundant employees, right? I mean, you've got two travel departments. You've got two accounting departments inside these two companies. When they merge, all those people get laid off, or at least half of them do.

12:16In this world, worldview, what you're looking at is a lot of these things are pro-competitive because you're stepping in and blocking these deals and increasing competition, increasing hiring, increasing dynamism in the economy. In a weird way, they're ending up in a similar place to where the Biden people ended up, but for a very, very different reason. Becky's right about it. You know, it could be as simple as, you know, do they like me or do they not? I mean, maybe it's a good idea to start rerunning some Apprentice reruns. But does it guarantee you that you get your deals passed just because you show up and donate money to the campaign or show up for the inauguration or do the rest of those things?

13:00And he moved into Texas? I mean, people are already doing Trump friendly. We started kidding about the MAGA 7 instead of the MAG 7. But does that even guarantee that you get your deals passed? That doesn't necessarily, but you do see, I don't know whether you call it kissing the ring or whatever you want to call it. Or kissing something else. Towing the line, you're already seeing it. Maybe. Cynically, if you want to view it cynically. I mean, imagine how Wall Street would view it if a liberal Democratic president was signaling that they didn't like Wall Street's conservative views. Oh, I think that was whatever social issue.

13:36That was happening in different ways. They were saying if you say anything about the laptop, you're in trouble. That was happening in different ways. Yeah. Absolutely. Worse. We have had some heavy hit differences. Worse. Worse. But, Eamon, the question I have is... Right, I mean, which is worse depends on which side your bread is buttered on. Right, right. Laptop's worse. Don't butter my bread. Eamon, my question is actually whether you think this is focused on certain types of industries that have maybe more of a political... Or social issue, or you think it's broad, meaning they look at two supermarkets and say that two supermarkets are a problem?

14:20Or do you think it's looking at media companies, which might have, you know, different perspectives on the airwaves or other things like that? Do you see what I'm saying? Mainstream media. Yeah, absolutely. And I think you have to run that analysis, Andrew, now in this world. I think if you're big tech, big media, you're going to have to tread very, very cautiously here. If you look at the way the Trump DOJ, for example, on antitrust is approaching Google, that decision is coming later this year. They're not deviating all that much from where Biden was. And remember, Trump even began that case in his first term.

14:55So, you know, if you're big tech, I don't think you're necessarily off the hook in terms of M &A here. Yeah. Can't hurt to fund the Melania movie. I think you'll start to see a lot of that type of behavior, right? I don't know. Might be a good movie. Reports from China say Walmart is pressuring its Chinese suppliers to cover the costs of U.S. tariffs. Now officials in Beijing want some answers. Eunice, it's a good idea. I think it's a good idea, Eunice. Joins us now from Beijing. Are they going to say no problem? I think a lot of Chinese suppliers think it's a good idea, too, Joe. What we're hearing right now is that state media is reporting that local Walmart executives were summoned by the Commerce Ministry, as well as other authorities, and warned about complaints that Walmart is pushing the cost burden of President Trump's tariffs onto Chinese suppliers.

15:55What's interesting is that these news outlets are citing a CCTV columnist who is anonymous and who has been used during President Trump's first term to message on U.S.-China trade issues. That person, if it is a person, is saying that Walmart's demand to significantly reduce prices is, quote, unilateral, that the move may violate commercial contracts, and said that if Walmart insists on doing this, that the next step is, quote, beyond talks, which is a threat of taking concrete action. So the backdrop, of course, as you guys well know of this, is that this comes as there's this frantic negotiation process going on among U.S.

16:41retailers, U.S. distributors, U.S. suppliers, as well as here in China, Chinese suppliers, to try to figure out who is going to pay for what's become an additional 20 percent tariff. So I've spoken to suppliers here who said that they just don't have the bandwidth to be able to deal with these tariffs. They said that their margins are very, very, very thin. And then what was also interesting is that the CCTV commentator had said that the Chinese companies do not have the space to cut prices for U.S. tariffs. So again, underscoring some of the troubles that the Chinese suppliers are having and trying to push back on Walmart.

17:25The thing about this is this is how Walmart operates all the time with its suppliers. It's how it's always gotten everyday low prices passed on to the consumer is it looks for any place that there's price inflation, any place that there's disruption and tries to push that back on the suppliers and uses a very heavy hand. It's not just with China and just with U.S. tariffs. This is how they do business. In the way they do it in China. I think I'm fascinated. So this is the same anonymous person that was around in the first Trump administration, reemerges, don't know if it's real. I mean, why anonymous?

18:01It seems like this is something that the CCP, it's almost like a mouthpiece for the CCP. I mean, why not just come out and be who you are? It is a mouthpiece. Right. Because what's very common here, Joe, is that the Chinese government will cite either anonymous, you know, voices or social media or or will will cite cite Xinhua News Agency. And a lot of it is because they don't want to take the blame for these decisions. But but what you were talking about, Becky, that you see Walmart is usually the one that's pushing all of these suppliers. Over years, I've always heard from suppliers that sometimes they would run a loss for Walmart because they know that Walmart is such a big client.

18:45And if you are a Walmart supplier, that actually helps to bring business for you as well. So Walmart was really the kingpin, but now the Chinese government is coming in and saying that they're going to be pushing back. What was interesting too is the language around it suggested that there could be some sanctions coming for Walmart if they didn't actually listen. Well, it's the first time that there's a bigger 800 pound gorilla in the room. If you've got a government that's actually pushing back and saying no, that's that that trumps Walmart, so to speak. Yeah. Was it Carlos Danger? I mean, what was the what named Pierre Dere delecto?

19:23Is there a name for... Deep throat. Yeah. I came up with that. Oh, I know what you mean. Hello. Hello. Thanks, Eunice. See ya. It's far, far away. I have to yell. Cheese will be next. Coming up next on Squawk Pod. Remember we talked half full, half half. You're full full. You are so full. Hedge fund founder Brad Gerstner, his altimeter capital invests in internet technology. He is bullish on the Trump administration remaking America, even if the markets stumble a bit. Periods of uncertainty. We have high economic uncertainty, high political uncertainty, and high technological uncertainty. And high multiples.

20:05An extended discussion with Gerstner kicks off right after this break.

20:13This is Squawk Pod with Joe Kernan, Becky Quick, and Andrew Ross Sorkin. Up in Andrew, Q. Welcome back to Squawk Box. So we're going to get right to our next guest for a wide-ranging discussion on the markets, tariffs, tech uncertainty, investing in AI, the IPO market, and so much more investing in America. What kids might be able to do, we'll talk about that in a moment. Brad Gerstner is founder and CEO of Altimeter Capital, a leading tech investment firm with notable investments in NVIDIA, Tencent, Kupang, Amazon, Meta, Snowflake, and others. Though, interestingly, sir, you have lightened the load during this uniquely maybe uncertain time.

20:53So I'm not ahead of this. You know, well, we started the year. First, it's great to be here. It's nice to see you. I even put on a tie for you. Thank you. Got rid of the black T-shirt for the day. You know, we started the year markets at an all time high. We had seen a big Trump bump coming out of the November election. And when you listen just to the words of the president, we knew this was going to be a big period of transition. Right. We were going from a period of four years of two trillion dollar deficits, massive fiscal stimulus, massive monetary stimulus. And we're going to delever the economy.

21:24Right. He talked very openly about the tariffs, more reciprocity, fair trade, talked openly about the fact we're going to have some level of austerity with Doge, etc., that we'll get into today. Periods of uncertainty. We have high economic uncertainty, high political uncertainty, and high technological uncertainty. And high multiples. Right. At all-time high multiples. So there's only one thing that can happen. Discount rates have to go up. Right? Risk premiums have to go up. And when they do, multiples come down. So for us, that was just a period to say, OK, we'll go to the sidelines. We'll wait this out a little bit.

21:57We've seen the markets come back in. And I have to tell you, we were buying some yesterday because now you see NVIDIA 18 or 19 times next year's earnings. Now you're getting paid. You have a margin of safety. So here's the question. Do you think that the uncertainty, I would argue, the uncertainty does not feel like it's over unless you think it is? No, listen, the market now is firmly ensconced in understanding that we're in a period of uncertainty. So I think think about the first 10 percent down, Andrew, which I think the Nasdaq troughed it down 14 percent yesterday from its peak. OK, the first 10 percent is just digesting the fact that there is more uncertainty.

22:35This week was the first week where I saw a banner on CNBC that says fears of recession. So the second 10 percent really is about growth and recession. And where are you on that? So I think the handoff between these two policies, right, can be messy and it could tip us in to growth concerns or recession. We heard Delta warn earlier this week. We heard cautionary comments out of Walmart. So I don't think we can, you know, go slowly through this transition. I think the economy is fundamentally sound, but I think we need to get clarity around the tariffs. We need to get clarity around taxes. We need to get clarity around reconciliation and doge.

23:16I think the president's going to lead us in that. Just to clarify, you were speaking pretty publicly about this back in early February. I know you had a podcast where you talked about those things. Did you sell stocks when you say you stepped to the sidelines? Yes. So you sold a lot of the positions and now you're starting to. So we took down our gross exposure. So that's our longs plus or shorts. We took down our net exposures really to kind of the bottom decile of exposure that Altimeter would normally have. Again, it's just in the too hard bucket, as Warren Buffett would say. You know, it wasn't because we thought we're going to fall off a cliff, but we were concerned that this could be more messy than people thought because the magnitude of the change is bigger than people thought.

23:56What would you buy with both hands in the NASDAQ? What is the what you would think is, wow, this is dirt cheap, 20 percent, 25 percent from the off the peak, off the peak? Oh, well, you know, again, it's all fact and circumstance dependent. it, if we're heading in a positive direction fundamentally, which I think we are, right, I think we're heading in a pro-growth, lower regulation, fiscally more responsible direction. On the other side of this. Right. And so when you're off 20 percent, to me, that's probably a huge buying opportunity. Because remember this, Joe, as of yesterday, the average stock in the Russell 3000 was down 30 percent.

24:30The average stock. Most stocks in the NASDAQ I was looking at, we're down 20 % to 40%. So yes, the index was only down 14 % because of the MAG-7's weight in the index. So timing is a dangerous game. But the question is, to the extent you think this continues to be messy, how messy is it? How much more is there? And to the extent there's some people who are sitting around going, you know what, the knife is falling. I'm going to let it continue to fall. But the mess could be... That's the opportunity. But the markets bottom long before the mess stops. But you said the next 10 % would be from growth.

25:08You're suggesting that there is another 10%. Listen, the future is a distribution of unknown probability. So there, of course, is a probability, right? There's a certain distribution that we're going to have. We're going to go further down. And let me give you some scenarios, maybe a framework to guide how we're thinking. So first, the president said April 2nd is going to be a big day. Howard Lutnick has come on here and said April 2nd is going to be a big day. We're going to announce the reciprocity tariffs. So I think we have to wait and see. We have to wait and see what that is. Now, the question is, is that the start, Andrew, or the end?