← CNBC's "Fast Money"
CNBC's "Fast Money"
Markets Rip Higher On Tariff Pause… And Why China Isn’t Getting Any Relief 04/09/25
00:49:11
Stocks surge after Trump hits pause on most tariffs, but ups the ante in the China trade war. What one China expert sees in store next in the tariff tit-for-tat. And the impact the levees are having on pharma’s production pipeline. Plus Walmart yanks its guidance, Delta flies past earnings expectations, and the bond market stays stuck. Fast Money Disclaimer
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- [00:02]
Melissa Lee
Live in the Nasdaq markets in the heart of New York City's Times Square. This is fast money. Here's what's on tap tonight, a pause that refreshes stocks with an historic rip higher on the back of President Trump putting reciprocal tariffs with over 75 nations on hold. The Dow climbing over 2900 points. The Nasdaq surging 12%, staggering. Another S&P 500 closing up another nine and a half percent higher today. But can you trust this rebound? We'll debate that. Plus Trump versus China. While tariffs are on hold for other countries, China is getting hit even harder. President Trump upping the ante again against Beijing. So how will this battle between Trump and Xi play out? Former Morgan Stanley Asia chair Stephen Roach is standing by. And later we'll go inside the rebound sector by sector, from retail to airlines to pharma banks and more. A must see hour coming up. I'm Melissa Lee coming to you live from Studio B at the nasdaq. On the desk tonight, Tim Seymour, Bono and Ice and Guy Adami and Michael Schumacher of Wells Fargo Securities. Welcome, Michael. We start off with the pause heard round the world. Stocks roaring higher midday after President Trump said he authorized a pause on most tariffs. The S and P which had seesawed between gains and losses all morning, surging more than 9% on the news, its best day since October 2008. The Dow swinging 3,500 points from low to high, clocking its biggest point gain on record. The NASDAQ surging 12%, its best day since January 2001. Even the small cap Russell 2000 up nearly 9%. Take a look at mega cap tech. Tesla soaring 22%. Apple up a blistering 15%, its biggest gain since 1998. Together, the Magnificent Seven added $1.8 trillion in market cap today alone. But even with today's gains, major markets still down sharply in the week since the tariffs were first announced and most are still down more than 10% from their records. For the latest on what has been coming out of the White House all day, and it's been a lot, let's bring in Eamon Javers. Eamon hey there, Melissa.
- [01:53]
Eamon Javers
You're right. The headlines have been coming fast and furious from this White House. We've been getting some insight into the president's thinking over the past couple of hours as to why he made this decision when he did. He said he was watching the bond market, some anxiety there. He's watching financial markets. He said people were getting a little yippee in markets and he also said that he was watching Jamie Dimon on television earlier today who was making the case that, you know, this could be a recession if these tariffs stay on. All of that clearly brewing in the president's mind and just within the past little while he's been in the Oval Office taking questions from reporters. He said in there that he, he views this as the top end for tariffs on China. He said, I can't imagine putting additional tariffs on China. He also said on US Steel that he wants to keep US Steel American. He doesn't want to see that company sold to the Japanese that moved that stock as well. And then he also talked a little bit about this idea of whether this was a negotiation or not. He was asked by a reporter in the Oval Office why it was that his aides and staff members here at the White House were saying this is not a negotiation when the president today is saying it is a negotiation. Here's how he answered that question a short time ago.
- [03:03]
Howard Lutnick
A lot of times it's not a.
- [03:05]
Eamon Javers
Negotiation until it is.
- [03:07]
Melissa Lee
And that happens.
- [03:08]
Eamon Javers
And you know, I said outside that you have to have flexibility to do it right. And that's what we have. We brought everybody to the table and it may not be a negotiation, it may not last. I mean, you know, things may be as that I think are not fair to us. So the president saying there of this 90 day pause, it may not be a negotiation, it may not last. So the devil clearly is going to be in the details here in terms of all of these 75 countries that have approached the White House about the idea of negotiation. And now, Melissa, what you have in terms of market uncertainty is this question of all of these simultaneous negotiations going on while the tariffs are paused. We're going to get a lot of, you know, sort of blips and readouts and movement in all of those negotiations over the, over the next 90 days. And so all of that is presumably going to be influencing financial markets as we go through the next three months.
- [03:59]
Melissa Lee
Eamon, thank you. Eamon Javors joining us from the White House. The bottom line here is we still don't know what's going to happen in 90 days. We know that the 10% tariffs are going to still be in place across the board. Are we better off now guy, than.
- [04:10]
Eamon Javers
We were before through the lens of the market? Yes. So a couple of things. I think the, the stock market was probably annoying this administration. I think the bond market specifically last night scared the administration, or at least it should have. And the fact that President Trump Says, you know, he watched the bond market, he listened to Jamie Dimon and he made a decision based on that. I actually admire it because things were going a little bit sideways for a period of time. So that's the good news. The bad news, I think is the move that we saw today rivals moves we've seen historically. So 15 of the greatest moves of this magnitude, eight of them took place in the 1920s and early 1930s, some of them during the great financial crisis and some of them during long term capital. So I'm not suggesting we're at any of those levels, but these are the types of moves we've seen in times of uncertainty. I also say this quickly. On Monday, none of us were breathless here. We said the market traded down to a four year trend line. Carter, we're pulled the chart up. We said at least in the short term that's a good level to trade from. We actually said this S and P could trade up to 5,500 over the next few weeks. I didn't think it would happen over two days, but here we are.
- [05:15]
Melissa Lee
Mel, what did you make of the move in the treasury market over the past couple of days? Michael? But most notably, I mean we're at 4.35 right now on the 10 year yield, pre Liberation Day, you know, the close of 4:1, we are at 4.17. So we're still higher here.
- [05:30]
Eamon Javers
Yeah, it's interesting, Melissa. The ten year began this year at 455, 460, kind of in that ballpark. But the move the last couple of days, downright scary. So there's been a lot of selling of cash, Treasuries, really throughout the last week, eight, nine days, something like that. Generally speaking, that was offset by flows in derivative markets, but not in the last couple of days, people just saying, I'm out. Really. It was a flight from balance sheet, any sort of transactions, any trades positions that required a lot of balance sheet. People like to talk about hedge fund basis trades being liquidated, things of that sort, but there was really no bid coming out. And also you had the 10 year auction today, 30 year bond auction tomorrow. Talk about raising the US Treasury's funding costs. This was it. So I can understand why Trump reacted to that. Yeah, I agree. It's great to be unliberated and it does feel as if this is an equity market day. It's an equity market story, but it's really the bond market and the bond market and even the currency markets are pushing us around. In other words, if we looked at you know, 12:45, even the bond market was telling us something. And it's, it's definitely, you know, I think something we need to listen to.
- [06:34]
Melissa Lee
All right, well, the driver for today's massive market turnaround, the President's announcement of the reciprocal tariff pause for 75 plus countries. One of the key players in the middle of today's decision, Commerce Secretary Howard Lutnick. He joins us live from the White house right now. Mr. Secretary, great to have you with us.
- [06:49]
Howard Lutnick
What a great day for America.
- [06:51]
Melissa Lee
Isn't, is a great day. If you take a look though, at the pre liberation day close on the s and P500, we're still lower from where we were then. And we did suffer not only declines in the equity markets, but also, you know, some crazy moves in the fixed income markets. Did the market reaction cause the administration to rethink its tariff plan?
- [07:14]
Howard Lutnick
Absolutely not. Absolutely not. The tariff plan for the President. Look, he's trying to fix the fundamental trade imbalances that have been going on for this country for 35 years. I mean, we were just in the Oval Office and he said, I don't blame China. I blame the people who sat behind the desk in the Oval Office for letting this occur. It is time to take back the ability to trade with America. And Donald Trump is leading the charge to do that.
- [07:41]
Melissa Lee
We understand that that certainly has been the administration's thesis this whole time, Howard. But at the same time, we had Wall street, your former compatriots come out raising the odds for recession, lowering price targets across the board. There wasn't any element of that feedback that entered the thinking because some would posit that that if Mr. Trump and the administration actually listened to Wall street and took a look at the reaction, the financial markets, the global markets for that matter, they would find solace in what the administration is doing.
- [08:15]
Howard Lutnick
Look, President Trump made it clear that he's got to reset trade. He's got allies and foes, both friends and foes. So what happened is we have so many countries who want to do deals with us, it's just not possible to talk to all, you know, over 75 companies, countries, sorry, countries coming in who want to redo trade, who are taking a good hard look at their trading, their rules, their non tariff trade barriers, their tariffs, their subsidies, their currency manipulation, they're finally willing to say, we'll make a better deal with the United States of America. Can we just have the time to do it? And the President listened to them. And of course, China took the exact opposite path. And you see what's happening. So if China is going to take that opposite path, the president's going the other direction. But for all those countries who wanted to work it out with the United States and make sure they create a fair trading model for the United States, President Trump was ready and willing to sit down with them and make a deal with them. And that's the position we're in now.
- [09:18]
Melissa Lee
According to reports, you met with the various bank CEOs over the past couple of days and they all expressed their reservations about how the policy was being played, was playing out and the impact on the markets. I'm curious because you've worn that hat as well not too long ago, Howard. And would you think that a 90 day pause would cause businesses to then resume spending, resume deals, resume their activity as they had planned to do at the beginning of the year? I mean, is that enough to sort of spur them to get back on track?
- [09:51]
Howard Lutnick
I think it is clear people want to come and build factories and reassure their production in America. That's why the President talks about the huge commitment of building in America. So the companies are going to come back to America. The fact is these countries understand that it was time to rethink the way they trade with America.
- [10:15]
Melissa Lee
But I'm talking about the way they trade with China doing business here, you know, in terms of, you know, for instance, Walmart pulling its guidance, I mean, what will give, do you think a 90 day pause is going to give companies enough confidence to actually give guidance to be secure in how they're planning for their businesses for the year, headcounts, capex, etc.
- [10:38]
Howard Lutnick
I think it's important for companies to understand that the countries that they do their business in matter. If you do business in China or you do business with a country that basically is just a proxy for China, that you're going to have to deal with the fact that President Trump does not think we're being treated correctly. But if you're doing business in other countries, really understand the country you're doing business in, understand their relationship and push them to make sure their relationship with the United States of America is fair and correct and that will be good for business. So what you're going to see is the greatest set of announcements of companies going to build in America. And of course they're going to build in America. That's what's happening and you're going to feel it all across this great nation. People are going to build in America and the job creation America is going to be fantastic. You just have to let Donald Trump, drive the car, drive the ship, drive the plane, however you want to call it. Donald Trump is in charge. He understands how to do this, and no one could do it better. And that's just what the market told you today. I understood they doubted it. I understood they were uncertain. But that's what you get. Never bet against Donald Trump.
- [11:48]
Eamon Javers
Mr. Ludnick. Mr. Secretary, does the administration feel that every trade deficit, by definition, means we're getting ripped off for losing? I mean, I would submit that we could be getting ripped off sometimes, but a trade deficit in and of itself doesn't mean we're losing. By the way, I know you know this. We're 5% of the global population. We're 30% of global GDP. So it's really hard to say we're getting totally ripped off.
- [12:12]
Howard Lutnick
Well, you look, you have to look at things like Europe, right? Their population is bigger than ours. Right. Their GDP is a little smaller. Why would they have a $235 billion trading surplus with us? Why would we have a deficit with Europe? It's not the cost of production. It's not the regulatory framework there. They're the same, if not worse than we are in every way. It's because they're not having fair trade with us. And that needs to be addressed. So what happens is everywhere. The leadership of the United States blinked before some country came and used it as a launch pad to do business in America. I mean, why is Europe doing so much business with China? Because it was basically a tariff arbitrage. Sell to Europe and have Europe, European companies then sell to us. So the idea is, let's end that. Let's call it for what it is, which is Chinese companies. They do business through China. They do business through Vietnam. They do business through Thailand. Come on. They do business through Malaysia. We've got to really address it the way it is and say, we want fair trade. We want to be treated the way we deserve to be treated, and that's what's happening now. So we have tariff, 10% tariff around the world today. And we are calling out China because they are going in a different direction. We're going to work with each of these countries, and we're going to come up with a great deal for America and hopefully a deal that they think is appropriate. And off we're going to go for the golden age of America. It's coming now. You feel it now. Finally, someone is behind the desk in the Oval Office who's going to protect America and the world. And it's coming, and it's coming now. And I tell you what, it feels great.
- [13:52]
Eamon Javers
Mr. Secretary, I guess the question on how we are focusing on country by country and you talk about bringing jobs back to America, there's some sense and please clarify this for me. Are we trying to re industrialize America and are we also looking to have a trade balance? Well, I mean it seems to me we re industrialized. We industrialized America 150 years ago and that jobs went overseas because it was more efficient to do that. We're also at record unemployment. So I'm just trying to understand how all this makes sense together.
- [14:22]
Howard Lutnick
So we can't be a nation that invents everything, but has everything built somewhere else. Eventually you become subservient to the people who build things for you. If you make nothing, but all you do is think about it, then someone else will be the builder. And if you also allow these giant trade deficits and you let yourself have budget deficits, what ends up happening is the rest of the world also owns you. In 1980, we owned more of the rest of the world than they owned of us. And now the rest of the world owns 18 trillion net more of the United States than we own of them. So 60% of our GDP is now owned by outsiders. It's time for that to be right sized and fixed. We're going to reassure great industrialization, bring back those jobs here and we're going to strengthen America so that America plays the right role in the world. It is not just the biggest consumer who overspends and eventually is owned by the rest of the world. That is just not going to happen. My grandchildren had a great day today because my grandchildren had a great day when Donald Trump was elected president. That's what's changing. It's America for the long term of America. Someone had to do it. And you're feeling that's what's happening now.
- [15:41]
Melissa Lee
When you talk about re industrial, re industrialization. Mr. Secretary, what do you want to be made here? I mean, how do you envision that manufacturing economy of the future? Are we, are we talking about bringing back textiles, T shirts, sneakers, you know, home goods, appliances, what everybody always talks about? Some would argue that those are lower value goods and you want those goods to be manufactured abroad so that the United States can manufacture higher value goods.
- [16:12]
Eamon Javers
And who's going to work those jobs?
- [16:14]
Howard Lutnick
So let's just go through this. So you have tsmc, right? So semiconductors. If you think about what is a semiconductor, every button you push is means it has a chip. It may not have the Newest chip that's in an iPhone, but it has an old chip. Your, your microwave oven, your refrigerator, your alarm clock, everything's got a chip in it. And that chip is all made in Asia, Right? Taiwan makes virtually everything. Taiwan is 81 miles from China. And China has said we're going to take it over. Imagine if China went and took over Taiwan, and every single thing that we want to produce that has a plug, that has a button is now owned by China, and we have nothing.
- [16:57]
Melissa Lee
It is outrageous that we've allowed that national security argument. There's no national security argument for bringing back.
- [17:03]
Howard Lutnick
All right, well, how about pharmaceuticals? You got a problem with pharmacy. You don't have a problem with pharmaceuticals. How about. How about steel and aluminum? You have a problem with steel and aluminum, right? You need, you need all these things. And what's happening is you need to address it in bulk. You need to address the fact that we can't sell a car in Japan or Korea or Europe. You know, it's just so blatantly unfair. At some point, our economy, our farmers need to be able to sell corn, our, our beef, our ranchers need to be able to sell beef. We've got to have the world stop taking advantage of us to the tune of $1.2 trillion and have our economy unleashed and be unshackled, finally unshackled. Our farmers have no idea what it's like to actually have a full world to sell to our ranchers, our seafood and our fishermen. They have no idea. These will be fundamental changes. That's why Donald Trump says, make America great again. That's why he says, bring back the golden age. It's really allowing the United States of America to sell its goods to the world. We're only selling them to ourselves, really. We have a $1.2 trillion trade deficit. That means everybody else sells to us and we're not allowed to sell to them. Doesn't that seem unfair to you if you're in business? Doesn't that seem unfair when he unleashes America on the rest of the world and gets fair trade with the rest of the world? America's GDP will grow. Our jobs will explode. Better jobs, higher paying jobs. That's the point. We shouldn't be growing our GDP 2%. We should be growing our GDP 4 and 5 and 6%. And no one's ever thought about it, and no one's ever tried. And that's what we're doing here, and that's what Donald Trump is doing. And we are all, all of us, who work for Donald Trump. We are his spokesman, but he is the driver. And don't get confused. Donald Trump is the driver of the policy. He authorized just the other day to negotiate. He authorized yesterday, and he came out with this policy today. And there was not the policy before then.
- [19:04]
Melissa Lee
He also seems to be a great stock pundit, Mr. Secretary, earlier this morning, before the pause, he put out a message saying, it's a great time to buy. And here we are. Here we are. Much higher.
- [19:16]
Howard Lutnick
I'd always bet on Donald Trump. Every time. I'd always bet on.
- [19:19]
Melissa Lee
He also wrote djt, which is a ticker for, for his media company.
- [19:23]
Howard Lutnick
No, no, no. Every, every.
- [19:25]
Melissa Lee
That was just.
- [19:26]
Howard Lutnick
Every text he sends to me. That's his name.
- [19:28]
Melissa Lee
But that was a great time to buy the market, right? I mean, uncanny.
- [19:31]
Howard Lutnick
Donald. Look, Donald. Donald Trump understands that it's. America is the greatest country, all right? We are the greatest country and we have the capacity for incredible greatness. But someone needs to take the shackles off. Someone needs to let our corn, our farmers sell corn to India. I mean, we had Modi come to visit us. 1.4 billion people, and we can't sell a bushel of corn. It just is not right. It's time for fair trade. Fair to America, but it's been fair to the rest of the world. It just hasn't been fair to us.
- [20:04]
Melissa Lee
All right, Mr. Secretary, always great to see you. Thank you for your time.
- [20:08]
Howard Lutnick
Thank you. Great to see you.
- [20:10]
Melissa Lee
Howard Lutnick, 5633. Was the S&P 500 close on four one. We are still below that. We're 700 points.
- [20:20]
Eamon Javers
In fact, didn't the market rally today because we paused this policy.
- [20:25]
Melissa Lee
There's still a.
- [20:26]
Eamon Javers
Trying to understand the cause and effect here. I mean, if this is a great day because markets rallied. Markets rallied because, in fact, we paused what was. Seemed to be an issue. I'm just trying to, you know, I'm just trying to.
- [20:37]
Melissa Lee
If you're going to call it what it is, then call what it is on the way down.
- [20:40]
Eamon Javers
Let's call it what it is. I mean, and again, it was, it was a day where the market felt like it was great to not, you know, be freed. So, you know, that that's, that's the dynamic. I'll say something else about today's markets move. It doesn't really instill a lot of confidence in markets. And if you think about how there's a lot of retail investors out there that really, I mean, this is, this has been. And I would Just caution that if you think about the 12% move in the NASDAQ today, the. I mean, this pretty much matches the day that we had. I think it was December 3rd in 2008 and then the next two days you were down 4.8% and then down 6.6%. Now, history is very different. There are very different conditions. But I think, you know what markets have done and we've talked about this. Michael's referencing the volatility in the bond market. This is the kind of stuff that doesn't really instill confidence. I tend to agree. If you look at the path of how we got here, ultimately we all lay out these, whether it's support levels, Fibonacci retracements, 20% bear market thresholds, you don't really get to decide how you get to that, that entry point. So kind of having somewhat of a systematized way of entering the market does make a lot of sense here. I think Tim really hits a nail on the point. We talk about confidence and we have seen a pullback in the vix. You call it confidence, you want to call it fear, you want to call it volatility. I mean, they're all essentially, you know, pointing to the same situation. And ultimately, you know, we still lack clarity on what these trade agreements are going to end up being. Is it going to be a country by country bilateral situation or there's, or is there going to be a more holistic approach as we look at capital flows, as we look at foreign investment here? And I would like to see more clarity on there before I declare victory. With that said, I will, I will call out both sides. I do think it does take a little bit of humility to say, hey, perhaps we got out in front of our skis, we're going to pause and we're going to reassess. I don't think anybody said that.
- [22:34]
Melissa Lee
Nobody said. In fact, he said, he said it was, I mean, you know, to do with that, it would have all been.
- [22:41]
Eamon Javers
This was a victory lap. I'm trying my best here.
- [22:44]
Melissa Lee
All right, let's get to the 10 year treasury yield. Retreating from session, highs of over 4 and a half percent. A better than expected auction, as Michael had mentioned, and the tariff pause. Factoring into the move. CNBC's Rick Santelli, what do you make of all the action today? Wow, Rick.
- [22:57]
Eamon Javers
Well, first of all, let's go through four charts real quick and then I'm going to ask the panel a question. First one, he mentioned that strong 10 year auction. It certainly was so from 1:00 Eastern to 126, we moved from 446 to 433. We dropped 13 basis points. And that was the catalyst for much more going on. The rest of the charts occurred from about 117 to 211 Eastern Time. The 2 TED spread moved from 67 down to 39, dropped 28 basis points. Two year note yield surged 35 basis points from 368 up to 403. And these fed funds from 118 to.
- [23:39]
Howard Lutnick
211, they dropped 44 basis points and.
- [23:43]
Eamon Javers
Ended up settling down 27 basis points. And I love this panel and everybody on the panel asked the one important question to Howard Ludnick. Are we better off after all this? Now I'm going to ask you, and I know the answer. Nobody at that table says yes. You know what I say? I ask you a different question. Who on the panel thinks globalism is stronger today than it was a week ago? Anybody? Anybody think globalism is in stronger hands today? No, no, of course not. Because to me, that's the benefit. That's the benefit.
- [24:17]
Howard Lutnick
You want to know the benefit?
- [24:19]
Eamon Javers
Globalism coming to an end. It wasn't fair to America in many ways. Trade deficits. Listen, I don't know how any of this stuff's going to turn out and it's super messy, but in the end, there's no resets in a crisis. Everybody's bringing up past crisis. Next couple of days historically are down. You don't get resets in the Tide bot. You don't get resets in Covid. You don't get resets after a tech wreck. You don't get resets after the credit crisis in 08. You got a reset today. This is different. How did we lose in globalism? Can you explain that? Do we have enough time? How do we lose in globalism? I don't want other countries to tell the US what to do, okay? I don't want one world, one government. And without that, without that trust, without everybody kind of conforming to the same tune, without trust, you can't have free global trade. China doesn't trust us, we don't trust China. I mean, it's not really that hard to understand. Globalism had to come to an end, otherwise our nationalism has to disappear. And I for one, I don't care if they call that populism. I call it patriotism. And there's many people that feel like I do.
- [25:30]
Melissa Lee
Rick, thank you. Always great to see you. Rick Santelli.
- [25:34]
Eamon Javers
Thank you.
- [25:35]
Melissa Lee
Michael on the call today, this afternoon, you said you were talking about scar tissue.
- [25:39]
Eamon Javers
Yeah.
- [25:40]
Melissa Lee
And that was before the pause. But I would submit that the scar tissue is maybe even worse now because you really never know what's going to happen.
- [25:47]
Eamon Javers
It's still there. And we've been talking about conf in markets. But think about confidence at the CEO CFO level. You get a 30 day pause, a 90 day pause. In this case, big deal. Are you really going to build that new plant or think about that new business line? I don't think so. I've talked to a ton of clients on that side of the table in the last couple of weeks and they're just dazed and confused like most of us are. So how can they really do planning at this point? They don't know what the rules are. So I do think scar tissue is a good term. I think it's in play for markets. It's in term in play also for business types. It's. It's a fact of life right now until the administration really says, this is it, we're done and sticks to it for quite a while.
- [26:24]
Melissa Lee
Yeah, I mean, that was sort of what I was trying to get at with, with Howard when he was CEO of Candor Fitzgerald. I'm sure if he were in that room as a bank CEO, his perspective would be a lot different in terms of the freeze in business that you see across the board, the freeze in deals that you see across the board now with all this uncertainty and is this enough? It's not. I mean, this is one quarter of reprieve.
- [26:45]
Eamon Javers
Yeah. China. Yes. I don't think it is enough. I think a lot of people realize that it's not. But in terms of the market, it was enough. And again, for now, you know, technically the market, I think is doing everything we've been talking about for the last few weeks. With that said, I mean, the question now becomes, what's the right multiple to put on S and P earnings in the environment that we're going into? And what are S and P earnings going to be? Because we're not going to be at the 270 level that everybody had sort of factored in earlier this year. You know, if you think we got Fed minutes today too, and those Fed minutes were from a meeting that was really before we got liberated. And those Fed minutes made it very clear that there was both concern about rising prices and slowing growth. And we went into this with rising prices and slowing growth. So, you know, the dynamic and the nice thing about today is maybe it does make this earnings season a little bit more in focus and we've heard from Delta, we've heard from Wal Mart, we've heard from real companies that are really touching both the economy, economy and touching some of the other countries in the world and some of their bilateral partners. So interesting.
- [27:50]
Melissa Lee
Speaking of Wal Mart shares surging almost 10% today, the retail giant affirming its full year outlook at its investor meeting day. Courtney Reagan was there, has all the details from Dallas Court. I'm also yes.
- [28:02]
Eamon Javers
So the message at Wal Mart's investor meeting here today is really that it's staying the course. This is in spite of the ever.
- [28:08]
Melissa Lee
Changing tariff announcements out of the White House.
- [28:10]
Eamon Javers
So the retailer leaving its full year guidance unchanged, reiterating guidance for 3 to to 4, 3 to 4% sales growth.
- [28:17]
Melissa Lee
In this current quarter, while also noting operating income range has now widened for this current quarter. Now CEO Doug McMillan said, quote, we just don't know enough to say that we're not going to make this year.
- [28:29]
Eamon Javers
And our attitude is we're not giving up on that and we can manage these things. McMillan and other executives noting several times during their presentations that in difficult economic.
- [28:39]
Melissa Lee
Times more customers come to Walmart and it gains share.
- [28:43]
Eamon Javers
It can be looked at as a winner. McMillan said the goal is to keep prices low, especially especially at those opening price points.
- [28:49]
Melissa Lee
But he also noted there's a wide portfolio of products it has. It can flex potentially up and down prices if needed.
- [28:56]
Eamon Javers
Now, two thirds of what Walmart sells in the United States is made or grown here because the majority of its sales are grocery.
- [29:03]
Melissa Lee
Now, the countries that it imports most from are China and Mexico.
- [29:06]
Eamon Javers
And then it said many, many others after that, but didn't detail percentages.
- [29:10]
Melissa Lee
Now, McMillan told reporters he's not aware.
- [29:12]
Eamon Javers
Of any orders that have been canceled.
- [29:14]
Melissa Lee
As a result of the April 2 tariff announcement.
- [29:17]
Eamon Javers
And he couched that by saying at least where sit right now at this moment.
- [29:20]
Melissa Lee
Now, if tariffs weren't the main headline today, it would probably be that for the first time in this current quarter, Walmart's US E commerce business has turned profitable.
- [29:30]
Eamon Javers
It's currently about 18% of total US sales. But the long term projection given today is that it could make up for about half of sales. Melissa?
- [29:40]
Melissa Lee
All right, Courtney, thank you. Courtney reagan, Walmart said that in order to defend price, they're going to invest in price, which means they're going to absorb some of those price increases. Margins will be under pressure.
- [29:52]
Eamon Javers
They will be. But you know, I think, listen, last quarter I thought Wal Mart, the quarter was fine we talked about into the quarter valuation didn't make sense. And to take money off table that was right. I didn't think we'd get as low as we did. But here we are at current price. We're trading at 30 times next year's numbers. Ish, which I think for Wal Mart is actually somewhat reasonable. So yeah, they'll sacrifice a lot on margins. I think they'll make it back on AI and I think Wal Mart wins in this environment. Well, Wal Mart always wins in dick dictating price. So they're going to stay there. They should stay there. They're dominant and they're going to be even more dominant. They said that E Commerce is going to be 60% of sales within five years and it's only 20% now. So, you know, I think you're staying long. Wal Mart, whether it needs to come down in multiple is a very another story. But Wal Mart is best in class.
- [30:36]
Melissa Lee
Yeah. Too expensive on a win?
- [30:38]
Eamon Javers
I don't think so. Particularly given the volatility in the market. I think you take some comfort in knowing that, you know, they have that large grocery item and then the tariff uncertainty, As I said, 60, 66, 67% of their goods are homegrown. So I think you have some, some buffer there.
- [30:54]
Melissa Lee
Coming up, upping the ante in the China trade war. While Trump paused tariffs on most countries, Beijing was hit with more what one policy expert sees next in the tariff tit for tat. You're watching Fast Money live in the NASDAQ marketsite in Times Square. Back right after this. Welcome back to Fast Money. China, the one country singled out on today's tariff pause. President Trump hiking taxes on Chinese goods to 125% after Beijing retaliated overnight. CNBC's Megan Cassell has got more on this. Meghann.
- [31:29]
Eamon Javers
Hey, Melissa. That's absolutely right.
- [31:31]
Melissa Lee
The president raising tariffs on China while lowering them on the rest of the world. Leaving this a trade war pretty much.
- [31:36]
Eamon Javers
Being fought on just one front rather than 85 or more. Administration officials said that the reason for further escalation against only China was because of their steep retaliation.
- [31:46]
Melissa Lee
They pushed back when everyone else offered.
- [31:48]
Eamon Javers
To cut their tariffs. So just to recap the timeline and the total tariff values here, the US.
- [31:52]
Melissa Lee
Imposed an 84% tariff on Chinese goods.
- [31:55]
Eamon Javers
At midnight last night. Beijing responded by upping their retaliatory tariff.
- [31:59]
Melissa Lee
To match at 84%.
- [32:01]
Eamon Javers
That kicks in tonight at midnight.
- [32:02]
Melissa Lee
And then Trump, Trump upped his China tariff even further to 125% total.
- [32:08]
Eamon Javers
And again that's on top of any duties that were already in place before he took office this term. Now, the president was asked today about where he sees things going next with China.
- [32:18]
Melissa Lee
Take a listen.
- [32:20]
Howard Lutnick
China wants to make a deal.
- [32:21]
Eamon Javers
They just don't know how quite to go about it.
- [32:23]
Howard Lutnick
You know, it's one of those things they don't know quite they're proud people.
- [32:28]
Eamon Javers
And President Xi is a proud man. I know him very well.
- [32:31]
Howard Lutnick
And they don't know quite how to go about it, but they'll figure it out in the process of figuring it out. But they want to make a deal.
- [32:39]
Melissa Lee
Now, yesterday, Trump did say that he was waiting still for China's call.
- [32:42]
Eamon Javers
So even though he called President Xi.
- [32:44]
Melissa Lee
A friend today, it is still not clear just how much the two leaders might be talking. Melissa and Meghan, in just the past hour or so. President Trump also mentioned something about TikTok. A deal is still on the table, and it depends on what, you know, everything depends on what China does with that. Also. That seems interesting, absolutely acknowledging that that.
- [33:02]
Eamon Javers
Deal fell apart as part of this, that it's more than just the tariff retaliation.
- [33:06]
Melissa Lee
He did also mention in the last.
- [33:07]
Eamon Javers
Hour, I should say, too, that he.
- [33:09]
Melissa Lee
Did say he can't imagine having to go higher with tariffs on China, that this 125% that he's added this term might be the ceiling, at least for now. But with TikTok and with so many other things, there are ripple effects that.
- [33:20]
Eamon Javers
Can go well beyond the tariff rates.
- [33:22]
Melissa Lee
All right, Meghan, thank you. Meghan Casella, for more on how China could respond, former Morgan Stanley Asia chair Stephen Roach joins us now. He is currently a senior fellow at Yale Law Schools. Paul Tsai, China Center. Stephen, great to have you with us. How do you see this playing out?
- [33:38]
Eamon Javers
Well, the markets were clearly in a death spiral and Trump flinched today and.
- [33:47]
Howard Lutnick
You know, gave us all some breathing room.
- [33:50]
Eamon Javers
But as you heard from Secretary Lutnick, you know, Trump is still clinging to this harebrained scheme to remake the world with tariffs. And that's not something that's going to end. Well, The China thing is unrelenting. You know, it's important to sort of note the sequence of events. We move first with these reciprocal tariffs and then, you know, China responded and Bessant and the president have turned it around saying China shouldn't have responded. Well, they, they were, they viewed this as an attack, so they felt they had to move.
- [34:31]
Melissa Lee
This seems to underscore, though, pausing the reciprocal tariffs on everybody but China and in fact, raising them specifically on China underscores the fact that this is a, this is a trade war that focuses on China and it sort of isolates China as well. And I'm wondering how you think that gets played out in China and what their next steps would be. I mean, it could be tit for tat and terror. So we've always said here that there are many other ways China could retaliate, particularly against countries who do business over there like an Apple or Starbucks or any other company that has executives over there who could easily be detained for a myriad of reasons.
- [35:09]
Howard Lutnick
Well, let's keep in mind, Melissa, that.
- [35:12]
Eamon Javers
China still remains today our third largest export market behind Canada and Mexico and the second largest foreign owner of Treasuries. So they've got plenty of options to deal with should the US Continue to tighten the screws. And you know, I was in China for 10 days a couple of weeks ago and it was pretty clear to me and talking to a lot of senior officials and academics and business people that they viewed the likelihood of further tariffs as clear justification to retaliate. And they did. And they retaliated after we hit them with reciprocal tariffs. And then after Trump didn't like that and he hit them with a penalty, they retaliated again. And he doesn't like that. So he's throwing a tantrum and continues to want to isolate and squeeze China and that that won't end well. Hi, Stephen, Mike Schumacher. So two questions for you. Number one is how likely do you think it is that China actually would sell Treasuries in bulk? There's been a lot of speculation about market action over the last week. And then secondly, what about the currency, the rmb? So our view of Wells is it weakens quite a bit. So we think US$C and H for instance, goes to 770 in a couple of months. Do you think that's possible? How would the government react? Well, I think the currency option would be preferred over the nuclear option of unloading Treasuries. But you know, if China feels that it is being attacked economically or militarily, they will respond and they will use all the weapons at their disposal, including their vast holdings of treasury, to strike back and defend themselves. So, you know, it's a two way street, Mike. It's where both nations are dependent upon each other and we have tools that we've used and they have plenty of tools that they can use. And right now it feels like a race to the bottom between the two largest economies in the world.
- [37:26]
Melissa Lee
Stephen, we got to leave it there. Appreciate Your time as always and your analysis.
- [37:31]
Eamon Javers
Thank you, Melissa.
- [37:32]
Melissa Lee
Stephen Roach. All right, emerging market specialists, what do you make of the latest move?
- [37:37]
Eamon Javers
Well, I think, I think it's deserved. So again, and we live in a world now apparently where, you know, being a communist is better than being a globalist. But I think China has been an abuser for a long time and I think our focus on China is really important. And I think China is in a very weak state. I think China is certainly an important trading partner, but I think were a lot more important. So, you know, whether we're doing this the right way or not, I, you know, I'm not sure I have a big issue with how we're doing it. I think as it relates to China, my guess is they tend to play the longer game and I think that's a problem. If we try to play the longer game with them over the longer period, I think actually they've, they've extracted a lot of value. So I say we push hard. I'm not surprised that we kept the pressure on China and I think we will.
- [38:22]
Melissa Lee
At what point do you think you get concerned or markets get concerned that China will use the nuclear option, as Stephen called it, in terms of selling Treasuries or stepping back from, I mean, I guess in recent months they've already stepped back, but in terms of participating in auctions, etc.
- [38:38]
Eamon Javers
Yeah, they've been stepping back for a couple of years. Melissa, as far as actually selling en masse, I think Xi Jinping would have to get up one morning and say, you know what? I'm willing to take a 25 to 50 billion hit. It's that kind of thing. And Mark to market. Does he want to do that? Probably not, Woody. Maybe conceivably, but I think there are better ways to go. I agree with Stephen Roach. The currency option is a better one to play right now.
- [38:59]
Melissa Lee
Coming up, farmers production pipeline. Will today's news spare drugmakers the worst pain or will continued uncertainty plague the industry? BMO's Evan Siegerman will join us next to lay it out. That is next back into welcome back to Fast money. Coming up in June, we're doing another live event here at the NASDAQ for Fast Money and in these whipsawing markets. It does seem like a good time to join us to talk about what to do with your investments and go one on one with our traders. For more information, head on over to CNBC events.com fastmoney or click on the QR code and you can buy tickets.
- [39:37]
Eamon Javers
Yeah, I mean an important time for community mail. I mean, what better time to we'll gather around, we'll have some drinks, we'll answer questions, have some fun. Now more than ever, we need this. So check out the QR code and we'd love to see in June.
- [39:50]
Melissa Lee
All right. Meantime, another check in the markets today. Stocks ripping higher after President Trump announced a pause in some reciprocal tariffs. The dow climbing nearly 3,000 points, its best gain percent gain since the pandemic. The S and P with a nearly 10% pop, its biggest jump since the financial crisis. And the Nasdaq leading the charge, notching its second best day ever. Every sector in the s and P500 in the green today. Tech the best performer with discretionary communications, industrials and materials, all with major gains. Crypto also surging on the rally. Bitcoin back above $80,000. Etherium Solana ripple also higher. Meantime, biopharma stocks rebounding along with the broader market. The iShares Biotech ETF and S&P Pharma ETF each putting in their best days since 2020. But the industry is still looking for clarity on the impact of tariffs on global supply chains after the President threatened major levies on pharma while speaking at an event just yesterday. For more BMO Managing Director Evan David Segerman joins us now. Evan, great to have you with us. Thank you for having us having me, all of you. In terms of the uncertainty, we're, we're talking about the uncertainty in the markets and how this lasts for 90 days and we still haven't heard about what these pharma tariffs could be. So how are, how are you advising investors? Are you still assuming that there will be tariffs coming or are you assuming that there will be some sort of pause in the meantime?
- [41:11]
Eamon Javers
So a few things that we're thinking about. First of all, we love the 90 day reprieve. We're very against any pharmaceutical tariffs. We think they're bad for the sector. What's really interesting is many of our major biopharma companies, I think Merck Lilly have a lot of supply or they manufacture their supply in the United States like Lilly, so they're able to weather the storm. And these are tariffs under emergency powers. So they only last the administration or if an act of Congress comes in and stops it. So a lot of these companies can't really change their supply chain so quickly. So they're going to weather it out. So I advise not doing anything, especially.
- [41:43]
Melissa Lee
Until we have more clarity in terms of a lot of the pharma companies that have made investments in Ireland. And Lilly also just reaffirmed its commitment to Ireland. Are there many finished products that come from Ireland into the United States or API's active ingredients that come from Ireland into the United States for, for finishing?
- [42:03]
Eamon Javers
So the Ireland is very important. So a lot of these companies domicile their IP in Ireland to save on taxes, but they also have to finish and manufacture the products and import them to the United States. So for a company like Merck or Regeneron, they do that and they import their products into the United States to pay lower taxes. With the whole transfer pricing thing, a company like Lilly has invested or is committing to invest 50 billion in US manufacturing. So they are committed to manufacturing for the US market in the United States. So they may not have to deal with that. In terms of reshoring ip, especially for a product that's on the market, that's very expensive because Ireland may charge a capital gains tax on the value of that ip. And of course, bringing, you know, the manufacturing onshore could take two years.
- [42:48]
Melissa Lee
For generic makers, I would think this is a particularly tough situation to be in since the margins are already so thin and a tariff can make producing generics unprofitable. Which companies do you think are most at risk in that realm? And what can everyday Americans think? You know, how do they. How should you think about, even if you're taking a generic, how much? Those granted, costs are low in general for generics, but, you know, for some people, you know, doubling that price could be a lot.
- [43:19]
Eamon Javers
So most of the companies that I cover really do not have huge generic businesses.
- [43:23]
Melissa Lee
They've divested them.
- [43:24]
Eamon Javers
So Pfizer, for example, divested them. But when you look at the generics business, generally a lot of those products are made in India and in China. China especially. You know, that's been a hot topic of conversation today. You know, I think that's something we're closely watching because a lot of the API and finished product is made there. They do a lot of chemical synthesis, brain, you know, antibiotics, statins, other pain medications, all the generic drugs that most people are used to getting for the pharmacy for a couple of bucks.
- [43:52]
Melissa Lee
So I'm focused on that because you.
- [43:54]
Eamon Javers
Don'T want to interrupt that supply. I appreciate the need to bring some of that onshore. However, doing that would be very challenging. And I don't know if that's where we really want to focus our energy, given that we have a lot of innovative manufacturing here in the United States. Evan in the spring of 2015, Gilead made an all time high 20 I think it was $120 a share. Then it became the victim of its own success and had seven years of just horrible performance. Well, we're back there now and despite the stock market puff, it's hanging around. Is Gilead still buy here? I would say so. We're really enthusiastic about the long acting prep launch. They have this drug called Lena Cafre launching in the second half of this year. I'd also focus on their durable HIV business. Right. They are the king of reinventing themselves from some of their earlier HIV medications to Biktarvy to now longer acting treatments allowing them to continue to be profitable and grow through an Eloe cycle. I'm also focused on their cell therapy business. Would be totally exempt from any sort of tariffs because those are super personalized medications.
- [44:56]
Melissa Lee
I've been great to see you. Thank you.
- [44:58]
Eamon Javers
Thank you for having me.
- [44:59]
Melissa Lee
Evan siegerman, Coming up, banks surging in today's tariff turnaround and the group is gearing up to kick off earnings season in less than two days time. How our traders are handling the moves ahead of those reports, more fast money. And welcome back to Fast Money bank stocks bouncing off their lows after President Trump's pause on some tariffs with the group finishing firmly in the green. Goldman Sachs and Morgan Stanley each surging more than 11% while Citigroup, JP Morgan and Wells Fargo all seeing gains between 7 and 9%. All this ahead of earnings with JP Morgan, Wells Fargo, Morgan Stanley headlining the first batch of results out on Friday. Von Owen, how are you looking at the financials at this point?
- [45:40]
Eamon Javers
Well, I'm looking at credit. Tim's mentioned it and you're starting to see high yield kind of widen out a little bit. In terms of how I would trade it. In terms of me having some type of fear going uncertainty entering this, I'd probably stick to JP Morgan. I think they're a well rounded business. They tend to take a cautious approach. If I'm looking for a little bit more beta, I'd probably play more of the traditional equity trading houses, Morgan Stanley or Goldman Sachs and look for some some trading fee accumulation around this volatility.
- [46:09]
Melissa Lee
What do you think Michael?
- [46:10]
Eamon Javers
I think broadly, Melissa. My issue is that we think the yield curve is going to flatten. Not a great thing for banks. I'll leave the specific calls to Mike Mayo, the rock star, but in terms of general environment, not that great. I agree on the credit front. I mean look at the move. This does not move this way. But Pulp and Hygie Chart Interdate rallied two Points, which is something we do not see. So the market at least today thinks credit is fixed. I'm not one of those people, Mel. If you look at high yield oas, and again, you can bring up this spread by looking it up even online, you've gone from 260 to 460 in terms of a high yield spread in the last three months. And Michael, it's interesting, you think the yield curve will flatten. Does, does, does that mean ultimately you think a recessionary rally in bonds happens? Because that has to be the assumption there, which means you're not that worried about the rest of the world stepping away from our bond market. Yeah, it's two things, Tim. One is weak growth. So weak growth kicks in, yields drop down the back end. And secondly, the Fed's boxed. The Fed does not want to cut. It's made that clear. If you get an amazing improvement in inflation, maybe you would think about it. I think that's really unlikely for the next few months. So front end sort of sits long and comes down. There you have it. Flatter curve.
- [47:15]
Melissa Lee
We're pretty much out of time, but I mean we're pretty much baking in a June cut that will be really some reckoning with the markets come June when they don't get. If that is true, when they don't get that cut that's already been baked in.
- [47:26]
Eamon Javers
Yeah, 100%. And again, the Fed said in those minutes today that we read that were from a little while back, they were already worried about rising inflation before liberation.
- [47:35]
Melissa Lee
Up next, final trades. Time for the final trade. Michael Schumacher.
- [47:52]
Eamon Javers
One theme, two trades. Melissa. Long US dollar trade. Number one, long dollar, Mexican peso. We think it goes to 22. Why Mexico's economy is going to take a hit. Got a reprieve. Not big enough. Number two, long US dollar versus China's currency, C and H. Same idea. I think it goes to 770 in a couple months. Tim, great having you.
- [48:11]
Melissa Lee
Michael.
- [48:11]
Eamon Javers
Citibank, I think rallies more than the rest. Bottom Vietnam. The Vietnam ETF I think presents an interesting trading opportunity here. Guy S and P has been like a bad soccer game up and down the field. Nothing happens, but results matter. Aem Melissa.
- [48:27]
Melissa Lee
All right, thanks for watching. Fast Mad Money. Jim Cramer starts right now. All opinions expressed by the Fast Money participants are solely their opinions and do not reflect the opinions of CNBC, NBCUniversal, their parent company or affiliates, and may have been previously disseminated by them on television, radio, Internet or another medium. You should not treat any opinion expressed on this podcast as a specific inducement.
- [48:50]
Howard Lutnick
To make a particular investment or follow.
- [48:52]
Melissa Lee
A particular strategy, but only as an expression of an opinion. Such opinions are based upon information the Fast Money participants consider reliable, but neither CNBC nor its affiliates andor subsidiaries warrant its completeness or accuracy, and it should not be relied upon as such. To view the full Fast Money disclaimer, please visit cnbc.com fastmoneydisclaimer.