Assessing the Damage 4/7/25

Summary

Halftime Report: Assessing the Damage (April 7, 2025) Host: Scott Wapner | Guests: Joe Terranova, Brian Belsky, Jim Laventhal, Mike Santoli, Steve Liesman

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Introduction

On the April 7, 2025 episode of CNBC's Halftime Report, host Scott Wapner navigates through the tumultuous landscape shaped by President Trump's ongoing trade war. Joined by top financial experts Joe Terranova, Brian Belsky, Jim Laventhal, Mike Santoli, and Steve Liesman, the panel delves deep into the repercussions of recent market upheavals and explores strategies for investors navigating these challenging times.

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1. The Impact of Trump's Trade War on Global Markets

Scott Wapner opens the discussion by highlighting the severe impact of Trump's trade policies, noting that "Trump's trade war wiping trillions of dollars in value from these markets" has led to unprecedented volatility. The panel anticipates a comprehensive assessment of the damage in the coming days, focusing on how markets are adjusting and what this means for future economic conditions.

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2. Navigating a Treacherous Market Environment

Joe Terranova characterizes the current market as "treacherous" (01:59), emphasizing the hostile environment for both investors and traders. He acknowledges the presence of trading opportunities but warns that the frequent deleveraging has caused hedge funds and institutional speculators to retreat, leaving the market susceptible to unpredictable swings. Terranova advises investors to "study how much risk you have in equities and bonds and the totality of your portfolio," stressing the importance of staying within one's comfort level during such instability.

Jim Laventhal counters this sentiment by arguing that the turmoil is not fundamentally different from past market corrections. He asserts that historical patterns indicate resilience, stating, "historically when you've had these types of days... the market's up on average 29% 12 months following" (08:30). Laventhal maintains an optimistic long-term outlook, suggesting that the current volatility presents buying opportunities rather than signals of enduring decline.

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3. Fundamental Changes vs. Technical Factors in Market Movements

A significant portion of the discussion centers on whether the recent market fluctuations are driven by fundamental economic changes or technical trading anomalies.

Scott Wapner challenges Jim Laventhal by asserting that the market's reaction is fundamentally linked to recession fears: "This is obviously about the market sensing a recession and trying to right price itself for the recession that many now see" (09:13).

In response, Jim Laventhal emphasizes that while technical factors play a role, "the markets are what the markets are," and fundamental data will eventually realign investment targets based on actual economic performance (10:22). He argues that the current environment necessitates patience, as true indicators of economic decline will only become clear through concrete earnings data.

Steve Liesman adds a technical perspective, noting that indicators like the VIX index and put-call ratios suggest a cautious but not entirely pessimistic outlook. He highlights that "the stock market in that level of uncertainty about the fundamentals is going to absolutely go to the most worst case outcome that it possibly can" (15:29), but also acknowledges the potential for historical patterns to guide future movements.

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4. Credit Market Concerns and Federal Reserve Interventions

The panel turns attention to the credit markets, with Mike Santoli discussing the widening of high-yield spreads and the Federal Reserve's role in mitigating dislocations. He explains that "high yield spreads is a chart of the market repricing recession odds higher" (16:56), but also cautions against viewing these spreads as definitive predictors of economic doom.

Tom Lee emphasizes the Fed's preparedness to address any liquidity crises, stating, "the Fed has a bunch of existing liquidity vehicles that are available both to banks" (22:39). However, he expresses skepticism about the Fed's ability to fully counterbalance the current trade tensions without significant policy shifts, especially given existing inflation pressures.

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5. Retail Investor Behavior Amid Market Turmoil

Kate Rooney provides insights into retail investor behavior, revealing that retail inflows remain strong despite market volatility. She notes that "the highest level of inflows from individual investors that we've seen in the past decade" persist, with particular interest in defensive trades like inverse ETFs for tech-heavy indices (38:01). This suggests a cautious but strategic approach among retail investors, focusing on hedging and dollar-cost averaging amidst uncertainty.

Joe Terranova warns, however, that "market structure has changed so dramatically over the last five years," making traditional retail strategies less effective. He points out that retail trading through options and other complex instruments might be contributing to increased market volatility (42:35).

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6. Financial Sector Insights and M&A Potential

The discussion shifts to the financial sector, with Jim Laventhal expressing confidence in large, multi-divisional banks like Bank of America, JPMorgan, Morgan Stanley, and Goldman Sachs. He anticipates that these institutions will "outperform" due to their robust balance sheets and diversified operations (49:27).

Steve Liesman adds that while mergers and acquisitions (M&A) are currently sluggish, prospects for M&A growth remain strong if market conditions stabilize. He highlights that "the Federal Reserve has said that corporate and consumer balance sheets are in good shape," which could pave the way for increased M&A activity once confidence returns to the market (52:35).

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7. Larry Fink’s Perspective on Current Market Opportunities

Leslie Picker summarizes comments from Larry Fink, CEO of BlackRock, highlighting his optimistic stance despite acknowledging the market's current weakness. Fink describes the situation as "more of a buying opportunity than a selling opportunity," even though he concedes the possibility of further declines. He also mentions an uptick in client consultations, indicating heightened investor concern and the need for strategic reassessment (18:32).

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8. Final Thoughts and Market Outlook

In the concluding segments, panelists reiterate a mix of caution and optimism. Jim Laventhal maintains that the markets have historically rebounded strongly within a year, advocating for a long-term investment perspective. Mike Santoli underscores the unpredictability of the current environment but remains open to various outcomes based on forthcoming economic data.

Steve Liesman expresses skepticism about immediate positive developments, anticipating challenging earnings reports that could further test the market's resilience (54:18). Nevertheless, the overarching consensus suggests that while short-term uncertainty prevails, foundational market strength and historical trends support a cautiously optimistic long-term outlook.

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Key Quotes

• Joe Terranova (01:59): "Treacherous. That's the word. The environment of today is an awful environment."
• Jim Laventhal (08:30): "Historically when you've had these types of days... the market's up on average 29% 12 months following."
• Scott Wapner (09:13): "This is obviously about the market sensing a recession and trying to right price itself for the recession that many now see."
• Steve Liesman (15:29): "The stock market in that level of uncertainty about the fundamentals is going to absolutely go to the most worst case outcome that it possibly can."
• Larry Fink (18:32): "Over the long run, he would say this is actually more of a buying opportunity than a selling opportunity."

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Conclusion

The April 7, 2025 episode of Halftime Report underscores the complexity of the current market environment influenced by geopolitical tensions and economic uncertainties. While skepticism abounds regarding short-term stability, historical precedents and fundamental market strengths provide a foundation for cautious optimism. Investors are advised to remain vigilant, diversify their portfolios, and focus on long-term strategies to navigate the ongoing volatility.

Transcript

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[Jim Laventhal]

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[Scott Wapner]

I'm Scott Wapner and you're listening to CNBC's Halftime Report, the podcast the most profitable hour of the trading day. We record this live weekdays at 12 Eastern. Listen in. Welcome to the Halftime Report. I'm Scott Wapner. Front and center this hour, Trump's trade war wiping trillions of dollars in value from these markets. In just a few days we will assess the damage. Now debate what is next with the investment committee. Joining me for the hour today, Joe Terranova, Brian Belsky, Jim Laventhal. Also with us on set today at Post nine, senior market commentator Mike Santoli. We will show you the markets we have had, as you probably know by now, the biggest intraday move since early 2020 from top, from bottom to top, 8%. It's been extraordinary, it's been volatile, it's changing by the minute. So continue to watch the majors and we'll continue to bring you up to date on what is happening. Joe, what's on your mind?

[Joe Terranova]

Treacherous. That's the word. The environment of today is an awful environment. It's an awful environment for an investor. It's an offered environment for anyone that's trying to trade this market the last couple of days. Yes, there are opportunities as it relates to trading. There are certainly opportunities for long term investors who do not believe that what the future will look like is going to look like something we saw in the 2000 when we had a lost decade. But what we are seeing today, when you have that 7% swing, when you've had the deleveraging that you've had over the last several, several days, what happens after that deleveraging? A lot of hedge funds, a lot of institutional speculators, they step to the sidelines and what you're greeted with is a type of a market environment where you have today where you think you potentially get an all clear single signal rather, and then you're just whipsawing all over the place. So what do you do in that environment? I think you really have to study how much risk you have in equities and bonds and the totality of your portfolio. And if you're beyond the boundaries of where your comfort level is, I think you have to retreat on that because you cannot have strong conviction about either direction right now given this treacherous environment.

[Scott Wapner]

All right, Tom Lee, we got Tariff Liberation Day wrong. Yeah, you did. We want to apologize as the terms of Tariff Liberation Day were far worse than we expected. Morgan Stanley be prepared for another 7 to 8% potential downside. Krinski's talking about the 200 week moving average, that's 46744 as being major support. You know, Mike, I'm curious. You've seen so many markets and you've seen a lot of volatile markets over the course of your career. What do you make of this one and the way that we've had this price action today?

[Mike Santoli]

I think a lot of those folks who are trying to use whatever process to come up with some kind of structural. Maybe we've done enough to the downside it does settle out not too far below where the overnight futures were, like kind of 46, 47, 4800. And that kind of takes you back to the beginning of 2022. And I think it is very relevant that we haven't seen this kind of intraday action since early 2020 because it is that kind of complete disjunction. Right. It was essentially the market was trying to handicap, you know, a process. The process was completely thrown off by an off the charts basically interruption in the world economy. And that's what happened in 2020. And then what you're left with is trying to figure out if we're getting to a level of being washed out to where it doesn't matter what. You know, we had the latest post from the president. People say, wow, the market took it well, that he said another 50% on China. Well, one, that's preposterous number. The market recognizes that once you're getting up to these levels, it doesn't matter. But also he said negotiations are happening with other countries. Do we, do we care? Do we not care? Is it just the market reacting to itself?

[Tom Lee]

Right.

[Scott Wapner]

Do we do we even believe it because you get the narrative of the two sides of the story. Not negotiable. Negotiable. He's going to negotiate. These aren't negotiating things. I mean is it for revenue?

[Mike Santoli]

You have that, you have the billionaire backlash. That's new this week. You have this idea that maybe there'll be legal challenges to it. I think that there's a migration in sort of the center of opinion of how this might go out and how urgent the issue is. To me I'm just watching the market and saying, you know, looks like it made the equity futures, made us triple bottom overnight. Use that as your, as your downside kind of mental floor for the moment it's like 4850ish, but I mean it's so tenuous and when the market's moving like this it's. I always say it has to just go really far to find anybody with conviction. And that's why you get, you know, this type of twitchy action.

[Scott Wapner]

Pascarello Goldman Sachs the fundamental backdrop has undeniably worsened. He says remember he's the one a week ago was like preservation of capital people. That's what this is about, that the game has changed. He follows it up with this most recent note. While the primary trend is now lower, I also think you have to be aware of the increased probability of indiscriminate short cycle rips to feature. Not an oddity of when you have the S and P do this sort of thing. I expect the S and P will cut a broad pattern of gap down, gap up over the next few weeks. And the final point, he reiterates his view. Preservation of capital still the principal objective, my trading instinct, and it's nothing more than that he says, is that next week brings some form of de escalation. You know you've had some the headline that the market moved on. We're looking Brian, for any signs of light. As many people I talked to yesterday late into the night were thinking that there's got to be some sort of pivot coming at some point because this is untenable, that they don't understand the damage that they are causing. If $11 trillion wiped out of stocks in a very short period of time doesn't ring the alarm bells, then something ultimately is going to do that. I'm frankly struck by the fact that you suggest today that you are staying the course, that you have 6700 for the year on the S and P. I have countless targets taken down more again today, 5600525950 from various strategists respectively there. Why are you staying the course?

[Jim Laventhal]

Well, first of all, we're excessively fortunate to be here today. We've had this opportunity over our career to be on this network during days like this. And I can't be more humble for that, number one. Number two, Joe used the term treacherous. I would say unfortunate. It's very unfortunate what's happening here because I don't think it is anything with respect to fundamentals. And as you know, we're a fundamental investor. I can't speak to other people's process or discipline, Scott, in terms of how they look at targets. I know that how we do. And my team and I spent the weekend writing two reports, one for the US and one for Canada, as is our duties as the chief strategist at Piper. I'm sorry, Piper at bmo. And at the end of the day, it is excessively rare to have this type of activity two days in a row. It's not rare to see a Friday type of sell off into the weekend and have the exacerbated bottom that Mike is talking about on a Monday. In fact, on Monday, March 20, you and I were on the markets of Turmoil show after the market closed on Covid. And at that day I said the markets were going to rally up 50%. And so I'm not being flippant, I'm not being stupid, stubbornly bullish. I believe in what the market is telling us historically and since 1950, when you have these types of moves in these successive days. 12 months out, the market's up 29%. Now, does that mean that we're not going to see these exacerbated moves on a short term basis? Nobody can predict those, nobody can time those. But what we can predict is the fundamental backdrop. Longer term, near term, yes, we have some damage here and we will assess that and assess our target once we know where the bottom is and when we begin to recover.

[Scott Wapner]

Okay, I want to take issue with one thing that you said, aside from the confusing where you currently work, that's neither here nor there. That's for you.

[Jim Laventhal]

I've had no sleep.

[Scott Wapner]

That's for you to reconcile, not me.

[Joe Terranova]

Better hope you still work there.

[Scott Wapner]

You make the claim that this is not due to fundamentals. I would make the argument that it is everything to do with fundamentals. Forget about the technical trading of levels here and there, averages, blah, blah, blah. This is obviously about the market sensing a recession and trying to right price itself for the recession that many now, see, as a higher probability, many firms are obviously taking up their expectations of that. If you think that earnings are going to have to come down, which they will in a recession, and that the multiple will have to come down, which it will, then that is purely based on fundamental trading, not on anything else. That's what the market's trying to go through. Don't you agree?

[Jim Laventhal]

Okay, so stocks lead earnings, which lead the economy. Stock market's telling you that we're probably going to have some sort of a slowdown and, or a recession. Remember when the recession, the Fed comes in and pumps in liquidity. The Fed pumps in liquidity. What are we going to do? We're going to buy stocks. So I think at some point we are going to have some sort of slowdown and the earnings are going to go down. We'll adjust our targets when we start to see some substantive proof of that.

[Scott Wapner]

What do you mean?

[Jim Laventhal]

Hold on a second. What's happening? Do you think that this rhetoric and change in tune and fake news and tariff stuff, do you think that has anything to do with how companies are going to be earning their money or how they're looking at going forward, how to model their company? How can they change on a daily or weekly basis when we don't know what we don't know?

[Scott Wapner]

You're telling me that companies haven't already changed their expectations for the kind of business and spending and investment that they're going to do? They all have.

[Jim Laventhal]

Do you think they all have. Do you think the membership process in Costco has changed? Do you believe the way that the operating system runs Apple has changed? Do you believe that the Internet machine at Google has changed? Do you believe that how Netflix and the way that they run their business has changed? No. The answer is no. Now, how they model that, how they grow that, how they operate that. Yes, we know that. And that is going to change. And we will change our numbers accordingly when we see those real numbers, Scott. So I think from a longer term perspective, we are investors. We're not going to, we're not going to react to today or last week or what Trump's going to say in 30 seconds. We don't know that because that's not fundamental. What Trump is saying is not fundamental with respect to his reaction and how we're reacting is not fundamental. But the markets are what the markets are and it's not different this time. It's not different this time. And the way that the markets react to these types of things and how they flush this out is exactly how they're going to flush it out.

[Scott Wapner]

We have had a, almost willingness by a President of the United States to send the market down by $11 trillion worth of value ever.

[Jim Laventhal]

And that's why I said unfortunate as an investor and as we talk and we have to answer to our clients, Scott, because we, unlike other people, we actually run real live money. And it's been a really humbling time. This is not time for pride. Pride brings disgrace and humility generates wisdom. Now is the time for humility and it's been a tough.

[Scott Wapner]

You don't sound humble.

[Jim Laventhal]

What do you mean I don't sound humble?

[Scott Wapner]

You're toned. I mean the, the, the strength of your voice sounds like there's humility in it. But your, your, your narrative doesn't sound humble at all. It's, it sounds like refusing to see the facts in front, in front of you.

[Jim Laventhal]

No, we don't know exactly what the facts are, quite frankly. When, when do you think that, do.

[Scott Wapner]

You think that the earnings numbers at the high are realistic? You stay. Are you staying with what are you at the 290, $300?

[Jim Laventhal]

No, I'm at 275.

[Scott Wapner]

And what multiple are you putting on? 275.

[Jim Laventhal]

Well, again, markets don't run off multiples versus earnings. That's not the way that it runs. That's an academic practice. It works with respect to the 500 stocks and the S&P 500 and what they're growing. That's too simplistic side of things. But if you take a look at where we think normalcy is, it's a high teen to low twenties multiple. That's where we are from. From a longer term perspective.

[Scott Wapner]

That's not a recession multiple.

[Jim Laventhal]

Who says we're going to recession?

[Scott Wapner]

That's not a slowdown. That's not even, it's just not even realistic for. Even if you get growth right now, it doesn't look like you're going to get much, does it?

[Jim Laventhal]

Do you know that we're going to pay 20.

[Scott Wapner]

Okay, so 20 times earnings makes sense to you right now? That makes sense.

[Jim Laventhal]

I think 20 times earnings. Given the fact of, of the consistency of the earnings backdrop the United States, longer term, yes, it makes sense. Especially considering where I actually do think that money's going to come back to the US over the next year or two. I really do. And so let's get through this unfortunate behavior and move on from here. And I'm sorry, I'm sorry if you don't think I'm humble because I'M actually quite humble, Scott, and you would know this if you'd actually sit with our clients and talk to us about how we've been in terms of longer term. And we have a track record that we're going to sit with in terms of calling markets and making people money. And we stand behind that.

[Steve Liesman]

Here's where I am. There are so many indicators right now that if you follow them, indicate from history that you will have a good 1 month and 3 month return. From here we can go down a long list where the VIX index is. You know, how many stocks, what percentage of the s and P500 on Friday traded, two standard deviations, put call ratios. It's a long list. I consider that technicals, the technicals in that regard actually support being in equities now and looking forward one to three months. The problem is the fundamentals. And I'm sorry, Brian, we may be talking different words here, but I'm going to use my definition. The fundamentals here are just so uncertain, like we don't know. And Scott, I think you were saying this. We just don't know what's next coming out of the President, President's mouth or if we can believe it. The problem with that is that the stock market in that level of uncertainty about the fundamentals is going to absolutely go to the most worst case outcome that it possibly can. I think that's what's being priced in right now is the worst case scenario. Now, some may say, and Mike, you may have alluded to this, that maybe we're not fully priced into a recession. Okay, the way I square this is.

[Scott Wapner]

Not a maybe we're not okay.

[Steve Liesman]

Where I square this. This tension that I have, Scott, between the historical patterns and the fundamentals is that we can go down in the short term. But I do believe those historical patterns of where we will be 1, 3, 6 and 12 months from now all point higher. And I want to say one more thing about this because many people have pushed back on this. They've said this is different, this feels different. You said this a minute ago. We've never had a president who seems so willing to break things the way this president is. All I can say to that is with a lot of history, a lot less hair and more of it being gray. I've been through plenty of world shifting events and it always feels different. It always has its own unique, unbelievable flavor. This time is no different in that regard. Even though the flavor is different, it feels like this is unprecedented. Always feels unprecedented at times like this.

[Scott Wapner]

Mike, you Always look at credit and you know, the many conversations that I've had over the last 12 to 15 hours have been all about credit from high level finance people in this town. You had spreads blow out a little bit last week. Junk spreads are at a 17 month high now. That's not wide enough if you think there's a lot more turmoil coming. You have potential losses of holders of corporate credit for selling a lot of leverage is how it was described to me.

[Mike Santoli]

No, that's that that chart of high yield spreads is a chart of the market repricing recession odds higher without getting to the point of saying we have full blown recession priced in because you know the long span of history you're going to get higher than these, these current level of spreads if you start into a default cycle. The other thing is there are false alarms, right? It's not as if it's this all seeing forward looking indicator of where things absolutely will go. And the tricky part, and I think it kind of brings together a lot of the points of view is there's such a time element in this. There is a world in which a 180 on policy and you haven't really done much damage to corporate earnings power in the near term but every day it diminishes. So every day you walk in and they hand you a call option and they say if they de escalate today it's worth something. If not it erodes by the end of the day. And so what are you going to do with your risk levels and then what are you willing to buy and sell at? So I think that's the track we're on until we have some kind of conclusive economic numbers to tell us, you know, perhaps otherwise. And to Jim's point, you know, you've seen these times, it's only a handful of times you went down 10% in the S&P in two days, right? November of 09, Covid a few others and every single time you would have said. But nobody can predict how it's going to go from here because the reason you went down 10% in two days is because literally unpredictable. It doesn't mean you're at the lower, it means the market is being forced to come to terms with something very dramatic.

[Scott Wapner]

We have some commentary right now from Larry Fink who obviously runs blackrock. He is speaking right now at the Economic Club of New York. Leslie Picker has the latest for us. Les, what's he saying?

[Jim Laventhal]

Hey Scott.

[Leslie Picker]

Yeah, he was asked first and foremost, kind of there's a lot of history in the building of the Economic Club of New York. How would you characterize this moment in American history? And he was pretty sanguine. He said, it's no different than anything else. We're fine. And then he said in the long run, he would say this is actually more of a buying opportunity than a selling opportunity, noting that doesn't mean we can't fall another 20% from here, too. But he does believe this is a direct quote, that over the long run, the fatality of the United States will persist. That said, he. He noted that they haven't had this many client conversations with the BlackRock community since March of 2020 in the heart of COVID So it sounds like the phone's really ringing off the hook to get some clarity here. But at least from his standpoint, he says even though the market could fall another 20% from here, that in the long run, he sees this as more of a buying opportunity than a selling opportunity.

[Scott Wapner]

Scott Leslie, thank you very much. Leslie Picker. Let us know what else Mr. Fink has to say. Let me just say, Brian, you say you're humble, then you're humble. I apologize for suggesting that you're not. It's not for me to say that you're humble or not, but you come off as a bit defiant to the notion that the game has, in fact changed, this environment is in fact different, and things could go bad from here. From an economic perspective, the market's trying to figure out where we're going and what the appropriate pricing is going to be.

[Jim Laventhal]

Well, thank you for that. You know, maybe it's the Irish Polish blood that got a little boiled. So in terms of my delivery. So for you, for that and for the viewers, I. I apologize. But I do believe what I believe, and I don't think it's different this time. And I do believe, if you Remember back in 2020, most people, including ourselves, pulled our forecast because, remember, we didn't know it was happening. And if you remember, too, In March of 2020, many macro bears were saying we're going into the Great Depression with actually no data to support that. So when we get the data and when we see earnings come in in first quarter, we'll take a look at where we're going to be in the target range. Are we going to get to 6700? It looks increasingly doubtful. It would be great. Are we going to get closer to 6700 than we think?

[Joe Terranova]

Probably.

[Jim Laventhal]

I really believe that. And I do believe. Believe in what? That that markets are not different anytime you say it's different this time. It is excessively, excessively dangerous in this business.

[Scott Wapner]

Okay. I'm just suggesting that what happened in 2020 that put us on a different trajectory, frankly, was a bazooka's worth of not only Fed liquidity, but fiscal policy from the government. If you think that the conditions are ripe for either one of those at the current time, then we need to talk, because I don't.

[Jim Laventhal]

No, I don't think it's. I don't think. Again, it's. Every market environment is different. Every market environment is different. Just like it was following the great financial crisis that we went through and following the tech wreck that we went through and following what happened in the 90s, early 90s. So do I think that we're going to have some sort of a, of a magic bullet that comes in and changes all this? No, I don't. I think the magic bullet is stop with the unfortunate commentary. Let's get back to how markets are supposed to be consistently delivering in terms of price performance and how they act. Let's kind of get through this malaise. And once we get through this malaise, let's take a look at forecast longer term, at least for the end of the year. But we do believe 12 months out, the market will be up more than 20%.

[Scott Wapner]

All right. Steve Liesman, our senior economics correspondent, is with us too. And I really want to focus on this credit issue because, you know, stock drops are hard to look at on the screen and on your statement. Deterioration of credit is a much more serious issue in the bigger picture. How are you thinking about that and how are those within the Fed orbit, do you think, considering all of this?

[Tom Lee]

Well, it's the thing you want to watch that would turn a stock downturn into something more meaningful. And I'm watching it. I know other people out there are watching it. It's hard to imagine you have this kind of movement in stocks without there being some dislocation. And that's a nice euphemism that works for a little while until it no longer works. You can be sure the Fed is watching the credit situation. You could be sure they're watching out for dislocations. I haven't heard anything right now that makes me nervous or that potentially makes them nervous right now. It was interesting to listen to Bessant on Sunday on the Meet the Press. On Meet the Press, his first answer was talking about the idea that this sell off had happened smoothly. And that's not important for the broader public, but it's important for people like us who watch the market very closely, that so far it had been smooth. But you got to be on the watch out for it. The Federal Reserve has a bunch of existing liquidity vehicles that are available both to banks. It has swap lines with foreign central banks that could be used if there was a dollar crunch overseas. What the Fed would want to do, Scott, in this situation is to not have to address any of this dislocation or any credit issues with monetary policy. It wants its liquidity vehicles to be used to solve those problems. And just one other thing, which is that I would argue to Brian, I don't like to argue with Brian, but it's different this time, at least right now, in that the Fed is a little hampered in coming in. It isn't like the market goes down and yada yada, yada, it comes back 20%. It comes back 20% because governments or central banks and companies take actions to make it come back 20%. And those actions could include help from the federal government, which I think Scott was just saying. I don't think we're going to get that this time help from the Federal Reserve, which is going to be very difficult given that there's an inflation impulse coming through. So companies are going to have to right size and that means a decline in investment and a decline in decline in unemployment, in employment if this lasts for a while. So yes, it may be that the market is up 20% a year from now, but there's a lot of changes that would happen in the economy for that to happen.

[Scott Wapner]

Yeah, Steve, thanks for teeing that up for us. Steve Liesman, senior economics correspondent. You want to address that, Brian?

[Jim Laventhal]

No, well, I don't want to ever argue with Steve Liesman. I mean that guy is amazing. No, I think our, our research and our call for up 20% or up 29% from current levels or from overnight levels have nothing to do with the Fed. Cutting rates, have nothing to do with monetary policy, has everything to do with markets normalizing and unskilling. All of the silliness that's gone on.

[Scott Wapner]

From all the money being put into the system now being taken out.

[Jim Laventhal]

So this is part of our longer term call, Scott Actually I was hopeful and prayerful we wouldn't get to this in terms of how bad it's gotten. But I believe that this has been a shock to the system. This is number two shock to the system, to normalization. First thing was deep seek, don't chase stocks because they're just going up the momentum trade completely in a way now this tariff stuff, I think we're being shocked into more normalized performance and I think we're going to see more of a tighter range in fixed income. We're going to see, we're going to see a normalization of multiple Scott 15 to 20 on the high end and then double digit earnings growth for the next five years. And if we need to have a negative year, if we need to have this type of thing draw for the next few quarters, fine. But I think longer term, I think this is where we're going for the next three to five years more normalized. What's going on right now is not normal and has not been normal for a while.

[Joe Terranova]

Where's the emergence of leadership come from?

[Jim Laventhal]

I think, well, you may remember that we think leader, you don't have to have one or two stocks or one or two sectors lead. I think, I think a lot of things are going to work together. I think we're back into the 90s where a lot of different strategies, asset classes work. And I know that you don't like small cap and everybody likes to complain about small cap, but I think the.

[Scott Wapner]

Reemergence of small caps are down 20% year to date.

[Jim Laventhal]

Yep. Because guess why? Because there's no, there's, there's been no follow through on there and people are chasing performance and they've been selling them because they've been underperforming. So that's going to continue.

[Scott Wapner]

You don't think they deserve to be down 20%?

[Jim Laventhal]

I don't think all of them need to. I think when I look at, when I look at small caps, I look at stocks, I don't look at the overall index. And the Russell by the way, is not the, I don't think the best, the best index with respect to looking at small cap. So I think there's going to be pockets of a lot of different areas that work longer term.

[Scott Wapner]

Let's get back to Leslie Picker with more from Larry Fink, less.

[Leslie Picker]

Hey Scott. Yeah, he's talking about the economy and said one thing I would say for certain is the economy is weakening as we speak. He is urging the administration to focus on more of the pro growth agendas which he campaigned on things like tax cuts and deregulation. And then Eric Schatzker who's the moderator there from Bloomberg, he followed up saying are we in a recession? Are we headed for a recession? And Fink said that Most of the CEOs he talked to say that we are probably in a recession right now. So we're going to continue listening, but wanted to bring you those headlines as they happen.

[Scott Wapner]

SCOTT okay, Leslie, thanks so much. I mean, this is what I'm alluding to, right? LARRY Fink, we're probably in a recession right now, which is why you I find it difficult to make the argument that, you know, the target should be where you have it, that earnings are going to be just fine, that there's no reason right now to have any expectation other than where earnings are supposed to be and then the multiples justified at the higher end, which you said high teens 20 that's you. You said that, not me. I want to know how you can justify that for our viewers, given what seems to be, for lack of a better description, quite obvious to most people.

[Jim Laventhal]

But you okay, and I'll go back to what I said. We wrote the reports over the weekend. We said that historically when you've had these types of days, it's very rare and it's not just because the Fed punched a bunch of liquidity since 1950, 12 months out from days like this and corrections like this. It doesn't matter if it's a correction or it doesn't matter if it's a bear market. The market's up on average 29.2% 12 months following. Now, with respect to changing our target, I can't announce on international television that we're going to change our target. I have to publish a report. I have to look at the research. I have to do all this. I don't expect I'm not going to react to everybody else changing their target because that's not how we roll. Now, as I said, I will react. When I know all the numbers, when I know the numbers are firm and we have confidence in the numbers in terms of growth, then we will when.

[Scott Wapner]

We have a recession, you're going to take your numbers down?

[Jim Laventhal]

No, because, well, the market's going to be up a tremendous amount before we have the recession. If the recession is happening right now, so then a recession right now and then 2/4, 2/2 of GDP negative by that time, we're going to be well into the Fed's probably going to have to cut if if we have a recession, the market's going to be rallying, SCOTT so we could be up from this, from these levels. That's just the way that it works. So I'm not going to react to recession and macro stuff. Once we see the numbers and feel better about where the bottoms up numbers, we will change our targets.

[Mike Santoli]

I mean, look, yeah, sure. Markets typically, if you go back to the old cycles, they bottom like halfway through a recession or something like that. I just feel like we're sort of several days into the reckoning with what this is going to be. And it's just the bands of probabilities around every outcome is so wide that I'm not saying you can't have it happen. And again, if you do a policy u turn, maybe you haven't done much except cost a lot of credibility on Wall street and amongst CEOs with the way that, you know, policy is being created.

[Scott Wapner]

But if you have a pivot, what is, what is the, I think the energy here, what's it going to be?

[Mike Santoli]

Yes, and you talk about credit. We talk about like the plumbing of the system. To me, if you're rooting for the Fed to get involved, you're kind of rooting for an accident. And you don't want to do that because the stock market's not going to hang in there for that because it's going to take a while for the data to pile up for them to act. If it's just about the fundamental, you know, economic numbers.

[Joe Terranova]

I think the first, first step is the violence of the last several days has to abate. And everyone clearly expected that it was going to be a clearing event. We heard that and everyone was positioned for the quote, unquote, clearing event. You've had this violent deleveraging process. I do think there are things within the market today where you could take heart in, you could look at in video, which is higher. You look at Amazon, some of the Mag 7 today look like they want to find some stabilization. That's a good thing. It's not indicative of this is the all clear. I think it's a process more than anything else that we have to go through. And that's really what a bottom is, a process.

[Scott Wapner]

Jimmy bought. You bought Citi today, Bell, right? Is that.

[Steve Liesman]

I did. I nibbled back at Citi. Just a little bit of history on this. You remember I trimmed this about two months ago at 84. Where is it right now? 58. I mean, I'm okay buying it back here. I trimmed it. I didn't add the full position back. And by the way, reminder, I sold on UnitedHealth Care on Friday, gave me some cash. I didn't put all that to work. Why the nibble at all, though, in light of what we're talking about is because of my belief and this is synthesizing everything we're talking about here, every piece of data that I'm coming In just about every piece is negative. Like, I'm not talking about the technicals, the historical patterns. I'm talking the fundamental analysis. Every piece is negative. And to me, it strikes me that the conglomeration, the aggregate of that sentiment is just simply too negative. Let me be clear. The odds of a recession, in my opinion, have picked up meaningfully. But what I'm hearing from a lot of people, not looking at you, Mike, just a lot of people, is a seeming 100% probability. I'm a little struck by what Larry Fink said. I'm a little struck by it. We may be on the cusp of a recession. We may be headed into a recession. Recession. The odds have gone up. But to say that we're in a recession now, I am looking for the massive number of layoff announcements. I'm not, I'm not seeing them. I think they are going to come if we continue on this path, but I'm not seeing it right now. And the reason I bring this up is because this is a moment where the polemics, the, the headlines can be damaging. And I'm sorry, I'm going to do this. You know, Jamie Dimon is somebody who commands my absolute respect. But it's been three years since, since the hurricane comment. It's been three years. If this is the final reckoning of the hurricane, I just, I feel like that, I feel like some of the people in positions of power are being just a little bit careless in what they're saying.

[Joe Terranova]

Earnings season on Friday and ultimately that's going to tell us where the market's going to go through the course of 2025. Are you going to get the 11% earnings growth that the street is now modeling for? I think we're going to learn a lot about that. And it largely depends on the direction of the economy.

[Scott Wapner]

I don't even know how much you're going to learn to be quite honest from this particular earnings season other than the commentary is going to be awful. But we already know that the numbers may not reflect the current environment. Just like the jobs report this past Friday. Please. It's a, jobs are a lagging indicator. A lot of that's before all of this tariff mess has but ripped through subsequent to that.

[Joe Terranova]

Scott, you, you will lose, you will lose immediately the buyback intentions. You will lose a lot of the capex that was previously planned if there is that overwhelming universal negativity.

[Scott Wapner]

You know, you look at other calls in this market, we talk some about Mega Cap, obviously, and you notice some of the nibbling in These names that, you know, there was a moment today where the NASDAQ was green, Citi was talking about semis today. Could see another 20% downside. Discretionary is under huge pressure. What do you think about discretionary names? Anything travel related has gotten destroyed. You think it's been overdone based on your view? Based on your view?

[Jim Laventhal]

Yeah. So we, we've been trimming around and moving some things around discretionary wise because we think from a discretionary sector perspective, I think positions are going to be more concentrated in names like Amazon, quite frankly. And so we've added there.

[Scott Wapner]

What have you gotten out of then, discretionary wise?

[Jim Laventhal]

We took, we took major profits in TJ Maxx, in longer term, in Marriott. Marriott, because we've seen volumes drop pretty dramatically. And so, and we sold Target a long time ago, but Target's in Staples. But at the end of the day, macro data on consumer discretionary, as Joe said, is lagging. So consumer sentiment typically bottoms a week, I'm sorry, a month after the sector bottoms. And so again, this time may be different, but at the end of the day, we think a lot of these numbers are already in there, number one. Number two, in terms of the earnings side of things, from a modeling perspective, in a process, if earnings do come down and they are going to come down and you see all analysts drop their numbers at once in terms of the current fiscal year next to secured, that's called an earnings revision. When you see earnings revisions all drop at the same time, that typically and historically is a fantastic buying opportunity. So I think, again, not to be always Pollyanna or positive, but I think if you have analysts dropping all their numbers at once, I think that actually could signal a nice buying opportunity.

[Scott Wapner]

What would make you negative? What would make you negative?

[Jim Laventhal]

I think if we see continued treacherous behavior here that's going to be longer than the next month or so. If we start to see earnings really decelerate dramatically more than we think it is, then we're going to have to change our tune. And then lastly, if we see some sort of uptick in inflation, that's also going to bother us and we're going to have to batten down the hatches.

[Scott Wapner]

All right, you guys want to take a quick break? Is that what we want to do? Yeah. All right, we'll do that. So let's do that. We come back, we do have some new data on how retail is feeling through all this. We will share that with you. Kate Rooney, following the Money. She has this report coming up next. This episode is brought to you by freshworks AI powered service software that makes work easier and processes less complex. Are you working harder than your software? Uncomplicate your business with FreshService for it and FreshDesk for customer support. Stop wrestling with clunky tools and start focusing on what matters delivering exceptional employee and customer experiences that drive ROI in weeks versus years, all with no hidden fees. Start working smarter, not harder, with Freshworks uncomplicated service software. Learn [e-mail] Are you still quoting 30 year old movies? Have you said cool beans in the past 90 days? Do you think Discover isn't widely accepted? If this sounds like you, you're stuck in the past. Discover is accepted at 99% of places. Take credit cards nationwide and every time you make a purchase with your card, you automatically earn cash back. Welcome to the now it pays to Discover. Learn [e-mail] credit card based on the February 2024 Nelson Report as a salesperson.

[Brian Belsky]

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[Mike Santoli]

We will hit 50,000 on the Dow and we're going to have a broad based recovery in the S&P 500.

[Joe Terranova]

The market's trying to find its bottom.

[Scott Wapner]

Now.

[Mike Santoli]

The thing I would say to retail investors is don't get panicked out by all of this.

[Scott Wapner]

Well, that was White House Trade adviser Peter Navarro today on this very network. Good message. After they've wiped out $11 trillion in value in the markets from the high and new data shows retail investors have been trying to chase the sell off. Our Kate Rooney is following that money looking to take a little long term. Larry Fink like advice, but not always easy. What do you know?

[Brian Belsky]

Yes, Scott, so that is what we're seeing. Last week, Mark, this record was the highest level of inflows from individual investors that we've seen in the past decade. It did slow slightly. If you look at Friday Vander research with this out, you can see on the chart there inflows were still near those records. And Marco Yukini over at Vander tells me the investor moves really come down to muscle memory. Says 15 years of buying the diplomatic has worked and it is hard to shake that off. There is one defensive trade we've noticed popping up. So this inverse ETF for the tech heavy qs, it's called the SKU qq Climb to the top of Vanda's most traded list by retail investors. First time that's happened in more than two years and suggests some hedging going on. It had not been in the top 10 on that record breaking Thursday. Also some steady buying of Vanguard's S and P index. So analysts say that could suggest dollar cost averaging some of the longer term allocation by more conservative investors. Robinhood noting that more aggressive dip buying is also wearing off. Steve Quirk, the chief brokerage officer over there told me there has been a migration to ETFs over some of the riskier single stocks out there. And the list of retail favorites though has been remarkably consistent across brokerage firms. It's not just Robinhood you look at. Fidelity to number one is still in video as of this morning. It had about a 72% buy ratio. You got Tesla Palantir still in the top 10. And then Ford became a top bet on the automakers this week. Amazon still among the most traded names. It comes as investors are sitting on record piles of cash as well. There's about 7.4 trillion sitting in money market funds right now. Scott, back to you.

[Scott Wapner]

Okay, Kate, thank you for that. That's Kate Rooney. You think a lot about, you know, what the retail psyche might be through all this. You know, there was a point in time during the, you know, beginning parts of this sell off that one of the reasons why you didn't initially have a larger flush was because retail was holding strong.

[Brian Belsky]

Yes.

[Scott Wapner]

And if not buying on the dip now that may be changing.

[Mike Santoli]

Yeah, tactically I'm not sure that's what you want to see, which is really the highly active retail trader Feeling as if we can just keep, you know, kind of averaging down and buying the same names. You maybe want to see a little bit of a backing away there. Even if the long term it's a smart thing to do if you're just rebalancing into, into equities. I've also, you know, even in high net worth like you look at the numbers from, from Merrill lynch then that's a similar instinct. Now retail investors in general are slow to book losses and so they're probably, if they have cash, they are looking to buy. I don't see it as much as the sort of 15 year by the dip we talk about in the 90s. Brian, you buy the dip way back then and everyone looked at the 87 crash. To me it's more about post Covid. There's this really highly active, you know, the kind of meme adrenaline traders as I call them. That that to me is still there and you know, I'm not sure they have to go away, but maybe it doesn't help that they're just.

[Joe Terranova]

My concern with, my concern with all of that though is that market structure has changed so dramatically over the last five years. I wonder if some of these retail trades traders, their expression of buying the dip is no longer in the individual security itself, but they're playing these zero dated options or they're doing it through a lot of options activity which is creating even more violence in this treacherous environment.

[Steve Liesman]

One thing that just I feel about this is look, the historical pattern is retail is going to get it wrong. And I, you know, that's why they're, I hate this term. All right, that's why they're called dumb money. But 2021, and we just mentioned meme stocks. Hey, guess who won? All right, the so called dumb money one. I don't think that that's a historical pattern. Not saying you're doing that Mike, but I don't think that's a historical pattern that we can really rely on that retail is getting it wrong. They've gotten it right.

[Mike Santoli]

Well, the vendor research shows that, that those accounts they track are underperforming the active traders. I mean if you just look at retail flow, obviously the market's been to Mike's point.

[Joe Terranova]

I think there's a difference. You know, when we're using the word retail, there's a difference between those active traders in that 21 period and true retail.

[Steve Liesman]

I see your point and I will be the first to admit that I started out the show talking about historical patterns that I believe in. I don't mean to be duplicitous by immediately saying here's a historical pattern that we should question. What I will say is that over the last five years I have learned to question historical patterns, a lot of them, whether it's mainline economic dogma, what we're talking about.

[Mike Santoli]

If I'm a plain vanilla retail investor, though, with long term money, the thing that I'm watching today is the fact that bonds are not helping, you know, and so that's a little bit of. Let's make maybe let's not say it's a. It's a pattern that's going to continue, but 6040 has not actually been.

[Joe Terranova]

It's helped you over the last several days. And everyone on the show knows I've been adding to the TLT position. But I watched it last night. I watched it this morning. This morning. Morning. I took off a little bit of the tlt. I'm still long tlt. I still think we've got lower yields ahead. But you have to look at those dynamics in the market and when you see things that should be happening that are not happening, you have to be quick to react to that. I also. You mentioned semis before. I just want to give this to the viewers. Watch the semis because they were first in. They were first in. They made their high last July. Software didn't make the high until December. The market, market didn't make the high obviously until February 19th of this year. Watch the semis. First in is usually first out after you have this violent deleveraging process is.

[Scott Wapner]

My humbly defiant friend. Have.

[Jim Laventhal]

Thank you. I actually do. Thank you so much. You know. Well, you know, it's different this time. When I learned the business a long time ago from my very first mentor, Bill O'Neill, he used to say that institutionals are smart money, retails are dumb money. I don't think it's that as simple anymore because retail has a bunch of different types of connotations. High private. Private wealth has done an amazing job in terms of asset allocation since the tech wreck. And our private wealth advisors, first at, when we were at a place called Merrill lynch, now at a wonderful place called bmo, have done a wonderful job positioning clients accordingly during these massive drawdowns. They are positioned to add here just like they were in 2020 and just like they are right now. So if you're doing your job as an advisor and you're cautioning your investors to be not fearful and focus on the longer term, now is when you should be adding Yeah, I mean I.

[Scott Wapner]

Just think, I think it's insulting to even use the words anymore to describe retail investors who are more armed with more information than they could ever at in the past when the markets have been democratized more so than they ever. True.

[Mike Santoli]

But over here everyone is riding the same curve, right? So if I have like a 90 factor model, I'm at one of these pods and it's trading automatically before the headline even gets to a human eye, you know, yeah, we have more information than ever. But guess who has more, you know, who's, who's paying the most for it? Who has the most firepower?

[Scott Wapner]

That, that's a fair.

[Mike Santoli]

I don't think it's dumb money. I don't think that's what is. I think it's difference of time horizons. Retail does best when it arbitrage is the professional time horizon. I don't have a monthly performance, you know, bogey I have to worry about. I'm talking about 20 years from now. I can make the market work to my advantage. If I buy on weakness. That's different than saying that they're always going to get every move right up and down.

[Scott Wapner]

Okay, Pippa Stevens has the headlines for us. Hi, Pippa.

[Brian Belsky]

Hey, Scott. The Trump administration has asked the support Supreme Court to block a court order to return a Maryland man back to the US From a notorious prison in El Salvador. In an emergency appeal filed today, the DOJ argued the US District judge overstepped her authority in ordering Kilmar Abrego Garcia's return just before midnight Tuesday. The administration had admitted that Garcia, a protected legal resident, was deported due to quote, an administrative error. Ukraine plans to send a team to Washington this week to negotiate on a minerals deal. He's deputy prime minister said today the team aims to work on a more expansive draft of the deal offered by the US as the Trump administration looks for repayment for military aid provided for Ukraine's fight against Russia. And it was a blockbuster weekend for the Minecraft movie. The Warner Brothers film based on the video game taking the top spot at the box office with an estimated 150 million according to comScore. It's the first movie this year to top 100 million and is the biggest opening since Deadpool and Wolverine last summer. Halftime report is back right after this.

[Scott Wapner]

Are you still quoting 30 year old movies? Have you said cool beans in the past 90 days? Do you think Discover isn't widely accepted? If this sounds like you, you're stuck in the past. Discover is accepted at 99% of places that take credit cards nationwide. And every time you make a purchase with your card, you automatically earn cash back. Welcome to the now it pays to Discover. Learn [e-mail] credit card based on the February 2024 Nelson Report. Ryan Reynolds here from Mint Mobile with a message for everyone paying big wireless way too much. Please, for the love of everything good.

[Jim Laventhal]

In this world, stop with Mint.

[Scott Wapner]

You can get premium wireless for just $15 a month. Of course, if you enjoy overpaying. No judgments. But that's weird. Okay, one judgment anyway.

[Jim Laventhal]

Give it a try.

[Brian Belsky]

@Mintmobile.Com Switch upfront payment of $45 for 3 month plan equivalent to $15 per month required intro rate first 3 months only, then full price plan options available, taxes and fees extra. See full [e-mail] all right, we will.

[Scott Wapner]

Have earnings this week, believe it or not. Earnings season kicks off. Brian Belsky.

[Jim Laventhal]

Yes.

[Scott Wapner]

Gonna go with you. I wonder what you think about these, these large banks. It's in the here and now. There's a lot going on, recession fears, lack of capital markets activity, probably even less now as a result of all of this. What do I do?

[Jim Laventhal]

Well, I think in the prior block we talked about wealth and we really like those multi divisional banks that have commercial bank, consumer bank, investment bank and wealth. And that's why we're sticking with bank of America. Our largest financial position across the board, Scott, is Berkshire and we still like JP Morgan, Morgan Stanley and Goldman. Now we do think that the medium sized banks, we still think that those banks are going to suffer relative to the really big banks and the small banks. So we're going to stay with that. Are their earnings going to be down? I would guess that they're going to be defensive. I know that you said in the prior commentary that it's almost too late, but. No, it's not. I think they're going to be very, very negative and very cautious. Under promise and over deliver. We're going to be back into that game. So we're still overweight financials. We think this is going to be the great opportunity for the next 12 to 24 months in terms of earnings growth, dividend growth, balance sheet. And so those are the names that we really like.

[Joe Terranova]

So to kind of respond to what I asked you before about emerging leadership surrounding financials themselves.

[Jim Laventhal]

Yeah.

[Joe Terranova]

And I just, I somewhat disagree with you that all boats can kind of rise. I think you have to find leadership when you're in this type of corrective environment from somewhere. How important to you is it that financials not really just survive the upcoming quarter but actually have a degree of relative outperformance to the rest of the market. Because like you, my strategy is overweight financials. A lot of the momentum strategies, overweight financials. Financials have been quote unquote, the story of the last six months.

[Scott Wapner]

Hey, by the way, blackrock, you know, Larry Fink continuing to speak, let me just introduce this into the conversation because I brought up the lack of deals. He says he does expect more M and A. I think they're going to be more M and A opportunities as we deregulate. I mean the big question I have is in the United States, will Citi banks, systemically important financial institution banks be allowed to do acquisitions now? And my belief is going to be yes. You know, if we have, you know, are you two, are we going to see a flurry of new opportunities in banking? M and A? The answer is, I think clearly yes. So just add that to whatever you were thinking about in your answer.

[Jim Laventhal]

Yeah. So per your point, you know, they've been under focus the last six months because you know, you had the Trump bump in the fourth quarter. Everybody kind of chased the banks because they were massively underweightfully so rightfully so. It was the right trade. So now if you see rates going down and you see these balance sheets of Fortress America in terms of how strong they are, you see the dividend growth side of things, you need the value. But I do firmly believe the really, really big ones and the really small ones by the way, are the best position. The small ones because of the relationship and the cleanliness of their balance sheet. The big ones because they're multi divisional assets, the middle sized banks. I think you're going to see surprising mergers, surprising mergers of just below the money centers and some of the bigger regionals because the only way that they're going to be able to compete going forward is to merge and try to take on the big banks.

[Scott Wapner]

What do you make of think as part of the conversation about all these things that haven't happened that people wanted to have happen and thought were going to happen, which why they, which is why they were positioned the way they were coming in. It's still like, hey, okay, it's still going to happen.

[Mike Santoli]

It's going to be hard to dislodge that general thrust of this idea that at least, you know, incrementally we're going to move in that direction. I don't think that if we don't get M and A, it's because of regulation. If we don't Get M and A. It's because people don't like where their stock's trading. They, you know, there's a wide bid ask. And they don't have CEO confidence which just plunged, which is one of the tightest correlations to M and A volume that you have out there. What I do think is interesting coming from the banks likely is probably the macro tell on the consumer because you always have Moynihan and Diamond saying our internal networks tell us spending is holding up and the deposits, you know, average deposits in the accounts are actually above pre Covid. Let's see if that. If that bears out as they give their guidance in the coming.

[Scott Wapner]

By the way, JPM and Bank of America are green today.

[Steve Liesman]

And yet, you know, take J.P. morgan, the creme de la creme off 25%. So these, you know, the creme de la creme in the financial industry has been, it's been hammered here. But Mike, I think where you ended there is exactly the biggest point. We know that M and A is lousy right now. The IPO market, forget it. The reason that bank stocks generally sell off as hard as they do in a recessionary environment is because of concerns about credit quality, having to take up loan loss reserves, having to actually flow those reserves through your pnl. But you know, I'm struck by the fact that not just the banks themselves, but the Federal Reserve has said that generally speaking, corporate and consumer balance sheets are in good shape. It's not, this is not. Doesn't feel anything like, you know, 2007 with the levels of leverage that we had then now.

[Joe Terranova]

Yeah, it sounds to me like you're going to be on the edge of your seat for Delta's earnings on Wednesday.

[Steve Liesman]

No, look, in fact, let's just. That's a big earnings report. And you know what? I think it's going to suck. I mean, I don't know how else to put it. How could he possibly come on and keep guidance. I can't see it now. I'm not.

[Scott Wapner]

They already kind of gave you a heads up that it doesn't look pretty good, the outlook. Right.

[Steve Liesman]

I mean the last numbers that he put to it were to take down first quarter but keep the full year intact. I just, I just don't see any way full year stays intact.

[Scott Wapner]

All right, let's do finals after this break. All right. 3:00 Eastern today, of course, Mike Santoli is going to join me for his last word and maybe more words given these markets. So thanks for being here for the hour. It's been a pleasure having you and I look forward to seeing in a couple hours. Adam Parker, Torsten Sloke, Ed Yardeni, Bruce Richards, Jack Manley. Everybody is going to join me for that final stretch and I cannot wait for that. Brian Belsky. I'll give you the first shot. Final trade. Sometimes it gets a little spicy, you know, it's good. Sometimes it gets a little spicy up here, especially when the markets are like this. People are certainly feeling unsettled and no one clearly knows where all this is ultimately going to go.

[Jim Laventhal]

No one does. Thank you so much. First Citizens bank shares.

[Scott Wapner]

Thank you. Farmer Jim Berkshire.

[Steve Liesman]

I'll bet he's salivating right now.

[Scott Wapner]

And of all salivating. He's probably feeling good about where they are. Go ahead.

[Joe Terranova]

I mentioned Semis before KLA Corp. It's a name we've owned in the ETF since inception.

[Scott Wapner]

All right, I'll see you on the bell. Thanks, everybody. You've been listening to CNBC's Halftime Report, the podcast. You can always catch us live weekdays at 12 Eastern only on CNBC. All opinions expressed by the Halftime Report participants are solely their opinions and do not reflect the opinions of CNBC, NBCUniversal, their parent company or affiliates, and may.

[Jim Laventhal]

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.

[Scott Wapner]

To make a particular investment or follow.

[Jim Laventhal]

A particular strategy, but only as an expression of an opinion. Such opinions are based upon information the Halftime Report participants consider reliable, but neither.

[Scott Wapner]

CNBC nor its affiliates and or subsidiaries warrant its completeness or accuracy, and it.

[Jim Laventhal]

Should not be relied upon as such. To view the full Halftime Report disclaimer.

[Scott Wapner]

Please visit cnbc.com halftimereportdisclaimer this episode is brought to you by Freshworks, AI powered service software that makes work easier and processes less complex. Are you working harder than your software? Uncomplicate your business with FreshService for it and FreshDesk for customer support. Stop wrestling with clunky tools and start focusing on what matters delivering exceptional employee and customer experiences that drive ROI in weeks versus years, all with no hidden fees. Start working smarter, not harder, with freshworks uncomplicated service software. Learn more at freshworks.

[Jim Laventhal]

Com.