Why the Dollar is Slipping and Navigating What’s Actually Moving Markets with Karen Finerman

Summary

Podcast Summary: "Why the Dollar is Slipping and Navigating What’s Actually Moving Markets with Karen Finerman"

Money Rehab with Nicole Lapin
Episode Release Date: April 21, 2025
Guest: Karen Finerman, Co-founder and CEO of Metropolitan Capital Advisors, Panelist on CNBC's Fast Money, Host of How She Does It podcast.

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Introduction

In this insightful episode of Money Rehab, host Nicole Lapin welcomes Karen Finerman to discuss the current financial landscape, focusing on the declining value of the U.S. dollar, market volatility, and strategic investment opportunities amidst ongoing tariff-related uncertainties. The conversation delves into how these factors influence market movements and investor strategies in what Karen describes as a "new normal."

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Current Market Conditions

Karen Finerman sets the stage by reflecting on the relative calm of the current week compared to the previous one’s turmoil. She emphasizes the importance of adapting to sustained economic conditions rather than reacting to fleeting headlines.

Karen Finerman [02:58]:
"The story this week is less about the moment-to-moment headlines and more about settling into this new normal."

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Understanding the VIX and Market Volatility

A significant portion of the discussion centers around the VIX index, a key measure of market volatility often referred to as the "fear gauge."

Nicole Lapin [05:25]:
"The VIX measures the likelihood of volatility in the market, more than 1% on any given day. It's become known as a fear greed index."

Karen explains that historically high VIX levels signal buying opportunities, aligning with her long-term investment strategy of staying net long.

Karen Finerman [06:57]:
"I look at the VIX as an indicator to buy when there's blood on the streets, even if it's my own. High VIX levels indicate fear, which creates opportunities for long-term investors."
[06:57]

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Investment Strategies and Stock Picks

Karen shares her portfolio experiences, highlighting both successes and challenges. She candidly discusses underperforming stocks like Meta, Amazon, Netflix, and JP Morgan, providing insights into her strategic adjustments.

Karen Finerman [07:15]:
"I have a lot of Meta positions, which have been difficult, but I still believe in the AI story and AWS. Despite short-term pain, the long-term prospects remain strong."
[07:15]

She revisits her 2025 stock picks acronymed as CARVED: Citi, Alibaba, United Rentals, Boeing, Energy, and Dell.

Karen Finerman [08:20]:
"Cited my picks at the beginning of the year, and while some like Dell are facing challenges due to tariffs, Alibaba has been performing exceptionally well."
[08:20]

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The Declining Value of the Dollar

A focal point of the episode is the unexpected decline of the U.S. dollar, which has fallen by approximately 8% this year, reaching three-year lows. Karen provides a comprehensive analysis of the factors contributing to this phenomenon, diverging from traditional crisis responses.

Karen Finerman [24:08]:
"Normally, in a crisis, there's a flight to quality where money flows into U.S. dollars and Treasuries. However, this time, we're seeing the opposite—selling in Treasuries and dollars dropping due to leveraged trades and carry trades unwinding."
[24:08]

She further elaborates on global shifts in reserve currencies and the impact of international investors moving funds out of U.S. equities into European markets due to valuation differentials.

Karen Finerman [27:27]:
"Typically, stocks and bonds move inversely with the dollar, but now we’re witnessing stocks down, bond yields up, and the dollar down—a completely unusual and concerning dynamic."
[27:27]

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Market Opportunities Amidst Uncertainty

Karen identifies current market opportunities, particularly in high-quality investments that are undervalued due to widespread selling. She highlights Amazon as an attractive buy, citing its strong balance sheet and robust AI-driven growth prospects.

Karen Finerman [19:01]:
"Amazon is trading at about 28 times earnings, a level it hasn't seen in its history. With AWS and their retail business thriving, it's a compelling buy at current prices."
[19:01]

She advises investors to look for companies with strong fundamentals and minimal debt, emphasizing the importance of certainty and long-term growth potential over market sentiment.

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The Financial Sector and Deregulation

The conversation shifts to the financial sector, where Karen discusses the impact of tariff-related chaos on banks. She expresses optimism about Citigroup under the leadership of CEO Jane Fraser, praising her strategic direction and cost management.

Karen Finerman [35:58]:
"Citigroup is an interesting situation because it's super cheap, and under Jane Fraser's leadership, they've been clarifying business lines and reducing expenses. This is a positive sign for future earnings."
[35:58]

Karen also touches on the topic of deregulation, citing potential benefits for banks in reducing operational costs and making loans more affordable, while cautioning against excessive deregulation that could lead to financial instability.

Karen Finerman [32:18]:
"Deregulation could free up more money for banks to make additional loans, thereby increasing profitability and making the banks healthier."
[32:18]

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Conclusion and Key Takeaways

As the episode wraps up, Karen Finerman offers pragmatic advice to listeners navigating the volatile market:

Karen Finerman [41:23]:
"Your gut is not your friend when it comes to investing. If you're terrified and hesitant to buy, it might actually be a good time to invest. Conversely, if you feel overly confident and want to borrow to invest, that's a red flag."
[41:23]

She underscores the importance of disciplined investment strategies and avoiding emotional decision-making, emphasizing that informed, rational actions are crucial for financial success.

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Final Thoughts

Karen Finerman provides a nuanced perspective on the current economic challenges and investment landscape. Her expertise offers valuable guidance for investors seeking to navigate uncertainty, emphasizing the importance of strategic planning, understanding market indicators like the VIX, and identifying undervalued opportunities in a shifting global economy.

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Notable Quotes:

• Karen Finerman [06:57]:
  "I look at the VIX as an indicator to buy when there's blood on the streets, even if it's my own."

• Karen Finerman [19:01]:
  "Amazon is trading at about 28 times earnings, a level it hasn't seen in its history."

• Karen Finerman [41:23]:
  "Your gut is not your friend when it comes to investing."

---

This comprehensive discussion equips listeners with a deeper understanding of the interplay between currency valuations, market volatility, and strategic investment selections in today's complex financial environment.

Transcript

[Nicole Lapin]

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[Karen Feinerman]

Have written, count them, five books now. But each time I'm in the writing process, I stay at an Airbnb. I love to stay at an Airbnb. When I was actually first launching this show, I was at an Airbnb in Arizona. It was so peaceful. It was stunning I could be productive and comfortable. The Airbnb was also surrounded by a ton of javelinas.

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Karen Feinerman, welcome to Money Rehab.

[Nicole Lapin]

Nicole, thank you for having me.

[Karen Feinerman]

So good to reconnect. Normally we kick off our interviews by getting straight into the headlines, but in this economy it just feels important to ask how you're doing.

[Nicole Lapin]

How am I doing? I mean, it's exhausting, I have to say. It's exhausting. And, you know, you just never know what you're going to find. And this idea of there could be monumental news at any moment is, it's tiring.

[Karen Feinerman]

Are you monitoring Twitter for monumental potential tweet?

[Nicole Lapin]

Well, I'm on, you know, I'm on the computer all day long and just at any moment it could be something really market moving. So you have to sort of be in this high level of, you know, high alert. High alert, exactly.

[Karen Feinerman]

Yeah. So has your investing strategy changed since Liberation Day?

[Nicole Lapin]

Liberation Day, no, it hasn't. It hasn't worked, I can tell you that. You know, I'm always long. I have various hedges on, but always, always net long, very net long. And that's been the strategy for years and years. And you know, it's painful when you are long going into the pandemic or going into the great financial crisis, whatever it might be. But the idea of sort of being able to market time so know when to sell, know when to get back in and then have that gap be wider than whatever taxes you might pay. To me is just a strategy that is too difficult. So I don't try to do it. But what I do try to do. One one of my favorite quotes, which I always come to is buy when there's blood on the streets, even if it is your own. And I can tell you recently there's been a lot of my own. So I look at the Vix, I, I don't know how closely you follow the vix, but it's sort of in no man's land now. It was up in the 50s, so I'd be a buyer when it's terrifying, it's not low enough now it's in limbo at I don't know, 30 where it is right now. So I'm not really doing much, just being exhausted.

[Karen Feinerman]

So can you give us a sense of the vix? We've been hearing in a lot in the news lately. So when you say that the VIX is high, around 50, what is it normally? And then you say that you look to cover some hedges. What do you mean by that?

[Nicole Lapin]

So the VIX is really, it is a measurement of how likely the volatility is in the market. More than 1% on any given day. But it's really become known to be the sort of fear greed index. So when the VIX is really low and the kind of lowest I've ever seen it drag along for a long time is low double digits, so, you know, 11 or 12, and then in periods of high uncertainty. So the highest I've ever seen it is during the pandemic, during the really, really dark, dark days of the pandemic. As high as about 80 intraday maybe. So now the VIX has gone from mid teens to as high as 56. I guess it was Tuesday morning. Was that when the bottom was sort of the. I can't even remember all the days, but so it hit somewhere in the mid-50s. And I like when the VIX is super high. I like when things start trading down integers at a time because that just tells me someone just wants to get out, regardless of price. And if I own that, that's not fun. But if I can buy more at a price where I'm buying from someone who says, I don't care what price I'm selling it, I just need to get out. That's ultimately been a good thing to do. That's been historically been a good thing to do. Exactly. You know, we shop, we love to get things on sale. We do not want our stocks on sale. That feels bad.

[Karen Feinerman]

Well, unless you're a long investor, like betting on the future, holding onto your investments for a long period of time, not trying to bet against the market. So when you say you see blood on the streets, including yours, what kind of blood have you been shedding? I hate saying that like I don't want you to shed blood.

[Nicole Lapin]

So. Well, you know, I have a lot of meta, very big position so that you know that that's been a very difficult one. I have Netflix, well, sort of hanging in the best Amazon, which I have, I like a lot, like how they're positioned, particularly in tough times like this. But the stock's down. I don't know where it is today. 172 or 3. I don't know the moment, but it's down considerably. And I still believe in the AI story. I still believe in aws. And then they have this remarkable retailing business, gigantic retailing business. So that hasn't been fun. The banks I. JP Morgan, my biggest bank position has went to 280. Probably shouldn't have been at 280 and then went down to about 210. So that's a fair amount of pain. Citigroup, I could go. I don't know how long this podcast is, but I could go on and on for a while of things that haven't worked.

[Karen Feinerman]

Yes, you had. Right at the beginning of the year, you shared the stocks that you were looking at for 2025.

[Nicole Lapin]

Yep.

[Karen Feinerman]

The acronym was carved, which is making me hungry, but it was right. Citi, Alibaba, United Rentals, Boeing Energy and Dell.

[Nicole Lapin]

Right.

[Karen Feinerman]

How do you feel about those picks moving into the second half of the year with everything we've seen in January?

[Nicole Lapin]

Well, Dell certainly is most in the crosshairs of all of them. The tariff wars, you know, the. It was somewhat of a reprieve. I don't know that it's a permanent reprieve of China. We'll see. But the combination of the concern about AI and data center growth, that's obviously right in Dell's wheelhouse. And then aside from that business, there's also the PC business, and that has sort of slowed. But also the PC business really is affected a lot by tariffs, so that's been the most painful one.

[Karen Feinerman]

But Alibaba having an amazing year.

[Nicole Lapin]

That's been having an amazing year. Yeah. I feel like there was sort of not regime change because the regime is exactly the same, but a change in policy and. And that doesn't have tariff issues. Right. They do very little business in the United States and they have a huge business. They have a huge cloud business. They have. I mean, they're in so many different things. Logistics and they really are conglomerate. They have a extraordinary amount of cash and it's not expensive, so. But it's subject to. Who knows?

[Karen Feinerman]

Who knows? With the success of your Alibaba pick, are you looking to double down more on Chinese D2C companies?

[Nicole Lapin]

I did buy some more Alibaba Friday, I think. Thursday. Friday. I think that even in the situation that we're in that China really feels that they need to support their economy and that that will. That will benefit Alibaba. So I have added.

[Karen Feinerman]

Have you looked at anything else or does anything else DTC?

[Nicole Lapin]

I own some FXI. I own Kweb, so some ETFs, but that's the only individual stock that I own.

[Karen Feinerman]

Does it worry you what's going on with the de minimis exemption? I'm assuming you've been following this being sunset for Chinese products.

[Nicole Lapin]

1. Right. So that doesn't affect Alibaba as much. So that, so Temu and Shi'an, that's really affecting them. And I think we're also going to see Meta is sort of a collateral damage there as well. Not this super bowl, but the one before that. It seemed like every other ad was Teemu Shi'an. And so we're going to see a meaningful contraction there. And that's. Those are big advertisers. So I think that's part of what's weighing down Meta. I mean you've got a lot of things but that you've got the lawsuit.

[Karen Feinerman]

And because there's this big push, especially on TikTok right now and we did an episode about how Chinese companies are now trying to market to individual Americans to buy directly and skirt around the tariff stuff. I mean I'm my. I don't know if you know, but my house burned down in the alley fires and so now I did not know that.

[Nicole Lapin]

Where do you live? In the Palisades.

[Karen Feinerman]

Where do you live? Yeah.

[Nicole Lapin]

Oh, but sorry.

[Karen Feinerman]

Thank you. Thank you. You're the best. It's only recently that we found a new place to move into and I need to buy everything. And so I was looking at Alibaba and I was like, oh my gosh, is this something that I can do directly? You can and not pay the tariffs?

[Nicole Lapin]

Well, the de minimis is $800. That's what a shipment, anything below $800. So I actually don't know if you aggregate for more than $800. Maybe there's a way around that. I actually, I don't know.

[Karen Feinerman]

I don't know. I think it's really interesting to see what's happening with the Chinese companies that are trying to take the tariff news and you know, spin it or sell their knockoffs or God knows what. Do you have any thought about what's going to happen?

[Nicole Lapin]

Well, it was interesting to the extent that any of that is about luxury high end goods. If I were Louis Vuitton and that were one of my suppliers, I would be very, very unhappy. So unhappy that I might look for another supplier. So if that is part of their, that their game plan, I think that part is going to be end up being Very problematic. But for other things, I know these manufacturers are just carpet bombing TikTok every 40 seconds. Yeah.

[Karen Feinerman]

Are you seeing. Well, so let me go back. I'm assuming you're not surprised by LVMH then tanking or the luxury sector.

[Nicole Lapin]

No, I actually was a little surprised that American Express was good because I would have thought the correlation between the LVMH consumer and American Express was high and that Louis Vuitton in the US was a miss in Asia. It was a disaster, but it was a miss. And so meaning. Well, they were expecting for it was about 4 percentage points low on same store. Same store sales or comps rather. And so that's a, you know, that's a miss. And I would have thought AXP would that customer would overlap directly and that wasn't the case.

[Karen Feinerman]

That's interesting. I mean what's tricky to understand is when a company is on sale or it's just not good. So if you're looking at some high quality investments, maybe on sale, we love a sale. But what about the LVMHs of the world?

[Nicole Lapin]

That's not been a good one for me. But I, I look at LVMH vs. Kering, for example. So you have two conglomerates, each has extraordinary brands. Kering has really struggled with Gucci and that is the main driver of their business. And it's just been a disaster for a couple of years. So I mean we're talking about like revenues down 20 revenues. That's enormous. And so to me that would fall in the. Oh, we might have a material change here in that a couple things. Something happened about two years ago that I really didn't like. It made me sell my stock. Caring which was the CEO who's married to Salma Hayek, the actress, bought caa, took control of Creative Artists Agency. And I hate acquisitions like that that are a huge distraction and it sort of really shows sort of taking your eye off the ball. And coincidentally that was when this sort of all the pent up demand and spend from the pandemic was starting to wane. And so for all of the luxury houses that was sort of weighing on them. But Kering is pretty levered. And so that distraction I thought was really not a good sign. So one thing about Bernard Arnault, he is all in. He is engaged all the time.

[Karen Feinerman]

Yeah. It seems like one of these things is not like the other because they're the parent company of know, YSL, Gucci, Balenciaga, BGA, Alexander McQueen, CIA.

[Nicole Lapin]

Yeah, yeah. And so I don't know if I don't know why you bought it, I don't know. I assume she's represented there. I I guess so. I really didn't like that and I if I thought, all right, if I'm going to have exposure in that area, I'd rather have LVMH Foreign.

[Karen Feinerman]

Hold onto your wallets.

Money Rehab will be right back.

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[Karen Feinerman]

And now for some more money Rehab.

Are there other opportunities right now in this market that you're seeing of things that are legitimately on sale? So when we talk about on sale, we talk about high quality investments being down, not the things that are probably not going to come back up.

[Nicole Lapin]

I think Amazon is really attractive now. It hasn't traded here at this level. So I like to look at pe assuming a balance sheet's fine, which their balance sheet is, it's very good. It's not as good as Alphabet, but it's very, very, very good. That's not an issue in any way at all. It's a positive. So I think we haven't had a chance to buy a business like this. Aws, which I don't know if you saw on cnbc, Andrew Sorkin's interview with Andrew Jassy last week and he talked about AI is the most transformative thing. They are not slowing down their AI business. And like they, what they saw as the opportunity in cloud maybe a decade ago, this is what they think the opportunity is. Now the margins in that business are gigantic. And then they have this extraordinary retail business. And so together you're trading, it's trading at about 28 times earnings. It hasn't been here probably ever in its entire history. So that's one that I've been adding to that I like.

[Karen Feinerman]

Yeah, if you just look at our packages outside.

[Nicole Lapin]

Yeah, right. Well, for your gut, for you guys, that must be all the time, every day.

[Karen Feinerman]

Yeah, packages. I'm trying to glean though from your strategy whether or not you think we're recession bound or not.

[Nicole Lapin]

I don't know. I think it's 50 50. The thing that's so unusual about this particular time is that it seems to be a self inflicted wound. Right. That I think we could get out of this fairly quickly if we had some clarity. The market hates uncertainty. So even bad news with certainty is better than vague uncertainty with no news. So it's hard to know, could the President just switch strategy and say all Right. We got, you know, 15% across the board. That's it. That's the deal around the world. I think the market would rally tremendously. But I'm also not optimistic that that will happen in the short term.

[Karen Feinerman]

Is it harder to hedge because of that? Because, you know, as you said, when the vix gets cuckoo high, crazy. You want to cover some of your hedges.

[Nicole Lapin]

Right.

[Karen Feinerman]

What is.

[Nicole Lapin]

Look, so if I'm short QS against a portfolio that has exposure to the Max 7, I'll buy some back. So I bought some back. Often I own puts that are, I'm not looking to buy puts that start to make money. Right. If the market goes down right from that, the point that I buy them, I'm looking at men as protection. If the market goes down 5% or more, that kind of move. So what I think of as sort of insurance with a high deductible, I'm going to take some pain the first 5% down before that hedge really starts to kick in. It'll start to move, but it won't. It'll really kick in the lower it goes. So. And when you own those and the market's going down, you're like, oh, thank God I own these puts. That's the time to sell them. It's hard to do, but yeah, almost always it's the right thing.

[Karen Feinerman]

Can you talk to a new options investor who might be exploring puts and calls and, and all the fun right now?

[Nicole Lapin]

I wouldn't be exploring them now for the first time, I can tell you it is a wild, wild market out there and with, you know, zero day options, I, I wouldn't touch those. And those are options that expire the same day. Right.

[Karen Feinerman]

Although we did see that crazy trade of somebody with, well, zero day spy.

[Nicole Lapin]

Yeah. With probably very, very good information.

[Karen Feinerman]

Yeah.

[Nicole Lapin]

Yeah. So there's that going on.

[Karen Feinerman]

That's not luck.

[Nicole Lapin]

No. Would you want to step into that? I mean, would you follow it? Maybe. That might not be so dumb. Right. That could be like, look, I don't know what's going on, but I know that that guy does that. That's.

[Karen Feinerman]

It's not a playing field right now.

[Nicole Lapin]

It is not. And so this isn't the time. If you don't, if you don't use options, this isn't the time to start trying them out. But I do, I think it's a good tool to have sort of in your, you know, your toolbox to be able to express you can a long bet. Right. You want to know the name? But let's say There's a lot of risk. You feel like other business could be terribly damaged in a tariff war that's protracted. Then you can buy calls instead of the stock and know, all right, here's the most I can lose, you know, with certainty, you know, with a call how much you can lose. You don't know how much you can make on the upside and you know, really is a lot. That's great. But you know what you can lose. So certainty again is, is a good thing to have.

[Karen Feinerman]

Yeah, it's insurance, you know, buy. Yeah, insurance.

[Nicole Lapin]

Insurance.

[Karen Feinerman]

The fire.

[Nicole Lapin]

Right. How much, how much is fire insurance now? It's not even available probably.

[Karen Feinerman]

Right, yeah, right, exactly. So same thing with hedging. Lock in your protection before the chaos.

[Nicole Lapin]

Right, chaos. It's very expensive and usually doesn't work out well when you buy protection in chaos.

[Karen Feinerman]

Let's talk about the value of the dollar. I think this is not getting as much attention. It's fallen by about 8% this year recently, trading near three year lows. Can you help us understand why this is happening?

[Nicole Lapin]

I can sort of, but honestly I'm not sure I can tell you sort of what's happening. So we're seeing normally when there is a crisis such as this, there is this what's called a flight to quality. And money around the world goes to the United States because it is the safest, the biggest, the rule of law, all of the things that make the US market great. And so people buy US dollars and they buy Treasuries. They might buy short term, they might buy the 10 year, for example. And that's usually what happens in a crisis. That did not happen in this crisis. In fact, the reverse happened. So there were selling in Treasuries, we saw the 10 year yield. When people sell the bonds, yields go up. They need to, you know, if you want to entice more people to buy those bonds, you have to pay more interest. So that worked the opposite way that we would have seen. And so when you have people from around the world, let's just use the example of Chinese sellers, I don't know how much of the selling was Chinese sellers, but they own hundreds of billions of dollars of bonds, $750 billion of bonds. So they sell their 10 year bond, they get dollars back for the bond, they sell those dollars. So you have this effect of the bonds going down and the dollar going down, which is the opposite of what you thought would happen. In addition, there was this giant levered basis trade on that had people buying the 10 year selling the 30 and they have to get out. That was sort of on top of it in a chaotic market. And then you had one more thing, the Japanese yen trade, which has been on for years, which is carry trade. Yes, the yen carry trade. So people short yen, they take that money by dollars, by Treasuries. Well, that started to unwind when China, when Japan started to raise interest rates and the yen appreciated. And then there's this question mark of is the US going to remain the reserve? Is the US Dollar going to remain the reserve currency of the world? I think so, but the idea that that's even a question right now is scary. So a lot of things going on, plus one other thing, which is in the last year or so, there's been a move out of some US equities into other countries, mostly Europe, because the valuation differential has gotten so huge that we talk about US exceptionalism and how great that, you know, this country is to do business and rule of law and all of that great capital markets, all of that. But the EU had underperformed for so many years and the US markets had done well. The value proposition changed. So money started to leave the US having nothing to do with tariffs. This, this predates Trump's election.

[Karen Feinerman]

So let's recap because I think this is really important. Typically in textbook world, stocks go down, bonds go down, bond yields go down.

[Nicole Lapin]

Price go up, right? That's sometimes confusing if you're new to it.

[Karen Feinerman]

It's like a seesaw, right? And then the dollar goes up, and.

[Nicole Lapin]

Then the dollar goes up.

[Karen Feinerman]

But now we saw stocks down, bond yields up, up, dollar down. All. I mean, the stocks down is sort of the, the constant. But the way that bonds reacted and the way the dollar reacted was really weird.

[Nicole Lapin]

Was really weird. And one more thing to think about was that the Trump administration's plan was, okay, if we slow the economy, then bond yields and the 10 year in particular will trade down, meaning the interest rate will be lower. So we know we have this enormous deficit that we need to fund. And one of the ways to fund that, you sell 10 years, you can sell much nearer in, but then you got to keep rolling and you don't know where interest rates will be. So it wouldn't have been a terrible thing if the 10 year traded down because there were concerns about a recession and that we were able to issue 10 year, you know, tens of billions of dollars or hundreds of billions of dollars of 10 years at a low rate. And so our interest rate costs would have gone down. But that's not what happened. And I think that correlation breaking down is what ultimately made Trump put on the 90 day pause to cool down the things that seem to be almost breaking.

[Karen Feinerman]

Yeah, I mean it makes sense, right. If you're issuing that much debt and when we talk about the US being in debt, it comes from our treasuries, selling the U.S. debt in the form of Treasuries. Other countries buy that. And so when you're issuing that debt, every basis point, so fraction of a percent, Matt, are billions of dollars, right?

[Nicole Lapin]

Yeah.

[Karen Feinerman]

And what we have to pay back or somebody to lend us money, essentially.

[Nicole Lapin]

Exactly.

[Karen Feinerman]

So the system was broken, the seesaw was broken and then really just underlying why the falling dollar matters right now, it's kind of a silent tax, right? Your, your money.

[Nicole Lapin]

Yes.

[Karen Feinerman]

If you're in the U.S. buy less.

[Nicole Lapin]

So one of the things that originally the Trump administration had talked about was, well, other currencies are going to go down against the dollar because we're, you know, king of the world. And so that even if we are tariffed, that will lessen some of the blow. And that's not what happened. Right. So the, the euro has appreciated a lot. The pound is appreciated. The Mexican peso is about flat from when he was elected. The Canadian dollar's down a little bit, but, but these big moves are not happening. So that's interesting. I don't know what exactly to make.

[Karen Feinerman]

Of it, but yeah, the dollar isn't currency. It's this confidence idea.

[Nicole Lapin]

Right.

[Karen Feinerman]

When it falls, the world starts looking for a new safe haven.

[Nicole Lapin]

Yes. Right.

[Karen Feinerman]

Sterling or the pound or the euro.

[Nicole Lapin]

Right. Whatever it might be. The one thing it does help is that our goods are comparatively cheaper. Right. So if you're European and wanted to buy an American made, whatever, take away the tariffs for a moment, it got a lot cheaper. It got 8% cheaper in the last, I don't know how long when you, from when you said it was around A$8 or so. So things got cheaper. That makes us a little bit more attractive. Also, it does help multinational companies when they report earnings. So let's say you're Procter and Gamble. You make your, you make, you sell $10 billion in Europe and you convert your euros back into dollars, you get more dollars, your earnings will go up. But I always dismiss that because it works the other way sometimes. I don't really count FX when I think about a company's earnings power. Others do.

[Karen Feinerman]

I don't FX just being in foreign exchange.

[Nicole Lapin]

Foreign exchange. Right.

[Karen Feinerman]

Currency stuff. I know I always have to decode all this.

[Nicole Lapin]

No, it's good. I assume people know. But why? How you know? It's born knowing what fx.

[Karen Feinerman]

No, it's a weird la.

[Nicole Lapin]

It's great to learn.

[Karen Feinerman]

World obviously been dominating all the financial news cycle. Of course, there's a lot of other stories happening and unfolding and evolving as well. What's something that you think has been overshadowed by all the tariff news that we should keep our eye on?

[Nicole Lapin]

Oh, that is a good question.

[Karen Feinerman]

Because I feel like it's like a shiny objects thing, right?

[Nicole Lapin]

Yeah. Right.

[Karen Feinerman]

People can get away with some weird stuff because nobody's really paying attention.

[Nicole Lapin]

I think deregulation, I feel like that is something in. In their control and that would be a benefit to many companies. So even Jamie Dimon said it on his call. Jamie Dimon, I think, is one of the, you know, greatest financial executives of the last century. Brian Moynihan also said it on. He's the CEO of Bank America. He said on his call the amount of paperwork and legal issues and rules that change and are so arcane in some ways and also just, I don't know, whimsical, but that they have to comply with cost banks so much money. So if deregulation happens in many businesses, but let's choose banking because they are particularly regulated, then that will free up more money for making additional loans. It will make the banks more profitable, which makes them healthier. And Jamie Dimon gave the example of if we could get rid of some of that regulation, we could make mortgages cheaper, up to about 70 basis points cheaper, which matters a lot if you're a homeowner and you can get a mortgage 70 basis points so lower than what you have now, that would be a very good thing. And that's something that's in their control. So we may see that.

[Karen Feinerman]

Not too much deregulation, though, right?

[Nicole Lapin]

Right.

[Karen Feinerman]

We don't want to go live through 2008.

[Nicole Lapin]

Right. So things, you know, it's a pendulum. Right. We always go from one excess past what probably is the right amount to the other that is the wrong amount is too much. So there's a lot of room to come back and still have guardrails that we need.

[Karen Feinerman]

Absolutely.

Hold on to your wallets.

Money rehab will be right back.

And now for some more money rehab.

We thought that this would be like the go go days again of fundraising and IPOs, but we've seen a big dry up there.

[Nicole Lapin]

Right. And we thought there would be a lot of mergers and investment banking activity. Not happening. One thing that is happening is the amount of trading revenue. So if you're the Goldman Sachs desk or JP Morgan's desk, the amount of volume we're doing trading is extraordinary. Right. We've had several of the highest volume days ever just in the last two weeks. So that they'll make money on that, they'll make sort of extra money. But I don't, I don't want to.

[Karen Feinerman]

Feel bad for them.

[Nicole Lapin]

I don't want to pay a big multiple of earnings on what I think is extra short term money. That isn't going to be a, a long term trend of giant trading day, you know, commissions. I'm not. But in the short, very short term it helps.

[Karen Feinerman]

In your picks in your carved city was for the stood, the C stood for city. That's been down 10% though.

[Nicole Lapin]

Yeah, that's been.

[Karen Feinerman]

I mean how are the financials?

[Nicole Lapin]

The financials started off really well and then really got hurt in this, in this tariff, whatever you want to call it. I don't know. Do you have a word for it?

[Karen Feinerman]

We can bleep it out. I don't know.

[Nicole Lapin]

Okay. That is the proper word for it I think. Yeah. So hullabaloo. Hullabaloo. Kerfuffle.

[Karen Feinerman]

I love a kerfuffle.

[Nicole Lapin]

Okay. Who doesn't love a kerfuffle?

[Karen Feinerman]

Perfect.

[Nicole Lapin]

Just because Jamie Dimon used the word kerfuffle.

[Karen Feinerman]

So kind of a folksy man.

[Nicole Lapin]

Yeah. But he, he's extraordinarily good at his business. But normally when you see turmoil in the financial markets, banks because they are levered, don't generally trade well. So Citibank didn't trade well. I mean JP Morgan shed was at 280, went to 210. That's an enormous move. Goldman Sachs, I mean all of them. So they all kind of moved together. There wasn't really a huge standout of one that you know, did great. Morgan Stanley is a little bit of a different business model. They were down 30% too. So you know they all kind of got hit Citi. I think Citi is a really interesting situation because it's super cheap and you're in the, in hopefully near the last third or so of a multi year effort by Jane Fraser. And I love that a woman is the CEO there, I love that. And she has really remade that bank, clarified the lines of business and really gone after expenses. So some of the Citi's earnings and improvement is in her control and she's doing it and that's been a really good thing to see. Just on this last earnings call we started to really see it. And she feels it'll be continue to happen in 2025 and 2026. So I love that earnings call. And all of them also say, though we don't know what the economy is going to bring, we don't know how people's, you know, are we going to have more credit issues? Likely. Right. Credit card non performing, you know, people who are unable to pay back their credit card, that ratio will go up and that's going to cost the banks money. But they're not seeing it yet. I believe they will. They believe they will.

[Karen Feinerman]

Delinquencies.

[Nicole Lapin]

Yeah. Yes, delinquencies. But Citigroup has this other thing which is within their own control, which is what I like a lot about it. And JP Morgan has the most extraordinary leadership. But you know, Jamie, Dynamo will leave one day.

[Karen Feinerman]

Yes. But not any day soon. A lot of life left in him. Yeah. So when we talk about things being on sale, would you say things being on sale that are high quality investments, Would you say that the financials would be one? And if you're sort of new to this space, there are a lot of ETFs, right?

[Nicole Lapin]

Yep.

[Karen Feinerman]

That combine a bunch of these banks together. But I kind of feel like if bank of America goes away, like just because it's called bank of America, zombie apocalypse problems.

[Nicole Lapin]

Yes. But I don't think that'll happen. So enough these big banks and I forget who are. I think there's eight of them. There's a JP Morgan, the Citibank, Wells Fargo, names like that. The government will not let them fail. They are called SIFI banks, strategically important financial institutions, which basically means we cannot let them fail. Otherwise the apocalypse is. The financial apocalypse is here. So as a result of getting that sort of protection that they also have a lot of this regulation that we talked about. But I really do believe the regulation has gone too far. And they're way, way, way less levered than they were going into the financial crisis. The business. I said the guardrails are there and, and they're working.

[Karen Feinerman]

Yeah. We need a Goldilocks situation, Right?

[Nicole Lapin]

Exactly. We need a Goldilocks situation. But when I try to think about, okay, buy if I. If I'm sort of, what would I buy? I always think, okay, if I owned none of anything, what would I go out and start buying today? So I would buy Citigroup, I would buy some JP Morgan, I would buy some Meta. I think the earnings power there is extraordinary. The stock now is about at a market multiple and if you back out, the cash it's at a lower than market multiple. So meaning the stock market trades at some multiple of the collective earnings of all the companies in, let's say the s and P500. So you have X amount of earnings times 20. That's the multiple that's currently on the market and that moves with interest rates. So that's where it is right now, 20 times earnings. So meta to me is an extraordinary business that is not a run of the mill S and P company. It is an extraordinary money machine, has some headwinds for sure, but the underlying business is extraordinary. It's not really subject to tariffs. If I own none of that, I'd be buying that. I'd be buying Amazon if I own none of that. So it's scary. It feels better sort of to buy it at Amazon at 220, but it isn't. It's better at 170. Whatever. 2, 3. If I check up right now, 172.22. Okay, so those kind of names I would start with. Also, just in a time of turmoil, you want to be at a company that doesn't have a debt problem. And none of these kind of companies have debt problems. So that's important.

[Karen Feinerman]

It is. We end our episodes, Karen, by asking all of our guests for a tip that listeners can take straight to the bank. Today you gave us so many already about how to navigate this market. And just try to not get too scared.

[Nicole Lapin]

Right.

[Karen Feinerman]

Get you tired either.

You need a nap, sister?

[Nicole Lapin]

Yeah, I do. I do. I do need a nap. So I here's the really, the tip that I would have is for almost everyone. Your gut is not your friend. Your gut tells you to do the wrong thing almost all the time. So if you're terrified and you don't want to buy anything, it's probably not a bad time to buy. And if you feel great and you want to own more and you want to borrow money to buy more, your gut's telling you the wrong thing.

[Karen Feinerman]

Don't listen to her. Sometimes she has a bad direction. Could be about personal relationships, could be about stocks. Just always check your gut.

[Nicole Lapin]

So true.

[Karen Feinerman]

Money Rehab is a production of Money News Network. I'm your host, Nicole Lapin. Money Rehab's executive producer is Morgan Lavoy. Our researcher is Emily Holmes. Do you need some money rehab? And let's be honest, we all do. So email us your money questions moneyrehaboneynewsnetwork.com to potentially have your questions answered on the show or even have a one on one intervention with me and follow us on Instagramoneynews and TikTokoneynewsnetwork for exclusive video content. And lastly, thank you.

No, seriously, thank you.

Thank you for listening and for investing in yourself, which is the most important.

Investment you can make.