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Discounts and coverage selections not available in all states or situations. Scott, thanks so much. Well, stocks losing a little bit of steam despite strong banks earnings and easing tariff volatility. For today at least. Welcome to the Exchange. I'm Wilfer Frost in for Kelly Evans. And here is what is ahead. Another beat for the big banks, both bank of America and Citi reporting better than expected results. Bank of America's Brian Moynihan telling Sarah Eisen he expects a slowdown, not necessarily a recession, while Citi's Jane Fraser believes the US Will stay the world's leading economy and the dollar will hold on to its reserv status. We'll dig into all of those results in just a few minutes. Meanwhile, tech and auto is getting some tariff relief recently, but President Trump has two new targets, semis and pharma will speak to a pharmaceo who's moving drug production from Canada to Barcelona. He'll explain why. Plus, China landing its latest blow in the widening trade war with the US Reportedly ordering its airlines not to take any more deliveries of Boeing jets. But the details and the impact on Boeing's bottom line. But before we get to all of that, let's get over to Dom Chu for today's market action. Just sliding a little bit down the last 15 minutes. Yes, we have, as you point out, we're losing just a little bit of steam here in the midday trade. As you look now, we are talking about just marginal losses, and I mean very marginal. We're down about 110 of 1% for the Dow industrials to a 40,505. That's a shedding of maybe 1920 points. The broader S&P 500 is at 5404. So hovering right around that 5400 mark just about flat on the session, a 1 point decline merely at the lows of the session. We are just about there right now, down about four points on the S and we were up 45 at the highs. So it hasn't really been a dramatic trading range so far. But at one point we were inching back up towards trying to recover some of the gains that we've lost since the tariff turbulence on April 2nd. By the way, the S&P 500 is currently just about four and a half percent below that April 2nd mark on that so called liberation day. And the Nasdaq composite right now just about flat on the session as well, down nine points to a total of 16,008. 22. One place that's seeing some market declines though is on the other side of the Atlantic with European luxury retailers, specifically LVMH Corp. On the French luxury side of things, down and closed almost 8% lower here after its sales quarterly sales disappointed may be indicating that there's a bit of a pullback. More caution among even the high end consumer for their goods like Louis Vuitton, like Moet Hennessy, Christian Dior and others. Kering, Burberry Group, Richemont and Hermes all kind of, you can see some movement a little bit lower here. By the way, Hermes did overtake LVMH at one point today to be the most valuable luxury goods company on the European side of things. So keep an eye on that. And then on our side of the Atlantic, back over here, streaming video giant Netflix is the best performing stock in the S&P 500 today, due in large part to reporting from the Wall Street Journal that during their annual business review last month they set aggressive targets to by the year 2030 increase their market capitalization to the $1 trillion level. They're currently just about 400 billion, as well as double their revenues. Again, it's a, it's a move overall, if you take a look at the way that Netflix is shaping up right now, up about 6% on the day so far. And by the way, they report their earnings results after the bell on Thursday, so we'll see whether or not there's any kind of volatility there. And by the way, the options market is currently playing with a less volatile earnings report than the prior eight quarters. I'll send things back over to you. Tom, great stuff as always. Thanks so much. The Dow is bang on flat as we speak, while the major bank ETFs are up more than 2% after the loss of the big Banks reported results this morning. Citigroup, bank of America both beating estimates on the top and bottom lines to round out what's been a very strong season for the banks despite some fears coming into it. Leslie Picker joins me now with a closer look. And Leslie, this could have been a much worse quarter than it's turned out to be. Yeah, I think the market's really breathing a sigh of relief as these Q1 earnings, at least for the big banks, have wound down. The big bank stocks solidly in the green over the course of their earnings reports which began last Friday, Friday. Today is reports from Citi and Bank of America making those two stocks the best performers in the group today. Investor fears about a deteriorating consumer and muted corporate investment activity. They were assuaged for now as neither company changed its outlook and executives on their call said delinquency rates are stable. Still, they noted the murkiness around what comes next. Here's Citi CEO Jane Frazier on the firm's conference call which wrapped up just a short while ago. I am not going to try to predict the unpredictable. While our corporate and consumer clients are resilient and in good financial health, the world is in a wait and see mode and is facing a more negative macro outlook than anyone had anticipated at the beginning of the year. And we know that prolonged uncertainty generally hurt confidence. In the meantime, the industry saw huge gains in trading with those more exposed to equity markets seeing the most benefit. That helped offset limited activity in the other side of the Wall street oriented business investment banking. There was a bit of dispersion on how banks did with investment banking during the quarter, but amid muted activity, there are still quite limited wallet share to go around. Well, Leslie, have any of the CEOs struck a really desperate note of caution around around the outlook or not? No, Honestly, Wilf, it was a pretty miraculous feat of walking that tightrope during the quarter in terms of giving investors and analysts a sense of, you know, their true feelings about the state of economy without really raising alarm or going into kind of prognosticating about where they believe policy should be in the best interest of the banks and their clients and so forth. So yes, it was definitely a delicate balance throughout the calls this season despite analysts really trying to get to the meat of it. One wonders what it would have been like if earnings had come just one week earlier. It could have been very, very different tone. Leslie, stick around because we're going to bring in now Chris Marinack, who's director of equity research at Johnny Montgomery Scott, into the discussion Great to see you, Chris, as always. I mean, trading the bright spot. But perhaps the other kind of attraction was fewer negatives than might have been feared. That's correct. I mean, I think it was a very solid quarter and I think if anything, the caution is going to be in the second and third quarter. We're all wa for a behavior change, whether it's CNI loan demand or just the reserve building that could occur if losses and the outlook changes as April and May unfold. I think it's still early though, so talk me through that in terms of the reserve building because there was some of that which probably wouldn't have come if not for the last couple of weeks of sort of turmoil in policymaking. Was it significant compared to past crises or not? No, very small. I mean, the bigger move occurred back in the second or third quarter of 2020 when Covid be that was a very big change on reserve build. You had companies building 50 to 100 basis points of reserves to loans at the time. So today you're seeing reserves basically flat on the basis point side and generally up about 1% late quarter. So I think you're going to see more building in the second and third. But whether it's dramatic like 2020 remains to be seen. I think a lot is going to be revealed these next four to six weeks as we see how the trade war and inflation and other data points come into focus. Leslie, talk to me about the sort of personal tone from today's two big bank CEOs, Jane Fraser and Brian Moynihan. Because both had challenges in the last couple of years, Jane, and there's sort of more of a slow process to finally turn things around. Brian, in and around that sort of SVB issue a couple of years ago. But both probably pretty pleased with how things are going now. Yeah, I mean it was pretty remarkable. Their tone was surprisingly upbeat. I mean, we saw Moynihan also on Squawk on the street earlier today and Sarah kind of said at the end of it, you know, it sounds like, you know, you're not too concerned about all of the things we hear about with these headlines every day. And it's not really reflected as much in kind of your day to day operations quite yet. And surprisingly well all of the banks that give outlooks for net interest income either maintain them or in JP Morgan's case, raised it slightly despite all of the various headwinds and the uncertainty surrounding the yield curve and what that might look like throughout the rest of the year. So all in all, I think some of the biggest fears were didn't ultimately come to pass as it pertains to this quarter and the outlooks and the tone was reflective of that. By the way, we're going to play a bit of that interview Sarah do with Brian Moynihan in the next block ahead of a debate about the economy. Chris, bring it back to the valuations for us because I guess they've pulled back a bit as a sector but they had had a terrific sort of 18 month run into the sort of December, January period. Well, we've kind of round tripped if you will. I mean we had the valuations improve since the election and then we pulled back from about a 12 and a half multiple on median for the carry to about 9 and a half as of yesterday. So we really returned to where we were. I think if anything the valuations are implying a much bigger haircut to EPS estimates than reality is. And I think as Leslie is saying, the the estimate changes should be much more modest, if at all. As you look at what we heard today in the last few days, what's your hopes in terms of the investment banks, Chris, for trading in the next quarter? Because clearly they blew it past most of the banks, particular on equity trading for this quarter. But we haven't even got into what must have been a pretty successful couple of weeks or months for those that are trading the volatility. Well, volatility is your friend. You said it. I think that April is going to be a very good month. The question is do we go back to normal in May or June or is it more of the same? It definitely could be another record quarter from the volatility side which therefore would drive trading for the big banks. And in terms of your top picks, which is your favorite at the moment, is it big cap, small cap, investment bank, retail bank? Well, I think that you have the biggest inflection coming on the mid cap banks where I think they were left for dead for a couple of days when the market sold off on the on the 2nd and 3rd of April. My opinion is that the regional banks and the mid cap banks have a big inflection in terms of earnings. They have a lot of dry powder to do buybacks and I think generally speaking their risk levels are very tolerable because they're not writing off that much of loans. So they have a lot of flexibility within earnings estimates and frankly with the stock prices. Well, great stuff. Love this chat as always, Chris. I guess you've still got all of the regionals to report in the days ahead. Leslie, you have earned a rest. Tomorrow morning. I will take it. Great stuff, Leslie and Chris, thank you very much for that. We've got a newsletter coming up now on Open Air. Kate Rooney has it for us. Hi Kate. Hi. Well great to see you. Well, OpenAI is considering from what I'm hearing, building its own social media network similar to Elon Musk's X, formerly Twitter or Meta's Instagram. This is according to a source familiar with those plans, who tells me all of this right now is in early stages. Executives that are talking about it have not landed on any specifics yet. But the plan from what I'm hearing is based on the viral nature we're seeing of OpenAI's image generation tools which have been widely shared on other social media platforms. The move could also add to chatbots viral growth numbers. The last count officially was 400 million weekly actives, but Sam Altman, the CEO recently said that doubled so suggest closer to 800 million. The Verge was first to report on the move today and OpenAI did decline to comment. It is not clear if this is going to truly come to fruition, but from what I'm hearing it is being taken seriously by the Open air team and OpenAI right now is one of the world's Most valuable private companies, $300 billion valuation. So if it does pull this off, it would also heat up a fierce battle between elon Musk whose CEO Vex, also a co founder of OpenAI. He has sued to block the for profit plans for that company. He has antagonized Altman on social media repeatedly and Altman has also made some comments publicly about Zuckerberg and Metta and maybe building their own social media app. So kind of hinted at this potentially wealth, but we'll see if this actually comes through. Back over to you. Really fascinating though, just sort of as you say adding to more of the tension between all of those high profile figures. Great stuff Kay. Thanks so much for that. Now big tech earnings kick off next week with the recent chaos of course from new tariff policies yet to play into comments from those companies CEOs and we'll see what comes out next week. Christina Parsonavilos has more for us in today's Tech check. Christina, great to see you. Nice to see you as well. Well you mentioned Q1 earnings specifically for hardware is going to kick off, but the numbers are really going to tell this deceptive story. Why? Because behind what was probably going to be a lot of robust figures lies something a little concerning businesses and consumers are frantically stockpiling before potential tariff hikes kick in. The signs are already visible. Apple has reportedly ramped up iPhone shipments by 10% in Q1 2025. This, according to Best Buy, witnessed the same trend with March sales jumping 8%, their best showing since 2021. Worldwide PC shipments are growing faster than they have in four years. Over in China, tech firms aren't taking any chances either. They're reportedly rushing to order a whopping $16 billion worth of Nvidia's H20 chips before a potential ban comes down. And then meanwhile, you've got Dell, Microsoft, Lenovo, all are flying electronics to the United States to beat the tariff clock or have already done so. This according to Nikkei reporting. And here's the real issue though for investors, what will likely look like strength in the upcoming reports could spell trouble down the road. Companies riding this artificial wave will probably pose great numbers short term while quietly lowering future guidance. Jordan Klein at Mizuho calls it getting a quote free pass due to tariff uncertainty. So the bottom line, this rush to buy now essentially steals from future quarters. We're likely looking at a significant gap in the second half of 2025. And all of this artificial demand is really masking early signs of weakening consumer spending, which I know runs counter to your segment just before about banking, but within the hardware and even down to shopping all of that, it's we're seeing trends of demand pull through. It's going to be fascinating to see because of course in the actual numbers they report it won't be coming up yet because it'll be the end of the March quarter. But as you say, there might be some confidence in the very short term that Q2 will look alright. The question I guess, which again imagine if these earnings had come a couple of weeks earlier, is whether long term guidance gets pulled or not. A week or two ago that looked almost certain it didn't happen with the banks. Are we expecting it not quite to happen here even if they're more exposed to the tariffs. A good example would be Logitech. They actually pulled their guidance because of tariff uncertainties. And just last month Micron, they're the first of all the chip makers to report report they said that their guidance didn't reflect tariffs because of the uncertain timing. So I wonder if we're going to get a mix of probably larger companies saying that our guidance is going to stay as is so that you're not going to see a freak out in the market but may not reflect the uncertainty because it's all over the place. I do worry about the second half of this year. So just going into the summer and whether we're going to see this demand slump because it's been pulled forward so much. Those earnings calls are going to be absolutely fascinating. Look forward to those. Christine, great stuff. Thank you. Well, so to come, the 10 year treasury yield holding steady today, but coming off a volatile period where it surged 73 basis points in just 10 days. We'll look at where rates go from here and what it means for the dollar. That's coming up next. Plus, President Trump setting the stage for tariffs on pharmaceuticals, saying domestic manufacturing is critical to national security. We'll dig into that argument with the head of one pharma company that's already started moving some of their manufacturing to the US From Canada as well as actually some to Europe too. As we had to break is another check in on stocks trying for a third straight day of gains. We dip red briefly, but as you can see, we're essentially flat as things stand. The Dow S and P, NASDAQ slightly higher, but only marginally. The exchange will be back after this. This episode is brought to you by Progressive Commercial Insurance Business owners meet Progressive Insurance. They make it easy to get discounts on commercial auto insurance and find coverages to grow with your business quote in as little as 7 minutes@progressivecommercial.com Progressive Casualty Insurance Company coverage provided and serviced by affiliated and third party insurers. Discounts and coverage selections not available in all states or situations. Are you ready to get spicy? These Doritos Golden Sriracha aren't that spicy. Sriracha sounds pretty spicy to me. Um, a little spicy, but also tangy and sweet. Maybe it's time to turn up the heat or turn it down. It's time for something that's not too spicy. Try Doritos Golden Sriracha. Spicy but not too spicy this summer. Turn your gifting game up during the summer plant and garden sale at 1-800-FLowers.com. right now you can score up to 40% off succulents and bonsais, fresh cut blooms and more. Whether you're celebrating a birthday, sending a thank you or a just because surprise, 1-800-FLowers lets you save big on a stunning selection of gifts. Save up to 40% off during the summer plant and garden sale at 1-800-flowers.com sxm. That's 1-800-flowers. Com sxm. Gift something unforgettable today. Welcome back. A new bank of America survey finding that investors are feeling the most negative about the economy in three decades. But bank of America CEO Brian Moynihan is in among them, staying relatively positive on the consumer. Here's what he told CNBC's Squawk on the street earlier. It's solid spending at a rate that consistent with it with the economy. It's grown 2%. It's consistent where it was in 17, 18, 19. It hasn't slowed yet. And I use the word yet because it may if there are more actual job eliminations and reductions and people are unemployed, you know, the unemployment rate still very strong. Great interview with Brian by Sarah Eisen earlier. Well worth checking out the full interview on the CNBC website. Well, our next guests are a little bit more bearish than Brian Moynihan there with one of them recently cutting his S&P 500 price target by 600 points to 5,800. Joining me now are David Lefkowitz, head of US equities at UBS Global Wealth Management, Mark Zandi, chief economist at Moody's analytics, and Peter Boekvar, chief investment officer at Bleakley Financial Group and CNBC contributor who's here with me in studio. A Very good afternoon to you all. Great to see you. Mark, I'm going to just start with you with a snapshot on the economy given what we heard from from Brian Moynihan just there. Are you as sort of relaxed about the outlook as seemingly he was? I mean, I think the storm is in front of us and it's heading our direction. And if things don't dissipate pretty soon. I know, I know I'm stretching that metaphor pretty hard here, but you get the point. I think the economy is going to be in trouble. You know, I don't think we've seen it show up yet in the consumer spending data, but consumers are telling us that they're really very nervous about what's going on. And, you know, they haven't seen the tariff hikes flow through to prices yet. But once they do, which is effective, an effective tax increase, I think that'll be enough to get them to pull back and we'll start to see much softer spending numbers. So, no, I'm not nearly as sanguine about things. I think we should be on high alert. David, you cut Your S&P 500 target 6400 to 5800, I think on Friday as then tensions ease over the week. I mean, how quickly are you having to readjust that target? Are you wishing you hadn't cut it quite so much or are you still think you kind of worth that cut. Yeah. So just. Yeah. Thanks, Wilford. So we did make some adjustments to our target price that was really just incorporating our new base case for what we think the tariffs will be, which came in higher than expected. We don't think they're going to stay at these very elevated levels. But what we also did on Thursday of last week when the Trump administration pivoted in our mind, that means that we should pivot also. And so we upgraded equities to an attractive view. We think we're nearing peak policy uncertainty. We're getting so many contrarian indicators. The VIX is off the charts. Sentiment is horrible. Positioning is very depressed. All of these factors, when you take them together, suggest that there's a low bar for equity gains from here. And now that the recession risks seem to be lower in our view because of the, the adjustment from the administration. We think stocks can climb higher over time. But there is a lot of wood to chop to get there. Peter, is the only challenge for US equities, the tariffs? No. Stocks, I think were vulnerable going into it. I think the deep SEQ news at the end of January sort of ended the tech trade in terms of its exceptionalism and dominance in terms of bringing stock market higher. So when you lose 35% of the S&P in those seven stocks and you add three more to get to 10, that's almost 40%, you've lost leadership. Then you throw in the belief that government spending is going too slow. And one of the major drivers of economic growth the last couple years, not just economic growth, but corporate profits, profit margins, has been government spending. You slow the rate of increase there. You also create some vulnerabilities. So there was some fragility, I think that was building even before the tariffs were laid on us. And now that of course obviously adds a lot more to the story. I wonder, you know, everyone's coming up with their updates of the likelihood of a recession or not. I guess the key question for me, has it become more likely than not? Have we crossed that threshold? And I'm keen to get each of your takes on this. But Peter, you first. So I'll break down. The three areas of main support to growth has been government spending, as I mentioned, upper income spending and anything related to AI tech spending. If the stock market rolls over again and heads lower, that will have a direct immediate impact on upper income spending. You cannot separate the economy and the stock market. AI tech spend is still very robust, but on a sequential basis. The rate of change on a percentage basis is beginning to slow. And as I mentioned, if you lose government spending, I don't know where there is. There is other support in the economy to keep us out of a recession. Mark, your take. Is a recession more likely than not now or not? It is. You know, to give you a number, I'd say it's 60% probability of recession starting at some point this year. I mean, highly uncertain, obviously, because it all depends on the President, the Trump administration and the tariffs from the trade war and what other countries do retaliation. I mean, highly uncertain. I think there's still potential for an off ramp here. If the administration scales back, that continues to scale back the tariffs and the trade war abates, then we can kind of navigate through. It's going to do a lot of damage. Growth is already slowing, as Peter pointed out, and it's going to remain weak, but we can navigate through without recession. That's the 40% probability. But, you know, with each passing day, that feels like the chances of taking that off ramp are becoming less and less. So. Yeah, I think recession risks are very high here, uncomfortably high. David, your take on that? We're a little bit more optimistic. I. Look, I can't dispute that the recession risks have risen, but when we look at the fact that we haven't seen any increase in layoffs in the job market, I think companies are going to be. Yes, they're clearly some companies are pausing investment plans, there's no doubt. But I also think they want to probably avoid the situation where they have to cut jobs and then. And then, you know, pivot again. So I think you're going to see companies hold on to jobs a bit longer. And then once we get some policy clarity around the tariffs, which we will in the coming few months, we think that will give companies the confidence to start to restart their investment spending plans. They'll make adjustments, they'll adjust to the tariffs. And so I think at some point you'll see, yes, we're going to have a period of stagflation, that's for sure. But then I think the markets are going to start to think about what's after that stagflation as they look into 2026. On that note, Mark, are you expecting the Fed to be preemptive or will we only get rate cuts once the economy has slowed? Yeah. And once the economy is not preemptive. No, I mean, that's one of the difficulties the tariffs pose. Right. I mean, what should they respond to the higher inflation that's going to result, particularly in the context of elevated inflation expectations. Which I'm sure they're quite nervous about. Or do they respond to the weakening economy? They don't know. And given all the uncertainty around economic policy and I'm not nearly as convinced that the economic policy outlook is going to look any clearer a month or two from now, may may even look more cloudy. So with that, that uncertainty and the fact they can't figure out what to do, I think they do. They just sit on their hands now. I do think ultimately the impact on growth will outweigh the inflationary effects and they'll start cutting interest rates. That could be a while from now. By the way, Jay Powell speaking to the New York Economic Club this time tomorrow, 1:30pm we'll have it live for you on the exchange. PETER so what do you do with all this with portfolios? I mean of course you've been very right about being bullish. Gold, you've been very right about being bearish dollar and the implications for various asset classes is that kind of priced in though? I mean gold's had a fantastic run. The dollar has been pretty, pretty weak. So I think, well, gold for sure. I mean the easy money with gold may have been made but I still think there's a lot of upside, thousands of dollars of upside here. I think we have a major shift going on, as I mentioned before in global markets and that seven stocks are no longer leading the world. I mean these seven stocks became a reserve asset. Foreigners piled into these seven stocks. It wasn't just US institutional retail investors. So you start to lose that leadership and investors are now finding other things to buy with international in particular. And I do think that outperformance is not just a one quarter thing, it is a multi year thing. So I'm finding better ideas outside the US just quickly on international. If markets were to crack again globally, they all correct or have we already found a floor in international? Well, nobody is immune but even with the correction, I mean European markets are mostly higher in the year and take the UK for example, it's flat, it's not not down. Plus you get a great dividend yield. So I think a lot of there's a lot of low expectations still after many, many years of underperformance in international stocks and also commodities too, which were long and bullish on as well. Anyone wants to come on and talk up the UK they're most welcome here on the exchange this week. Guys, we have to leave it there. David, Mark, Peter, a pleasure as always. Thank you very much. We have a quick look at the markets as we go to break here because we are at session lows. In fact, we're down what, a quarter of a percent now for the Nasdaq 210 of a percent for each of the Dow and to the S and P. So any slight declines as you can see, but nonetheless the session lows. So to come, drastic times call for drastic measures. And Apple are reportedly making some extraordinary shipping moves to bypass President Trump's impending tariffs. An extraordinary story. We've got a few next Remember when laundry day meant literally your entire day sorting loads of switching machines for getting wet clothes until they need washing again? Those days are over. The new Samsung Bespoke AI laundry combo takes clothes from dirty to dry in as little as 68 minutes. No transfers needed. A new way to do laundry is here from the brand rated number one in customer satisfaction Samsung. Visit samsung.com bespoke to learn more. Based on most customer satisfaction awards, Home Appliance Surveys Leading Customer Research Organization 2020 through 2024 this episode is brought to you by Progressive Commercial Insurance Business owners meet Progressive Insurance. They make it easy to get discounts on commercial auto insurance and find coverages to grow with your business quote in as little as 7 minutes@progressivecommercial.com Progressive Casualty Insurance Company coverage provided and serviced by affiliated and third party insurers. Discounts and coverage selections not available in all states or situations. Welcome back to the Exchange. I'm Pippa Stevens with your CNBC News update. For the first time, China has publicly accused three hackers of working for the National Security Agency. In a report by China's cyber organization, the country offered a reward for information leading to their arrest. However, NBC News was not able to determine if the individuals were were employed by nsa. The agency did not respond for comment. A Russian court convicted four journalists of extremism Tuesday and sentenced them to five and a half years in prison each. They were accused of working with an anti corruption group founded by the late opposition leader Alexei Navalny, which was outlawed in 2021. All four have maintained their innocence, arguing that they were being prosecuted for doing their jobs. And Open Air and H and R Block announcing today they're partnering to create an AI tool to help tax professionals. The company said the service will help H&R block's representatives stay current on any tax code changes and quickly help with complex cases. The initial phase of the partnership will start later this year with a larger rollout for the 2026 tax season. Well, back to you. Great stuff. Thank you so much for that. Well, still to come here on the Exchange Johnson and Johnson fractionally low despite beating earnings estimates. Estimates on the top and bottom lines as you can see, down 0.6% but still up 6% year to date. It comes as they and other pharma companies are preparing for tariffs to take a toll, hiking their full year sales forecast while maintaining their profit guidance JJ expecting to see about $400 million worth of tariff related costs, here's what the CFO told squat box this morning. I don't want to speculate, I want the process to play out. But any countries of interest around national security, I think you're going to land in an assessment that concludes you to believe that's mostly generic products, generic pharmaceuticals that are coming in, which by the way, 90% of prescription drugs today in the US are generic. Right. The other thing that might be precursor materials. So those chemicals such as hydrochloric acid, magnesium, that helps synthesize the therapeutics that we make. Welcome back to the Exchange. Well, pharma stocks mix as the Trump administration launches a national security investigation into pharmaceuticals and pharmaceutical ingredients that are imported into the U.S. angelica Peebles is here with more details on this. Angelica, talk us through exactly the kind of the moving parts. And I guess we're getting a snapshot of some companies more affected than others based on the share price moves today. Yeah, so if you remember, drugs were exempt from the widespread tariffs were announced a few weeks ago so the administration could impose specific tariffs on the sector. We knew this was coming. And in talking to lawyers, this is actually somewhat of a relief because there was a sense that the administration could just drop this and there could be, it could be implemented pretty quickly. But now we have a three week comment period where the industry can make its case. And so there was some concern again that they would open this and would have it tomorrow. But now at least there's three weeks to prepare. And so I expect you'll see plenty of lobbying and the administration now has to consider the feedback. So it could be even longer before we see the final policy. Now the administration technically has 270 days to complete the investigation, but no one I talked to expects that it'll take that long, especially since the president himself has said that he wants these tariffs to come soon, very quickly. And until then, again, you're going to see these companies making their case that they're already investing in the US and you can't make such big changes overnight. You heard that from Johnson Johnson this morning. And then on the generic side, I would anticipate that you'll hear those companies Say that it's just not feasible to move manufacturing to the US because the margins are so thin and the cost would be too high to do that. So of course, we'll need to see how those arguments land. Angelica, great stuff. Thanks so much for that snapshot. Well, let's bring in our next guest. He's a pharma company that manufactures and distributes, distributes branded and generic pharma products and is planning to move some production from Canada to Barcelona due in part to Trump's tariff plans. George Hampshen, the CEO of Curex, joins us now. George, thanks so much for joining us on this. I guess just, just stepping back a little bit. First of all, what is your message to the administration and the president in terms of the key things they should be considering right now? Well, I think we need some consistency, right? What exactly do we need to focus on? What's important to this administration? I mean, clearly tariffs are not a dream state for any of us, but we need just a little bit of time here to be able to make some changes. And I agree with the CFO of Johnson and Johnson, the very thin margins on generic will make it very, very difficult to move those into the United States. And George, so what are you doing now? As you know, you know these tariffs are coming. Obviously you are moving some of your manufacturing. But first walk us through why Canada to Spain, why you think that will help with tariffs. And again, you know, if you're planning on moving manufacturing to the US and at what expense? So this is, this is how we've done this short term, right. So we had manufacturing in Canada. Almost all of our product contrary which is, you know, available in 60 countries, is, was made in Canada. We opened up a site in Barcelona, Spain for the purpose of diversifying and meeting worldwide demand. And since that time, we've really ramped up both sites to maximum capacity and we brought into the United States as much contrary as we can and really stockpiled it. Right. A short term solution, not a long term solution. On the long term side of things, we basically have moved all of our pipeline assets and R and D and future manufacturing into the United States. But again, that takes time and it takes cost. Sometimes, you know, it's quite hard to work out exactly what is driving the trade policy. But you know, trade surpluses versus deficits clearly a big factor. What about pricing? Do you think the president should be focused on countries where drugs that you guys manufacture a price cheaper? Is that something that he should be fighting for in trade negotiations? I think it's the pharmaceutical pricing has always been a flashpoint. Right. It's a, it's a. It's a hot topic. I think we've established in the United States that it really is the system of delivery that's driving up these costs. The PBMs and some of the insurance companies that work off of rebates based on WAC price. There are definitely foreign entities who are pharmaceutical companies who make most of their money in the United States through selling their product much higher. Contrary, I can tell you, in the United states, we offer it $99 per month shipped directly to the patient's house is cheaper than in most other countries. I wanted to ask you specifically about the news. I'm sure you saw it yesterday, about Pfizer ending the development of its experimental daily weight loss pill. And it came because of a health issue with a patient, a liver injury that was potentially caused by the drug in trial. Do you see that as a win? Do you see it as a. For your company or as a worry and that these things could emerge as well? What's your take? It's unfortunate. If we're going to solve obesity, we need more products in the marketplace helping to solve obesity. I think it shows a couple of things. First, it's very hard to make new products. We're talking about Pfizer, the company that basically saved the world from a global pandemic that wasn't able to complete the next R and D process. The second thing it shows is the value of clinical trials and how our system is set up to be the gold standard in the world for how the system works to protect patients. This is why one of the reasons there's such a flashpoint right now around compounding pharmacies crises and their. Their lack of controls. Right. And on the compounding, I mean, obviously now we're already in the situation where companies are not supposed to continue compounding Lilly's drugs. We're going to soon have that with Novo as well, but we're still seeing it. So do you anticipate that we're going to continue seeing compounding long term and, you know, what are you trying to do on that front? Well, first off, this is a regulatory enforcement gap issue, not a legal gap issue. If this becomes a legal issue where, you know that we very publicly sued Found Health, I was very satisfied with that outcome. But we can't play whack a mole with these profiteers that pop up in every single therapeutic category. It's just impossible. So the regulatory body that already has the laws in place needs to enforce the law. But there's two type of compounders. I know you know this because you did such a great review of this. There's a type that are really in place to ensure global or US Based distribution does not get disrupted by a product shortage. And that is a critical piece of our health care system. The other piece are these folks who have recently popped up, these online systems, etc. You see them promoting products even on the super bowl, right, where they're taking approved pharmaceutical products, right, that have gone through clinical trials, FDA approved and they're doing things like turning them into pills, turning injectables into pills, turning them into patches, nasal sprays. It's just, it's not that simple. And the only people that really lose here are patients. And so we don't stop this, what's happening with this, with this group, through a regulatory process, it will proliferate across every disease state. George Hampton, really great to have you with us today. Thanks for joining us. Yeah, great to see you. Lots more still to come here on the exchange. Hewlett Packard Enterprise hired today. Shares popping on the activist investor Elliot Management has built a more than $1.5 billion stake in the company. Elliot and HP both both declined to common HP up about 5% today, but down nearly 37% from its 52 week high back in January. The exchange back after this. Welcome back. Well, shares of Apple down about 9% since Trump's a big tariff announcement nearly two weeks ago. Since then, the president has announced a 90 day pause for some countries and raised China tariffs to 145% but then exempted phones, chips and computers. It's not wasting any time though. Apple reportedly airlifting a record amount of iPhones to front run the tariffs. Steve Kovach is here with the details. Steve? I mean when we when I saw this headline airlifted, I was like, right. Well as in like individual drones dropping them in. But it's a cargo plane. It's a cargo plane. But do they typically come by boat or there's always a mix front load? It really depends on what's happening here. And look, this story is really important, Wolf, because we've been trying to figure out how Apple is mitigating tariffs ever since this whole conversation started. Now the new update we got today is coming from Reuters that in March, Apple airlifted about $2 billion worth of iPhones from India into the US to get ahead of those tariffs that came on April 2. Most of those are coming from Apple supplier Foxconn. Foxconn also makes the iPhones in China for Apple. Reuters reported this last week, by the way, but this new report today is citing official U.S. customs data with more hard numbers within there. And just add this on to everything else we've been hearing about India and Apple over the weekend. Bloomberg reported one in five iPhones are now being made in India. And IDC, the research firm, yesterday they said Apple pulled forward shipments in the March quarter ahead of tariffs and shipped 10% more iPhones than they did in the first quarter of last year. This is of course all ahead of the Liberation Day tariffs. And since then, as we learned late Friday night, there were exemptions for Apple and other computer and phone makers, though there are still their so called fentanyl tariffs of 20% on imports from China. Wolf, we're going to see so many more headlines of this as India increasingly becomes a dominant exporter of iPhones into the US we're going to see also the same thing about iPhones being made in Vietnam or other MacBook computers. But what you're not going to see, iPhones made in the US Apple is tariff hopping here from China to India, not China to the usa. As we hear so much from the White House. I mean we talk a lot about pull forward demand. Like all jokes aside, I've been doing upgrade. I wasn't sure when I was going to get. I'm definitely, I would have done it last week if I didn't have this trip coming. And it'll be interesting to see whether it's a catalyst for people that may not have bothered upgrading if not for this. And we're going to find that out in just a couple of weeks when Apple reports earnings during that March time frame as the talk of tariffs really ramped up. And by the way, there's 20% fentanyl tariffs were in effect during that period. And yes, this is a question I get asked most. I was just in the makeup room and they're asking me should I go buy an iPhone now? Is the price going to increase? Apple also did something else. They released that cheaper iPhone 16e which has a lot of the top Apple intelligence features and high end features in a cheaper phone model and that may have boosted sales as well. People pulling that forward too. We heard about it from the banks today, people pulling forward spending. It's going to be really interesting to see how that all plays out. Well, I'm definitely going to get mine here. I'll wait till I get back to tariff free uk. That's probably, that's probably the smarter move right now. No price increases yet. So you'll be fine if you buy it now. Well, exactly. But not sure what the dollar and the pound look like right now. Well, we bounced back a little bit. Okay. Weak dollar. I mean, we're still a long way from the heyday. Do it here. It's all relative. Steve, great stuff. Thanks so much. We'll sort of come. China expanding its trade war with the US Reportedly refusing any more Boeing jet deliveries. But one analyst notes that Boeing was already taking steps to reduce its China exposure. She'll join us next to explain. Welcome back. Well, Boeing shares lower on a report that China is no longer accepting deliveries of Boeing jets. Meanwhile, United Airlines reports after the bell this evening, the street closely watching guidance after Delta withheld its full year outlook last week. Our next guest, recently downgraded airlines, but United remains her sole buy. Joining me to discuss all of that, Sheila Kioglu, airlines and defense analyst at Jefferies. Long time no see. Sheila, great to see you. How are you? Seeing you as well. Very well indeed. All the better for seeing you. Firstly, this is snapshot, this Boeing story. So what portion of their sales go to China anyway? It used to be 15% of sales, but now that number is only 5% of the current skyline. So that means aircraft expected to be delivered in 25 through 2030, it's about 5% of aircraft. What's happening is basically we deliver 1700 aircraft per year and Airbus takes China's share, which is about 20% of global demand, or 300 aircraft per year. So this announcement, is it a game changer for you as it relates to your, your Boeing valuation? No, not really. In general, Boeing's de risk, its China impact, it used to be 15 to 20% of sales, now it's 5%. It's actually smaller that than that in certain years. So China is currently immaterial to Boeing, although it's a big part of global air traffic demand. Airbus takes that share, but Boeing takes it from other carriers. And Boeing Skyline is fairly diversified. So of course China is not going to take aircraft that are so much more expensive. So just quickly, I mean, as Boeing's supply to China has fallen, is it all been to to Airbus's benefit or are there Chinese makers now that people kind of rate and that the Chinese airlines use or not? Boeing has not received a China order since June 2017. So quite a long time. And it's all been made up with Airbus. COMAC is still quite far behind. Although COMAC has a large order book, they're unable to deliver the technology Isn't there yet. So we'd bet on a Chinese manufactured aircraft in the next two decades, not in the next two years. So let's flip to the airlines. You're not particularly positive on the group as a whole. Why is that? It depends what day of the week it is and what tariff news looks like. Two weeks ago we downgraded the entire space to underperform and hold ratings with the exception of United as you mentioned. But it seems like the airlines have lived a recession over the last two weeks and let's see see what the demand trends look like coming out of it. Delta last week reported and removed guidance and so did Frontier. So I think United is actually going to be able to keep guidance because they've had to do what they can attitude to keep their earnings for the year. But we'll see. But we've seen massive price movements across the airline, particularly just the US Consumer falling away corporate and federal employees. So obviously United has exposure. They're going to feel it. It just can they put out a guidance or provide us some guidance on what they're expecting for the year? And in terms of the sort of other factors that are at play, how much of a benefit do they get from for example low oil prices or is that completely swamped by what's driving low oil prices? I think it's what trumps everything else is US consumer demand. Right now what the airlines are pricing in based on historical multiples guidance is that consumer demand is flat for the year. So Delta as an example assumed capacity up 4%. They removed that guidance to flat. We're assuming pricing is currently flat. Every point of price is about 6% EPS hit to an airline like United or a dollar on their $12 midpoint. So that's, that's how to best think about it. US domestic pricing is the most material impact to airlines earnings. Well used to be and of course it's very variable. So as consumers fly less it'll move down with that naturally. Sheila, great stuff as always. Thank you so much for joining us. Lovely to see you again, Sheila. Kyle from Jefferies. As we leave you a quick check in on the markets. We're down near those session lows again but it doesn't mean big decline, certainly not off the back of the gains that the bounce back we've seen of late down about 210 of 1% each of the the Dow, the S and p and the NASDAQ. As you can see the 10 year for 31 again easing pressure there on yields of late. That does it for the Exchange. Power Lunch. Up next with Brian Sullivan. This episode is brought to you by Progressive Commercial Insurance. Business owners meet Progressive Insurance. They make it easy to get discounts on commercial auto insurance and find coverages to grow with your business quote in as little as 7 minutes@progressivecommercial.com Progressive Casualty Insurance Company. Coverage provided and serviced by affiliated and third party insurers. Discounts and coverage selections not available in all states or situations.