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Increasing Recession Risk, TikTok Deadline Extended, and a Stealth Tariff Winner? 4/4/25
00:57:33
JPMorgan’s Chief Economist tells us why he upped his U.S recession risk to 60%. President Trump posting he’ll extend the TikTok sale deadline by 75 days—we have instant reaction from the CEO of AppLovin, one of the companies bidding to buy the social media service. Plus, the software name that could be a stealth tariff winner.
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- [00:01]
Kelly Evans
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- [01:02]
Steve Liesman
You're listening to the Exchange. Here's today's show. Thank you very much, Scott. And stocks are selling off sharply for a second straight day as China retaliates with tariffs. It's Friday. We have two hours left in the trading week. And welcome to the Exchange. I'm Kelly Evans. Here's what's ahead. We're down 1629 on the Dow right now job surprise to the upside in March. Let's not forget what happened at 830 Eastern and we'll talk about the impact that it really has. The President taking some credit for that. Also for lower egg prices, for lower energy prices. WTI is down 8% to a 4 year low today. And for lower interest rates, the 10 year yield about 3.9% at last check. Question is at what cost? The latest round of tariffs leading JP Morgan to up their recession odds to 60% from 40. The economist behind that call joins us live here in a moment. He warns there will be blood. Retail is also still getting hit hard today. But one exception, Nike Footlocker on holding on all of these making a U turn higher this morning. And news, the President is willing to cut Vietnam's tariffs to zero if an agreement can be reached. So you see names with that bigger exposure in the supply chain. In ONS case it's 90% of it. And that's where we are seeing some green and some upside today, although the story keeps changing. Another one we're keeping an eye on. The clock is ticking on tick tock. Don't forget this is simmering on the back burner. They've got to find a US Buyer or face this band. One of the companies that's made a bid is Applovin. And the CEO will join us a little bit later this hour. But let's start with the jobs report and everything that's going on with the economy. What the Fed chair just said this morning and what's it all telling us. Nonfarm payrolls rose by 228,000 last month, up from the revised one 17,000 in Feb. That was way better than the estimate for 140k. The unemployment rate did rise 4.2%, highest since November. The jobs numbers aside, one of our next guests is worried that Trump's new set of tariffs pushes the US Closer to a recession. As we mentioned, he just raised his odds to 60% from 40. Let's bring in JP Morgan chief economist Bruce Kasman. Also here, KPMG Chief Economist Diane Swonk and our very own Steve Liesman. And what a group to kick things off with this hour. Steve, can you also just quickly bring us up to speed on what the Fed chair in his speech in the 11 o' clock hour said? Because that has a lot to do with why stocks are taking another leg down.
- [03:21]
Kelly Evans
Yeah. So the Fed is on pause. I think there's an expectation that as things get worse, the Fed is going to step in. I think that was not what Powell was saying. In fact, you could also almost argue the chair was a little hawkish in the following way. He said that it could take several quarters while inflation from tariffs work their way through. He said that the tariffs were more extreme than he had expected, than markets expected. He noted that, and so therefore the inflation effect would be stronger. He also said, I'm going to play a soundbite here, Kelly, just for a second, just to show you he I kind of asked about this the last press conference if he would say this and he wouldn't say at the press conference. Now he's saying it. I will play it and I'll come back and tell you what I think it means. Inflation is going to be moving up and growth is going to be slowing, but it isn't really, to me, it's, it's not clear at this time what the appropriate path for monetary policy will be. And we're going to need to wait and see how this plays out before we can start to make those adjustments. I'm sorry, Kelly, that was not the actual sound that happens on television here that I wanted to play. The phrase he said is our obligation is to keep longer term inflation Expectations well anchored and to make certain that a one time increase in the price level does not become an ongoing inflation problem. That means they're going to make sure. Go ahead.
- [04:38]
Steve Liesman
Well, no, you say, I want you to say it, not me.
- [04:40]
Kelly Evans
You got to have the initial round clear, be sure there's not a second round of inflation before the Fed can respond.
- [04:46]
Steve Liesman
Or I was going to say, I don't know if I'm putting this quite the right way. If they cut in response, we could potentially get inflation becoming a little bit.
- [04:54]
Kelly Evans
That's another really good way to put it. It also says if there's a second round, it's our responsibility and it's our responsibility to make sure there isn't one.
- [05:02]
Steve Liesman
All right, let's bring our experts. Well, we're, you know, you're an expert.
- [05:05]
Kelly Evans
To see not as much as these two people. Are you kidding me?
- [05:08]
Steve Liesman
Let's bring in Bruce first who's making all the headlines this week. And Bruce, people will say, well, they know you're not a regular. They know we probably talk to you once a quarter or so. I mean, you are not the first person who's going to come out with some attention grabbing headline, which is why it grabbed all of our attention. So unpack a lot. Your team has done great work this week. We've seen them trying to tally up the estimates of, you know, how much tariffs revenue that will raise, how that equals to a tax cut, hike or so forth on the consumer. And how do you get to a 60% recession call now?
- [05:39]
Kelly Evans
Well, let me say first that I think as we looked at the data this week, both us and globally, we're looking at an expansion that's still standing on solid ground. What we've been watching as we've gone through this year is a tension between a still healthy expansion and a building macroeconomic shock coming from policy. What we got this week was a very big tax increase on U.S. businesses and households. We would scale it in terms of a roughly 20% rise in tariff rates to basically the highest tax increase we've had in the US if it's going to be fully delivered that we've had since 1968. So there's a big direct shock here that's coming through in terms of higher tariffs. But I think the bigger story here is we're in the midst of a reassessment of business expectations about what this administration is about. The signals that I think are coming through are challenging. Where we were coming into the year, where people thought that while this administration moved to in extreme ways. It still had a commitment to supporting the business sector and the expansion. I think that's being challenged. So the tax increase, if it's being delivered, is going to be magnified by what we think will be a fairly big hit to business sentiment. On top of that, there are disruptive effects, retaliations which I won't go into, which also comes into our assessment. We put it together, we're worried that over the course of the next three to six months this stuff could build to the point that it breaks the expansion.
- [07:01]
Steve Liesman
Steve, I just want to bring you in here to kind of respond or highlight what you think is important about that.
- [07:08]
Kelly Evans
When I read Bruce's assessment, it was the business sentiment thing that stood out to me and it sort of counts as a shock in my opinion. And one of the things I think I pointed out several times on this show is the shock is relative to the expectations for President Trump, relative to what we're getting now. Some people put it in terms of we thought there was a Trump put, but Bruce is expanding that, if I'm hearing correctly saying it's not just the tariffs, it's a whole bunch of things like he doesn't seem to be listening. They don't. And across the spectrum I'm going to put this is not what Bruce is saying, but that Besant doesn't seem to be arguing with him that Kevin Hassett is not doing a job that we all thought maybe Kevin Hassett would do. Which is to say I guess I'll not mince more say Mr. President, this is crazy, you can't do this. Right. That's what you would have hoped Kevin might have said to him or Bessant now Lutnick, I don't know cuz he seems to be.
- [08:06]
Steve Liesman
But let me rewind for a second. This is not going to be a popular take on a day when the dow was down 1,700 points. But are they all delivering what the president wishes, which is what voters wanted him to do?
- [08:16]
Kelly Evans
But the question is what is the role of a presidential advisor to do what the president wishes or to give him the hard honest truth and are they giving it to him? And I think I've said this before as well. It seems like there's a difference between the cadre around the president in the first administration and the cadre in the second.
- [08:32]
Steve Liesman
That's intentional, right? The first administration was viewed as kind of having people who knew Washington but.
- [08:38]
Kelly Evans
Stood in the way of there's a line from Airplane that stood out to me. The spoof I'M not going to say it. What is it?
- [08:44]
Steve Liesman
I don't, I don't know.
- [08:45]
Kelly Evans
I don't. It was chump don't want no help, Trump don't get no help. Okay, that was Florence Henderson talking jive on air.
- [08:51]
Steve Liesman
Let's bring in Diane Swonk here. Diane, if you could kind of give us your own assessment of where we're going. The business shock again, the jobs report this morning, if it, if it weren't for the tariffs, would have told us this economy actually has more momentum or is creating more jobs than anyone would have anticipated, including the shocks that we had up until Wednesday. So I think that complicates things for the Fed. But I'm curious your take. Well, we actually now have a recession with stagflation and that's what the Federal Reserve a mild recession with stagflation. And this is a high watermark in employment. Now, some of the that were furloughed actually didn't get counted as furloughed because the judge had said they had to be reinstated and they're paid retroactively. That's been a slow ramp up to get some of those probationary workers back on the payrolls. But we do know the spillover effects are beginning to come out. We've seen war notices pick up and we've seen, we think there will be some employment losses due to the tariffs as well. And so we're looking at, you know, retaliatory environment, how much retaliatory retaliation you put in, you know, if you take all of the tariffs at face value because they layer on top of each other. And many people are not really looking at how these do that. If they were to sustain, they would be the highest since the early 1900s, which is really sort of stunning to think about that. And we agree wholeheartedly with this being a very large tax increase on the US Economy. But the spillover into inflation is exactly, we're getting it. The same thing that Powell was talking about is you still get a bump in inflation and you have this slower growth, higher inflation stagflation scenario, which the markets really have not fully sort of accepted yet because they're looking towards history. While we get weak growth, the Fed cuts. This is not as easy. And as Fed Chairman Powell pointed out today, they're in no hurry and they need more clarity. They need to figure out which is going to be the dominant factor, whether or not they could look through tariffs. You didn't hear them say that today. And I think that's important as well.
- [11:01]
Kelly Evans
Dan, did you hear it as mildly hawkish when you look at the Fed probabilities? I think we have a chart of that and I'd love to hear Bruce's take on this. We had gone in with some expectation, actually a 48% probability of the Fed acting in May. That's now down to 30. Wow. We had actually, you can't see from this chart, we had a fifth cut on earlier charts that was up as high as, I think, 60%. That's fallen off still. And maybe Diane wants to answer this. Is the market too ambitious about planning or predicting Fed rate cuts? If Powell is saying inflation over quarters, he used that, that time period.
- [11:41]
Steve Liesman
Yep, yep. And that's exactly what we're seeing. And basically in our model, once we do the simulations, it's not easy for the Fed to actually begin cutting until the fourth quarter, which is over quarters, and that is with a recession as well. And I think that's something that the financial markets, this stagflationary scenario, weakening growth, you know, the effects on profit margins, uncertainty wane, all those are important. But it really is hard for the Fed to go ahead and cut as inflation is picking up.
- [12:13]
Kelly Evans
Bruce, can you weigh in and also give us a little bit of your expertise on other foreign banks as well, that they have it easier because they have only a single mandate, most of them. But where do you see, how do you see the Fed do in this? And what about, say, the ECB and some. And bank of Canada? Well, I would agree. I think that Powell was mildly hawkish today, and I think he's making the point that the Fed is not going to move preemptively, that it is going to defend its anchor in terms of its credibility. Right. But I would take a little bit of issue with what's been said here. I think the minute the labor market breaks, I don't care how high inflation is, the Fed is easing and it's easing aggressively because it knows if the economy goes into a recession, that's going to do quite a bit of damage. It's going to bring inflation down with a lag, and it doesn't need to wait to see inflation move lower. So the Fed will be slow. In a world in which we don't break, the minute we break, the Fed will be fast.
- [13:07]
Steve Liesman
Our colleague, Diane, you're shaking your head. Jump in. No, I mean, if we have a very big break and we have a meltdown, of course the Fed will move quickly. But this is really important because the embers of inflation are still smoldering we are in a different context than we were. And the Fed has evoked several times the cautionary tale of the 1970s. Now, we don't expect anything like that in terms of a mile bout of stagflation that we're seeing out there. But this is, you know, happening against the backdrop as well of changes in immigration policy which are already constraining prime age labor force participation. Even though the participation rate picked up in the labor market today, prime age participation has fallen two months in a row. It was men falling last month, women falling this month, and part of that is due to shifts in participation by foreign workers. Bruce, we're at session lows on stocks right now with the dow down about 1860 points. I don't want to blame you, but I don't, I don't think the idea here of, of the recession we've outlined without the Fed necessarily helping is doing much to help. So let me just try to add a couple of potential offsets. And how does this run through your models? For starters, we see mortgage rates obviously going to fall, whether that's a refi boom, a buying boom or something more. The behavior of some of the homebuilders, which are green today, and stocks like that almost feels a little bit like early cycle. And I don't want to go that far, but I just want to throw it out there and ask if that's a countervailing presence. Also, oil prices, this is a big collapse. You're almost below 60 today on WTI. Does that benefit at the pump for consumers offset some of the potential headwinds that you see either?
- [14:46]
Kelly Evans
Well, I think you're raising a really important point here. First of all, we forecast recession. We're not by any means saying that's the only thing that could happen here. I think we have an economy that is still on solid ground. It's getting hit by big shocks. So I think part of the point you're hitting here is really where things are going to matter right now is to what degree does consumer purchasing power get squeezed by higher inflation? And you're right to point out an offset in terms of falling energy prices. And to what degree does a consumer, which still has the wherewithal to cushion the blow and has consistently been cushioning the blow of higher inflation and periods of, of temporary softening in labor demand over the last 10 years, whether it will continue to do so. We're concerned that that's going to be harder to do in a world in which inflation is high, business sentiment is weakening and the labor Market is softening, but it's by no means clear, by any means, 100% what's going to happen here. And the points you're raising about some cushions and some offsets here I think are appropriate to recognize in terms of how we track this.
- [15:50]
Steve Liesman
All right.
- [15:51]
Kelly Evans
Gonna make a very quick.
- [15:53]
Steve Liesman
Put a button in it.
- [15:54]
Kelly Evans
Which is, I think the market is trying to figure out, do they price to Bruce's 60%. Hmm. Or do they price to his 40%? And there's also another countervailing force here, which is the more the market goes down, the higher, I think there's a probability the president backs off, which could limit to the downside. But I believe, Bruce, if I'm not mistaken, if you have a recession, corporate earnings fall 15 to 20%. And that's not priced in, probably. Yeah. And I mean recession, it would be profits going down 20, 25%, jobs being, you know, basically more than a million jobs being lost. That's a recession. I mean, there are other events which could be milder, but recessions are brakes. Mild recessions are only mild in relation to other recessions. And that's why we care about it so much. That's why markets are so sensitive to it. Their breaks, they're nonlinear. They reverberate over time and space. And we should not anticipate what exactly a recession is going to look like once that break takes hold.
- [16:56]
Steve Liesman
All right, Bruce and Diane, really appreciate you joining us today. It means a lot. Bruce Kasman, Diane Swonk. Steve, thank you. As always. Our Steve Liesman.
- [17:03]
Kelly Evans
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- [17:50]
Steve Liesman
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- [18:55]
Kelly Evans
As a long term investor, I'm going to say we should hold at these times. This is what long term investors do. They don't panic when times are down. They don't sell when stocks are lower. But if you need your money in the stock that you have in stocks and you're going to need it in the next six to 12 months, I would advise caution. This is, this is not just the market having a panic. This is bad policy having bad effects. The stock market is all about things happening versus expectations. And the expectations were that we would get an administration that was very pro business, that would be good for the market, lower taxes, lower regulation, more approved mergers. Instead we're getting some policies that are extremely bad for business. And that in my opinion is why we haven't justified sell off of the market where.
- [19:43]
Steve Liesman
So are you juggling things around, Charlie, in the portfolio?
- [19:47]
Kelly Evans
I haven't made a lot of moves because the news is fully reflected in stocks. And so the names that are going to be hurt by tariffs are being hit hard. I will say the area that's been in my opinion hit probably a little too hard are regional banks and even some larger banks. Banks obviously aren't importing products that are going to be tariff. Banks would be hurt by problems and in credit. And we're not seeing that yet. So names like bank of America and bank of Oklahoma that have traded down in a big way, I am more positive about. There are some names in health care that have been hit very hard because of what Cabinet Secretary Kennedy has proposed. And so maybe Some of those health care names are oversold. But I don't want to minimize what's going on here. Tariffs are in this kind of tariff, very bad policy. They're going to have a real effect on the economy.
- [20:43]
Steve Liesman
You know what's so fascinating, Charlie, is the amount of retail buying that we're seeing. Did you hear those data points earlier? Big retail volumes buying into this market sell off yesterday. What do you think that's about in the retail, by the way, going back now to the pandemic, they've kind of been the smart money, right. They were buying in the 3-20-20 lows. You know, we don't have to get into the momo stocks and whether those have always worked out so well. But what do you make of this discrepancy where we have it seems, you know, retail buying into the sell off while pretty much every investment pro economist we talk to is pretty bearish.
- [21:16]
Kelly Evans
Yeah, I think the retail investor has been taught to buy the dip. Look, if you bought stocks on dips any time over the last 15 years, you've done very well. And so I support that basic instinct that's better than the opposite where people would panic and sell on the way down. But I do just want to stress that this is not a temporary phenomenon. If we're going to have less globalization, if we're going to have tariffs, significant tariffs, that's going to be bad for the economy for a while. And so I don't want people to think this is just the market having an emotional reaction. These are bad policies. And now we still all have the same hope, which is that Mr. Trump will be able to recognize some victories. He'll be able to get some major company to drop some seeming some major country to drop their tariffs and he will announce a victory. That can still happen. But this is worse, much worse than any of us thought.
- [22:13]
Steve Liesman
So even companies like in video, right. You know, you say for all that's happening, the boom, the innovation cycle is clearly going to, to be moving forward. Those shares are, I think 30% off their highs. They're below 100 now. You know, is there a level at which they or an Amazon or some of these other almost defensive stapley kinds of big tech investments make more sense to you to get involved here.
- [22:35]
Kelly Evans
And I'm glad you brought those names up because there were names going into this that were overpriced. The Magnificent Seven everybody's talked about, it's not original thought for me were overpriced. And so some of them have just now gone into Correction. But what I'm more focused on is the names that were reasonably priced before this all happened and have now been hit just as almost as hard. They haven't been hit quite as hard, but, but you have to be careful about that. I would say some of the names like Nvidia, some of the stories are coming back down to earth because the companies won't be able to spend in Capex to advance their strategies in a recession the way they would if the economy was going on all cylinders.
- [23:16]
Steve Liesman
All right. And is that your, you know, like you said, I know we have to see how the headlines and the trade wars evolve, but what if the jobs report hold, hold in there, you know, what if jobless claims don't spike? What's the time frame for you where you might say, you know what, maybe we're absorbing this shock and businesses are planning through it.
- [23:33]
Kelly Evans
So I'm sorry, thank you so much for bringing this up. I should have said this earlier. A strong jobs number does mean that the consumer and the middle consumer and even the lower end consumer who frankly we've been seeing some weakness with, might be a little stronger. They don't tend to have the exposure to the stock market that the upper end does. And so the consumer, which had been a little rocky, might get a little stronger here and that might give us some support. Some names like Smuckers that we love that tend to buy Hostess Cupcakes, those names could do better. And frankly, lower gas prices are very good for the middle and lower end consumer. So there are some things to feel positive about in the face of this very bad policy turn.
- [24:12]
Steve Liesman
All right, Appreciate you kind of taking us through that. Plank by plank. Charlie, thank you. Really appreciate it today.
- [24:17]
Kelly Evans
Thanks.
- [24:18]
Steve Liesman
Charles Bobrinskoy with Ariel investments rates. The 10 year treasury yield is well below 4%, although it's made somewhat of a rebound after Powell's comments earlier on. Around 395 was the latest. Mortgage rates six and a half on the 30 year. Diana Ohlich has more. Diana, again, we're watching these going okay, they're ratcheting down. But at what point you heard Josh Brown talk about this earlier. At what point does a company like Rocket get a, get a real business boost, right, instead of just maybe some help on the margin? Well, I'll get to that in a second. But I just want to start with the headline, which is that the average rate on the 30 year fix dropped 8 more basis points this morning to 6.55%. That according to Mortgage News Daily. So we're now down 20 basis points in two days or since the tariff announcement and it's now at the lowest.
- [25:02]
Kelly Evans
Rate since October 4th.
- [25:03]
Steve Liesman
Now, the homebuilder stocks, which sold off yesterday, are bouncing back today, likely on the drop in rates. The homebuilding ETF itb, which includes both builders and building material product stocks, is up about 2 1/2 percent. But names like Lennar Pulte and luxury home builder Toll Brothers are also up solidly on the day. But when you look at the real impact on this recent drop in rates on a monthly payment, because that's what we care about, the difference is really not that much from where we were when we started this year at just over 7% on the 30 year fixed. Here's the math. So on a $400,000 home, which is a little below the median price, actually with 20% down on a 30 year fixed, and this is without property taxes and insurance, you're looking at a monthly payment of $2,033 today. Back in January, your payment would have been about 125 bucks more. That is not that much when you're already paying over $2,000 a month regardless. Maybe for the entry level buyer, but again, not that much. The builder stocks, though, may also be reacting to the fact that lumber is exempt from all the recent tariff activity. That's a win for them. Although the chairman of the nahb, the builders association, said the other tariffs will undoubtedly raise some construction costs. I would also, we haven't been solidly below 6% on the 30 year fixed since the summer of 2022. And last year the expectation was that we were going to be there. Now, to your question, Kelly, is this going to be some kind of a boom for a company like Rocket in refinancing? Maybe, Maybe. But remember, if you're not getting a cut of at least 75 basis points on your mortgage rate when you do.
- [26:39]
Kelly Evans
A refi, it's really not worth the.
- [26:41]
Steve Liesman
Cost of that refi. Will this drop in rates push more buyers who are on the fence into the market? You've already got higher home prices. You've got concern about the economy and everything else that they're buying. Prices are going up for that. I don't know if you know that 125 bucks is going to really matter. No. So that's the math I was wondering about. So you think about 75 basis points is kind of where you're going to see that savings. Right. And the vast majority of people, the vast majority of current homeowners have rates not just below 6% or 5%, but.
- [27:13]
Kelly Evans
A lot of them below 4%.
- [27:15]
Steve Liesman
I'm below 3% on my mortgage. So it's going to take a lot more than that to get what you would call a refi boom. You might see the weekly percentage numbers jump by a lot because only that's because the volumes are so very low. Right. Coming off a low base. Diana, for now, thanks. Appreciate it. Diana Olek with the latest there. Let's turn now to Washington, where the Senate, amid all of this, is taking the next step toward passing that budget plan. And this is going to dictate a lot of what happens towards the back half of the year for the economy. It's got a multitrillion dollar package of tax breaks and spending cuts. Emily Wilkins has the latest details. Emily? Hey, Kelly. Well, yes, the Senate is about to go into a basically a marathon voting session that will end with them advancing Trump's agenda. And just a reminder here, this are the policy details. They're not there yet. This is more of the fiscal blueprint and it does include that $5 trillion tax package. But while the measure represents a step forward in the process, it also shows just how difficult getting a final bill done is going to be. And that's because this blueprint basically provides completely different instructions for the House and the Senate. Under the instructions, the House has got to find at least $1.5 trillion in cuts, while the Senate, at least on paper, is only required to find 4 billion. Now, senators have promised that they'll do more, but again, that's just not in what they'll be voting on tonight. And the Senate is also proposing using this very unique accounting method where extending any current tax breaks that are set to expire at the end of this year won't count towards the cost of the overall bill because those tax cuts.
- [28:49]
Kelly Evans
Are currently in place.
- [28:50]
Steve Liesman
And you have a couple fiscal hawks in the House who have some concerns about that. But in the Senate, Senator Kevin Cramer said that given that this is just the blueprint, not the actual policies, it makes sense to leave some wiggle room.
- [29:04]
Kelly Evans
Until you get started. You really can't have the level of negotiation that you're talking about, much to the surprise maybe of many. We're not all the same even in the Republican Party. And the conservatism is taking on takes on different sort of different standards and degrees and emphasis person by person.
- [29:25]
Steve Liesman
The Senate is expected to vote on the bill actually early Saturday morning, but they'll be starting votes tonight on numerous amendments. And this is going to be very Interesting, because you'll see Democrats have the chance to actually put forward a number of amendments on tariffs and see if they can possibly get more of their Republican colleagues on the record with whether or not they could support rolling back some of what we've seen Trump implement this week. Guys, exactly what we're wondering is we've heard some senators criticize the tariffs, you know, some even just to speak out at all or to repudiate, you know, what the president was trying to do with his tariff powers on Canada earlier. Should we expect more action out of Congress, Emily, to try to push back against what the president has done or is doing? Absolutely, Kelly, and you're really already seeing it. Yesterday you saw Senator Chuck Grassley, Republican from Iowa, join with Democrat Maria Cantwell to basically introduce legislation that would increase congressional power in overseeing tariffs. And that might not apply apply to what we saw from Trump just the.
- [30:25]
Kelly Evans
Other day, but it does give you.
- [30:27]
Steve Liesman
A good barometer of where Republicans are at.
- [30:29]
Kelly Evans
And you've already begun to see at.
- [30:31]
Steve Liesman
Least two more Republicans sign on to that piece of legislation as sponsors. You're also going to see a Senator, Tim Kaine. He said he wants to try again enforcing a vote on tariffs, depending on remember what he did before with some of the stuff Trump had done last month. Now he's looking to see if he can again force a vote on stuff done this week. And the House as well is looking to potentially force a vote. So we're really starting to see some cracks here between where Republicans are versus where Trump is on this particular issue of tariffs. A lot of Republicans are telling me, look, words Trump has asked for some time. He's saying it's just short term pain. We're willing to let it see how it plays out. But you can tell that there is a lot of nervousness here if we don't start seeing the market.
- [31:12]
Kelly Evans
Correct.
- [31:12]
Steve Liesman
And a lot of concerns about what could happen to prices for consumers. What's the earliest you think we would, would we would see any real action out of Congress, Emily? That's a great question, Kelly, because I think this is going to take a while. I think the impacts of the tariffs are going to have to really hit the American people hard. I think that's one thing when I talk to lawmakers, they're looking for at this point, lawmakers message to their constituents has been, hey, give this a chance, take a breath, let's see how this all plays out.
- [31:41]
Kelly Evans
But I was talking to a couple.
- [31:42]
Steve Liesman
Of lawmakers yesterday and said, you know what happens if it's still like this in six months. And you could see them being like, oh, my gosh, it can't go as long as six months. We're going to need to have it much more short term than that until we see a correction and until things start leveling out. So I think Republican senators, they're willing to give Trump a chance. They really are focused on moving his agenda through in this major tax package through. That's taking up the bandwidth right now up here. But the louder the calls get from their constituents, the more pressure they're going to be under to act. All right, Emily, for now, thanks. Appreciate it very much. Emily Wilkins on Capitol Hill today. And our next guest says the key issue here for this big budget bill is timing, because if Congress takes too long or fails to expand the amount of tax cuts, the negative effects of tariffs will slow the economy down. Let's bring in Dan Clifton, who's head of policy research at Strategus. Dan, where to begin? Is it significant to you that they're able to advance this bill with all the potential blowback right now against the tariffs?
- [32:40]
Kelly Evans
Yeah, I would caution on the blowback on the tariffs. Obviously, there's going to be messaging issues around Canada. Nothing is going to pass into law. You would have to get something passed in the Senate, the House, and then to the president's desk. And that seems very, very unlikely. So the cracks are definitely there over the trade policy, but it's not something that I think is going to be reversed. What is happening, Kelly, is that the president has just put forward $600 billion of tariff increases. And let me put this in context. We will collect now more money from tariffs from these proposals than we will from the entire corporate income tax this year. So essentially, Trump has now doubled the corporate income tax through these tariff proposals. There's not going to be much change. Maybe there's some modest negotiation with this country or that country. It's now in Congress's hands to start making things better for their constituents. And they have a budget reconciliation process open to be able to do that. So the timing here has to speed up. It was headed for July 4th. It's now got to be closer to Memorial Day. And the size of this has to be increased. The president will get $600 billion of revenue from these tariff increases. That gives Congress more resources to say, what can we do? Because extending the existing tax cuts is no longer an option. You're going to need to see lower marginal tax rates, lower corporate tax rates and more incentives to invest to ease that pain and to push off a possible and growing likelihood of a recession.
- [34:22]
Steve Liesman
So two problems down with that. And this is fascinating. But to two issues with that. Number one, they still have to use reconciliation. So it still has two quotes, unquote, not increase the deficit. And number two, I think I forgot it. So walk us through piece by piece. It's like, first of all, do they still have the ability to pass through the extension or further tax cuts without increasing the deficit and using reconciliation?
- [34:47]
Kelly Evans
Yeah, I don't think that's going to be a problem. This is going to be the most complicated reconciliation bill we've done in 25 years. But what will happen here is that there is no desire to have a $400 billion tax increase on American families on January 1st. So they get the extension. The fight this to date has been how much spending reductions do you have? There's wide agreement on the tax side. And then you can't really have the deficit increase in years 11 through 20 in reconciliation. So they're going to have to play with the budget math to get there. But Kelly, I'm pretty convinced now that Congress is waking up to very significant equity market corrections and a growing probability of recession that they're going to realize that they can use some of this tariff revenue to get some sort of larger tax cuts. And I want to be clear, but not one for one will not accept that.
- [35:36]
Steve Liesman
Right? Exactly. They can't use it.
- [35:38]
Kelly Evans
They can't technically use something pro growth.
- [35:41]
Steve Liesman
So they can't technically use the tariff revenue and other estimates. Tax foundation thinks it's only going to be 280 billion, but they can't technically use that revenue as part of whatever is going to happen. You just think that that gives them some breathing room.
- [35:53]
Kelly Evans
Absolutely gives them breathing room. That's exactly right. And I want to say that the president's already done $150 billion of tariffs before Tuesday's announcement. So this was on top of that about another 450. And what we see in the daily tariff revenue data is that first tranche is already starting to come in because we could see it on a daily basis. So they will have some resources to be able to do that. And they won't use it dollar for dollar, but it gives them more flexibility to do something. And if they don't, we're probably going to have a recession. So what I expect for every action there's a reaction, a more pro growth and a faster tax bill, possibly the Fed being forced to cut rates. And you could see some global policy changing as countries realize that they're going to have to do something for themselves now that Trump has this onerous policy on them.
- [36:42]
Steve Liesman
And interestingly enough, because yields are falling, they're not under as much pressure about the deficit issue. If the 10 year was still at 5% and rising and doing what it was doing to the housing market and so forth, the idea of oh, we're going to not touch Social Security, Medicare or Medicaid and we're going to give you even bigger tax cuts would probably get a bigger blowback. Now they've got a 3.9% 10 year as they potentially pursue all of that.
- [37:04]
Kelly Evans
Absolutely, Kelly. And there's two things to this that's very important. Remember that the deficit is going to come down $600 billion because of this tariff revenue this year. That means 600 billion less of treasury issuance. And the market is treating these tariffs as deflationary, not inflationary as the market had been anticipating in the whole lead up to it. They are saying that this is going to hurt growth more than it is going to hurt inflation. Maybe there's a price rise up upfront, but overall with slow economy and that means that Congress can use fiscal policy to offset that and they're less binded on it because rates are starting to come down.
- [37:37]
Steve Liesman
Dan, I'm glad you were here today. Thanks so much.
- [37:40]
Kelly Evans
Thank you.
- [37:40]
Steve Liesman
Dan Clifton with Strategus.
- [37:42]
Kelly Evans
The day begins at the Chase Sapphire lounge by the club at Boston Logan Airport. You get the clam chowder. In San Diego, it's Tostadas New York, espresso martini. It's 10:00am why not? It's the quiet before your next flight, the shower that resets your day, the menu that lets you know where you are. This is access to over 1300 airport lounges and every Sapphire lounge by the club. And one card that gets you in Chase Sapphire Reserve, the most rewarding card. Learn more@chase.com SapphireReserve cards issued by JPMorgan Chase bank and a member FDIC subject to credit approval. Will the job market bounce back from the recent weakness? Will the White House challenge the accuracy of the data numbers and analysis of the critical August jobs report squawk box Friday 8:30am Eastern streaming on CNBC.
- [38:27]
Steve Liesman
Sticking with Washington, we've got some breaking news on TikTok. Matter of fact, Eamon Jabbers what's the latest?
- [38:33]
Kelly Evans
Kelly We've got new reporting now from NBC News reporting that the president is about to take some executive action here in order to extend the deadline for a sale or transfer of TikTok now, this is new reporting just coming in this minute from NBC News, suggesting that the President is going to sign that executive order. We don't know exactly when that's going to happen. The deadline for that was tomorrow. Remember, Congress passed a law a year ago saying that TikTok needed to be suspended or transferred to U.S. ownership. That didn't happen. The president earlier this year ended up extending the deadline for that to April 5th. Now, President Trump has said that he believes that he's close to a deal. And earlier this week, he floated the idea of a deal for TikTok in return for lowering his tariffs on China. But the White House hasn't presented any evidence yet that the Chinese government has actually authorized a TikTok sale or is participating in any negotiations around this. Now, I've been told that the Chinese government is wary of appearing to be bullied into a sale. And the massive Trump tariffs announced this week make Beijing less likely, not more likely to agree to a transition there. Still, a number of companies have signaled their interest in participating in a deal for the wildly popular app, including Oracle, Amazon, and even reportedly, YouTube star Mr. Beast. And this week, mobile technology firm Applovin also signaled interest in participating in the deal. So, Kelly, if the President is now extending this deadline, as NBC News is reporting that he is, that seems to be an indication that they don't have a deal on the table with the Chinese government to sell TikTok. And they have really, as I said, never demonstrated evidence that the Chinese were negotiating to sell TikTok at any point in this. But things can change. As you know, there's a lot of stake in the global economy right now.
- [40:27]
Steve Liesman
Eamon, stick around. We have a post from the president confirming this. It reads, my administration has been working very hard on a deal to save TikTok, and we have made tremendous progress. He says the deal requires more work to ensure all necessary approvals are signed, which is why I am signing an executive order to keep TikTok up and running for an additional 75 days. The President continues, we continue hope to continue working in good faith with China, who I understand are not very happy about our reciprocal tariffs, which he says are necessary and fair and balanced trade between China and the usa. This proves the tariffs, the President says are the most powerful economic tools and very important to our national security. We do not want TikTok to go dark. We look forward to working with TikTok and China to close the deal. Thank you for your attention to this matter with Abe Kelly. Yes, go ahead.
- [41:12]
Kelly Evans
Yeah, I was just going to say, as you listen to what the president's saying there, you know, clearly there was no deal here that he was able to get. And the question is, what has changed in terms of Xi Jinping's incentive to allow a sale of TikTok to the United States? If Xi Jinping values TikTok and Chinese ownership of it as a media organization in the United States that has vast influence over young Americans, why would he part with that for really any amount of money? And then the second question is, if he feels that ultimately the US government is going to ban TikTok, why not allow President Trump to take the political heat for doing that with young voters who are going to be outraged by any kind of deal that ends the existence of TikTok? They love the app. So if you're Xi Jinping, you say, either I'm going to keep this app or I'm going to let Trump take the heat for killing it.
- [42:00]
Steve Liesman
Right.
- [42:01]
Kelly Evans
And either way, it's a win for Xi Jinping. The question is, for the US Government, how do you overcome those incentives on Xi Jinping side? And Trump had floated this idea earlier, earlier in the week of maybe lowering US tariffs in exchange for TikTok. We just haven't seen any confirmation from the Chinese side that TikTok is even on the table.
- [42:20]
Steve Liesman
Let's ask our next guest about that. Amen. Stay right there. We've got the CEO of one of the companies bidding. Adam Farooqi is the CEO of AppLovin. Adam, your shares are down 17%. They've been on a roller coaster ride. There's like 30 different bidders. Everybody wants TikTok, but maybe no one's ever going to have it.
- [42:37]
Kelly Evans
Yeah, I mean, we put forth the bid because we think we come at it with the best possible solution for all parties. We're in a position where we're proposing that they merge the entire global business of TikTok with our company. And the reason why this is important is the only way to abide by the law and solve the national security concerns here, we think, are that a Western company owns this app. Now, there's a few business reasons, too, that this is important for. For a proposal like this. We're an advertising company. Our business has grown immensely over the last couple of years after we launched an AI model in advertising. If you can pair our algorithm with the TikTok audience, the expansion on that platform for dollars spent will be through the roof.
- [43:21]
Steve Liesman
We recreate it. I mean, here's the irony to me. For years, years, for years, Adam, this issue with TikTok has been simmering, simmering and simmering and simmering. And Instagram's algorithm is still not good enough. Why not? I mean, why not at some point just try to, if you or somebody has to have an algorithm, are the Chinese really that good and that special at TikTok that only they can come up with an algorithm good enough that people really enjoy using it?
- [43:46]
Kelly Evans
Well, there's two algorithms we got to talk about. One is the recommendation engine. Theirs is exceptional. The old administration just kicked the can on this for four years, didn't try to resolve anything around national security. The president's trying to resolve this now. A Western company has to take this over to ensure there's no biases in the algorithm, there's no data leakage. Oracle's done a great job there as the cloud provider. And there's no issue in this application. This is important domestically here to Americans. It's also important in the uk, the eu, everywhere else. And what we're proposing is partnering with the Chinese to run the thing we bring to at a different algorithm, an advertising personalization algorithm. What's important about that is this thing is under monetized. If it expands, you'll create potentially millions of jobs from small businesses being able to spend more money to make more money. And that's a function that's important to understand. So we have business reasons, but we also think, most importantly, we solve the national security angle and give a win to the President, but also give a win to the Chinese because they can use a partnership with us to effectively run their business in the public markets, which is something that they've wanted to do for a few years.
- [44:53]
Steve Liesman
Let me bring in Eamon on that note. Go ahead.
- [44:55]
Kelly Evans
Yeah, Adam, it's Eamon in Washington. I just wanted to ask you, you say, just to clarify, you say you put in a bid for TikTok, you put in your bid with the US government though, correct. Who is not the seller? Yes, we have. Right. And so what have you heard from the actual seller here? I mean, have you talked to anybody in the Chinese government, Have you talked to, talk to anybody at ByteDance directly to see if this, if this app is actually for sale? The only thing we know is that the Chinese government has gone on record saying a fair deal is something they could get behind, not a forced deal. That's important. No one's going to force a founder who built one of the world's best businesses to part with his business. What we're bringing to the table is a partnership emerge where we resolve the headache they've had internationally around data and security. We do it right, and in addition to that, we help them expand their app with better advertising expertise, and they benefit from all the future growth. That's really important to the proposal that we put forth.
- [45:50]
Steve Liesman
Adam, how much do you think TikTok is worth? If the Chinese want a fair proposal, if they're potentially open to selling it at a fair price, And I know it depends on whether we're talking just us or the whole thing. You're talking about more at the whole thing. What's a fair price?
- [46:03]
Kelly Evans
I think it depends on who the buyer is. To us, it's strategic because we can provide the advertising solution to expand the application more than anyone else in the world. And so therefore, it's more strategic to us. The combination of the companies would be worth more. It'd be better for investors, it'd be better for the Americans. And so therefore we could come to the table with a much stronger bid than others. Adam, do you think that the Chinese government is potentially going to use TikTok in the future to manipulate US public opinion, to gather data on individual Americans? All the sort of nightmare scenarios that people say that they could use it for, is that a legitimate national security threat, in your view? There are legitimate national security concerns. We have no way to know. As Americans, we should have solutions that work. It's great that the President is not kicking the can like the last administration and is trying to find a solution that works. We think ours is that solution. Now, what is this new 75? I mean, the President did just kick the can just at the beginning of the segment. We got this new proposal for an additional 75 days here. What does this new 75 days do for the ultimate fate of Tick Tock and for your bid in particular, do you think? Yeah, look, it buys time to put the pieces together. The President's a great dealmaker. We're proposing essentially an enhancement to the deal that they've been working on, but a bigger version of all the deals contemplated. Something that solves the issue domestically, solves the issue internationally, gives the Chinese a win because they get to participate in the public markets and benefit from all the future growth of the business. That's exceptional that they built and gives our President a win because we can actually abide by the law and solve the national security concerns once and for all.
- [47:40]
Steve Liesman
Adam, thank you for joining us today. We hope to check back in now that we'll have 75 more days to see what happens. Adam Farooqi is the CEO of AppLovin even. Thank you very much. I'm sure we'll see you shortly as the news rolls in. Fast and Furious from Washington this hour. In the meantime, let's get to Courtney Reagan for the news update. Hi, Courtney. Hi, Kelly. Washington's top federal prosecutor is launching investigations into alleged leaks about the prosecutions of the January 6 riot cases. In an email seen by NBC News, interim U.S. attorney Ed Martin said Friday the alleged leaks damaged the parties and was used by media as misinformation, but didn't share any examples of these specific leaks. US District judge ruled today that the Trump administration violated a court order by pausing the discussion. Disbursement of FEMA grants to states. A coalition of states had asked the judge to force FEMA to release the disaster relief funding that had remained frozen despite the judge's order in early March to lift the freeze. And jury selection in Massachusetts continues today for Karen Red's retrial. She's accused of killing her Boston police officer boyfriend, John O', Keefe in 2022. The first trial ended in a hung jury last night. Redd's lawyers asked the Supreme Court to intervene, arguing double jeopardy because jurors came forward after the first trial to say they agreed on acquittal for two charges and were only deadlocked on the third. Kelly, back over to you. Courtney. Thank you very much. Courtney reagan. Well, no surprise here. It's been a rough week for retail after Trump's tariff announcement. The XRT ETF is down 5%, 5 below. Kohl's and Carvana are among the worst performers. But tariff and recession worries are giving the off price retailers a boost. And Dollar General is the best performer this week, up 10%. They have very limited supply chain exposure to China. TJX and Ross stores who get discarded inventory that's now been front loaded, round out the top three. Meanwhile, footwear shares have turned higher today after yesterday's big drop. The president posting on Truth Social that Vietnam is willing to cut its tariffs to zero if a deal can be reached. Nike makes half its footwear in Vietnam, while on holding makes 90% of it. For more on what this could mean for footwear, let's bring in FDRA CEO Matt Priest. And Matt, what are you hearing? Welcome.
- [49:43]
Kelly Evans
Thanks, Kelly. We're hearing a lot of concern. We're obviously encouraged by the call between the president and and the Vietnamese head of state there and we're encouraged by that conversation. But at the end of the day, our members are trying to figure out how to cost goods in a really struggling environment. 87% of our executives we surveyed just last week see that economic headwinds are right in front of us. And that number is probably going to be 100% now that we have the announcement on Wednesday. So for us, all eyes are how we cost goods. How do we, you know, how much of this goes to the consumer and how can we mitigate some of this impact?
- [50:20]
Steve Liesman
There's actually been some research on how much, you know, sneakers cost. And I mean, people are just kind of applying this price tag to existing models and doing the math. But Nike and some of these companies, they have, they have profit margins. They can absorb this hit in those margins if they choose to and not pass it along to the consumer. So be very curious about that.
- [50:39]
Kelly Evans
You know, I think all companies are kind of different as they, as they come up with their pricing and cost margins. Right. But the trend. But the fact of the matter is these tariffs, Kelly, that were announced in the Rose Garden are on top of the rates that are already applied. And as we've talked about before on your program, we have very high duties across the board. All of our footwear companies pay this. So a pair of sneakers out of Vietnam that has a 20% duty on it right now, it will have 46% next week. That's 66%. Some of our goods out of China are going to be north of 100%. And so when you get to those types of duty levels, that takes money out of business, American business, that hurts American jobs, and that drives up prices for American consumers. None of those options are good. And so I think that's why there's a lot of concern amongst our members in the industry at large.
- [51:29]
Steve Liesman
Are people talking about reshoring? Is that an option?
- [51:32]
Kelly Evans
We've been talking about it for a long time. We actually represent the vast majority of domestic footwear producers here. The dirty little secret about the announcement on Wednesday is the fact that the administration is also taxing and putting tariffs on all the inputs and materials and machinery that's needed to produce here in the US So that's not going to be a viable option either because those costs are going to go up. And that's just not a problem with footwear. We've seen this in components, with automobiles, RVs, and other things that are manufactured here. And so that's not going to be an opportunity to serve the industry or the American consumer as much as we need to.
- [52:08]
Steve Liesman
You know, we first spoke with you about a month ago when your data, your just weekly shopping data showed that there had been this drop off in buying and some hesitation among the consumer. I don't know if you can kind of bring us up to speed as to what's been happening now as everyone, are they trying to buy shoes or footwear now and maybe front load this a little bit or just wait and see?
- [52:26]
Kelly Evans
I wish that were the case and I'm glad you asked me that. I was prepared because I was hoping you would ask me that. Kelly. Look, you know, we have year to date leading up to the inauguration, we were at north of 14% growth in retail for footwear since the inauguration. The 10 weeks since we're down 11 points. We see a consumer that is nervous, that is holding back and we keep getting told to play the long game. Right. This is a long game opportunity. Our consumers have been playing the long game for years now from an inflation perspective. So they're worn out and I think we're seeing that in the numbers.
- [53:00]
Steve Liesman
Yeah. If I ever don't ask, by the way, tell me anyway because we always want to know. Sometimes we don't get there. Matt, thanks for bringing it all to us. It's good to see you again.
- [53:07]
Kelly Evans
Of course. Good to see you.
- [53:08]
Steve Liesman
Matt Priest of the FDR President Trump's new tariffs have been taking the tanking the transport and logistics stocks amid concerns about how the global supply chain will be affected. But our next guest company, well, they could maybe benefit. It's Descartes Systems Group. They're a logistics and supply chain management software company and they could see more business as countries announced tit for tat tariffs and complicated regulations. Joining us now for more is CEO Ed Ryan. Ed, Julie Beal was on our program earlier this week, mentioned you guys as maybe a candidate of a place to look in the market for opportunity. What's your first blush reaction to everything that's happened this week?
- [53:46]
Kelly Evans
It's created a lot of uncertainty in the market. We operate the largest database of tariffs and duties around the world for our customers. They're spending a lot of time in that database right now trying to figure out what they should do in their supply chain and how they might be able to modify things in their supply chain to fight their way through this as best they can.
- [54:05]
Steve Liesman
So do people pay for access to that system? Is that basically the business model?
- [54:09]
Kelly Evans
Sure. They pay for access to it and they pay to use it every day. They pay to rate shipments as they move across the world to figure out what the tariffs and duties are. And then also they can use it as a research tool to go in and try to look at different countries that they can import things from and how much it would cost from each different country.
- [54:28]
Steve Liesman
So is it fair to say that for a business, uniquely positioned business like yours, who would have ever thought, how long have you been in business and doing this? Did you ever think, yeah, there's going to come a day when the number one piece of information that everyone on the planet is suddenly searching for is tariff and customs info?
- [54:43]
Kelly Evans
Yeah, I mean, it's always been an important part of our business. We also operate something called the global Logistics Network which processes shipments for all these customers. That's how we got into the business of tariffs and duties and rating them as they're processing those shipments. So yeah, we have a lot of customers scrambling right now and we have a lot of people internally trying to make sure that we get all of the new rates into the tariff databases on Saturday when they go in and any reciprocal tariffs that come back from other countries that they're in there accurately so that the customers can rate their shipments and pay the right tariffs and duties as they're moving things around the world.
- [55:17]
Steve Liesman
Yeah, and your client, I mean it makes sense. You've got the airlines, you've got Ocean and Truck and you know, intermodal and retailers, manufacturers, distributors and all these different businesses who have to know this. Could you. We did have a viewer question on this earlier this week who said, what's the difference between a tariff and a duty and a levy and a custom? Are we all just using the same words for different things or are there nuances there?
- [55:35]
Kelly Evans
There are actually differences between them, but they all end up as percentages that get tacked on to onto shipments as they move across various borders of the world. They're typically breast in percentages of the value of the cargo.
- [55:49]
Steve Liesman
Interesting. So finally, from kind of where you sit, all of this is now being implemented. Right. We're getting past the headline phase. This is actually the rubber hitting the road. Saturday we get the 10% tariff. Next Wednesday we're getting all of the reciprocal so called tariffs. And I guess that's unless we hear anything between now and then.
- [56:08]
Kelly Evans
Yeah, certainly it's created a lot of uncertainty for our customers. They're spending a lot of time trying to figure out what to do and I think it's given a lot of them pause. You know, they kind of freeze when they don't know what to do. Also over the last several weeks we've seen a big uptick in shipment volumes as companies. I think we're saying, hey, let me get some of this product into The United States before these tariffs hit, you know, we. We saw maybe global trade kind of increased by a couple of points over the last month because of that. And so it's all very interesting stuff. And, you know, we help our customers deal with this complexity, and there's a lot of complexity going on right now. So it's interesting times.
- [56:46]
Steve Liesman
Can you confirm, not to put you on the spot, but can you confirm that your business is actually up or do you anticipate. Anticipate it being up this year as a result?
- [56:52]
Kelly Evans
I think there's two aspects to it. One, our tariff and duty database, that has got a lot of attention right now, and that's quite helpful. An even bigger part of our business, 30% of our businesses, is operating something called a global logistics network, which processes global shipments around the world as people move cargo between the ocean. Air carriers, trucking companies, railroads, and then their customers get paid by the shipment to do that. That's the interesting part for us. We want to see what kind of happens with that, with that side of the business. And do the shipping volumes stay the same? We know they're going to change the way they move and what countries they move out of. And we just have to see what happens to the global economy with this because that could impact shipping volumes, which would offset some of the gains we might have in the tariff business. So.
- [57:33]
Steve Liesman
Excellent point.
- [57:34]
Kelly Evans
More to come. We'll see.
- [57:35]
Steve Liesman
All right, Ed, come back. We'd love to have you back. Thanks so much for joining us today.
- [57:39]
Kelly Evans
Thank you.
- [57:39]
Steve Liesman
Edward Ryan with Descartes Systems Group. And with the market down 1600 points still around session lows, let's bring in KKM Financial's Jeff Kilberg to round things out for us this hour. Jeff, buying, selling, screaming. What are you doing?
- [57:53]
Kelly Evans
Mostly buying and screaming, Kelly. And it's interesting to see where TikTok has all of a sudden become like the focal point. And I think investors are just gravitating towards the recent news. We saw about that extension, that executive order that President Trump just signed. If that really is going to give us 75 days to negotiate a TikTok deal, maybe we will see the temperature taken down a little bit by President Trump. And like President Trump or not, he is our quarterback. And this quarterback right now, President Trump. If you're listening, you need to call it audible. Lloyd Blakefein just gave you the roadmap. Take the tariffs down, give us some more time here. And I think we saw The S&P 500 bounce about 50 points just now when we saw that TikTok News hit. And if we do see some type of delay on these tariffs being implemented on April 9, you could see the market rally and actually go up 2, 3, 4, 5% and by the end of today's close. So I think President Trump owes it to the US Economy. I think we would go all the way back, Kelly, to the depression back in 1929. It took decades and decades to rebuild trust in the US Stock market. We are seeing trust right now shaken. It is being rattled. We do not want to see this develop or metastasize over the weekend. And I think President Trump has to step up and be the quarterback that the whole U.S. economy on the left and right. We need him to step up now.
- [59:10]
Steve Liesman
Interesting that you see tick tock as maybe, you know, an indicator there, you know, that is being delayed by 75 days. You're the Vix expert. Lot of focus. Vix curve inverting. It's going to get worse. This is typically a buying sign. This has only happened in 2001 and 2008. We're at, you know, I think 40 or so last check. What does it tell you?
- [59:29]
Kelly Evans
Well, the VIX tells us when it's under 20, that's time to buy protection. When the VIX fluctuates and really spikes over 40, even 50, that is when it's time to trim that protection and start buying stocks. So you look at some of these names like a Home Depot, American Waterworks, look at JP Morgan, if rates are really coming down, Kelly, JP Morgan is one of the biggest mortgage loan companies in the world. We want to own those essential names. So I think you have to be really calm, cool and collected in this moment in time, despite the fact it just absolutely feels horrible right now.
- [59:58]
Steve Liesman
That's the playbook. Jeff, thank you. Really appreciate it. Today, Jeff Kilberg with kkm. Before we go, don't miss an exclusive interview next hour. Andrew Ross Sorkin sitting down with Microsoft CEO Satya Nadella to mark the company's 50th anniversary. He'll also be joined by Bill Gates and Steve Ballmer. It all begins around 2:30 Eastern on power Lunch. And that's it for us. Thanks for watching the Exchange. And we'll pick up market coverage of this sell off on Power Lunch with Brian Sullivan right after the break. You've been listening to the Exchange. Make sure you're subscribed to get each episode every day, same time, same place.
- [60:37]
Kelly Evans
Did you know Tide has been upgraded to provide an even better clean in cold water?
- [60:41]
Steve Liesman
Tide is specifically designed to fight any.
- [60:44]
Kelly Evans
Stain you throw at it. Even in cold butter. Yep.
- [60:48]
Steve Liesman
Chocolate ice cream.
- [60:49]
Kelly Evans
Sure thing, barbecue sauce. Tide's got you covered. You don't need to use warm water. Additionally, Tide pods let you confidently fight tough stains with new coldzyme technology. Just remember, if it's gotta be clean, it's gotta be Tide.