Iran Escalation Risk, Renewed Private Credit Concerns, and Pullback Opportunities 4/2/26

Summary

Podcast Summary: The Exchange (CNBC)

Episode: Iran Escalation Risk, Renewed Private Credit Concerns, and Pullback Opportunities
Date: April 2, 2026
Host: Leslie Picker (in for Kelly Evans)

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Overview

This episode dives into a volatile day on Wall Street, dominated by escalating geopolitical risks in Iran, surging oil prices due to the crisis in the Strait of Hormuz, and renewed concerns in private credit markets. The show explores the ripple effects across energy, equity, and credit sectors, while also touching on political developments in Washington, including the surprise removal of the U.S. Attorney General. Featured guests provide insights into market dynamics, policy responses, and investor strategies amidst ongoing uncertainty.

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Key Discussion Points & Insights

1. Iran Escalation and the Strait of Hormuz Shutdown

[00:32–05:54; 17:05–19:56]

• Leslie Picker sets the scene, noting Wall Street’s 800-point swing and oil’s >10% jump driven by rapidly evolving Iran headlines.

• Eamon Javers (Washington Correspondent) explains:

  • Iran and Oman are reportedly negotiating a protocol for safe shipping through the Strait of Hormuz.
  • President Trump declared the crisis “not his problem,” shifting expectations for U.S. intervention.
  • The UK hosts a 40-nation virtual summit on the strait, with the U.S. notably absent.
  • Trump predicts the war (and market volatility) could last 2–3 more weeks.
  • Quote: “President Trump said other countries should use military force to reopen the strait, but seemed to indicate that the United States could not or would not do it.” [02:53]

• Pippa Stevens (Energy Reporter) highlights:

  • Oil shipments through Hormuz are down 95%, with 1 billion barrels lost expected by the end of April if the war persists.
  • European diesel surged 9.5%, U.S. heating oil rose 7%.
  • Diesel price spikes function as a "hidden tax" on goods movement, pushing up inflation.
  • California diesel hits a record $7.56/gallon.
  • Quote: “The rise in diesel prices is more worrisome and could have a larger inflationary impact...like a hidden tax on the delivery of goods.” [04:20]

• Amrita Sen (Energy Aspects) points to a lasting risk premium:

  • The disconnect between physical and futures markets is masking real tightness.
  • “The longer it stretches on, the bigger of a headache it becomes for global energy markets.” [05:54]
  • Oil’s new “floor” likely shifts higher; $70–100 could be the post-crisis norm.
  • Long-term, Middle East investment risk creates an enduring market shift.

2. Markets’ Volatile Response and Investor Positioning

[11:03–13:18; 17:46–19:56]

• Marco Papic (BCA Research) takes a cautious investment stance:
  • Underweight equities since January; long oil since Jan 6 “in anticipation of this particular event.”
  • Expects de-escalation eventually but not yet—markets shouldn’t buy risk assets today.
  • Notes equities and oil typically don’t rise together; sees equities as “getting it wrong.”
  • Quote: “President Trump did not definitively say last night that de-escalation is in place...So no need to shift the equity position right now.” [11:53]
  • Draws parallels to pandemic and Ukraine war, cautioning patience before ‘buying the dip’.
  • Regarding a Hormuz protocol with Oman: “Iran is trying to have this plausible deniability...but the endeavor is effectively an online retail store where you show up, put some information, pay in yuan, and get your ship through.” [17:55]
  • Warns of “pandemic-style shutdown in global supply chains” if Hormuz remains closed.

3. Breaking Political News: Attorney General Ouster

[13:18–17:00; 22:53–24:19]

• Eamon Javers reports Pam Bondi fired as Attorney General, replaced by Todd Blanche:

  • Rooted in friction over release of Epstein files and expectations for political indictments.
  • Quote: “Pam Bondi is out as Attorney General and Todd Blanche is in...after a cycle of frustration around the Epstein story.” [14:48]
  • Discusses the challenge for the new AG: balancing Trump’s public demands for political prosecutions with legal realities.

• Libby Cantrell (Pimco) weighs potential impacts:

  • Markets are used to Washington churn, but the main question is DOJ’s direction regarding the investigation into Fed Chair Powell.
  • Confirmation of a new, permanent AG could be “stickier” given shifting Senate dynamics.

4. Policy Fallout and Public Reaction

[22:00–26:57]

• Libby Cantrell shares that Trump’s address left more questions than answers, satisfying neither markets nor congressional Republicans.
  • Voters remain focused on affordability; rising gas prices are politically toxic.
  • There’s little sign of a clear economic or diplomatic off-ramp for the crisis.

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5. Trade Policy: One Year After 'Liberation Day' Tariffs

[29:05–31:24]

• Megan Casella reviews the rollercoaster in tariffs since Trump implemented sweeping “Liberation Day” duties.
  • Despite volatility and a Supreme Court intervention, the average U.S. tariff rate is back near year-ago levels (~7.5%).
  • Projections see tariffs climbing again to 9-10% as more measures roll out.

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6. Economic Outlook: Recession and Inflation Risks

[33:09–34:44]

• Steve Liesman reports on economists’ “flash survey”:
  • Elevated recession odds: 43% see 35–50% chance, 43% at 20–35%.
  • Geopolitical turmoil has pushed more forecasters to a downside bias.
  • Oil shocks add 0.5–1.0 percentage point to inflation in most scenarios, with the Fed likely on hold.
  • Quote: “Share of forecasters seeing risks skewed to the downside has jumped sharply... driven by a broadening of geopolitical conflicts.” [33:35]

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7. Pullback Opportunities: Market & Sector Picks

[34:45–39:15]

• Jay Woods (Freedom Capital Markets) discusses strategy:
  • Market is “on edge...going from tweet to tweet”; expects possible retest of recent S&P lows.
  • Recommends looking for relative strength in the Mag 7, especially on technical oversold conditions:
    • Nvidia: Attractive for long-term buyers if it hits technical support ($160–150).
    • Apple: Utility-like defensive play, still strong.
    • Alphabet: Remains in a long-term uptrend; Waymo and YouTube drive value.
  • Energy remains a buy, “higher for longer” oil outlook: ExxonMobil and Chevron cited.
  • Notes surprising strength of solar stocks, suggesting TAN ETF and SolarEdge/Next Power as plays.
  • Quote: “You look at stocks like Exxon and Chevron, they're flagging. In technical terms…good entry points; if we get another spike...could see ExxonMobil going back above the 120, 175 highs from just earlier this week into the 1 90s.” [38:15]

8. Renewed Private Credit Market Risks

[40:54–44:29]

• Blue Owl caps redemptions after high withdrawal requests in two of its private credit funds.
  • Cites “AI-related disruption to software companies” as concern.
  • Dan Rasmussen (Verdad) warns of self-reinforcing cycle—concerns trigger withdrawals, forced selling lowers prices, exposing leveraged owners.
  • Mechanisms that “gate” redemptions (limit withdrawals) slow the process but don’t eliminate credit risk.
  • 20–40% withdrawal requests is “catastrophic,” with Blue Owl facing a “bank run” of sorts.

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9. SpaceX Files for IPO: The Retail Shareholder Question

[44:43–47:15]

• Deirdre Bosa details SpaceX’s confidential IPO filing:
  • Elon Musk wants 30% of shares allocated to retail investors—unprecedented compared to the typical 5–10%.
  • Sees this as an explicit move to build a loyal, Tesla-style retail base from day one.
  • Could set a precedent for future OpenAI and Anthropic listings.
  • Quote: “Musk has seen what a loyal retail base can do for him...So that is exactly the shareholder base that he wants at the Space X from day one.” [45:22]

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Memorable Quotes (with Attribution and Timestamps)

• “The rise in diesel prices is more worrisome and could have a larger inflationary impact...like a hidden tax.” — Pippa Stevens [04:20]
• “President Trump said other countries should use military force to reopen the strait, but seemed to indicate that the United States could not or would not do it.” — Eamon Javers [02:53]
• “When you're looking at the screen, the price you guys are showing...is almost giving us a false sense of security that things are not that stressed.” — Amrita Sen [06:45]
• “I'm not extrapolating this linearly into some sort of a Mad Max scenario...But I am looking for a de-escalation — it just isn’t here yet.” — Marco Papic [11:03]
• “For Blue Owl, the bank run is here and it’s happening...there’s really no stopping it now that people are seeing those redemption numbers.” — Dan Rasmussen [44:09]
• “Elon Musk has seen what a loyal retail base can do for him...that is exactly the shareholder base that he wants at the Space X from day one.” — Deirdre Bosa [45:22]

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Important Timestamps

• 00:32 — Opening remarks and market update amid Iran crisis.
• 02:05 — Eamon Javers on Iran, Oman, and the Strait of Hormuz.
• 03:38 — Pippa Stevens on oil/diesel market turmoil.
• 05:54 — Amrita Sen on enduring energy market shifts.
• 11:03 — Marco Papic on investment positioning and market logic.
• 13:18 — Eamon Javers on Attorney General firing.
• 22:00 — Libby Cantrell on policy/political implications.
• 29:05 — Megan Casella on tariffs one year later.
• 33:09 — Steve Liesman on recession/inflation forecasts.
• 34:45 — Jay Woods on equity/sector opportunities.
• 40:54 — Dan Rasmussen on private credit fund redemptions.
• 44:43 — Deirdre Bosa on the SpaceX IPO and retail investors.

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Conclusion

This episode captures a trading day defined by geopolitical uncertainty, energy market shocks, and concern over private credit contagion, with expert guests offering context, analysis, and actionable strategies for navigating high volatility periods. Political developments add further intrigue, as investors digest the implications for markets and policy-making in an era of rapid change.

Transcript

[A]

This episode is brought to you by Extra Credit, TransUnion's financial services podcast. Each episode features subject matter experts who discuss topics that matter most to today's industry leaders, from fraud trends to the state of consumer credit and plenty in between. Extra Credit was created as a way to share unique perspectives, industry happenings and data backed insights to help leaders like you adapt to changes in this unpredictable market. Come have a [e-mail] extra credit pod that's transunion.com extra credit podcast

[B]

at Janice Henderson, investors we believe working together is the way to work better, like combining your portfolio plans and our in depth strategy, your valued assets and our valuable insights, your vision and our mission, working in harmony to seek the right investment opportunities. JANICE henderson, Investors Investing in a brighter future together. You're listening to the Exchange. Here's today's show. SCOTT thank you and welcome to THE Exchange, everybody. I'm Leslie Picker in for Kelly Evans. Today it's a volatile session on Wall street with the Dow swinging more than 800 points from the high to the low as Iran headlines keep changing rapidly. Now down about 160 points, the S&P erasing a one and a half percent decline. The Nasdaq was down more than two earlier. You can see now just a quarter of a percent. And this, of course, is oil jumping more than 10% following the president's speech and risk of further escalation in Iran still at that level now despite a headline that Iran is drafting a protocol with Oman for the Strait of Hormuz. And we are watching the old asset trade, Blue Owl capping redemptions after getting increased requests in two of its private credit funds, Blue Owl, Ares and Blackstone, all under pressure this hour, but far off session lows at this juncture. More on that ahead. But we begin with the latest on Iran and Eamon Jabers in Washington. Amen.

[A]

Hey there, Leslie. Iranian state media reported earlier today that a Foreign Affairs Ministry official in Iran says the country is, quote, developing a protocol for Iran and Oman to monitor transit through the Strait of Hormuz. Now the report quoted the official saying that any requirements put in place for shipping would not mean restrictions, but rather safe passage and services for ships passing through. Word of that negotiation, although it's not at all been confirmed, was enough to send markets briefly into positive territory this morning as investors weighed whether it meant shipping might return sooner than expected. And meanwhile, world governments have begun to wrestle with the question of what to do to reopen the Strait of Hormuz after President Trump signaled last night that he believes it's just not his problem to deal with. The UK today hosting diplomats from more than 40 countries in a virtual summit on the crucial waterway. The United States not participating in the meeting, which UK Foreign Secretary Yvette Cooper said would focus on ways to reopen the strait after Iran had hijacked it. In his address to the nation last night, President Trump said other countries should use military force to reopen the strait, but seemed to indicate that the United States could not or would not do it. Now, the President also said that he believes stock prices and the price of oil will normalize when the war ends, which he described. Leslie, as being two or three weeks from now. Back over to you.

[B]

All right, Eamon, thank you so much. Now to the reaction in the energy markets. Pippa Stevens is keeping an eye on those pretty volatile moves.

[C]

Pippa that's right, Leslie. So oil prices are jumping after President Trump's address offered no clear path to reopen the Strait of Hormuz, where transits remain 95% below pre war levels. TD saying that as the war stretches on the barrel math becomes, quote, increasingly grim. The firm forecasting nearly 1 billion lost barrels of oil and products by the end of April, with each additional month losing an additional 450, 50 million barrels. For US oil. The spread between the front and second month contracts is now the widest on record, speaking to just how tight physical markets are. And as Middle east crude barrels remain stuck in the Gulf, WTI and Brent could receive an availability premium beyond crude itself. This continues to be a product story. European Diesel surging some 9 1/2% with US heating oil futures. That's a proxy for Diesel, up another 7%. Consumers are focused on prices at the pump topping $4. But the rise in diesel prices is more worrisome and could have a larger inflationary impact. Trains and trucks run on diesel and when the price rises, it's ultimately passed along to the consumer almost like a hidden tax on the delivery of goods. In California right now, diesel is at a record $7.56 per gallon. Leslie?

[B]

Pippa, if the strait were to open in some capacity, but it was still expensive, whether there was some kind of tax required, what do you think that would mean for energy prices?

[C]

Well, let's say that the strait were to fully open, miraculously, somehow today it would still take weeks if not months for flows to get back to what they were prior to the war. That's because all of these ships, all of these very large tankers have to be repositioned. There's Going to be a lot of congestion at the loading docks once transits do return. But I think what people are increasingly saying now is that there is never going to be a going back to the pre Iran war levels for oil because this geopolitical risk premium will now be priced in. And there's also these growing questions about whether some of those producers who've been forced to shut in production will ever be able to return to their prior output levels. This is most notable in places like Iraq and Kuwait that do have those mature, more mature fields. And so Leslie, there are a lot of questions but I think the number one thing is that the longer the stretches on the much bigger of a headache it becomes for global energy markets.

[B]

Right. So quickly for things to change. And it sounds like the permanence of it all will be very enduring. Pippa, thank you. My next guest says the President's pledge that he will not leave allies in the Middle east stranded indicates that this war will be longer than expected and the energy markets are now readjusting to that reality as Pippa also laid out for us. Joining me now is Amrita Sen, Founder and Director of Market Intelligence at Energy Aspects. And do you agree with that notion?

[D]

Oh yeah, absolutely. And I agree with everything because we chat quite a bit. And the reality of what is going on in the physical market is actually the kind of the real supply, demand, balance right now. I mean you have dated Brent today, which is the physical marker for what I would say is a global benchmark trading at over $140 near record high levels even though the, you know, the futures market is much more subdued at 110. What I will say is that when you're looking at the screen, the price you guys are showing the price everybody seeing, it's almost giving us a false sense of security that things are not that stressed. But if you look at the actual price at which refiners and producers are transacting and then what's translating to products prices. Diesel in Europe is almost $200 per barrel today. If you look at the national average price of diesel in the US it's really close to hitting record all time highs. So you are seeing it. It's just that it's the financial market is almost masking the true tightness that everywhere else is showing up.

[B]

Is it masking it? Does it typically lag? And how would you also characterize what the forward curve looks like as well? Do you think that's appropriately reflective of the long standing issues we may see in terms of energy prices?

[D]

Great Question. And I mean we've been debating this. We've never seen the financial market and the physical market disconnect for so long. Ultimately they have to coincide. But maybe, you know, it's only at the time of expiry of a contract because that's when the two meet. There's been a lot of intervention. You know, there's been kind of the volatility in the market has just made a lot of people take off positions they're just not able to hold. They've had to stop out. We've seen measures by lots of different governments trying to talk the price down or kind of intervene in different ways, directly or indirectly. And I think that's what's creating these distortions. You talk about the back end of the curve. It is fascinating to see how the front is absolutely soaring and the back is actually down. Yes, there's been some producer hedging, but I also think people are not really reflecting the fact that what we've been saying we. That whatever the new normal looks like will just not be the same as the old status quo. Right. So we are going to have a higher floor for oil prices. Minimum 70 to $80, probably closer to $100 given everything that's going on. We don't even know the extent of the damages like paper was saying. So we haven't seen that yet. Now a lot of people will say to me, that's the trade after the trade, right? At some point, whenever there is peace, we will see a pullback first. That is true. But after that happens, we will see that back end of the curve go up quite materially.

[B]

That's what I was going to ask. If, even if it's like a tail scenario, is it possible that we ultimately do see stability? Is there a measure that whether it's the US or Iran or some of the other allies could take that would ensure that the strait is stable and that, you know, trade can flow through there once again,

[D]

look, absolutely, at some point that will have to happen, right? Because again, it's just an untenable situation right now from both sides. The problem is every day that's going by we have 11 million barrels per day of crude production. That's shut in over 5 million barrels per day of products and LPG that's not getting out. Then there's fertilizers, chemicals. The world economy is at huge risk. We are staring at a recession, right? So, but that's not, that's almost the problem that every day it's a non linear impact on the global economy and on oil, oil or energy markets everywhere. That's partly the issue we have over here. But that doesn't mean that the back end of the curve should ultimately not be higher. Right. Because transit will be more problematic through the street whenever it does open up. Also, companies are telling me, CEOs have said to me they all need to reevaluate how they will think about investing in the Middle east. That is the lowest cost production in the world and therefore now there probably needs to be a higher return for investing there.

[E]

Now.

[B]

Yeah, there's a lot of wonky stuff, interesting stuff going on both in the financial markets as well as on the ground. Amrita said, we appreciate you digging into all facets of this story for us with energy aspects. Thank you so much. My next guest says stocks and oil don't move up together and one of them is getting it wrong. He thinks it's equities and he's staying underweight. Joining me now is Marco Papage, macro and geopolitical strategist at BCA Research. You think equities are getting it wrong to go down when oil is rising, but your underweight equities explain that to me.

[F]

Well, yeah, underweight equities still have been since January and long oil since January 6th in anticipation of this particular event. Now, that doesn't mean that I'm extrapolating this linearly into some sort of a Mad Max scenario where we're all looking for a canister of gasoline. That's not what I'm looking to do at all. In fact, I am looking for a de escalation. I think that it is imminent. I think it is coming. It's just that we're not there yet and oil prices going up on a day when stocks are sideways and have rallied come back. It just doesn't make sense. President Trump did not definitively say last night that de escalation is in place. The US has ramped up some attacks, you know, hitting one of the largest infrastructure pieces in Iran. So it's not clear that we're still in the clear. So no need to shift the equity position right now.

[B]

So you think that equities should be falling by a greater magnitude today than on all the headlines that you've been seeing?

[F]

Well, I mean, day to day moves don't really matter. But yes, to answer your question today, given the move in oil prices, absolutely. I think equities should be following as well. Now they may be sniffing out something that's the trade after the trade, like your last guess was saying like, there are many trades after the trade. But for today, given the move in oil prices and given President Trump's speech last night, you know, is it time to start nibbling at risk? I don't think so. But Monday perhaps, and the Iran Oman negotiations, that is really very important, as is the shipping traffic through Hormuz. When the second derivative of that starts looking really positive, that will be the time to buy back into equities. And I would just remind everyone watching this that you didn't turn bullish on the pandemic when we got the vaccine. I mean, if you did, you're a terrible investor. You did not turn bullish. European assets when we got a deal between Ukraine and Russia. Oh, that's right. We never got one. So in other words, the last two calamities investors have had to invest in, the time to buy risk was well before the calamity was over. In fact, one of them is still going on the Ukraine conflict. Yeah, that will happen this time as well, is just. I don't think it's on April 2, you know, 2026.

[B]

Sorry, Marco. Stay right here. We do have some breaking news out of Washington. Eamon Jabbers has that story for us. Eamon.

[A]

Leslie, A White House official confirming to our colleagues at Ms. Now that Pam Bondi has been removed as the Attorney General of the United States. The White House official telling Ms. Now just in the past couple of moments that the new acting interim Attorney General will be Todd Blanche, and he is expected to post about this on social media in a short time. So we'll wait for the official statements as to why this happened. But there had been increasing tensions between the White House and the Department of Justice, particularly over the Epstein files. Going back to all the way. You know, early last year, when Pam Bondi promised to release Epstein files, staged sort of a meeting with a bunch of MAGA folks who were enthusiastic about releasing the Epstein files, gave them documents that didn't really live up to their billing, and then started a cycle of frustration around the Epstein story that ultimately ended up in President Trump being pressured to agree to release everything that the DOJ knew about Epstein and that massive document dump that we saw at the end of last year. So that was one point of tension. We'll see what the White House says and what the Department of Justice says in the moments to come. But for now, what we know is that Pam Bondi is out as Attorney General and Todd Blanche is in. In what they're calling acting Interim Attorney General. Leslie, back over to you.

[B]

Yeah, Eamon thank you so much for that. It does appear, based on reports, that those tensions have been simmering for a while. What do we know about Todd Blanche, especially as it pertains to some of the frictions that had been reported behind the scenes. Does he. How do you solve any of that?

[A]

Yeah, one of the questions is going to be how does he navigate this very tricky situation now where the president clearly wants indictments and criminal convictions of people that are his political enemies. He's pushed for that. You saw him over the weekend, I think at one point on one of the days this weekend, the president posted on social media 14 consecutive times about Letitia James somebody, a political rival who he has said has committed crimes. The president wants those cases to move forward. The problem that, you know, Lyon, prosecutors have faced so far is that they can't match the evidence that they can bring to trial with what the president has insisted is out there. And that makes it very difficult to get their subpoenas through to get grand juries to move forward with indictments. And it will getit could be difficult to move forward with convictions if they can get these cases across the line. None of that seems to matter to the president, who is frustrated that he hasn't seen the kind of convictions that he wants. And I think anybody who takes this job next is going to face a very tricky dynamic of trying to both please a president and move forward on the basis of the law and find himself in a very tricky political situation. And that is a different kind of Department of Justice than we've seen before. Previous administrations have always, you know, bent over backwards to suggest, even if there was politics at play behind the scenes, to suggest that the Department of Justice was independent from the president's desires. This administration hasn't really bothered with that nicety as much. The president has signaled publicly what he wants, and we've seen the Department of Justice do that. It does seem like in this case, Leslie, ultimately the president got frustrated that the reality on the ground wasn't moving as fast as he wanted it to.

[B]

Absolutely. Eamon, thank you so much. Doing double duty for us in the first 15 minutes of this show.

[A]

That's right.

[B]

With the attorney general out. Reportedly out. And geopolitics. So let's turn back to geopolitics and the markets. Marco Papich is still with us. And Marco, I wanted to ask you about something that Eamonn led the show with today, which was this reported agreement or discussion that's taking place with Oman in terms of how it could navigate the strait of Hormuz in this current environment? Is that important because of the role Oman plays in the, in the geopolitical posture in terms of trade or because it could set a precedent for others to have similar agreements in order to have more trading flow through the Strait of Hormuzz?

[F]

Yeah, thank you for that question. I was afraid you were going to ask me how to trade Pam bomb these firing. No, I agree. I think it's a big deal. It's a big deal more because Oman and Iran actually share Strait of Hormuz. So there is no international waterway in between them. There's no space for it, but the strait is considered an international waterway regardless. So Oman is a critical geographical piece of the puzzle. It also shows, I mean, Tehran is basically signaling to all of us that it is not unilaterally setting up a new mechanism. It's trying to have this kind of plausible deniability. No, no, no. We're involving others in this endeavor. But the endeavor is effectively an online retail store where you show up, you click, you put some information, you pay and yuan, and you get your ship through. So I think eventually this is going to work. And I think that there is really no way to open the strait in the near term. You know, six months from now, sure, there can be a flotilla of 50 countries standing shoulder to shoulder forcing Iran to open it. That can be done. The problem is from now until then, we've got a Mad Max world where there's no energy left. And so instead of that, I think most of the world will simply acquiesce to this new reality where Iran is effectively putting a premium in an oil barrel in order to allow energy to be shipped out of Hormuz.

[B]

Sorry, just one more quick follow up question. In the Mad Max world where there's no energy left because of the Strait of Hormuz.

[F]

Oh, absolutely, yes. Well, not, not no energy anywhere, but absolutely. I mean, Hormuz is so critical to so many other things that your previous guest was also talking about. It's not just this, it's also lng, it's also phosphates, it's helium, it's fertilizers. And so if there isn't shipping through it, we're going to have a very non binary outcome. You know, we're not dealing here with oh, Hormuz is open and you buy some risky assets. Hormuz is closed and we have a run of the mill recession. No, no, no. We're going to have a pandemic style shutdown in global supply chains.

[B]

All right, well, let's hope it doesn't come to that, but we appreciate you being all over at Marco Papich. Papich. Thank you very much. Coming up, what did we learn from the president's address to the nation last night? We'll look at the political fallout with Pimco's head of public policy, Libby Cantrell. Plus our first look at the Iran war's impact on our economy through the lens of some of the country's most respected economists. We'll connect the dots from the Middle east to the US labor market ahead. The exchange is back after this.

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New episodes every Tuesday, wherever you get your podcasts.

[B]

Welcome back to the Exchange, a volatile session on Wall street with the Dow swinging more than 800 points from the high to the low. The NASDAQ erasing a 2% drop. The S&P was down 1 1/2%. The small cap Russell 2000, now essentially positive. A messy market reaction to the president's speech last night. My next guest says the political reaction may end up being the same. For more, let's bring in Libby Cantrell, head of public policy at Pimco. Libby, thank you for being here. And before we get to some of the geopolitical concerns that you're focused on. I first want to ask you about some breaking news that Eamonn Javors brought us last earlier in the hour where he talked about Attorney General Pam Bondi's ouster reportedly. And I'm just curious what you make of that, especially in the context of what it means for the investigation involving the Fed and Chair Powell.

[E]

Yeah.

[J]

Well, good afternoon. I think that's exactly right. I mean, the market's pretty inured to these personnel changes in Washington, regardless of what the administration is. But I think the only real market read through is does this, you know, does this lead to a DOJ that may see this as an inflection point to back off of that investigation into Powell? As you very well know, as long as that investigation is, you know, out there and, you know, Chairman Powell is not exonerated from that criminal investigation, Senator Tillis, the Republican from North Carolina, has pledged that he will hold up the confirmation of Kevin Warsh. There is going to be a hearing, it looks like, but that is very different from a vote and then, of course, a floor vote. So I think that's sort of the real question. Does this necessarily kind of present an inflection point or an opportunity, if you will, for the Department of Justice to sort of back off of that investigation or, you know, or does it actually lead them to sort of double down? So I think, again, if any sort of market read through to that breaking news, it's probably through that investigation into Chair Powell.

[B]

Well, the reports say that Todd Blanche will be serving in an acting capacity as ag. Is there anything we know about him as it pertains to these types of issues and whether he will, you know, press on the gas or maybe slow things down a little bit?

[J]

It typically, you know, acting secretaries or what have you are pretty low to make any really big policy shifts. So I think it remains an open question. I do think, though, this is to a more permanent DOJ Attorney general is about the confirmation. I mean, as you may remember, former AG, now former Pam Bondi was confirmed, you know, 54 to 46 Democrats, all Republicans, in addition to Democratic Senator Fetterman, who voted in favor. This is a very different political environment where Republican senators are probably going to question whomever President Trump nominates, you know, a little bit more than they were inclined to those first few sort of honeymoon, you know, months and weeks of, of Trump 2.0. So I do think confirmation here could be a little bit stickier, you know, in terms of who he actually nominates for that, you know, that permanent position.

[B]

Let's turn to geopolitics now because I know that's also front and center. I'm curious how it's all being received politically. How was the speech last night received politically, particularly among Republicans, where it will certainly matter going into the midterm elections?

[J]

Yeah, well, I think, you know, obviously I think the markets were hoping for some, you know, some real answers and if anything, they just got more questions. No real olive branch, no real clear roadmap to an off ramp. And in many ways, I think, you know, Congressional Republicans are probably hoping for some more clarity as well. You know, keep in mind that members of the House and the Senate are home both this week and next week. And so they're hearing, you know, most likely a lot from their own constituents about this conflict, of course, about the rising price of gas. And I don't have to tell you, but affordability is front and center for voters. It was the, it was the most important issue, of course, in the 2024 election. It continues to be, you know, the most sort of pertinent issue. And so increased gas prices certainly exacerbate those concerns. I would not be surprised if members of Congress are not hearing a lot from their constituents about this. So again, I don't, I don't think yesterday necessarily g the markets or those members very much reassurance just about exactly how this will, how this conflict is going to wind down and you know, what the off ramp could look like.

[B]

Yeah, it does certainly feel like the policy measures that they could take to combat all of this, at least economically, are pretty limited at this point in time. Libby, thank you so much for rolling with us on some of the breaking news as well as breaking down what it all means politically from a geopolitical standpoint. Appreciate it.

[D]

Thanks.

[B]

Coming up today marks one year, you can believe it, since President Trump first unveiled his so called Liberation Day tariff plans. And in the back and forth since then, stocks have largely shrugged off any long term impact. After the break, a deep dive into where we stand and where we're likely headed next.

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[A]

We will establish a minimum baseline tariff of 10%. You notice that on the chart and that'll be on other countries to help rebuild our economy and to prevent cheating.

[B]

That was of course President Trump one year ago today unveiling his so called Liberation Day tariff plan which included a 34% duty on Chinese goods, 20% on the EU and 46% on Vietnam. Stocks plunging in the day is following that announcement with the major averages falling about 10%, the Nasdaq suffering back to back 5% losses. But stocks have rebounded nicely since then. The Nasdaq the outperformer, up 24% and tariff rates are basically back to where they were a year ago. So what's next for the President's trade agenda? Megan Casella has a closer look. Hey Megan.

[E]

Hey Leslie. That's exactly right. It's been a wild ride for tariff rates since then. But here with this one chart we can take a little snapshot glance at everything that has happened with the tariff rate in the year since. So this is the average effective rate that US Importers have been paying according to the PEN Wharton budget model. You can see how low those average rates were when the President first took office, just about 2.3%. It started to climb with those first fentanyl tariffs early in the term. And then on Liberation Day when that global 10% tariff first took effect, that brought the average effective rate to something like 7%. And some change. We kept climbing through the summer. That's when things started to get a little bit dicey with the auto tariffs coming online with those steel and aluminum tariffs doubling to 50%. And then in August, that was when all of those reciprocal tariffs, those country specific tariffs first took effect. We got a little bit of relief through the fall and you can see that here. That was when the President struck a little bit of a detente with China when he offered some exemptions for grocery items in particular. And then things really started to get interesting. You can see here this is the Supreme Court ruling repealing all of those tariffs imposed under ipa. You can see how much relief it brought, bringing the average rate below 5%. But because the administration responded so quickly with those section 122 tariffs, again putting a 10% global baseline tariff back into effect. Now this average rate is right around seven and a half percent, almost exactly where we were a year ago today. So for all that's happened between now and then, for all the relief it felt like the Supreme Court brought to importers, we're pretty much where we were a year ago. The question now, of course, is where this line goes next. I've been talking with economists who say they see it climbing back up above 9%, maybe even above 10% by later this year as more and more tariffs come online. Leslie?

[B]

Yeah, Megan, I was going to say if Rip, Brent, Rip Van Winkle just fell asleep the last year, he would have missed it all. But I guess if the trend is going higher, see what happens on that front. Meghan, thank you. Now to Julia Boorstin for a CNBC news update. Hey, Julia.

[I]

Hey, Leslie.

[H]

Well, the CFTC has filed lawsuits against Arizona, Connecticut and Illinois for trying to regulate prediction markets. In the lawsuits, the agency argues that it alone has the authority over prediction markets and that states interference creates harmful regulatory inconsistency, echoing the Trump administration's approach to regulating these markets. OpenAI CEO Sam Altman says his company is still in talks with Disney after shutting down the AI video generation tool sora. On a podcast out today, Altman said he would love for the two companies to collaborate in the future. Disney was set to invest $1 billion in store and give the app access to hundreds of Disney characters. Dutch authorities have recovered a priceless Romanian gold helmet that was stolen last year. Two gold bracelets were also recovered. In early 2025, a gang of robbers used firework bombs to break into the museum and smash the display containing the ancient artifacts. Museum director said the helmet had minor damage but can be fully restored. Back over to you.

[B]

Wow, that's really cool, Julia. Thank you. Coming up next, our market guest says the president's address did nothing to ease investors fears about a prolonged war. So is there more weakness ahead or should you buy some of the beaten up names? That's next. Welcome back to the Exchange. We are getting a first look from economists on how the Iran war will affect the economic outlook. For more let's get to Steve Liesman.

[K]

Steve Leslie, we are getting that first look at how the Iran war is impacting forecasts out there. Economists that may see an elevated chance of a recession. They've edged their growth forecast lower while boosting their inflation numbers. The national association for Business Economics they went back into the field for a flash survey at the end of the month after oil prices surged. Though oil prices are even higher now than that late March survey period. Here's what they found. The survey found 43% of respondents see recession odds at 35 to 50% and 43% put it at 20 to 35%. Both are elevated compared to the prior survey named President Gregory Daco saying, quote, unquote, that rapid deterioration in sentiment sits against the initial March survey that had already told a cautionary tale. The share of forecasters doing risks skewed to the downside had jumped sharply from 48% in November to 77% driven by a broadening of geopolitical conflicts. 47% see a zero to half point boost to inflation from the oil price surge. 27% think it will be a half to a full percentage point. 10% seeing no change at all. Now responses were divided when it came to the outlook for the fed funds rate. A third see no change this year. That's in line with the market, which has an 80% probability on no change. 27% see one rate cut and the third see two rate cuts coming. Before the flash survey, the consensus was for those two cuts. The survey shows effects of oil price search so far relatively mild compared with what it could have been with the most worrisome message not to hit the growth or inflation, but probably Leslie, the elevated chance of recession, huh?

[B]

It seems like some of those at least would be interconnected but interesting results of the survey nonetheless. Steve, thank you.

[K]

Pleasure.

[B]

From economic worries to market worries, our next guest says the president's speech did little to soothe investors, but the downturn the conflict has caused is creating opportunities, especially in some of the Mag 7 names. With me now is Jay woods, chief market strategist for Freedom Capital Markets and CNBC contributor. Jay, thank you very much. Great to be here for being here today. So I'm currently looking at WTI. On my screen is 111rent 108. You know, what type of psychological impact does that have on the equity markets, especially given there doesn't appear to be a near term solution?

[L]

Well, I think we're going to find out when we get some economic data over the coming weeks and months when Those oil and gas numbers really go into the economy. But what we're looking at right now is a market that is just on edge and we're going from tweet to tweet. And over the long term, you know, to quote Benjamin Graham, the market is a voting machine and that short term volatility is telling us. We didn't like that speech last night, but as the day evolved, the possibility that we may figure out the straight somehow has edged consumer investors fears. Now we have to look, all right, is this just an oversold rally? As a technician, I do believe that and all of us technicians are in that camp hike. So I'm a little concerned about that. But going into a three day weekend, the next thing to watch do we go boots on the ground. Is the straight figured out? And this oil spike, does it continue? Because if we're higher for longer, that will have impact. So this downtrend could continue. And I believe we will probably see a retest of those recent lows, recent being Monday, those lows that we had. So 6363.50 is a level that I could see the S and P trying to settle in. But to break out above, we need a little more clarity. And we didn't get that from that speech last night.

[B]

So absent that clarity amid all of this uncertainty, it's a fast moving story. I mean we've seen what the markets did just today in terms of volatility. What, what do you advise investors to do? Is there a good way to hedge this? And then do you see buying opportunities?

[L]

Yeah, well, we look for relative strength, what stocks have been holding, holding up. So we go to the Max 7 first because everyone wants to talk about the Max 7. And you look at Nvidia now, the fundamentalist knows that this stock on a valuation is dirt cheap. It's, you know, growth is there, but technically it's broken down. So I look for opportunities. If we were to get this washout, if we go back to an oversold condition, I think Nvidia is the first stock you want to buy. It has support 160 to 150. If it gets there, I want to be in, if I'm in the stock now over the long term, like some of my family members are, I tell them stop looking at the news, don't worry about it. But that's a stock that will lead this market on a washout or hopefully on the road to recovery. Then real quick, Apple from a relative perspective, one of the best performers. It's become more of A utility play than that tech play. We know the story hasn't been there, but the utility behind it continues. And then Alphabet. Alphabet has caused waves in, in the market. They're like the wave maker. But when you look at the sum of the parts and you look at it technically, the stock is still in a strong long term uptrend. This dip gives people an opportunity to buy the name. And you look at just Waymo and YouTube alone from the, you know, some of the parts that makes Google or Alphabet as we call it, the spot that I would want to put money to work on any dip, including this one.

[B]

Do you think the uptrend in energy is near completion or do you think it still has room to run?

[L]

Actually, I still think it has room to run for higher for longer. You look at stocks like Exxon and Chevron, they're flagging. In technical terms, they've had a nice run, a little overbought, they're coming back levels between 155 and 160. And ExxonMobil look like good entry points with a downside risk to 145. So the trader in me is looking all right. If it doesn't work, I have downside risk. But if we get another spike, if this goes on longer, then I could see ExxonMobil going back above the 120, 175 highs from just earlier this week into the 1 90s. And here's a sector that no one talks about, solar. I just wrote about this for CNBC Pro so your subscribers can go and check it out. But the solar etf T A n tan, very nice symbol that is up 16% year to date. And it's been an area that you wouldn't think would do well in a Trump administration, but the first administration. So 550% is down 70% under Biden, so 62% under Trump. And technically it's breaking out. Good risk reward opportunities. SolarEdge and Next Power, good symbols in the Solar ETF. If you're looking for something a little different off the radar, maybe also a

[B]

bit of a hedge against those oil prices and natural gas prices. Jay woods, thank you very much. Appreciate it.

[L]

Thank you.

[B]

Coming up, private credit concerns front and center once again today. Blue Owl capping redemptions at two of its private credit funds. This is the treasury is reportedly meeting with regulators, regulators to assess private market risks. So is there real concern about contagion? That's next. Welcome back to the Exchange. Blue Owl shares paring losses after following to the lowest intraday level ever. Currently down about 3.4%. The move comes as the firm caps private credit fund redemptions at 5% following steep request levels. The company saying it's due to quote heightened market concerns around AI related disruption to software companies. That's at least the case for its private credit tech fund, tech oriented fund. How worried though should investors be about a contagion in the sector? For more let's bring in Dan Rasmussen, founder and portfolio manager at for Dodd. Dan, these numbers, they're some of the last to come out of these non traded private credit business development companies. And so you know you definitely don't have a benefit when you're the last one. And the ones who came before you have significant with withdrawal requests, redemption requests and blue owls were multiples higher than many of their peers here. You know, what do you make of the whole redemption dynamic and the gating dynamic as well? Because the way that these funds are structured are such that people can ask for their money back but the fund managers don't have to give it to them.

[M]

Yeah, we're in the early innings. This is a self reinforcing cycle where the flows actually predict the fundamentals. Concerns lead to outflows, outflows lead to forced selling. The forced selling drives the prices down further and that's when you start to see who owns these assets in a levered way and when those people start to blow up, whether that's life insurers who have levered exposure to, to these private credit vehicles, regional banks, we don't really know yet who holds this stuff but we know when it's mark to market, if they owned it on leverage, they're going to be in trouble. And that means that liquidity dries up in the sector and as liquidity dries up it's, it makes it unable for most of the companies that were borrowing from these private creditors to refinance and that's when you get defaults. So we're in that first stage right now where concerns have led to withdrawals. But just like a bank run this type of investor sentiment, very dramatic and negative investor sentiment is self reinforcing and I think is going to inevitably lead to a credit crisis.

[B]

But there's a, there's a key difference between these types of fund structures. In a bank, which is at a bank, depositors can come take their money out and they can have a run and effectually cause the bank to go under. With these types of structures, investors can ask for their money back but they're then gated which is what we've Seen pretty much across the board, at least in the first quarter. So are those mechanisms, while they may upset investors, they don't require forced sells because the fund managers can just gate those who are seeking their redemption requests. Right. So how protective is that of the system?

[M]

That just means that this rolls out a little bit slower than it would. Right. And you can see this comparing the performance of the public. BDC just sold off very sharply relative to those interval funds which are privately traded and valued at par. Right. Those are still marked at par. Of course, the BDCs have sold off sharply. But this is going to play out inevitably. And I think what you know is that, you know, you want to get in line, right? I mean, if you know that there's a line at the exit, you want to get in line, so you have an option to exit. Right. So that's what everyone's doing. They're getting in line and no one's going to get out of line. Right. So you've got a while for this to play out. And credit markets take a while. Right. Most companies can keep, keep paying interest payments for a few quarters before they really get blown out and can't do it anymore. So this is a slow rolling credit crisis, but it is a credit crisis.

[B]

Well, this is an interesting situation, at least with these two individual funds, whereby at least according to the letter that Blue Owl sent to its investors, it was a pretty small cohort of investors who were seeking redemptions here. It wasn't. They basically said, at least in the case of one of their funds, that 90% of their investors did not seek a redemption here. So I'm just curious how ubiquitous this is and you know, how, how widespread the concerns are among the limited partners here.

[M]

Yeah, I mean, if you're seeing 20% or 40% redemption requests, you know, you can try to put lipstick on a pig, but that's a catastrophic level of withdrawals. Right. It really is. And I think you can see that not all private credit is the same.

[A]

Right.

[M]

There are people that are not receiving big redemption requests. Those are the people with better underwriting standards, less exposure to the worst areas of the market. But for Blue Owl, the bank run is here and it's happening and there's, there's really no stopping it now that people are seeing those redemption numbers. Because again, you're a fool not to put yourself in line for redemptions if you know you're gated.

[B]

Well, we'll see what happens three months from now whether those who weren't able to get the redemption seeking week to do so again in the second quarter or if all of this blows over and you know, we'll just say remember when time will tell. Dan, thank you. Dan Rasmussen, Thanks.

[M]

Pleasure.

[B]

Thanks for coming up. Space X confidentially filing to go public in what would be one of the biggest would be the biggest IPO ever and it could have big implications for OpenAI and Anthropic. We'll tell you why next the exchanges back after this this. Welcome back to the exchange. Space X confidentially filing for an IPO when reportedly Elon Musk wants 30% of the IPO to go to retail investors. Why and how could it benefit him? Deirdre Bosa has more in today's tech check. That may be the highest proportion I've ever heard of.

[I]

It is, you're right Alpia, it is. And you know the space very well. So that 30% number is the one to watch here. In a typical IPO, retail gets 5 to 10%. So Musk wants three times the norm. And that framing is that this is about giving everyday investors access. But there's another way to read it. Musk has seen what a loyal retail base can do for him. At Tesla, retail owns about 30% of the stock. They backed his $56 billion pay package after a court struck it down and then they approved a new one worth up to $1 trillion. So that is exactly the shareholder base that he wants at the Space X from day one. Now the timing makes sense to retail has become a massive force in this market. More than 300 billion into US stocks last year according to JP Morgan. But until now that has been bottom up GameStop, AMC, others, retail organizing itself. This is different. It's top down an issuer designing the shareholder base before a share even trades, before it even gets to market. So Musk is trying to build this from the jump. And if it does work, Leslie, it could become the playbook for OpenAI and Anthropic's expected listings later this year. The trade at large. It's really interesting to think what this

[H]

could do to it.

[I]

It could be priced on retail faith and loyalty. And that's certainly different than what we've seen on the price, especially for new companies.

[B]

Yeah. And historically retail has served as that marginal buyer on day one. That kind of especially for a name that's, that's pretty name brand like Space X is, does that maybe pour cold water or pose any risk to that notion?

[I]

That's the, I mean there is a question of whether they can actually fulfill this 30% of such a large listing. But you're right, they've been along for the ride. And this is a fundamental change. Right. If you want them, if you want to allocate 30% to these retail investors, that changes the dynamic.

[B]

Right.

[I]

Of the company, the whole makeup of it. Might be willing to vote more with Elon Musk. So it's really interesting to consider whether it actually happens. Speak to some people who say kind

[B]

of like, yeah, right, it's going to

[I]

be hard or you're going to leave them with the bag if they do that. So we'll see how it all plays out.

[B]

Yeah, it's definitely an interesting idea. I'm very curious to see how it works, especially on that first day of trading where retail can come in and really make a difference there. Deirdre Bosa, thank you so much. That's it for us. Thank you for watching the Exchange. Power lunch starts after this quick break. You've been listening to the Exchange.

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Make sure you're subscribed to get each

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