The Exchange (CNBC)

Episode: "Tariffs, Treasuries, and Tech" (Aired April 8, 2025)

Overview

In this charged episode of The Exchange, host Kelly Evans surveys a financial landscape in upheaval as new U.S. tariffs on China are poised to take effect at midnight. The show brings together CNBC reporters and expert guests to unravel complex market moves, White House infighting, congressional discontent, and the reverberations across tech, housing, and consumer confidence. This episode serves as both a real-time guide to surging volatility and a deeper analysis of the shifting U.S. trade strategy under President Trump’s renewed agenda.

Main Themes & Purpose

• Impending U.S. tariffs on China: Uncertainty over timing and enforcement, market reactions, and political infighting
• White House and Congressional discord: Public arguments among top officials, concerns over trade policy's direction and impact
• Market impacts: Massive moves in the major indices, especially tech (the "MAG7"), oil, and Treasuries
• Economic fallout: Housing, consumer spending, and recession risk
• Sector spotlights: Apple’s tariffs pain, cruise industry resilience, and financial sector outlook

Key Discussion Points & Insights

1. Market Update & "Tariff Tantrum" Context – [00:46–04:00]

• Stocks off highs, volatility persists: After an early rally (Dow up quadruple digits, S&P up nearly 200 points), gains fade dramatically.
  • “At the highs of the session, it was much stronger ... now only up 22 [points] right now. So again, green, but fading a little bit.” — Dom Chu [01:31]
• Tech is central: The "MAG7" stocks lost $1.8 trillion in market cap over three days.
• Oil prices slide: Crude below $60/barrel; energy sector leads losses, acting as a market bellwether.

2. Tariff Confusion & White House Feud – [04:00–07:44]

• Misreporting adds to instability: Erroneous news that tariffs started at noon caused market swings; clarified to midnight.
• Public row between Elon Musk and Peter Navarro:
  • Musk insults Navarro: “Navarro is dumber than a sack of bricks.” [04:18]
  • Issue: Musk’s role as producer vs. assembler, and his China ties vs. Navarro’s hardline stance.
• White House divided: President must eventually pick a side (Musk’s globalist or Navarro’s protectionist vision).
• Speculation on Musk’s exit: His special government role expires soon; tension may hasten departure.

3. Congressional and Industry Reactions – [07:44–13:25]

• Silicon Valley vs. White House: Rep. Ro Khanna criticizes Commerce Secretary Howard Lutnick for antiquated views: “Lutnick loves 19th-century policies, but he should understand 21st-century production.” [08:20]
• Policy direction: Some see Treasury Secretary Bessant gaining influence, market hopes for negotiation, but “permanent tariffs” still the likely path.
• International dynamics: China’s retaliatory 34% tariff signals hardening positions; cooperative signals from Japan, Korea, Indonesia.
• Congressional hearings: Senators grill U.S. Trade Rep, questioning endgame and highlighting consumer and business pain.
  • Notable exchange:
    • “Who pays these high tariffs?” — Sen. Koszewski
    • “It will be the consumer.” — Dom Chu [12:20]
    • “Tariffs are a double-edged sword … a lot of collateral damage.” — Steve Liesman [12:26]

4. Economic Theory Meets Political Reality – [13:25–17:39]

• Tariffs risk ‘going backwards’:
  • “I’m concerned here that we’re going to be going, trying to go backwards and try to make a deal with the past. But there’s nobody in the past to make a deal with.” — Steve Liesman [14:49]
• Blurry vision: Trump strategy links tariffs, Treasury reserves, and dollar strength but with many internal contradictions.
  • “I think the vision is very blurry and inconsistent … Do you want a strong dollar? The other side of the trade deficit is a massive capital account surplus.” — Steve Liesman [16:52–17:32]

5. Treasuries, Inflation, and Dollar Dynamics – [19:27–22:57]

• Poor 3-year auction signals nervousness:
  • “I gave it D for demand and D for dog ... Starting to see rates get a little more stubborn, especially on the long end … The auction really did reverse a lot of green back in the red.” — Rick Santelli [19:42]
• China’s actions over Treasuries and currency:
  • There’s skepticism about the “China dumping Treasuries” narrative.
  • “Behavior in the dollar doesn’t underscore a big liquidation in Treasuries … Our dollar historically is not weak at these levels.” — Rick Santelli [21:27]
• Yuan hits all-time lows vs. dollar: China’s currency depreciation may portend future trade tensions.

6. Global Spillovers & Risks for Europe – [22:57–24:37]

• Dumping risk:
  • “If the United States is not a viable marketplace for China ... other parts of Southeast Asia, [Europe] could be dumping grounds for a lot of Chinese goods—a deflationary pressure.” — Dom Chu [23:44]
• Unquantifiable losses:
  • “You’ve blown a lot of things up from a world trade standpoint ... Analysts don’t know where [the losses] are.” — Steve Liesman [24:15–24:38]

7. Housing Market Update – [25:00–27:14]

• Mortgage rates spike: Now at 6.85%, highest in over a month, erasing last week’s rate dip.
• Stock market drag: 1 in 5 homebuyers plan to sell stock for a downpayment, but weak markets complicate that.
• Persistent headwinds: High prices, shaky confidence, and the broader economic malaise crimp the housing outlook.

8. Apple Under Pressure: Tariffs and Supply Chain Risks – [27:04–32:24]

• Apple’s worst three-day slide since 2001: Down 20% in a week.
• Tariffs hike costs:
  • “Tariffs add about 50% to the cost of Apple. ... If they don’t raise prices, costs go through the roof ... $2 negative impact on EPS.” — Laura Martin, Needham [27:54, 29:09]
• Relocating manufacturing isn’t realistic:
  • “If the US made iPhones, prices would be 3x … and it couldn’t be done immediately. It takes years.” — Laura Martin [30:04]
• Broader impact: Companies may cut marketing/ad spend to offset costs (hurting media sectors).
• Advertising and streaming hybrid resilience:
  • “Netflix is almost like a durable...they just go down to the $7 ad-driven tier.” — Laura Martin [31:57]

9. Market Technicals and Strategy – [32:24–39:51]

• Bear market dynamics:
  • “We’re in a classic bear market … establishing a new range … until further notice, that’s the range that’s going to get traded on these headlines.” — Mike Wilson, Morgan Stanley [32:57–34:32]
• Capitulation and uncertainty: Markets need “incrementally negative” news to break lower; see forced liquidations.
• Valuations remain a risk: High starting valuations worsened the downturn.
• Rolling correction/recovery:
  • “There’s probably three, four, five other headwinds beyond tariffs … The correction started four months ago.” — Mike Wilson [35:21]
• Selective opportunity: Seek sectors already hit hardest (e.g., homebuilders, consumer goods, non-AI tech), but it may be too soon to buy.

10. CEO and Sector Spotlights

Norwegian Cruise Lines: Tariffs, Recession & Industry Resilience – [39:55–46:23]

• Value proposition for cruising:
  • “When we study it, the average cruise is priced about 30% better than the average hotel vacation. We’re 2% of the global market … I wouldn’t say we’re recession-proof, but when times are bad, people still want to go on vacations.” — Harry Sommer, Norwegian Cruise [40:58]
• Forward bookings are strong: 65–70% booked for next 12 months; “no dramatic U-turns” yet post-tariffs.
• On U.S. shipbuilding and manufacturing:
  • “It takes years to develop that type of talented infrastructure.” — Harry Sommer [43:27]
• Taxes and perception:
  • “Cruise lines pay two and a half billion dollars in taxes ... any narrative that [says we don’t] is simply incorrect.” — Harry Sommer [44:43]

Stifel CEO on Recession Risk and Opportunity – [48:16–54:17]

• Not surprised by volatility:
  • “What has happened here has happened very fast, so much faster than we thought, but the basis ... this was going to happen. President Trump ran on this.” — Ron Koszewski [48:27]
• Tariffs as recalibration:
  • “The president’s transactional. He carpet bombs first and negotiates second, and that’s what we’re seeing.” — Ron Koszewski [49:06]
• Long-term optimism:
  • “Now is where you would wade in. There are great companies on sale.” — Ron Koszewski [51:32]
• Policy uncertainty makes business difficult, but opportunity emerges for long-run investors.

Notable Quotes & Memorable Moments

• Elon Musk vs. Peter Navarro: “Navarro is dumber than a sack of bricks.” — Elon Musk, recapped by Eamonn Javers [04:18]
• Congressional frustration: “Whose throat do I get to choke if this proves to be wrong?” — Sen. Tillis [12:38]
• Steve Liesman’s economic historical quip: “I’ve been researching the extent to which we were a great nation in the late 1800s ... life expectancy was around 40 years.” [13:36]
• On ‘Fortress America’: “There appear to be a wing of the President’s advisors that want to erect barriers … call it Fortress America, and leave everything out.” — Steve Liesman [15:30]
• Apple’s manufacturing fantasy: “The president believes the US has capability to make iPhones.” — White House, recounted by Laura Martin [29:55]
  “Yeah, I don’t think that’s a thing.” — Laura Martin [30:04]

Timestamps for Key Segments

• [00:46] — Market overview and context for "tariff tantrum"
• [04:18] — White House infighting; Musk vs. Navarro spat
• [08:20] — Rep. Khanna accuses Lutnick of 19th century thinking
• [12:14] — Senators question tariff policy; “Who pays?”
• [14:49] — Liesman on economic risks of backward-looking policies
• [19:42] — Rick Santelli on Treasury auction and market reactions
• [23:44] — Dom Chu on European risk from China dumping goods
• [25:13] — Diana Olek on mortgage rates and housing impact
• [27:54] — Laura Martin on Apple’s tariffs exposure
• [32:57] — Mike Wilson on market technicals and bear market trading
• [40:58] — Harry Sommer on cruise industry value proposition
• [48:27] — Ron Koszewski on policy-driven market upheaval

Tone & Language

• Urgent, skeptical, and at times exasperated, with flashes of humor and resignation as market participants, analysts, and executives grapple with erratic policy, rapidly changing data, and the struggle to “see the endgame.”
• The show maintains its CNBC newsroom formality, directness, and focus on numbers and tactical insight, punctuated by emotionally charged quotes from both political and market actors.

Conclusion: Big Picture Takeaways

• Tariff overhang grows: No sign of quick resolution or clear forward strategy, despite hopes of negotiation.
• Market volatility is here to stay: Technicals dominate trading as fundamental data streams play catch-up.
• Winners and losers shake out: Tech (especially Apple) and consumer sectors are most at risk; some sectors (e.g., cruises, homebuilders) are monitoring for emerging opportunities.
• Economic isolation vs. global integration: The trade debate reflects much deeper tensions about America’s economic future.
• Investors look for select opportunities amidst chaos: Experts recommend selectivity, patience, and a long-term perspective as “recalibration” creates turbulence and, potentially, bargains.

This episode offers a nuanced, real-time snapshot of a pivotal day for markets and policy, balancing headline urgency with deeper context and forward-looking analysis.