← The Exchange
The Exchange
Treasury Auctions and Tariff Actions 04/09/25
01:00:02
A strong 10-year Treasury auction pushing stocks higher at the top of the hour, but it was President Trump’s 90 day pause of some tariffs that sent stocks soaring. We have the story as it breaks, including Treasury Secretary Bessent’s news conference, and instant reaction from strategists and traders as the Dow posts its biggest rally in five years.
Loading summary
Transcript129 lines
- [00:04]
A
Thank you very much, Scott. Stocks are largely holding their gains right now. The dow's up to 80, but we could be getting a market moving event this hour. Hello and welcome to the Exchange. I'm Kelly Evans. Let's start with the chart of the day, the 10 year treasury yield. We have a 10 year auction happening right now as we speak after a huge spike in rates overnight with bulk selling of US Treasuries. The 10 year hit 450 earlier and it's nearly back there now soaring from Friday's low of 3.8% 6%. Rick Santelli is live at the CME and will bring us the action results momentarily. Diana Olek is watching the mortgage market where rates are already back above 7%. Steve Liesman watching the Fed here and whether they will have to step in if things get worse or more disorderly. We also have economist and strategist Drew Mattis who just upped his recession probabilities to 75% and sees 100 basis points of cuts this year. It's great to have you all on board. Really appreciate your time. Thank you. Drew quickly kind of set the scene for us. And how surprised are you by the spike in rates?
- [01:05]
B
While this spike in rates is surprising and it's actually one of the reasons for additional concern. You know, when people are moving towards a recession forecast and they're pricing in more Fed easing rates should be going down and said they're going up, which suggests that something else is going on, whether it's people raising cash to meet margins or whether it's foreign investors shedding Treasuries to get into other securities. That's kind of the open question right now and that's the question everyone's trying to figure out.
- [01:32]
A
Yeah. Let me bring in also Peter Boockvar who's standing by kind of watching these results, Peter, thinking things through today and I think you guys might have a nice kind of discussion here. I mean, you think the US Is really starting to look more like a third world country, which is not comforting at all or the direction we thought that we were going. So just what jumps out to you? What's significant about the activity of the past 24 hours?
- [01:54]
B
Well, I was specifically referencing when you see a rise in interest rates and you see a weaker currency. Historically speaking, that's what you usually see in a third world country. Now maybe this is just a one off day, but I don't necessarily think that's the case. I do think there's another factor here which I'm beginning to hear some rumblings particularly in the municipal bond market where people are selling ahead of tax day on April 15 when the market is somewhat normal, the bid offer spreads are pretty tight. But now we're at a point where we're six days away from making tax payments, people have no choice to sell bid offer spreads gapping out at the same time and people take whatever price they can get on the bid side when they sell. So I think that's also exaggerating things here too.
- [02:41]
A
We can show maybe the MUB one of those kind of muni ETFs, perhaps any kind of composite we have. We've seen the the price is selling off and we all remember Covid when the Fed had to launch that muni bond buying facility. The point here being, Drew, that it's not about whether there's problems, quote unquote, in the muni bond market. It's the broader point that Peter is making about liquidity. And when market participants are just stepping back and you start to see yields rise and even like a state and local who's rolling over paper or something like that is potentially going to see an impact.
- [03:09]
B
Well, absolutely. And Peter makes a great point which is, you know, when things like this are happening and there's so much noise and there's so many different markets moving in so many different directions and sometimes not the way they're supposed to be moving. When they're synced together properly, people forget about some of the things that matter. And one of the things is tax days coming up, which means a big liquidity drain from the market as people sell securities or just basically move cash and send it to the US treasury. That then deposits at the Federal Reserve where it leaves the banking system. And so this will be happening over the next week or two and really not a lot of people are paying attention to it. And it's at this point, given everything else going on in the market, it actually takes on outsized importance not to drop the ball on watching the little things.
- [03:53]
A
No, I completely agree. We also have Jim Bianco on standby. Let's layer you in here, Jim, you're saying, and I thought you kind of really nicely summed up what might be going on in the bond market overnight where you say something broke. By the way, I'm not going to front run Rick here, but my guess is the 10 year auction went okay because the Dow is up 500 points and the 10 year is down about 5 basis points right now. So as things stand at 1pm Eastern, how would you describe now kind of the functioning of the bond markets, I'm amazed we're still near 450 on the 10 year.
- [04:25]
B
Yeah, the actual the auction went extremely well. There was a lot of buying that came in on the auction and that's part of the nature of a broken market is you know, things don't behave like you would think. The backdrop for the auction would have been considered to be one of the worst that we've had in several years to actually have a 10 year note auction. And it went very, very well right now, which is why you're seeing such a big reaction in the markets. But I think really what's happened is the reason that the market sold off is that as the Dow was going down, as all the calls of recession came in, if you looked over, you saw that the market was never ever expecting the Fed to step in. That that is still less than a 50% probability that the Fed is even going to cut rates in four weeks in normal period. What we've saw in the last week or so we would have been expecting the Fed to cut rates today. And I think the reason that this has changed is we're worried about inflation, tariff driven inflation. I think that that is pretty much taken the Fed completely out of the picture. No matter how bad the economy gets, Jay Powell said on Friday we're going to have to worry about inflation more. And the market came to the realization there isn't going to be any quantitative easing or massive cutting of rates. And that started this big unwind that we've seen in the bond market.
- [05:44]
A
And I want to come back to that and kind of show a couple of relevant data points. Let's just bring in Rick here with the full auction results. We're up 500 on the Dow, Rick, and we're below 440 now in the 10 year.
- [05:54]
B
Yeah. First of all I want to point out, and normally I don't make a big deal about this, but this is the second reopening of an issue. So it's a nine year ten month. About four weeks from today we'll have a brand new ten. And the reason I bring this up is the existing issue is more of a shock absorber to anything out of the ordinary than a normal primary first time offering. Now having said that, this was a stellar auction, a solid a the when issued market was trading about 3 basis points higher than the auction went off and the yield at the auction is 4.435. So we stopped through like three basis points. That's aggressive pricing. Part of that of course is the wild ranges that we've had low to high what we were doing overnight. But an even bigger issue may be that maybe there are some investors that are keeping a level head that are using the big moves to yields, to the upside price, to the downside as a sort of concession thinking that gives them some sort of a cushion to purchase during the auction versus maybe waiting in the secondary market. And ultimately there's a lot of things going on that you all are going to continue to talk about. But I would like to say after all my years since the early 80s observing markets, whether it was the 87 crash, long term capital, Thai baht, all the different crises we've seen, you, you know, it becomes an issue versus liquidity issues versus liquidity problems. And I still think we're in the first camp. I never ignore all the signs because the big deal would be if this becomes more than a liquidation. I mean, don't forget folks that it wasn't that many sessions ago that there was a flight to safety. You know, think the some of these trades that we've seen historically carry trades you can't expect they're going to reverse in one session. So much of the flight to safety trade is going through an unwind process in a much thinner market where many are sitting on their hands. And that's what I'm hearing from my sources.
- [07:59]
A
I'll pose this question to the whole panel, but want to give you a stab at it. First of the kind of three reasons why we could be seeing yields sell off so much. It could be the Chinese are actively doing it, dumping Treasuries, trying to make a point. Could be inflation, which Jim was just starting to talk about. Or it could be kind of financial firms caught on the wrong side of this and effectively blowing up and having to reposition. What are you hearing is the reason for this major sell off?
- [08:23]
B
It's just a reversal of a trade in my opinion. And all the other issues can be real. I think the China issue. Listen, I don't mean to insult anybody and I don't get direct calls to G, but I think that's the least possible at the moment. I think it is an inflationary issue as Jim pointed out quite nicely with regard to the Fed being taken out, but I really do truly think it's reversals of trades and positions.
- [08:49]
A
Would love to get everyone else's point of view. Rick. Thanks Jim. Starting with you. So is it an inflation? Because here's the weird thing, I don't know if we have these charts ready. If you look at 5 year 10 year break even like the 10 year tips have backed up but it kind of makes sense because old 10 year yields have backed up. So there's some inflation pricing there. There's not a lot more that's showing up in the break evens. There's the five year. I mean you, you'd have to squint real close to see that last wiggle up there on the screen.
- [09:14]
B
Take a look at the two year break even. It's going straight up because of tariffs. It's tariff driven inflation is what we're talking about. We're talking about.
- [09:21]
A
So why is the curve steepening though? And I'm sympathetic to this point but why is the curve steepening? The two year yield then is maybe whatever. It's the ten year where we're seeing all the impact.
- [09:32]
B
Yeah, the ten year yields going up because the, because of this tariff driven inflation. And it goes to what Rick said, that the expectation in the marketplace was that in a period of economic weakness the Fed steps in and cuts rates aggressively. Now in a period of economic weakness, the Fed has to weigh the potential of cutting rates in the face of higher CPI inflation. And they're saying that they're not going to do it and the market is not expecting them to do it. So there is going to be no Fed relief. And I think that's pushing us for this reversal of trades.
- [10:07]
A
We're going to.
- [10:07]
B
All these trades were on under an assumption economy is going to weaken. We're going to have a recession that's going to step in and cut. It is because of that inflation that we have. That's now put that last point off to the side. They can't cut unless the economy weakens so bad that it overwhelms whatever inflation that we're going to have. And that's really the question. It's the question on Wall street right now. If you're in stagflation, weak growth, sticky inflation because of tariffs, which one matters more? And it seems like it's the inflation one that might matter a little bit more and that's the way that the market's trading.
- [10:42]
A
Peter Drew, you agree? Peter, first to you.
- [10:45]
B
Well, I think there are two things. We also saw gilt yields in the 10 year go up by 15 basis points. We saw big sell offs in bonds in Australia outside of the bullions which actually were a safety trade today. Yields across the rest of Europe are also higher too. I mean to me you have two players right now in the treasury market. One that wants to buy Treasuries because they're worried we're going into recession and tariffs are going to clinch that. And then you have those that want to sell because of all the other factors we talked about foreigners selling, weaker dollar inflation and so on. This is where the line is now being drawn here on this good treasury auction. It seems that this 440 level is a line in the sand.
- [11:24]
A
It just is crazy to me, Peter. I mean, 390 seemed to make more sense in an economy that was slowing down. Right. Even with near term inflationary pressures. Do you think US households should step in and be buyers here?
- [11:36]
B
We are buying the shorter end of the curve. I don't see any reason to take much duration risk right now and I've been saying that for the last couple of years. I think we're in a bond bear market. This is the unwind of negative interest rates, zero interest rates and qe. Just look at the Japanese bond market, look at the European bond market. Yields are higher. Sovereign bond yields are a different game here. They're not the same flight to safety as they were pre Covid and Drew.
- [12:01]
A
This is where I think your perspective gets really interesting because we're hearing about inflation and all of the stickiness, but you're still expecting the Fed to do maybe a full point of cuts this year.
- [12:10]
B
Yes, a full point of cuts. But bear in mind they're going to be well lagged and they're going to be in response to what we expect will be a deterioration in the labor market. You know, they've been pushed into, into a corner and they're, they're going to fight their way out of it, which is by doing nothing while all this market volatility is going on. Because if they do something, they may just encourage further activity that will create more volat in financial markets. So, you know, we actually don't think this is an inflation story in the back of the curve. I simply, I do know, you know, tariffs are going to push prices up, but they're going to push them up for a year. So for the 10 year note, one year of the 10 is going to have higher inflation and then the rest of it's probably going to have weaker growth. So you know, I think there's probably, you know, truth to all the, there's some portions of truth to all of it. If you look at the other countries that are selling off today, it's the US the uk, Australia, New Zealand and Canada. You know, those countries are pretty close geopolitical allies. It's, it's not, you know, it's a little odd that they're all selling off at the same time. When you have countries that are Europe, you know, the Europe bloc that are actually doing fine, you know, you would expect to be a more widespread sell off globally and it's just not that's where you'd expect to be concentrated in the US and it's not. So, you know, I'm not sure it's the inflation story. I'm not sure it's foreigners selling. There's probably some of all of it happening.
- [13:35]
A
Right.
- [13:36]
B
And at the end of the day though, you know, the Fed is just going to sit back and watch us all until the unemployment rate moves in a way that they, when they cut rates, they can claim it was not driven by political reasons.
- [13:47]
A
Well, and that's exactly I want to get to Stephen, Diana here, but Drew, before you go, you were writing like a month ago that you expected the Fed to restart QE before the end of the year. And that was for some technical reasons. So what, whether it's technical reasons or what's going on in the bond market, is this almost a foregone conclusion at this point or would this just be pouring gasoline on a fire?
- [14:04]
B
Yeah, so it's not really restarting qe, it's just going back to normal. The balance sheet used to grow over time and what we're going to see some point in the near future is they're going to stop letting Treasuries roll off. They're going to replace the mbs, the mortgage backed securities that are rolling off with Treasuries. And that's a modest curve, steeper.
- [14:24]
A
All right, just want to bring Steve in on this point, Steve, just to kind of bring this to a head, what you expect the Fed will or won't do about all of these situations?
- [14:34]
B
Well, it depends on the answer to the question you asked the panelists here. What I would say is this, Kelly, and I think you know this, that markets don't reach new equilibriums overnight, but shocks can push it more quickly towards that new equilibrium. The Fed can come in. First of all, the Fed's going to tell the market that they have a whole bunch of liquidity facilities out there if necessary. Right now what we're hearing is that there is no severe dislocation like you had in the pandemic or the great financial crisis that would require the Fed to come in and do a special operation or any kind of liquidity injections here. I do not believe, I think it was Jim who was saying this. The Fed comes in with rates anytime soon because it has to get the, it has to let the market clear when it comes to the inflation story here. The more interesting question I have, Kelly, that I can't answer is are we on the way to some kind of new equilibrium here? It is of interest to people. The dollar is weakening. Bonds are rising at a time when you would expect to see a flight to safety. Is there a broader questioning of the soundness or the safety of US Assets in the new tariff regime? And with this new leadership we have in the United States, there are questions being asked about that. There's questions being asked about, well, who's going to be the better buyer of Treasuries, not retaliation from China. But it just follows that if China and Japan don't have the dollar flow to buy our Treasuries, they don't have the dollars to buy them. So who's going to step in and be that, be those buyers for the Treasuries at a time when we have rising deficits, maybe even rising more if the economy slows down. So there are substantial questions longer term. But I'm also hearing what Rick is hearing. You have trades going on, for example, a move into safer assets because taking cash from safe assets, some margin calls out there. So those are the kinds of things that we're hearing. Capital Economics wrote a nice piece on concern about U.S. fiscal policy. Trump, as far as everybody can tell, is not going to be reducing the deficit. And then, of course, as you guys have been discussing the uncertainty about China, not from retaliation, but how does it act amid a world of permanently lower dollar flows into the Chinese treasury that then are not recycled back into the United States?
- [17:02]
A
All right, Jim Bianco, I'll just give you a quick final word here. You want to react to what Steve just laid out there.
- [17:07]
B
Oh, I think Steve's right that the Chinese are not selling to punish or to retaliate. But there was a story earlier today that Amazon is going to cancel some inventory orders from China. That's money that would have been sent to China, that would have eventually been recycled back into the US Bond market. It's not going now. You could write that story large, maybe hundreds of times over the next couple of weeks if these tariffs continue. And it's going to be a loss of buying power that's going to be coming back to the US Bond market.
- [17:33]
A
Very interesting, Kelly.
- [17:34]
B
If somebody, if somebody could tell the president about the capital account, the other side of the trade deficit, we might be in a better position here. But they don't seem to understand that when we have a trade deficit, it comes back to the U.S. it's the greatest deal going. But we apparently don't want that deal. We want a better deal.
- [17:50]
A
But the only thing I would say to that is and maybe Peter, I'll ask you this, maybe already asked you this question. If the lack of foreign buying is making treasury yields kind of higher than they otherwise shouldn't be, should be, then couldn't you US financial players step in and benefit from that arbitrage trade? Right. In other words, then if I can get 450 on a 10 year, why don't I just sit back and do that? If other people are forced sellers because of these global trade changes, well that's.
- [18:16]
B
Been going on for the last 10 years. Ten years ago foreigners owned 50% half the US treasury market in terms of marketable securities. That reissue is down to 30%. I think it's possible what China's doing and maybe other foreigners are doing is they're not necessarily getting out of the U.S. treasury market. They're just selling the long end and buying T bills. They're essentially doing their own operation twist. But Kelly, sorry, we have to continue. Maybe Drew has a thought on this. But let me just make this point. By definition we consume more than we save, which means we need foreign dollars to plug our holes when it comes to deficits. So we need to have that foreign money now. We can try to bring down our deficits, we can try to increase our savings and reduce our consumption. But I think there's still going to be a hole to fill for foreigners.
- [19:03]
A
Peter, wouldn't you say that's the tightrope they're trying to walk is to make all those adjustments at the same time?
- [19:09]
B
Yes. We're being thrown everything all at once.
- [19:12]
A
Right. And if it works out great and nobody knows and so we're watching it in real time and if not, not. Gentlemen, thanks. Really appreciate you all joining this hour to try to unpack all of these extraordinary moves. The Dow is off as it was up 570 at the highs or maybe there right now. Anyway, Peter Bockva, Jim Bianco, Drew Mattis, Steve Liesman to Diana. Oh lick now is are the numbers I'm seeing on my screen correct here for the Dow? Are we up 7,840points right now? Diana, I'm watching this. Literally glitching and gap. We're up 900 points. Is this, this is, this is. Yeah. Okay there. Wow. Our charts can't even keep up with how quickly these numerical moves are happening. We are at session highs. Emily Wilkins in Washington with some breaking news. Emily, what's going on? Hey, Kelly. Well, Treasury Secretary Scott Bessant was supposed to be meeting with a group of House Republicans, but he had to cancel at the last minute. And we've learned that it's because he was pulled into a meeting with President Trump. Now, we don't know the exact details, of course, what this meeting is on, but certainly a lot of discussion right now about tariffs, a lot of discussion about what's happening in the market, and also a good bit of discussion. Bassett has been on the Hill this week talking with lawmakers in part about the tax package that they have been working on. This is a key part of Trump's agenda. The House is set to take a major vote on it today, but at this point point they do not have the votes. There are a number of Republicans who are pointing to the fact that this could add trillions of dollars to the deficit through this package and then pointing at the bond market and saying, hey, if we want to make sure that we are keeping the markets steady, consistent, we need to make sure that we are moving forward a package that is not going to add trillions of dollars to the national debt. And so going to be very interesting day in Congress to kind of watch lawmakers move and see if this is going to actually be a point where Republicans start breaking with Trump over their concerns about the deficit. Guys, this is one of the strangest market moments I've ever seen where we're seeing the Dow and other major averages spike higher so quickly that our charts literally can't keep up. The dow is up 1500 points right now. And the latest headline that I see on the news wires, right, is the president saying he's raising the China tariff to 125% effective immediately. Emily, that's obviously not what you're talking about. And we don't know where these reports are coming from, not to mention reports on the news wires. The last couple of days have led us in all sorts of crazy directions. So let's go back to what we do know, which is about this meeting between Trump and Besant that was was supposed to happen. Tell us again. So Bessant was actually supposed to be meeting with lawmakers on a day that lawmakers were set to pass a very critical bill piece of legislation and he had to cancel on lawmakers because he got pulled into a last minute meeting with Trump. So certainly something seems to have happened at the White House where Trump says, hey, I need my treasury secretary Right now I don't have any more clarity on exactly what that is though. Let's go across town to our Washington bureau where Megan Casella will wait a moment. Emily, let me just back up as we wait to get our other reporters ready and find out exactly what's going on here. And just to rewind for the past couple of minutes, we came in this hour with the Dow up 2 or 300 points. We had a 10 year bond auction that everyone was nervous about after there appeared to be a bond buying strike in global markets overnight that pushed the ten year yield up to almost four and a half percent. That auction went well. That was the initial spike higher in the dow up about 500 points. We saw the 10 year fall to below 440, which is where it remains. That then saw markets continuing back to where they were pre market. And just, just in the last couple of moments, the Dow has gone from up about 300 points to up 1500 points with very little explanation as to what's caused this sudden move other than the canceled meeting Emily just told us about. With Bessant now being pulled in by the president to the White House, a couple of headlines from Trump on the wires about China tariffs. Megan Casella is in our D.C. bureau. Meghan, maybe you can enlighten us with more. Kelly we are just sifting through everything that we're seeing in this truth social post, but two major developments. I'm going to go first, that the President says he is authorizing a 90 day pause and substantially lowering the reciprocal tariff during this period of 10% effective immediately. There's some fuzzy language here. The upshot is that there's a 90 day pause in the reciprocal tariff. What I'm not clear on is whether we go to zero during that time or to back where we were or if the 10% tariff remains in place, either way a major step forward. The President says that this is because more than 75 countries have called representatives of the United Markets. Negotiations are ongoing and so he's instituting this 90 day pause. In the meantime, on the other hand, some negative news on China, saying that based on the lack of respect that China has shown to the world's markets, he's raising the tariff on China to 125%. That's of course up from the 104% that took effect just at midnight. Now going even higher to 125% because he does not like the way China has been retaliating rather than coming to the United States and wanting to negotiate. So two major step Forwards here, one obviously very good for the markets. You're seeing the markets react to that. The other one on China looking like they don't like the lack of respect that they see. So we are looking at a world in which things continue to get worse with China one of our largest trading partners, but of course not the largest, but getting much better with everybody else, at least temporarily while these negotiations, Kelly, are ongoing. Okay, so in a very simple nutshell, Meghan, thank you. The President has just announced a 90 day pause, capital letters pause, and a substantially lowered reciprocal tariff during this period of 10% effective immediately. Now this is a long run on sentence in the Truth Social post. Let's try to unpack it. He starts by saying based on the lack of respect China has shown, I'm raising the tariff there to 125% effective immediately. Mark doesn't really care about that part. Says at some point they'll realize ripping off the USA is not sustainable. Then he says, conversely, and based on the fact that more than 75 countries have called representatives to discuss trade, trade barriers, tariff and so forth, and that these countries have not, at my strong suggestion, retaliated in any way, shape or form, I have authorized a 90 day pause and a substantially lowered reciprocal tariff during this period of 10%, also effective immediately. Wow, this is a shocking turn of events Here at about 01:25 Eastern Time, the President again posting on Truth Social that for those trading partners who have not done reciprocal tariffs or retaliated in any way, he has authorized a 90 day pause and a substantially lowered reciprocal tariff during this period of 10%, also effective immediately. The Dow is up 2100 points right now. The Nasdaq is up 7.8%. The S&P is up 6.3%. That 10 year auction is a distant memory at this point. In fact, 10 year yields remain a little bit lower down around and under 4.4%. Scott Kronert is here with us. He's a U.S. equity strategist at Citi. Scott, your reaction?
- [26:24]
B
Well, Kelly, this is, this is what we're looking for when we sat down to plug in for this call. But clearly the events are unfolding pretty quickly. So I think, you know, the market's been looking for President Trump to find an off ramp down a negotiation path on terrorists. That's quite obvious and that's been an overhang for some time on US Equities, I think to put some perspective on this, you know, our work is that 4700 of the S and P, more or less prices in tariff risk. So as you. And that was tariff risk as we presumed it yesterday. So what you have to do now is begin to allow for some alleviation of that stress. And obviously that's what you're seeing today. So this would be an as expected response in the, in, in the discussion drama here where you begin to see the President pull back from some of the, the stated tariff circumstance.
- [27:16]
A
You know, Scott, five minutes ago we were talking about how the US Was going to kind of reassemble this new economic order, including what the implications were for Treasuries and all the rest of it. Now, does it matter?
- [27:28]
B
I think it still matters, but I don't think to the same degree. Obviously, you've alleviated the pressure point here for now. And I think that discussion in terms of the global world financial order probably gets pushed back to the background for now. But again, as we've learned, things can change quickly. I think what we're looking at here in terms of the Secretary Besson angle is that, you know, he's been a little bit more of the view that, yeah, we get it. You know, there's, there's some tariff aspect here that makes sense. But let's not go overboard. You go back to where we started, Kelly. I mean, going into this year, we were modeling, okay, we're going to get a 10% across the board tariff that maybe gets negotiated down to 5%. That's a marginal impact on S&P 500 fundamentals. We can live with that because of all the other things going on with fundamental dynamics. So I think when you then went to 20%, much bigger issue, much bigger headwind for the S and P. You're alleviating some of that and putting us back to where we started, I think, a couple of months back.
- [28:27]
A
And let's retrace the events back to what is it just last Wednesday was Liberation Day as the president called at April 2 the announcement of what had been in the works for weeks, if not months, reciprocal tariffs. There was all of this surprise and concern about how those rates were actually calculated. A lot of surprise that they were as high as they were on. Certain partners like Vietnam who had seemed to play ball, weren't necessarily the worst actors and so forth. We've heard days now of defense of this regime, of basically saying, we're trying to close the trade deficit, we're trying to reorder the US Economy. And all of this from all of the major cabinet advisers, all of them kind of trying to lay out this scenario. And now the president has backed down.
- [29:06]
B
Well, look, I think when you looked at the Liberation Day statistics, I think Vietnam jumped out is like here's an example of the math that they use to compute tariff rates predicated on trade deficits.
- [29:19]
A
Right.
- [29:20]
B
I'm going to say probably has some issues. Right. Because it didn't take into account the reality, the underlying fundamental circumstance of the relationship with many of these countries. And Vietnam is the poster child for that. So I think the moment investors saw that, it's like, wait a minute here, something's just not right with the formula, with the approach which I think precipitated a lot of the reaction. Thursday, Friday and again, the first part of this week, I look at it from our perch. We went into Q2, getting more aggressive on the growth part of the market. When overweight tech remain overweight, calm services on the view that at some point this is going to play through, that part of the market that got hit first is more likely to snap back quickest. And I think that's what we're seeing now unfold. So I think the, the playbook's changing quickly and we've gone from, you know, a lot of uncertainty to alleviating some of that.
- [30:10]
A
Yes. And we'll cycle through some of the Mag 7, the major cap names. Nvidia was higher even before all of this happened. But Scott, if you could hang tight for just a moment. Let's get to Eamon Javors at the White House. Amen. What an extraordinary turn of events. The Dow is still up about 90.
- [30:25]
B
Kelly. No comment from the officials here at the White House on the president's decision, why he reversed course, who was with him at the time? He did. I just spoke with somebody in the West Wing who was in the Oval Office moments ago. They're offering no color, no insight, no context here to the President's decision. Just saying simply the truth speaks for itself. That is the truth social post that the president put up on social media. I can tell you that I was standing next to some lower level aides in the West Wing when this hit the wires. None of them were in a position to expect this and all of them were surprised to see it. The president had given no indication that he was thinking about reversing course on the future of his tariff program. Obviously he's bifurcating his response here. One response for China, one response for the rest of the world. They had told me here at the White House earlier today that there were more than 70 countries that had sought negotiations with the White House. The president suggesting in his report in his post just now that that number is 75 nations. So clearly this is a sudden pivot and reversal by this White House and aides here are not in a position right now to offer any kind of context or insight into why the President did what he did. What we do know is that there were reports off of Capitol Hill that Treasury Secretary Scott Bessant was set to meet with a number of Republicans on the Hill. That meeting was canceled. Bessant was said to be headed to a meeting at the White House. Presumably that has something to do with this. We haven't quite connected those dots just yet though, Kelly, to know exactly who was in the Oval Office with the President at the time that the President made this decision. I'm just checking to make sure that there's a Marine at the West Wing door here to indicate that the President is indeed in the West Wing. And that is the case. So the President is here. We don't know who's in the Oval Office with him and we don't know why he made this decision.
- [32:20]
A
Kelly, the NASDAQ is up about 8%, Apple is up 10%. Amen. And again, going back, there were not any conditions attached to this either. In the post, the President says, you know those countries that have not retaliated in any way, I have authorized a 90 day pause, but there's really no strings attached here. So even as they're, we all thought going to use these negotiations as a way of winning certain, you know, maybe it's investment dollars, maybe it is lower tariffs or non tariff barriers, what have you. Now all of a sudden this appears to be saying, well, that pressure is off of those countries to put those concessions on the table.
- [32:56]
B
Right. So the question is if these tariffs were the thing driving them to the table, as you point out, why take them off now if they're already at the table and you've got the pressure succeeding and the sense of urgency on the other side. You know, the market was up today, you know, leading into this. But you also had this dynamic of the treasury market and bond yields spiking overnight and you know, real concerns about what that meant for the future of the US economy. So it may be that the President decided that enough is enough here in terms of economic pain. He's got people at the table and he's prepared to declare victory.
- [33:34]
A
Eamon, stay there if you would. Aim. And Javers, we just want to go to Steve Kovac who's watching this 10% snapback and Apple. Steve, which by the way doesn't retrace the 30%, it's down year to date, but this is this and Nike, which is up 8%. These are kind of the poster children of the, of the China supply chain. Now, the China tariff goes up, Steve, interestingly enough. But the market is perceiving this as, hey, at least there's relief in other parts of the supply chain, like in India. Sure. That they can lean on right there. There's relief there.
- [34:00]
B
And then India is the perfect example there. Kelly, India got hit with those 26% tariffs.
- [34:05]
A
And we've been talking, you and I have been talking about this for years, how India has become this offloading of.
- [34:11]
B
Supply manufacturing for Apple to build those iPhones. They keep increasing the amount of iPhones.
- [34:17]
A
They build there every year. I would fully expect now, if these new tariffs stick, for Apple to shift.
- [34:23]
B
Even more production over to India because.
- [34:25]
A
Of that 10% rate.
- [34:26]
B
Also Vietnam, Vietnam is a hugely important manufacturing center increasingly.
- [34:31]
A
And Malaysia for Apple, Vietnam, of course.
- [34:34]
B
I think it had something in the.
- [34:35]
A
40% range there and they make a lot of the accessories there. That means Apple watch, that means AirPods and things of that nature. But China still the sticking point here with what is it, 124, 25% tariffs.
- [34:47]
B
On China, that still puts a huge.
- [34:49]
A
Burden on the iPhone business.
- [34:51]
B
Remember, Kelly, between 80 and 90% of.
- [34:54]
A
All iPhones are still made in China. So even if every single iPhone that.
- [34:59]
B
They make in India gets shipped over.
- [35:00]
A
To the United states at that 10% tariff rate, that's still not going to.
- [35:04]
B
Be enough to fulfill the demand that.
- [35:05]
A
We have here in the United States. It is a relief.
- [35:08]
B
There's no doubt about it. That's why we're seeing the spike in.
- [35:10]
A
Shares here on Apple. But still a lot of work to be done here on the China front because they're so heavily dependent on China for the production of iPhones, for the production of many of their products.
- [35:21]
B
We are seeing diversification in Vietnam, Malaysia and India. But still so much of the focus is going to be on China. And it's not just about the stuff.
- [35:28]
A
Being made in China and imported the United States. Kelly, you got to remember, as this trade war heats up, we know China has this appetite for retaliatory measures.
- [35:35]
B
So we'll see what happens.
- [35:36]
A
What and what kind of screws that.
- [35:38]
B
Can turn on Apple as this trade.
- [35:41]
A
War heats up just between these two countries. Steve, appreciate it. Steve Kovac dows up 2600 points. The NASDAQ Composite is up 9.6%. Megan Casella has more. Meghan, some comments from Lutnick Absolutely. A little bit more color, Kelly, that we're getting from the Commerce Secretary posting on X saying that he and the Treasury Secretary, Scott Bessant, who we know had just canceled that meeting with members of Congress, sat with the President while he wrote one of the most extraordinary truth posts of his presidency. Referring of course to the 90 day pause. Lutnick goes on to say the world is ready to work with President Trump to fix global trade and China has chosen the opposite. So again suggesting a little bit there what they are looking at here. More than 75 nations they say have reached out to the US just in the last week to try to negotiate on these tariffs, vowing not to retaliate, vowing to work together. And of course they're very angry with Beijing for taking the opposite tack, vowing this retaliation. So so far, everybody else, it seems like, is getting this 90 day pause. My read is that the 10% baseline tariff would stay in effect during this pause while while the China gets the higher tariff. I also would just say, Kelly, that we do have to see some paperwork before this higher tariff on China could go into effect. The president would have to sign something on this now at the White House. Let's see if we can dip in. The president just put out a statement announcing an additional tariff on China. The tariff on China will now go up to 125% because China imprudently decided to retaliate against the United States. And as I said at the podium yesterday, when you punch at the United States of America, President Trump is going to punch back harder. In that same vein, we have had more than 75 countries from around the world reach out to President Trump and his team here at the White House to negotiate better trade deals for the American worker. We have been overwhelmed with the amount of requests from countries around the world. I'll let the secretary speak to that. We will continue continue with the tailor made negotiations that I spoke about yesterday. In the meantime, there will be a 90 day pause on the reciprocal tariffs as these negotiations are ongoing and the tariff level will be brought down to a universal 10% tariff. The Secretary here has been a huge part of the President's trade team, of course, and will continue to lead these negotiations moving forward to look out for the American worker, which is always President Trump's goal. So I'll kick it over to our great Treasury Secretary, Scott Best. Good.
- [38:02]
B
Thank you. And we saw the successful negotiating strategy that President Trump implemented a week ago today. It has brought more than 75 countries forward to negotiate. It took great Courage, great courage for him to stay the course until this moment. And what we have ended up with here, as I told everyone a week ago, the. In this very spot, do not retaliate, and you will be rewarded. So every country in the world who wants to come and negotiate, we are willing to hear you. We're going to go down to a 10% baseline tariff for them, and China will be raised to 125 due to their insistence on escalation. Thank you for doing this. Let me ask you three quick things.
- [38:59]
A
For the sake of clarity, because the markets are open and they're wondering, first.
- [39:02]
B
Of all, Mexico and China, are they part of this 10 universal. Well, China, No. China, Mexico and Canada.
- [39:09]
A
Mexico and Canada, are they part of the 10%?
- [39:11]
B
Yes.
- [39:11]
A
Okay. Second, given then that you have the rest of the world essentially calling into.
- [39:15]
B
Stunt China, is this now just. Just all about China? Well, it's about bad actors. And, you know, what we will see is some of the very early countries are China's neighbors that we're going to see. I'm seeing Vietnam today. Japan's at the front of the queue. South Korea, India. So we will see. And as I've repeatedly said, and President Trump has been saying it for years, China is the most imbalanced economy in the history of the modern world. And they are the biggest source of the US Trade problems. And indeed, they are problems for the rest of the world, because what we've seen is that as the US Announced the tariff wall last week, many of those goods have already started flooding into Europe.
- [40:05]
A
So, as you see it now, this trade war is China versus the rest of the world.
- [40:09]
B
Well, I'm not calling it a trade war, but I am saying that China has escalated, and President Trump responded very courageously to that. And we are going to work on a solution with our trading partners.
- [40:27]
A
Excuse me. Excuse me, Raquel. If I could just add to what the secretary said. Many of you in the media clearly missed the art of the deal. You clearly failed to see what President Trump is doing here. You tried to say that the rest of the world would be moved closer to China, when in fact, we've seen the opposite effect. The entire world is calling the United States of America, not China, because they need our markets, they need our consumers, and they need this president in the Oval Office to talk to them. And that's exactly why more than 75 countries have called, because the United States of America is the best place in the world to. To do business. And as the President has shown great courage, as the Secretary has said in choosing to retaliate against China even higher. Elena, go ahead. Thank you. Treasury Secretary Bussen, can you explain more of the decision making on what feels like a reversal here? I mean, just these went into effect less than 15 hours ago. These tariffs. Why the pause now? What led to that?
- [41:20]
B
No, again, President Trump created maximum negotiating leverage for himself and the witch terrorists went into effect 15 hours ago. The ones that we have lowered went into effect a week ago or they were announced a week ago. And we have just been overwhelmed, overwhelmed by the response from mostly our allies who want to come and negotiate in good faith. So we are expecting them to come with their best deal. As I said a week ago today, don't retaliate, hold your ground. Let's see what happens. And China, they kept escalating and escalating and now they have 125% tariffs that will be effective immediately.
- [42:05]
A
Go ahead. Mr. Secretary, thanks so much for doing this. The 90 day pause on the reception tariffs, is that because of the whiplash that we've been seeing across the financial markets? How much was what we saw in the stock markets a part of?
- [42:18]
B
No, it's because it's going to because of the large number of inbounds. We've had more than 75 countries contact us and I imagine after today there will be more. So it is just a processing problem. Each one of, each one of these solutions is going to be bespoke. It is going to take some time and President Trump wants to be personally involved. So that's why we're getting the 90 day pause.
- [42:45]
A
Secretary, there was a tweet that UN Secretary Letnick run the Oval Office with the President talking about this. Can you talk about what that conversation was like and what you guys said to one another?
- [42:56]
B
Look, it's all the President's decision. And the president had a level in mind to raise the China tariffs. And then he had the three month, essentially the three month pause in mind. And we were discussing the exact wording.
- [43:18]
A
Sorry, of course, the President's decision.
- [43:23]
B
It was the President's decision to wait until today. And again, as I've said in the past, no one creates leverage for himself like President Trump.
- [43:33]
A
Mr. Secretary Shelby, go ahead. What does the President want to see by this? I think it's July 9, deadline to keep things paused. Is it just trade barriers coming down or is it more than that?
- [43:45]
B
Well, that these are trade negotiations. But if countries want to come and offer other things. I talked about yesterday that we are thinking about a big LNG project in Alaska that Korea South Korea, Japan, Taiwan are interested in financing and taking a substantial portion of the offtake. But again in essence that is trade because it will decrease the trade deficit that we have with those countries. So everything's on the table.
- [44:23]
A
A clarification of the 10 for all the pause what have you to those countries who just had a 10% baseline terrorist like Brazil and others, are they still going to have these nine spots because they were saying that there will be a terror 10% for water. So what happened to those who just had a 10%?
- [44:40]
B
Yeah, that's going to remain.
- [44:42]
A
Mr. Secretary, you call this an embargo to China?
- [44:46]
B
Pardon?
- [44:47]
A
You call this a, to China trade environment?
- [44:51]
B
Well, they, I'm not sure what you mean by the word embargo.
- [44:55]
A
100, 125 terrorists, like 84%. Isn't this an embargo?
- [45:03]
B
Well, it's not, it's. Look, it's China's decision that we have the deficit with them. They sell us almost five times what we sell them. So again I think it's an own goal by China.
- [45:18]
A
Does it signal that you're confident that you're going to be able to strike a satisfactory deal with all these 75 nations that have approached you?
- [45:26]
B
It signals that President Trump cares about trade and that we want to negotiate in good faith. And as I said, each one of these is going to be a separate bespoke negotiation. So we are confident that, you know, having seen the other side of where this could go and it was like I said last week that the market didn't understand those were maximum levels. The countries can think about those levels as they come to us to bring down their tariffs, their non tariff trade barriers. We're going to discuss currency manipulation, subsidy of labor and industry apply to the sectoral tariffs that the President has announced. Pharma, lumber. Anything else? No, it's on the reciprocal.
- [46:21]
A
Andrea, go ahead. Mr. Secretary. Sir, I want to ask you about the, what you're doing here. So the market is reacting crazily, right?
- [46:32]
B
I, I haven't seen it.
- [46:33]
A
This move is going on the chamber down the market reaction. The markets have tanked. Right. You know there's been a lot of volatility in the market, not just in terms of stock markets but also in terms of. So will this move in your, in your mind, do you anticipate that this is going to calm the market soon?
- [46:55]
B
Well, I think what we've seen, I think the willingness by more than 75 countries to come and negotiate, I think now the market understands that everything they saw Last Wednesday was a ceiling and now we have a 10% temporary floor. And I think the market, my 35 years in the market, I always wanted certainty. So I think we've got more certainty.
- [47:20]
A
But Mr. Secretary. Maggie, go ahead. Mr. Secretary. Why do people assume this is the last word the President began this morning saying be five hours later he announces a new policy. Why will investors in the market assume that this is.
- [47:35]
B
Because again, as I said, We've given 90 days and the only certainty we can provide is that the US Is going to negotiate in good faith. And we assume that our allies will too. And in terms of certainty, we will see what China does. But what I am certain of, what I'm certain of is that what China is doing will affect their economy much more than it will ours because they have an export driven flood the world with cheap export models. And the rest of the world now understands because when we put up our tariff wall, those exports were already flowing to the rest of the G7 and to the global South.
- [48:21]
A
How much of this decision was driven by the bond market cratering overnight? What is happening? China selling their bonds?
- [48:29]
B
I have nothing that says that. And we actually had quite a good 10 year auction today. And all this was, again, this was driven by the President's strategy. He and I had a long talk on Sunday and this was his strategy all along. And that, you know, you might even say that he goaded China into a bad position. They, they responded. They have shown themselves to the world to be the bad actors and we are willing to cooperate with our allies and with our trading partners who did not retaliate. It wasn't a hard message. Don't retaliate. Things will turn out well. Secretary, negotiations with these 75 countries, how long will that take? Will it be a matter of weeks? Will it be a matter of months? Do you expect financial markets to be stable during that time period? Well, we've started with a 90 day pause and we will see if more countries turn up, what will happen. But we have a meeting with Vietnam today and we have one of the largest trade deficits with them. So I'm hoping it will move in a good direction. I was at the Japanese ambassador's house last night for the Cherry Blossom festival, which was quite festive, and he and I had a good chat. They are going to send a deal team over. So we'll see. These are complicated negotiations. These are imbalances that have taken decades to create. And, but I think having seen, seen the maximum level that Donald Trump is willing to go to, President Trump has created this negotiating leverage.
- [50:13]
A
Excuse me, everybody. Excuse me. The secretary. Excuse me. The Secretary is obviously a very busy man. As he has said, he's had more than 75 countries that the trade team has to respond to. I'd just like to end with this. For decades, Republicans and Democrats have said that these unfair trade practices are ripping off the, the American people are ripping off our country, but nobody has ever done anything to address it. We finally have a president here at the White House who is playing the long game, who is doing what is right for the American worker in our industries here at home. And he has put together a fantastic team. And Secretary Bessant, Secretary Lustnick, the entire trade team who will be focusing on negotiating these good deals to put the American workers first. And we're going to get to work to do that. Thank you.
- [50:57]
B
Secretary.
- [50:58]
A
What about the eu? What about the eu? They retaliated this morning. Why are they being treated like China? Secretary Bessen at an impromptu press conference at the White House with the Press Secretary Caroline Leavitt, moments after the President announced on Truth Social that he will be winding or repealing or putting on pause the reciprocal tariffs, but leaving in place the 10% tariffs for now and ratcheting up tariffs on China. Eamon Javers is standing by at the White House. And Eamonna, only on a. After a series of events like what we've seen, I think when people absorb the China tariff still being into effect, they're still going to have to think through both the inflation, the growth aspects of that the supply chain hit. But this is a huge about face, a huge reaction in the markets. Perhaps it was the bond market, as the Treasury Secretary was asked about, that got the White House's attention after the sell off we saw overnight. But regardless, what an extraordinary moment here.
- [51:50]
B
Absolutely, Kelly. And I can tell you that nobody that I talked to in the West Wing today expected this. If this was the strategy all along, it was very tightly held in a very close circle of people. You heard the Treasury Secretary there say that he had a conversation with President Trump back on Sunday in which the President indicated that it was his strategy to let the tariffs go into place on Wednesday, today and then announce this 90 day pause now that indicates that they've been holding this secret for several days from the entire world. The Treasury Secretary also said that there's no way in which the bond market meltdown overnight affected this. He said we had a very good 10 year auction and the bond market was not part of the concern. But the bond market meltdown certainly did get the attention of the world, Kelly. And I can tell you that what I'm looking at here is some of the palace intrigue of this announcement. Right, because it's unexpected, very sudden. But also, who was at that microphone and who wasn't at that microphone? You saw the press secretary there and you saw the treasury secretary there. The person we didn't see is Peter Navarro, who is one of the architects of the tariff strategy. We also didn't see Howard Lutnick, who is the Commerce Secretary, who's involved in a lot of White House meetings. Lutnick putting out a post on social media suggesting that he was in the room for this decision, but was not clearly asked by the President to go out to the microphones, explain it. That fell to Bessen. And we know that Bessen is the person who has been saying all along that this is a negotiation, that the president is open to talking with foreign trade competitors and that Lutnick and Peter Navarro were the folks who were saying this is not a negotiation. This is all about a permanent regime change in global trade. So it looks like to the extent there are factions inside this White House, this is the triumph of the Besant faction. And the Peter Navarro faction is a little bit on the run here at the White House.
- [53:43]
A
Amen. Appreciate it. With The Dow up 2100 points, the NASDAQ at the highs was up almost 10%. Let's bring in Steve Liesman. Steve, because we were talking a moment ago about how complicated things are for the Fed. If this is telling us that growth is going to hang in there in the meantime, I guess it makes things a little easier for them. But we're also seeing the odds of a cut at what the next meeting go up to almost 90% at the next meeting.
- [54:06]
B
That's not what I have at the June meeting. I have June. The May meeting, I have went down to 20%, went down a little bit for the June meeting. I mean, look, you can say this is relief, but there's another 90 days of uncertainty to come, which is worth. And you could also try to spin this as a victory, or you could see this as a failure of policy and leadership on the part of the White House. Kelly in the following way. I remember the night before the tariffs were imposed and the day. And that day. And I asked our great White House reporter Megan Casella why we had heard nothing of the plan. And the reason I asked is it because they don't know or they're not saying? And what we found out since is they didn't know the plan was made up that day. It was not nobody on Wall street. They didn't run it by Wall street, they didn't run it by business leaders and CEOs. And now you could argue after withering punishment from markets, from bond markets, trillions lost across the globe. The President, he didn't just flinch, but he ducked when it came to what was coming his way here. So they can try to spin this as a victory and Maybe they have 75 calls, maybe they get 75 trade deals. But it just seems to me that the other way to tell this story is that the President just flinched and did not run this by the markets, run this by the business. And he was facing a deep recession. I will point out there are still trillions lost from that day. Kelly, there's still quite a bit that's been lost here in terms of where we were just on April 3rd. We're still down, way down. These 10% tariffs. The market doesn't like these either. We didn't get that back yet.
- [55:55]
A
Let's bring in Citi's Scott Kronert on that note. Steve, thanks. And Scott, I was just looking at some of the same charts Steve is referencing. So on the Nasdaq we were up at 20,000, we're still call it 15. Numbers are moving so quickly. Several thousand points off the high 16,591. The S& P same story. I mean These were the 52 week highs when everyone was screaming that things were overvalued and frothy. We've seen a dramatic snapback today. What happens now?
- [56:22]
B
Well, I still think that that's where the momentum is. I'm going to kind of stick with our guns here that I think our focus on on tech and the growth parts of the market, whether you get there by it via this means or whether you get there by traditionally where you get when you shift to early cycle. I think the growth part of the market is where the action is going to be. Most notably right now, I would say in response to what Steve's point was, I mean I'm glad to see bessants reassertion, if you will, in terms of the process. I think that's been something notable. And then I just remind so many times over the years, you know, you're looking at a policy issue and often it's not the what of the policy as much as it is the how. And the how is what had I think much of the investment community disgruntled. And I think what we're seeing now is a clear path towards negotiation, which is where we thought we were going to get to anyway. And so I think clearly you got relief rally right now. Doesn't mean we're out of the woods. But I still think worst case now off the table. And we're back to a little bit more, let's call it centered focus on where policy goes from here.
- [57:25]
A
All right, Scott, appreciate you sticking around for us this hour. It's been one for the ages. We appreciate it. Let's turn to Jeff Kilberg now who's founder and CEO of KKM Financial. Jeff, making some trades as we speak. Scott just mentioned looking to growth, looking to early cycle. That's usually things like you've got your shades on. Do tell.
- [57:42]
B
Be cool, Kelly. He said be cool.
- [57:46]
A
Is that what, is that what the president said? That's right.
- [57:48]
B
That was what, that's what the president said this morning. What velocity. This is sensational. And we talked about is it different this time? And it certainly felt different, Kelly. We saw the bond market really maybe be that straw that broke the camel's back being President Trump wanting to make a deal, but the fact that he's pivoting, spinning this, he is going to claim victory. And right now I know we're still about 7% away from just last Wednesday in the S&P 500. We are seeing this possibly be a victory with all these details still come out next 90 days. But right now the underinvested, the people that were really concerned, all the 4020% Black Monday calls, those are off to the sideline for now, Jeff.
- [58:30]
A
And by the way, as we pointed out Thursday and Friday, to see 2.4percent down days in a row is one of the most unique things that's happened in recent decades. It's almost always been a buying signal on a 6, 912 month basis. So we had priced in a lot. What happens when the dust settles and we realize, okay, 125% tariff on China still in effect. Still kind of if you had thrown everything else out this year and only knew that, you'd think, well, that's probably going to be a headwind for stocks in the economy.
- [58:55]
B
Well, I think it's pretty strategic the way we're going to essentially pit about 70 to 90 different countries against China. So hopefully they find a way. I know President Trump talked about being gracious. We just want a fair deal. But we do have to level that playing field. But put China to the side, I think we are going to be okay for earnings season. We're going to have to measure, Kelly, how much damage was done in the last four or five trading sessions because confidence was shaken. But if this was all part of the deal art of the deal for President Trump who he had a lot of us fooled because it actually felt different this time. But once again when you see the vix go above 60 that seemingly I know we're not out of the woods by any means, kelly. It's been 30 minutes seemingly when the Vix goes above 60 that's the time to buy equity. Specifically the NASDAQ 100, the beaten up stocks. Those Mag 7 stocks are just racing higher today.
- [59:44]
A
Yeah. And you had told us that to watch 4040 and watch those levels. Jeff, appreciate you joining us. Put the shades back on and we'll check back in soon. Jeff kilberg, and that's it for us on an hour that won't be forgotten soon. Thanks for watching the exchange. We'll pick up coverage on Power Lunch. Over to Brian Sullivan now.