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Welcome to Catalyst. I'm Madison Mills. We are 30 minutes into the US trading day. Let's get you the three catalysts that we're watching this hour. First up, we break down the market action as stocks fluctuate following their biggest sell-off of the year. Plus a break down the economic pictures Jolt's data drops ahead of the key inflation report that is on deck for Wednesday, and we'll hone in on the state of the consumer as retailers report and warn on economic uncertainty ahead.Half an hour into the start of the US trading day. Let's get a check on the markets brought to you by Tasty Trade. Taking a look first at the major averages. Interesting to see the S&P 500 still lying in just around the flat line here now just turning into positive territory for the first time, I believe since the market opened. But your tech heavy Nasdaq is where we want to focus up now nearly 7.7%. Nearly every member of the Mag 7 recovering today after record losses. The Mag 7 down 20%.from its peak, will that buying continue in the mag 7? We will of course track that for you here on Yahoo Finance all day today, but let's let the board into the bond market because we're really seeing the bond market rolling over here and a lot of investors hiding out, particularly in the front end of the curve. No surprise to see those yields popping up as we do see some of the buying opportunities coming into the market today. You've got your 10 years still hovering around that 42 level, but finally, let's take a look at Bitcoin. We've been.Talking about the selling action that we've been seeing this morning and that is continuing to hear you're still firmly below that 82,000 level hovering just around 81,000 this morning. Now I want to welcome in my guest host for this morning, Kenny Polcari. He is the chief market strategist at Slate Stone Wealth and host of the Yahoo Finance podcast Trader Talk. He's got 30 years of experience in institutional equities and wealth management, and he's joining me now, and Kenny, we're gonna talk about some of the jobs data that's.Dropping this morning here but just want to get your take broadly on what we're seeing in the market in terms of the selloff.

So I'm not surprised. I don't think anyone should really be surprised considering we've been talking about a potential pullback in the market for months now. Everyone's saying, you know, had gotten stretched. Certainly the tech, the mag 7 had gotten really stretched, but you know, they kept feeding the beast and so no one really wanted to, uh, no one really wanted to take ownership, right? And then you start getting hit with all the negative headlines and like I've been saying, suddenly.everyone's accentuating the negative and eliminating the positive, right, because they're finding any negative story they can find. They're, they're, they're ripping it up and they're putting it across deadline and it's creating a lot of angst in the market. Now, some of it is, some of it is real, some of it is concerned about a recession, some of it's, you know, geopolitical concerns, Russia and Ukraine, uh, and some of it is just a normal cycle in the market. Look, you've gone, we've gone, we've gone a long time without, you know, more than, more than.20 months without a 10% pullback and we've gone even longer without more than a 20% pullback, right? So, so the fact that we're starting to see this, and yesterday was, yes, it was an ugly day, was it uncomfortable? Absolutely. uh, did it make people a little bit anxious? It surely did. But as a long term investor, you shouldn't days like that are actually opportunities.

All right, well, we're going to continue to cover all of that and more throughout our show. Kenny, you're going to stick with us. I do want to talk about January's job opening.And labor turnover survey here coming in just above estimates. Job openings rising by 232,000 to 7.74 million. That's just above the estimate, which was 7.6 million. Nothing too big to write home about in that headline number. But as the growth scare leads to a sell-off that we have seen in stocks with the worst day in 2025 this week, markets now pricing in over 80 basis points of rate cuts this year. Our next guest does anticipate a cut coming in May ahead of key.on Wednesday we'll discuss all of that. We've got Veronica Clark here, cities' economist Veronica, great to speak with you this morning. Just level set with me. How are you viewing the economy right now? Is this an economy that is in the process of slowing, or are we already slow and how does that impact your recession potential

outlook? Yeah, I think this is an economy that has been slowing pretty gradually for a while, and I think that's just the consequence of elevated rates. Rates are at restrictive levels. We've seen.That way on sectors like manufacturing and housing, um, hiring rates are incredibly low. We got that with the jolts data this morning, and that does mean it's not an economy that's well positioned to handle some kind of shock. Um, so it does look like, you know, the economy was slowing even before all these, these new risks that we're getting into now.

Veronica,it's Kenny Pula. I want to ask you a quick question. Um, the Joltz report because it just came out, so I didn't actually get a chance to look at the whole thing. So tell me, it actually came out stronger, didn't it? Isn't it more jobs?

Yeah, yeah, there was an increase in a downward revised level of jobs from December. Of course, this is January data, so it does feel kind of stale at this point. We got some revisions to the last couple years, so we'll have to dig into the details more, but I think markets now are reacting to we just got some new tariff headlines. That's probably more important than this somewhat stale jolts reading at thispoint.

Quits rate number, did that go up aswell?

It did slightly. Um, it's been coming down just like hiring rates have been coming down. Layoff rates are still very low. That layoff rate actually ticked lower again. Um, but again, this is before, you know, the, the new risk to the labor market as we're getting into the spring andsummer.

And I wonder how you're thinking about what might break the labor market becauseKeep hearing that is the key focus for the Federal Reserve now is that second part of their dual mandate when it comes to jobs and we're hearing more warnings from corporate America over the past 24 hours from Delta, from Verizon about their capex plans moving forward. In your view, if there is a pause in spending from corporate America, does that break the labor market and push the Fed?

Yeah, this was already a very precarious labor market, I think, you know, it's been low, low hiring, low quits, but also low layoffs, um, but that does mean that that low hiring rate, this is not a a sector labor market that's well, you know, positioned to absorb shocks from maybe the the government sector. Of course, we are looking at, you know, federal worker layoffs in the coming months.Um, yeah, any increase in uncertainty is just going to weigh on hiring more. I think that would be maybe even the bigger cause of an additional weakening in the labor market. Of course, if people are worried about their jobs, maybe you'll cut back on spending, you'll start to save more. Of course, that's less economic activity. Maybe that even slows the economy more. So yes, this does seem like a labor market that's not well positioned to.Handle the shock.

But Veronica, let me ask you, I get this is a two-part question. Number one, if the, if the economy slows, because we've been running at a rapid pace, right? So it's intentionally, if they're pulling back on government spending, they want to intentionally try to slow the market down, slow the economy down. um, and so then we're gonna, you know, if we fall into a recession, is that necessarily a really bad thing in your mind?

It doesn't necessarily need to be. Um, I mean, usually recessions are, you know, we're not always talking about 2008, right? We, we have experienced, you know, many years, you know, long history of recessions every five years or so, and they don't always have to be something so, so dramatic. Um, I do think, you know, rates have been restricted for a while. It's probably been, you know, masked, you know, in terms of, you know, we've had very stimulative fiscal, you know, stimulus, um, that's probably masking the underlying weakness in the economy, um, but.This could be still a correction. It still would be painful, of course. Well,

it might be painful from an investor point of view, but in fact, all this in this chaos creates longer term opportunity and some really great names that are maybe getting unnecessarily beaten up just because people are anxious, which, you know, that's a whole other conversation we have from the, from kind of the long-term investing side. But let me ask one more question about rates at 4.25%, you really think rates are that restrictive?

Yeah, I, I think so. I think rates are restrictive. I don't think there have been enough structural changes in the economy in the last 5 years to convince me that rates are, you know, 200 basis points, neutral rates are 200 basis points higher than they were 5 years ago. Um, I do think rates are restrictive and it's it's being masked by, you know, substantial fiscal stimulus, the fact that, you know,Companies and households have, you know, refinanced mortgages or termed out debt for many years. You're not facing higher rates yet, uh, but I think this level is, is still slowing, you know, the, you know, the economy

overall. Really quickly, Veronica, it seems like given the Ks shaped recovery, we've already seen a blue collar recession. How likely do you think it is that we see a white collar recession?

Yeah, there, there's definitely been this bifurcation in, in the economy and consumers, and you see it in in businesses too, you know, large corporates who are doing OK, but maybe small businesses that are struggling more. Um, I do think, you know, slowing consumption, of course, is, you know, we've seen that in lower income households. Maybe one factor.that has been supporting, you know, consumption of wealthier individuals has been, you know, wealth effect from, you know, asset prices going up and and maybe that is now changing. Um, so yeah, there, there could be this spillover into those higher income earners too.

Yeah. All right, Veronica, thanks so much. We got to leave it there. Thank you. Thank you.Some breaking news here as we had to break. President Trump saying he's increasing Canada's steel and aluminum tariffs to 50%. You can see here the S&P 500 continuing to move to the downside off the back of that news. We originally saw the Nasdaq flipping into negative territory. Now we're seeing the Nasdaq flipping back into positive territory, continuing.Some of the gains that we saw earlier this morning again, President Trump posting on Truth Social saying that he wants to increase those tariffs on steel and aluminum originally saying they were going to be at 25% now coming out and saying he wants to raise that tariff rate to 50% again in a post on Truth Social this morning. We'll cover all of this and more when we come back.

Some of the biggest names on Wall Street have been wiped out to $2.5 trillion. That is a combined market cap of losses in some of these names, the top 10 and the S&P 500, only this year. So it's a huge reversal in fortunes from 2024. And let me just show you how this breaks down here. Heading the pack is Nvidia, and you can see they have swung from a $2.07 trillion gain to a $678 billion.loss for Tesla $500 billion to the upside. last year now $510 billion to the downside this year and it's only March. In Apple, very similar story. The list goes on to Microsoft and Alphabet, and it's not all bad though. After we get through Amazon and Broadcom, we see Eli Lilly not shedding quite as much. It was able to add $180 billion last year, but it still lost a nominal $18 billion.This year, but meta still holding on to gains, some of those gains from its 20 day win streak, which was just incredible. That is actually added to gains. So holding on to $36 billion this year. And then you have Berkshire Hathaway. We don't talk a lot about this mega cap stock, but it was up $201 billion last year and it's already added $94 billion this year. And you can really visualize this in a heat map and I have these 10.Uh, stocks right here and let me just show you the two day total because this will give you an appreciation for what we saw yesterday. Tesla is still down to 11.6%. It was down 14, 15% yesterday. Apple still down 7%. Here is the month to date and uh fun stat here. Nasdaq 100 having the worst start to March ever, and that goes back to the beginning of data, excuse me, in 1985, 1986. And then here is the year to date and what you'll see.Here is it's not quite as bad. We do have those gains that I was talking about in Meta, Eli Lilly, and also Berkshire Hathaway. And now I thought we'd do some technical analysis because the charts on these various issues, those break down in various ways. Some of them are good, some of them are bad, and some of them are downright ugly. And we're going to start with Berkshire Hathaway here. I'll put a line chart on so you can see this is a 5 year chart, and this is beautiful. This is, you can see.After the 22 bear market, we just took off and that's from the lower left to the upper right, and before that time you had another trend channel uh intact over here, just a very steady series of higher highs and higher lows, which is a definition of trend. That's what you want to see and it's nowhere near even in violation of violating that very nice trend channel that we're seeing. Here's Eli Lilly, another chart that's fairly strong in the technicals. You kind of had.Head and shoulders in here if you squinted, but it didn't fulfill. You dipped a little bit down and then it popped right back above and so now you just have this consolidation formation near the highs. We can also say some pretty positive things about Apple here, although I don't like that it just lost its 200 day moving average just shown, but it really has some space here to kind of chop around and this might be a head and shoulders top, but downside levels ought to contain that if we do have that.That drop into this prior price memory that we see in that formation. Broadcom also looking fairly good. This is a pretty steep trend channel here. It is in the process of violating it to the downside, and this heightened volatility here, you don't sometimes you see that in tops in individual stocks, and so that is a little bit concerning, but it's kind of right down back to the decision point, the Rubicon for broadcom, so it remains to be seen if this is a topping formation.Meta meta is looking pretty good, but it is in the process of violating a trend line here. Mehta is also prone to some very, very steep historical sell-offs. 75% only recently in that 2022 Bear. So just history kind of provides some caution for meta alphabet.Here's another trend channel break, but here's what I'm looking at these highs over from 2021, those theoretically should contain price here. It's got a little bit to go to see if it tests its formation. If it goes down though, we have a huge M top to deal with, but critically we're not there just yet.Moving down the line, Microsoft looking a little bit toppy. It just broke through its head and shoulders top. do have some price potential price support down here. It has a little ways to go to find that. And then Amazon. Amazon, here's another that we can see these prior highs from the 20 the pre 2022.bull market, it's kind of trying to find its footing up here and we have seen some accelerated volatility, mostly to the downside, but also a few days to the upside there. Amazon, when it makes its gains, tend to be very fast and furious, so kind of like meta, you've got to watch to the downside, although we haven't had a big Amazon drop down like that similar to Meta in some time.Nvidia, Nvidia is just incredibly volatile and it's looking a little bit toppy right here. I don't have a specific formation, but you kind of want to see this level, the lower 100s. You want to see that hold for Nvidia. And finally, Tesla, we're kind of getting into the ugly here. It's just been so volatile. This top, this breakout to new highs there, that was just a tease, that was a false breakout.And it's been, uh, on the way down just about as quick as it was on the way up. So you put it all together, uh, we got a mixed bags in in terms of the mag 10 and uh I think Berkshire Hathaway probably comes out on top here. So tune into Stocks and Translation for more jargon busting deep dives, new episodes on Tuesday and Thursday on Yahoo Finance's website or wherever you find your podcast.

All right, Jared, thanks so much for bringing that down as always. Some breaking news crossing the wire. President Trump saying he's increasing Canada's steel and aluminum tariff to 50% effective tomorrow. You can see stocks continuing their sell off. The Nasdaq reversing its earlier gains. Now hovering below the flat line, the S&P is down about 5.5%. I'm still with Kenny Polcari on set with me, and Kenny, just want to add so that you're aware here he's talking about substantially increasing those tariffs on cars.Coming into the US on April 2nd as well. He talks about the need for Canada to immediately drop its anti-American tariff policies. So this is a long-winded Truth Social posts. What do you make of the market reaction?

So I'm not surprised with the market reaction, right? It's just more uncertainty and it's more kind of chaos, right, because he just, he changes his mind on a whim. He puts it out there on Truth Social and so the market interprets it. I'll go scrapes, you know, scrape all the headlines. They react to these negative headlines.And so you get what you get in the market, right? So I'm not surprised that the market's reacting like this. Look, there's been a lot of internal damage in the market over the last couple of weeks, and so the market will continue to thrash around until there's more clarity. You're not going to get that until until we get moreclarity,

right? Is the clarity, this is my big question is the clarity going to be enough to stop the selling because we've seen global selling of US stocks as well.

So I think clarity will be enough to stop selling once it settles down.Everyone understands, OK, what's the focus? Is it going to change your mind, is his mind every day, then there's not gonna be any clarity, right? Once there's clarity, once we start to see other nations come to the table and start to negotiate on trade, because look, there are countries that, that hit us over the head with tariffs, right? Um, and we're getting to understand that now as we learn more about that. So once that comes to the table and people really starting to countries start negotiating, then I think it all settles down. But what if

theCertainty is here to stay.

Well, listen, it's there's always some level of uncertainty, right, that that is in the markets, but I think it's these major issues, right? It's going to be the geopolitical issues. It's going to be the trade issues for sure. And so once we get a little bit more clarity, and there will always be uncertainty, but that doesn't mean it can't calm down. All right,

Kenny, well you're going to stick with us for our next conversation here. We're going to focus on one trending ticker that we are watching today Tesla rising after plunging more than.15% yesterday, its biggest drop in five years. The plunge calling causing Elon Musk's net worth, by the way, to drop by $29 billion in just one day. This is Musk says he's running his businesses with great difficulty as he works for the White House on government efficiency and continues to run several businesses as well. Joining us to discuss, we've got Garrett Nelson, CFRA analyst. Garrett, the stocks up 4% today. You are still bullish on Tesla. Why?

Yeah, thanks for having me. I think it's really important for investors to have some historical context here. Um, volatility has been the rule, not the exception, uh, for Tesla shares for a long time now. In fact, looking back to the end of 2018, according to our research, this is the 8th time that the stock has declined by 40% or more from the peak to the trough. Um, this declined from the December highs.Uh, is, is over 50%. So, um, but this is the 8th time that's happened and, and each time it's, it's been a very lucrative buying opportunity for investors. So we continue to like the stock. Uh, we understand, uh, a certain amount of damage that's been done to the brand, um, and the backlash against Elon Musk against the company, um, you know, with, uh, Musk's efforts with, with, uh, with Doge.Um, but I think all that is well known in the marketplace. It's discounted in the current share price. We've seen declines in Tesla sales, uh, you know, in, in, in Europe, in China, um, we expect to see, uh, some weakness in the US. So I don't think any of that is a surprise. And so we're viewing this as a buying opportunity.

So, uh, Garret, it's Kenny Pulcurry. So let me ask you a quick question because it's up today. I understand that, but if you look at it on the chart, like you said, it's had, it's had a, a big correction. I would suspect that people should not be surprised if we see Tesla come down and check trade at that 180-ish range, uh, where, you know, at one point back in early 24, that was resistance and then it became support and now it's bound.and now it's potentially coming back down. So I think investors should, should expect actually that they would see Tesla trade down. If the market continues to be anxious and nervous, that money will come out of Tesla's. But to your point, I agree as a long-term investor, I think Tesla is a great story. It's more than just a car company, right? It's a technology company. And so I think there is a lot of opportunity there and there are some very bullish, uh, uh, you know, price targets on it.

I think that's right. It's impossible to know where the bottom might be anytime you see a selloff. It's, it's, it's impossible to predict, but what we're saying is fundamentally we think the story is still intact. This company had over $36 billion of cash on the balance sheet at the end of last year. They generated $3.6 billion.Of positive free cash flow last year. They have the highest gross margins in the industry. You look out, we see some potential catalysts ahead with the introduction of uh full self-driving robo taxis in the Austin market in the June time frame. And then the whole reason for the big rally late last year was, uh, the election result and the fact that the Department of Transportation, one of their top priorities is going to beUh, putting in place a regulatory framework for mass adoption of autonomous vehicles, and that's really the Tesla story going forward. It's all about autonomous driving. That became clear after the RoboTaxi day last October, and we think, you know, Tesla has a real first mover advantage in that market, and we estimate the, the market uh potential there is north of $5 trillion so it's still trading at a fraction of that market opportunity.

But what's really critical in the success story that you point out for Tesla moving forward is that people continue to buy Teslas. At what point, Derek, do you start to get concerned that there's too much negative sentiment about owning a Tesla?

Look, I mean, there's, there's going to be a a a hit uh with Tesla's sales volume. I don't, I don't think.Um, anyone is, that shouldn't be a surprise to anyone at this point when you know you look at everything that's happening, the backlash against the business, the vandalism. I don't think that's really a surprise. So the question

is exactly go ahead. What is

the stock discounting at this point? And we think, you know, we just given the volatility we've seen over the shares over the years.You know, 8 declines of 40% or more, peaked a trough. We think this is another one of these scenarios, and, and we'd be buyers, um, you know, at these levels because we, we still believe the long-term story is intact.

And, and Garrett, I wonder too moving forward what you think about the risks of Elon continuing to run the business, especially given his own admission on Fox News that it has been challenging to run the business while working in the government. At what point does that start to be a risk?

Yeah, so by, by his own admission, you know, he's running his businesses with, with great difficulty right now. I don't think that should be a surprise. Uh, you know, he's spending most of his time in Washington DC these days. So, you know, one thing that we do think might make sense is for Tesla to elevate another senior level of management, um, to kinda make sure that the company is on track with their near and intermediate term goals. You know, Musk's uh Doge commitment.Uh, won't end until the middle of next year. So he still has, you know, if he continues, uh, you know, well over a year still in that role. And so that's going to take up a lot of his time. It's going to continue to consume a huge amount of his time. So I, I think, you know, one thing that's, that is, has been clear over the years is Tesla has a very deep bench. There's a lot of talent at the company and so we think.Uh, it might make sense for the company to elevate someone, uh, you know, to make sure that they're staying on track in terms of their goals. It's such a critical point in the company's history right now that, um, the company just can't afford to, to fumble the ball right now.

Right. So Garrett, let me ask you, is there, is there one or two names that come to mind for you in terms of who that person might be and how the market might receive that person?

I, I wouldn't suggest any specific names, but I think, you know, if you go back to their investor events, um, over the last few years, I, I think, you know, some of the people who have spoken, who have presented, um,You know, regarding Tesla's, uh, full self-driving innovations, some of the research and development that they've been doing, um, you know, you, you'll you'll find a pretty short list of, of talent there. I think the investor perception is very much that Tesla is a one-man show, but, um, I think the investor events.Over the last several years show that there's a very deep bench of talent there and so I think there's there's a number of highly capable individuals who could fill that that role.

All right, Garrett thanks so much for joining us and a huge thanks to our own Kenny Polcari for joining me on set as well and for folks listening, if you want to see more of Kenny, you can find him on Trader Talk every Wednesday at 120 p.m. Eastern on Yahoo Finance or wherever you get your podcasts.Now as we head to break, I do want to give us a check on the major averages here amid those fresh comments from the president increasing those tariffs on steel and aluminum up to 50%. You got your S&P down.Nearly 8%. You got your tech heavy Nasdaq down about 50%. We did see a recovery in the market prior to those comments from the president. You had your tech heavy names in particular, lifting the Nasdaq up nearly as much as 0.1% and now firmly back down to the downside off the back of these comments, our own Kenny Pocari sharing with me that this points to the uncertainty that is going to continue to be a drag on the market until we get clarity from the president on these tariffs. We more of your markets action when we come back.Stocks continuing to be under pressure this morning as Trump ramping up the trade war with Canada, specifically talking about increased tariffs on steel and aluminum. You've got your big auto stocks moving to the downside off the back of his comments on Truth Social, specifically about no cars coming into the US that are made outside of the US. You're seeing that pressure playing out amongst the big three automakers and in particular here on your screen you've got GM down about 3.5%, Ford down over 2%, and Stalantis down over 4%. Well, that 50% tariff.Will go into effect on all steel and aluminum imports from Canada starting Wednesday, according to President Trump announcing that on Truth Social this morning. The higher levy is in response to Ontario's retaliatory 25% tariff on electricity to the US Here on set we've got Monica Guerra, Morgan Stanley's wealth management head of US policy, joining me now. And Monica, just want to get your take on the market action that we are seeing just in terms of the uncertainty that all of this kind of tit for tat on tariffs is leading to in the market.How much more selling do you think we're going to have given some of that uncertainty and what does clarity start to look like in your view? What are you watching?

So policy uncertainty is at levels that are reminiscent of COVID-19 right now, right, that folks are essentially holding cash on the sidelines, they're waiting to see how this plays out.I think this latest move with Canada in particular, while it's a net negative right now, we see having this massive sell-off, is important to remember that it gives us a certain level of certainty going forward. So bad news is still news that you can trade off of, and that's important to remember. So if we're looking at steel and aluminum tariffs in particular, back in 2018 when steel was under, you know, the gun, it sold off 11%.But then you have to remember year end it actually was up because of global supply and demand dynamics. So especially when we're thinking about commodities tariffs, we have to think about the entire global market, not just the US and Canada. Now this is a significant, uh, I would say negative impact because of how tightly linked.Our supply chains are right, we're seeing that with the auto makers, but going forward, what we're doing is we're trying to really think through what are the major policy components that are going to have a longer lasting impact for us through 2025 and 2026. Tariffs are on that list 100%. We have to think about the magnitude and pacing of those actions. So when we're thinking about Trump 1.0.First it was growth policy, lower taxes followed by tariffs and more fiscal austerity. This is the reverse. Trump 2.0 is austerity first, then followed by a potential for growth policy. Now we have to see if they can stick the landing or if this is going to be a longer termtrend,

right, getting our veggies before the dessert this time around, but I wonder.For those tax cuts, how much relief might that have for the market given the fact that it's likely to just be an extension of tax cuts that were already in place? Does that give a lot of relief, or do we need to see more in terms of that dessert policy?

Yeah, that's that's a great question. So one of the things we're thinking about the dessert component is that tax cuts aren't going to come to fruition until 2026. So we have a whole year of this potentially.Being pretty bumpy, we get some certainty, I think, in the summer months, so August, because budget, debt ceiling, some of those key policy initiatives have to be resolved by that point. So then second half of the year, I think markets will likely stabilize and that there won't be as much knee jerk reaction around headline risk. Now 2026, when we're thinking about where does that policy stimulus come from.And that's really with the corporate income tax. So if they do lower the corporate income tax to 15%, and that's going to, you know, satisfy market expectation and be a positive in 2026. Now like this scenario with tariffs, it is still the potential for Trump to disappoint and the GOP to disappoint on taxes if they get a less deep.Right, so if we end up at 19%, for example, right, that could have a different market response. So we have to monitor the depth of these tax cuts and if they commit to that 15%, I think that markets will respond positively, right? That's what we're expecting, that's what they've been messaging on, but the other thing I just want to mention on the tax front real quick um is.With the corporate lens, you also have to think about where else could they potentially raise taxes. And while the message has been lower taxes, lower taxes over and over again, they did increase guilty in FDII taxes in 2017 to offset some of the burden.So what that means is that companies that have greater revenue exposure to offshore could have some idiosyncratic risk. So again this is something we'll look under the hood as the tax bill comes together and we'll continue to communicate with you and ourclients

and we have certainly seen this uncertainty playing out in the market and also of course the economy. We were earlier speaking with Julia Carnata who is a macro policy founder just about the environment when it comes to the the trade backdrop that we're seeing. Let's take a listen to what she had to say.

A lot of the actions we're seeing were not the ones we expected going in. Yes, we expected tariffs on China. We did not expect a trade war with Canada and Mexico. There's a range of sectors that are gonna be impacted by this, um, that again weren't the ones that we were really focused on starting at the start of the year.

So Monica, my question to you is, and I was speaking with a source about this earlier who said that the market saw a lot of relief back in 2019 when there was that truce between the US and China, that 90 day truce, plus the Fed was acting a little bit more dosh, both of those things led to a bit of a relief rally in the market.Is there the potential for that same thing this time around if we do start to see a little bit more of a negotiation between the US and China? Is that going to be enough given that there are a lot more players in this cast this time around?

I think that any certainty could create, you know, an opportunity for relief, especially around China. This is, you know, a situation where China isn't backed up against the wall, so there's still this opportunity for greater tariffs from the US and retaliation.And that creates again the sort of leaning into the uncertainty piece. Now for us when we're thinking about, you know, where do we go from here and what's the smartest strategy.I think that from a wealth management perspective folks will automatically think defensive, right? And so we want to sort of turn, you know, again remind folks that when you're thinking about high quality stocks this is actually the time to be looking at cyclicals right this is the time to be looking at, you know, financials, industrial areas where you may get some good high quality equities right that um while they do have tariff risk well they do have.growth will outperform as things right size because even over the mag 7 even over the mag 7 yeah because Mag 7 has sort of run its course. If we're really looking for winners, it's not just the tax policy winners, but it's also the deregulation winners and financials are high on that list. They're one of the first places where you're going to see deregulation really impact industry because it is so nimble and responsive.Especially to the interest rate environment, so one of the things that the administration has talked about, and I, and I love this tagline is they're trying to de-level delever the government and re-lever the private sector. And so if they, I would say open up and have smart, I want to emphasize that smart and responsible deregulation, especially around community banks that could create some, um, I would say some growth opportunities, especially when you're thinking about.Lower income earners, etc. and could be a boost.

Some of those potential tailwinds. All right, Monica, giving us a lot to think about. Thank you so much for joining us on set. We really appreciate it. As we had to break, I want to check in on shares of Verizon shares falling by their most since 2008 after the telecom company issued disappointing financial guidance. Chief revenue officer saying it's been a challenging quarter from a competitive intensity standpoint. You can see here those shares off nearly.7%, but this is just the latest company in a slew of companies now that have reported some disappointing guidance moving forward here. We had Delta Airlines reversing their earlier positive guidance from early in 2025, already two months into the year, reversing that guidance off the back of concerns specifically about corporate America spending on airlines. Are we going to see this trend continuing and how will that impact earnings? We're going to discuss all that next right here on Catalyst.Coles and Dick's sporting goods adding to the flood of companies raising concerns about the US consumer. Comparable sales at Kohl's are expected to drop as much as 6% this year, far exceeding Wall Street's projections to the downside there. And then Dick's also disappointing with the low end of its sales forecast and earnings guidance, trailing the average analyst's estimate.With more we got Michael Baker with DA Davidson is the managing director and senior research analyst. Michael, it's great to speak with you. I know that you highlight here that those calm sales were the strongest in 2.5 years here, but it seems like there's still concerns about the stock. Would you be buying some of the weakness that we're seeing today?

We would be, yeah, absolutely. Uh, Dick's had a very good quarter. Their guidance is below consensus. 0% of the companies that I cover have guided to numbers above consensus so far this earnings season.Given the environment and the uncertainty, the policy rifts, as we're calling them, for rates, inflation, effects, and tariffs, it makes sense to guide conservatively. That's exactly what we saw here. We just got off the phone with the CEO off the call, I should say, and they are not seeing any concern with the consumer at all. This is justGuiding in, in their words appropriately or prudently cautious, that does make sense and so we would be buyers here. This has been a really good stock over the last couple of years, but still one of the cheapest in our space and so we like it on the secular growth story fromhere.

So what are they blaming the weakness on and and what is justified in that excuse?

Again, we're not saying weakness. They coughed at 6%. Uh, they did guide to a lower number, but that's being prudently cautious. A year ago they guided 2024 to 1 to 2% in terms of costs, and they just came in at 5.5%. They beat their earnings guidance by a full dollar. That's about 8%. So it's just the game sometimes that companies play where you want to guide conservatively, it makes sense to do that, but you want to set a bar.That can be beaten and we think that's exactly what's going on here now. Sometimes when companies guide below, it's because they're seeing a slowdown and we need to know that, but that's not what's happening here in our view. So

then why do you think that the market is so negative on the stock this morning? I mean, we are seeing a slew of companies saying that they're lowering their guidance off the back of concerns about the economy, about tariffs. I hear you saying that DX is the exception to what's starting to be a trend.

Yeah, I, I think the stock's down for a couple of reasons. One, the, the, the easy analysis is, OK, the guidance is below the street, you know, the interpretation is that that they are seeing weakness. You would have had to have listened to the call to to understand that's not really what's happening. Secondly, there's a lot of signs that we might be going into a, a recession. So regardless of, of what they're seeing now, this is a consumer discretionary name, so that that sector has been under pressure. So in a way, we think the weakness could be uh.Irrelevant relative to the numbers that they put up today. It's just what we're seeing from from broader, you know, sector rotation outside of these kind of names. But again, we think that's an opportunity because we think it is down more than it should be given the strength in their business in the long term growth outlook.

And they're also spending to grow, utilizing the cash they do have on the balance sheet to grow. Michael, how do you think that they can do that in a way that is effective for growth for the company and more long term?

Right, so the SGNA dollars will be higher and the cap X will be higher, but that's because they're opening a lot of new stores. They, they've found this great new concept called House of Sports, which is really a showcase type store, a big giant store. It's working really well. They've invested in some, uh, what you might call alternative businesses. One that we're really impressed by is Game Changer, which is kind of a software as a service, uh, type of initiative that's growing about 45% year over year with very.Very high margins, they're investing in retail media that we're seeing from a lot of companies, so they're investing SGA dollars, but it's driving higher sales and higher gross margins. And so we think that's a favorabletradeoff.

All right, Michael, we got to leave it there. Thank you so much for joining us this morning. Appreciate it. Sure, as we had to break, let's get a quick check in on shares of Volkswagen, the European carmaker forecasting another challenging year amid an ongoing turnaround effort thanks to.Persistent headwinds from tariffs among other potential headwinds. You can see that stock down about 1%. The other automakers moving off the back likely of that increased tariff announcement from President Trump teasing out a 50% tariff on steel and aluminum. He previously teased out a 25% tariff. He expects that 50% tariff to go into effect as soon as tomorrow. You can see the reaction that that is having in these auto stocks. We'll be back with more on Catalysts.Stocks are lower after President Trump says he's increasing Canada's steel and aluminum tariff to 50%. These trade tensions and weakening economic data causing investors to go risk off and leading to an unwind of 16 years of US stock market dominance. So far this year, international stocks are outperforming the S&P 500. Now strategists are downgrading US stocks.And HSBC taking them to neutral cities saying quote exceptionalism is at least pausing and that two of their models triggered cautionary warnings. Meantime, HSBC saying quote, We are not turning negative on US equities. We see better opportunities elsewhere. Joining us now, the strategist behind that HSBC call Alistair Pinder, head of emerging markets and global equity strategist at HSBC, and Alastair, it's great to speak with you.This shift in in sentiment has happened very quickly. What shifted the US exceptionalism narrative that has existed for over a decade in your view?

Yeah, thank you for having me, and I think, you know, really the big catalyst uh which has caused this shift, you know, out of the US and into international stocks is the way that governments are reacting to Trump's policies. I think the one thing that we underestimated um is how governments were going to respond forcefully with fiscal policy. Now we've seen that in China, uh, with the NPC meeting where they increased their budget.deficit target. We're now seeing that in Europe as well, where Germany and the new coalition government are announcing their plans to do almost €1 trillion of fiscal spending split between defense spending and infrastructure spending, and honestly this offsets a lot of the tariff headwinds that we thought would be materializing for these two markets and really means that actually the growth backdrop may not be as bad as we initially thought.

One of the things I'm curious about, especially off the back of the announcement from Trump about an hour ago on Truth Social, that he was increasing stealing aluminum tariffs and tariffs that would hurt Canada in particular is the impact of the tit for tat in the trade war that is developing. Are you concerned about reciprocal tariffs leading to less resilience for that basket of European stocks?

100%. I mean that is the the big downside risk to our view is that essentially this tit for tat nature on tariffs uh causes a much deeper, you know, economic and and global slowdown and in that view there's probably very few places within the equity space, uh, both within the US and internationally, uh, which would be immune to that. You would hope that, um, you know, that essentially leaders would be aware of that.and acknowledge the fact that the tit for tat nature could cause more downside risks and again focusing like much like you know China has done instead of necessarily going tit for tat, you know, responding a little bit, but then actually focusing on what domestic policies they can do to offset some of the headwinds that they're going to be seeing from tariffs.

So is Europe still in buying opportunity in your view?

Uh, definitely. So I think you really gotta, you gotta break down, uh, Europe's outperformance, uh, year to date into two components. Really from January to February, what we saw was Europe was outperforming, uh, because the euro was weakening. Uh, we went all the way from 112 down to 103. Um, this was a tactical, uh, you know, uh, momentum, uh, for Europe, but now we have something structural, which is essentially that Germany is coming out and saying, here is, you know, a sizable amount of fiscal stimul.Which we're gonna, you know, deploy over the next 10 years, that for me is a game changer. That is a seismic shift in Europe's economy, and that's why I think you have a bit more longevity now in, in the European equity market trade. The final thing I'll just highlight is that obviously a lot of people are very concerned about the equity market exposure to tariffs, particularly in Europe. A few things to note, 25% of revenue in Europe comes from the US, but only 10% of that is what I would say is.Right, the rest of it is services. The rest of it comes from companies that produce and sell in the US. So actually I think European equity market exposure to tariffs is probably slightly less than what we think and it is very sectorspecific.

If you believe in the AI narrative in particular combined with your view, Alistair, that stimulus is a positive catalyst for markets, then why do you look at Europe as opposed to China as the beneficiary of that stimulus if you do want to take advantage of the AI trade?

So I, I think there, there's two different narratives. I mean, we're both overweight EM and and Europe in this context, so I think both of them provide uh very interesting and compelling opportunities. We've touched on, on Europe and the way that they could be supported, uh, through the, you know, the fiscal spending which helps the domestic names. In China, you know, not only do you have the fiscal stimulus, but you also now have this alternative, uh, AI trade which is kind of material.as a result of the development of the deep sea wave, and that's really catalyzing China's internet stocks which despite the rally year today still trade on just 16 times, you know, 12 month forward earnings, you know, still cheaper than the Magnificent Seven, and I think a lot of investors are looking and seeing this as another alternative AI set which we didn't have, you know, 6 or 12 months ago.

All right, Alistair, we got to leave it there. Thank you so much for the breakdown of what's going on in European equities in particular. I really appreciate you making the time for Yahoo Finance. Let's get a check on the major averages as we head to break. We are still seeing that selling continuing. You got your S&P 500 down about 0.1% now. The Nasdaq 100 down about 0.1%. I do want to mention the S&P 500 closing below that 200 day moving average already this week. We've got another key support level.Previous low from September 11th, if it breaks below that, we could continue to see even more selling the relative strength index though flashing over sold signals so we could see some buying coming in if we do hit that 28 level on the RSI moving forward here. But interesting to see this selling continuing off the back of that increased tariff announcement from President Trump. Tariffs up to 50% on steel and aluminum. Coming up, we've got wealth dedicated to all your personal finance needs. Brad Smith has it for the next hour.