SOTS 2nd Hour: Stocks Fall, Trump Vs. Powell, and Apollo’s Recession Odds 4/21/25

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Sara Eisen (0:59)

Good Monday morning. Welcome to Squawk on the Street. I'm Sara Eisen with Carl Quintanilla and David Faber. Live as always from Post 9 of the New York Stock Exchange. Markets are tumbling this morning. We are kicking off the week here with a decline that is deepening. The Nasdaq is now down 2.25 percent. The S&P down 1.75 percent. Every sector is lower right now. Hardest hit. Consumer discretionary and technology. But as I mentioned, widespread sell-off. Take a look at what's happening in bonds right now. Sell-off in the US dollar. Mixed picture in the bond market. There's buying in the short end of the curve with the two-year yield lower, but the 10-year and the 30-year yield higher. It's kind of that sell-America story again, reverberating through the markets. The focus today on whether the president can fire Jay Powell and whether that's a new source of uncertainty out there.

Carl Quintanilla (1:45)

Meantime, we're also watching this breaking news out of Rome today. Pope Francis has passed away at age 88 The Vatican announced the news earlier this morning. This is a live look at the Vatican. The Pope's death, of course, comes after that recent bout of double pneumonia and bronchitis. We will head live to the Vatican later on this hour.

David Faber (2:04)

Meantime, we did get some economic data that just crossed the tape. Let's get to Rick Santelli for that. Rick.

Rick Santelli (2:11)

Yes, David. Leading economic indicators for the month of March are leading into the red, minus 7 tenths of a percent. That's a bigger negative than we were expecting. And that means 36 out of the last 39 months have been negative and four in a row. So, this is not a very strong number. As a matter of fact, it's the weakest since October of 23 And something else is going on, of course, and that is the 2's 10th spread. Currently hovering at 62 basis points, meaning a 10-year and a 2-year yield are separated by 62 basis points. It hasn't been that wide since Feb of 22 And the dollar index, should they close at these levels, down over a percent, will be the weakest since March of 22

And should the euro currency close where it's currently traded, it will be the strongest since September of 22 So you can see the way everything's aligned at this point, with short-term rates moving down and long-term rates moving higher. Sara, back to you.

Sara Eisen (3:16)

Okay, thank you very much, Rick Santelli. Let's kick it off with the president's post this morning on Truth Social about Fed Share Powell just feeding into the uncertainty there about what's going to happen with the Fed Share and whether he's going to close out his term. Which ends next year. Here's Trump today talking about preemptive cuts in interest rates. He said they're being called for by many with energy costs way down, food prices including Biden's egg disaster substantially lower and most other things trending down. There's virtually no inflation. He goes on to say with these costs trending so nicely downward, just what I predicted they would do, there can be almost no inflation, but there can be slowing of the economy unless Mr. Too Late, a major loser, lowers interest rates.

Now, Europe has already lowered seven times. Powell has always been too late, says the president, except when it came to the election period, when he lowered in order to help Sleepy Joe Biden, later Kamala get elected. How did that work out? That's the political story around the Fed. I have not seen any economists calling for interest rate cuts now preemptively, because I think the Fed faces this predicament of potentially higher inflation as a result of tariffs as well as a slowing economy. We're going to get a lot more information this week on just you know, finance ministers talking about trade. It's the IMF World Bank meetings, which means all the world's central bankers and all the finance ministers are out. But guys, on the idea of preemptive cuts, you know, and whether there's this real conversation about what that should happen, nothing the president is saying is wrong. Inflation has come down. The problem is this idea that tariffs could push the Fed away from both of its goalposts on its mandate. And so it's hard to know whether the Fed should be cutting now or not. I mean, just take a look at jobless claims, for instance. There's not evidence in the weekly numbers of Americans filing for unemployment claims that there's any stress in the system. Jobs is a key part of their mandate. Similarly, unemployment. There's jobless claims. I mean, it spiked during 20, remember, during COVID. And there have been other little spurts of weakness where there have been more Americans filing for unemployment claims, but we're just not there yet. And then on the inflation front, the president's right. We've made a lot of progress on that front, but we're still above the 2% goal. I mean, there's PCE basically of where we've come down a long way, but we're still above the goal. So it's hard to argue for Fed cuts. And I think the Fed feels good in its legal argument, but it does add another sort of like self-imposed layer of uncertainty on top of tariffs about will he or won't he try to exert pressure like he's done with the executive branch on something like a Fed.