SOTS 2nd Hour: Stocks Reverse Steep Losses on Iran Headlines. Does China Have an Edge over U.S.? Private Credit Fears Persist 4/2/26

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Carl Quintanilla (0:58)

Good Thursday morning. Welcome to Squawk on the Street. I'm Carl Quintanilla with Seema Modi, David Faber here at Post 9 of the New York Stock Exchange. Sara Eisen has the morning off. Giving back some of the rally last couple of days, although for the week, Major Average is still enjoying the best performance since November of last year. SMP is up about 150 points since Friday night.

Ahead this hour, investors feeling a bit gloomy about the Iran War, but JP Morgan's David Kelly says the economy can probably handle it. A recession will not come in 26 He'll join us to make that case. Apollo's Torsten Slux with us. We'll talk about how this fresh surge in energy prices might impact the inflation picture. And former Morgan Stanley Asia Chairman Stephen Roach with us with a look at how the Iran War has fundamentally shifted the US-China relationship.

David Faber (1:45)

Let's start, though, with the latest on Iran and the President's speech last night. Eamon Javits joins us from Washington, Eamon.

Eamon Javers (1:53)

Yeah, good morning, David. World governments have begun to wrestle with the question of what to do to reopen the Strait of Hormuz after President Trump signaled last night that he believes it's not his problem to deal with. The UK today hosting diplomats from more than 40 countries in a virtual summit on the Crucial Waterway. The United States not participating in that meeting, which UK Foreign Secretary Yvette Cooper said would focus on ways to reopen the Strait after Iran had hijacked it. Separately, French President Emmanuel Macron said today it would be unrealistic to use military force to open the Strait despite President Trump's suggestion last night that other countries should take it. He said any military effort to reopen the Strait and get oil flowing would take forever and expose those transiting the Strait to fire from Iranian troops and ballistic missiles. Now, in his address to the nation last night, President Trump argued the opposite.

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Go to the Strait and just take it, protect it, use it for yourselves. Iran has been essentially decimated. The hard part is done, so it should be easy. And in any event, when this conflict is over, the Strait will open up naturally.

Eamon Javers (3:05)

The president also said that stock prices and the cost of oil will normalize when the war ends, which he described as being two to three weeks from now. That's a time frame he laid out in public a couple of times this week, and he stuck to it in the speech last night, guys.

Carl Quintanilla (3:23)

Amen, appreciate that. Amen Javerza this morning in joining us with some of the news from this president's speech last night. Meantime, stocks here giving back a chunk of this week's gains, but we are off the worst levels of the morning. Joining us this morning, David Kelly, JP Morgan Asset Management's Chief Global Strategist joins us here at Post 9 Good to see you, David. Thanks for coming in. You willing to look through the next couple of weeks of activity in terms of military action?

David Kelly (3:46)

Over the next few weeks, yes, because there's no way this is not going to end with oil coming out of the Persian Gulf. Ultimately, the United States is going to have to come to some agreement with whoever is in charge in Iran to allow US oil and everybody else, well, not so much US oil, but oil will go out to the world as well as everything else that comes from the region, and the price of that is going to be that Iran is going to be able to export stuff too, because there's no other endgame possible here. So I think you do have to look past that and then look towards the rest of the year. Meanwhile, I think the US economy has got enough going forward to keep growing slowly from here.