Closing Recap

Tuesday, April 15, 2025

After a few weeks of massive stock market swings higher and lower (including some record moves) and aggressive overnight future moves amid increased volatility (VIX) on tariff headlines, stock prices have calmed down somewhat during the first two days of the abbreviated trade week as major averages finished little changed, erasing earlier gains. The S&P 500 (SPX) held above 5,400 most of the trading day while the dollar bounced off the recent multi-month lows and Treasury yields eased following last week’s surge. Gold prices remain not far off all-time highs while oil was little changed. With global tariff headlines quieting down the last few days, attention turns back to earnings with big banks out the first few days ahead of the onslaught of results next week. A Handful of transport earnings out tonight with UAL in airlines and JBHT in trucking.

On the trade/tariff front today, Canada’s finance ministry said the country to provide temporary six-month relief from counter tariffs for goods imported from the U.S. that are used in manufacturing, processing and food and beverage packaging. Canada announces performance-based remission framework for automakers, designed to incentivize continued production and investment in Canada. The move comes a day after President Trump said he is exploring possible temporary exemptions to his tariffs on imported vehicles and parts. However, stocks caught a little volatility after EU and U.S. officials made little progress in resolving trade disputes, Bloomberg reported. U.S. officials signaled most tariffs will stay. After a two-hour meeting, EU trade chief Maros Sefcovic left unclear on U.S. goals. Lastly, White House Press Secretary Karoline Leavitt said the trade team is currently considering 15 trade deals and expects first deals will be announced “very soon” says President Trump wants to sign off on all trade deals.

Bearishness continues to dominate as Bank America said its April Global Fund Manager Survey shows 5th most bearish FMS in past 25 years, 4th highest recession expectations of past 20 years! The firm saw a record number of global investors intending to cut US stocks; FMS max bearish on macro, not quite max bearish on market (“peak fear” norm is ≈6% cash level vs 4.8% today); but BAML‘s FMS says a. April asset price lows to hold near-term, b. big upside needs big tariff easing, big Fed rate cuts, and/or economic data resilience. Net 82% of respondents say global economy to weaken (30-year high), 42% say recession likely, inflation expectations highest since Jun’21, probability of hard” landing surges to 49% (vs 37% “soft,” 3% “no” landing). Also, @charliebilello noted, “The S&P 500 crossed into bear market territory last week with a peak-to-trough decline of over 21%. This was the 4th bear market for the index in the last 7 years and the 5th correction of more than 20% since the March 2009 low.”

• March import prices fell -0.1% vs, consensus for unchanged and down from Feb +0.2% while March export prices unchanged (consensus unchanged) vs Feb +0.5%; U.S. March year-over-year import prices +0.9%, export prices +2.4%; U.S. March non-petroleum import prices unchanged, year-over-year +1.6%.

• Oil prices inched down on Tuesday as WTI crude oil slipped -$0.20 to settle at $6.133 per barrel after the International Energy Agency (IEA) followed OPEC in slashing its oil demand forecast, though price falls were limited by U.S. President Donald Trump’s suggestion of some new tariff exemptions. The IEA cut its forecasts for global oil demand growth to 730,000 barrels per day (bpd) this year from 1.03 million bpd.

• Treasury yields slipped early afternoon with the 10-year yield hitting lows around 4.3% (more than 20-bps off last week’s highs) before bouncing a bit late day, while shorter-term maturities like the 2-year were little changed. Bitcoin erased earlier gains, moving back below $85,000 this afternoon in a “risk-off” mood.

• GM was downgraded to equal-weight from overweight at Barclays and cut its view on the US auto industry and mobility to negative (downgraded APTV, MBLY and VC to equal-weight from overweight); says the tariff have begat a "highly challenging environment" and it has resulted in a difficult short-term investment for the sector.
• Honda Motors (HMC) is considering switching some car production from Mexico and Canada to the United States, aiming for 90% of cars sold in the country to be made locally in response to new U.S. auto tariffs, the Nikkei newspaper reported on Tuesday.
• TSLA, RIVM, LI, NIO, XPEV: Global sales of electric and plug-in hybrid vehicles rose 29% year-on-year in March, helped by growth in China and Europe, while EV growth in North America was hampered by U.S. President Donald Trump’s stance towards emissions standards and uncertainties around tariffs – Reuters reported.
• In Autonomous: AUR was initiated at Buy and $10 tgt at Needham saying sees a long runway of durable growth, with AUR mapping and adding new routes while scaling trucks on the road upfitted with the Aurora Driver platform leaning on OEM and Tier 1 supplier partnerships to grow autonomous miles driven.

• In Food & Beverages: PEP was downgraded to Neutral from Buy at Bank America (tgt to $155 from $185) saying Frito-Lay North America’s growth is likely to remain below long-term trendline this year and while international segments are scaling and making large contributions to sales and profit growth, it’s not enough at this point to make up for slower growth at the North American snacks segment; Grocer ACI guided its annual profit $2.03-$2.16, below estimates of $2.28 as forecasts 2026 adj. EBITDA $3.8B to $3.9B, vs. est. $4B; HRL upgraded to Neutral at Bank America saying current market dynamics are rewarding stocks with near-term EPS visibility and low revision risk and Hormel fits these parameters. GIS, HSY, MDLZ, PEP shares were volatile after Arkansas on Tuesday became the first state to ask the U.S. Department of Agriculture to allow it to ban soda and candy from the Supplemental Nutrition Assistance Program, also known as food stamps.
• In Home Improvement Retail: LOW announced a definitive agreement to acquire Artisan Design Group for $1.325B, adding $1.8B in annual revenue (2% LOW FY24) including 132 facilities and 3,200 employees. Acquisition expected to close in F2Q25 with ADG providing design and installation services distributing flooring, cabinets, and countertops with ADG a flooring category leader.

• In Chemicals: DOW and APD downgraded to Underperform at Bank America and cut HUN, PPG and GPRE to Neutral from Buy and upgraded WLK and ESI to Buy from Neutral and raised DD and ADM to Neutral. Hitting reset button on major disruptions as Chemicals/Agriculture coverage is down 15% year-to-date vs 8% for the S&P 500, yet the bulk of the underperformance, ~600bps, has been realized since April 2.
• In Materials: ALB PT cut to $64 from $85 at Citigroup and earlier reduced lithium estimates ahead of earnings as sees tariffs disputes as a potential incremental headwind to global auto sales and says it is likely to keep prices depressed in the near term.

• Citigroup (C) Q1 Non-GAAP EPS of $1.96 beats by $0.11, revenue of $21.6B beats by $310M, issues FY25 guidance unchanged; Q1 cost of credit of $2.7 billion increased 15%, driven by a higher net build in the allowance for credit losses; Q1 net interest income (NII) $14.01 billion, surpassing the estimate of $13.68B; Q1 Fixed Income, Currencies, and Commodities (FICC) sales and trading revenue was $4.48Bvs. est. $4.37B; Q1 investment banking revenue $1.04B vs. est. $939.8M.
• PNC Q1 EPS $3.51 vs. est. 43.39; Q1 revs $5.45B vs. est. $5.48B; Q1 NIM expanded 3 bps to 2.78%; Q1 Fee income decreased 2% due to a slowdown in capital markets activity and seasonality; Q1 Average deposits decreased $4.6 billion, or 1%; Q1 provision for credit losses $219M.

• DTIL noted the FDA granted fast track designation for PBGENE-HBV, the company’s in vivo gene editing program aimed at chronic hepatitis.
• JNJ Q1 adj EPS $2.77 tops consensus $2.58 and revs $21.9B above consensus $21.57B; mixed guide as cuts FY25 adjusted operational EPS view to $10.50-$10.70 from prior $10.75-$10.95 (est. 10.50); raises FY25 operational sales view to $91.6B-$92.4B from $90.9B-$91.7B and is above consensus $90.29B.
• NVAX said preliminary data showed that its non-mRNA JN.1 COVID-19 vaccine induced lower frequency and severity of short-term side effects and impact on daily life compared with PFE mRNA vaccine.
• VERV was upgraded to Overweight at Cantor saying based on the quality of the Phase 1 clinical data, it believes risk/reward is now skewed in its favor, with its assumed 35% probability of success for the program in HeFH.
• In Dental: XRAY was downgraded from Overweight to Equal Weight at Morgan Stanley and cut tgt to $14 from $21 saying after being the worst performer in the group in 2024 (-47% vs -21% dental group and +23% S&P 500), XRAY’s shares are down 21% YTD (vs. -16% group and -5% S&P 500) primarily on the macro/policy backdrop and its plans to refocus the Byte business model around treatments.

• In Internet & Media: According to the WSJ, NFLX is targeting doubling revenue by 2030 and reaching a $1tn valuation (vs ~$400bn valuation currently; implies ~16% CAGR).

• In Software: HUBS was upgraded from Neutral to Buy at UBS while cut its tgt to $675 from $775 noting shares are down 35% since mid-Feb and with the valuation now at 9x CY25E EV/S (below 2-yr avg. of 11x), is upgrading its outlook given its view that the set-up is attractive for a high-quality software company who has a more conservative FY25 guide and could be a snapback long if macro headwinds prove to be overblown.
• In Semiconductors: ALGM shares declined after ON terminated its efforts to acquire Allegro MicroSystems and withdrawn its all-cash proposal to acquire the company for $35.10 per share; NVDA said RTX 5060 graphics cards are available in May at $299; RTX 5060 TI graphics cards equipped with 16gb or 8gb graphics memory, available April 16 at $429 and $379.