Mid-Morning Look

Tuesday, April 01, 2025

After bouncing roughly +2.5% from lows on Monday (to finish near highs), US equity futures turned lower this morning on new tariff headlines (via Washington Post) ahead of tomorrow’s so called “Liberation Day” where Trump is poised to unveil a sweeping reciprocal tariff plan this Wednesday, April 2, in a White House Rose Garden event. Treasury Secretary Bessent said it would be at 3pm ET on Wednesday. Uncertainty persists over Trump’s often-shifting plans, characterized by last-minute carveouts and reversals. Earlier today, the Washinton Post reported the White House is having early talks about a tax refund/dividend check from the trillions in revenue they plan to collect from sweeping tariffs, said former commerce secretary Wilbur Ross, who ate dinner with Trump, Bessent, Lutnick, Kennedy & others at Mar-a-Lago Friday. Ross also said that he believes WH will land at between 15 and 25% tariff rate for all imports but that there will be some limited exceptions for select products. He also suggested it would not be literally every country. But the rate will be the same for all the ones that are tariffed. Those headlines pulled futures lower and lifter gold further, which hit fresh all-time highs of $3,177 an ounce (after rising 18% in Q1). Stocks extended losses this morning following economic data where manufacturing missed but prices paid jumped. US markets are holding lower, with the S&P (SPX) below 5,600 as investors await tariff news tomorrow.

• S&P Global manufacturing PMI dipped to 50.2 in the final print for March (vs. 49.8 preliminary), down from the 52.7 in February but held in expansionary territory for a third straight month, not seen since last April, May, and June, after 6 months in contraction.
• ISM U.S. manufacturing activity index 49.0 in March below consensus 49.5 and down from 50.3 in February while prices paid rises (inflationary) to 69.4 in March above vs 62.4 in February; ISM U.S. manufacturing new orders index 45.2 in March vs 48.6 in February and employment index 44.7 in March vs 47.6 in February
• Feb construction spending rises +0.7% topping consensus +0.3% to $2.196 trln, vs Jan -0.5% (prev -0.2%); US Feb private construction spending +0.9%, public spending +0.2%.

• In Media & Broadcasting: NMAX shares rise again after surging over 800% yesterday in mini-IPO; In towers, Morgan Stanley assumed and upgraded AMT to Overweight from EW (PT to $250 from $213) and SBAC assumed and downgraded to EW from Overweight (PT to $240 from $252) saying sees 2025 as likely a low-point for net organic revenue growth for the industry, as carrier investment picks up and consolidation churn and FX headwinds fade. In telco, Oppenheimer raised the price targets on the three carriers (VZ, T, TMUS) by ~10% on underappreciated LT FCF upside potential, and still relatively low historical valuations.
• In Retailers: PVH shares surged after quarterly results as itsQ4 update showed that some initiatives are starting to stabilize the business; in discount retail, DG was upgraded to Overweight from Market Weight at Bank America; in athletic wear, LULU was downgraded to Hold from Buy at Argus saying Lululemon’s growth is likely to be hurt by, an aging product line in need of an update, U.S. tariffs on imports from China and Mexico and competition from Nike, Nordstrom, Under Armour and Vuori; in footwear, ONON said its Co-CEO Marc Maurer has decided to depart after 12 years with the sportswear company; the Co said it will transition to a single-CEO structure, with current Co-CEO and CFO Martin Hoffmann taking the helm effective July 1, 2025.
• In Transports: Airlines DAL, AAL downgraded to Hold from Buy and LUV, AC downgraded to Underperform at Jefferies (UAL remains lone Buy). Jefferies notes consumer sentiment continues to disappoint, now at 4-yr lows, and tariffs take effect this week after delays affecting biz confidence that BTN reports could be down y/y of late vs guides underwriting +HSD. On avg, Jefferies airline ests are 19% below consensus on Q1:25 EPS, 14% below on Q2, and 12% below for 2025. In truckers/logistics: Bank America downgraded KNX to Neutral.

• PRGS +8%; delivered better 1QFY25 with revenue/EPS ahead of expectations driven by steady demand across the product portfolio while mgmt guides Q2 EPS and revs above consensus and raises FY EPS to $5.25-$5.37 from prior $5.00-$5.12 (est. $5.06) and boosts FY adj operating margin.
• PVH +18%; on better results as Q4 EPS $3.27 above consensus $3.21 and revs fell -4.8% y/y to $2.37B vs. est. $2.33B which exceeded guidance of a decrease of 6% to 7%; said it expects flat to higher revenue in fiscal 2025 after sales declined 6% last year to $8.65 billion.
• RBLX +1%; partnered with GOOGL to scale immersive advertising; Launches rewarded video ads
• SHAK +2%; upgraded to Buy at Loop Capital as believes there is the potential for 10%+ upside to mgmt’s guidance for adj EBITDA of $200-210M in 2025 in the event comparable sales continue to beat expectations.
• ULTA +1%; upgraded to Buy from Neutral at Goldman Sachs and raised tgt to $423 from $384 noting the firm has been on the sidelines with this name since December 2022.
• XPEV +2%; delivers 33,205 units in March, up 268% YoY.

• DAL -5%; more weakness in airlines as Jefferies downgraded AAL, LUV, DAL noting consumer sentiment continues to disappoint, now at 4-yr lows, and tariffs take effect this week after delays affecting biz confidence
• EE -5%; as 7M share Spot Secondary priced at $26.50.
• JNJ -3%; shares fell after a U.S. bankruptcy judge rejected its $10 billion proposal to end tens of thousands of lawsuits alleging that its baby powder and other talc products cause ovarian cancer.
• TKR -6%; as announces CEO transition as Tarak B. Mehta departs as CEO and director and Richard G. Kyle appointed interim President and CEO.
• WPP -7%; along with weakness in advertising sector with OMC, IPG lower.