Mid-Morning Look

Tuesday, April 08, 2025

U.S. stocks with a much different picture then what we have seen over the last week as broader global markets are soaring, with a more than 3% advance for major U.S. averages as several nations overseas rushed to negotiate with President Donald Trump after his series of “reciprocal” tariffs, although China continues to push back with aggressive retaliatory talk. The Dow Jones Industrial Average jumped over 1,300 points, or over 3.5%, after losing more than 3,500 points since Wednesday as investors panicked over Trump’s “Liberation Day” taxes, which economists have warned could reheat inflation and even trigger a recession. Markets had slumped Monday morning after the President over the weekend signaled his tariffs wouldn’t be revoked anytime soon – but news of trade talks with several countries once again fueled hopes on Tuesday that the hefty tariffs could be negotiated lower. Yesterday, in a Truth Social post on Monday afternoon, Trump revealed he spoke with Japanese Prime Minister Shigeru Ishiba that morning and today talked about positive developments with trading partner South Korea. Overall, stocks across most major emerging markets are higher, rebounding after logging sharp declines in recent sessions. Indications that countries are looking to negotiate trade deals with the United States further provided impetus for risk taking. Oil, gold prices, Treasury yields, and Bitcoin all see rebounds alongside stock prices.

Futures got another boost after 9:00 AM after Donald Trump tweets on Trust Social saying: “I just had a great call with the Acting President of South Korea. We talked about their tremendous and unsustainable Surplus, Tariffs, Shipbuilding, large scale purchase of U.S. LNG, their joint venture in an Alaska Pipeline, and payment for the big time Military Protection we provide to South Korea. They began these Military payments during my first term, Billions of Dollars, but Sleepy Joe Biden, for reasons unknown, terminated the deal. That was a shock to all! In any event, we have the confines and probability of a great DEAL for both countries. Their top TEAM is on a plane heading to the U.S., and things are looking good. We are likewise dealing with many other countries, all of whom want to make a deal with the United States. Like with South Korea, we are bringing up other subjects that are not covered by Trade and Tariffs and getting them negotiated also. “ONE STOP SHOPPING” is a beautiful and efficient process!!!

Overnight, China’s Commerce Ministry said it “resolutely opposes” U.S. President Donald Trump’s threat of escalating tariffs and vowed to take countermeasures to safeguard its own rights and interests. The comments came after Trump said he would impose an additional 50% duty on U.S. imports from China Wednesday, if Beijing does not withdraw the 34% tariff it imposed on American products last week. “The U.S. threat to escalate tariffs on China is a mistake on top of a mistake,” the statement said, according to a CNBC translation. “China will never accept it. If the U.S. insists on its own way, China will fight to the end.”

The European Union still wants to avoid a trade war with the U.S. despite Donald Trump’s administration’s rejection of the “zero for zero” offer on all industrial goods put forward by Brussels, an EU spokesperson told reporters on Tuesday. White House trade adviser Peter Navarro said that the European Union needed to lower its non-tariff barriers, including those created by value-added taxes and food safety regulations, if it wanted to reach a deal.

• In Brokers & Exchanges: CME, CBOE, MKTX all upgraded to Overweight as Morgan Stanley as sees rates, index options, and credit best placed, elevate CME to Top Pick while downgrade NDAQ, TW to Equal eight as sees risks to cap mkts/beta-sensitive streams driving slower growth at NDAQ and less scope for premium valuation to extend at TWPrefer brokers with more defensive revenue streams and idiosyncratic earnings growth levers. Upgrade SCHW to Overweight and stay Overweight LPLA. Downgrade HOOD to Equal Weight and VIRT to Underweight as see risks for retail dis-engagement to pressure trading revs at HOOD drives 22%/45% EPS cut and market making revs at VIRT w/16%/21% EPS cut.
• In Mortgage lending/Finance: Barclays said it remains Overweight on balanced businesses (PFSI), and upgrade RKT to EW from UW on potential upside from its announced acquisition of COOP. Given the evolving macro, the firm is cautious on mortgage credit as it adds an incremental layer of risk to credit normalization for MIs. At JP Morgan, GHLD was upgraded to Neutral from Underweight and ESNT to Overweight from Neutral saying the lower rate outlook could lead to substantially higher originations volumes while for ESNT, the stock’s lower multiple and reduced credit risk as higher coupon mortgages refinance for the upgrade.
• In Life/P&C Insurance: LMND downgraded from Equal weight to Underweight at Morgan Stanley given the company is looking to expand into a competitive and more uncertain auto insurance market. JP Morgan with several changes as named ALL a top pick, upgraded RNR to Overweight in reinsurers and downgraded AIG to Neutral saying their outlook for the P&C sector is positive given ongoing firm pricing, a defensive risk profile, and attractive valuation levels (especially after the pullback since April 3). In a separate note, PLMR was upgraded to Overweight from Neutral saying despite the stock outperforming this year, JPM thinks PLMR still has a multi-year runway for growth and has fundamental upside that is not fully reflected in earnings expectations. They also downgraded BWIN as it thinks it has potential to outperform other public brokers over time given its above-average organic growth profile and ongoing margin expansion.

• BTU +9%; coal stocks rise (AMR, HCC) after President Trump will sign executive orders on Tuesday aimed at boosting the country’s coal industry. He plans to sign several executive orders directing the Interior and Energy Departments to take action to support the industry (3:00 PM as per White House) https://tinyurl.com/5yj2f3rw
• CRMD +15%; after Q1 revs $39M topped the $32.3M estimate and increased first-half guidance for sales to existing purchasing customers to between $62M-$70M.
• CVS +9%; announces CFO transition plan, appoints new Chief Medical Officer; expects to meet or exceed FY25 guidance based on results through February. Brian Newman named CFO effective April 21 and Amy Compton-Phillips named Chief Medical Officer effective May 19.
• HUM +12%; surged along with gains in ELV, UNH, CVS, CNC after the U.S. announced a 5.06% average increase in the government’s final reimbursement rates for 2026 Medicare Advantage (MA) health plans – more than double of what was proposed in January.
• LOCO +10%; shares jump after saying late Monday it received an unsolicited acquisition proposal from Biglari Capital to acquire all of the Company’s issued and outstanding shares of common stock that it does not already own, as per SEC 8K filing.
• MRVL +3%; after Infineon agreed to buy the chip designer’s automotive networking business for $2.5 billion.
• MU +5%; after telling U.S. customers it plans to impose a surcharge on some products to account for U.S. President Trump’s new tariffs, Reuters reported citing four sources familiar with the matter said. Micron’s overseas manufacturing sites are largely based in Asia, including China, Taiwan, Japan, Malaysia and Singapore
• PCRX +16%; after announcing that it has settled its litigations with Fresenius Kabi USA, LLC (Fresenius), Jiangsu Hengrui Pharmaceuticals Co., Ltd., and eVenus Pharmaceuticals Laboratories, Inc. related to patents for EXPAREL(R) (bupivacaine liposome injectable suspension).
• SPIR +29%; after saying in a filing, it and Kpler will resolve ongoing litigation and mutually release claims, assuming maritime business sale closes by Apr 25; Spire agreed to sell the maritime unit to Kpler for about $241 mln in November.