Mid-Morning Look

Tuesday, April 15, 2025

U.S. stocks choppy early, trying to climb the tariff “wall of worry”, attempting a 3-day win streak and rising 4 of the last 5 as the US dollar bleeding has appeared to stop for the time being and Treasury yields are steady (but higher) as investors position themselves ahead of earnings season. So far, banks have been solid, with cautious outlooks amid the tariff impact uncertainty as BAC and Citigroup (C) both advanced on earnings this morning, following better results from GS and JPM in recent days (financials XLF, KRE early market leaders). Pharma giant JNJ reported a top and bottom line beat today with mixed guidance, but the earnings onslaught begins next week. Right now, it is still all about tariffs and the global trade impact on economies, with news flow fluid each day. The CBOE Volatility index (VIX) dropped below 30 this morning (low of 28.29) but moves back above on EU tariff comments (see below).

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.

• 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%.

• 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 Autos: Autos got a pop late yesterday and carried to today after President Donald Trump said he is exploring possible temporary exemptions to his tariffs on imported vehicles and parts. 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 reported.

• DTIL +8%; after the FDA granted fast track designation for PBGENE-HBV, the company’s in vivo gene editing program aimed at chronic hepatitis.
• ERIC +7%; as Q1 earnings ex charges rose 44% y/y to 6.2B Swedish crowns ($636M), a nearly 40% beat to the average estimate of 4.44B crowns; Q1 net sales grew 3% to 55B crowns but missed est. 55.7B crown forecast.
• HPE +4%; Bloomberg reported Elliott Investment Management has built a position worth more than $1.5B in Hewlett Packard Enterprise, making Elliott one of the top five shareholders. https://tinyurl.com/mvmd4kv6
• NFLX +5%; after the WSJ reported NFLX is targeting to double revenue by 2030 and reaching a $1tn valuation.
• RKLB +9%; said it was selected to provide hypersonic test launch capability through development programs in the US and UK.
• VERV +26%; adding to yesterday’s +26.3% advance after initial Ph1B data for VERVE-102 on both safety and efficacy (was upgraded to Overweight at Cantor today).

• ALB -3%; as Citi lowered PT to $64 from $85 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.
• ALGM -10%; 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.
• APLD -17%; as posted quarterly results that missed expectations for revenue and adjusted Ebitda.
• BA -1%; after Bloomberg reported China ordered halts to jet deliveries from the U.S. planemaker amid trade war. Beijing also asks Chinese carriers to halt purchase of aircraft-related equipment and parts from U.S. companies, per report.
• COTY -4%; double downgraded to Underperform from Buy at Bank America predicated on a lower valuation for both the Prestige and Consumer Beauty businesses due to slowing growth and cuts tgt to $4.50 from $9.00.
• DOW -2%; 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.