Early Look

Friday, April 4, 2025

U.S. futures were slightly weak overnight before tumbling in recent minutes as the tariff retaliation against the U.S. begins. China announces extra 34% tariffs on US goods, imposed from April 10^th and adds 11 US companies to the unreliable list. China also announces rare metal controls, imposing export controls on samarium, gadolinium, terbium, dysprosium, lutetium, scandium and yttrium. The move comes after the U.S. said it imposed 10% across the board tariffs on countries and extra tariffs for so called “bad actors” which included China. The news pushed U.S. stock markets to their lowest levels in 2025, closing at their lows on Thursday in a bloodbath of a trading session that saw the S&P 500 and Russell 2000 small cap index both register their biggest one-day pct losses since June 2020, while the NASDAQ registers its biggest daily pct drop since March 2020. The S&P 500 is down 6 in the last 7 weeks. Many large cap tech stocks are looking sharply lower again, including main drivers of the market AAPL, AMZN, GOOGL, META, MSFT, NVDA and TSLA (Mag7) in another rout early for tech stocks. Monthly payroll figures at 8:30 AM EST.

The flight to safety continues, pushing the 10-year Treasury yield below 4%, falling another 15bps to 3.897% (16-month low) while gold futures reverse and move higher back to $3,125 an ounce. The 2-year Treasury yield continues to fall to lowest since September 2022, last down 20.4 bps to 3.5205%. Meanwhile oil futures tumble as WTI crude declines over 5% to $63.45 per barrel. The decline in stock markets is pushing sentiment lower while fed fund futures markets are now forecasting 50% chance of five cuts this year (up from 4 yesterday). In Asian markets, The Nikkei Index, Shanghai Index and Hang Seng Index were all closed, but in Europe more weakness as the German DAX is down -1,000 or 4.4% to 20,750, while the FTSE 100 is down -289 points or 3.42% to 8,184. It appears investors have gone from buying the dip to trying to catch the falling knife. The CBOE Volatility Index (VIX) ended Thursday at the highs, rising nearly 40% to 29.96 and is up another 14% this morning to 34.31 (its highest level since early August).

• The Dow Jones Industrial Average fell -1,679.39 points, or 3.98%, to 40,545.93
• The Nasdaq Composite tumbled -1,050.44 points, or 5.97%, to 16,550.61
• The Russell 2000 Index declined -134.82 points, or 6.59% to 1,910.55

• 8:30 AM ET                  Private Payrolls for March…est. +127K (prior +140K)
• 8:30 AM ET                  Manufacturing Payrolls for March…est. +4K (prior +10K)
• 8:30 AM ET                  Unemployment Rate for March…est.4.1%
• 8:30 AM ET                  Average Hourly Earnings M/M for March…est. +0.3%
• 11:25 AM ET                Fed’s Powell Gives Keynote Remarks
• 1:00 PM ET                   Baker Hughes Weekly rig count data

• Guess Inc. (GES) Q4 adj EPS $1.48 vs. est. $1.40 and revs rose 4.6% y/y to $932.3M vs. est. $912.3M; Q4 gross margin 44.1% vs. 45.4% y/y; forecasts 2026 revs +3.9%-6.2% and forecasts 2026 adj EPS $1.32-$1.76 vs. est. $2.07; names Alberto Toni as new CFO, succeeding Interim Chief Financial Officer Dennis Secor; said to streamline our guess full price store portfolio by exiting non-strategic, unprofitable locations in North America.
• Kraft Heinz (KHC) downgraded to Sell from Neutral at Citigroup with lowered $27 tgt ahead of the Q1 report as sees risk to the company’s organic sales growth. Kraft’s measured takeaway growth continues to struggle, driven by share losses in most key categories.

• Matador Resources (MTDR) announces the sale of its eagle Ford assets and provides an update on the strength of its balance sheet; board to consider stock repurchase program later this month.
• Shell Midstream Operating, a subsidiary of Shell (SHEL), has agreed to sell its 16.125% interest in Colonial Enterprises to Colossus AcquireCo LLC, a wholly owned subsidiary of Brookfield Infrastructure Partners L.P. (BIP) and its institutional partners, for $1.45 billion.

• Franklin Resources, Inc. (BEN) preliminary month-end assets under management (AUM) of $1.53 trillion at March 31, 2025, compared to $1.57 trillion at February 28, 2025. This month’s AUM reflected the impact of negative markets and preliminary long-term net outflows of $4 billion, inclusive of $7 billion of long-term net outflows at Western Asset Management.
• Progressive (PGR) downgraded to Neutral from Buy at Bank America on valuation and cuts tgt to $287 from $300 saying investors seem to have rotated into Progressive shares as U.S. tariffs get implemented and fear of recession rises.

• Simulations Plus (SLP) Q2 adj EPS $0.31 vs est. $0.12, adj EBITDA $6.6Mm vs est. $7.09Mm on revs $22.4Mm vs est. $21.9Mm, gross margin 59%; guides FY revs $90-93Mm vs est. $90.44Mm and adj EPS $1.07-1.20 vs est. $0.47.

• US listed China stocks under pressure this morning as well with BABA, BIDU, PDD, JD, SINA, NTES and others all trading sharply lower.
• The EU mulls fining “X” over $1B for breaking disinformation law, the New York Times reported.
• Five9 (FIVN) said sees Q1 EPS, revenue in-line with or better than guidance; expects to reduce workforce by roughly 4%