Mid-Morning Look

Monday, April 21, 2025

U.S. stocks open the week sharply lower, adding to last week’s declines as several factors continue to weigh on investor sentiment, pushing major averages lower (many indexes still down -20% from all-time highs). President Donald Trump’s renewed his verbal attacks on Federal Reserve Chair Jerome Powell, pushing for interest rate cuts (see comments by Trump below), saying the U.S. economy could slow down unless interest rates are lowered immediately, repeating his criticism of the Federal Reserve Chair. Treasury yields jumped, and the dollar extends its recent plunge. Also investor concerns arise heading into earnings’ season (roughly 120 S&P 500 stocks report this week) as markets remain fearful of uncertain outlooks given the impact of tariffs. Also overnight, China warned other countries not to strike trade deals with the U.S. at Beijing’s expense. The Trump administration has been seeking to isolate China even as it imposes huge duties on goods from other countries. Meanwhile, Japanese Prime Minister Shigeru Ishiba said his country will not keep making concessions to reach a deal with the U.S., signaling some frustration following a first round of talks. A second round is expected to take place before the end of April, with the negotiations closely watched by other countries. In lone piece of data, March leading economic indicators tumble (-0.7%) vs. consensus (-0.5%); Feb leading economic indicators revised to +0.2% prior. Note the S&P is down more than 300-points from its April 19^th high of 5,528 for Spuz after surging over 9% on April 9^th (lows today below 5,200).

Treasury yields hit highs of 4.41% on the 10-year earlier (now back down to 4.33%) and the 30-yr up 9 bps to 4.9% before pulling back as well. The U.S. dollar index (DXY) no relief, falling -1.15% at 98.25 while June gold prices surge 3% to $3,430 an ounce (new all-time highs). The dollar dipped and yields ripped as investors weighed the risk of Powell and company not adjusting rates in times of turbulence and President Trump’s aggressive tariff stance on global trade partners. Note the SPX is down 10% in the first 73 trading days of 2025, the fifth worst start to a year in history, while gold is up 27% in 2025, on pace for its best year since 1979. The Euro jumps to strongest level against the U.S. Dollar since November 2021.

More harsh words from President trump yet again on Fed Chairman Jerome Powell saying on Truth Social; “Preemptive Cuts” in Interest Rates are being called for by many. With Energy Costs way down, food prices (including Biden’s egg disaster!) substantially lower, and most other “things” trending down, there is virtually No Inflation. With these costs trending so nicely downward, just what I predicted they would do, there can almost be no inflation, but there can be a SLOWING of the economy unless Mr. Too Late, a major loser, lowers interest rates, NOW. Europe has already “lowered” seven times. Powell has always been “To Late,” except when it came to the Election period when he lowered in order to help Sleepy Joe Biden, later Kamala, get elected. How did that work out?”

• In Chemicals: LYB and DOW both added as catalyst call Buys into earnings at Deutsche Bank saying the upcoming Q1 earnings release will be a clearing event and catalyst for the shares. Scotia said that CF is a relative winner in fertilizer sector after last week, the U.S. Administration announced its intention to proceed with fees for Chinese built ships that dock at U.S. ports. Over time, total levies could be as much as $1.5M per ship, depending on a detailed fee table.
• In Banks: CMA Q1 EPS $1.25 with net interest income $575M vs. est. $563M; NIM 3.18% vs. est. 3.15% and Provision for credit losses $20M, vs. est. $22.9M. Jefferies downgraded Canadian Banks CM and NTIOF to Hold from Buy as anticipate credit weakness to be more pronounced on the personal side, commercial lending is anticipated to weaken as well. SFNC upgraded to Neutral from Underweight at Piper after a bumpy credit qtr took the shares down over 3%, the firm said. INDB Q1 adj EPS $1.06 vs est. $1.16 on NII $145.505Mm vs est. $144.97, NIM 3.42%; raised quarterly dividend by 4% in Q1.

• FIS +4%; upgraded to Buy from Hold at TD Cowen after the company entered into a definitive agreement to acquire GPN’s Issuer Solutions business for an enterprise value of $13.5B
• NEM +2%; as gold miners outperform (AU, GOLD, AEM) with gold prices surging as much as 3.3% to above $3,435 an ounce for the first time ever.
• MSTR +2%; seeing strength in crypto and Bitcoin miners (MARA, CLSK, RIOT) as Bitcoin jumps over 3.7% to $88,250.
• NFLX +3%; shares rally on better results and guidance for Q2 (sees Q2 revs $11.04B vs est. $10.902B and EPS $7.03 vs est. $6.28) with no change to FY guide for revs, operating margin; Q1 beat on advertising and subscription revenue and margins.

• AMZN -3%; downgraded to Outperform from Strong Buy at Raymond James (tgt cut to $195 from $275) saying the Street is underestimating EBIT pressures in 2025-26.
• NVDA -5%; after reports Huawei Technologies plans to begin mass shipments of its advanced 910C artificial intelligence chip to Chinese customers as early as next month, two people familiar with the matter said as per Reuters. Some shipments have already been made, they added.
• TSLA -6%; as Wedbush analyst Dan Ives said Elon Musk should step back from his controversial work at the Department of Government Efficiency and re-focus his attention on Tesla Inc., adding the electric-vehicle maker faces a “code red” moment as it prepares to report first-quarter earnings.