Mid-Morning Look

Thursday, May 08, 2025

U.S. stocks open higher after President Donald Trump said the U.S. has made a “comprehensive” trade deal with the United Kingdom. The President will hold a press conference at 10 A.M. ET to announce the details of the agreement. Also, semiconductor chip stocks continued to rally after Bloomberg reported late Wednesday that Trump won’t go through with the Biden administration’s AI diffusion rules (were set to take effect on May 15). Investor risk improving again today after the Fed meeting in rear-view mirror (holding rates steady) and on the upcoming Trump trade announcement with the UK, has stocks higher and Bitcoin back near $100K. Last massive flurry of earnings today as 426 of the S&P 500 have reported earnings this quarter – next few weeks we will get large cap retail/software names.

In Central bank news, the FOMC left rates unchanged yesterday but this morning, the Bank of England cut its main interest rate by 25bps to 4.25% (as expected), with an unexpected three-way split among policymakers, including two who voted to keep rates unchanged. It had previously been relatively flat against the dollar after U.S. President Donald Trump said the United States and Britain will announce a deal to lower tariffs on some goods later in the day. The BOE’s Monetary Policy Committee voted 5-4 in favor of the decision to cut rates by a quarter point. So, in the last 2 weeks, the European Central Bank (ECB) cut interest rates, the Bank of England (BoE) this morning cut rates, the People’s Bank of China (PBoC) cut rates yesterday and the Swiss National Bank (SNB) recently cut rates. The US Fed, however, held interest rates steady. Powell again suggested the central bank will continue to take a “wait and see” approach to policy, as he underlined the economic uncertainty and market volatility created by Trump’s tariff push.

In trade news, Trump said he would unveil a “full and comprehensive” agreement with the U.K., with a press conference set for 10 a.m. ET. Such a pact would be the first of its kind since he unleashed tariffs on the world. U.K. officials cautioned the accord won’t be a full trade agreement and some details remain to be finalized. Also, the European Union (EU) launches a public consultation on possible countermeasures as response to US tariffs; European commission notes it plans potential countermeasures on up to 95B euros of U.S. imports in response to U.S. tariffs. Proposed countermeasures would target US aircraft, alcoholic drinks, fish, cars and car parts; proposed countermeasures would also target US chemicals, plastics, electrical equipment, health products and machinery. The list also includes €4.4 bln of EU exports of steel scrap and chemical products for possible restrictions.

Other News: In potential tariff impact, shipping group Maersk (AMKBY), widely regarded as a barometer of global trade, reported preliminary underlying earnings before interest, tax, depreciation and amortization (EBITDA) of $2.71 billion for the first three months of the year, up 70% y/y and above ests of $2.57 billion, but said global container market volume growth had been revised to -1% to 4% (from prior view of 4%) “given the increased macroeconomic and geopolitical uncertainty.” Gold prices fell on Thursday, reversing earlier gains, as U.S. President Donald Trump hinted at a potential trade deal with Britain. The British pound strengthened +0.25% to $1.332 vs. the US dollar after the BOE meeting. Chip stocks rally, healthcare stocks drop on trump headlines (more below).

• U.S. Q1 non-farm unit labor costs +5.7% (consensus +5.1%), vs Q4 +2.0% (prev +2.2%); while U.S. Q1 non-farm productivity -0.8% (vs. consensus -0.7%), vs Q4 +1.7% (prev +1.5%).
• March wholesale inventories revised to +0.4% (vs. consensus +0.5%) and from +0.5%; U.S. March wholesale sales +0.6% (consensus +1.9%) vs Feb +2.0% (prev +2.4%); U.S. March stock/sales ratio 1.30 months’ worth vs Feb 1.30 months.

• In Chemicals: NTR Q1 EPS/sales miss ($0.11/$5.1B vs. est. $0.31/$5.184B) while maintaining FY 2025 guidance ranges as operating performance, capital allocation priorities consistent with previous expectations; CF posted a top and bottom line Q1 beat; IFF was upgraded to Overweight from Equal Weight at Barclays and raised tgt to $84 from $76 after earnings and maintained guidance; AXTA was downgraded to Neutral from OW at JP Morgan noting the co’s restructuring efforts led to a good Q1 earnings performance but volumes were lower by a couple of percent; MOS was upgraded to Outperform at RBC Capital saying expects phosphate markets to remain tight given steady demand growth and limited supply, supporting elevated prices.
• Semiconductors: ARM shares fell as reported $1.24B in revenue in Q4, slightly ahead of the midpoint of its $1.175-1.275B guided range, with $0.55 in adjusted EPS, slightly ahead of estimates while for Q1, guided for revenue of $1.0-1.1B, below the $1.08B estimate at midpoint, with adj EPS of $0.30-0.38, below the $0.42 estimate. NVDA and other chip stocks rallied after reports the Commerce Department said it doesn’t intend to implement artificial-intelligence processor restrictions drawn up under the Biden administration that were set to go into effect on May 15. The Commerce Department plans to replace the rule, which imposed caps on how many chips could go to countries such as India, Switzerland, Mexico, and Israel
• In Crypto: the WSJ reported COIN agreed to acquire crypto options exchange Deribit in a $2.9 billion cash-and-stock deal as transaction comprises $700 million in cash and 11 million Coinbase shares/the deal is expected to close by year-end. Bitcoin prices nearly $100k this morning lifting crypto related stocks/miners early including COIN, MSTR, HOOD, CLSK, IREN, MARA, RIOT and others.

• AXON +11%; boosted its full-year revenue outlook to $2.6B-$2.7B from $2.55B-$2.65B after posting first-quarter revenue of $603.6 million that topped analysts’ estimates of $586M.
• CVNA +9%; Q1 revenue and Adjusted EBITDA of $4.2B/$488MM handily beat consensus of $4.0B/$434MM and put out a new LT target of 3MM units in a wide 5–10-year range at an Adjusted EBITDA margin of 13.5%.
• MELI +6%; Q1 results were strong across the board and ahead of consensus on virtually all key metrics. Recovery in Argentina proved even stronger than expected, supporting margin improvement despite increased investment in credit card and logistics expansion in Brazil and Mexico.
• MSTR +3%; Bitcoin prices rose 3% around $100k this morning lifting crypto related stocks/miners early including COIN, HOOD, CLSK, IREN, MARA, RIOT and others.
• NVAX +15%; Q1 net income $519M vs. -$148M loss y/y as revs up to $667M from $94M y/y and above ests $343.8M and said is in discussions with the FDA regarding its proposed study design for its COVID-19 vaccine.
• TPR +4%; raises FY25 EPS view to $5.00 from $4.95-$4.90 (est. $4.92) and boosts FY25 revenue growth view to 4% or approximately $6.95B from previous view of 3% growth (est. $6.87B).

• ARM -6%; reported $1.24B in revenue in Q4, slightly ahead of the midpoint of its $1.175-1.275B guided range, with $0.55 in adjusted EPS, slightly ahead of estimates while for Q1, guided for revenue of $1.0-1.1B, below the $1.08B estimate at midpoint, with adj EPS of $0.30-0.38, below the $0.42 estimate.
• CART -3%; after announcing Fidji Simo to resign as CEO of Maplebear; remains as Chair of board; reaffirms outlook for Q2 and FY25.
• CLF -16%; reported a Q1 EBITDA loss of $174M, which compares to a consensus loss of $106M and JEFF’s estimate of a loss of $113M; provided detail on operational/strategic changes including idling six facilities, suspending CAPEX at the Weirton plant, cutting both near-term and potentially longer-term CAPEX.
• DNUT -22%; as Q1 sales fell 15.3% y/y to $375.2M, missing estimates of $384.4M and withdrew their year guidance.
• FTNT -11%; following a mixed 1Q as total revenue, product revenue, billings, and margins beat, but services revenue missed. 2Q guided in line. 2025 top-line guide unchanged; however, EBIT margin raised 50 bps.
• NTR -4%; Q1 EPS/sales miss ($0.11/$5.1B vs. est. $0.31/$5.184B) while maintaining FY 2025 guidance ranges as operating performance, capital allocation priorities consistent with previous expectations.
• REGN -6%; as Politico reported President Donald Trump plans to revive an effort to dramatically slash drug costs by tying the amount the government pays for some medicines to lower prices abroad.
• SHOP -5%; posted a wider quarterly loss and operating income that was well below the analysts’ estimates; Q1 sales in-line but Q1 operating income of $203M well below the $437M estimate and wider net loss (-$682M).
• TAP -5%; reported Q1 sales were short of consensus and cut its 2025 guidance to low single-digit decline in annual net sales, compared with previous expectations of a low single-digit growth.