April 22nd Market Overview

Happy Tuesday.

Tuesday certainly brought a different vibe than Monday, didn't it? The market managed a solid rebound and some hopeful words out of the Treasury suggesting the trade friction might eventually? ease up.

Earnings calls are reminding everyone about the real-world tariff impacts still playing out. Felt like one step forward, with caution still in the air.

Let's dig in...

Executive Summary

• Markets rebounded sharply as Treasury Secretary Bessent signaled potential trade de-escalation with China
  

• Gold briefly topped $3,500 before retreating as risk appetite returned
  

• Multiple defense contractors warned of tariff impacts, with RTX projecting an $850 million hit
  

• Manufacturers like 3M and GE Aerospace outlined strategies to offset tariff costs
  

• Bitcoin ripped above $90,000 as investors sought alternatives amid dollar weakness (down -8.5% since Jan 1st.)
  

Market Overview

Key Market Drivers

1. Trade Tensions Easing: Treasury Secretary Bessent signaled potential "de-escalation" with China at a JPMorgan event, calling current tariffs "unsustainable." Markets responded positively to his urgency despite acknowledging a final deal could take "two or three years." White House confirmed 18 trade proposals under review.
   

2. Tariff Impact Spreads: The IMF cut U.S. growth forecast to 1.8% (from 2.7%), warning of slower global growth. Small businesses report depleting inventory to survive.
   

3. Gold Volatility: Gold $GC_F ( 0.0% ) hit an intraday record above $3,509 before retreating on Bessent's comments. The swing highlights investor preference for gold over Treasuries and Dollar amid uncertainty.
   

4. Fed Pressure: Trump escalated criticism of Powell as "Mr. Too Late" while demanding immediate rate cuts, following last week's comments about studying his "termination." Market concerns about Fed independence persist despite some Republican defense of Powell.
   

Stock Spotlight

3M $MMM ( ▲ 0.38% ) : Advanced after Q1 adjusted EPS/revenue beat estimates. Reaffirmed FY25 adj. EPS guidance but warned tariffs could reduce EPS by $0.20-$0.40.

RTX Corp $RTX ( ▲ 0.32% ) : Declined despite a Q1 beat, as management warned tariffs are expected to cut FY25 operating profit by ~$850M. The warning weighed on the defense sector.

GE Aerospace $GE ( ▲ 0.52% ) : Gained following a Q1 adjusted EPS beat. Maintained FY25 guidance, outlining cost cuts and duty refunds to offset potential tariff impacts.

Tesla $TSLA ( ▼ 3.38% ) : Shares rose ahead of its Q1 earnings report tonight. Significant short interest has built YTD; BofA trimmed its PT citing tariff risks on imported parts (~30%).

First Solar $FSLR ( ▼ 8.32% ) : Gained significantly after the U.S. imposed steep duties (some >3,500%) on solar imports from four SE Asian countries found to be circumventing tariffs on China.

Big Name Updates

Apple $AAPL ( ▲ 0.61% ) : Morgan Stanley reiterated Overweight rating ($220 PT), citing a survey showing stronger-than-expected U.S. consumer perception for “Apple Intelligence” despite tariff uncertainty.

NVIDIA $NVDA ( ▼ 0.09% ) : Deutsche Bank lowered PT to $125 on China chip restriction impact. KeyBanc noted a shift back to the Bianca compute board aids the GB300 launch timeline (Q4 2025).

Amazon $AMZN ( ▼ 1.59% ) : U.S. reportedly pushing India for full e-commerce market access for $AMZN / $WMT during trade talks. AI partner Anthropic suggested fully AI workers could appear by 2026.

Alphabet $GOOGL ( ▼ 0.85% ) : Court testimony revealed Google pays Samsung $SSNLF ( ▼ 3.18% ) a substantial monthly fee under a multi-year deal to preinstall its Gemini AI app.concerns.

Other Notable Company News

Kimberly-Clark $KMB ( ▲ 0.94% ) : Lowered FY25 adjusted operating profit forecast, partly citing “changes in the global geopolitical landscape.”

Roche $RHHBY ( ▲ 0.27% ) : Announced $50B in U.S. investments over 5 years (12k jobs, new facilities) to expand domestic manufacturing, partly addressing tariff risks.

United Airlines $UAL ( ▼ 0.16% ): Bank of America initiated coverage with a Buy rating ($90 PT), citing revenue diversification strength for potential outperformance.

Verizon $VZ ( ▲ 2.58% ): CEO stated the company will pass costs of high smartphone tariffs to consumers, not absorb them.

Coca-Cola $KO ( ▲ 0.28% ): Japan unit announced price hikes up to 23%; stock reached a new all-time high.

Stellantis $STLA ( ▼ 3.23% ): Redburn Atlantic downgraded to Neutral, anticipating production cuts and sales declines due to U.S. auto tariffs.

Texas Instruments $TXN ( ▲ 0.4% ): Barclays downgraded to Underweight ($125 PT), warning tariffs could push Chinese customers to domestic analog suppliers.

Macy’s $M ( ▼ 0.09% ): Goldman Sachs downgraded to Neutral ($12 PT), citing macro caution (slowing growth, inflation) and potential tariff impacts via vendors.

Danaher $DHR ( ▲ 0.2% ): Shares rose on a Q1 earnings/revenue beat, seen by Argent Capital Management as positive for a potential bioprocessing sector recovery.

Sector Watch

Bond Market

U.S. Treasury yields declined Tuesday despite the equity rally, with the 10-year yield settling near 4.397%. Separately, the Institute of International Finance (IIF) warned of a likely U.S. recession later in 2025, forecasting negative GDP growth in Q3 and Q4.

Policy Watch

• U.S.-China Trade: Treasury Sec. Bessent signaled eventual “de-escalation” but noted formal talks haven’t begun and a deal could take years. The White House is reviewing 18 trade proposals and meeting with 34 countries. China’s Premier reportedly sought coordination with Japan on U.S. tariffs.
  

• Tariff Economic Impact: The IMF sharply cut 2025 U.S. (1.8%) and global (2.8%) growth forecasts, blaming tariffs for a “new era” of slower growth. Goldman Sachs ($GS) CEO Solomon warned market pressure persists until trade clarity improves, noting stalled capital spending.
  

• Federal Reserve: President Trump continued public criticism of Chair Powell, demanding rate cuts. Powell maintains he serves his full term, but the rhetoric fuels uncertainty about Fed independence. Several Fed officials are scheduled to speak.
  

• U.S.-India Relations: Following VP Vance’s visit, the U.S. and India agreed on terms to negotiate a bilateral trade deal, covering market access, barrier reduction, and defense co-production.
  

• Drug Pricing Initiative: President Trump reaffirmed his goal to lower U.S. drug costs toward international levels, potentially via Medicare. Pharma sees this as a major risk, spurring U.S. investment announcements (Roche $RHHBY ( ▲ 0.27% )).
  

• Domestic Politics: President Trump’s approval rating reportedly fell to 42%. Reports suggest he continues to support Defense Secretary Hegseth amid removal speculation.
  
  

What to Watch

1. Tesla Earnings (Tonight): Focus will be on more than just EPS/Revenue.

   • Guidance: Any changes to delivery targets or production ramps?

   • Margins: How are price cuts and costs impacting profitability?

   • Tariff Commentary: How is Tesla managing supply chain risks and potential cost increases from tariffs?

   • Demand Signals: Commentary on order trends globally.
     

2. Fed Speaker Commentary: Multiple officials are speaking (Jefferson, Parker, Barkin, Kugler).

   • Policy Path Clues: Any hints on the future direction of interest rates amidst conflicting economic data and political pressure?

   • Inflation Outlook: How do they view the persistence of inflation?

   • Trade War Impact: Acknowledgment of risks tariffs pose to the economy or inflation?
     

3. Trade Negotiation Developments: The White House is meeting with 34 countries.

   • Concrete Progress?: Any announcements or credible leaks regarding deals or frameworks, particularly with key partners?

   • China’s Reaction: Any official response from Beijing to Bessent’s comments or U.S. actions?
     

4. 2-Year Treasury Auction Results: Results due later today.

   • Demand Strength: Key metrics like the bid-to-cover ratio will indicate investor appetite for short-term U.S. debt.

   • Foreign Participation: Indirect bidder percentage can signal international demand levels amid geopolitical uncertainty.

P.S. 

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Thanks for reading 🙂

- John