April 8th Market Overview

Happy Wednesday

Markets gapped up hard and held green today after Trump and Iran agreed to a two-week ceasefire late last night.

For the first time in five weeks the market feels like it can actually breathe. I'm not buying the full celebration just yet though. Iran's parliamentary speaker accused the U.S. of violating the deal before the closing bell even rang. Two weeks is not a lot of time when the two sides can't agree on anything. I do think sentiment has changed for the better.

Let’s dig in...

Today's Big Picture

Iran and U.S. Agree to a Fragile Truce

Trump announced a pause on attacks, contingent on the Strait of Hormuz reopening. The first ships are moving, but Iran's parliamentary speaker already accused the U.S. of violating the deal hours later. They meet in Islamabad on Friday. Nuclear enrichment, sanctions, troop withdrawal, compensation.

Oil Drops but the Supply Problem Is Real

WTI fell to around $94, Brent near $95. Sounds great until you realize 11 million barrels per day are still shut in, according to Wood Mackenzie. Restarting that production could take six to nine months. Tanker operators are not going to risk their fleets on a two-week handshake.

Rate Cut Odds Jump, but the Math Is Tricky

Traders priced rate cuts back in and killed all hike bets. Rate cut odds hit 43 percent by December, up from 14 percent yesterday. But Nick Timiraos at the WSJ makes a sharp point: removing the recession scenario actually makes it harder for the Fed to cut, not easier. The inflation problem never went away. Energy costs that built up over the last five weeks won't fully reverse even if this ceasefire holds.

Market Overview

Index Performance

Stock Spotlight

Delta Air Lines $DAL ( ▲ 4.39% )  
beat Q1 estimates with $14.2 billion in revenue and $0.64 adjusted EPS. CEO Ed Bastian said travelers are absorbing fare hikes without flinching. Q2 guidance came in light at $1.00 to $1.50 adjusted EPS versus the Street's $1.70.

Levi Strauss $LEVI ( ▲ 9.69% )  
beat on both lines. Direct-to-consumer sales crossed half of total revenue for the first time. Management raised full-year earnings guidance.

Meta Platforms $META ( ▲ 6.49% )  
released Muse Spark, its first new AI model in over a year. Stock had its biggest intraday move since January.

Intel $INTC ( ▲ 10.38% )  
hit levels not seen since 2021. Elon Musk is partnering with the chipmaker on his Terafab project to build custom silicon for SpaceX, xAI, and Tesla.

Big Name Updates

Exxon Mobil $XOM ( ▼ 4.94% )  
warned the war will cut Q1 global production by about 6 percent quarter-over-quarter. Higher crude prices give back $1.9 to $2.3 billion in earnings, but derivatives timing effects wipe out $3.5 to $4.9 billion. Net negative quarter.

Carnival $CCL ( ▲ 10.2% )  
rallied after the strait partially reopened. The stock had dropped 20 percent from the start of the war to the ceasefire announcement.

Morgan Stanley $MS ( ▲ 4.6% )  
launched the first U.S. bank-issued bitcoin ETF under the ticker MSBT. The 0.14 percent fee undercuts BlackRock's $BLK iShares Bitcoin Trust at 0.25 percent.

Other Notable Company News

Clean Harbors $CLH ( ▲ 1.33% )  
upgraded to buy at Citi with a $346 target. The bet is U.S. chemical production rises to fill the void from the Middle East.

Aehr Test Systems $AEHR ( ▲ 25.48% )  
upgraded to buy at Craig Hallum with a $68 target. Management flagged a big upcoming order from its lead hyperscale AI customer.

Royal Caribbean $RCL ( ▲ 4.42% )  
had its earnings estimate cut at JPMorgan. Analyst cited consumer hesitancy, fuel costs, and ships stuck in the Gulf. New target is $341.

Venture Global $VG ( ▼ 9.07% )  
dropped more than 10 percent. The LNG exporter had been positioned to profit from desperate Asian and European buyers. That trade just got less urgent.

CF Industries $CF ( ▼ 6.3% )  
headed for its worst day since 2022. Fertilizer stocks had been on a tear while Middle East shipments stalled. The ceasefire flipped it.

Dell Technologies $DELL ( ▲ 4.28% )  
hit all-time highs and got a price target raise to $205 at BofA.

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Sector Watch

Bond Market

The 10-year yield fell to 4.28 as buyers moved back into Treasurys on ceasefire news. A $39 billion 10-year note auction priced in line with expectations.

• European bonds rallied hard. Italy's 10-year yield dropped 0.30 percentage points. UK gilts pulled back from their highest levels since 2008.

• Rate hike expectations in Europe collapsed. Markets went from pricing three hikes this year to just one or two.

• Yields are still well above pre-war levels. The bond market is not treating this as an all-clear.

Policy Watch

Iran Ceasefire

The two sides want completely different things. Trump demands zero uranium enrichment and full dismantlement. Iran's 10-point list demands the U.S. accept enrichment, lift all sanctions, pay compensation, and pull troops from the region. VP Vance called it a "fragile truce" and said people inside Iran have been "lying" about the deal. I lean toward Evercore ISI's read: this probably turns into an extended, shaky detente similar to where we ended up with China on trade.

Tariffs

Trump set a 50 percent tariff on countries supplying arms to Iran.

Fed

Vice Chair Philip Jefferson said the oil shock complicates his inflation outlook. Worth noting: he pointed out inflation has been above the 2 percent target for five years straight. March meeting minutes drop later today.

Energy Supply

BofA put it simply: "Boats will move, but oil fields stay shut." 11 million barrels per day remain offline. Qatar's Ras Laffan LNG terminal needs roughly four months of repairs. IATA says jet fuel supply normalization will take months, not weeks. Wood Mackenzie warned that rushing to restart production could do long-term damage to the underlying assets.

What to Watch

Islamabad Talks on Friday

First face-to-face between the U.S. and Iran. If these break down, oil goes right back up and stocks give it all back.

March CPI Tomorrow

Inflation numbers land in the morning. I want to see if the energy shock has started bleeding into core prices yet.

Fed Meeting Minutes

Due out later today. The question is how worried policymakers were about the war's economic impact before this ceasefire landed.

Strait of Hormuz Traffic

Only a handful of ships have crossed so far. If commercial traffic doesn't pick up meaningfully this week, the supply chain stays broken and oil rallies again.

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