Wednesday, April 8, 2025

More shots fired in the trade war begun one week ago: following a +50% increase on tariffs for Chinese imports to the U.S., China has added a +50% tariff on U.S. goods imported into that country. This brings tariffs on American goods into China — soybeans, electronics and oil, to name but a few — to +84%. Tariffs placed on Chinese goods coming into this country are currently +104%.

To quote Mr T’s character Clubber Lang in “Rocky III,” when asked for a prediction he offered one word: “Pain.” This feels familiar to us in more ways than one. These tariffs are going to bring plenty of pain until it brings the nations’ negotiators to the table. This is how all wars end. But that trajectory is unclear at present, especially as many of President Trump’s advisors insist tariffs are a means to re-growing the American goods-producing labor force over time.

The pain is made plain in today’s pre-market trading: the Dow is down an additional -850 points, the S&P 500 -95 and the Nasdaq -280 points. Spot oil prices are down to four-year lows, with WTI crude for May down around $56 per barrel. Meanwhile, bond yields continue to rise: +4.46% on the 10-year and +3.82% on the 2-year. 
 

What to Expect After the Opening Bell

Wholesale Inventories will be out later this morning, for the month of February. Expectations are for growth to have moderated to +0.3% from +0.8% the previous month. Of course, these are backward-looking numbers; if anything, a higher level of inventories from the early part of this year would mean companies have gotten somewhat ahead of our current trade turmoil, depending on the inventories we’re talking about.

The minutes from the latest Federal Open Market Committee (FOMC) meeting will be released this afternoon. Again, we’re looking in the rearview mirror here, but below the headline non-move from a Fed funds rate of between +4.25-4.50%, we look for signs the members of the Fed were concerns about an economy encumbered with heavy tariffs.

Late last week, projections changed from market analysts: from 1-2 Fed funds rate cuts expected in 2025 to 5. This seemed rather sudden, and clearly would anticipate a major economic downturn at some point this year, presumably due to tariffs putting downward pressure for a longer period of time. Today, at least, we’ll see if the Fed was even bothering to discuss such things roughly a month ago.
 

Delta Air Lines Reports Mixed Q1 Results

In what has become the opening salvo on at least the heaviest amount of quarterly earnings releases, Delta Air Lines DAL is out this morning with its Q1 results. The major airline outpaced expectations on its bottom line to 46 cents per share from 40 cents expected (and a penny higher than the year-ago quarter) on revenues of $13.0 billion, which was shy of the $13.8 billion in the Zacks consensus.

Check out the updated Zacks Earnings Calendar here.

Further, next-quarter guidance has moved downward on both top and bottom lines: to earnings per share between $1.70-2.30 (from $2.62 per share in the prior Zacks estimate) on revenues between -2% to +2%. Shares, however, are up modestly — likely due to the earnings beat, as well as the fact that Delta shares are down -40% year-to-date.

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