April 8th Market Overview

Happy Tuesday.

Wild swings continue. Markets opened with a powerful rally today that slowly evaporated into deep red as the closing bell approached. The 104% rate on Chinese goods is confirmed, and while negotiation talk continues (Bessent mentioned 70+ countries), no concrete deals seem likely before the trade hike takes effect.

A personal ask - each time someone checks out today’s sponsor it buys me a sip of coffee. It's free, fast, and keeps these insights coming daily.

Let's dig in...

Executive Summary:

• Markets saw an initial relief rally fade significantly as uncertainty persists ahead of the midnight deadline for higher U.S. tariffs, including a confirmed 104% rate on Chinese goods.
  

• Healthcare insurers up after the administration announced a higher-than-expected 5.06% payment increase for Medicare Advantage plans in 2026, boosting sector sentiment.
  

• Negotiation hopes linger as Treasury Secretary Bessent confirmed over 70 countries have sought tariff discussions, suggesting "solid proposals" could yield deals, though none are imminent.
  

• Reflecting trade anxieties, small business optimism posted its sharpest drop since mid-2022, falling 3.3 points in March.
  

Market Overview

Key Market Drivers

1. Trump-China tariff standoff: The White House confirmed 104% tariffs on Chinese goods will take effect at midnight tonight after China vowed not to rescind its 34% retaliatory duties. Trump posted on Truth Social that China “wants to make a deal badly, but they don’t know how to get it started.”
   

2. Medicare payment boost: The Centers for Medicare and Medicaid Services announced a 5.06% payment increase for Medicare Advantage plans in 2026, substantially higher than the 2.23% hike proposed under Biden. This represents a $25B+ boost for insurers and improved margins.
   

3. Global negotiation rush: Treasury Secretary Bessent noted that over 70 countries have contacted the White House for tariff negotiations, with priority given to those that didn’t escalate tensions initially.
   

4. Market sentiment swing: Tuesday marks the fourth consecutive session of extreme volatility, with Monday seeing approximately 29 billion shares traded—the highest volume in at least 18 years.
   

5. Small business impact: The NFIB’s headline optimism index dropped 3.3 points to 97.4 in March, with the net share of owners expecting better business conditions tumbling 16 points to 21%—the biggest monthly fall since December 2020.

Stock Spotlight

Tesla $TSLA ( ▲ 0.02% ): Morgan Stanley reiterated its Overweight rating ($410 PT), citing Tesla's lead in "Embodied AI" beyond short-term policy noise.

Broadcom $AVGO ( ▼ 1.97% ): Announced a $10 billion share repurchase through year-end, citing board confidence in its semiconductor and infrastructure software segments.

Marvell Technology $MRVL ( ▼ 2.12% ): Agreed to sell its auto ethernet unit to Infineon for $2.5 billion cash; deal expected by year-end.

Levi Strauss $LEVI ( ▼ 0.53% ): Reported Q1 adjusted earnings +52% YoY and reiterated full-year guidance, excluding potential tariff effects.

Micron Technology $MU ( ▲ 2.11% ): Considering a tariff-related surcharge starting April 9 (per Reuters), a possibility previously flagged on its March earnings call.

Big Name Updates

Meta Platforms $META ( ▼ 2.22% ): Jefferies reiterated its Buy rating ($600 PT), anticipating a performance boost upon arrival of advanced reasoning models like Deepseek R1.

Microsoft $MSFT ( ▼ 0.17% ): Removed from Bank of America's US 1 list.

Netflix $NFLX ( ▲ 1.42% ): Named Morgan Stanley's new top pick in Media/Entertainment. MS noted potential near-term growth slowdown but remains bullish on member value driven by original content.

UnitedHealth Group $UNH ( ▼ 2.07% )/ Humana $HUM ( ▼ 3.46% ) up handsomely following the higher Medicare Advantage payment rate announcement.

CVS Health $CVS ( ▼ 0.45% ): Named former UPS exec Brian Newman as CFO, the first major hire under new CEO David Joyner. Shares also gained on the Medicare news.

Other Notable Company News

Shopify $SHOP ( ▼ 1.12% ): CEO: Company prioritizes AI for tasks; new hires only if AI cannot perform the job.

Advanced Micro Devices $AMD ( ▲ 1.18% ): Downgraded to Sector Weight at Keybanc on concerns over China AI sustainability, gross margin risks, and potential Intel price war.

Affirm $AFRM ( ▲ 0.72% ): Initiated Buy ($50 PT) at TD Cowen, calling it a "top-performing BNPL brand."

Rocket Companies $RKT ( ▲ 7.98% ): Upgraded to Equal Weight ($14 PT) at Barclays, citing the COOP acquisition.

CME Group $CME ( ▲ 0.82% ): Upgraded to Overweight ($301 PT) at Morgan Stanley, highlighting its fee-driven revenue (80%) and strong moat in futures/options.

Charles Schwab $SCHW ( ▼ 0.05% ): Upgraded to Overweight at Morgan Stanley (PT lowered to $76 from $91), citing a "defensive earnings recovery story."

Sector Watch

Bond Market

Treasury curve steepened today as long-term rates rose while short-term yields fell. The 10-year yield climbed 8 bps to 4.237%, while the 2-year dropped 3.9 bps to 3.699%, widening the 2s/10s spread.

The 30-year bond jumped 10.9 bps to 4.703%. This steepening typically signals inflation concerns as trade policy uncertainty persists.

Policy Watch

1. A bipartisan group of House legislators introduced the Trade Review Act of 2025, which would require Trump to give Congress 48 hours' notice before imposing tariffs and limit them to 60 days unless extended by congressional resolution. The Trump administration has indicated the president would veto the bill.
   

2. JPMorgan warned of potential 25% U.S. tariffs on autos and parts, projecting 30% earnings cuts for Toyota, Honda, and EU OEMs, with General Motors $GM facing higher exposure (40% imports) compared to Ford $F (7%).
   

3. The administration announced Trump will sign energy-related Executive Orders today boosting the coal industry.
   

4. European Commission President Ursula von der Leyen indicated the EU is willing to negotiate with the U.S. on tariffs while simultaneously preparing retaliatory measures.
   

5. The PBOC (China’s central bank) said it will provide re-lending support for Huijin (a sovereign wealth fund) when needed, as China prepares for potential economic impact from escalating tariffs.
   
   

What to Watch

1. Midnight tariff implementation: Pay close attention to any last-minute negotiations or announcements from the White House or Beijing before the 104% China tariffs take effect at 12:01 a.m. ET Wednesday.
   • Watch for market reaction in Asian trading sessions as the deadline passes
   • Monitor for any unexpected exemptions or carve-outs
   

2. Individual country negotiations: Treasury Secretary Bessent mentioned over 70 countries seeking tariff talks, with priority given to those that haven’t escalated tensions.
   • Track which countries secure early meetings with U.S. trade representatives
   • Note any pattern in which sectors receive early relief or exemptions
   

3. Corporate response strategies: Companies are beginning to outline their approaches to the tariff situation.
   • Watch for more announcements of tariff surcharges similar to Micron’s plan
   • Track supply chain relocation announcements as companies reassess manufacturing footprints
   • Monitor inventory strategies as businesses potentially stockpile ahead of further trade restrictions
   

4. Congressional pushback: The bipartisan Trade Review Act of 2025 represents the first significant legislative challenge to Trump’s tariff authority.
   • Watch for additional Republican defections on trade policy
   • Track how the bill progresses through committee stages

Thanks for reading 🙂

- John