Monday morning brought a spring in the step of the stock market, with premarket trading showing promising gains. S&P 500 futures rose by 1.3%, Dow Jones Industrial Average futures ticked up 0.9%, and Nasdaq futures jumped 1.6%. What’s behind this market cheer? Strong earnings reports from banks and a surprising pause in tariffs by the Trump administration.

POTUS, in a move that delighted investors, announced a temporary halt on tariffs for electronics imported from China. This decision sent tech stocks soaring, with Apple shares rocketing up 6.4%, and other tech giants like Nvidia and Micron Technology also enjoying gains. 

Investors are keeping a keen eye on the Federal Reserve's next moves and upcoming corporate earnings reports. Fed officials, including Richmond President Thomas Barkin and Atlanta President Raphael Bostic, are set to speak today. The market is also eagerly awaiting quarterly results from Johnson & Johnson and Netflix later this week, along with March retail sales data and a speech by Fed Chair Jerome Powell.

Over the last ten days, Wall Street has experienced one of the worst three-day bearish runs in its history, and one of the strongest rises ever recorded in a single session. Investors have rarely seen such rapid shifts in value, with money flowing in and out at an unprecedented pace. This whirlwind period began when Washington decided to disrupt the gears of globalization. Last week, the S&P 500 rebounded by 5.7% after a steep 9.1% drop the week before, as Donald Trump decided to temporarily ease some of the tariffs he had recently imposed globally. However, tariffs on China, cars, aluminum, and steel remained untouched. The US bond market's alarming signals last week likely influenced this decision, as the White House faced mounting pressure. The situation was becoming chaotic, with several staunch Trump supporters distancing themselves amid fears of potential derailment of the US economy or even global financial stability.

Over the past 72 hours, the tariff fable has been enriched with new twists and turns. The Trump administration began by removing smartphones and computers from the 145% tariffs now applied to China, under pressure from influential technology groups such as Apple. On Truth Social on Sunday, however, the US president made it clear that this is not a total exemption, but that a 20% surtax will apply to these products. These could subsequently be subject to separate additional customs duties, said US Secretary of Commerce Howard Lutnick. In parallel, there will be specific customs duties on semiconductors and medicines, once the work in progress to determine their intensity is completed. Cacophony and improvisation are still the order of the day. With so many announcements, reactions, overreactions, retaliations, punishments, exemptions and so on and so forth, “nobody understands any more what to apply or to whom”, writes a manager known to be close to the Republican camp. And just imagine the job of the US customs services in this context! “The biggest rally of the year would occur the day Lutnick is fired... I suggest the administration determine who is in control of the message, whatever it is, because it changes every day. American companies can neither plan nor invest with this constant back and forth,” wrote Sven Henrich of NorthmanTrader. The bullish financier Ed Yardeni, disillusioned as rarely before, has come to paraphrase Forrest Gump: ”Tariffs are like a box of chocolates, you never know what you're going to get.”

To extricate yourself from the incessant back and forth on customs duties and gain some perspective, you have to keep an eye on three things: the yield on the 10-year US bond, Scott Bessent and the Fed. Nothing has really stopped Donald Trump lately, except the bond market. What financiers call the bond vigilantes, i.e. the rate sentinels, woke up last week to the risk created by White House policy. The yield on 10-year US debt skyrocketed to 4.5%, suggesting potential panic in the debt market. Team Trump has been forced to back down on reciprocal tariffs. We are therefore keeping a close eye on fluctuations in US yields.

Business circles are now scrutinizing the behavior of Scott Bessent, who is considered to be the most capable and pragmatic of Trump's men. Not Navarro, Lutnick or Greer. Bessent was previously a hedge fund manager. He has an excellent understanding of the financial markets and it was he who convinced the US president to back down last week. He was particularly alerted by the fact that US banks had not participated, or had participated very little, in US debt auctions at the beginning of last week. On the contrary, they had to sell US debt to meet the liquidity needs of their customers. A disastrous signal that partly explains the administration's about-turn.

On Friday, the Federal Reserve decided to step onto the dance floor, sparking a rebound on Wall Street after Thursday's stumble. Jerome Powell dispatched his team to deliver some reassuring notes. Susan Collins, the Boston Fed President, assured that the Fed stands ready to keep financial markets humming if needed. Meanwhile, John Williams from the New York Fed chimed in, promising action to fend off the specter of stagflation. While it's no surprise that the Fed is committed to ensuring market stability and avoiding stagflation, the public announcement signals a more proactive stance. The skeptics among us might suspect that this move hints at some brewing trouble that needs swift attention. 

Also on the macro agenda this week, the European Central Bank meeting on Thursday. The consensus is for a 25 basis point cut. The day before, China will unveil its first growth estimate for the first quarter of 2025. In the United States, several indicators will set the pace of the week: retail sales on Wednesday, building permits and jobless claims on Thursday, not to mention a barrage of speeches by Fed members.

On the corporate side, after a lull, the earnings season gets going again this week. Among the first big names are Goldman Sachs, Johnson & Johnson, LVMH, ASML, Hermès, L'Oréal and Rio Tinto. It's an opportunity to take the pulse of companies in a context still marked by the tariff shock.

In Asia Pacific, the rebound continues after signs of a relative easing on customs duties. Japan and India are up by nearly 2%, while South Korea and Australia are up by just over 1%. China is in the green, especially Hong Kong, which is up 2%. Taiwan is more hesitant with questions about tariffs on semiconductors. The European and American leading indicators are in bright green.

Today's economic highlights:

Today: industrial production in Germany will be released. See the full calendar here.

  • Dollar index: 99,420
  • Gold: $3,218
  • Crude Oil (BRENT): $65.60 (WTI) $61.97
  • United States 10 years: 4.45%
  • BITCOIN: $85,205

In corporate news:

  • CVC is said to be considering a $75 billion offer for the American private lender Golub Capital, according to the FT.
  • General Motors is cutting 500 jobs in Canada.
  • Amgen faces an antitrust lawsuit filed by Sandoz in the United States.
  • KKR appoints General David Petraeus as chairman of its Middle East operations and establishes a dedicated investment team.
  • CK Hutchison sees Italian tycoon Gianluigi Aponte's family business as the primary investor in its ports acquisition.
  • TSMC anticipates a significant rise in first-quarter profit, despite uncertainties due to Trump's policies.
  • Singapore experiences a positive market response following the central bank's second monetary policy easing this year.
  • Apple shares rose after the U.S. granted tariff exemptions on electronics, boosting optimism despite ongoing uncertainties.
  • BP plc made a new oil discovery at the Far South prospect in the deepwater region of the US Gulf of Mexico, enhancing production capabilities.
  • Meta faces an antitrust trial over its acquisitions of Instagram and WhatsApp, amidst broader market fluctuations.
  • Goldman Sachs experienced a 22% growth in earnings per share and a 15% increase in first-quarter profits, driven by record equities trading.
  • Intel is set to sell a 51% stake in its programmable chip unit, Altera, to private equity firm Silver Lake for $8.75 billion.
  • DaVita Inc. experienced a ransomware attack that encrypted parts of its network.
  • International Paper Co. is in exclusive negotiations to sell five corrugated box plants in France, Portugal, and Spain to PALM.

Today's main earnings reports: Goldman Sachs, M&T Bank, etc.

Analyst Recommendations:

  • Apple Inc.: KeyBanc Capital Markets upgrades to sector weight from underweight.
  • Freeport-Mcmoran Inc.: HSBC upgrades to buy from hold with a target price reduced from USD 41 to USD 40.
  • Icon Public Limited Company: TD Cowen downgrades to hold from buy with a target price reduced from USD 254 to USD 157.
  • Medpace Holdings, Inc.: TD Cowen downgrades to hold from buy with a target price reduced from USD 370 to USD 328.
  • Tpg Inc.: Morgan Stanley downgrades to equalwt from overwt with a target price reduced from USD 80 to USD 47.
  • Wells Fargo & Company: Phillip Securities upgrades to buy from accumulate with a target price reduced from USD 85 to USD 75.
  • Blackstone Inc.: Evercore ISI maintains its outperform recommendation and reduces the target price from USD 191 to USD 152.
  • Blue Owl Capital Inc.: Evercore ISI maintains its outperform recommendation and reduces the target price from USD 26 to USD 20.
  • Caterpillar Inc.: JP Morgan maintains its overweight recommendation and reduces the target price from 490 to USD 380.
  • Dell Technologies Inc.: Citigroup maintains its buy recommendation and reduces the target price from USD 145 to USD 105.
  • Devon Energy Corporation: Jefferies maintains its hold recommendation with a price target reduced from USD 43 to USD 32.
  • Elf Beauty: Baird maintains its outperform recommendation and reduces the target price from USD 110 to USD 85.
  • Estee Lauder: Citigroup remains neutral recommendation with a price target reduced from USD 77 to USD 55.
  • Hp Inc.: Citigroup remains neutral recommendation with a price target reduced from USD 36.50 to USD 25.
  • Hubspot, Inc.: Mizuho Securities maintains its outperform recommendation and reduces the target price from USD 900 to USD 700.
  • Kkr & Co. Inc.: Morgan Stanley maintains its market weight recommendation and reduces the target price from 156 to USD 114.
  • Micron Technology, Inc.: CTBC Securities Investment Service Co LTD maintains its buy recommendation and reduces the target price from USD 114 to USD 81.
  • Mongodb, Inc.: Mizuho Securities maintains a neutral recommendation with a price target reduced from USD 250 to USD 190.
  • Murphy Oil Corporation: Jefferies maintains its hold recommendation with a price target reduced from USD 30 to USD 23.
  • Southwest Airlines Co.: Citigroup maintains its sell recommendation with a price target reduced from USD 30 to USD 23.
  • Stellantis N.v.: Equita SIM maintains its hold recommendation with a price target reduced from 13.90 to EUR 11.
  • The Carlyle Group Inc.: Morgan Stanley maintains its market weight recommendation and reduces the target price from 57 to USD 44.
  • Twilio Inc.: Mizuho Securities maintains its outperform recommendation and reduces the target price from USD 165 to USD 125.
  • United Rentals, Inc.: JP Morgan maintains its overweight recommendation and reduces the target price from 1000 to USD 750.
  • Vertiv Holdings Co: Citigroup maintains its buy recommendation with a price target reduced from USD 153 to USD 98.