What You Need To Know For April 10th

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Welcome back!

Thank God the bulk of tariffs got paused for 90 days - yesterday Trump officially gave a 90 day pause on reciprocal tariffs for more than 75 countries who were engaging in initial negotiations. This sent the S&P and Nasdaq rallying hard - with the Nasdaq up 12% - it’s 2nd best day ever! Trump stated to nations “Do not retaliate and you will be rewarded.”

What’s been notable about this pivot was that 1) the Fed has been relatively quiet, with no inclination to change policy and 2) U.S. treasury yields have widened out significantly, with the 10-year flirting with ~4.5%. Fears of a bond market meltdown were likely a big driver of the pivot. The Trump administration has been eyeing sending rates lower so they can effectively refinance the U.S. debt load, but the bond market has not cooperated.

Note, we still have 125% tariffs on China, a 10% global baseline, and a 25% tariff on cars. Analysts expect this to grind U.S. trade with China to a near halt. China hit the US with 84% retaliatory tariffs that go effective today. Meanwhile, countries like Vietnam are now heading to the negotiation table, and now have a 10% tariff over the next 90 days, instead of the 46% reciprocal rate initially proposed.

However, we have some concerns regarding business and consumer confidence: Given that there’s still extended uncertainty on which tariffs get enacted, this will impact the ability for businesses to make big capital outlays. On the consumer side, it’s probably a good idea to buy items impacted by tariffs in advance. Just this past week, there was a rush to buy iPhones. But for consumers with incomes heavily impacted by future tariffs, their consumption of discretionary items may decline significantly. If businesses don’t know what the rest of 2025 is going to look like, then this may spark hiring freezes, followed by layoffs.

The hope is though, and the reason why we rallied is under the thinking that we’re going to take a much more rational approach to trade over the next few months, with risk of sudden escalation against negotiating countries currently off the table.

Retaliation, or even more escalation with China will surely send stocks back down though. For now though, we’ll take each day as it comes:

Earnings Corner 📜 

Trending Up 📈 

Delta Air Lines (DAL): Delta reported earnings that beat estimates, but mgmt. noted concerns over the impact of tariffs on the economy and air travel. The earnings call comes after Delta cut back its 2025 growth projections in March, citing widespread economic uncertainty. Yet, despite the pessimism, the airline’s stock soared on Trump’s 90-day tariff pause, closing up 23.4%

Constellation Brands (STZ): The Modelo and Corona brewer reported earnings that beat estimates, but released a sales outlook that disappointed analysts due to the impact of tariffs. On April 4th, Trump rolled out sector-specific tariffs impacting aluminum cans and foreign beers; these duties were no affected by Wednesday’s 90-day reprieve for all nations accept China. The stock still closed up 7.3%

Walgreens (WBA): The pharmacy chain reported earnings that beat estimates, due to successful cost cuts as the company prepares to go private. PE firm Sycamore Partners is set to acquire the retailer for $10B, closing in Q4 of 2025. The stock was up 1.8%

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Today’s Headlines 🍿 

• Trump probably listened to Jamie Dimon, when making his big pivot: In an interview yesterday, Trump said he watched an interview where the JPM Chief called a recession “a likely outcome”. This was right before the official decision regarding the pivot came out, with Trump noting how Dimon has said “something had to be done”

• Marko Kolanovic thinks Trump blinked because of the bond market - with treasuries refusing to tighten, the ex-JP Morgan strategist believed their narrative collapsed. Kolanovic also warned on chasing this rally

• Goldman published a recession call and then reversed it right after Trump’s 90 day pause announcement. Following the 90 day pause, a recession is no longer the Bank’s base case.

• “We’re probably in a recession right now,” says Larry Fink. The BlackRock founder shared that American CEOs believe the economy is already slowing down and stocks could drop another 20% from recent lows. In the same interview, Fink also berated NYC, calling out growing crime, widespread filth, and worsening schools

• House Republicans blocked a Democratic bid to vote on tariffs: The act would’ve allowed disapproval measures on tariffs to be fast-tracked to a floor vote within 15 days of introduction. Barrons estimates that now the topic is off the floor until October

• U.S. Treasury Secretary Escalates Trade War. Scott Bessent won’t rule out delisting Chinese stocks from U.S. exchanges, noting “I think everything’s on the table.” Bessent said that Beijing’s most recent move was a “big mistake”

• “Boys will be boys” says White House Press Secretary: Elon continued his battle with Trump trade advisor Peter Navarro, calling him a “moron” and “dumber than a sack of bricks.” The DOGE Chief was responding to Navarro’s claim that Tesla is a “car assembler,” not a “manufacturer”

• “Worst-case scenarios” are on the horizon. The Head of the Bank of Spain and member of the European Central Bank governing council warned that Trump is triggering a “very negative shock” which may end the dollar’s status as a reserve currency

• Trump doesn’t want U.S. Steel (the Company) to be sold to Japan: Trump ordered a new review of the Nippon & U.S. Steel merger. Joe Biden had previously blocked the merger on national security grounds

• Spirit Airlines CEO resigns. Ted Christie officially stepped down just three months before a slated $3.8mm bonus. The departure comes after the company announced last month that it had emerged from Chapter 11 and was continuing to restructure

• A new crown for the Chicken Finger King: Raising Cane’s Founder Todd Graves is now worth $11.5B after his chain saw revenue surge 34% last year. Graves owns 90% of the company

• Can ChatGPT do that? Shopify will now only make new hires if managers can prove AI can’t do the work. CEO Tobi Lütke has been notably agressive in pushing his workforce to integrate AI into their workflows. In an efficiency push, two years ago Lütke deleted 12,000 events from employees’ calendars

• Do nothing, get paid. Google is using aggressive noncompetes and extended notice periods to lock in developers and stymie rivals. Apparently, AI staff are getting paid to twiddle their thumbs

• Get me a Rolex, in gold. Demand for used gold timepieces from the king of watch brands has surged as the precious metal itself has climbed to record highs (with bullion up +10% YTD) thanks to Trump tariff uncertainty

  

• Big gov drives HC rally: Health insurers jumped on Tuesday after the federal government announced a $25B increase in payments for Medicare Advantage plans for 2026. The 5% rate increase was surprising given the White House’s purported plans to trim the budget

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M&A Transactions💭 

Sun Fluoro System, provider of fluororesin lining equipment, was acquired for $174.47M by NAU IB Capital.

The Ethernet Business of Marvel Technology (NAS: MRVL) has reached a definitive agreement to be acquired for $2.5B by Infineon Technology (ETR: IFX). Qatalyst Partners advised on the sale.

Hidden Road, developer of a global credit network platform, was acquired for $1.25B by Ripple. Financial Technology Partners advised on the sale.

HealthEdge, developer of an integrated financial, administrative and clinical software, has entered into a definitive agreement to be acquired for $2.6B by Bain Capital. EV/EBITDA was 30.23x and EV/Revenue was 6.5x. Evercore Group and UBS advised on the sale.

Finmatics, developer of software as a service, was acquired for $108.78M by Visma.

Echo Lake Foods, distributor and wholesaler of frozen foods, has reached a definitive agreement to be acquired for $258.0M by Cal-Marine Foods (NAS: CALM).

Cityfit, operator of fitness clubs, was acquired for $146.08M by Medicover (STO: MCOV B). EV/Revenue was 4.22x.

Accolade, offers technology-enabled solutions, was acquired for $804.06M by Transcarent. EV/Revenue was 1.8x. Morgan Stanley advised on the sale.

Protect AI, developer of a cybersecurity platform, has entered into a definitive agreement to be acquired for $700.0M by Palo Alto Networks (NAS: PANW).

Lyst, operator of an online fashion retail platform, has reached a definitive agreement to be acquired for $154.0M by ZOZO (TKS: 3092).

Havfram, provider of subsea services, has reached a definitive agreement to be acquired for $979.04M by DEME (BRU: DEME).

Good Energy Group, a developer and supplier of electricity in the UK, was acquired for $128.59M by Esyasoft Technology. EV/EBITDA was 19.26x and EV/Revenue was 0.56x.

Private Placement Transactions💭 

Rescale, developer of a cloud-based infrastructure platform, raised $115.0M of Series D venture funding from Hitachi Ventures, Applied Ventures, and Foxconn Technology at a pre-money valuation of $672.0M.

DRML Miner, developer of a cloud mining platform, raised $1.0B of venture funding from Nomad Capital, No Limit Holdings, and Sky9 Capital.

Tailscale, developer of a corporate virtual private network, raised $160.0M of Series C venture funding led by Accel at a pre-money valuation of $1.29B.

Merida Biosciences, developer of precision therapy, raised $121.0M of Series A venture funding led by Bain Capital Life Sciences, Third Rock Ventures, and BVF Partners.

A Low-Carbon Ammonia Production Facility was formed as a joint venture between CF Industries (40%), JERA (35%), and Mitsui (25%) for $4.0B.

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Until next time!

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