Futures slump, Constellation warns, CarMax stalls, Trump loves steel, Definity cat losses
I’m old enough to remember two days ago when the White House denied they were considering a 90-day pause. Memories.
We mixed it up for our latest episode of In the Money with Amber Kanwar. Frances Horodelski joined me to unpack the market chaos. Then I spoke with Darcy Morris of Ewing Morris. He is known for activist investing and we talked about activism in the age of market volatility. He shared campaign war stories and gave us insight into some of the campaigns he is working on now. Tune in! Listen on Apple, Spotify or here.
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Blink: Markets staged a rip-your-face-off rally after US President Donald Trump announced a 90-day pause on some tariffs while jacking up tariffs on China to 125%. Canada’s status remained largely unchanged as a result of the announcement: non-compliant goods and autos/steel/aluminum tariffs remain in place. The S&P 500 surged 9.5%, the NASDAQ up 12% while the TSX popped 5%. These are historic one-day gains. “That was the #11 all time one day gain for the SP500,” wrote Michael Antonelli at RW Baird, “The only days above it are in the Great Depression, October 2008, and COVID.” Not exactly the best company. This morning futures are lower as the reality of trade barriers sets in, however lessened. The WSJ has an article this morning about why Trump blinked. They say it was because of US Treasury Secretary Scott Bessent helped to persuade the President to take time to negotiate with trade partners. Trump has gone up against formidable foes many times, but very rarely does anyone win a battle against the bond market. The sell-off in yields was real and serious. The best part, of course, is that hours before reversing the decision Trump posted “THIS IS A GREAT TIME TO BUY!!!” on Truth Social. That may have been true yesterday, but this morning the rally is fading. The sell-off is interesting given we just got a read of inflation in the US that showed prices actually unexpectedly came down. In fact overall CPI fell 0.1% from the previous month, the first decrease in almost five years. But given this captures prices in March, pre-tariffmagedon, investors aren’t putting much weight into it.
Sobering: Shares of Constellation Brands are falling in the pre-market after warning that tariffs are going to weigh on profits. The owner of Corona and Modelo issued a forecast for 2026 profit that was below expectations as they have to absorb a 25% tariff on their aluminum cans. The pinch on profits comes at a time when sales are struggling. “(Constellation) has finally reset its medium-term Beer net sales expectations to a more realistic +2-4%, down from a highly unrealistic prior range of +7-9%,” wrote Evercore’s Robert Ottenstein in a note to clients. He takes comfort that it seems that most of the tariff hit is just on the cans and not on other inputs.
In reverse: Shares of Carmax are falling 7% in the pre-market after profit missed expectations. The used-vehicle retailer’s sales grew 5.1% but that was less than the 6.4% expected. The details under the hood are a little better. Used-car prices ticked up for the first time in two years. Notwithstanding today’s plunge, the stock has held up very well on the idea that new car prices would be going higher because of tariffs thus incentivizing purchases of used-cars. Indeed the company saw the fastest growth in used-car sales in three years. The sell-off comes one day after a 9% surge in the stock yesterday in that big market rally. “If not for the rally yesterday, this print likely would have been enough,” wrote RBC’s Steven Shemesh.
Trumped: US Steel is falling in the pre-market after Trump indicated he didn’t want it sold to Japan’s Nippon Steel. “US Steel is a very special company,” said Trump, “we don’t want it to go to Japan or any other place.” The deal has been on the table since 2023 but investors are skeptical that it will get approvals. Nippon offered to buy the company for $55/share and the stock is trading at a huge discount indicating that skepticism.
Insurance watch: I’ll have my eyes on Definity Financial at the open after the insurer warned of bigger than expected catastrophic losses for Q1 2025. The property and casualty insurance company said catastrophic losses due to heavy snow and rain led to losses that were “approximately double our expectation.” While this is a hit to the bottom line near-term, analysts may view this as a longer term positive because it gives insruers cover to increase their prices.
