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“Had it not been for the recent uncertainty from global tariffs and their downstream impacts, we would have raised our expectations for 2025.” – Tim Arndt, CFO, Prologis
Below is a snippet of commentary from today’s Morning Lineup. Start a two-week trial to Bespoke Premium to view the full report.
It’s still early in the Q1 earnings season, but one of the most significant quotes we have heard in an earnings conference call came from Prologis (PLD) CFO Tim Arndt where he noted that business fundamentals were improving to close out the first quarter to the point where the company was planning to raise expectations. Then the President appeared with the Reciprocal tariffs on April 2nd, and that moment changed everything. That ceremony forced corporate America to reassess everything as we enter one of the most uncertain operating environments in at least a generation.
In addition to a trickle of earnings news this morning, we got updates on Housing Starts and Building Permits for March at 8:30, along with jobless claims, and the April Philly Fed report. Housing Starts were a big miss, but Building Permits came in stronger than expected. Initial Jobless Claims came in 10K lower than expected, while Continuing Claims were higher. The Philly Fed report was a big miss and came in at -26.4, which, outside of one reading in April 2023, was the weakest since the Covid crash.
Ironically, the main company of focus this morning has nothing to do with tariffs. Shares of UnitedHealth (UNH) are trading down over 20% in the pre-market after the company reported a reverse triple play with weaker-than-expected EPS and revenues while also lowering guidance. After dropping as low as $438 in late February, the stock rallied up just above $600 as recently as last Thursday, but this morning has given it nearly all back as the stock sinks to $460.
What makes today’s plunge even more painful is that investors had been gravitating to the stock as they took on more defensive positioning since the market peak in February. Since the 2/19 peak in the S&P 500 through yesterday’s close, UNH had been the 12th best performing stock in the S&P 500 and the best performing stock in the Dow, and that included a 12.5% downside gap on 2/21! When the defensive stocks start to fall, where is an investor to turn?
With the stock on pace to open down 20.52% as of this writing, it would go down as UNH’s second-largest downside gap at the open since 1990. The only one that was larger was a 20.57% gap in August 1998 when the company took a $900 million charge. At this point, though, it wouldn’t take much more downside for today’s decline to unseat that decline. Besides the August 1998 occurrence, the only other time that UNH gapped down anywhere near 20% was in July 1996 (-19.13%). It’s also interesting to see that this morning’s extreme downside gap follows what was one of the stock’s most extreme upside gaps less than two weeks ago!
