Daily US Equity Opening News - Indices surge as US & Iran announce 2-week ceasefire; LEVI & DAL extend higher on earnings

TODAY’S AGENDA:

US INDEX FUTURES: ES +2.7%, NQ +3.5%, YM +2.7%, RUT +3.8%
DAY AHEAD: In afternoon trade, the Fed will release minutes from its March confab (see below for primer). In energy, API weekly energy inventory data was said to show headline crude stocks posting a surprise build of +3.7mln bbls (exp. -1.6mln), Cushing stocks drawing down by -0.6mln bbls, distillate inventories seeing a smaller than expected draw of -0.6mln bbls (exp. -0.9mln), and gasoline inventories posting a larger than expected draw of -4.0mln bbls (exp. -1.4mln). The more widely followed DoE inventory data will be released later on Wednesday. Notable corporate earnings due today include: Constellation Brands (STZ). In supply, the US Treasury will auction USD 39bln of 10yr notes. On the speakers’ slate, Fed’s Daly (2027 voter, dove) will speak on the outlook for policy and the economy; Fed’s Waller (voter, dove) will deliver a speech at Bemidji State University.
BROKER MOVES: DE upgraded at Jefferies; COIN downgraded at Barclays. For the full list, click here.
MAJOR MORNING MOVES RECAP: XLE, RCL, CCL, JETS, DAL, DOW, LEVI, ANIP, VSAT. For the full list, click here.
PRIMER - FOMC MINUTES (14:00EDT/19:00BST): The FOMC left rates unchanged at 3.50-3.75%, with no change to forward guidance, balance sheet plans or implementation guidance. Miran was the sole dissenter, favouring a 25bps rate cut. The statement was little changed, though it now says unemployment has been “little changed in recent months” and adds that developments in the Middle East pose uncertain implications for the US economy. The updated projections were modestly hawkish: growth forecasts were raised across 2026-2028, inflation projections were also revised higher, most notably for 2026, while the unemployment forecast for 2026 was unchanged at 4.4%, with only a slight upward revision for 2027. The median rates path was unchanged through 2028, though the longer-run fed funds estimate edged up to 3.1%. Powell’s press conference came across as hawkish despite the unchanged median dots. He stressed that persistent inflation, not weak growth, remained the main concern, highlighting sticky non-housing services, the need for more goods disinflation and upside risks from tariffs, oil and the Middle East. He said rate cuts would require renewed progress on inflation, while also noting that a rate rise was discussed, although most officials did not see it as the base case. Since the meeting, policymakers have generally endorsed the hawkish hold, with most favouring keeping rates steady until inflation shows clearer progress. Cuts remain possible only if the labour market weakens, but the bar is higher after the oil and war shock. Hikes are not the base case, though several officials say they cannot be ruled out if inflation worsens. Policymakers generally see a baseline of resilient growth, moderating inflation and only gradual labour market softening, but uncertainty has risen sharply. Officials have repeatedly stressed the “fog” around the outlook and a more difficult growth-inflation trade-off, though they have said policy is well placed to wait for clearer evidence before moving. On the Middle East conflict, officials noted possible two-sided shocks: it can lift inflation through energy and supply chains while also weighing on growth, sentiment and jobs. Policymakers have said that any short-lived shock could be looked through, but a prolonged conflict would likely delay cuts and raise the risk of a more hawkish response. Meanwhile, inflation is still seen as too high and as the main policy risk. Most say there is no clear evidence yet of second-round effects or a wage-price spiral, and expectations remain broadly anchored, but many have warned that persistent oil or supply shocks could bleed into core inflation and expectations, complicating policy.

NEWS:

IRAN

Iran Ceasefire - President Trump announced that the US and Iran agreed to a two-week ceasefire contingent on Iran opening the Strait of Hormuz. He said military objectives had been met, and a 10-point Iranian proposal provided a workable basis for a final agreement, with most past points of contention already resolved. US officials said Iran’s proposal includes full sanctions relief, transit fees and a regional ceasefire. Iran’s Supreme National Security Council said Pakistani officials told Tehran the US had accepted Iran’s proposal as the basis for talks, and Iran will negotiate with the US for two weeks only on those points, Tasnim reported; it added that the existence of talks did not mean the war has ended, and it would only end if the principles in its 10-point plan are agreed. Iran Foreign Minister Araghchi said it had accepted negotiations based on the US 15-point proposal and the general framework of Iran’s 10-point plan, adding that Tehran would halt defensive operations if attacks stopped, and safe passage through the Strait of Hormuz would be possible for two weeks.
Ceasefire Talks - US and Iran are expected to hold a first round of in-person peace talks in Islamabad on Friday, Axios reports; Vice President Vance is likely to lead the US delegation; Parliament Speaker Ghalibaf will lead talks on the Iranian side, though subsequent reports suggest it has still not been decided. RANE Group analysts said Trump’s decision to extend his 7th April deadline for Iran to reopen the Strait of Hormuz lowers the near-term risk of large-scale US military action and possible Iranian retaliation, but added that the chances of a full peace agreement remain low.
Strait of Hormuz Passage - Shipowners are assessing the terms of the US-Iran ceasefire, which could temporarily reopen the Strait of Hormuz and allow more than 800 vessels stranded in the Persian Gulf to leave, Bloomberg reports. The waterway, which carried about 20% of global oil supply prior to the war, has been largely closed since late February after US and Israeli strikes prompted Iran to tighten control, severely disrupting traffic and energy supplies. Petronas said a vessel chartered by one of its units, carrying Iraqi crude, passed through the Strait of Hormuz and is heading to its refinery in Pengerang, Johor.
Saudi Arabia - Saudi Arabia's east-west oil pipeline was hit by a drone attack, FT reports citing sources; a pumping station was hit around 1pm local time (just over 2 hours ago). The pipeline carry's crude from the Gulf to the Red Sea for export. The pipeline has become an economic lifeline for the Kingdom since the effective closure of the Strait of Hormuz. Damage currently being assessed. Aramco has been rerouting exports to the Red Sea via the line to avoid the Strait of Hormuz.
Iran Cyber Attacks - Before the ceasefire was announced, US agencies warned that Iran-linked cyberattackers are targeting critical infrastructure including drinking water, sewer and energy systems; a joint statement from the EPA, FBI and other agencies said the attacks are aimed at operational technology used in water and sewer systems, as well as government facilities and services. Separately, a pro-Iran cybercrime group claimed responsibility for cyberattacks that took Chime (CHYM) and Pinterest (PINS) offline, Bloomberg reports.

TRADE

US-China - USTR Greer promoted a US-China board of trade, and downplayed a similar mechanism focused on bilateral investment; he said the aim would be to work with China to identify non-sensitive goods the two countries should trade, and define what those flows should look like ahead of a possible Trump-Xi meeting next month.
South Korea - South Korea posted a record current account surplus of USD 23.2bln in February, led by semiconductor exports; the goods balance recorded a USD 23.4bln surplus, with exports up almost 30% Y/Y, outpacing a 4% increase in imports.

MACRO

Fedspeak - Vice Chair Jefferson (voter, dovish) said current policy is appropriately positioned as he sees downside risk to employment and upside risk to inflation. He said the labour market could be stabilising, and is roughly balanced, but still vulnerable to shocks; inflation remains above target, and higher energy prices may lift inflation in the short term while weighing on spending if sustained. Fed’s Goolsbee (2027 voter, dovish) said inflation could “come roaring back” as higher oil prices create a stagflationary shock; Goolsbee added that the Fed is in an uncomfortable position with no obvious playbook. He described the job market as stable but not great, and said prolonged high inflation risks becoming embedded in the economy.
RBNZ - The RBNZ kept its OCR at 2.25%, with the decision reached by consensus rather than a vote; Governor Breman said a rate rise was discussed, but was not close; she said Q2 CPI is projected at 4.2%, spare capacity will persist, financial conditions have tightened, and policymakers are watching wage growth, inflation expectations and core inflation to judge the timing of any tightening. Analysts said that the commentary hawkish; Westpac brought forward its first hike call to September (from December) following the announcement.
Japan Wages - Japan’s real wages rose +1.9% Y/Y in February (exp. 1.3%), the fastest pace since 2021, while nominal wages increased 3.3% Y/Y (exp. 2.7%). Analysts said the gains support the case for the BoJ to consider a rate hike as soon as this month.

TECH

Oracle (ORCL), Allianz (ALIZY), Bank of America (BAC) - Pimco is in talks with Bank of America to help provide about USD 14bln of debt financing for an Oracle data centre in Michigan intended to power OpenAI applications, Bloomberg reports. The financing could be structured as a bond, with Pimco potentially syndicating part of it.
OpenAI - Elon Musk is seeking to remove Sam Altman as OpenAI CEO and board member as part of his lawsuit over OpenAI’s conversion to a for-profit company. A court filing says Musk also wants President Greg Brockman removed and is seeking an order restoring OpenAI’s status as a nonprofit research organisation.
AI Companies - AI companies are trying to ease rising public concerns about the technology’s potential harms, WSJ writes, noting that recent polls show AI is broadly unpopular. The article points out that OpenAI, this week, published policy proposals addressing worries, including job displacement and wealth concentration, including ideas such as a four-day workweek and a public-wealth fund distributed to citizens.
Megaspeed International, Bain Capital, Nvidia (NVDA) - Bain Capital’s Bridge Data Centres removed Megaspeed International from its Malaysian facility and replaced it with Zenlayer; the switch followed US suspicions that Megaspeed was smuggling Nvidia chips. The change was disclosed in a memo to lenders tied to a recent USD 2.8bln loan, Bloomberg reports.
ViaSat (VSAT) - Upgraded at Barclays to 'Equal Weight' from 'Underweight' with a USD 49 PT (prev. 23). The company's core satellite business, which represents over 85% of its EBITDA, is structurally threatened by new low orbit earth players. However, Barclays believes free cash flow break-even is "now in sight" for ViaSat while the last launch of a key satellite is coming soon. It thinks ViaSat could benefit from the growing interest in spectrum, "as it holds a large portfolio which it may be able to monetise."
Uber (UBER) - Uber is expanding AI infrastructure on AWS, using Graviton chips for real-time systems and piloting Trainium for model training. Aims to improve ride matching, demand handling, and personalisation at scale. Meanwhile, Pony AI, Verne, and Uber launched Europe’s first commercial robotaxi service in Zagreb. Service covers ~90 sq km (incl. airport), bookable via Verne app (Uber integration coming), with plans to expand across the city.
Rigetti Computing (RGTI), Amazon (AMZN) - Rigetti said its 108-qubit Cepheus-1-108Q system is now generally available through Rigetti Quantum Cloud Services and Amazon Braket. The company said it is its highest qubit-count system and the industry’s largest modular quantum computing system, built from 12 interconnected 9-qubit chiplets, with 99.1% median two-qubit gate fidelity and 99.9% median single-gate fidelity.
Super Micro (SMCI) - Super Micro said an independent investigation is under way into the March 2026 indictment of two employees and a contractor over an alleged export-control conspiracy. The company is not a defendant and is not accused of wrongdoing; the three individuals no longer have ties to Super Micro.
Unity Software (U), Meta( META)- Companies continue its multi-year partnership to power next-gen VR experience.
Kioxia (KXIAY) - Considering its first ever dividend, Nikkei eports.
Kodiak AI (KDK) - Completed an autonomous trucking programme in Ohio with DriveOhio, marking its first operational deployment outside the Sun Belt. The programme included long-haul trucking activity on interstate routes, as well as Level 4 autonomous driving demonstrations at the Transportation Research Centre track.
Commerce.com (CMRC), Rezolve AI (RZLV) - Rezolve AI launched a hostile bid for Commerce.com, according to Bloomberg.

CONSUMER DISCRETIONARY

Ford (F) - Ford and other US automakers have sought relief from aluminium tariffs after fires last Autumn shut Novelis’ Oswego, New York rolling plant, creating supply bottlenecks for vehicles including the F-150, WSJ reports. The administration has so far rejected the requests. The plant is the largest domestic supplier of automotive aluminium sheet, and is expected to remain offline until at least June.
General Motors (GM) - NHTSA said General Motors will recall 271k vehicles due to rear-view image issues that reduces driver vision behind the vehicle.
Levi Strauss (LEVI) - Shares rose in extended US trading after it beat earnings and revenue expectations, and raised FY guidance amid strong sales growth led by direct-to-consumer performance. Q1 2026 (USD): Adj. EPS 0.42 (exp. 0.37), Revenue 1.7bln (exp. 1.65bln); exec said results reflected broad-based growth across channels, regions and categories; CEO said its evolution into a DTC-first denim lifestyle brand is supporting a larger addressable market, faster growth and a stronger operating foundation. Sees Q2 EPS between 0.22-0.24 (exp. 0.23), Q2 revenue at 1.50-1.52bln (exp. 1.51bln), and Q2 adj. EBIT margin between 8-9%, noting that gross margin is expected to be slightly down due to unfavourable FX effects, while tariffs are expected to be fully offset through mitigation efforts. Raised FY26 adj. EPS view to 1.42-1.48 (exp. 1.47; prev. saw 1.40-1.46) and raised FY26 organic revenue growth view to 4.5-5.5% (from 4-5%). Elsewhere, it said Executive Vice President and Chief Financial & Growth Officer Harmit Singh will remain in the role until a successor is appointed, then transition to Special Advisor before retiring.
Alibaba (BABA) - Alibaba and China Telecom launched a southern China data centre for AI training and inferencing using 10,000 Alibaba-developed Zhenwu chips, with capacity for models with hundreds of billions of parameters, CNBC reports. The companies said the Shaoguan facility can expand to 100,000 chips and serve sectors including healthcare and advanced materials. Meanwhile, Alibaba promoted Qwen Lab to Qwen's large model business unit, and established a tech committee, led by CEO Eddie Wu, according to an insider note.
Reckitt Benckiser (RBGLY), Danone (DANOY) - Danone is reportedly exploring a bid for Reckitt’s Mead Johnson unit with Centerview Partners, according to La Lettre; Reckitt bought Mead Johnson for USD 17bln in 2017, and it accounts for around 15% of its revenue.
Kimberly-Clark (KMB) - A Kimberly-Clark employee was arrested on arson charges after a fire at the company’s 1.2mln-square-foot distribution centre in California. The facility, which serves about 50mln people and stores facial tissue and toilet paper, was destroyed after the roof collapsed, with all products inside lost.
First Brands Group - A judge said bankrupt auto-parts maker First Brands Group must allow NOCO until Friday to bid for at least one of 12 brands being sold in its multi-billion bankruptcy case. NOCO said it had been wrongly denied a chance to bid on one brand.
Stellantis (STLA) - In discussions with Leapmotor to develop Open EV, Reuters reports.

FINANCIALS

Anti-Money Laundering - US regulators proposed overhauling anti-money-laundering rules to let banks focus resources on higher-risk activities rather than minor issues. The change would shift supervision toward core financial risks instead of process-related items, in a move likely to be welcomed by Wall Street, Bloomberg reports.
Private Credit - US Treasury officials plan to discuss risks from insurers’ roughly USD 1tln private-credit holdings with state insurance regulators, WSJ reports. The article also notes that the National Association of Insurance Commissioners published a 2024 study finding ratings on insurers’ private-credit investments were routinely inflated, then removed it from its website in May, saying it needed clarification.
Blue Owl (OWL) - Moody’s cut the outlook on Blue Owl Credit Income Corp. to negative from stable after significantly higher-than-peer redemption requests in Q1 as well as the the majority of the redemptions requested being from a very limited number of investors, signalling concentrations risks in the equity holder base . The move adds to signs of strain in private credit funds aimed at retail investors and forms part of Moody’s broader shift to a negative outlook on private credit investment vehicles, Bloomberg said.
Coinbase (COIN) - Coinbase said it plans to expand into equities trading and payments in Australia after receiving an Australian Financial Services License with retail derivatives authorisation from ASIC. Meanwhile, Barclays downgraded the stock to 'Underweight' from 'Equal Weight ', with a USD 140 PT (prev. 148). The bank said the company's volumes weakened again in Q1, and without passage of the CLARITY act or a macro-driven recovery, this should continue into Q2. The firm's adjusted EBITDA estimates for Coinbase are now 24% below the Street, primarily driven by lower spot trading, particularly retail trading revenues. It expects the decline in volumes will weigh on Coinbase's profitability and sees "little valuation support" for the shares.
Stablecoins - The FDIC proposed guidelines for banks and fintech subsidiaries issuing stablecoins; Chair Hill said the framework would set requirements for reserve assets, redemption of outstanding stablecoins, permissible activities and capital.
Arthur J. Gallagher (AJG) - Said a DOJ civil settlement involving AssuredPartners of South Florida and AssuredPartners does not affect the price it paid for AssuredPartners. Gallagher said the conduct occurred before its August 2025 acquisition, APSF was excluded from the deal, it never owned APSF, and the settlement amount was fully reserved under the purchase agreement.
Better Home & Finance (BETR) - Announced the pricing of 1,875,000 share offering for expected gross proceeds of USD 60mln.

ENERGY

Energy Inventories - API weekly energy inventory data was said to show headline crude stocks posting a surprise build of +3.7mln bbls (exp. -1.6mln), Cushing stocks drawing down by -0.6mln bbls, distillate inventories seeing a smaller than expected draw of -0.6mln bbls (exp. -0.9mln), and gasoline inventories posting a larger than expected draw of -4.0mln bbls (exp. -1.4mln). The more widely followed DoE inventory data will be released later on Wednesday.
Exxon (XOM) - Sees 6% hit to Q1 production vs Q4 amid Middle East conflict, guides Q1 EPS up Q/Q (prev. USD 1.71).
Shell (SHEL) - Shell said Q1 results were supported by oil trading, with trading performance significantly higher Q/Q; this came despite the Iran conflict damaging its Middle East assets. The company flagged weaker Q1 output due to Middle East disruptions, with the impact on Qatari volumes partly offset by the ramp-up of LNG Canada, while Australia weather constraints and Qatar LNG outages also affected volumes. Trading and Optimisation is expected to be in line with Q4 2025, while it noted that long-term LNG contracts typically include pricing lags.
SLB (SLB), Subsea7 (SUBCY) - SLB signed a strategic collaboration agreement with Petronas Suriname E&P and Subsea Integration Alliance, comprising SLB OneSubsea and Subsea7, to support resource development in Suriname’s frontier basin.
Vermilion Energy (VET) - Said Q1 production averaged about 125,000 boe/d (vs guidance of 122,000-124,000), driven by the Deep Basin, Montney and Germany, partly offset by cyclone-related downtime in Australia. European gas realised about USD 16/MMBtu. Australia averaged about 1,000 BPD, and production is expected to resume in early Q2.
Scorpio Tankers (STNG) - Announced that it priced a private offering of USD 325 million aggregate principal amount of 1.75% convertible senior notes due 2031, upsided from prior USD 300mln amount.
Santos (SSLZY) - Expects to restart production at its Barossa gas plant in Australia around 18th April after replacing compressor dry gas seals and cleaning heat exchangers. The facility was shut in March for equipment work, and the restart is expected to help ease Asia’s gas supply crunch.

INDUSTRIALS

Delta Air Lines (DAL) Q1 2026 (USD): EPS 0.64 (exp. 0.60), Revenue 15.9bln (exp. 14bln). Adj. operating income was 652mln with a 4.6% operating margin. Adj. pre-tax income was USD 532mln with a 3.7% pre-tax margin. Operating cash flow was 2.4bln, FCF 1.2bln, and net debt fell to 13.5bln, below 2019 levels. Commentary: Management said demand remains strong and capacity growth is being reduced with a downward bias until the fuel environment improves. Q2 guidance: Expects pre-tax profit of ~1bln, on a more than 2bln increase in fuel expenses at the forward curve. Revenue seen up low-teens Y/Y, EPS between 1.00-1.50 (exp. 2.02), operating margin between 6-8%.
Airlines - IATA’s Walsh said the two-week US-Iran ceasefire is positive for airlines because it should allow some oil flows to return, but jet fuel and ticket prices are likely to stay elevated for some time.
Airline M&A - US Transport Secretary Duffy said there is room for some airline mergers in the US aviation industry, adding that President Trump likes to see big deals happen.
Airbus (EADSY) - Airbus Executive Vice President Wouter van Wersch said airlines may speed up retirement of older aircraft as higher oil prices improve the appeal of newer, more fuel-efficient jets.
CK Hutchison (CKHUY), Maersk (AMKBY) - CK Hutchison has started London arbitration against Maersk via its unit Panama Ports Co. after Panama’s forced takeover of its two ports in the country. The company said the case is separate from its more than USD 2bln damages claim against the Panamanian government.
Lockheed Martin (LMT) - The Trump administration’s proposed budget seeks USD 2.9bln in 2027 for Lockheed Martin’s AIM-260 air-to-air missile (vs USD 894mln this fiscal year), Bloomberg reports; the increase suggests accelerated production and possible near-term deployment of the classified weapon.
RTX (RTX) - Received a not-to-exceed USD 709mln undefinitised US Air Force contract action for Small Diameter Bomb Increment II Lot 12 production and test equipment.
Boeing (BA) - Awarded a maximum USD 101mln undefinitised delivery order under a three-year basic ordering agreement for KC46 commercial common depot-level repairables.
Deere & Company (DE) - Jefferies upgraded DE to 'Hold' from 'Underperform' with a USD 550 PT. The firm believes that additional downside risk is limited following the recent pullback of 15% since mid-February, noting that valuation on Deere shares is more balanced at current levels. Deere is one of the highest-quality companies in the firm's coverage, given the strength in its product innovation, significant market penetration and a large captive data lake, the analyst tells investors in a research note.
Chiyoda (CHYCY) - Chiyoda said it is considering resuming construction work on a major LNG export plant in Qatar following the US-Iran ceasefire. Work had been halted after Qatar evacuated staff from Ras Laffan in early March following an Iranian drone attack, which shut production and further delayed the expansion project.

HEALTHCARE

Novavax (NVAX) - Shah Capital plans to vote against Novavax board and pay, escalating pressure for changes. The activist investor urges cost cuts, share buybacks and a potential sale, holding a ~9% stake.
Bayer (BAYRY) - Exec said it sees no need to change its 2026 forecasts due to US pharma tariffs; the company had already accounted for tariffs in its guidance, and highlighted the US-EU trade deal capping tariffs on most goods, including medicines, at 15%; the pharma company expects 2026 EBITDA before special items between EUR 9.6-10.1bln.
Insmed (INSM) - Phase 2b CEDAR study of brensocatib in adults with moderate to severe hidradenitis suppurativa did not meet primary or secondary efficacy endpoints in either the 10mg or 40mg arms. Brensocatib was well-tolerated with no new safety signals. Insmed will discontinue development in HS.
Grail (GRAL) - Grail is collaborating with Epic to integrate the Galleri multi-cancer early detection test into Epic’s EHR platform.
ANI Pharmaceuticals (ANIP) - Announced that following final approval from the FDA for its Abbreviated New Drug Application, or ANDA, the Company launched Isosorbide Mononitrate Tablet USP, 10 mg and 20 mg. ANI's Isosorbide Mononitrate Tablet USP is the generic version of the reference listed drug, or RLD, Monoket.

COMMUNICATIONS

Warner Bros. Discovery (WBD) - President Trump said CNN falsely reported an Iranian statement after the Iran ceasefire announcement and said authorities were examining whether a crime was committed. The White House demanded a correction and apology. CNN said the statement came from Iranian officials known to it and was also reported by multiple Iranian state media outlets.
Nexstar (NXST), Tegna (TGNA) - A federal judge in California delayed deciding whether Nexstar can resume integrating Tegna after a lengthy antitrust hearing. The judge said he would soon issue a written order on whether to extend a two-week pause requiring Nexstar to keep Tegna separate while two lawsuits challenge the merger.
Universal Music Group (UNVGY) - UMG confirmed it received an unsolicited, non-binding proposal from Pershing Square; The board and its advisers will review the proposal and its implications. It added that the board has full confidence in the company’s strategy, in Sir Lucian Grainge, and the management team.
Telefonica (TELFY) - Telefonica sold its Mexican unit, Telefonica Hispanoamerica, to Melisa Acquisition for USD 450mln.

MATERIALS

Vale (VALE) - Vale brought forward planned maintenance shutdowns at its two pellet plants in Oman to mitigate potential impacts from the Iran war, Bloomberg reports.
Eldorado Gold (EGO), Foran Mining (FMCXF) - Eldorado Gold’s bid to buy Foran Mining won shareholder support, advancing the plan to create a larger gold and copper miner after an activist campaign challenged the deal. Almost 85% of Eldorado shareholders who voted backed the CAD 3.8bln acquisition, above the 50% threshold required, and Foran investors also approved it.

REAL ESTATE

China Vanke - China Vanke is seeking to extend a yuan bond due this month by offering to repay 40% of principal upfront, Bloomberg reports. The developer is considering terms similar to earlier proposals to extend three other bonds by one year, underscoring continuing liquidity pressure as it tries to avoid default.