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  • The Russell 2000 Index has soared, but you might be better off looking elsewhere for quality small-cap stocks

    The Russell 2000 Index has soared, but you might be better off looking elsewhere for quality small-cap stocks

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    The Russell 2000 Index soared 12% in December, which might reflect investors’ exuberance about the state of the U.S. economy — it appears the Federal Reserve has won its battle against inflation.

    But if you are looking to broaden your exposure to the stock market beyond the large-cap S&P 500
    SPX,
    buying shares of a fund that tracks the Russell 2000 Index
    RUT
    might not be the best way to do it. This is because the Russell 2000 isn’t selective — it is made up of the smallest 2,000 companies by market capitalization in the Russell 3000 Index
    RUA,
    which itself is designed to capture about 98% of the U.S. public equity market.

    A better choice might be the S&P Small Cap 600 Index
    SML
    because S&P Global requires companies to show four consecutive quarters of profitability to be initially included in the index, among other criteria.

    Below is a screen of analysts’ favorite stocks among the S&P Small Cap 600, along with another for the Russell 2000.

    Watch for a “head fake”

    Much of the small-cap buying in December might have resulted from covering of short positions by hedge-fund managers. This idea is backed by the timing of trading activity immediately following the Federal Open Market Committee’s announcement on Dec. 13 that it wouldn’t change its interest-rate policy, according to MacroTourist blogger Kevin Muir. The Fed’s economic projections released the same day also indicate three cuts to the federal-funds rate in 2024.

    Heading into the end of the year, a fund manager who had shorted small-caps, and then was surprised by the Fed’s interest-rate projections, might have scrambled to buy stocks it had shorted to close-out the positions and hopefully lock in gains, or limit losses.

    That buying activity and resulting pop in small-cap prices could set up a typical “head fake” for investors as the new year begins, according to Muir.

    The long-term case for quality

    Looking at data for companies’ most recently reported fiscal quarters, 58% of the Russell 2000 reported positive earnings per share, according to data provided by FactSet. In other words, hundreds of these companies were losing money. These might include promising companies facing “binary events,” such as make-or-break drug trials in the biotechnology industry.

    In comparison, 78% of companies among the S&P Small Cap 600 were profitable, and 93% of the S&P 500 were in the black.

    Here are long-term performance figures for exchange-traded funds that track all three indexes:

    ETF

    		 Ticker

    		 2023

    		 3 years

    		 5 years

    		 10 years

    		 15 years

    		 20 years
    iShares Russell 2000 ETF

    		 IWM 17%

    		 7%

    		 61%

    		 99%

    		 428%

    		 365%
    iShares Core S&P Small Cap ETF

    		 IJR 16%

    		 25%

    		 69%

    		 129%

    		 540%

    		 515%
    SPDR S&P 500 ETF Trust

    		 SPY 26%

    		 34%

    		 108%

    		 210%

    		 629%

    		 527%
    Source: FactSet

    An approach tracking the S&P Small Cap 600 has outperformed the Russell 2000 for all periods, with margins widening as you go further back.

    Brett Arends: You own the wrong small-cap fund. How to get into a better one.

    Looking ahead for quality… or not

    For the first screen, we began with the S&P Small Cap 600 and narrowed the list to 385 companies covered by at least five analysts polled by FactSet. Then we cut the list to 92 companies with “buy” or equivalent ratings among at least 75% of the covering analysts.

    Here are the 20 remaining stocks among the S&P Small Cap 600 with the highest 12-month upside potential indicated by analysts’ consensus price targets:

    Company

    		 Ticker

    		 Share “buy” ratings

    		 Dec. 29 price

    		 Consensus price target

    		 Implied 12-month upside potential
    Vir Biotechnology Inc.

    		 VIR,
    +4.47%         		88%

    		 $10.06

    		 $32.00

    		 218%
    Arcus Biosciences Inc.

    		 RCUS,
    +3.04%         		82%

    		 $19.10

    		 $41.00

    		 115%
    Xencor Inc.

    		 XNCR,
    +6.03%         		92%

    		 $21.23

    		 $39.83

    		 88%
    Dynavax Technologies Corp.

    		 DVAX,
    +2.86%         		100%

    		 $13.98

    		 $24.80

    		 77%
    ModivCare Inc.

    		 MODV,
    +0.95%         		100%

    		 $43.99

    		 $75.50

    		 72%
    Xperi Inc

    		 XPER,
    +1.81%         		80%

    		 $11.02

    		 $18.20

    		 65%
    Thryv Holdings Inc.

    		 THRY,
         		100%

    		 $20.35

    		 $32.75

    		 61%
    Ligand Pharmaceuticals Inc.

    		 LGND,
    +1.25%         		100%

    		 $71.42

    		 $114.80

    		 61%
    Green Plains Inc.

    		 GPRE,
    -1.67%         		80%

    		 $25.22

    		 $40.30

    		 60%
    Patterson-UTI Energy Inc.

    		 PTEN,
    +0.28%         		75%

    		 $10.80

    		 $17.00

    		 57%
    Ironwood Pharmaceuticals Inc. Class A

    		 IRWD,
    +8.48%         		83%

    		 $11.44

    		 $17.83

    		 56%
    Catalyst Pharmaceuticals Inc.

    		 CPRX,
    +1.78%         		100%

    		 $16.81

    		 $26.20

    		 56%
    Payoneer Global Inc.

    		 PAYO,
    -3.45%         		100%

    		 $5.21

    		 $8.00

    		 54%
    Helix Energy Solutions Group Inc.

    		 HLX,
    -2.63%         		83%

    		 $10.28

    		 $15.00

    		 46%
    Arlo Technologies Inc.

    		 ARLO,
    -3.05%         		100%

    		 $9.52

    		 $13.80

    		 45%
    Pacira Biosciences Inc.

    		 PCRX,
    -5.16%         		100%

    		 $33.74

    		 $48.40

    		 43%
    Privia Health Group Inc.

    		 PRVA,
    +2.95%         		100%

    		 $23.03

    		 $32.53

    		 41%
    Semtech Corp.

    		 SMTC,
    -1.23%         		92%

    		 $21.91

    		 $30.90

    		 41%
    Talos Energy Inc.

    		 TALO,
    +1.19%         		78%

    		 $14.23

    		 $20.00

    		 41%
    Digi International Inc.

    		 DGII,
    -1.21%         		100%

    		 $26.00

    		 $36.14

    		 39%
    Source: FactSet

    Any stock screen should only be considered a starting point. You should do your own research to form your own opinion before making any investment. one way to begin is by clicking on the tickers for more about each company.

    Click here for Tomi Kilgore’s detailed guide to the wealth of information available for free on the MarketWatch quote page.

    Moving on to the Russell 2000, when we narrowed this group to stocks covered by at least five analysts polled by FactSet, we were left with 936 companies. Among these, 355 have “buy” or equivalent ratings among at least 75% of the covering analysts.

    Among those 355 stocks in the Russell 2000, these 20 have the highest implied upside over the next year, based on consensus price targets:

    Company

    		 Ticker

    		 Share “buy” ratings

    		 Dec. 29 price

    		 Consensus price target

    		 Implied 12-month upside potential
    Karyopharm Therapeutics Inc.

    		 KPTI,
    +4.18%         		75%

    		 $0.87

    		 $6.00

    		 594%
    Rallybio Corp.

    		 RLYB,
    +0.42%         		100%

    		 $2.39

    		 $16.50

    		 590%
    Vor Biopharma Inc.

    		 VOR,
    -0.89%         		100%

    		 $2.25

    		 $15.44

    		 586%
    Tenaya Therapeutics Inc.

    		 TNYA,
    -0.62%         		100%

    		 $3.24

    		 $19.14

    		 491%
    Compass Therapeutics Inc.

    		 CMPX,
    -5.13%         		86%

    		 $1.56

    		 $9.17

    		 488%
    Vigil Neuroscience Inc.

    		 VIGL,
    +2.66%         		88%

    		 $3.38

    		 $18.75

    		 455%
    Trevi Therapeutics Inc.

    		 TRVI,
    -2.99%         		100%

    		 $1.34

    		 $7.33

    		 447%
    Inozyme Pharma Inc.

    		 INZY,
    +1.64%         		100%

    		 $4.26

    		 $21.00

    		 393%
    Gritstone bio Inc.

    		 GRTS,
    +6.86%         		100%

    		 $2.04

    		 $10.00

    		 390%
    Actinium Pharmaceuticals Inc.

    		 ATNM,
    +4.72%         		83%

    		 $5.08

    		 $23.36

    		 360%
    Lineage Cell Therapeutics Inc.

    		 LCTX,
         		86%

    		 $1.09

    		 $4.83

    		 343%
    Century Therapeutics Inc.

    		 IPSC,
    +9.64%         		86%

    		 $3.32

    		 $14.67

    		 342%
    Acrivon Therapeutics Inc.

    		 ACRV,
    +1.83%         		100%

    		 $4.92

    		 $21.13

    		 329%
    Avidity Biosciences Inc.

    		 RNA,
    +1.22%         		100%

    		 $9.05

    		 $37.50

    		 314%
    Longboard Pharmaceuticals Inc.

    		 LBPH,
    +316.25%         		100%

    		 $6.03

    		 $24.17

    		 301%
    Omega Therapeutics Inc.

    		 OMGA,
    -1.33%         		100%

    		 $3.01

    		 $12.00

    		 299%
    Allogene Therapeutics Inc.

    		 ALLO,
    +12.77%         		82%

    		 $3.21

    		 $12.79

    		 298%
    X4 Pharmaceuticals Inc.

    		 XFOR,
    +5.21%         		86%

    		 $0.84

    		 $3.26

    		 289%
    Caribou Biosciences Inc.

    		 CRBU,
    -2.79%         		89%

    		 $5.73

    		 $22.25

    		 288%
    Stoke Therapeutics Inc.

    		 STOK,
    +11.41%         		78%

    		 $5.26

    		 $19.33

    		 268%
    Source: FactSet

    That’s right — this Russell 2000 list is all biotech. And in case you are wondering if any companies are on both lists, the answer is no.

    Don’t miss: 11 dividend stocks with high yields expected to be well supported in 2024 per strict criteria

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  • Shari Redstone reportedly in talks to sell Paramount parent to Skydance

    Shari Redstone reportedly in talks to sell Paramount parent to Skydance

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    Media tycoon Shari Redstone is in talks to sell controlling interesting in Paramount parent National Amusements to media and entertainment company Skydance, Puck and the New York Times reported Sunday.

    On Friday, shares of Paramount Global Inc. rallied 13% after Deadline reported Skydance and private-equity firm RedBird Capital were kicking the tires on National Amusement, which has a 77% stake in Paramount.

    According to the Times, Redstone — the daughter of late Paramount CEO Sumner Redstone — has held talks with Skydance in recent weeks, though the Times said it was unclear if a deal would be reached.

    Skydance, which is led by David Ellison, son of Oracle founder Larry Ellison, is one of Hollywood’s top independent studios, and has produced Paramount blockbusters such as “Mission: Impossible — Dead Reckoning” and “Top Gun: Maverick.” RedBird is a financial backer of Skydance.

    A sale would be a major reversal for Redstone, who waged a bitter battle for control of the company in 2016, and who later led the effort to merge CBS Corp. and Viacom, which led to the creation of the current Paramount Global.

    Deadline had reported that Skydance would be more interested in Paramount’s IP and movie studio, and could look to sell its TV assets, including CBS.

    A deal could signal the start of a major shakeup across the media industry, as traditional TV companies are struggling to make money in the streaming age. Comcast Corp.
    CMCSA,
    -0.17%    ,
    which owns NBCUniversal, could be looking to expand, while Warner Bros. Discovery
    WBD,
    +6.01%
    could be a potential seller. Disney
    DIS,
    +0.84%
    CEO Bob Iger recently floated the idea of selling ABC, but quickly walked that back.

    Paramount Global shares
    PARA,
    +12.11%
    have surged nearly 40% in the past month, but are still about flat year to date.

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  • Elon Musk’s X apocalyptic moment

    Elon Musk’s X apocalyptic moment

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    Is this the beginning of the end for X, the social-media site previously known as Twitter?

    In the last two days, major advertisers, ranging from IBM Corp. IBM, Apple Inc. AAPL, Lions Gate Entertainment Corp. LGF.A, Walt Disney Co. DIS, even the European Union, have pulled their ads from X, after Elon Musk appeared to endorse antisemitic conspiracy theories and because these big spenders weren’t thrilled with the algorithm’s product placement nestled alongside pro-Nazi posts.

    Earlier…

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  • Honda joins Toyota in raising U.S. wages for its auto workers as unionization push looms

    Honda joins Toyota in raising U.S. wages for its auto workers as unionization push looms

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    Honda Motor Co.’s U.S. unit joined other foreign carmakers in raising their automobile workers’ wages in the wake of historic wins for the United Auto Workers and as the union has vowed to intensify its organizing push.

    Honda
    7267,
    -4.11%
    gave U.S. production workers an 11% raise that will go into effect in January. Honda also cut down the time to reach a top wage from six years to three years, and added benefits, the company said Friday.

    The Wall Street Journal on Friday first reported the raises, citing a memo it had reviewed.

    UAW President Shawn Fain has said numerous times the union wants to expand its base into the nonunionized automobile workforce beyond the Midwest.

    At an address to UAW members in mid-October, for instance, Fain said that the UAW was “going to organize non-union auto companies like we’ve never organized before.”

    Don’t miss: Ford and GM inventories rise despite UAW strike, but demand concerns linger

    U.S. auto workers at foreign carmakers such as Honda and Volkswagen AG
    VOW,
    -1.12%    ,
    which have their major factories in the Southeast, are not unionized. Neither are auto workers at Tesla Inc.
    TSLA,
    +2.22%    ,
    which has car-making factories in California and Texas.

    Auto workers went on strike for six weeks starting in mid-September, hitting several factories and facilities of Ford Motor Co.
    F,
    +1.65%    ,
    General Motors Co.
    GM,
    +0.75%
    and Stellantis NV
    STLA,
    +1.57%    .

    The labor action, which the UAW dubbed a “stand-up strike,” called on select local unions to stand up and walk out. It marked a break from tradition: Going back decades, the UAW would strike at one company at a time, mostly to save its picket-line firepower and strike fund.

    Related: There’s a new Tesla bear in town: EV maker is a ‘very expensive company,’ HSBC says

    The new strategy yielded big results, including pay raises of around 25% over the life of the four-year contract plus cost-of-living adjustments, the end of several wage tiers, and better retirement benefits.

    At an event Thursday to celebrate the UAW deal and the reopening of a Stellantis factory in Illinois, President Joe Biden seemed to support the UAW’s unionization push.

    “I want this type of contract for all auto workers,” Biden said. “And I have a feeling UAW has a plan for that.”

    During the UAW strike, some Wall Street analysts said that Tesla would benefit from the increased costs to unionized factories following the labor agreements. One analyst noted that even before any wage increases, the Big Three automakers were paying their workers 38% more than comparable Tesla workers earned.

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  • Disney and other entertainment giants report after upbeat results from peers, but investors are getting harsher on companies that don’t deliver

    Disney and other entertainment giants report after upbeat results from peers, but investors are getting harsher on companies that don’t deliver

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    Last month, Netflix Inc.
    NFLX,
    +1.80%
    stock jumped after it reported big subscriber gains and hiked prices. Last week, results from Paramount Global
    PARA,
    +15.44%
    beat expectations, sending shares of the streaming and entertainment giant on its best percentage gain in nearly a year, and Roku Inc.
    ROKU,
    +8.58%
    also offered an upbeat outlook.

    This week — as Walt Disney Co., Warner Bros. Discovery Inc., Lions Gate Entertainment Corp. and AMC Entertainment Holdings Inc. all report results — we’ll get a deeper sense of whether the entertainment industry is starting to make investors happy again, even if they make viewers less happy in the process.

    Those companies will report as the streaming industry, under pressure from investors to turn a better profit, consolidates and as platforms charge more to watch and cram more advertisements into shows and films.

    Cable TV providers and movie theaters, too, are trying to figure out a way forward as streaming becomes more prevalent. Even as Hollywood’s writers come back to work following a strike that shut down production, its actors are still striking, with issues surrounding AI usage to portray actors, streaming payments and other issues in the balance.

    Disney
    DIS,
    +2.14%    ,
    which reports results on Wednesday, faces questions about losses at Disney+, efforts to cut billions in costs and stamp out streaming-account sharing, its planned takeover of the streaming platform Hulu and speculation over which of its large media properties it might sell. BofA analysts recently estimated that ESPN, which Disney has leaned on for years, could be worth around $24 billion. Meanwhile, activist investor Nelson Peltz has been angling for seats on Disney’s board, and its fight with Florida Gov. Ron DeSantis continues.

    Elsewhere, Warner Bros. Discovery
    WBD,
    +6.23%
    — the parent company of the streaming service Max, Warner Bros. Pictures, Discovery Channel, CNN and other channels — reports on Wednesday, as it tries to turn its reserves of intellectual property into franchise films. Meme-stock theater chain AMC
    AMC,
    +2.19%    ,
    which also reports Wednesday, following upbeat results from rival Cinemark Holdings Inc.
    CNK,
    -2.43%    .

    Sales at the theater chains have been lifted in recent months by “Barbie” and “Oppenheimer.” While both were original films, analysts have said the avalanche of sequels and remakes in theaters is unlikely to stop.

    The pressure to boost profits will ultimately affect what TV shows and films get made, and what viewers actually consume. And a report from FactSet on Friday found that investors have been more unkind than usual to companies whose results come up short of Wall Street’s expectations.

    That report found that through the third-quarter earnings season, companies whose earnings miss expectations have seen an average stock-price drop of 5.2% during the two days before the publication of the results through the two days after. If that figure holds, it would be the stock market’s biggest adverse reaction to an earnings miss since the second quarter of 2011.

    This week in earnings

    Among S&P 500 companies, 55 including one from the Dow, will report quarterly results during the week ahead.

    EV startup Rivian Automotive Inc.
    RIVN,
    +0.68%
    reports amid concerns about EV demand. Following Ticketmaster parent Live Nation Entertainment Inc.’s
    LYV,
    +3.53%
    blowout quarterly results last week, results from Madison Square Garden Entertainment Corp.
    MSGE,
    +1.03%
    will shed more light on people’s appetites for live entertainment. Results from digital marketing platform Klaviyo Inc.
    KVYO,
    +3.86%
    and fast-casual chain Cava Group Inc.
    CAVA,
    +5.49%
    — both recent IPOS — will offer a deeper look at digital ad budgets and a competitive restaurant backdrop, respectively.

    The New York Times Co.
    NYT,
    +0.91%
    also reports during the week. So do Planet Fitness Inc.
    PLNT,
    -0.09%    ,
    Gilead Sciences
    GILD,
    +0.44%    ,
    eBay Inc.
    EBAY,
    +3.98%
    and Take-Two Interactive Software
    TTWO,
    +1.03%    .

    The call to put on your calendar

    Cybersecurity drama: Cyberattacks are getting more severe, and customers are starting to feel their effects more acutely. Against that backdrop, casino and resort operator MGM Resorts International
    MGM,
    +5.27%
    will report quarterly results on Wednesday, in the wake of a cyberattack that took down some of its systems. MGM has said that attack, which the company disclosed in September, would cost them roughly $100 million.

    The company said the fallout of that attack — which disrupted hotel bookings and put hotels on manual operations, resulting in long lines — was largely contained to September. But the SEC last week accused software company SolarWinds Corp.
    SWI,
    +1.74%
    of failing to disclose its purported cybersecurity vulnerabilities, potentially leaving other companies wondering whether they’re vulnerable to similar legal action.

    The numbers to watch

    The gig economy and delivery demand: Rival ride-hailing platforms Uber Technologies Inc. and Lyft Inc. report results on Tuesday and Wednesday, respectively. Maplebear Inc.
    CART,
    +0.94%    ,
    better known as the grocery-delivery platform Instacart, also reports on Wednesday.

    Analysts have been kinder to Uber
    UBER,
    +2.73%    ,
    the larger of the two ride-hailing companies. But Lyft has tried to cut its prices and roll out new services, including one that tries to match women and non-binary riders and drivers. The financials from all three companies will land after strong results from food-delivery platform DoorDash Inc.
    DASH,
    +5.35%    ,
    which has expanded its services into retail an effort to compete with Instacart and other delivery providers. And they’ll fill in the picture of rider demand following the back-to-school season and a bigger push to get workers back into offices.

    Beyond ride-sharing, results from Uber and Instacart will narrow the lens on delivery demand, as some analysts question whether higher prices for basics and the return of student-loan payments might make food delivery more dispensable. Analysts also seem likely to zero on in those companies’ high-margin digital-ad businesses, as more e-commerce platforms try to turn their apps and websites into online billboard space.

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  • Who is having the most influence over your money in 2023? Meet the MarketWatch 50.

    Who is having the most influence over your money in 2023? Meet the MarketWatch 50.

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    What do Elon Musk, Warren Buffett, Shawn Fain and Lina Khan have in common? On the surface, it might not seem like much — one is an impetuous tech-bro genius, another is a buy-and-hold nonagenarian investor, and the other two are a tough union boss and a business-busting regulator. 

    But each of them are having a serious impact on your money. They all appear on this year’s MarketWatch 50 list of the most influential people in markets. The MarketWatch 50 is our tally of the investors, CEOs, policymakers, AI players and financial…

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  • Ford’s stock drops 4% after carmaker pulls guidance, EV unit loses $1.3 billion

    Ford’s stock drops 4% after carmaker pulls guidance, EV unit loses $1.3 billion

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    Ford Motor Co.’s stock dropped 4% after hours Thursday after the carmaker reported lower-than-expected quarterly earnings and withdrew its guidance for the year, citing the pending agreement with the United Auto Workers.

    Ford
    F,
    -1.65%
    also reported an adjusted loss of $1.3 billion for its EV unit, which was wider than Wall Street expected, saying that customers interested in EVs are “unwilling” to pay the vehicles’ premium prices. The company paused billions of long-term investment in EVs due to that disconnect.

    “Our business is never short of challenges, especially right now with the evolution of the EV market,” Chief Executive Jim Farley told analysts in a call following results.

    Ford earned $1.2 billion, or 30 cents a share, in the third quarter, swinging from a loss of $827 million, or 21 cents a share, in the year-ago period.

    Adjusted for one-time items, Ford earned 39 cents a share. Adjustments included a $2.7 billion impairment charge related to the investment in the shuttered, Ford-backed Argo AI driverless-car company.

    Revenue rose 11% to $43.8 billion, the carmaker said.

    Analysts polled by FactSet expected Ford to report adjusted earnings of 46 cents a share on sales of $43.94 billion.

    Ford said that its EV business segment recorded an EBIT loss of $1.3 billion, thanks to “continued investment in next-generation EVs and challenging market dynamics.”

    Many customers in North America interested in EVs are “unwilling to pay premiums for them,” which “sharply” flattens EV prices and profit, Ford said.

    The carmaker said it was “poised to deliver profitability” within its previous EBIT guidance range of $11 billion to $12 billion before it decided to withdraw the year’s outlook pending the agreement with its workers.

    The results come as striking employees at Ford are returning to work after the carmaker and the United Auto Workers reached a tentative agreement, which was announced late Wednesday.

    The agreement is going through ratification steps, and negotiations between the union and General Motors Co.
    GM,
    -1.59%
    and Stellantis NV
    STLA,
    -2.17%
    are said to be “active.”

    On the call with analysts, Farley said that once the deal is ratified, Ford will provide Wall Street “a deeper look at the contract and its impact on our business.”

    Ford, GM and Stellantis each have had several factories and distribution centers offline due to the strike. GM and Stellantis are expected to follow with agreements of their own.

    Ford was the first company to face walkouts at a key factory, as workers at Ford’s Kentucky pickup-truck plant walked out on Oct. 11.

    GM earlier this week detailed some of the impacts of the strike, particularly through the end of the current quarter, and also withdrew its guidance.

    See also: UAW strike moves to GM’s key SUV plant

    Ford shares have underperformed the broader equity market, and are losing about 1.6% so far this year, which contrasts with gains of around 8% for the S&P 500 index
    SPX.

    The underperformance holds for the past three months, with Ford shares down 16% compared with the index’s 8% drop in the period.

    The union said that the current four-year deal grants a 25% increase in base wages through April 2028. It will cumulatively raise the top wage at Ford by more than 30% to more than $40 an hour, and starting wages by 68% to over $28 an hour.

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  • UAW won’t expand auto workers strike

    UAW won’t expand auto workers strike

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    The United Auto Workers said Friday it has made progress in the negotiations with the Big Three carmakers, and didn’t announce any new plants that would expand its ongoing strike.

    Nearly 34,000 workers at Ford Motor Co.
    F,
    +0.95%    ,
    General Motors Co.
    GM,
    +1.13%
    and Stellantis NV
    STLA,
    -0.37%
    are on strike, with the most recent labor-movement expansion hitting Ford’s highly profitable Kentucky pickup truck factory earlier this month.

    There was “serious movement” in negotiations at GM and Stellantis, UAW President Shawn Fain said Friday in an address to the membership.

    “The bottom line is we’ve got cards left to play and they’ve money left to spend. That’s the hardest part of a strike. Right before a deal, is when there’s the most aggressive push for that last mile,” Fain said.

    Earlier Friday, GM made new proposal to auto workers, reinstating cost-of-living adjustments and offering compounded raises of about 25% over four years.

    Auto workers started the strike at the stroke of midnight Sept. 14, walking out at one plant each of GM, Ford, and Stellantis NV
    STLA,
    -0.37%    .
    The union expanded the labor action to more factories and facilities as the weeks went by.

    Striking at all Big Three at once was a departure from the long-standing UAW tradition striking at one car company at a time, to save picket-line firepower and the strike fund.

    During his address Friday, Fain vowed to intensify efforts to unionize at more auto plants.

    “We are going to organize non-union auto companies like we’ve never organized before,” he said.

    Tesla Inc.
    TSLA,
    -3.69%
    has for years fended off efforts to unionize its factory in Fremont, Calif. Several foreign automakers have U.S. plants in the Southeast, where union traditions are not as the Midwest.

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  • Tesla’s quarterly deliveries, profit seen lower by Citi

    Tesla’s quarterly deliveries, profit seen lower by Citi

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    Analysts at Citi on Thursday dialed down their expectations for Tesla Inc.’s third-quarter deliveries and profit, saying they based their new numbers on China sales, global registration data and an implied production pace for the EV maker.

    Tesla
    TSLA,
    +2.44%
    and General Motors Co.
    GM,
    +2.50%
    are scheduled to report third-quarter vehicle sales next week, while Ford Motor Co.
    F,
    +1.37%
    and a few others are slated to report September sales.

    Earlier this week, a Deutsche Bank analyst warned that there was “meaningful downside risk” to current 2024 Tesla projections due to limited volume growth, and cut his price target on Tesla stock.

    J.D. Power on Thursday estimated another double-digit gain for U.S. new-car sales in September. GM, Ford and Stellantis NV
    STLA,
    +2.45%
    are facing a strike affecting some of its assembly plants and, in the case of GM and Stellantis, auto-parts distribution centers.

    The Citi analysts, led by Itay Michaeli, said they trimmed their Tesla quarterly sales estimates to 450,000 vehicles, from a previous expectation of 468,500 vehicles.

    See also: Tesla sued for racial discrimination, retaliation by EEOC

    They lowered their forecast for adjusted per-share earnings to 75 cents in the quarter, from a prior estimate of an adjusted EPS of 81 cents for the quarter.

    The Citi’s expectations compare with FactSet consensus of Tesla deliveries of 462,000 vehicles in the quarter, and consensus around an adjusted EPS of 79 cents for the quarter.

    “We will revisit our model post the [third-quarter] delivery report,” the Citi analysts said. They kept the equivalent of a hold rating on the stock.

    The update on the sales estimates was based on recent weekly China data “in part reflecting the Model 3 refresh transition,” as the compact sedan in some parts of the world is getting a minor update; the latest available global Tesla registration data; and their observations on production rate and “inventory discounting, with our estimates assuming some [quarter-on-quarter] de-stocking,” the analysts said.

    Given Tesla’s production pace and the Model 3 changes, “we see a greater range of delivery outcomes vs. typical quarters,” they said.

    Tesla shares have doubled so far this year, compared with gains of around 12% for the S&P 500 index
    SPX.

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  • Ford pauses work on $3.5 billion EV battery plant in Michigan

    Ford pauses work on $3.5 billion EV battery plant in Michigan

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    Ford Motor Co. said late Monday it has halted work on a $3.5 billion battery factory in Michigan, just days after the carmaker made concessions to its striking workers.

    “We’re pausing work and limiting spending on construction on the [Marshall, Mich.] project until we’re confident about our ability to competitively operate the plant,” a Ford
    F,
    +1.21%
    spokesperson said. “We haven’t made any final decision about the planned investment there.”

    Ford said in February it was investing $3.5 billion to build the facility in Marshall, about 100 miles west of Detroit. The plant, which Ford called BlueOval Battery Park Michigan, is part of Ford’s “commitment to American manufacturing,” the company said then.

    The plant was expected to employ about 2,500 workers at the start of production, scheduled for 2026. The $3.5 billion investment is part of Ford’s commitment to invest more than $50 billion in electric vehicles globally through that year.

    Employees in some parts of a Michigan Ford plant making Broncos and Rangers have been on strike since Sept. 14, part of a first wave of United Auto Workers’ labor action also hitting one plant each of General Motors Co.
    GM,
    +1.47%
    and Stellantis NV
    STLA,
    -0.57%
    after the union’s contract expired without progress in the negotiations.

    Read more: UAW strike: 5 things to know

    The UAW on Friday expanded the strike to 38 GM and Stellantis distribution centers across 20 states, but didn’t extend the labor action at Ford because it said it had won some concessions for the automaker, such as a return of cost-of-living adjustments.

    Ford was showing the UAW that it was “serious about reaching a deal,” union leadership said at the time.

    The strike comes at a time the legacy automakers are stretched thin to make investments in EVs, with batteries an especially critical — and pricey — components.

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  • UAW expands strike to 38 GM and Stellantis auto-parts distribution centers in 20 states

    UAW expands strike to 38 GM and Stellantis auto-parts distribution centers in 20 states

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    The United Auto Workers on Friday expanded its strike to 38 General Motors Co. and Stellantis NV auto-parts distribution centers in 20 states, hobbling the two carmakers’ repair networks.

    UAW President Shawn Fain said that the union has made “some real progress” in negotiations with Ford Motor Co.
    F,
    +1.89%    ,
    which agreed to cost-of-living increases, some job protections and other concessions, and it won’t be striking at additional Ford plants.

    “Ford is showing us they are serious about reaching a deal,” Fain said.

    Nearly 13,000 UAW members have been on strike since last Friday at a Missouri GM plant making GMC Canyons and Colorados, an Ohio Stellantis plant making Jeep Wranglers and Gladiators, and portions of a Michigan Ford plant making Broncos and Rangers.

    Joining them are 3,475 workers at 18 GM fulfillment centers and 2,150 workers at 20 Stellantis centers across the U.S. The workers at the auto-parts distribution centers started to walk off at noon Eastern on Friday.

    GM said that the strike’s “escalation” was “unnecessary.”

    “We have contingency plans for various scenarios and are prepared to do what is best for our business, our customers, and our dealers,” the company said in a statement Friday. “We will continue to bargain in good faith with the union to reach an agreement as quickly as possible.”

    Don’t miss: Tesla may be the winner of the Big Three labor woes

    Stellantis said later Friday that it made a “very competitive offer” on Thursday that included a pay raise of 21% over the four-year life of the contract for some of its full-time hourly workers and a “significant product allocation that allows for workforce stability through the end of the contract.”

    “And yet, we still have not received a response to that offer. We look forward to the UAW leadership’s productive engagement so that we can bargain in good faith to reach an agreement that will protect the competitiveness of our company and our ability to continue providing good jobs,” said Stellantis, which was formed in 2021 with the merger of Fiat Chrysler and France’s Groupe PSA and is headquartered in the Netherlands.

    Meanwhile, Wall Street seemed encouraged by the progress with Ford negotiations.

    That was “encouraging,” suggesting that the Big Three could “perhaps reach a labor agreement sooner than some have been expecting,” measured in days and weeks and not months, Citi analyst Itay Michaeli said in a note Friday. The new strikes at auto-parts distribution facilities would likely immediately impact “a relatively smaller yet high-margin revenue stream” for GM, Michaeli said.

    A potential parts shortage could add pressure on the carmakers to reach an agreement sooner, he said. Compared with the possibility of strike at full-size truck plants, at the heart of the automakers’ profits, however, “today’s update seems somewhat more encouraging.”

    Wedbush analyst Dan Ives called the UAW action “an aggressive move that essentially goes at the hearts and lungs of auto operations for GM and Stellantis.”

    A settlement with Ford is likely over the coming week, Ives said. “The UAW and GM/Stellantis now have crossed the invisible line and the UAW strike is about to get a lot nastier.”

    Since the strike began, the union and the automakers have said they are engaging in constant talks as they try to reach a compromise on a new national contract.

    The union is demanding wage increases, an end to tiers, the restoration of pensions and cost-of-living adjustments and other concessions. Although both the union and companies have claimed progress during talks, GM President Mark Reuss said in a recent opinion piece in the Detroit Free Press that the UAW’s demands are “untenable.” That’s in line with Ford President Jim Farley’s characterization of the union’s wage proposal as “unsustainable” for the company before the strike deadline.

    Fain mentioned Reuss’s “untenable” comment in his update Friday via webcast. GM and Stellantis “are going to need some serious pushing” to meet union demands, he said.

    See: 5 things to know about the UAW strike


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  • UAW expands strike to 38 GM and Stellantis auto-parts distribution centers in 20 states

    UAW expands strike to 38 GM and Stellantis auto-parts distribution centers in 20 states

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    The United Auto Workers on Friday expanded its strike to 38 General Motors Co. and Stellantis NV auto-parts distribution centers in 20 states, hobbling the two carmakers’ repair networks.

    UAW President Shawn Fain said that the union has made “some real progress” in negotiations with Ford Motor Co.
    F,
    +1.89%    ,
    which agreed to cost-of-living increases, some job protections and other concessions, and it won’t be striking at additional Ford plants.

    “Ford is showing us they are serious about reaching a deal,” Fain said.

    Nearly 13,000 UAW members have been on strike since last Friday at a Missouri GM plant making GMC Canyons and Colorados, an Ohio Stellantis plant making Jeep Wranglers and Gladiators, and portions of a Michigan Ford plant making Broncos and Rangers.

    Joining them are 3,475 workers at 18 GM fulfillment centers and 2,150 workers at 20 Stellantis centers across the U.S. The workers at the auto-parts distribution centers started to walk off at noon Eastern on Friday.

    GM said that the strike’s “escalation” was “unnecessary.”

    “We have contingency plans for various scenarios and are prepared to do what is best for our business, our customers, and our dealers,” the company said in a statement Friday. “We will continue to bargain in good faith with the union to reach an agreement as quickly as possible.”

    Don’t miss: Tesla may be the winner of the Big Three labor woes

    Stellantis said later Friday that it made a “very competitive offer” on Thursday that included a pay raise of 21% over the four-year life of the contract for some of its full-time hourly workers and a “significant product allocation that allows for workforce stability through the end of the contract.”

    “And yet, we still have not received a response to that offer. We look forward to the UAW leadership’s productive engagement so that we can bargain in good faith to reach an agreement that will protect the competitiveness of our company and our ability to continue providing good jobs,” said Stellantis, which was formed in 2021 with the merger of Fiat Chrysler and France’s Groupe PSA and is headquartered in the Netherlands.

    Meanwhile, Wall Street seemed encouraged by the progress with Ford negotiations.

    That was “encouraging,” suggesting that the Big Three could “perhaps reach a labor agreement sooner than some have been expecting,” measured in days and weeks and not months, Citi analyst Itay Michaeli said in a note Friday. The new strikes at auto-parts distribution facilities would likely immediately impact “a relatively smaller yet high-margin revenue stream” for GM, Michaeli said.

    A potential parts shortage could add pressure on the carmakers to reach an agreement sooner, he said. Compared with the possibility of strike at full-size truck plants, at the heart of the automakers’ profits, however, “today’s update seems somewhat more encouraging.”

    Wedbush analyst Dan Ives called the UAW action “an aggressive move that essentially goes at the hearts and lungs of auto operations for GM and Stellantis.”

    A settlement with Ford is likely over the coming week, Ives said. “The UAW and GM/Stellantis now have crossed the invisible line and the UAW strike is about to get a lot nastier.”

    Since the strike began, the union and the automakers have said they are engaging in constant talks as they try to reach a compromise on a new national contract.

    The union is demanding wage increases, an end to tiers, the restoration of pensions and cost-of-living adjustments and other concessions. Although both the union and companies have claimed progress during talks, GM President Mark Reuss said in a recent opinion piece in the Detroit Free Press that the UAW’s demands are “untenable.” That’s in line with Ford President Jim Farley’s characterization of the union’s wage proposal as “unsustainable” for the company before the strike deadline.

    Fain mentioned Reuss’s “untenable” comment in his update Friday via webcast. GM and Stellantis “are going to need some serious pushing” to meet union demands, he said.

    See: 5 things to know about the UAW strike


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  • U.S. stocks end lower, S&P 500 drops third straight week as Fed worries linger

    U.S. stocks end lower, S&P 500 drops third straight week as Fed worries linger

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    U.S. stocks ended modestly lower Friday, with the Dow Jones Industrial Average falling for a fourth consecutive day in its longest daily losing streak since June. The S&P 500 and Nasdaq each logged a third-straight weekly decline as rising bond yields rocked equities in the wake of the Federal Reserve meeting on Wednesday.

    How stock indexes traded

    • The Dow Jones Industrial Average
      DJIA
      fell 106.58 points, or 0.3%, to close at 33,963.84.

    • The S&P 500
      SPX
      shed 9.94 points, or 0.2%, to finish at 4,320.06.

    • The Nasdaq Composite
      COMP
      dropped 12.18 points, or 0.1%, to end at 13,211.81.

    For the week, the Dow fell 1.9%, the S&P 500 dropped 2.9% and the Nasdaq Composite slumped 3.6%. The S&P 500 and Nasdaq each booked their biggest weekly percentage drop since March, according to Dow Jones Market Data.

    What drove markets

    Stocks slipped after two days of selling sparked by the Federal Reserve projecting its policy interest rate would remain above 5% well into next year.

    The notion in markets that the Fed would be cutting rates soon was “offsides,” leading to a “knee-jerk reaction” in bond markets that hurt stocks, said Michael Skordeles, head of U.S. economics at Truist Advisory Services, in a phone interview Friday. In his view, the central bank may cut its benchmark rate just once in the second half of next year, if at all, as inflation remains too high in a “resilient” U.S. economy with a “still fairly strong” labor market.

    Rapidly rising Treasury yields have been blamed for much of the pain in stocks. The yield on the 10-year Treasury note
    BX:TMUBMUSD10Y
    climbed 11.7 basis points this week to 4.438%, dipping on Friday after on Thursday rising to its highest level since October 2007, according to Dow Jones Market Data.

    Senior Fed officials who spoke Friday voiced support for the more aggressive monetary policy path signaled by Fed Chair Jerome Powell on Wednesday.

    Boston Federal Reserve President Susan Collins said rates are likely to stay “higher, and for longer, than previous projections had suggested,” while Fed Gov. Michelle Bowman said it’s possible the Fed could raise rates further to quell inflation. The latest Fed “dot plot,” released following the close of the central bank’s two-day policy meeting on Wednesday, showed senior Fed officials expect to raise rates once more in 2023.

    Meanwhile, the S&P 500 finished Friday logging a third straight week of declines, with consumer-discretionary stocks posting the worst weekly performance among the index’s 11 sectors by dropping more than 6%, according to FactSet data.

    “Markets weakened this week following an extended period of calm, as the hawkish tone adopted by Fed Chair Powell following the FOMC meeting caused the decline,” said Mark Hackett, Nationwide’s chief of investment research, in emailed comments Friday. “Bears have wrestled control of the equity markets from bulls.”

    Economic data on Friday showed some weakness in the U.S. services sector, while manufacturing activity recovered slightly but remained in contraction, according to S&P U.S. purchasing managers indexes.

    Still the U.S. economy has been largely resilient despite a hawkish Fed, with “strong economic growth driving fears of continued inflation pressure,” said Hackett. He also pointed to concerns that a “too strong” economy and “developing clouds” such as strikes, a potential government shutdown, and student loan repayments “will impact consumer activity.”

    Read: Government shutdown: Analysts warn of ‘perhaps a long one lasting into the winter’

    Jamie Cox, managing partner at Richmond, Virginia-based wealth-management firm Harris Financial Group, said by phone on Friday that he’ll become concerned about the impact of a government shutdown on markets if it stretches for longer than a month.

    “I’m only worried if it goes past a month,” said Cox, explaining he expects “little” economic impact if a government shutdown lasts a couple weeks.

    Meanwhile, United Auto Workers President Shawn Fain said Friday that the union is expanding its strike to 38 General Motors Co.
    GM,
    -0.40%
    and Stellantis NV’s
    STLA,
    +0.10%
    auto-parts distribution centers in 20 states, hobbling the two carmakers’ repair network.

    “We’re seeing strike after strike,” which overtime could fuel wage growth that’s already “robust,” said Truist’s Skordeles. That risks adding to inflationary pressures in the economy, he said. And while U.S. inflation has eased “dramatically,” said Skordeles, “it isn’t down to where it needs to be.”

    Companies in focus

    Steve Goldstein contributed to this report.

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  • Instacart, Ford, Pinterest, Coty, Dollar General, Intel, and More Stock Market Movers

    Instacart, Ford, Pinterest, Coty, Dollar General, Intel, and More Stock Market Movers

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    This copy is for your personal, non-commercial use only. To order presentation-ready copies for distribution to your colleagues, clients or customers visit http://www.djreprints.com.

    https://www.barrons.com/articles/stock-market-movers-457cee3b

    • Order Reprints
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  • UAW strike sets the stage for the 4-day work week — and a win could take it mainstream

    UAW strike sets the stage for the 4-day work week — and a win could take it mainstream

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    Striking United Auto Workers want better wages, improved job security, retiree pay increases, and a 32-hour work week that could turbocharge broader acceptance of shorter work weeks.

    Right now, nearly 13,000 UAW workers have walked off the job at Ford Motor Co.
    F,
    -0.08%    ,
    General Motors Co.
    GM,
    +0.86%
    and Jeep and Chrysler parent Stellantis
    STLA,
    +2.18%    ,
    still considered the influential Big Three for car makers.

    If the union gets a win from on its 32-hour work week demand, that could be a big deal for momentum behind the broader four-day work week movement, experts say.

    Four days of work is “still in the early-adoption phase,” said Alex Soojung-Kim Pang, director at Four Day Week Global, where he advises companies considering how to implement a curtailed traditional work week.

    A UAW win on the 32-hour demand “would help move the four-day week from being something you do if you have a bold leader and you want to stand out in your industry, to a mainstream aspiration for every worker and business owner,” said Soojung-Kim Pang.

    “A lot more people can look at the four-day week and say if they are doing this in an auto factory, I absolutely can do it here in my small plant, or in my business,” he added.

    Even if the 32-hour work week doesn’t make it to the final deal, it’s a “game changer” that the demand is there at all, he said. The demand could plant the idea in labor talks far beyond the UAW-company standoff.

    A UAW win on the 32-hour week would cause a “massive reverberation,” said Cathy Creighton, of Cornell University’s School of Industrial and Labor Relations.

    The demand’s presence is a sign of the COVID-19 pandemic’s lasting effects, said Creighton. While five days of in-person office attendance seems like a thing of the past, “we’ve had fundamental changes in how workers and employers view work life and work-life balance.”

    Many factory workers may not be able to pull off remote work but they can press for a shortened week on the physically demanding work, she noted. Historically, the UAW was one of the first unions to deliver health benefits, vacation and pensions for its members, she noted.

    “I think the labor movement has been playing it safe for a long time, and now they are not,” Creighton said. The UAW’s 32-hour work week demand is a prime example, she said. “The five-day work week is so ingrained in our psyche that to think of something different is like an earthquake.”

    Some research indicates people are ready for a shake-up. Nearly six in 10 people who work five days say they would prefer four 10-hour days, according to an August poll in an ongoing look at worker attitudes run by academic researchers.

    “We all know that living in a plant seven days a week, 12 hours a day, isn’t a living at all. We need real work-life balance. Auto workers deserve a life,” UAW president Shawn Fain told members in a video update days before the targeted strike.

    Roughly 12,700 UAW members so far have walked off the job at a Ford Motor plant in Michigan, a GM plant in Missouri and an Ohio plant for Stellantis NV, the maker of brands like Dodge, Chrysler, Jeep and Ram Trucks.

    Of course, there’s no guarantee how far the demand gets. The companies have counter proposals for the array of union asks, as a chart shows from researchers at Evercore ISI. They don’t yet have counters on the 32-hour work week.

    Switching to a 32-hour week with a 40-hour pay rate would be a sharp labor cost on top of the wage increases the UAW is already seeking, a Stellantis spokeswoman said. It would require hiring at least 25% more workers to stick with current manufacturing schedules, she said.

    “We are extremely disappointed by the UAW leadership’s refusal to engage in a responsible manner to reach a fair agreement in the best interest of our employees, their families and our customers,” the company said in a statement.

    In a statement, GM said it was “disappointed by the UAW leadership’s actions, despite the unprecedented economic package GM put on the table, including historic wage increases and manufacturing commitments.”

    Ford did not respond to a request for comment.

    “It’s a big game of chess that Shawn Fain is playing. We’ll see how it turns out,” Creighton said.

    “Even if they don’t get the four-day week this time, there are going to be other moves in this game in the future,” from the UAW and beyond, Soojung-Kim Pang said.

    “Even if you have to give on the four-day week now, that doesn’t mean you give on the four-day week as an ideal or a goal.”

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  • GM and Ford’s stocks are higher as UAW strike kicks off. Their bonds tell a different story.

    GM and Ford’s stocks are higher as UAW strike kicks off. Their bonds tell a different story.

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    Ford Motor Co.’s and General Motors Co.’s stocks were higher Friday as workers kicked off a strike, but their bonds have been under selling pressure for some time.

    Nearly 13,000 U.S. auto workers went on strike early Friday after the three automakers and the UAW failed to reach an agreement before their national contract expired just before midnight.

    The union has opted for targeted strikes, so workers at a Ford
    F,
    -0.04%
    plant in Michigan and a GM
    GM,
    +0.83%
    plant in Missouri were first to down tools, along with workers at a Stellantis N.V.
    STLA,
    +2.12%
    plant in Ohio.

     UAW President Shawn Fain has said others could join later and asked all 150,000 members to be ready if and when they’re called to strike.

    The strike at all three U.S. carmakers is a break with tradition, as the union for many years has elected to center strike efforts at one company to protect its strike fund and picket-line firepower.

    For more, read: UAW strike: 12,700 Ford, GM and Stellantis auto workers walk off the job

    Ford’s stock was last up 0.5%, while GM was up 1.4%.

    But as the following charts from data solutions company BondCliQ Media Services shows, the bonds have seen far more selling than buying over the last 10 days. Bondholders are often viewed as “smarter” than shareholders, because they tend to be laser-focused on a company’s financials and cash flows, to ensure they will be repaid their principal when bonds mature.


    Net customer flow of Ford and GM bonds (last 10 days). Source: BondCliQ Media Sources

    The next chart shows that Ford has seen more selling than GM.


    Ford and GM’s debt trading volumes (last 10 days). Source: BondCliQ Media Services


    Most-active Ford issues with net customer flow (last 10 days). Source: BondCliQ Media Services


    Most-active General Motors issue with net customer flow (last 10 days). Source: BondCliQ Media Services

    Stellantis, meanwhile, was seeing strong buying of its U.S. dollar-denominated bonds. The company, the former Fiat Chrysler, has far less debt than Ford and GM.

    Stellantis has about $26.5 billion of total debt, according to FactSet data, about $19.7 billion of which is in bonds.

    Ford has $143 billion of debt and $124 billion of bonds. GM has $118 billion of debt, with about $107 billion in bonds, according to FactSet.


    Most active Stellantis NV issues (USD) with net customer flow (last 10 days). Source: BondCliQ Media Services

    Fitch Ratings said earlier Friday the strike will have a limited financial impact on the auto makers, at least for now with just three plants striking.

    “It seems likely the UAW will try to ratchet up pressure on the automakers over time by shifting the strike to more impactful plants and adding more plants to the strike,” Stephen Brown, a senior director at Fitch, said in emailed comments. “The impact on the automakers of striking individual plants could be similar to the semiconductor-induced disruptions that we saw over the past few years.”

    See also: Big Three need to step up for the automotive workers who keep them profitable

    Fitch had already incorporated the potential impact of strikes in its recent decision to upgrade its ratings of Ford and GM, he said. The agency moved Ford to BBB- from BB+, moving it back into investment trade from speculative, or “junk,” status.

    “Ford, GM and Stellantis all have robust liquidity positions that will help them to withstand a potentially drawn-out period of production disruption. Based on June 30 figures, we estimate Ford has over $50 billion of cash and credit facility capacity, while GM has nearly $40 billion,” said Brown.

    Stellantis stock was up 2.2% Friday and has gained 36% in the year to date, outperforming GM’s 1.2% gain and Ford’s 9.0% gain. The S&P 500
    SPX
    has gained 17% in the same time frame.

    For live coverage of the UAW strikes, click here.

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  • UAW strike: Ford, GM, Stellantis record profits haven’t been shared fairly with workers, Biden says

    UAW strike: Ford, GM, Stellantis record profits haven’t been shared fairly with workers, Biden says

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    President Joe Biden on Friday offered his support to the United Auto Workers, as he addressed their strike aimed at the Big Three auto makers.

    Auto companies have seen record profits because of the “extraordinary skill and sacrifices” of UAW workers, Biden said in a brief speech at the White House.

    “Those record profits have not been shared fairly, in my view, with those workers,” the president added.

    “The companies have made some significant offers, but I believe they should go further to ensure record corporate profits mean record contracts for the UAW,” he also said.

    Biden gave his remarks after about 12,700 workers went on strike early Friday as their union and the Big Three automakers failed to reach an agreement before a contract expired.

    It’s a targeted strike at a Ford Motor 
    F,
    -0.08%
    plant in Michigan, a General Motors 
    GM,
    +0.86%
    plant in Missouri and a Stellantis NV 
    STLA,
    +2.18%
    plant in Ohio.

    The UAW so far has not endorsed Biden’s re-election bid, even as the AFL-CIO and other big unions have lined up behind the Democratic incumbent.

    The presidential race in 2024 could be a rematch of 2020’s contest between Biden and former President Donald Trump, who has won over some union households that historically have backed Democrats like Biden rather than Republicans.

    See: Here are the Republicans running for president

    Biden got more support than Trump from union households in the battleground states of Michigan and Wisconsin in 2020, but Trump got more support from such households in Ohio and Pennsylvania, according to Edison Research exit polls.

    Trump has seized on concerns that the car industry’s shift toward electric vehicles
    CARZ,
    which the Biden administration has promoted, could hurt American workers. “The all Electric Car is a disaster for both the United Auto Workers and the American Consumer,” the former president said Friday in a post on his Truth Social platform.

    On Friday, Biden said he hopes the UAW and car companies “can return to the negotiation table to forge a win-win agreement,” and he said he’s sending two administration officials to Detroit — Julie Su, the acting secretary of labor, and Gene Sperling, a senior adviser.

    GM posted a 2022 net profit of $11.04 billion, up from $10.38 billion in 2021, while Ford recorded a 2022 net profit of $7.62 billion, up from $6.43 billion in the prior year. For Stellantis, the parent company for brands such as Chrysler, Dodge and Jeep, last year’s net profit was $17.83 billion, up from $15.12 billion.

    UAW President Shawn Fain said in a statement after Biden’s speech that union members “agree with Joe Biden when he says ‘record profits mean record contracts.’” 

    Fain also said: “Working people are not afraid. You know who’s afraid? The corporate media is afraid. The White House is afraid. The companies are afraid.”

    Now read: Tesla may be the winner of the Big Three labor woes

    And see: Will the UAW strike push up car prices?

    Plus: UAW strike to have limited impact on Big Three, Fitch says

    Claudia Assis contributed.

     

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  • UAW strike: 12,700 Ford, GM and Stellantis auto workers walk off the job

    UAW strike: 12,700 Ford, GM and Stellantis auto workers walk off the job

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    Nearly 13,000 U.S. auto workers went on strike early Friday after the Big Three and the United Auto Workers failed to reach an agreement before their national contract expired just before midnight.

    UAW President Shawn Fain called the targeted strike at a Ford Motor
    F,
    -0.16%
    plant in Michigan, a General Motors
    GM,

    plant in Missouri and a Stellantis NV
    STLA,
    -0.58%
    plant in Ohio. A strike at all three U.S. car makers is a break with tradition, as the union for many years has elected to center strike efforts at one company to protect its strike fund and picket-line firepower. Fain said the union could add more plants to strike as part of its strategy to keep the automakers guessing, and urged all 150,000 UAW members to be ready if and when they’re called to strike.

    “This is our generation’s defining moment,” Fain said Thursday night as he addressed UAW workers by webcast two hours before the deadline. “The money is there. The cause is righteous.”

    Fain said the union is committed to a contract that reflects the “incredible sacrifices and contributions” that its members have made for years. The union has said wages for auto workers who make the top rate have risen about 6% over the past four years, while the three automakers’ North American profits have increased about 65% during that time.

    The union is asking for double-digit wage increases, an end to tiered wages and benefits, the restoration of pensions and cost-of-living adjustments, retiree pay increases and more.

    A Stellantis spokesperson said the company is in contingency mode and sent the following statement: “We are extremely disappointed by the UAW leadership’s refusal to engage in a responsible manner to reach a fair agreement in the best interest of our employees, their families and our customers.”

    A GM spokesperson said the company will continue to bargain with the union and that “we are disappointed by the UAW leadership’s actions, despite the unprecedented economic package GM put on the table, including historic wage increases and manufacturing commitments.”

    Ford did not immediately comment after the strike began, but said in a statement earlier Thursday night that it was unhappy with the union’s counterproposal: “If implemented, the proposal would more than double Ford’s current UAW-related labor costs.”

    GM’s Wentzville, Mo., plant, which the union said has about 3,600 UAW members, builds some of the car maker’s mid-size trucks and full-size vans, including the Chevy Colorado and the GMC Canyon. Ford’s plant in Wayne, Mich., makes Ford Broncos, and about 3,300 members who work in final assembly and paint would be striking. The Stellantis Toledo, Ohio, plant, which has about 5,800 UAW members, makes Jeep Gladiators and Wranglers.

    UAW members join workers around the nation and across industries — such as Hollywood writers and actors, hotel staff and healthcare workers — who are on strike or are preparing to walk off their jobs. Fain reiterated to UAW members Thursday night that amid rising economic inequality, he looks at the auto workers’ strike as part of a larger battle between the haves and the have-nots.

    Michelle Kaminski, associate professor in the School of HR and Labor Relations at Michigan State University, said in an interview with MarketWatch that “when the union president says this is a generational strike, I really agree with him.”

    She added: “When I think about economic conditions, they are more favorable to the union now than [at any point] in the 30 years I’ve been in this field.” She said auto workers have “given up a lot” over the past couple of decades as the companies have needed both government help and worker concessions to survive.

    Kaminski also cited the auto makers’ profit and financial position; the pandemic’s effect on the labor force and how workers’ commitments to their jobs have changed; and increasing inflation as factors in why she sees the timing as key. “The union’s window of opportunity is right now,” she said.

    But CFRA analyst Garrett Nelson said in an interview with MarketWatch that the union “needs to be careful not to overplay their hand, as the balance sheets of the Detroit three are flush with cash and they can probably wait things out longer than the workers can.”

    Automakers could weather a strike, although anything longer than about two weeks is viewed as more impactful and detrimental to the companies. GM has about $39 billion in cash and equivalents, while Ford has around $51 billion, according to a recent Moody’s Investors Service report. Stellantis’s cash and equivalent pile towers over the others, at $69 billion.

    The union’s strike fund starts at $825 million, and striking workers will receive $500 a week. Fain said earlier this week that a targeted strike would help the union have flexibility and apply pressure to the companies as negotiations continue; analysts say it means the union wouldn’t deplete its strike fund so quickly.

    See: Why United Auto Workers are fighting to end a two-tier system for wages and benefits

    The effects of the strike could be far-reaching, both for the companies and workers who may not necessarily be on the picket lines.

    Nelson said the union’s strategy of targeting specific plants could turn into a supply-chain “logistical nightmare” for the auto makers. They will have to adjust deliveries of specific parts to their assembly plants, and the average vehicle is made of more than 30,000 parts.

    “The automotive supply chain is among the most complex of any industry,” Nelson said. “Not knowing which plants the UAW will target in advance could create a massive level of uncertainty and have a crippling impact on production. If the strike goes on for too long, we think auto suppliers could have to cut production and furlough workers at their plants, creating a ripple effect across the industry.”

    Major suppliers’ balance sheets are not as strong, and GM, Ford and Stellantis together generally account for between 25% and 45% of their net sales, so the degradation of the supply chain is a major risk in the event of a prolonged strike.

    The U.S. Chamber of Commerce this week warned about the potential widespread impact of a UAW strike. In a letter to President Joe Biden urging him to help the parties reach an agreement, the chamber said the “Detroit Three are critical to our economy.” More than 690,000 supplier jobs are tied to the auto makers, along with about 660,000 dealership jobs, the chamber said.

    “A strike will quickly impact large segments of the economy, leading to layoffs and potentially even bankruptcies of U.S. businesses,” the chamber said.

    See: Tesla may be the winner of Big Three-UAW labor talks

    Also: Would a United Auto Workers strike push up used-car prices?

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  • UAW strike countdown: Union president says targeted strike possible at all Big Three automakers

    UAW strike countdown: Union president says targeted strike possible at all Big Three automakers

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    United Auto Workers President Shawn Fain said Wednesday that autoworkers and the Big Three automakers are still far apart, although negotiations continue, and that the union may strike all of the Big Three at once.

    “We’re keeping all of our options open. An all-out strike is still a possibility,” Fain said during a webcast with members.

    The UAW and Ford Motor Co.
    F,
    +1.53%    ,
    General Motors Co.
    GM,
    +0.57%
    and Stellantis NV
    STLA,
    -0.42%
    have made progress during their talks but were still far apart on the union’s key priorities, though negotiations will continue until the deadline of 11:59 p.m. Eastern on Thursday, Fain said.

    “For the first time in our history, we may strike all of the Big Three at once,” Fain said, adding that he looked at this time as “our defining moment.”

    He said if no deal is reached, there’s also the possibility of doing “standup strikes” at certain plants, designed to keep the companies guessing. These could escalate and spread elsewhere in order to give the union leverage in bargaining. He told UAW members that they should not strike unless their local is called to do so.

    A targeted strike helps the UAW avoid distributing strike pay, set recently at $500 a week per member, to all 150,000 of its members. But it could have a broader effect.

    “It is possible for strikes at critical parts plants to have much wider implications,” Marick Masters, a business professor at Wayne State University in Detroit, said in an interview with MarketWatch on Wednesday. 

    He noted that the 1998 strike against GM, a work stoppage by 9,200 workers at two of that company’s plants in Flint, Mich., resulted in shutdowns that affected more than 150,000 workers. 

    See: These Ford, GM plants are the most likely strike targets

    Jody Calemine, a senior fellow and director of labor and employment policy at the Century Foundation, a progressive think tank, said Wednesday that the union is employing an interesting strategy.

    “It will turn the screws slowly and probe for weaknesses, and try to get as much movement out of companies as possible while keeping the options to escalate,” he said.

    Calemine said Fain has done a “masterful job” of painting the fight as a “real showdown” between working families and the companies. But he added that “the principal danger for the union would be losing the narrative. Other places would continue to work, or get laid off or locked out.”

    That’s reflected in some of the online comments by UAW members who watched Fain’s update. One worker said on Facebook: “Strike us all or none at all.”

    The UAW president quoted scripture, repeated his calls for unity and said the “strike plan is driven by faith that together we can and will move mountains.”

    Fain said the companies have revised some of their offers: On wages, Ford has put forward a 20% increase over the life of the four-year contract, up from its previous offer of 9%, while GM’s latest offer is 18% and Stellantis’s offer is 17.5%. That’s compared to a wage increase of 40% — or 46% when compounded annually — that the union sought originally and later revised to 36%.

    “Their proposals don’t reflect the massive profits that we’ve generated for these companies,” Fain said.

    The union has pointed out that while the Big Three’s profit has risen 65% over the past four years, and the pay of each of the companies’ chief executives have risen 40%, the UAW top wage rate has risen 6% over that time.

    See: Why United Auto Workers are fighting to end a two-tier system for wages and benefits

    A GM spokesperson said Wednesday that the company continues to bargain in good faith and sent a statement that reads in part: “We are making progress in key areas that we believe are most important to our represented team members. This includes historic guaranteed annual wage increases, investments in our U.S. manufacturing plants to provide opportunities for all, and shortening the time for in-progression employees to reach maximum wages.”

    Ford and Stellantis did not immediately return a request for comment.

    The most recent U.S. autoworkers’ strike was at GM in 2019, which lasted for nearly six weeks and involved about 50,000 workers.

    See: Would a United Auto Workers strike provide an opportunity for Tesla — and push up used-car prices?

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  • Charter vs. Disney: Is this the end of the bundle as we know it?

    Charter vs. Disney: Is this the end of the bundle as we know it?

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    It was the night cable TV went out across most of America.

    Late Thursday, all Disney channels, including ESPN and ABC, went dark on Charter Communications Inc.’s
    CHTR,
    -3.16%
    Spectrum cable service as discussions over affiliate renewals hit an impasse — in the middle of the U.S. Open and college football season, and with the NFL regular season kicking off this Thursday night on NBC.

    The carriage dispute between Charter and Walt Disney Co.
    DIS,
    -0.55%
    threatens to upend business for both companies and dramatically reshape both the pay-TV and streaming ecosystems, and it could also spill over to affect content distributors and millions of consumers. The result will likely be far less spending on content from media and entertainment companies, including on sports and original programming.

    If Charter exits the TV business altogether, millions of homes are likely to abandon the pay-TV bundle, potentially speeding its decline as other, smaller TV providers follow suit, analysts said.

    “If Charter can drop ESPN, then any network (broadcast station or cable network) can be dropped,” analysts at LightShed Partners said in a note Tuesday. “Nobody is safe and the leverage will have permanently shifted to the distributor not because content is no longer king, but because too much content no longer requires the big video bundle and because the video bundle no longer is economically viable for distributors.”

    Indeed, the pandemic-era boom that streaming services enjoyed is unlikely to return. Netflix Inc.
    NFLX,
    +2.00%
    recently introduced an ad-supported tier while cracking down on password sharing. Disney also announced higher prices last month.

    “The collateral damage could be wide-ranging from sports leagues with rights coming up for renewal, local TV station affiliates seeking material step-ups and creative talent tied to the programming investments made by linear networks,” MoffettNathanson analysts Michael Nathanson and Craig Moffett said in a report Friday.

    Cable TV system needed a reset

    Billions of dollars and hours of must-see-TV time are at stake. The conflict boils down to two issues: How much the carrier will pay per channel, and what percentage of a distributor’s footprint will be required to have the channel in their package.

    The showdown was inevitable, with murmurings the cable TV model was fundamentally broken and with programmers like Disney continuing to pursue direct-to-consumer options. For example, Disney has indicated it plans to take ESPN, its most valuable property in the pay-TV bundle, direct to consumers in the coming years.

    The conflict “marks the beginning of the end of the media-carriage bundle extortion on [multichannel video programming distributor services], and does not bode well for other networks that are perceived to have far less clout than Disney,” Raymond James analyst Frank G. Louthan IV said in a note on Friday.

    Oppenheimer analysts went so far as to deem the dispute a “tipping point” for legacy TV and a defining moment for Charter, the country’s second-largest cable TV provider with 14.7 million subscribers. Media providers like Disney are transitioning to over-the-top (OTT) TV — streaming content via the internet — but are still expecting cable providers such as Charter to keep paying the same amount for legacy TV, the analysts said.

    “The linear TV business model is broken. The only thing that can save it somewhat longer term is by combining and bundling with OTT services,” the Oppenheimer analysts said.

    The impasse has Disney executives urging Charter subscribers to ditch the cable giant for Hulu with Live TV, which offers EPSN, ABC, Disney+ and other channels. Disney owns two-thirds of Hulu.

    “Disney deeply values its relationship with its viewers and is hopeful Charter is ready to have more conversations that will restore access to its content to Spectrum customers as quickly as possible,” Disney executives wrote in a blog post late Monday. “However, if you are one of these frustrated customers, it can be infuriating to not be able to access the content you want. Luckily, consumers have more choices today than ever before to immediately access the programming they want without a cable subscription.”

    Charter has remained firm that it is prepared to abandon its video business.

    “We’re on the edge of a precipice. We’re either moving forward with a new collaborative video model, or we’re moving on,” Charter CEO Chris Winfrey said on a conference call with Wall Street analysts Friday morning. “This is not a typical carriage dispute. It’s significant for Charter, and we think it’s even more significant for programmers and the broader video ecosystem.”

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