Tag: Automobiles

Here’s what the Israel-Hamas war has done to U.S. gasoline and diesel prices

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Fuel prices, with the cost of gasoline and diesel at the pump both down from a month ago, don’t appear to be fazed by the escalating risks to oil supplies in the Middle East from the Israel-Hamas war, but they are.

The decline in fuel prices seen nationally is actually a “bit above what would be ‘normal’ for this time of year,” said Patrick De Haan, head of petroleum analysis at GasBuddy. However, he believes “prices won’t fall as far as they would have had the attacks on Israel not happened.”

On Friday, the average retail price for a gallon of regular gasoline stood at $3.528, down 5.7 cents from a week ago, while the average retail diesel price was at $4.465 a gallon on Friday, down 7.8 cents from Sept. 30, according to data from GasBuddy.

U.S. retail gasoline prices have fallen so far this month.

GasBuddy

“Geopolitical risk is now heightened, changing the calculus” for the fuel market, said Brian Milne, product manager, editor and analyst at DTN.

‘Seasonal component’

In considering retail gasoline prices during the fourth quarter, the “seasonal component is less pronounced than in years past,” said Milne. Demand for gasoline tends to fall following the summer travel season. Combined with a “strong slate of refinery maintenance,” which led to less fuel supply on the market, the rise in crude oil prices has slowed the decline in fuel prices, said Milne.

If not for the heightened geopolitical risk in the Middle East, he said he might have expected to see gasoline prices decline by another 30 cents to 40 cents per gallon into late December because of lower demand.

Retail gas prices may fall another 20 cents a gallon or more, depending on the location within the U.S., if we avoid broader hostilities in the Middle East, said Milne.

However, if a conflict breaks out beyond Israel and the Gaza Strip, gasoline prices are likely to move sharply higher because of a spike in crude costs, he said.

For its part, oil has seen volatile trading following the Hamas attack on Israel on Oct. 7, with futures prices for U.S. benchmark West Texas Intermediate crude
CLZ23,
-0.42%

CL.1,
-0.39%
higher for the week, but lower for the month.

California prices ‘plummet’

For now, California, which typically is among the states that pays the most per-gallon for gasoline partly due to taxes on the fuel, is seeing prices “plummet” — down nearly 60 cents in the last three weeks, said GasBuddy’s De Haan.

“The West Coast is certainly seeing a much larger decline than is ‘normal’ and it’s due to the refinery situation now improving drastically,” as well as California’s RVP waiver, he said.

The California Air Resources Board allowed gasoline sold or supplied for use in California that exceeds the RVP, or Reid Vapor Pressure, limits through the end of Oct. 31, marking an early transition for the state from the lower RVP gas used in the summer to help cut gasoline emissions to the higher RVP gas used in the winter.

On Friday, the average price for a gallon of regular gasoline in California sold for $5.476, GasBuddy data show. That’s down 16.7 cents in just the last week.

Gas price outlook

De Haan said he does not expect to see a spike in gas prices nationally at this point, and there’s still room for prices to fall — just not as much following the Hamas attack on Israel.

“If we get to November and Iran gets involved in the situation, then we certainly could see gas prices impacted in some way as the current drops will likely be fully passed on by then, giving stations no ‘room’ to absorb higher prices reflected by a potential rise in oil,” said De Haan.

Still, falling demand, as well as “seasonality in general,” are what are pushing prices down, “enhanced by refinery improvements in areas” that saw price surges, he said.

Prices may even fall further after refinery maintenance season wraps up in mid-November, and refiners have to find places to put even more gasoline output, said De Haan.

He’s comfortable with the gasoline price forecasts GasBuddy issued in December of last year, which predicted a monthly national average for the fuel of $3.53 for October — matching the current price. The forecast also called for an average of $3.36 a gallon for November and $3.17 for December.

GasBuddy doesn’t have a forecast for 2024 yet, but prices may look similar to this year, as long as the situation in the Middle East doesn’t further crumble,” said De Haan.

View on diesel

Diesel, however, is another story.

Price for that fuel have dropped by 85.5 cents a gallon from a year ago to Friday’s $4.465 level, GasBuddy data show.

U.S. retail diesel prices are sharply lower than a year ago.

GasBuddy

While down from a year ago, diesel prices are currently at a “very high level historically” because global supply is low, said DTN’s Milne.

At this time in 2022 diesel fuel inventory was even tighter than it is now, and Europe was heading into winter without Russian natural gas after it was cutoff following the invasion of Ukraine, he said.

That led to a spike in natural-gas prices and prices for gasoil, a European heating oil, also surged, lifting heating oil and diesel prices globally, explained Milne.

Like gasoline, diesel prices could move “sharply higher if the war in Israel expands, and oil flow is put at greater risk,” he said.

De Haan, meanwhile, said diesel prices could climb closer to $5 a gallon if there’s a “squeeze,” with relief then [coming] in the spring/summer” seasons.

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October 20, 2023
Will electric cars disappoint environmentalists?

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The Manhattan Institute’s Mark Mills and InOrbis CEO Rosario Fortugno debate the resolution, “Between now and 2035, electric vehicles in the consumer market will disappoint environmentalists by remaining a product bought mainly by the well-heeled minority.”

Taking the affirmative is Mills, a Manhattan Institute senior fellow, a faculty fellow at Northwestern University’s engineering school, and a partner in Montrose Lane, an energy-tech venture fund. He is author of the book The Cloud Revolution: How the Convergence of New Technologies Will Unleash the Next Economic Boom and a Roaring 2020s.

Taking the negative is Fortugno, the CEO of InOrbis, a company that works to develop technologies for electric vehicle fleet management, autonomous vehicles, and machine learning. He blogs at ApplyingAI.com on the topics of free markets, electric vehicle adoption, and the benefits of artificial intelligence.

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Gene Epstein

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October 20, 2023
Subprime car-loan rates are hitting 17%-22%. Should investors be worried?

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Many borrowers with subprime credit have been paying 17% to 22% rates on new auto loans this year as the Federal Reserve’s inflation fight takes a toll on lower-income households.

That borrowing range reflects the average cost, or annual percentage rate, for a loan in recent subprime auto bond deals, according to Fitch Ratings, an increase from last year’s average APR of closer to 14%.

Higher borrowing costs can mean households need to put more of their income into monthly auto payments, ramping up the risks of late payments, defaults and car repossessions. Those risks, however, have yet to make investors flinch.

The subprime auto sector already has cleared almost $30 billion of new bond deals this year, according to Finsight, a pace that’s slightly below volumes from the past two years, but still above historical levels since 2008.

The subprime auto bond market is revved up, even as borrowing rate soar

Finsight

“I do believe there has to be a reckoning if rates stay higher for longer,” said Tracy Chen, a portfolio manager on Brandywine Global Asset Management’s global fixed income team.

Figuring out when the tumult might hit has proven difficult. Instead of slowing, the economy has shown resilience despite the Fed lifting its policy rate to a 22-year high of 5.25% to 5.5%. The central bank also indicated it might need to keep rates higher for some time to fight inflation. Longer-duration bond yields, as a result, have pushed higher, but still hover below 5%.

Subprime standoff

Inflation eats away at paychecks, especially those of lower-wage workers, a problem the Fed hopes to solve by keeping borrowing rates elevated. A gauge of inflation out Thursday showed consumer prices were steady at a 3.7% yearly rate in September, above the Fed’s 2% target.

“This recession has been on everyone’s mind for the past three years,” Chen said. While she thinks the economy will likely contract in the middle of 2024, a lot of damage could be done before that. “The longer rates stay here, the harder the landing.”

For now, the Fed is widely expected to hold rates steady at its next meeting in November. “Fed policy makers are now shifting their focus from ‘how high’ to raise the policy rate to ‘how long’ to maintain it at restrictive levels,” said EY Chief Economist Gregory Daco, in emailed comments.

Stocks were flat to slightly higher in choppy trade at midday Thursday after the inflation report came in hotter than forecast, with the Dow Jones Industrial Average
DJIA
near unchanged and the S&P 500 index
SPX
up 0.2%.

Past recessions and the burden of higher interest costs typically hit lower-wage workers harder, making subprime credit a canary in the coal mine for the rest of financial markets. Even so, investors in subprime auto bonds have yet to demand significantly more spread, or compensation, to offset potentially higher defaults among these borrowers.

Related: Subprime auto defaults on path toward 2008 crisis levels, say portfolio managers

Take the AAA rated 2-year slice of a new bond deal issued in mid-October by one of the subprime auto sector’s biggest players. It priced at a spread of 115 basis points above relevant risk-free rate, up from a spread of 90 basis points on a similar bond issued in August, according to Finsight, which tracks bond data.

When factoring in Treasury rates, the yield on the bonds bumped up to about 6% and 5.7%, respectively. The shot at higher returns and low delinquencies in subprime auto bonds have likely helped with investor confidence. The rate of subprime auto loans at least 60-day past due in bond deals was about 5% in September, according to Intex, up from historic lows around 2.5% two years ago.

“I think people still feel confident,” Chen said of subprime auto bonds. When putting a recent bond out on a Wall Street list to gauge its market value, she said bids come in right away.

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October 12, 2023
UAW says 8,700 Ford workers have walked off the job at Louisville truck plant

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In what was described as an unannounced decision, the United Auto Workers union has called a strike at Ford Motor Co.’s
F,
+0.41%
large Kentucky Truck Plant in Louisville, the union said Wednesday.

The union, in a statement, said that 8,700 union members had walked off the job at 6:30 p.m. Eastern at the plant, which Ford described as its biggest. The union said that the move marked a “new phase” in its ongoing strike, in which select workers have been called on at different times to walk out.

In a statement, UAW President Shawn Fain said Ford “has not gotten the message.”

“It’s time for a fair contract at Ford and the rest of the Big Three,” Fain said. “If they can’t understand that after four weeks, the 8,700 workers shutting down this extremely profitable plant will help them understand it.”

Ford, in a statement, called the decision “grossly irresponsible” and said it had made an “outstanding offer” in the negotiations, which involve the union and the Big Three auto makers.

Ford said the vehicles made at the factory — the F-Series Super Duty, the Ford Expedition and the Lincoln Navigator – bring in $25 billion a year in sales.

The automaker said the UAW’s decision “carries serious consequences for our workforce, suppliers, dealers and commercial customers.”

Fain will host an event on Facebook on Friday to give updates on bargaining. Shares of Ford fell nearly 2% after hours.

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October 11, 2023
GM stock sinks to 3-year low after report that faulty air-bag parts may lead to massive recall

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General Motors Co.’s stock ended at its lowest in three years on Thursday following a news report saying that the carmaker may face a massive recall in connection with defective air-bag inflators.

The Wall Street Journal reported Thursday that at least 20 million GM
GM,
-2.35%
vehicles are built with the potentially dangerous air-bag part, made by auto supplier ARC Automotive of Tennessee.

GM stock fell 2.4% to close at $30.31, its lowest since Sept. 30, 2020, when it closed at $29.59. The stock has been down for five straight sessions, and off more than 8% in the period.

The report, citing people familiar with the matter, said that GM would be among the “most exposed” automaker to the recall, which involves 52 million inflators made by ARC.

At least two people have been killed and several others injured after the inflators exploded with too much force during a crash, sending shrapnel flying, the report said.

The National Highway Traffic Safety Administration has not yet released how many vehicles would be in the recall, or the specific models that would be affected, it said.

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October 5, 2023
Rivian shares sink after preliminary sales estimates, plan to offer $1.5 billion in convertible notes

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Shares of Rivian Automotive Inc. slid in the extended session Wednesday after the EV maker issued preliminary quarterly sales estimates that were on par with Wall Street’s forecasts and announced plans to offer $1.5 billion worth of convertible notes.

Rivian
RIVN,
+9.22%,
in a filing, gave a preliminary third-quarter sales estimate of between $1.29 billion and $1.33 billion. Analysts polled by FactSet expected sales of $1.31 billion. The company estimated it had cash, cash equivalents and short-term investments of $9.1 billion as of Sept. 30.

Rivian also said it plans to offer, subject to market and other conditions, $1.5 billion worth of “green” convertible senior notes due in 2030. That would be in a private offering to “qualified institutional buyers,” Rivian said.

The plan would give buyers the option to purchase up to an additional $225 million in notes. The notes will be senior, unsecured obligations of Rivian. Noteholders will have the right to convert their notes in certain circumstances and during specified periods, the company said.

Shares fell 8% after hours.

Rivian stock ended the regular trading day up 9.2%, and so far this year has gained around 28%, which compares with an advance of around 10% for the S&P 500 index
SPX,
+0.81%.

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October 4, 2023
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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September 28, 2023
Tesla sued for racial discrimination, retaliation by EEOC

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Tesla Inc. was sued Thursday by the U.S. Equal Employment Opportunity Commission, which alleges the EV maker violated federal law by “tolerating widespread and ongoing racial harassment of its Black employees” at its Fremont, Calif., plant, and by retaliating against those opposing the harassment.

Black employees at the Fremont factory, Tesla’s
TSLA,
+2.44%
first assembly plant and for years its only vehicle-manufacturing facility in the U.S., “have routinely endured racial abuse, pervasive stereotyping and hostility” as well as having racial slurs hurled at them, the lawsuit alleges.

“Slurs were used casually and openly in high-traffic areas and at worker hubs,” the EEOC said. Black employees “regularly” saw graffiti with slurs, swastikas, threats and nooses throughout the facility, including on desks, in bathroom stalls and elevators, according to the suit.

Tesla, which disbanded its media relations team during the pandemic, did not immediately return a request for comment. In August, SpaceX, another one of Tesla’s Chief Executive Elon Musk’s companies, was sued by the Justice Department over its hiring practices.

Employees who spoke up against the racial hostility suffered retaliations that included being fired or transferred, the EEOC said.

The lawsuit was filed in the U.S. District Court for the Northern District of California after attempts at reaching a settlement before the litigation. It seeks compensatory and punitive damages as well as back pay for the affected workers. It also seeks changes to Tesla’s employment practices to prevent discrimination in the future, the EEOC said.

A Black Tesla employee was awarded $137 million in 2021 by a jury that agreed he was subjected to racial harassment at the Fremont factory, but in April 2022 a judge reduced the award to $15 million.

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

The first Model S rolled out of the Fremont factory in 2012, and the plant now makes Model S, Model 3, Model X and Model Y vehicles, with capacity to make more than a million vehicles a year as well as energy products and battery cells.

Tesla opened up its second U.S. vehicle-making factory in the Austin, Texas, area in the spring of 2022.

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September 28, 2023
Betting markets now see a Trump 2024 win as likelier than a Biden victory — and give Newsom better chances than Trump’s GOP rivals

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Donald Trump’s chances of winning the 2024 presidential election appear to be improving this week, as betting markets tracked by RealClearPolitics put them just ahead of President Joe Biden’s for the first time this year — at 32%, compared with 30%.

That’s illustrated in the below chart, which also shows Democratic Gov. Gavin Newsom of California with an 8% chance of getting elected president, even though he has ruled out a White House run repeatedly. Newsom’s chances are ahead of those for Trump’s rivals for the Republican nomination, such as Florida Gov. Ron DeSantis and former U.N. Ambassador Nikki Haley.

To be sure, betting markets got last year’s midterm elections wrong and can be poor predictors for several reasons. The clientele for political gambling tends to be right-leaning and male, and betting markets can get caught up in narratives as well as skewed by unreliable polls, one expert in political gambling and prediction markets told MarketWatch last year.

Trump’s chances of winning the 2024 presidential election have hit a new high for the year, as Biden seems to fade a bit, DeSantis has seen a big drop, and some bettors like Michelle Obama.

RealClearPolitics

Trump’s improved chances come as he skipped a GOP primary debate for a second time, instead giving a speech Wednesday night directed at Michigan auto workers in which he suggested that none of the debaters deserved to become his vice president.

The former president has 56.6% support in national primary polls, according to a RealClearPolitics moving average of surveys. He has been indicted this year in two separate election-interference cases, a hush-money case and a classified-documents case, but many Republican voters have rallied around him.

DeSantis is a distant second in those polls with 14.4% support, followed by Haley at 5.8%, entrepreneur Vivek Ramaswamy at 5.1% and former Trump VP Mike Pence at 4.2%. In aggregate, the non-Trump GOP candidates get 35.9% support in RCP’s average of national polls, compared with Trump’s 56.6%. In RCP’s average of surveys for Iowa, which holds the first major contest in the GOP primary, they get 46.4% support vs. his 49.2%.

Now read: DeSantis says at debate that Trump’s spending ‘set the stage for the inflation that we have now’

See also: Gas tax a target at Republican debate. Here’s what you’re paying now.

Plus: Instagram, other social media should be banned for anyone 16 and under, Ramaswamy says at GOP debate

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September 28, 2023
Here’s how the Republican presidential candidates say they’ll whip inflation
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Inflation remains a top concern among Americans, so what do the Republicans seeking President Joe Biden’s job say they’ll do about it?

MarketWatch asked the 2024 GOP White House hopefuls to give at least three ways that they would address the elevated prices that have blown up many household budgets.
Most campaigns provided responses, while some didn’t but have offered proposals in other venues. See what they’re all planning below.

The economy is the No. 1 issue for Republican voters, according to a recent Wall Street Journal poll, which found 36% citing the economy generally and an additional 10% citing inflation.

MarketWatch contacted the eight contenders who took part in their primary’s first debate, along with former President Donald Trump, who skipped the debate, and two relatively well-known contenders who failed to qualify for the first debate, Larry Elder and former Congressman Will Hurd. They are listed below in order of their ranking in the latest polls, based on a RealClearPolitics moving average.

Inflation was low when Trump became president, with prices rising less than 2% a year. That was even considered a problem before the COVID-19 pandemic, with inflation often characterized as stubbornly or persistently low. Inflation began to spike in 2021, shortly after Biden took office, due to a global shortage of goods and a huge rebound in consumer demand following the pandemic’s early stages. Economists say massive stimulus by both the Trump and Biden administrations as well as low interest rates fostered by the Federal Reserve helped to push inflation to a 40-year high.

Biden has stressed that inflation, as measured by the consumer-price index, has “fallen by around two-thirds,” and he and his team have talked up their efforts to lower costs for prescription drugs and insulin, to crack down on junk fees for a range of services, and to use the Strategic Petroleum Reserve to lower gasoline prices. Biden’s re-election campaign didn’t respond to MarketWatch’s request for comment.

Donald Trump

“I would get inflation down,” Trump said in a recent interview with NBC’s “Meet the Press,” while saying that “we did a great job with inflation.” His campaign pointed MarketWatch to a number of policy proposals in which Trump himself is quoted.

Former President Donald Trump walks over to speak with reporters before departing from Atlanta’s airport last month.

AP
- The former president says he’ll rein in what he calls Biden’s “wasteful spending,” which Trump says is key to stopping inflation. Trump is proposing to use what’s known as impoundment authority to reduce federal spending. That term refers to the ability of a president to withhold congressionally appropriated funds from their intended use, according to the Committee for a Responsible Federal Budget.
- Trump also calls for boosting energy output. “When I’m back in the White House, I will immediately unleash energy production, slash regulations, like I did just three years ago, and repeal Biden’s tax hikes to get inflation down as fast as possible, and it will go quickly, so that interest rates can get back under control,” Trump says on his campaign website. “I would get inflation down, because drill we must,” he told “Meet the Press.”
- A Trump spokesman did not respond when asked for specifics about which Biden-approved tax increases Trump would repeal. The former president and his advisers, meanwhile, have reportedly discussed deeper cuts to both individual and corporate rates that would build on the 2017 Tax Cuts and Jobs Act.
Ron DeSantis

Florida Gov. Ron DeSantis, says a spokesman, “will reduce inflation by, among other measures, tackling government spending, unleashing domestic energy and removing burdensome Biden administration regulations.”

Florida Gov. Ron DeSantis speaks in July during a press conference in West Columbia, S.C.

AP Photo/Sean Rayford
- In his economic plan, DeSantis leans heavily into energy policy for addressing inflation. “DeSantis will unleash our domestic energy sector, modernize and protect our grid and advance American energy independence. This will not only increase our economic and national security while reducing inflation, [but] it will also help fuel a manufacturing renaissance that will create jobs, revitalize our communities and improve our standard of living,” says his plan.
- He told “CBS Evening News with Norah O’Donnell” that, as president, he would “stop spending so much money. We need a president that’s going to be a force for spending restraint, because that’s one of the root causes, with Congress spending so much.” He criticized both Democrats and Republicans for government spending.
Vivek Ramaswamy

Republican presidential candidate Vivek Ramaswamy speaks in April at an event in Iowa.

AP

“This isn’t complicated,” entrepreneur and author Vivek Ramaswamy said in a recent post on X. “Fight inflation, unleash growth by taking the handcuffs [off] the U.S. energy sector & dismantling the regulatory state.” His campaign didn’t respond to MarketWatch’s request for comment, but his campaign website offers the following proposals:
- “Drill, frack & burn coal : abandon the climate cult & unshackle nuclear energy.”
- “Launch deregulatory ‘Reagan 2.0’ revolution: cut > 75% headcount amongst U.S. regulators.”
- Ramaswamy is also calling for dramatically changing the Federal Reserve, by ending the central bank’s dual mandate of keeping inflation low and maintaining full employment. “Limit the U.S. Fed’s scope: stabilize the dollar
  DXY
  & nothing more,” his campaign site says.
Nikki Haley

A spokesman for Nikki Haley’s campaign pointed to a Fox Business interview on Wednesday in which she called for ending the federal gas tax and cutting spending, as well as to her speech Friday in New Hampshire on her economic plan.

Republican presidential candidate Nikki Haley is a former U.S. ambassador to the United Nations and former South Carolina governor.

Getty Images
- “We want to eliminate the federal gas tax completely,” Haley told Fox Business. “We have to get more money in our taxpayers’ pockets.” That tax helps pay for highways, but she said the system isn’t working, echoing a point that some policy analysts have previously made. Biden pushed for temporarily suspending the federal gas tax in 2022, but Congress didn’t provide sufficient support for his proposal. In her economic speech, Haley also promised to cut income taxes for working families and make permanent the tax cuts that small businesses scored in 2017’s GOP tax overhaul.
- The former U.S. ambassador to the United Nations said members of Congress are “spending like drunken sailors,” as she promised to reduce the federal government’s outlays. “I will veto any spending bill that doesn’t take us back to pre-COVID levels,” she told Fox Business, referring to budgets that date to before the onset of the coronavirus pandemic in March 2020.
- Haley in her speech Friday pledged to support the U.S. energy industry, as she suggested that Washington has been “stifling it.” She said: “We’ll drill so much oil and gas, families will save big on their utility bills.”
Mike Pence

A spokesman for Pence’s campaign pointed to the former vice president’s plan for “ending inflation,” which calls for actions such as reducing the federal government’s spending and changing the Federal Reserve’s job description.

Former Vice President Mike Pence served as governor of Indiana and as a congressman before becoming Donald Trump’s running mate in 2016.

AP
- A Pence administration would “end runaway deficits by freezing non-defense spending, eliminating unnecessary government programs, repealing over $3 trillion in new spending under Biden, and reforming mandatory programs that drive our debt,” the plan says. Earlier this year, he urged “commonsense and compassionate” reforms for programs such as Social Security and Medicaid.
- Pence wants to end the Fed’s dual mandate, which calls for the U.S. central bank to focus on full employment and stable prices. “Trying to serve two, often contradictory goals has led to wild fluctuation in rates,” his plan says, adding that it’s better to “leave employment policy to the president and Congress.”
- The former vice president’s plan said he aims to bring supply chains and production “back home,” and that would happen by “removing regulatory burdens, enacting pro-growth tax policies, and ensuring access to abundant American energy.” In other words: “We will fight inflation by making America the best place to do business again.”
- Similar to his 2024 GOP rivals, Pence blasts Biden’s energy policies, though some of the Democratic incumbent’s stances, such as his approval of the Willow drilling project in Alaska, have also been criticized by environmental groups. Pence’s plan says: “It is time to reverse Biden’s attack on American energy by restarting oil and gas leasing on federal lands, opening the Arctic and offshore regions for exploration
  XOP,
  approving safe transportation of oil and gas, mining rare earth minerals, and rejecting climate change hysteria that is causing U.S. energy
  XLE
  production to fall.”
Chris Christie

Former New Jersey Gov. Chris Christie addresses a New Hampshire audience in April.

AP Photo/Charles Krupa

Chris Christie’s White House campaign didn’t respond to MarketWatch’s requests for comment, but the former New Jersey governor has emphasized that reducing government spending will help tame inflation.

“The out-of-control government spending has created this inflation,” Christie said in June during a CNN town hall. “I mean, even Larry Summers, who I don’t agree with much on, former Democratic Treasury secretary, warned Joe Biden, ‘Don’t do this spending. It’s going to cause the inflation.’ So, first, we need to bring spending down, and we’ve talked about that before.”

Related: Larry Summers has a new inflation warning

Tim Scott

U.S. Sen. Tim Scott pointed to reducing the federal government’s spending and repealing one of Biden’s signature legislative packages, when asked about how he would address inflation.

Tim Scott, a U.S. senator from South Carolina, speaks last month during the presidential debate in Milwaukee.

Getty Images
- Scott, from South Carolina, said in a statement that he would aim to “snap non-defense discretionary spending back to the pre-COVID 2019 baseline.” He described that as stopping Democrats from “turning the temporary pandemic into permanent socialism.”
- Scott said he would rescind the Inflation Reduction Act, which is Democrats’ big economic package aimed at addressing climate change, capping drug costs and raising hundreds of billions of dollars through taxes on corporations. “The Inflation Reduction Act actually increased inflation and the only thing it reduced was money in our pockets,” he said in his statement. “Cutting that off and restoring tax cuts and eliminating the tax increases would go a long way to having the kind of stimulative impact in our economy and controlling spending.”
- Scott called for stronger economic growth. “We have to also grow our economy somewhere near 5% consistently,” he said, adding that could create 10 million jobs. The U.S. economy grew by nearly 6% in 2021 after contracting in 2020 as COVID hit, then it expanded by about 2% in 2022.
Related: Republican presidential candidate Tim Scott says he wants to put the focus on tax cuts

Asa Hutchinson

Former Arkansas Gov. Asa Hutchinson blames “excessive federal spending” for leading to inflation when giving speeches, and outlines a plan for “fiscal responsibility” on his campaign site.

Asa Hutchinson, governor of Arkansas from 2015 until this year, speaks at an Iowa event in April.

Scott Olson/Getty Images
- “Restore discipline by reducing federal government size, cutting spending, balancing the budget, and lowering the deficit to tame inflation,” it states.
- When Hutchinson was governor, he signed a $500 million tax-cut package, saying “it could not come at a better time with the continued challenge of high food and gas prices.” That was in August 2022. On his campaign website, he repeats a call to cut taxes and “reduce regulations to boost the private sector and enhance wages for American workers.”
Hutchinson’s campaign did not respond to a request for comment from MarketWatch.

Doug Burgum

North Dakota Gov. Doug Burgum, a GOP presidential hopeful, speaks at the Iowa State Fair in August.

Brandon Bell/Getty Images

North Dakota Gov. Doug Burgum’s website says that as president he would “get inflation under control, cut taxes, lower gas prices
RB00,
+0.31%,
reduce the cost of living and help people realize their fullest potential.” It doesn’t provide specifics.

A spokesman for Burgum’s White House campaign didn’t respond to MarketWatch’s requests for comment. A spokesman reportedly told the New York Times that the campaign will roll out its vision and plans on its own timeline.

Larry Elder

Larry Elder, a conservative radio host and a gubernatorial candidate in California in the failed 2021 recall of Democratic incumbent Gavin Newsom, said he views energy and tax policy and a constitutional amendment as ways to whip inflation.

Larry Elder is a conservative radio host and former gubernatorial candidate in California.

AP
- “Reverse the war on oil
  CL00,
  +0.93%
  and gas
  NG00,
  -2.65%
  ; permit drilling in Anwar [Arctic National Wildlife Refuge]; authorize the Keystone Pipeline; reverse the Biden restrictions on drilling on federal lands; and encourage nuclear energy
  NLR,
  ” Elder said in a statement.
- “Encourage an amendment to the Constitution to set spending to a fixed percent of the GDP,” he also said.
- Elder said the reduction in spending forced by that constitutional amendment would “coincide with a steep reduction in personal and corporate income taxes,” offering further help to Americans with stretched budgets.
Will Hurd

2024 Republican presidential hopeful Will Hurd, a former Texas congressman, speaks in Iowa in July.

AFP via Getty Images

Former U.S. Rep. Will Hurd of Texas announced his candidacy in June but so far hasn’t made it to the debate stage. In his campaign-launch video, he labeled inflation “still out of control.”
- In a post on X in June, Hurd called for reining in spending. “You cannot be putting government funds into, at a time where you’re seeing the rising inflation,” he said.
- And he said tax hikes are a nonstarter when inflation is high. “The worst time to talk about increasing taxes is when everybody’s hurting from inflation.”
- Hurd also said the deficit should be addressed, to “start bending the curve back on the debt.”
Hurd’s campaign did not respond to a request for comment from MarketWatch.

Now read: Republican presidential debate: Candidates could win with a clear economic message about the ‘crisis among working people’

And see: As Biden joins UAW picket line, poll shows Democrats’ edge over GOP on ‘caring about people like me’ has vanished

Jeffry Bartash contributed.
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September 26, 2023
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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September 25, 2023
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

Uncredited

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September 22, 2023
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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September 22, 2023
Here’s what Germany should be called instead of the ‘sick man of Europe,’ says Deutsche Bank

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The hurdles facing Germany’s economy in recent years have been plentiful, but the “sick man of Europe,” label is unfair, say Deutsche Bank strategists, who see promise for investors in the region’s biggest economy.

Contrary to the rest of the eurozone, Germany has only managed to get back to its pre-COVID growth level, yet a title of “sore athlete” is more accurate, say Maximilian Uleer, head of European equity and cross asset strategy and Carolin Raab, European equity and cross asset strategists, in a note to clients that published Friday.

“Germany has been facing multiple challenges, from rising energy costs, its high manufacturing exposure, to weak demand from its export destinations. Some of the challenges are ‘homemade’ and might persist, while others could start to unwind and soon turn into opportunities,” the pair said.

Germany’s economy is the worst-performing of the developed world this year, with both the International Monetary Fund and European Union forecasting contractions in growth.

Read: Germany’s economy struggles with an energy shock that’s exposing longtime flaws

But the strategists say economic growth is a poor proxy for German equity performance. The German DAX index
DX:DAX
is up 18% since the end of 2019. DAX constituents generate just 18% of their revenues domestically, compared to 22% from the U.S. and 15% from China.

Across the broader HDAX index of 100 members, manufacturing, information technology and financial services are the main contributors to equity performance. That’s as public services, trade, business services and real estate, all of which contributed significantly to GDP over the past four years, are underrepresented in the indexes.

Germany has also managed to grow its real GDP by 26% over the past 20 years , and keep its debt-to-GDP ratio stable, while the eurozone (including Germany) has seen that debt ratio climb 30% since 2003. The short term has seen lower growth since COVID-19, and rising leverage owing to fiscal support measures to mitigate the pandemic and the war in Ukraine.

Again, the strategists see a silver lining. “Going forward, in our view, Germany has bigger leeway with regards to its fiscal support capacity, as its absolute debt/GDP ratio remains one of the lowest among the eurozone members,” said Uleer and Raab.

*Since 2003: Q3 2003-Q2 2023 / since Covid: Q4 2019-Q2 2023. Source: Bloomberg Finance LP, Deutsche Bank Research 09/20/2023

Among the country’s big hurdles is rising energy costs, with the pair noting that the country’s net-zero goals are laudable, but pose a “substantial challenge” to its energy-intensive industries. Power prices remain substantially higher than three years ago and are double the cost of those in the U.S.

Also read: Inside Germany’s industrial-sized effort to wean itself off Putin and Russian natural gas

“This price differential, combined with stronger fiscal support for energy-intensive companies in the U.S. via the Inflation Reduction Act, weigh on the competitiveness of German corporates,” said the strategists.

As for opportunities, China’s reopening remains a positive for DAX companies, though that country also seems to be making slow progress. Chinese households are sitting on massive savings still waiting to be spent, said the strategists. They advise investors to wait for data that confirms a stabilization of the country’s bumpy property market before they would turn more positive.

Overall, Deutsche Bank expects inflation to normalize in the coming 12 months and low growth in 2024, but a rebound in 2025.

Plus: A 1-liter stein of beer at Munich’s famed Oktoberfest will cost nearly $15 this year

And what’s priced into the DAX already? Even after a gain of 12% this year so far — French
FR:PX1
and Greek stocks
GR:GD
— are beating Germany by a respective 20% and 30% — the index is still cheap and trading at a 20% discount to its 10-year average on a forward one-year price/earnings basis. Germany can count on stronger U.S. data, even if Europe continues on a weak path.

“We expect the DAX to hold up in 2024, and do not forecast the index to underperform, despite lower German GDP growth as compared with the rest of the eurozone,” they said.

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September 22, 2023
VinFast reports half-a-billion-dollar loss for its second quarter

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VinFast Auto Ltd. late Thursday reported a second-quarter loss of half a billion dollars, saying it delivered more than 9,000 electric vehicles globally for sales of about $315 million in the period.

Vietnamese EV maker VinFast VFS went public in August through a SPAC deal, and the stock more than tripled by the end of its first session, sending the company’s market valuation soaring to more than $200 billion.

VinFast’s…

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September 21, 2023
UAW sets deadline for further possible strikes

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United Auto Workers President Shawn Fain said Monday that if the union has not made substantial progress toward reaching an agreement with the Big Three automakers by Friday at noon Eastern time, it is prepared to call for additional strikes. About 13,000 auto workers from three UAW plants in three different states are currently on strike at Ford Motor
F,
-2.14%,
General Motors
GM,
-1.80%
and Stellantis
STLA,
-1.61%,
and the union has said it is prepared to call on more workers to walk off their jobs if necessary. “We’ve been available 24/7 to bargain a deal that recognizes our members’ sacrifices and contributions to these record profits,” Fain said in a livestreamed update. “Still the Big Three failed to get down to business.” A GM spokesman said “we’re continuing to bargain in good faith with the union to reach an agreement as quickly as possible for the benefit of our team members, customers, suppliers and communities across the U.S.” An earlier Stellantis statement said the company resumed negotiations with the union Monday, which the union confirmed. “We continue to listen to the UAW to identify where we can work together and will continue to bargain in good faith until an agreement is reached,” the statement said. Ford did not immediately respond to a request for comment.

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September 18, 2023
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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September 17, 2023
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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September 15, 2023
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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September 15, 2023
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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September 14, 2023