Tesla Model Y, equipped with FSD system. Three front facing cameras under windshield near rear view mirror.
Mark Leong | The Washington Post | Getty Images
Tesla drivers in the U.S. were involved in accidents at a higher rate than drivers of any other brand of vehicle over the past year, according to a new study of 30 automotive brands by LendingTree.
The researchers analyzed quotes from people looking to insure their own vehicles, and did not include accident or incident data involving drivers of rental cars, a spokesperson for LendingTree told CNBC by email on Tuesday.
The study said, “It’s hard to nail down why certain brands may have higher accident rates than others. However, there are indications that certain types of vehicles attract riskier drivers than others.”
With 24 accidents per 1,000 drivers during the period from mid-November 2022 to mid-November 2023, Tesla drivers clocked in with the worst accident rate in the U.S., followed by Ram drivers who were involved in about 23 accidents, and Subaru drivers who were involved in about 21 accidents per 1,000 drivers during the year.
By contrast, drivers of Pontiac, Mercury and Saturn vehicles were all involved in fewer than 10 accidents per 1,000 drivers during the period of the study.
BMW drivers were the most likely to engage in driving under the influence, the researchers found. They were involved in about 3 DUIs per 1,000 drivers in a year, about twice the rate of DUIs among Ram drivers, who were the second worst drivers in this regard.
For driving incidents overall, which included not only accidents but also DUIs, speeding, and other citations, Ram drivers had the highest incident rate, while Tesla drivers had the second-highest incident rate in the U.S.
Accidents, DUIs, speeding and other citations can all lead to higher insurance rates for drivers. Lending Tree found that one speeding ticket can bump up the price of vehicle insurance by 10% to 20%, accidents can increase rates by around 40%, while DUIs can lead to a rate increase of 60% or more.
The Lending Tree findings about drivers with the highest rates of accidents and incidents by vehicle brand followed an Autopilot software recall by Tesla in the U.S. that impacts some 2 million of the company’s electric vehicles.
Tesla EVs come standard with an advanced driver assistance system (ADAS) marketed as Autopilot. The company sells more extensive driver assistance packages called Enhanced Autopilot and Full Self-Driving (or FSD) options in the U.S. as well. Those who pay for FSD can also test software features that are not fully debugged yet on public roads.
Tesla’s ADAS technology is meant to help drivers with steering, acceleration and braking. CEO Elon Musk claimed in 2021 that a Tesla driver using Autopilot was about 10 times less likely to crash than a driver of the average car. While Tesla publishes its own safety reports, the company has not allowed third-party researchers to evaluate their data to confirm or debunk such claims.
Musk has also touted Tesla’s systems as if they are already, or will soon be, safe to use hands-free — yet Autopilot and Full Self-Driving systems still require Tesla drivers to remain attentive to the road and ready to steer or brake in response at all times.
A two-year investigation by the National Highway Traffic Safety Administration (or NHTSA) found that Tesla’s Autosteer feature, which is part of Autopilot and FSD, had safety defects that may cause an “increased risk of a collision.” NHTSA said it found that Tesla drivers can too easily misuse the cars’ Autosteer feature and may not even know whether it is engaged or switched off.
According to filings with the federal vehicle safety regulator, Tesla did not concur with NHTSA’s findings but agreed to conduct a voluntary software recall, and promised to make safety improvements to Autosteer with “over-the-air” updates. The updated software will nag drivers to pay attention to the road more often, and lock drivers out of using Autopilot if Tesla’s systems detect irresponsible use.
Tesla did not respond to a request for comment about the Lending Tree study and why the accident and incident rates may have been so high among Tesla drivers in the U.S. over the past year.
Read the full Lending Tree study of the best and worst drivers in the U.S. by auto brand, here.
CNBC’s Jim Cramer said the Federal Reserve’s decision to hold rates steady is a win for the bulls and is a sign the tightening cycle is coming to an end. With inflation easing and the potential for rate cuts next year, Cramer said the economy has managed a soft landing and more sectors are ready to soar.
“Sure, the easy money has been made in a couple of sectors — mostly tech — but now it’s time for a bunch of other sectors to shine, the economically sensitive ones that were supposed to be crushed by an inevitable recession,” Cramer said. “These stocks aren’t liked. May I suggest you cotton to them because the plane has landed, our seatbelts are unbuckled, we’re going down the gangway, calling an Uber and getting the heck out of the airport.”
The Fed held its key interest rate steady for the third straight time, and committee members indicated there could be at least three rate cuts in 2024.
Some on Wall Street worry this Fed action suggests there’s a recession on the horizon, but Cramer said it would be wise to ignore this outlook, adding that a strong labor report on Friday indicates the contrary. To Cramer, potential rate cuts would mean “smooth sailing” for stocks, with investors becoming less interested in bonds.
Although the market has been up for weeks, Cramer said there’s still money to be made in cyclical stocks and sectors that benefit from lower interest rates such as homebuilders, autos and financials. Cramer suggested buying financials that have hit lows recently, including Bank of America, JPMorgan Chase and even regional banks that suffered after the banking crisis in March. He also named Caterpillar, Stanley Black & Decker, Ford and General Motors.
“Not only is the Fed no longer our enemy, it’s much more likely to become our pal, assuming the economy stays on its current, slower course,” Cramer said. “This is the about-face that the bulls were waiting for.”
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Disclaimer The CNBC Investing Club Charitable Trust holds shares of Caterpillar and Stanley Black & Decker.
DETROIT — As sales of all-electric vehicles grow more slowly than expected, major automakers are increasingly meeting their customers in the middle.
More and more companies are reconsidering the viability of hybrid cars and trucks to appease consumer demand and avoid costly penalties related to federal fuel economy and emissions standards.
The shifting strategies run counterintuitively to industrywide EV messaging of recent years. Many auto companies have begun to invest billions of dollars in all-electric vehicles, and the Biden administration has made a push to get more EVs on U.S. roadways as quickly as possible.
But hybrid vehicles — those with traditional internal combustion engines combined with EV battery technologies — could help the automotive industry lower fuel consumption and emissions in the short-term, while easing consumers into vehicle electrification.
Sales of traditional hybrid electric vehicles, or HEVs, such as the Toyota Prius, are outpacing those of all-electric vehicles in 2023, according to Edmunds. HEVs accounted for 8.3% of U.S. car sales, about 1.2 million vehicles sold, through November of this year. That share is up 2.8 percentage points compared with total sales last year.
EVs made up 6.9% of sales heading into December, or roughly 976,560 units, up 1.7 percentage points compared with total sales last year. Sales of plug-in hybrid electric vehicles, or PHEVs, accounted for only 1% of U.S. sales through November.
“There’s been so much talk over the past few years about the move toward electrification and sort of forgoing hybrids, but … hybrids are not dead,” said Jessica Caldwell, Edmunds executive director of insights. “There’s a lot of consumers out there that are interested in electrification, maybe not ready to go fully electric.”
Hybrids can also cost less and relieve many concerns typically associated with EVs such as range anxiety and lack of charging infrastructure. The average hybrid this year cost $42,381, according to Edmunds. That’s below the roughly $59,400 average for an EV; $60,700 for a PHEV; and $44,800 for a traditional vehicle.
Morgan Stanley earlier this month said Toyota Motor, Honda Motor and Hyundai Motor, including Kia, account for 9 out of 10 hybrid sales in the U.S. Representatives for those automakers said they are actively attempting to increase production and sales of hybrid vehicles in the U.S.
“While the transition to full battery electric transportation will take time, hybrids and plug-in hybrids will play an equally important role in Kia America’s near and mid-term goals,” Eric Watson, vice president of Kia America sales, said in a statement to CNBC.
And other companies, such as the Detroit automakers, are following suit.
The Detroit automakers have varying strategies for hybrid vehicles.
Ford Motor offers PHEVs but is leaning into HEVs, announcing plans in September to double sales of the V-6 hybrid model during the 2024 model year to roughly 20% in the U.S. It’s part of Ford CEO Jim Farley’s plans to quadruple the company’s production of gas-electric hybrids.
Ford’s hybrid sales through November of this year are up 23% over the same period in 2022 to more than 121,000 units, or 6.8% of its total sales through that point. In comparison, Ford’s EV sales are up 16.2% to roughly 62,500 units, accounting for 3.5% of its total sales.
Battery breakdown
Both hybrids and plug-in hybrids have a traditional engine combined with EV technologies. A traditional hybrid such as the Toyota Prius has electrified parts, including a small battery, to provide better fuel economy to assist the engine. PHEVs typically have a larger battery to provide for all-electric driving for a certain number of miles until an engine is needed to power the vehicle or electric motors.
Chrysler parent Stellantis, for its part, is leaning on PHEVs for its electrification strategy, before introducing a host of EVs starting next year. The company is the top seller of plug-in hybrid electric vehicles in the U.S., and the vehicles accounted for about 10% of the company’s third-quarter sales, led by Jeep Wrangler and Grand Cherokee SUVs.
But General Motors isn’t ready just yet to alter its EV plans, which include a goal to exclusively offer all-electric vehicles by 2035.
GM led the way for plug-in electric vehicles with the Chevrolet Volt during the 2010s. The company discontinued the vehicle in early 2019, citing demand and cost concerns.
Since then, the automaker has not offered another hybrid vehicle in the U.S. other than the recently launched Chevrolet Corvette E-Ray, a hybrid version of the famed sports car. GM does offer hybrids, including PHEVs, in China.
2024 Chevrolet Corvette E-Ray hybrid sports car
GM
“We still have a plan in place that allows us to be all light-duty vehicles EV by 2035,” GM CEO Mary Barra said Monday during an Automotive Press Association meeting in Detroit. “We’ll adjust based on where the customer is and where demand is. It’s not going to be ‘if we build it they will come.’ We’re going to be led by the customer.”
Her comments come after GM President Mark Reuss told CNBC in August that he was “flexible” regarding hybrids as a way of meeting federal regulations.
“If it means we have to do that by law, then we have to do that by law,” he said. “If there’s regulations that get dealt on us, then we’re going to look at everything in our toolbox to meet them.”
Major auto companies, including the Detroit automakers, were counting on EVs to assist in offsetting the emissions and low fuel economies of larger SUVs and trucks that can cost them hundreds of millions of dollars in fines by the federal government.
GM and Stellantis were forced to pay a combined $363.8 million in penalties for failing to meet federal fuel-economy standards for cars and trucks they produced in previous years, according to information published by the National Highway Traffic Safety Administration in June.
Such fines would significantly increase under current proposals by the Biden administration to improve fuel efficiency of vehicles and move toward EVs, according to automaker lobbying groups.
The American Automotive Policy Council, a group representing the Detroit Three, earlier this year said the automakers would face more than $14 billion in noncompliance penalties between 2027 and 2032 barring significant changes to their fleets’ overall fuel efficiency. U.S. automakers have separately warned the fines would cost $6.5 billion for GM, $3 billion at Stellantis and $1 billion at Ford, according to Reuters.
NHTSA in July proposed boosting fuel efficiency requirements by 2% per year for passenger cars and 4% per year for pickup trucks and SUVs from 2027 through 2032, resulting in a fleetwide average fuel efficiency of 58 mpg.
With EVs playing a lesser role than anticipated to boost those fleetwide averages, hybrids could save automakers millions.
“Even without electric vehicles, there’s an expectation that electrification of an internal combustion engine is going to be necessary to meet regulations anyway,” said Stephanie Brinley, principal automotive analyst at S&P Global Mobility.
The resurgence of hybrids is especially important for Toyota. The world’s largest automaker is considered the pioneer of traditional hybrids, with the Prius.
The company ironically became a target of environmental groups last year for its strategy to move forward with a mix of hybrids, PHEVs and EVs, which critics viewed as a lack of commitment to an all-electric future.
Toyota’s argument at the time, and still, is that it’s meeting consumer needs and planning for a more gradual global adoption that will naturally include some markets shifting to EVs sooner than others.
The company further says it takes into account the entire environmental impact of producing EVs compared with hybrid electrified vehicles, arguing it can produce eight 40-mile plug-in hybrids for every one 320-mile battery electric vehicle and save up to eight times the carbon emitted into the atmosphere.
“People are finally seeing reality,” Toyota Chairman and former CEO Akio Toyoda, who has been heavily criticized for the slower approach on EVs, said in Octoberregarding EVs, according to The Wall Street Journal.
Toyota CEO Akio Toyoda speaks during a small media roundtable on Sept. 29, 2022 in Las Vegas.
Check out the companies making headlines before the bell: Coinbase — Crypto-related assets surged after Bitcoin topped $40,000 for the first time this year. Coinbase jumped 7%, MicroStrategy gained 7% and Marathon Digital climbed 13%. Uber Technologies — The ride-hailing stock rose 4% after S & P Dow Jones Indices on Friday said it will enter the S & P 500, along with Jabil and Builders FirstSource . The three will replace Sealed Air , Alaska Air Group and SolarEdge Technologies . Shares of Jabil and Builders FirstSource were each higher by more than 2%. General Motors — Shares of the Cadillac and Chevrolet maker added 1.3% after an upgrade from Mizuho Securities, which said GM has bottomed and is poised for growth, particularly after the labor settlement with the United Auto Workers. Spotify Technology — Spotify rose more than 1% before the bell after the music streamer said it’s laying off 17% of its workforce as it looks to trim costs amid slower growth. The cuts total about 1,500 jobs, according to a CNBC source familiar with the matter. Spotify was 129% higher for the year as of Friday’s close. Alaska Air Group — The Seattle-based carrier slid 12% after agreeing to acquire Hawaiian Airlines for $1.9 billion. Alaska Air, which would pay $18 a share, would take on $900 million in debt as part of the deal. Hawaiian Holdings, Hawaiian Air’s parent, soared 182%. Alaska Air is also coming out of the S & P 500 index. Lululemon Athletica — Shares slipped 2.1% after Wells Fargo downgraded the athleisure company to equal weight from overweight. The bank said Lululemon’s positive catalysts have already played out, and forecasts more muted growth in 2024. Carvana — Shares jumped more than 5% after JPMorgan upgraded Carvana to neutral from underweight. The Wall Street firm said the online car retailer has bolstered productivity and made progress cutting costs. — CNBC’s Michelle Fox, Hakyung Kim, Pia Singh and Samantha Subin contributed reporting
A recall on your vehicle can derail your travel plans, depending on the issue at hand.
It’s an issue plenty of drivers have to consider this fall. Subaru, Volkswagen, General Motors, Mercedes-Benz, Toyota and Honda Motor are among the vehicle manufacturers that have issued recall notices with the National Highway Traffic Safety Administration in November — collectively affecting more than 2.3 million vehicles.
Among those, Toyota recalled nearly 1.9 million RAV4s to fix a battery issue that could potentially cause a fire. Honda Motor issued a recall last week on nearly 250,000 Honda and Acura vehicles due to a manufacturing error that may cause engine damage.
Luckily, “recalls are covered repairs by the automaker at no cost to the consumer,” said Tom McParland, contributing writer for automotive website Jalopnik and operator of vehicle-buying service Automatch Consulting. If a driver’s vehicle was recalled, they should make an appointment at their local dealer for the repair.
Yet, as many Americans prepare to drive long distances to see family and loved ones for the holiday weekend, travel plans may need to change depending on the severity of a recall affecting your vehicle, experts say.
Sometimes the government can compel automakers to recall their vehicles, but these notices usually occur after multiple people report the same problem or the automaker finds a flaw in the manufacturing process after an investigation, said Brian Moody, executive editor for Kelley Blue Book.
“It’s common for there to be a recall when there haven’t been any incidents yet,” said Moody.
Once the recall notice is issued, the manufacturer will send out mailed notifications to drivers, but those can arrive weeks or months later.
For example, the NHTSA notices say owner notification letters for Honda’s Nov. 2 steering control recall are expected to be mailed Dec. 18. For the Nov. 16 recall on damaged engines, drivers should expect to receive a notification on Jan. 2, 2024.
If you hear about a recall in the news, it can help to call the dealer or the automaker’s customer service line to determine if your car is affected, experts say.
“It’s not always that a recall applies equally to every single version of a model that you have. There may be limitations,” Moody said.
As to whether or not travel plans should be altered, the decision will depend on the nature of the recall, said McParland.
“If the recall says possible transmission failure, that’s a lot more risky for long-distance travel versus a glitchy navigation system,” McParland said.
If you decide to rent a car instead of driving your own due to a recall notice, it’s unlikely to be reimbursed by the automaker.
“Usually rentals are not covered” as part of the recall repair, McParland said.
While some insurance policies may have a breakdown coverage and may provide rentals if the vehicle is in the shop for a major recall service, it is not the norm.
“It’s worth calling your carrier to ask,” added McParland.
It is more common for luxury automakers to provide their customers with loaner cars. Otherwise, it is up to the individual dealership or the manufacturer’s terms of sale, Moody said.
Here are three tips to help drivers navigate recalls:
1. Figure out if your car is affected
“There is a government database where folks can look up if their car is impacted by the recall,” McParland said. Drivers can put in their VIN into the NHTSA site. It will pull up all the recalls your car model has had, said Moody.
To see if the recall was already addressed, you can either check the government website or look through the manufacturer site, said Moody.
Drivers can also look into different online resources in addition to the government data, Moody said. Other website services can help you locate nearby repair shops and typical car issues your model may have.
If you receive a mailed notification from the manufacturer, follow the instructions and call your dealership as soon as you can.
2. Book an appointment ‘as soon as possible’
If your car is affected by a recall, “you want to make an appointment as soon as possible,” Moody said.
While the repair will be completed at no cost to the consumer, some dealers may have a backlog of appointments for a certain issue, said McParland. “An immediate repair may not be available,” he said.
3. Check if a mechanic is covered under the warranty
If you are facing a backlog of recall appointments at your local dealer and would opt to take the vehicle elsewhere for a faster service, ask the manufacturer first, said Moody. Contact customer service and explain your situation. The company may be able to cover the recall repair done by outside official channels, he said.
Otherwise, the rule of thumb for a recall is to take your vehicle to your local dealership of that automaker. There is a system in place where the manufacturer reimburses the local dealer and the service is free for the customer, Moody said.
Altogether, if you don’t know what the recall is for or don’t understand what the affected car part does, call your local dealer or manufacturer to ask, especially before you head out on a long trip.
“If you see something like ‘may lose control’, or ‘vehicle fire’ … maybe don’t drive until you find out for sure if the car is covered,” Moody said.
Kyle Vogt resigned as chief executive of autonomous-vehicle company Cruise late Sunday, following the recent suspension of Cruise’s operations on public roads.
“Today I resigned from my position as CEO of Cruise,” Vogt, who co-founded Cruise and oversaw its 2016 acquisition by General Motors Co. GM, tweeted Sunday night. “The last 10 years have been amazing, and I’m grateful to everyone who helped Cruise along the way.”
Stock futures were up Friday morning as the major indexes look for their third straight week of gains. Futures tied to the Dow Jones Industrial Average rose about 80 points, or 0.24%, while S&P 500 futures advanced 0.2%, and Nasdaq 100 futures were essentially flat. On the week, the Dow is up 1.9% through Thursday’s close, the S&P 500 is up 2.1% and the Nasdaq is up 2.3%. Follow live market updates.
People shop in a holiday section ahead of Black Friday at a Walmart Supercenter on November 14, 2023 in Burbank, California.
Mario Tama | Getty Images News | Getty Images
According to Walmart, Christmas may come relatively cheap this year. CEO Doug McMillon said alongside the company’s quarterly earnings report that the retailer expects to see lower prices in some general merchandise and key grocery items. “In the U.S., we may be managing through a period of deflation in the months to come,” he said. “And while that would put more unit pressure on us, we welcome it, because it’s better for our customers.” Shares of the big-box retailer fell 8% on the day following the cautious outlook.
A Boeing 777-9 jetliner aircraft is pictured on the tarmac during the 2023 Dubai Airshow at Dubai World Central – Al-Maktoum International Airport in Dubai on November 13, 2023.
Giuseppe Cacace | AFP | Getty Images
Aircraft manufacturer Boeing racked up 295 orders across four days of the 2023 Dubai Air Show, trouncing its French rival Airbus’ 86 orders, according to company reports and third-party tallies. Each year the Middle East’s largest aviation event comes flush with jet orders. This year’s buyers showed a particular appetite for wide-body planes, CNBC’s Natasha Turak reports. Boeing’s popularity at the show represents a notable rebound after years of safety concerns.
United Auto Workers members strike the General Motors Lansing Delta Assembly Plant on September 29, 2023 in Lansing, Michigan.
Bill Pugliano | Getty Images
Union workers at General Motors ratified a labor deal with the United Auto Workers, according to results posted by the union Thursday. With tallies from all local chapters in, the agreement received 54.7% of the nearly 36,000 votes cast. It came after a contentious final few days of voting, with several major plants rejecting the contracts. But enough workers at smaller facilities voted in support to seal up ratification. Union workers at Ford Motor and Stellantis are still voting on similar contracts. So far, those agreements have won the support of roughly two-thirds of each automaker’s voting population.
WASHINGTON, DC – OCTOBER 04: U.S. President Joe Biden delivers remarks on new Administration efforts to cancel student debt and support borrowers at the White House on October 04, 2023 in Washington, DC.
Kevin Dietsch | Getty Images
More student loan borrowers are walking away from their debt in bankruptcy proceedings — the result of a policy change by the Biden administration intended to help people who were saddled with debt and struggling financially. Ten months after the policy change, student loan borrowers have filed more than 630 bankruptcy cases, marking a “significant increase” from recent years, officials with the Biden administration said. “Our efforts have made a real difference in borrowers’ lives,” Associate Attorney General Vanita Gupta said Thursday. Outstanding student debt in the U.S. exceeds $1.7 trillion. Economists have said the swelling debt load could slow the U.S. economy.
– CNBC’s Brian Evans, Melissa Repko, Natasha Turak, Michael Wayland and Annie Nova contributed to this report.
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Check out the companies making headlines in midday trading. Sonos — The stock climbed 17% after Sonos CEO Patrick Spence said the company is entering a multiyear product cycle that will include an entry “into a new multi-billion dollar category” in the second half of fiscal 2024. Macy’s — Shares of the department store chain popped more than 6% on the back of better-than-expected quarterly results. Macy’s also said margins and inventory levels improved during the third quarter. General Motors — General Motors shares dipped more than 1% in midday trading. The move comes after union workers on Thursday said it ratified a record deal with the United Auto Workers. Alibaba — The U.S-listed shares of Alibaba dropped more than 8% after the Chinese internet company scrapped plans for a spin-off of its cloud business, citing the “recent expansion of U.S. restrictions on export of advanced computing chips.” Williams-Sonoma — The seller of kitchenware and home goods gained 4.8%. Williams-Sonoma on Thursday reported a record operating margin of 17% in the third quarter, signaling a healthy return on sales for the company. Its adjusted earnings of $3.66 per share came ahead of the FactSet consensus estimate of $3.33 per share. Cisco Systems — Shares dropped 11.3% after the company’s earnings guidance for the current quarter came out below analyst estimates, driven by a slowdown in new product orders. Cisco also cut its full year forecast for revenue. Children’s Place — Shares of Children’s Place plunged 25.8% after retailer quarterly adjusted earnings of $3.22, trailing the FactSet consensus estimate of $3.49. Children’s Place cited higher fulfillment and labor costs for the lackluster results. Deckers Outdoor — The footwear company behind the Hoka and Ugg brands declined 2.5% after Piper Sandler downgraded the stock to neutral from overweight. The Wall Street firm said its overweight thesis on the apparel stock “has largely played out.” Palo Alto Networks — The cybersecurity stock slid more than 5% after Palo Alto Networks issued a weaker-than-expected billings forecast for the current quarter and full year. Walmart — Shares dropped more than 7% after the big box retailer gave disappointing guidance . Walmart said it expects adjusted earnings per share of $6.40 to $6.48 for the year, slightly lower than analysts were anticipating. CFO John David Rainey told CNBC he is now more cautious on the consumer. However, the company beat earnings and revenue expectations for the quarter. Advance Auto Parts — The auto parts retailer tumbled 4% after Bank of America downgraded the stock to underperform from neutral. The firm cited ongoing challenges in the medium-term that will pressure free cash flow for at least the next 12 months. Plug Power — The stock retreated 7% following a Citi downgrade to neutral from buy. The bank said the company is facing near-term issues related to liquidity and execution. — CNBC’s Michelle Fox, Alex Harring, Hakyung Kim and Pia Singh contributed reporting.
Warren Buffett’s Berkshire Hathaway sold a number of stocks last quarter during the volatile market, according to a new regulatory filing. The Omaha-based conglomerate dumped its remaining $780 million stake in General Motors , a stock Berkshire has been trimming for a few quarters. Berkshire also sold its $650 million stake in materials company Celanese , while exiting smaller positions in United Parcel Service , Johnson & Johnson , Mondelez International and Procter & Gamble. Meanwhile, Berkshire trimmed its stakes in Amazon and Aon slightly, the filing showed. These holdings were still worth more than $1 billion each at the end of September, however. The conglomerate was also downsizing its top bets HP and Chevron . Some of these moves, especially ones involving smaller positions, could have been done by Buffett’s investing lieutenants Todd Combs and Ted Weschler, who each manage about $15 billion for Berkshire. It was previously revealed that Berkshire was a net seller of publicly traded stocks in the third quarter, buying $1.7 billion worth of equities while selling nearly $7 billion. The S & P 500 shed more than 3% last quarter before bouncing back this month. Besides these moves, the “Oracle of Omaha” kept his top holdings unchanged. Apple continued to be the conglomerate’s biggest bet by far, with a value north of $156 billion. Bank of America, American Express, Coca-Cola, Kraft Heinz and Moody’s were also Berkshire’s longtime holdings. Buffett has been in a defensive mode as of late. Not only was he selling stocks, he was also hoarding a record level of cash. Berkshire’s cash pile, mainly parked in short-term Treasury bills, hit $157.2 billion at the end of September thanks to a surge in bond yields. Berkshire has also asked the SEC to keep the details of one or more of its stock holdings confidential.
United Auto Workers (UAW) members strike at a General Motors assembly plant that builds the U.S. automaker’s full-size sport utility vehicles, in another expansion of the strike in Arlington, Texas, October 24, 2023.
James Breeden | Reuters
DETROIT – General Motors plans to invest roughly $13 billion in U.S. facilities by April 2028, the United Auto Workers union said as part of its recent tentative agreement with the automaker.
GM has already announced some of the planned investments such as $4 billion at Orion Assembly in suburban Detroit and $2 billion in Spring Hill, Tennessee, for new electric vehicles. Others, such as $1.25 billion for a future electric vehicle plant at Lansing Grand River, are new.
Many of the new investments include hundreds of millions of dollars for assembly plants to support or add additional volume as well as engine and components plants.
Details of the tentative agreement were released Saturday after local UAW leaders with GM approved the pact, which must still be ratified by a simple majority of the union’s 46,000 members with the automaker. GM was the last Detroit automaker to reach a tentative agreement following Ford Motor and Chrysler-parent Stellantis.
GM’s U.S. investments through the terms of the 4 ½-tear tentative compared to $8.1 billion announced by the union at Ford and $18.9 billion at Stellantis, including $6.2 billion in previously announced parts plants in Kokomo, Indiana.
GM declined to comment on the released details, referring back to a statement by CEO Mary Barra when the tentative deal was initially announced: “GM is pleased to have reached a tentative agreement with the UAW that reflects the contributions of the team while enabling us to continue to invest in our future and provide good jobs in the U.S.,” she said. “We are looking forward to having everyone back to work across all of our operations, delivering great products for our customers, and winning as one team.”
The tentative labor agreement was announced Monday after roughly six weeks of targeted strikes by the union against GM, Stellantis and Ford, also known as the “Big Three” automakers. The work stoppages began on Sept. 15 after the sides failed to reach deals covering 146,000 UAW members with the automakers by a strike deadline.
“There’s a reason why the Big Three and their allies feel like they just got taken to the cleaners. This contract has wage increases and economic gains like nothing we’ve ever seen before, said UAW Vice President Mike Booth during an online broadcast Saturday. “The gains in this contract are worth more than four times the last contract.”
Like the UAW’s tentative agreement with Stellantis and Ford, the deal includes 25% pay increases, bonuses and other enhanced benefits for autoworkers, such as profit-sharing payments and a $5,000 ratification bonus.
The 25% raises include an 11% increase upon ratification, followed by a 3% bump-up in the next three years and then a 5% increase in September 2027.
At GM, the union also made major gains in cutting down different tiers, or levels, of workers to be paid the same or similar to their traditional colleagues at assembly plants. UAW President Shawn Fain said some workers will receive an immediate raise of 89% if ratified by members.
“One of our central goals in this round of negotiations was the elimination of tiers,” Fain said during the broadcast. “While we didn’t win everything, we made enormous strides at GM. We did more to eliminate wage tiers than any of the Big Three.”
New workers added to the agreement include employees at GM’s Ultium Cells joint venture for battery cells, Fain reconfirmed Saturday. The battery workers will receive a raise of between $6 and $8 an hour, he said.
Fain on Saturday reiterated the union’s plans to use the record contracts with GM, Ford and Stellantis as leverage to unionize other automakers.
“We aren’t bashful or quiet about what our plans are: Our goal is to spend the next few years organizing auto workers across this country,” Fain said. “The Big Three aren’t the only auto companies making record profits. Auto workers at Toyota, Honda, Volkswagen, Hyundai and Tesla, they deserve record contracts. too.”
Toyota Motor earlier this week announced plans to hike wages at its U.S. factories. The new rates would see hourly manufacturing employees at top rates in Kentucky receive roughly 9% pay increases to $34.80 an hour – still below the more than $40 an hour top rate under the UAW’s tentative agreements with the Detroit automakers.
UAW members at Ford have already started voting on that tentative agreement. Most notably, 82% of workers at Ford’s Michigan Assembly Plant voted in support of the pact this week. The suburban Detroit plant was among the first to strike alongside other assembly plants with GM and Stellantis.
UAW members with Stellantis and GM are expected to vote on the deals over the next couple of weeks.
United Auto Workers President Shawn Fain gestures in solidarity with striking workers during a rally at UAW Local 551 on Saturday, Oct. 7, 2023, in Chicago.
John J. Kim | Tribune News Service | Getty Images
DETROIT – United Auto Workers President Shawn Fain wants to expand the union’s battle from the Detroit automakers to Tesla, Toyota Motor and other non-unionized automakers operating in the U.S.
The outspoken leader plans to use record contracts recently won after contentious negotiations and U.S. labor strikes with General Motors, Ford Motor and Chrysler-parent Stellantis to assist in the union’s embattled organizing efforts elsewhere.
“We’ve created the threat of a good example, and now we’re going to build on it,” Fain said Thursday night when discussing Stellantis’ tentative agreement. “We just went on strike like we’ve never been on strike before and won a historic contract as a result. Now we’re going to organize like we’ve never organized before.”
Doing so would greatly assist the union’s bargaining efforts and membership, which has been nearly halved from roughly 700,000 members in 2001 to 383,000 at the beginning of this year. UAW membership peaked at 1.5 million in 1979.
The UAW has previously failed to organize foreign-based automakers in the U.S. Most recently, plants with Volkswagen and Nissan Motor fell short of the support needed to unionize. The UAW has previously discussed organizing Tesla’s Fremont plant in California with little to no traction in those efforts.
It remains to be seen whether the recent efforts are gaining traction at any other automakers, but Fain has vowed to move beyond the “Big Three” — Ford, GM and Stellantis — and expand to the “Big Five or Big Six” by the time its 4½-year contracts with the Detroit automakers expire in April 2028.
The deals include 25% wage increases that would boost top pay to more than $40 an hour, reinstatement of cost-of-living adjustments, enhanced profit-sharing payments and other significant pay, healthcare and workplace benefits. The contracts must still be ratified.
The union has already received significant interest from non-union automakers in light of the tentative agreements, Fain said. And last month, he rejected comments from Ford Chair Bill Ford arguing the company and union should be working together to battle non-American automakers.
“Workers at Tesla, Toyota, Honda, and others are not the enemy — they’re the UAW members of the future,” Fain said.
Fain has taken particular aim at Toyota in recent days.
The automaker earlier this week confirmed plans to hike wages at its U.S. factories. The new rates would see hourly manufacturing employees at top rates in Kentucky receive roughly 9% pay increases to $34.80 an hour.
Fain on Thursday called that pay raise “the UAW bump,” joking that UAW stands for “U Are Welcome” to join the union’s movement.
UAW President Shawn Fain marches with UAW members through downtown Detroit after a rally in support of United Auto Workers members as they strike the Big Three auto makers on September 15, 2023 in Detroit, Michigan.
Bill Pugliano | Getty Images
“Toyota isn’t giving out raises out of the goodness of their heart,” Fain said. “They could have just as easily raised wages a month ago or a year ago. They did it now because the company knows we’re coming for ’em.”
Toyota, which has 49,000 hourly and salaried U.S. workers, said the “decision to unionize is ultimately made by our team members.”
“By engaging in honest, two-way communication about what’s happening in the company, we aim to foster positive morale which ultimately leads to increased productivity,” the company said Friday in an emailed statement. “Working together has provided a history of stable employment and income for our team members.”
The UAW has so far not been able to establish enough support to force an organizing vote at Tesla’s facilities, including its Fremont, California, plant where the union previously represented workers when it was a GM-Toyota joint venture.
Fain on Thursday told Bloomberg News he believes organizing Tesla and taking on CEO Elon Musk is “doable.”
“We can beat anybody,” Fain told Bloomberg. “It’s gonna come down to the people that work for him deciding if they want their fair share… or if they want him to fly himself to outer space at their expense.”
Still, Musk has historically clashed with union proponents.
As some workers sought to form a union at the company’s Fremont factory in in 2017 and 2018, Tesla was paying a consultancy named MWW PR to monitor employees in a Facebook group and on social media more broadly, as CNBC previously reported.
Elon Musk, CEO of Tesla and owner of X, arrives for the Inaugural AI Insight Forum in Russell Building on Capitol Hill, on Wednesday, September 13, 2023.
Tom Williams | Cq-roll Call, Inc. | Getty Images
Tesla also terminated the employment of a union activist named Richard Ortiz in 2017. And in 2018, Musk said in a tweet, “Nothing stopping Tesla team at our car plant from voting union. Could do so tmrw if they wanted. But why pay union dues & give up stock options for nothing?”
The tweet violated federal labor laws, the National Labor Relations Board later found.
An administrative court ordered Tesla to reinstate Ortiz and to have Musk delete his tweet, which it concluded had threatened workers’ compensation. Tesla appealed the ruling, and Musk’s offending post remains on the social media platform which Musk now owns, has rebranded as X and runs as CTO and executive chairman.
In February, a different group of organizers filed a complaint with the NLRB claiming that Tesla had fired more than 30 employees at its Buffalo facility in retaliation for a union push there by Tesla Workers United. Tesla called the workers’ allegations false, saying 4% of its Autopilot data labeling team in Buffalo had been terminated due to performance issues.
The Equal Employment Opportunity Commission, the federal agency responsible for enforcing civil rights laws against workplace discrimination, sued Tesla in September, alleging widespread racist harassment of Black workers, and retaliation against those who spoke out.
And in late October, just over 100 of Tesla’s service employees in Sweden, members of the industrial labor group IF Metall, walked off the job for a short strike. Hundreds of mechanics and technicians at non-Tesla shops also agreed not to repair any of the EV makers’ cars in solidarity. However, Tesla has so far refused to negotiate with IF Metall.
Tesla did not immediately respond to a request for comment.
The United Auto Workers said late Monday it has reached a tentative agreement with General Motors Co. GM, +0.51%,
the third and last of the Big Three carmakers to have such a deal with its workers. GM workers on strike will return to their jobs as the agreement goes through a ratification process. “Like the agreements with Ford F, -1.91%
and Stellantis STLA, -0.22%,
the GM agreement has turned record profits into a record contract,” the union said. “The deal includes gains valued at more than four times the gains from the union’s 2019 contract.” That year, the UAW had a strike at GM only; this year, workers at several Big Three facilities walked out, a break with tradition for the union. The tentative agreement with GM grants 25% base-wage increases through the four years of the contract, cumulatively raising the top wage by 33% plus cost-of-living adjustments to more than $42 an hour, the union said. GM’s starting wage will increase by 70% compounded with estimated COLA to over $30 an hour. Shares of GM edged lower in the extended session Monday after ending the regular trading day up 0.5%.
Shares of General Motors Co. GM, +0.04%
bounced 1.2% off a 3 1/2-year low in morning trading Monday, after CNBC reported that the automaker reached an tentative deal with the United Auto Workers that would end the six-week long labor strike. The report comes a day after the UAW widened its strike against GM, as the Associated Press reported, hours after a tentative deal was reached with fellow Big 3 automaker Stellantis N.V. STLA, -0.19%
and about a week after Ford Motor Co. F, -1.61%
also reached a deal. CNBC reported that the UAW’s 4 1/2-year agreement with GM includes a 25% wage increase, including a 68% increase in starting hourly wages to $28 an hour. and UAW didn’t immediately respond to a request for comment. The stock, which closed Friday at the lowest price since Aug. 7,. 2020, has tumbled 28.1% over the past three months while the S&P 500 SPX, +0.81%
has shed 9.2%.
Lana Payne celebrates on stage as Unifor, Canada’s largest private sector union, announce Lana Payne as their new president to replace outgoing leader Jerry Dias in Toronto, Ontario, Canada August 10, 2022.
Cole Burston | Reuters
DETROIT – After reaching a tentative agreement Saturday with the United Auto Workers union, Chrysler-parent Stellantis is now facing a national labor strike in Canada.
Canadian union Unifor called a national strike of more than 8,200 autoworkers early Monday morning after the sides failed to reach a new agreement by 11:59 p.m. Sunday.
The Canadian work stoppage comes two days after the Stellantis reached a tentative deal for roughly 43,000 U.S. autoworkers with the UAW after roughly six weeks of targeted strikes that began Sept. 16.
The new strikes in the Canadian province of Ontario affect two large assembly plants that produce the Chrysler 300 sedan and Pacifica minivan and Dodge Challenger and Charger muscle cars.
The latter vehicles, produced at Stellantis’ Brampton Assembly, are specifically notable, as the company is producing the final traditional V-8 models of the Dodge muscle cars ahead of production stopping at year’s end.
The Canadian work stoppage comes nearly three weeks after Unifor launched a roughly 12-hour national strike against General Motors after the sides failed to reach a tentative agreement by a union-set deadline.
Unifor, which represents 18,000 Canadian workers at the Detroit automakers, took a more traditional approach to its negotiations than its U.S. counterpart. The Canadian union is negotiating with each automaker separately and using a deal first reached last month with Ford as a “pattern” for GM and Stellantis.
That traditional patterned-bargaining approach runs counter to the UAW’s new strategy of bargaining with all three automakers at once.
The UAW has been gradually increasing the strikes since the work stoppages began after the sides failed to reach tentative agreements by Sept 14. The targeted, or “stand-up,” strikes are taking place instead of national walkouts.
However, once the UAW reached a tentative agreement, which must still be ratified by members, Wednesday with Ford Motor, it has used that deal as a template for proposals with Stellantis and GM.
An Amazon.com Inc worker prepares an order in which the buyer asked for an item to be gift wrapped at a fulfillment center in Shakopee, Minnesota, U.S., November 12, 2020.
Amazon.com Inc | Reuters
The initial third-quarter report on gross domestic product showed consumer spending zooming higher by 4% percent a year, after inflation, the best in almost two years. September’s retail sales report showed spending climbing almost twice as fast as the average for the last year. And yet, bears like hedge-fund trader Bill Ackman argue that a recession is coming as soon as this quarter and the market has entered correction territory.
For an economy that rises or falls on the state of the consumer, third-quarter earnings data supports a view of spending that remains mostly good. S&P 500 consumer-discretionary companies that have reported through Oct. 25 saw an average profit gain of 15%, according to CFRA — the biggest revenue gain of the stock market’s 11 sectors.
“People are kind of scratching their heads and saying, ‘The consumer is holding up better than expected,’” said CFRA Research strategist Sam Stovall said. “Consumers are employed. They continue to buy goods as well as pursue experiences. And they don’t seem worried about debt levels.”
How is this possible with interest rates on everything from credit cards to cars and homes soaring?
It’s the anecdotes from bellwether companies across key industries that tell the real story: Delta Air Lines and United Airlines sharing how their most expensive seats are selling fastest. Homeowners using high-interest-rate-fighting mortgage buydowns. Amazon saying it’s hiring 250,000 seasonal workers. A Thursday report from Deckers Outdoor blew some minds — in what has been a tepid clothing sales environment — by disclosing that embedded in a 79% profit gain that sent shares up 19% was sales of Uggs, a mature line anchored by fuzzy boots, rising 28%.
The picture they paint largely matches the economic data — generally positive, but with some warts. Here is some of the key evidence from from the biggest company earnings reports across the market that help explain how companies and the American consumer are making the best of a tough rate environment.
How homebuilders are solving for mortgages rates
No industry is more central to the market’s notion that the consumer is falling from the sky than housing, because the number of existing home sales have dropped almost 40% from Covid-era peaks. But while Coldwell Banker owner Anywhere Real Estate saw profit fall by half, news from builders of new homes has been pretty good.
Most consumers have mortgages below 5%, but for new homebuyers, one reason that rates are not biting quite as sharply as they should is that builders have figured out ways around the 8% interest rates that are bedeviling existing home sellers. That helps explains why new home sales are up this year. Homebuilders are dipping into money that previously paid for other incentives to pay for offering mortgages at 5.75% rather than the 8% level other mortgages have hit. At PulteGroup, the nation’s third-biggest builder, that helped drive an 8% third-quarter profit jump and 43% climb in new home orders for delivery later, much better than the government-reported 4.5% gain in new home sales year-to-date.
“What we’ve done is simply redistribute incentives we’ve historically offered toward cabinets and countertops, and redirected those to interest rate incentives,” PulteGroup CEO Ryan Marshall said. “And that has been the most powerful thing.”
The mechanics are complex, but work out to this: Pulte sets aside about $35,000 for incentives to get each home to sell, or about 6% of its price, the company said on its earnings conference call. Part of that is paying for a mortgage buydown. About 80% to 85% of buyers are taking advantage of the buydown offer. But many are splitting the funds, mixing a smaller rate buydown and keeping some goodies for the house, the company said.
Wells Fargo economist Jackie Benson said in a report that builders may struggle to keep this strategy going if mortgage rates stay near 8%, but new-home prices have dropped 12% in the last year. In her view, incentives plus bigger price cuts than most existing homes’ owners will offer is giving builders an edge.
At auto companies, price cuts are in, and more are coming
Car sales picked up notably in September, rising 24% year-over-year, more than twice the year-to-date gain in unit sales. But they were below expectations at electric-vehicle leader Tesla, which blamed high interest rates, and at Ford.
“I just can’t emphasize this enough, that for the vast majority of people buying a car it’s about the monthly payment,” Tesla CEO Elon Musk said on its earnings call. “And as interest rates rise, the proportion of that monthly payment that is interest increases.”
Maybe, but that’s not what’s happening at General Motors, even if investor reaction to good numbers at GM was muted because of the strike by the United Auto Workers union.
GM beat earnings expectations by 40 cents a share, but shares fell 3% because of investor worries about the strike, which forced GM to withdraw its fourth-quarter earnings forecast on Oct. 24. Ford, which settled with the UAW on Oct. 25, said the next day it had a “mixed” quarter, as profit missed Wall Street targets due to the strike. Consumers came through, as unit sales rose 7.7% for the quarter, with truck and EV sales both up 15%. GM CEO Mary Barra said on GM’s analyst call that the company gained market share, posting a 21% gain in unit sales despite offering incentives below the industry average.
“While we hear reports out there in the macro that consumer sentiment might be weakening, etc., we haven’t seen that in demand for our vehicles,” GM CFO Paul Jacobson told analysts. But Ford CFO John Lawler said car prices need to decline by about $1,800 to be as affordable as they were before Covid. “We think it’s going to happen over 12 to 18 months,” he said.
Tesla’s turnaround plan turns on continuing to lower its cost of producing cars, which came down by about $2,000 per vehicle in last year, the company said. Along with federal tax credits for electric vehicles, a Model Y crossover can be had for about $36,490, or as little as $31,500 in states with local tax incentives for EVs. That’s way below the average for all cars, which Cox Automotive puts at more than $50,000. But Musk says some consumers still aren’t convincible. .
“When you look at the price reductions we’ve made in, say, the Model Y, and you compare that to how much people’s monthly payment has risen due to interest rates, the price of the Model Y is almost unchanged,” Musk said. “They can’t afford it.”
Most banks say the consumer still has cash, but not Discover
To know how consumers are doing, ask the banks, which disclose consumer balances quarterly. To know if they’re confident, ask the credit card companies (often the same companies) how much they are spending.
In most cases, financial services firms say consumers are doing well.
At Bank of America, consumer balances are still about one-third higher than before Covid, CEO Brian Moynihan said on the company’s conference call. At JPMorgan Chase, balances have eroded 3% in the last year, but consumer loan delinquencies declined during the quarter, the company said.
“Where am I seeing softness in [consumer] credit?” said chief financial officer Jeremy Barnum, repeating an analyst’s question on the earnings call. “I think the answer to that is actually nowhere.”
Among credit card companies, the “resilient” is still the main story. MasterCard, in fact, used that word or “resilience” eight times to describe U.S. consumers in its Oct. 26 call.
“I mean, the reality is, unemployment levels are [near] all-time record lows,” MasterCard chief financial officer Sachin Mehra said.
At American Express, which saw U.S. consumer spending rise 9%, the mild surprise was the company’s disclosure that young consumers are adding Amex cards faster than any other group. Millennials and Gen Zers saw their U.S. spending via Amex rise 18%, the company said.
“Guess they’re not bothered by the resumption of student loan payments,” Stovall said.
The major fly in the ointment came from Discover Financial Services, one of the few banks to make big additions to its loan loss reserves for consumer debt, driving a 33% drop in profit as Discover’s loan chargeoffs doubled.
Despite the fact that U.S. household debt burdens are almost exactly the same as in late 2019, and declined during the quarter, according to government data, Discover chief financial officer John Greene said on its call, “Our macro assumptions reflect a relatively strong labor market but also consumer headwinds from a declining savings rate and increasing debt burdens.”
At airlines, still no sign of a travel recession
It’s good to be Delta Air Lines right now, sitting on a 59% third-quarter profit gain driven by the most expensive products on their virtual shelves: First-class seats and international vacations. Also good to be United, where higher-margin international travel rose almost 25% and the company is planning to add seven first-class seats per departure by 2027. Not so good to be discounter Spirit, which saw shares fall after reporting a $157 million loss.
“With the market continuing to seemingly will a travel recession into existence despite evidence to the contrary from daily [government] data and our consumer surveys, Delta’s third-quarter beat and solid fourth-quarter guide and commentary should finally put the group at ease about a consumer “cliff,” allow them to unfasten their seatbelts and walk about the cabin,” Morgan Stanley analyst Ravi Shanker said in a note to clients.
One tangible impact: United is adding 20 planes this quarter, though it is pushing 12 more deliveries into 2024, while Spirit said it’s delaying plane deliveries, and focusing on its proposed merger with JetBlue and cost-cutting to regain competitiveness as soft demand for its product persists into the holiday season.
As has been the case throughout much of 2023, richer consumers — who contribute the greater share of spending — are doing better than moderate-income families, Sundaram said.
The goods recession is for real
Whirlpool, Ethan Allen and mattress maker Sleep Number all saw their stocks tumble after reporting bad earnings, all of them experiencing sales struggles consistent with the macro data.
This follows a trend now well-entrenched in the economy: people stocked up on hard goods, especially for the house, during the pandemic, when they were stuck at home more. All three companies saw shares surge during Covid, and growth has slacked off since as they found their markets at least partly saturated and consumers moved spending to travel and other services.
“All of the stimulus money went to the furniture industry,” Sundaram said, exaggerating for effect. “Now they’ve been falling apart for the last year.”
Ethan Allen sales dropped 24%, as the company said a flood in a Vermont factory and softer demand were among the causes. At Whirlpool, which said in second-quarter earnings that it was moving to make up slowing sales to consumers by selling more appliances to home builders, “discretionary purchases have been even softer than anticipated, as a result of increased mortgage rates and low consumer confidence,” CEO Marc Bitzer said during Thursday’s earnings call. Its shares fell more than 20%.
Amazon’s $1.3 billion holiday hiring spree
Amazon is making its biggest-ever commitment to holiday hiring, spending $1.3 billion to add the workers, mostly in fulfillment centers.
That’s possible because Amazon has reorganized its warehouse network to speed up deliveries and lower costs, sparking 11% sales gains the last two quarters as consumers turn to the online giant for more everyday repeat purchases. Amazon also tends to serve a more affluent consumer who is proving more resilient in the face of interest rate hikes and inflation than audiences for Target or dollar stores, according to CFRA retailing analyst Arun Sundaram said.
“Their retail sales are performing really well,” Sundaram said. “There’s still headwinds affecting discretionary sales, but everyday essentials are doing really well.
All of this sets the stage for a high-stakes holiday season.
PNC still thinks there will be a recession in early 2024, thanks partly to the Federal Reserve’ rate hikes, and thinks investors will focus on sales of goods looking for more signs of weakness. “There’s a lot of strength for the late innings” of an expansion, said PNC Asset Management chief investment officer Amanda Agati.
Sundaram, whose firm has predicted that interest rates will soon drop as inflation wanes, thinks retailers are in better shape, with stronger supply chains that will allow strategic discounting more than last year to pump sales. The Uggs sales outperformance was attributed to improved supply chains and shorter shipping times as the lingering effects of the pandemic recede.
“Though there are headwinds for the consumer, there’s a chance for a decent holiday season,” he said, albeit one hampered still by the inflation of the last two years. “The 2022 holiday season may have been the low point.”
U.S. stock futures slid Monday morning as the 10-year Treasury note yield again ticked above 5% — a level it hit Thursday for the first time since 2007. Earnings and inflation data will help to shape whether equities bounce back from a down week. The Dow Jones Industrial Average fell 1.6%, the S&P 500 dropped 2.4% and the Nasdaq Composite shed 3.2% last week. A string of major earnings reports are due Tuesday through Thursday. The personal consumption expenditures data out Friday will offer clues about whether the Federal Reserve will hike interest rates again this year. Follow live market updates here.
The tech sector, which has largely driven market gains this year, will headline a busy stretch of earnings this week. Other key reports will come from the transportation and food and beverage spaces. Investors will focus on General Motors and Ford results as executives will answer questions about the effects of the more than month-long United Auto Workers strike. Here are the major reports this week:
The first humanitarian aid convoys since the start of the Israel-Hamas war arrived in Gaza over the weekend, and more shipments of food, water and medical supplies are expected Monday. U.S. President Joe Biden spoke to Israeli Prime Minister Benjamin Netanyahu on Sunday, and said there will be a “continued flow” of aid into Gaza. Israel intensified airstrikes on the besieged area in recent days, as it holds off on a potential ground invasion. Leaders around the globe are trying to prevent the conflict from turning into a broader war. Follow live updates on the conflict here.
Another country is probing Alphabet’s Google for potential anticompetitive practices. Japan’s Fair Trade Commission said it would investigate potential antitrust violations related to Google’s search engine and its apps and platforms. The move in Japan follows scrutiny over allegations of anticompetitive conduct in the European Union and United States. A Google spokesperson told CNBC that Android is an open platform that ensures “users always have a choice to customize their devices to suit their needs, including the way they browse and search the internet, or download apps.”
– CNBC’s Lisa Kailai Han, Ruxandra Iordache, Matt Clinch and Arjun Kharpal contributed to this report.
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Gold bars of different sizes lie in a safe on a table at the precious metals dealer Pro Aurum.
Sven Hoppe | Picture Alliance | Getty Images
This report is from today’s CNBC Daily Open, our new, international markets newsletter. CNBC Daily Open brings investors up to speed on everything they need to know, no matter where they are. Like what you see? You can subscribe here.
Tesla clocks worst week of the year Tesla shares dropped more than 15% last week to close at $211.99 on Friday, marking the worst weekly performance for the stock this year as CEO Elon Musk sounded pessimistic about macroeconomic issues on a recent earnings call. Shares of the electric automaker are still up 96% year-to-date.
Big earnings week Investors will be watching out for an action-packed week of earnings as companies including Microsoft, Meta Platforms, Amazon, Alphabet, General Motors and Ford among others gear up to post their quarterly results. The carmakers will be under the radar this week amid ongoing strikes and contract negotiations with the United Auto Workers union.
X to launch new subscription tiers Owner Elon Musk said X, the social media service formerly known as Twitter, will launch two new tiers of subscriptions for users. One tier will be “lower cost with all features, but no reduction in ads,” while the other is “more expensive, but has no ads,” Musk said.
[PRO] The U.S. is trying to tighten the screws on Chinese AI The artificial intelligence behind ChatGPT-like products and autonomous driving is driving enormous demand for Nvidia’s chips in China. In the past week, however, analysts cut their Nvidia price targets after news the U.S. plans to ban the sale of more high-end semiconductors to China. Here’s what that means for stocks.
Rising Treasury yields, looming interest rate hikes to fight inflation and the heightening conflict in the Middle East drove investors away from risky assets last week.
The yield on the benchmark 10-year Treasury crossed 5% for the first time since 2007 on Thursday, a level perceived by markets as a potential drag on the U.S. economy as it could translate to higher rates on mortgages, credit cards, auto loans and more.
A move into safe-haven gold seemed like a sensible bet, given the worsening crisis in the Middle East. Gold was up 2.5% last week, recording its second consecutive weekly rise after adding 5.22% in the prior week.
Investors are now bracing for a heavy week of earnings as Big Tech companies including Alphabet, Amazon, Meta and Microsoft will take centerstage.
“We’re hopefully going to see some continued positive strength there on the economy and what they see going forward,” said Ryan Detrick, chief market strategist at Carson Group. “The headlines are scary, for sure. But the fundamentals to us are pretty strong. We’re still seeing earnings season that’s going to come in better than expected.”
This will arrive after a mixed batch of earnings from behemoths like Tesla and Netflix last week. Tesla marked its biggest weekly decline after Elon Musk shared his pessimistic view on the macroeconomic landscape, while Netflix shares soared as markets cheered its new ad-tier subscription plan.
Given the huge role advertisers and subscriptions play for the bottom lines of such firms, it was no surprise that Musk turned his attention to improving the usability of social media platform X, formerly known as Twitter.
Musk said. X is gearing up to launch two new tiers of subscriptions for users, in hopes that it could improve the company’s finances and open new revenue streams. Musk’s sweeping changes across the company, including firing most of its employees and reinstating previously banned accounts, scared advertisers away.
This report is from today’s CNBC Daily Open, our new, international markets newsletter. CNBC Daily Open brings investors up to speed on everything they need to know, no matter where they are. Like what you see? You can subscribe here.
Tesla clocks worst week of the year Tesla shares dropped more than 15% last week to close at $211.99 on Friday, marking the worst weekly performance for the stock this year as CEO Elon Musk sounded pessimistic about macroeconomic issues on a recent earnings call. Shares of the electric automaker are still up 96% year-to-date.
Big earnings week Investors will be watching out for an action-packed week of earnings as companies including Microsoft, Meta Platforms, Amazon, Alphabet, General Motors and Ford among others gear up to post their quarterly results. The carmakers will be under the radar this week amid ongoing strikes and contract negotiations with the United Auto Workers union.
X to launch new subscription tiers Owner Elon Musk said X, the social media service formerly known as Twitter, will launch two new tiers of subscriptions for users. One tier will be “lower cost with all features, but no reduction in ads,” while the other is “more expensive, but has no ads,” Musk said.
[PRO] Earnings playbook Big Tech takes center stage in what could be a make-or-break week for S&P 500 earnings. About 150 S&P 500 companies are slated to report, including Microsoft, Meta Platforms, Amazon and Alphabet. Those results come during a tough time for Wall Street, as higher rates and conflict in the Middle East rattle investor sentiment. Here’s how to trade a busy week of earnings.
Rising Treasury yields, looming interest rate hikes to fight inflation and the heightening conflict in the Middle East drove investors away from risky assets last week.
The yield on the benchmark 10-year Treasury crossed 5% for the first time since 2007 on Thursday, a level perceived by markets as a potential drag on the U.S. economy as it could translate to higher rates on mortgages, credit cards, auto loans and more.
A move into safe-haven gold seemed like a sensible bet, given the worsening crisis in the Middle East. Gold was up 2.5% last week, recording its second consecutive weekly rise after adding 5.22% in the prior week.
Investors are now bracing for a heavy week of earnings as Big Tech companies including Alphabet, Amazon, Meta and Microsoft will take centerstage.
“We’re hopefully going to see some continued positive strength there on the economy and what they see going forward,” said Ryan Detrick, chief market strategist at Carson Group. “The headlines are scary, for sure. But the fundamentals to us are pretty strong. We’re still seeing earnings season that’s going to come in better than expected.”
This will arrive after a mixed batch of earnings from behemoths like Tesla and Netflix last week. Tesla marked its biggest weekly decline after Elon Musk shared his pessimistic view on the macroeconomic landscape, while Netflix shares soared as markets cheered its new ad-tier subscription plan.
Given the huge role advertisers and subscriptions play for the bottom lines of such firms, it was no surprise that Musk turned his attention to improving the usability of social media platform X, formerly known as Twitter.
Musk said. X is gearing up to launch two new tiers of subscriptions for users, in hopes that it could improve the company’s finances and open new revenue streams. Musk’s sweeping changes across the company, including firing most of its employees and reinstating previously banned accounts, scared advertisers away.
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.
Striking United Auto Workers (UAW) members from the General Motors Lansing Delta Plant picket in Delta Township, Michigan September 29, 2023.
Rebecca Cook | Reuters
DETROIT – The United Auto Workers union believes there is “more to be won” in ongoing contract negotiations with the Detroit automakers following five weeks of labor strikes against the companies, UAW President Shawn Fain said Friday.
His comments come despite record contract offers from General Motors, Ford Motor and Stellantis that now include 23% hourly pay increases and other significantly enhanced benefits during the terms of the four and a half-year deal.
“There is more to be won,” Fain said during an online broadcast. “These are already record contracts, but they come at the end of decades of record decline. So it’s not enough to be the best ever, when auto workers have gone backwards over the last two decades. That’s a very low bar.”
Despite Fain’s comments, the union did not announce additional strikes Friday against any of the companies. He said the “bottom line is we’ve got cards left to play, and they’ve got money left to spend.”
Fain did not address a Friday report by Bloomberg that the union has asked for a 25% increase in general wages.
The union has not announced any additional strikes since initiating an unexpected walkout on Oct. 11 at Ford’s Kentucky Truck Plant that produces highly profitable pickup trucks and SUVs. That’s despite Ford having the best proposal regarding economics, as outlined Friday by Fain.
Fain spent quite a notable amount of time during the online broadcast discussing how the union plans to use these talks to assist in organizing non-union plans. He also heavily criticized the Monday comments of Ford Chair Bill Ford to bring an end to the negotiations.
“Bill Ford said it shouldn’t be Ford versus the UAW. He said it should be the UAW and Ford against foreign automakers,” Fain said. “I want to be crystal clear on one thing: The days of the UAW and Ford being a team to fight other companies are over … Non-union autoworkers are not the enemy. Those are our future union family.”
Ford said it remains “eager to conclude these negotiations with a contract” that benefits its workers, citing it’s “good that Mr. Fain acknowledged Ford’s contract offer ‘already’ is a record and remains the best one on the table.”
Stellantis said the sides “continue to be productive, building on the momentum from the past several weeks,” but declined to discuss specific details. GM declined to comment regarding Fain’s comments, citing details it released of its most recent offer earlier Friday.
The UAW hasn’t expanded strikes at GM since Sept. 29 or at Stellantis since Sept. 22, despite offers made this week not meeting details of Ford’s proposal from last week and Fain last week saying the union was initiating a “new phase” of strikes and contract negotiations.
“Right before a deal is when there’s the most aggressive push for that last mile. They just want to wait us out,” Fain said. “They want division. They want fear. They want uncertainty. And what we have is our solidarity.”
The strike at Ford’s Kentucky plant — responsible for $25 billion in revenue annually — marked a major escalation in the UAW’s targeted, or “stand-up,” strikes. It also represents a shift in strategy, as Fain had previously publicly announced the targets before the work stoppages occurred.
The UAW has been gradually increasing the strikes since the work stoppages began after the sides failed to reach tentative agreements by Sept 14.
About 34,000 U.S. automakers with the companies, or roughly 23% of UAW members covered by the expired contracts with the Detroit automakers, were on strike.
Here are details of current proposals by the companies to UAW:
Wages: All three automakers have offered a 23% pay increase over four and a half years.
Wage tiers: All three automakers have agreed to eliminate wage tiers at parts facilities where workers have historically been paid less than production-line workers.
Wage progression: Ford has offered a three-year progression to the top wage rate, a system that was in place from the mid-1990s until the aftermath of the 2008 economic crisis. GM has also offered a three-year progression, but only for current workers. GM wants a more gradual four-year progression for future hires. Stellantis has offered only a four-year progression.
Cost of living adjustments (COLA): Ford has offered to restore its COLA formula to the level last used in 2009, meeting the UAW’s demand. Fain said that GM is “approaching restoration but not fully there,” while Stellantis wants to delay cost-of-living adjustments by a year.
Job security: Ford and Stellantis have agreed to give the union the right to strike over plant closures, a key UAW demand. GM has so far rejected that demand.
Temporary workers: Ford has offered to convert current temp workers with 90 days of service to full-time employees, with a raise to $21 per hour for remaining and future temps. Whether those future temps will be converted to full-time employees automatically is still being negotiated, Fain said. GM has proposed to convert current and future temps with one year of service to full time employees, and has matched Ford with a $21 per hour wage for remaining and future temps. Stellantis agreed to convert “thousands” of current temps to full-time status, with a wage increase to $20 per hour for remaining and future temps. As with Ford, the automatic conversion of future temps is “still being negotiated,” Fain said.
Retirement plans: All three automakers have offered a $3 increase to pension benefits. Ford and Stellantis have offered to increase their 401(k) contributions to 9.5% plus $1 per hour. GM offered an increase to 8% plus $1.25 per hour.
Payments to retired workers: Ford offered annual lump sum payments of $250 to retired workers, with surviving spouses eligible to continue to receive the payments. GM offered a one-time lump sump payment of $1,000, with surviving spouses not eligible. Stellantis rejected all increases to retiree pay. Fain said all three offers were “deeply inadequate.”
Profit sharing: Ford offered to improve its existing profit-sharing formula by including profits from Ford Credit, its financing subsidiary, and to make temp workers eligible to receive profit-sharing payments. Stellantis and GM both want to maintain their current profit-sharing formulas, but GM has offered to make temp workers with 1,000 hours of service eligible to receive payments. Stellantis has not offered to make its temporary workers eligible to receive profit-sharing payments.
Work-life balance: All three automakers have offered to make Juneteenth an official paid holiday and have offered two weeks of paid parental leave.
