ReportWire

Tag: Passenger Cars

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

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

    [ad_1]

    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

    [ad_2]

    Source link

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

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

    [ad_1]

    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

    [ad_2]

    Source link

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

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

    [ad_1]

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

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

    • Order Reprints
    • Print Article
    [ad_2]
    Source link

  • Where the Strike Stands. What Auto Makers and UAW Say.

    Where the Strike Stands. What Auto Makers and UAW Say.

    [ad_1]

    UAW workers went on strike in the early morning hours on Friday at the GM Wentzville Assembly plant in Wentzville, Mo.


    Photograph by Nick Schnelle

    The United Auto Workers’ strike against the three auto makers with roots in Detroit starts the week with pl…

    [ad_2]

    Source link

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

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

    [ad_1]

    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.”

    [ad_2]

    Source link

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

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

    [ad_1]

    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.

    [ad_2]

    Source link

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

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

    [ad_1]

    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.

     

    [ad_2]

    Source link

  • An Investor’s Guide to Navigating a UAW Strike

    An Investor’s Guide to Navigating a UAW Strike

    [ad_1]

    The UAW could start soon, though it might not hurt the shares of GM and Ford.


    Jeff Kowalsky/Bloomberg

    The labor contract between the United Auto Workers and the Detroit-Three automakers expired at midnight on Thursday. A deal isn’t done and the union will …

    [ad_2]

    Source link

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

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

    [ad_1]

    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?

    [ad_2]

    Source link

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

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

    [ad_1]

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

    [ad_2]

    Source link

  • The economy is doing better than anyone thinks, but these troubles are in the pipeline, says Bill Ackman

    The economy is doing better than anyone thinks, but these troubles are in the pipeline, says Bill Ackman

    [ad_1]

    Stock investors are showing some hesitancy for Tuesday, with big signals on the economy coming this week via consumer prices and retail sales. Ahead of that, Apple is expected to tempt consumers with yet another new iPhone on Tuesday.

    How much should investors be worrying right now? Our call of the day from Pershing Square Capital Management manager Bill Ackman says that in the near term, we can relax a little, but it isn’t all roses.

    Read: Hedge funds have bailed on the U.S. consumer in a big way, Goldman Sachs data finds

    He told the Julia La Roche Show in an interview where he felt like he had a “crystal ball of what was going to happen,” starting in January 2020 with the COVID-19 outbreak, and that carried on through interest rates and the economy. Indeed, the manager reportedly made nearly $4 billion on a couple of pandemic-related bets.

    “I would say the crystal ball has clouded a bit in the last period. I think these are unusual economic times and perhaps we always say that, but I don’t think this is a pattern that has been repeated…or it hasn’t been for more than 100 years,” he said.

    But he remains near-term upbeat. “For two years, people have been saying that recession’s around the corner and you know we’ve had a very different view, and continue to have this view that I think people are coming around to, that the economy is actually still quite strong,” he said.

    And while those on lower-income rungs have burned through a lot of COVID savings, he thinks the economy has yet to really see impact from the big fiscal stimulus seen in recent years.

    Looking down the road though, Ackman has got a stack of concerns over the economy. He sees about a third of federal debt due to get repriced meaning that over a relatively short period of time, “interest expense will become a much bigger part of the deficit that is not going to be a contributor to the economy.”

    And while higher interest rates do help savers, ultimately that will be a big drag on the economy, he said, adding that rising inflation, mortgage rates, car payments and credit card rates, are all set to slow the economy.

    “We’re still in the midst of a war and there’s political uncertainty you know with an upcoming election,” he said. That partly explains Pershing Square’s hedge via a short position on the 30-year Treasury bond
    BX:TMUBMUSD30Y
    that he laid out in a tweet in early August.

    For roughly a year, long-term Treasury yields have been trading below short-dated ones, which is known as an inverted yield curve, a phenomenon that’s often seen as a precursor to recession.

    “I don’t see inflation getting back to 2% so quickly, if at all, and if in fact we’re in a world of persistent 3% inflation, you know it doesn’t make sense to have a 4.3%, 4.25% Treasury yield,” he said.

    Other risks? Ackman remains worried about regional banks following the spring crisis, as many have big fixed-rate portfolios of assets that have gotten less and less valuable as rates rise. “I would say the commercial real estate picture has not gotten better, if anything, you know, you’re going to start seeing real defaults, particularly with office assets,” he said.

    “Regional banks have the most exposure to construction loans so they are going to be a lot of construction loans that won’t be able to repaid. There will be a lot of restructurings, so either the investors groups are gonna have to put in a lot more equity or the banks are going to start taking some losses,” he said.

    Ackman says investors also face a presidential campaign that could add some stress. The hedge-fund manager said he’s surprised there have not been “more and better alternative candidates” for the 2024 campaign over President Joe Biden and former President Donald Trump.

    He’d like to see JPMorgan Chase & Co. CEO Jamie Dimon toss his hat in the ring and believes Biden is “beatable,” by a strong candidate.

    Ackman himself said it’s “possible,” he himself could run someday, but he’s more focused on having a better investment track record over Berkshire Hathaway Chairman and CEO Warren Buffett — and needs some 30 years to match the Oracle of Omaha.

    Read: Here’s an easy way to make a more concentrated play on the ‘Magnificent Seven’ stocks

    The markets

    Stock futures
    ES00,
    -0.36%

    NQ00,
    -0.45%
    are tilting south, led by tech, with Treasury yields
    BX:TMUBMUSD02Y

    BX:TMUBMUSD10Y
    steady to a touch lower and the dollar
    DXY
    recovering some ground.

    Read: Watch this ‘canary in the coal mine’ for signs of trouble in markets, Neuberger Berman CIO says

    For more market updates plus actionable trade ideas for stocks, options and crypto, subscribe to MarketDiem by Investor’s Business Daily.

    The buzz

    Oracle shares
    ORCL,
    +0.31%
    are down 10% in premarket trading after disappointing guidance from the cloud database group.

    Apple’s
    AAPL,
    +0.66%
    big event kicks off at 1 p.m. Eastern, with the launch of the pricier iPhone 15 expected to be on the agenda.

    Hot ticket. Arm Holdings’ IPO is already 10 times oversubscribed and bankers will stop taking orders by Tuesday afternoon, Bloomberg reports, citing sources.

    Tech’s wild week: How Apple, Google, AI, Arm’s mega IPO could set the agenda for years

    Upbeat results are boosting shares of convenience-store operator Casey’s General Stores
    CASY,
    -1.02%    .

    Packaging giant WestRock
    WRK,
    -1.48%
    and rival Smurfit Kappa
    SK3,
    -8.87%
    have announced a stock and cash tie up. WestRock shares are up 8% in premarket.

    Read: U.S. budget deficit will double this year to $2 trillion, excluding student loans

    Best of the web

    No better than gambling? Amateur investors are piling into 24-hour options.

    Demand for oil, coal, gas to peak this decade, IEA chief says

    U.S. takes on tech giant Google in landmark case.

    The chart

    Bank of America’s global fund manager survey for September sees investors still bearish, but no longer on the extreme side. Here’s the chart:

    Read: Fund managers just made their biggest shift ever into U.S. stocks — and out of emerging markets

    The tickers

    These were the most active stock-market tickers on MarketWatch as of 6 a.m. Eastern:

    Ticker

    		 Security name
    TSLA,
    +10.09%         		Tesla
    AMC,
    +2.23%         		AMC Entertainment
    CGC,
    +81.37%         		Canopy Growth
    NVDA,
    -0.86%         		Nvidia
    GME,
    -3.90%         		GameStop
    AAPL,
    +0.66%         		Apple
    ACB,
    +72.17%         		Aurora Cannabis
    NIO,
    +2.89%         		Nio
    MULN,
    +5.77%         		Mullen Automotive
    AMZN,
    +3.52%         		Amazon

    Random reads

    “Worst investment ever.” Brady Bunch fan buys original house for cut-price $3.2 million.

    And the house from the “Halloween” slasher films just sold for $1.8 million.

    China may ban clothes that hurt people’s feelings.

    Need to Know starts early and is updated until the opening bell, but sign up here to get it delivered once to your email box. The emailed version will be sent out at about 7:30 a.m. Eastern.

    Listen to the Best New Ideas in Money podcast with MarketWatch financial columnist James Rogers and economist Stephanie Kelton.

    [ad_2]

    Source link

  • VinFast loses more than $140 billion in market cap in two weeks after week-long nosedive for EV maker

    VinFast loses more than $140 billion in market cap in two weeks after week-long nosedive for EV maker

    [ad_1]

    Electric-vehicle startup VinFast Auto Ltd. has seen its market capitalization fall more than $140 billion in less than two weeks, weighed down by a six-day losing streak for the company’s stock.  

    Shares of VinFast
    VFS,
    -2.72%
    soared last month after the company went public through a special-purpose acquisition company deal, taking its market cap to an eye-watering $231.3 billion on Aug. 25 — easily surpassing established automakers such as Ford Motor Co.
    F,
    +0.57%
    and General Motors Co.
    GM,
    +0.09%    .

    VinFast is on pace to extend its losing streak to seven days. Shares of the low-float company fell 26.3% Thursday, taking VinFast’s market cap to $85 billion, according to FactSet data. Ford’s market cap is $47.7 billion and GM’s is $44.5 billion, FactSet data show.

    Related: This EV company has a bigger market cap than Ford or GM. But you may not have heard of it.

    The EV maker is a majority-owned affiliate of Vietnamese conglomerate Vingroup, one of the largest publicly traded companies in Vietnam. VinFast said that as of June 30, 2023, the company has delivered close to 19,000 EVs.

    About 99% of VinFast shares are controlled by Vingroup chair and VinFast founder Pham Nhat Vuon, making only a small portion available to investors.

    Related: EV startup VinFast may be worth more than Ford or GM, but there’s a catch

    VinFast is importing its vehicles into the U.S. and is also ramping up its North American presence. In July, the company broke ground on an electric-vehicle manufacturing site within the Triangle Innovation Point in Chatham County, N.C. The startup says the plant will eventually have the capacity to make 150,000 vehicles a year.

    [ad_2]

    Source link

  • U.S. stocks end higher after Fed Chair Powell’s Jackson Hole remarks, S&P 500 snaps 3-week losing streak

    U.S. stocks end higher after Fed Chair Powell’s Jackson Hole remarks, S&P 500 snaps 3-week losing streak

    [ad_1]

    U.S. stocks ended higher Friday after Federal Reserve Chairman Jerome Powell warned the central bank may need to raise interest rates even higher to temper a strong U.S. economy and quell inflation, while assuring investors that monetary policy would proceed cautiously.

    How stock indexes traded

    For the week, the Dow fell 0.4%, the S&P 500 gained 0.8% and the Nasdaq climbed 2.3%, according to Dow Jones Market Data. The Dow booked back-to-back weekly losses, while the S&P 500 and technology-heavy Nasdaq Composite each…

    [ad_2]

    Source link

  • This EV company has a bigger market cap than Ford or GM. But you may not have heard of it.

    This EV company has a bigger market cap than Ford or GM. But you may not have heard of it.

    [ad_1]

    Shares of electric-vehicle startup VinFast Auto Ltd. have surged since the company went public through a special-purpose acquisition company deal last week, taking its market capitalization to levels well beyond established automakers such as Ford Motor Co. and General Motors Co.

    Shares of low-float company VinFast
    VFS,
    +40.35%
    rose 16.1% Friday, after ending Thursday’s session up 32.3%, sending the company’s market cap to $231.3 billion. In comparison, Ford’s
    F,
    +1.36%
    market cap is $47 billion and GM’s
    GM,
    +0.21%
    is $45.2 billion, according to FactSet data. Rival EV maker Rivian Automotive Inc.
    RIVN,
    +2.19%
    has a market cap of $18.6 billion. However, all of these are dwarfed by Tesla Inc.’s
    TSLA,
    +3.72%
    $730.2 billion market cap.

    In roughly a week, the VinFast stream on Stocktwits, a social platform for investors and traders, has racked up about 3,000 watchers, and message volume is “pretty consistent” throughout the day, Tommy Tranfo, Stocktwits’ head of community, and Tom Bruni, a senior writer for the platform, told MarketWatch Thursday.

    Related: EV startup VinFast may be worth more than Ford or GM, but there’s a catch

    “What everyone is discussing is whether or not the current hype in the stock is warranted given where the business is,” Tranfo and Bruni said in a statement emailed to MarketWatch Thursday, noting the company’s soaring market cap. “That’s despite the underlying business doing less than $1 billion in revenue, having negative cash flow from operations of $1.5 to $2 billion.”


    Uncredited

    In the short term, the stock is trading on momentum and hype, according to Tranfo and Bruni. “But eventually, its business results have to justify the valuation. And as we’ve seen with other startups in the space, it’s easy to say they’re going to accomplish XYZ, but harder to actually execute and produce results,” they said.

    “From the community side: [We] think what we’re paying attention to the most right now is if this hype sticks,” they added.

    Related: Rivian, Lucid and XPeng make the list of 20 EV companies expected to grow sales most quickly through 2025

    The EV maker is a majority-owned affiliate of Vietnamese conglomerate Vingroup, one of the largest publicly traded companies in Vietnam. VinFast said that as of June 30, 2023, the company has delivered close to 19,000 EVs.

    About 99% of VinFast’s shares are controlled by Vingroup chair and VinFast founder Pham Nhat Vuon, making only a small portion available to investors.

    Stocktwits’ Tranfo and Bruni noted that EVs have a good track record of growing strong retail community support. “So there is reason to believe that this momentum could continue, but it may be too early to tell for sure,” they added. “Retail loves the electric-vehicle industry, so the interest is likely to continue regardless of how well the company (and stock) actually perform.”

    Related: Tesla’s stock jumps 7% after Baird highlights Cybertruck, other ‘catalysts’ for the year

    VinFast is importing its vehicles into the U.S. and is also ramping up its North American presence. In July, the company broke ground on an electric-vehicle manufacturing site within the Triangle Innovation Point in Chatham County, N.C. The EV startup says the plant will eventually have the capacity to make 150,000 EVs a year.

    Claudia Assis contributed.

    [ad_2]

    Source link

  • Nvidia may be the AI stock for now, but here are the picks for later, says Goldman Sachs

    Nvidia may be the AI stock for now, but here are the picks for later, says Goldman Sachs

    [ad_1]

    Wall Street looks ready to build on Monday’s gains, the first in five sessions for the S&P 500
    SPX
    and Nasdaq Composite
    COMP.
    That’s as expectations build around Nvidia, which has had a lackluster August, to knock it out of the park with earnings on Wednesday.

    Investors have had months to focus on AI darlings such as Nvidia. In our call of the day, Goldman Sachs takes a look at stocks to trade after the big AI trade. A team led by strategists Ryan Hammond and David Kostin complied a basket of companies with the biggest potential long-term earnings per share boost from the impact of AI adoption on labor productivity.

    Their analysis indicates that following widespread AI adoption, EPS for the median stock in that basket could be 72% higher than the baseline, versus 19% for the median Russell 1000 stock.

    “We estimate the potential productivity-related EPS boost from increased revenues or increased margins, using a combination of company-level estimates of the share of the wage bill exposed to AI automation and the labor cost to revenue ratio,” said the Goldman team.

    Since early 2023, when AI emerged as a theme for investors, they note their long-term basket of stocks has outperformed the equal-weight S&P 500 by just 6 percentage points, far less than near-term beneficiaries such as Nvidia
    NVDA,
    -0.49%    ,
    Microsoft
    MSFT,
    +0.94%
    or Meta
    META,
    +0.51%    .


    Goldman Sachs Investment Research

    “The estimated AI-driven earnings boost is likely to occur over the next few years, but should be reflected in stock valuations sooner. However, the eventual share price impact will depend on the ability of companies to use AI to enhance earnings,” said Goldman.

    While unable to pin it exactly, Goldman expects AI adoption will start to a have a “meaningful macro impact” between 2025 and 2030, with regulatory constraints and data privacy concerns likely to slow widespread adoption. Nearly 75% of CEOs see AI take-up impacting companies or cutting labor needs within the next five years, even if they don’t right now.

    Firms with the biggest workforce exposure to AI and larger and more innovative ones, will likely adopt generative AI earlier than others, say the strategists. They say to “expect valuation multiples for these companies to increase first as the adoption timeline crystallizes, even if actual adoption and the associated EPS boost is occur later.”

    Goldman’s estimates on the potential earnings boost for those long-term AI beneficiaries consist of several factors: the share of each company’s wage bill exposed to AI automation, how much of a company’s wage bill is exposed to AI automation and labor cost as a share of revenue.

    “For the typical Russell 1000 stock, 33% of the wage bill is potentially exposed to AI automation and labor costs currently represent 14% of total sales. The potential boost from higher sales would increase earnings by 11% and reduced labor costs would increase earnings by 26%, all else equal,” say the strategists.

    Here is a taster of their long-term AI beneficiaries basket:


    Goldman Sachs

    And a few more:


    Goldman Sachs

    Read: U.S. stocks may bounce this week, but summer selloff is only halfway done, analysts warn

    The markets

    U.S. stocks
    SPX

    COMP
    are trading mixed. The yield on the 10-year Treasury
    BX:TMUBMUSD10Y
    is steady at 4.33%.

    For more market updates plus actionable trade ideas for stocks, options and crypto, subscribe to MarketDiem by Investor’s Business Daily.

    The buzz

    Microsoft
    MSFT,
    +0.94%
    has proposed a Ubisoft license to win U.K. regulatory approval for its Activision Blizzard
    ATVI,
    +1.09%
    buyout. Activision shares and Ubisoft
    UBI,
    +9.93%
    surged in Paris.

    On the heels of a 7% surge, EV-maker Tesla
    TSLA,
    +2.77%
    is up 1.8%.

    Opinion: SoftBank’s Arm is going public, but it faces a rapidly growing threat

    Lowe’s shares
    LOW,
    +3.34%
    are up after the DIY retailer’s earnings topped expectations, though it notes lower discretionary demand.

    Among Monday’s late earnings news: Fabrinet
    FN,
    +27.25%
    is up 18% after the high-tech manufacturing services company upbeat forecast, with new AI products helping drive results. Videoconferencing group Zoom Video Communications
    ZM,
    -4.15%
    is up 4% after reporting an earnings jump and guidance.

    Read: Why Amazon is this analyst’s top internet stock pick

    The world’s biggest miner BHP
    BHP,
    -0.98%
    reported a 58% slump in annual profit amid tumbling commodity prices in part due to China’s economic troubles. U.S.-listed shares are up 4%.

    Arm Holdings filed its long-awaited IPO, which could be the year’s biggest. The chip designer aims to raise up to $10 billion with a valuation of $60 billion to $70 billion.

    Existing home sales for July are due at 10 a.m., with several Fed speakers throughout the day: Richmond Fed President Tom Barkin at 7:30 a.m. and Chicago Fed President Austan Goolsbee and Fed. Gov. Michelle Bowman both at 2:30 p.m.

    Best of the web

    ‘Own what the Mother of All Bubbles crowd doesn’t.’ This market strategist expects stagflation and is investing for it now.

    New video shows the day police raided 98-year old Kansas newspaper owner’s home.

    Hitler’s birth house in Austria will be turned into a police station with a human rights training center.

    The tickers

    These were the top tickers on MarketWatch as of 6 a.m.:

    Ticker

    		 Security name
    TSLA,
    +2.77%         		Tesla
    NVDA,
    -0.49%         		Nvidia
    AMC,
    -17.31%         		AMC Entertainment
    NIO,
    -1.87%         		Nio
    APE,
    -11.32%         		AMC Entertainment Holdings preferred shares
    TTOO,
    -6.13%         		T2 Biosystems
    GME,
    -3.63%         		GameStop
    AAPL,
    +0.63%         		Apple
    MULN,
    -19.19%         		Mullen Automotive
    AMZN,
    +0.15%         		Amazon.com

    The chart

    Is tech dancing to the beat of its own drum? The Chart Report flagged this one from Scott Brown, founder of Brown Technical Insights, showing performance of the Technology Select Sector SPDR ETF
    XLK
    :


    @scottcharts

    “It’s only been a week, but consensus and conventional wisdom suggest higher yields are bad for Growth/Tech stocks. Meanwhile, Tech is acting like it never got the memo. It’s still too early to tell if Tech is trying to tell us something, but Scott points out that the sector is facing a crucial test this week at the March 2022 highs (around $163). $XLK is solidly above $163 after today’s bounce, but where it ends the week will likely hinge on $NVDA, as the company releases earnings on Wednesday evening,” says Patrick Dunuwila, editor and co-founder of The Chart Report. 

    Random reads

    “We are the champions.” Spain erupted in celebrations to welcome its Women’s World Cup victors. And England’s Lionesses got a 1,000 soccer-ball tribute.

    No, Tropical Storm Hilary didn’t flood Dodger Stadium.

    These thirsty beer-drinking thieves are raccoons.

    Need to Know starts early and is updated until the opening bell, but sign up here to get it delivered once to your email box. The emailed version will be sent out at about 7:30 a.m. Eastern.

    Listen to the Best New Ideas in Money podcast with MarketWatch financial columnist James Rogers and economist Stephanie Kelton.

    [ad_2]

    Source link

  • How much would a strike cost the Big Three automakers? Wall Street thinks it has an answer.

    How much would a strike cost the Big Three automakers? Wall Street thinks it has an answer.

    [ad_1]

    Wall Street got busy Monday calculating the impact of a strike on the Big Three automakers amid increasingly fraught labor negotiations between union workers and companies, and a  “greater likelihood” of a walkout next month.

    Also on Monday, President Joe Biden weighed in, urging the United Auto Workers and Ford Motor Co.
    F,
    +0.49%    ,
    General Motors Co.
    GM,
    +0.53%
    and Stellantis NV
    STLA,

    to “to work together to forge a fair agreement.”

    Negotiations so far have been tense, and the contract expires in one month.

    Citi analyst Itay Michaeli estimated that a strike at GM lasting about two weeks impacting roughly about 100,000 vehicles would result in an impact of around $1.3 billion before interest and taxes; a five-week one, impacting about 280,000 vehicles, would result in a $3.4 billion impact EBIT. That would be a similar hit as GM’s 2019 strike, he said.

    Recent headlines are “pointing to increasingly challenging labor negotiations and a greater likelihood of a strike next month,” Michaeli said.

    A longer stoppage would result in shrinking dealer inventory and possibly start to impact sales sometime during the second half of October.

    For Ford, Michaeli calculated an impact of about $1.6 billion EBIT for a two-week strike affecting about 130,000 Ford vehicles, growing to $4 billion in the case of a five-week strike affecting 330,000 Ford cars and trucks. Like GM, sales would be hobbled roughly by mid-October in the case of a longer strike.

    “For both companies, the exact volume impact will in part depend on the extent of any Canada/Mexico downtime, and to that, GM appears somewhat better positioned than Ford due to GM’s higher exposure to Mexico production (including for pickup trucks) and other supply-chain considerations,” the analyst said in his note Monday.

    Both companies likely can keep their guidance intact in the case of a brief, one-week strike, but a strike beyond the two-week mark “likely triggers a [fiscal-year guidance] cut, though it would set 2024 up with reduced inventory and greater volume/price recovery prospects,” Michaeli said.

    A big question is whether a strike targets one specific automaker, as it was the case with GM in 2019, or all three at the same time — with more industry volume loss but also potentially a shorter strike, Michaeli said.

    “To that, Ford is generally viewed to be the least likely to be selected as a target,” he said.

    Deutsche Bank analyst Emmanuel Rosner said in his note Monday that he estimates an impact on earnings of about $400 million to $500 million for every week of production for each automaker, for a total of about $1.4 billion.

    GM’s 2019 strike lasted almost six weeks, with a loss of about $3.6 billion EBIT; GM North America lowered revenue estimates as nearly 300,000 fewer vehicles were delivered.

    Extrapolating the same $13,000 per unit in EBIT hit, Ford, GM and Stellantis could see [$550 million, $480 million, and $400 million] in weekly profit impact, reaching that $1.4 billion-a-week estimate, Rosner said.

    “In a bad-case scenario with 8 weeks of strike against all 3 automakers, which would bring the UAW strike fund to very low levels, this could cause $11.2 billion in lost profits for the [Detroit 3],” Rosner said. “While this is considerable, it would still be considerably less than the impact from the lifetime of the 4-year contract,” which would create “a permanent raise in the OEMs’ cost,” he said.

    The analyst also quantified the cost of UAW’s demands, focusing on the union’s “higher-probability asks” such as converting temporary employees into full-time workers, the elimination of a tiered-wage system, and about 40% base wage increase over the four years of the life of the contract. He left out “unlikely” to be met demands around pensions and post-retirement healthcare benefits.

    “Our analysis suggests accommodating these demands would likely constitute a large but not destructive headwind to OEMs’ earnings in year 1, with incremental costs stepping up even further in subsequent years,” Rosner said in the note.

    If these demands are granted with cost-of-living raises on top, Rosner estimated costs to all three automakers around $3.6 billion in the first year of the contract, amounting to $23 billion in total for the four years, “with highest hit to Stellantis, followed by GM and then Ford.”

    “Specifically, we estimate that the conversion of temporary employees to full-time workers would cost D3 a total of $1.4 billion, not yet factoring in wage increases, with the highest impact to Stellantis given the higher [percentage] of temporary employees used currently relative” to GM and Ford, the analyst said.

    [ad_2]

    Source link

  • Ford is going all in on hybrids. Here’s why.

    Ford is going all in on hybrids. Here’s why.

    [ad_1]

    Ford Motor Co. is betting that hybrid vehicles will be the bridge toward an all-electric-vehicle future for perhaps longer than most people expect. It’s a cautious strategy that has its admirers on Wall Street.

    Ford
    F,
    -4.48%
    is not thinking about “extremes” between hybrids and EVs, company Chief Executive Jim Farley said recently. The automaker decided to keep investing in heavy-duty hybrid vehicles and has been surprised by their popularity, he said.

    That’s a “subtle shift of strategy” for Ford, but one that makes sense in the current reality, said Garrett Nelson, an analyst with CFRA.

    On the call with analysts following Ford’s quarterly results last month, Farley noted that Ford’s hybrid offerings are extremely popular. About 10% of F-150 pickup trucks and 56% of smaller Maverick pickup trucks being sold in the U.S. are hybrids, he said.

    “We are adding hybrid options across our [internal-combustion-engine] lineup,” he said. “And we expect to quadruple our hybrid sales in the next five years, and we were already No. 2 in the market last year.”

    The pure-battery EV market has become saturated, and Ford is indicating that it is willing to be flexible, CFRA’s Nelson said.

    “Bottom line, aside from Tesla
    TSLA,
    +1.30%
    EVs, the vast majority of other EV models have sold very poorly,” Nelson said, adding that although many people are not interested in EVs, hybrids could be an easier sell.

    Related: Electric vehicles vs. gas-powered cars: Which one is cheaper to buy and own?

    “Consumers are becoming much more educated,” he said. “You can in a lot of cases go on pure battery power and not even use any fuel with these hybrids.”

    Japanese carmakers such Toyota Motor Corp.
    7203,
    +1.40%

    TM,
    +0.26%
    and Honda Motor Co.
    7267,
    +5.87%

    HMC,
    -0.09%
    have taken that approach from the start, making much bigger bets on hybrids, and “in hindsight that appears to have paid off,” Nelson said.

    Indeed, “hybrids are a much easier purchase in today’s environment,” said Karl Brauer, an analyst with iSeeCars.com.

    “They cost less than electric vehicles, they don’t involve range anxiety, and Ford has managed to make them quite practical in how it pairs the technology with the F-150,” Brauer said.

    Hybrids are more expensive to buy than internal-combustion-engine vehicles, but they are cheaper than electric vehicles because their batteries are significantly smaller — even those in plug-in hybrids, which are capable of driving several dozen miles solely on an electric charge. About a third of the cost of an EV is the cost of the battery.

    Hybrids have one more critical advantage over EVs, Brauer said — they can be produced and sold for a profit.

    Ford’s strategy contrasts with a more aggressive EV push by General Motors Co.
    GM,
    -5.79%    ,
    Nelson said.

    GM late Wednesday unveiled its Cadillac Escalade IQ, a luxury EV that starts at around $130,000 and has 450 miles of range. GM expects to begin making the vehicle in the summer of 2024, with sales beginning in late 2024.

    GM’s future lineup includes a number new EV models as well as electric versions of popular vehicles that were previously available only as gas-powered models. That includes an electric Chevy Equinox for next year and a return of the Chevy Bolt, among the cheapest EVs available in the U.S.

    See also: GM is bringing back the Bolt. What do we know so far about the updated EV?

    GM will cease production of the Bolt later this year but has promised to bring it back using the company’s new shared EV platform. Observers expect the new Bolt to be available around 2025.

    GM’s EV strategy is generally viewed as more risky.

    Tesla started a price war earlier this year, cutting prices of its EVs several times. Ford also cut prices, most notably on the F-150 Lightning, the electric version of a pickup truck that’s been the best-selling vehicle in the U.S. since the 1980s.

    Hybrids also do away with so-called charge anxiety, because their gas-powered engines kick in when needed.

    Related: EVs zoomed ahead with a 8.2% slice of auto financing pie in second quarter

    According to a Consumer Reports survey in June, about 6 in 10 respondents said that concerns about charging were holding them back from purchasing an EV, and about 5 in 10 cited range as a reason they wouldn’t buy one just yet.

    Tesla has made its fast-charging ports the de facto standard in the U.S., and several automakers, including Ford and GM, have inked deals to allow their EV owners to power up at Tesla’s Supercharger network, which has charging stations located near major highways.

    An often-cited 2022 study about the reliability of public, open-to-all fast-charging stations in nine counties in the San Francisco Bay Area found a range of issues with the stations, from charging and payment failures to annoyances such as spaces being occupied by gas-powered vehicles or EVs that are not actively charging.

    [ad_2]

    Source link

  • Tupperware and Yellow have skyrocketed, but don’t confuse them with meme stocks

    Tupperware and Yellow have skyrocketed, but don’t confuse them with meme stocks

    [ad_1]

    All eyes have been on shares of Tupperware Brands Corp. and Yellow Corp. in recent days as the stocks have soared despite a dearth of fresh news in the case of the former, and negative news in the case of the latter.

    Shares of the beleaguered maker of iconic food-storage containers enjoyed a record 434% gain in July on no apparent news. Yellow’s stock
    YELL,
    -26.15%
    has also skyrocketed, despite reports that the trucking company is facing bankruptcy.

    Over the weekend the Wall Street Journal reported that the less-than-truckload company has shut down operations as it prepares for bankruptcy. On Monday the International Brotherhood of Teamsters said it was served legal notice that Yellow was “ceasing operations and filing for bankruptcy.” MarketWatch has reached out to Yellow with a request for comment.

    Related: How ‘left-for-dead’ Tupperware became a buzzy trading play

    Set against this backdrop, the surging share prices for Tupperware
    TUP,
    -25.99%
    and Yellow have sparked comparisons with the meme stock phenomenon, where discussions on social media can send share prices surging. This trend turned companies such as AMC Entertainment Holdings Inc.
    AMC,
    -3.45%
    and GameStop Corp.
    GME,
    -4.42%
    into meme stock “darlings” in recent years. But Samantha LaDuc, founder of LaDucTrading.com, says there’s a different explanation for what’s been happening to shares of Tupperware and Yellow.

    “Literally, it’s short covering, as the paired trade of long quality, short junk unwinds,” she told MarketWatch, via email. “And it typically always precedes volatility.”

    Short selling of a stock occurs when an investor borrows shares and sells them immediately expecting the price to drop. The shares can then be repurchased and returned to the lender, with the investor pocketing the difference. Although sometimes vilified, short sellers are actually misunderstood, Robert Sloan, managing partner at financial analytics firm S3 Partners and author of “Don’t Blame the Shorts,” recently told MarketWatch.

    Related: Short selling stocks — and trying to play short squeezes — can be very dangerous

    In a letter to investors this week, Dan Loeb, the chief executive of the hedge-fund firm Third Point, explained that short selling is much more challenging today than it has been historically.

    “Fundamental analysis is increasingly taking a back seat to monitoring daily option expiries and Reddit message boards, as evidenced by the numerous short squeezes and manipulations of heavily shorted stocks such as AMC and GameStop in 2021 and others this year,” he wrote. “While we have not abandoned short selling, we continue to reduce our single-name short exposure in favor of market hedges and short baskets.”

    LaDuc explained that in June and July hedge funds aggressively covered shorts in global equities, and also noted the trend of FOMO, or fear of missing out.

    “We have had the largest six-month increase in leverage on record (according to Goldman), with a clear case of FOMO-the-MOMO [momentum] chase in full view as concentration risk in megacap tech forced a NASDAQ “SPECIAL REBALANCE” to ‘down-weight’ AAPL, MSFT, GOOGL etc.”

    Related: Short sellers are not evil, but they are misunderstood

    Short covering occurs when a person with a short position buys back the shares, ending the short trade, and returns the shares to the seller. With this strategy, the short seller aims to cover after the share price falls and make a profit. They may also cover if the price goes up to limit their losses.

    Last week LaDuc told MarketWatch how she was able to anticipate a Tupperware stock spike despite a dearth of traditional market-moving news around the name.

    Tupperware’s stock has continued its upward trajectory, rocketing again on Tuesday. The stock eventually ended Tuesday’s session up 26% at $5.38, with LaDuc warning her clients of the risks involved in a parabolic rally. “I suggested to clients it was likely done and to be very cautious if still long because ‘Parabolas are trapped longs that can trigger volatility which can trigger a liquidation event’.”

    Related: Yellow’s stock quadruples in 2 days even after reports that bankruptcy is coming

    Shares of Tupperware are down 23.2% Wednesday. Yellow Corp.’s stock, which ended Tuesday’s session up 121.6%, is down 17.3% Wednesday.

    With regard to Yellow Corp. LaDuc attributes its recent stock movements to insider and Wall Street manipulation. “Low priced, low-float stocks are VERY easy to push around,” she told MarketWatch.

    Bankrupt companies such as Bed Bath & Beyond Inc.
    BBBYQ,
    +1.46%
    have even proven attractive to some investors recently, sparking comparisons with the meme stock phenomenon.

    “They are clearly retail investors, largely on the Robinhood 
    HOOD,
    -4.16%
     platform, that are readers of Reddit,” Howard Ehrenberg, a bankruptcy and reorganization practice partner at law firm Greenspoon Marder, told MarketWatch last month. “They are people buying on rumor and hoping that by participating in a mass purchase binge, they will make money.”

    Related: Tupperware stock skyrockets to a record 434% gain in July

    Hertz Global Holdings Inc.
    HTZ,
    -1.73%    ,
    which filed for bankruptcy protection in 2020 and exited bankruptcy the following year, also fueled meme-stock comparisons, when mostly retail investors piled into the stock during the bankruptcy process.

    Typically in a bankruptcy, shareholders are wiped out as creditors take control of the remaining assets. But those investors were rewarded when the company got a big capital injection and was able to resume trading on an exchange.

    The investor behavior around these types of stocks has caught the attention of academics. Victor Ricciardi, visiting finance faculty at Tennessee Tech University and co-author of the new book “Advanced Introduction to Behavioral Finance,” recently described some of the behaviors that can prompt investors to purchase bankrupt stocks.

    “Representativeness bias refers to when past performance influences how an individual perceives an investment,” Ricciardi told MarketWatch via email last month. “In particular, a person makes a general assumption about a small sample of information or experience.”

    Related: Why investors gamble on shares of bankrupt companies — Bed Bath & Beyond, for example

    So, for example, if a person made a substantial gain from a previous bankrupt stock they might conclude that all bankrupt stocks result in investment gains, according to Ricciardi. There are also parallels with gambling.

    “The notion of the long shot bias is based on the tendency for people to overweight the probability of a long shot bet paying off, especially in horse racing and lotteries,” Ricciardi added. “This is driven by overconfident behavior and dreams of becoming a millionaire overnight.”

    Tupperware’s stock has risen 250.6% in the last three months, while Yellow shares have climbed 84.3%.

    Tomi Kilgore and Phil van Doorn contributed to this report.

    [ad_2]

    Source link

  • Manufacturing stalled in the first half. But now the stage is set for a recovery, says JPMorgan.

    Manufacturing stalled in the first half. But now the stage is set for a recovery, says JPMorgan.

    [ad_1]

    The Institute for Supply Management’s manufacturing index is due for release Tuesday, which outside of inflationary periods (i.e., now), tends to be one of the more important economic indicators for financial markets, given its record as a bellwether.

    ISM manufacturing data during the current rate-hike cycle (in red) has lagged other periods.

    Even compared to other rate-hike cycles, the ISM manufacturing series has been one of the worst in history, points out Jason Daw, head of North America rates strategy at RBC Dominion Securities. Daw makes the case that the U.S. economy overall is not very strong for this period of the cycle, and the manufacturing data, not just ISM but also industrial production, has been particularly feeble.

    But the call of the day comes from JPMorgan’s economic team. They note that while global manufacturing stalled in the first half, the non-manufacturing components rose at a 3.2% annualized rate, allowing the global economy to grow at an above trend 2.7% rate.

    The team led by Bruce Kasman say that the typical channels through which weak manufacturing would bring down the broader economy haven’t materialized. “A major channel by which weakness in goods sectors broadens out is through depressing corporate income and pricing power. While our start-of-year outlook anticipated elevated wage gains to pressure corporate profits, the surprising strength in [first-half] global GDP was accompanied by upside surprises to inflation,” they say. In turn, there have been solid gains in both labor income and profits, and while margins have come off their peaks, they are well above pre-pandemic levels.

    Business hiring, they add, is the ultimate signal of confidence, and employment growth has continued even though expectations have soured.

    Now, say the JPMorgan team, the stage is set for a goods sector recovery. Labor income, when adjusted for inflation, is rising, while finished goods inflation is falling sharply.

    Also, business capital spending continues to expand, particularly in emerging economies outside of China. And importantly, inventories are swinging from a drag to a lift. In the first half, the step down in the pace of stock building depressed global industrial production by 3.4 percentage points.

    “Even if the pace of stockbuilding was only to level off, the impulse to global industry would be material. Add to that a potential desire to align the pace to firming demand growth and the boost could generate a jump in factory output in the coming months,” they say.

    Finally, they note, the tech spending decline after the 2020 to 2021 surge looks to be ending, and global motor vehicle production is picking up as supply-chain bottlenecks ease.

    The markets

    After an okay finish for the S&P 500
    SPX,
    -0.29%
    to a strong July, U.S. stock futures
    ES00,
    -0.36%

    NQ00,
    -0.42%
    were a bit lower as the seasonally weak month of August commenced. Gold futures
    GC00,
    -1.28%
    were trading below $2,000 an ounce. The dollar
    DXY,
    +0.42%
    rose.

    For more market updates plus actionable trade ideas for stocks, options and crypto, subscribe to MarketDiem by Investor’s Business Daily.

    The buzz

    The ISM report is due out at 10 a.m. Eastern, when the job openings and construction spending reports also come out. Monthly auto sales also will be released throughout the day.

    Pfizer
    PFE,
    -0.03%    ,
    Caterpillar
    CAT,
    +4.05%    ,
    Uber Technologies
    UBER,
    -3.96%
    and after the close, Starbucks
    SBUX,
    -0.35%
    and Electronic Arts
    EA,
    -0.61%
    highlight the day’s earnings reports. Pfizer lowered its sales guidance while Caterpillar beat Wall Street earnings estimates and Uber reported a surprise profit.

    JetBlue Airlines stock
    JBLU,
    -8.56%
    slumped as the airline says it no longer expects to report a profit in the third quarter, owing to what it called a challenging environment in the northeast, as well as a preference by consumers for long-haul international flights.

    CVS Health
    CVS,
    +0.48%
    is going to cut 5,000 corporate jobs, according to The Wall Street Journal.

    Best of the web

    BlackRock
    BLK,
    -0.56%
    and MSCI
    MSCI,
    -0.42%
    are targets of a Congressional probe into facilitating U.S. investment in China.

    The first new U.S. nuclear reactor in nearly seven years starts operations.

    Modern-day Oppenheimers see the future of nuclear energy — and it’s mobile.

    Top tickers

    Here were the most active stock-market tickers as of 6 a.m. Eastern.

    Ticker

    		 Security name
    TSLA,
    -1.13%         		Tesla
    TUP,
    +14.28%         		Tupperware Brands
    NIO,
    -4.97%         		Nio
    AMC,
    -0.27%         		AMC Entertainment
    PLTR,
    -2.60%         		Palantir Technologies
    GME,
    -1.80%         		GameStop
    NVDA,
    -0.74%         		Nvidia
    AAPL,
    -0.15%         		Apple
    NKLA,
    +14.79%         		Nikola
    AMSC,
    +54.02%         		American Superconductor

    The chart

    The inflation-adjusted equity premium is looking pretty bleak. That’s calculated by taking the expected return to the S&P 500 and subtracting 10-year TIPS yields. “While admittedly this graphic is skewed by the few megacaps trading at huge multiples, it’s sobering nonetheless,” says Michael Ashton, better known as the Inflation Guy.

    Random reads

    Granted, Philadelphia’s a big sports town, but there were actual tailgates to get the Eagles’ throwback Kelly green jerseys that went on sale.

    A Chinese zoo has denied that a bear is human after video of the creature standing on two feet.

    Need to Know starts early and is updated until the opening bell, but sign up here to get it delivered once to your email box. The emailed version will be sent out at about 7:30 a.m. Eastern.

    Listen to the Best New Ideas in Money podcast with MarketWatch financial columnist James Rogers and economist Stephanie Kelton.

    [ad_2]

    Source link

  • Ford revenue jumps 12%, but stock dips as Wall Street spooked by shifting EV production goal

    Ford revenue jumps 12%, but stock dips as Wall Street spooked by shifting EV production goal

    [ad_1]

    Ford Motor Co. late Thursday reported quarterly profit that was about three times higher than last year’s and a 12% increase in its revenue, moving it to raise its outlook for 2023, but the beat-and-raise was overshadowed by a delay in EV production goals.

    Ford stock
    F,
    +0.44%
    initially rose about 3% after the positive results, with Chief Executive Jim Farley telling investors that the company’s goal is to match an “exciting, long-term vision” of itself with “boringly predictable execution quarter after quarter, year after year.”

    Share gains started to fade, however, as investors zeroed in on the shifted production goal, and ended the extended session down 1.2%. Ford said it expects to reach a production rate of 600,000 EVs in 2024; when it reported first-quarter earnings in May it said it would reach that milestone by the end of this year.

    The company’s EV production growth has been “disappointing,” CFRA analyst Garrett Nelson said Thursday.

    Nelson said he was “cautious” on Ford in light of the stock’s run so far this year and the possibility that “higher-for-longer” interest rates would weigh on sales after a strong first half of the year. Looming labor negotiations with the United Auto Workers are another reason for caution, he said.

    Ford earned $1.9 billion, or 47 cents a share, in the second quarter, nearly three times higher than in the year-ago period and a 4% margin, the company said. Adjusted for one-time items, the automaker earned 72 cents a share.

    Revenue rose 12% to $45 billion, Ford said, and its cash and liquidity are “persistently strong.” The revenue increase included a 39% rise for Ford’s EV business.

    Analysts polled by FactSet expected Ford to report adjusted earnings of 54 cents a share on sales of $43.17 billion.

    Supply-chain “disruptions” have persisted but are now easing, and Ford has “more work to do” to streamline its systems, reduce costs and improve quality, Farley said in the call.

    EV adoption is still in the upswing, Farley said, but the number of companies entering the market is growing even at the higher end of the market. With its varied offers, though, Ford is building EV “loyalists” to its brand, Farley said.

    Ford lifted its EBIT guidance range for the full year to between $11 billion and $12 billion. It also adjusted upward its expectations for 2023 adjusted free cash flow to between $6.5 billion and $7 billion. Capital expenditures would be between $8 billion and $9 billion, the automaker said.

    The guidance presumes “headwinds” including “global economic uncertainty and inflationary pressures, higher industrywide customer incentives and continued EV pricing pressure,” Ford said, as well as increased warranty costs and costs associated with union contract negotiations.

    On the positive side, “tailwinds” accounted for in the guidance included “improved” supply chain, higher industry volumes, upside from the its all-new Ford Super Duty truck and lower commodity costs, Ford said.

    Ford earlier this month surprised Wall Street by cutting the price of its sought-after electric pickup truck, the F-150 Lightning.

    Ford earnings close the cycle for major U.S. automakers, as Tesla Inc.
    TSLA,
    -3.27%
    reported second-quarter earnings last week and General Motors Co.
    GM,
    +1.78%
    earlier this week.

    Shares of Ford have gained 19% so far this year, matching the advance for the S&P 500 index
    SPX,
    -0.64%    .
    The stock holds an outperformance, however, in the past three months, up 19% to the S&P’s 11%.

    See also: GM, Hyundai and other car manufacturers to build 30,000 fast EV chargers in challenge to Tesla

    [ad_2]

    Source link