Tag: Passenger Cars

Many investors are betting on an inflation peak. Here’s why a former hedge-fund manager says they’re wrong.

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Investors are waking up to big trouble in big China. Stock futures and oil prices are falling after angry anti-COVID zero protests swept the country.

“This is a sudden powerful new distraction for markets when this week was supposed to be about incoming U.S. data,” sum up strategists at Saxo Bank. They say watch companies exposed to China, “given forward earnings are likely to be downgraded following further China lockdowns and protests.”

Before China grabbed the spotlight, holiday weekend sales, jobs and inflation data that due this week, as well as remarks by Fed Chairman Jerome Powell were the big focus.

Other questions are now swirling. Will China-related falls in oil prices lend to the peak inflation theory? And what about China’s post-COVID economic rebirth?

Onto our call of the day, which says it’s time to short long bonds because of sticky food inflation — thanks to China. It comes from Russell Clark, a former hedge-fund manager who has spent the last 20 years focusing on that market, macro and short selling.

He notes investors have been scooping up the the iShares 20 years+ Treasury Bond ETF
TLT,
-0.34%,
a liquid exchange-traded fund that buys long-dated bonds, even as with U.S. inflation hovering at 1970 highs.

“The reason that people are getting bullish bonds I believe is that the yield curve has inverted. And every time that has happened, you have a recession and you want to get out of equities and into bonds,” says Clark. A yield curve inversion occurs when long-term interest rates drop below short term rates. The inversion of 2 and 10-year Treasury yields is at its steepest since the 1980s.

Clues may lie in Japan’s poorly performing bond market. “Not only has it been prescient in leading the U.S. bond yields lower from 1999 onward, in 2020 the JGB market was also prescient in signaling the future U.S. treasury sell off,” he says.

Russell Clark

And what Japan is likely seeing that U.S. investors aren’t right now is China-driven food inflation. That’s something the Fed will find it tough to ignore, he said.

Since the since the 1980s, food commodity prices have followed raw commodity prices higher, If the Fed wants to work that down, it will raise interest rates. For example, falling natural-gas prices
NG00,
-3.37%
would help ease fertilizer costs for farmers.

Clark points out that China is the world’s biggest food importer, with much higher prices than the U.S.

“Pork, which is the most consumed meat in China, is now 3 times more expensive than the U.S. market, and has recently doubled in price. As Japan is also a large importer of pork, perhaps this was the reason the JGB market sold off before the U.S.,” he said.

Beef is also a major import for China, and yes, prices are much higher than that of the U.S.

“In essence, I am saying that China is exporting food inflation to the rest of the world, and I don’t see that ending at the moment. JGBs seem to agree – and when I look at the index value of US Food CPI on a log basis, I keep thinking that is says interest rates are going higher not lower,” said Clark.

He sees food inflation looking secular, rather than cyclical, due to the demands of an increasingly urbanized China. “Secular food inflation implies POLITICAL pressure to have higher interest rates. US treasuries look a short to me, just as everyone has gotten long,” he said.

The markets

Stock futures
ES00,
-0.73%

YM00,
-0.54%

NQ00,
-0.72%
are falling, and Treasury yields
TMUBMUSD10Y,
3.684%

TMUBMUSD02Y,
4.467%
and oil
CL.1,
-3.12%
also are falling. The Japanese yen
USDJPY,
-0.61%
is seeing some safe-haven bids. The Hong Kong Hang Seng Index
HSI,
-1.57%
closed down 1.5%.

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

The buzz

An apartment-building fire in a locked-down city that killed 10 appeared to spark protests across China, calling for the President Xi Jinping to step down and zero-COVID policies to stop. A BBC reporter was arrested and beaten. Meanwhile, lockdowns mean China farmers are destroying crops they can’t sell.

And similar unrest at China’s Zhengzhou Foxconn
2317,
-0.50%
factory is expected to cause a shortfall of 6 million Apple
AAPL,
-1.96%
iPhone Pros this year.

Pinduoduo shares
PDD,
-1.44%
are soaring after the China-based mobile marketplace reported profit and revenue beats.

MGM Resorts
MGM,
-0.42%,
Las Vegas Sands
LVS,
+0.26%
and Wynn Resorts
WYNN,
-0.57%
higher in premarket after Macao tentatively renewed their casino licenses.

Retailers are in focus after Black Friday online sales topped a record $9 billion. That’s as some wonder if Cyber Monday is still a thing.

St. Louis Fed President James Bullard will sit down for an interview with MarketWatch on Monday, at 12 noon Eastern. New York Fed President John Williams address the Economic Club of New York at the same time. Fed’s Powell will speak on Wednesday, along with several other Fed officials this week.

A busy data week starts Tuesday with home-price indexes and consumer confidence data. GDP, the PCE price index for October — a favored gauge of the Federal Reserve and November employment data are also on tap this week.

Best of the web

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Iran was calling for the U.S. to be expelled from the Qatar World Cup.

Lab study shows next COVID strain will be more deadly.

The tickers

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

Ticker	Security name
TSLA, -0.19%	Tesla
GME, -1.99%	GameStop
AMC, -1.70%	AMC Entertainment
AAPL, -1.96%	Apple
COSM, +34.06%	Cosmos Holdings
AMZN, -0.76%	Amazon.com
BBBY, -2.70%	Bed Bath & Beyond
MULN, -2.39%	Mullen Automotive
APE, +0.83%	AMC Entertainment Holdings preferred shares
DWAC, +6.44%	Digital World Acquisition Corp.

Random reads

Chinese woman on a mission to visit everyone else’s lonely elderly relatives.

‘Gaslighting’ is Merriam Webster’s word of the year. No, really.

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 reporter Charles Passy and economist Stephanie Kelton

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November 28, 2022

It’s a Bad Time to Buy a Car. How to Score a Decent Deal Now if You Can’t Wait.

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Car buyers just can’t catch a break these days. Vehicle prices climbed sharply during the pandemic, and now the cost of financing a new set of wheels is going up.

Even if prices ease, interest rates on car loans likely will climb higher, at least for a while, making this an inopportune time to replace a vehicle, financing experts say.

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November 27, 2022

Bear markets come in three stages; and we’ve only just started the second, says veteran analyst.

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Stocks will start the Black Friday half-session near 10-week highs, having rebounded partly on hopes the Federal Reserve will be slowing the pace of interest rate rises as it waits to see how much previous tightening has impacted the economy.

Investors are thus looking ahead to when the Fed eventually pivots and borrowing costs can start coming down again. For now, they are displaying few concerns about how much damage any economic slowdown may do to corporate earnings.

It’s all too rosy, reckons Peter Boockvar, chief investment officer of Bleakley Financial Group. In an interview with Magnifi+, an AI investing and trading platform, the veteran analyst warns that stocks will grind lower next year, and we have not seen the bottom of a bear market still in its middle phase.

“Bear markets usually come in three stages. The first one is we take a lot of the frothy excesses and euphoria out of the market in terms of the sexy names that we saw in 2021 and we take a PE ratio down. We’ve done that, we went from 22 times earnings, call it 16 to 17,” says Boockvar.

In the second phase, he adds, investors start calculating the economic and company earnings consequences of the ongoing rises in interest rates…”and then the third phase is everyone throws in the towel. No one wants to own a stock again, and that’s your bottom and that’s when you need to be buying stocks hand over fist.”

“I feel like we’re really just only beginning to start that second phase,” he said.

Still, there will be opportunities. It all depends on your time scale, according to Boockvar.

“If you have a big purchase that you have to make within the next year or two, whether it’s a kid going college or it’s a wedding, a bar mitzvah or some other expense like a home that you have put aside money for, it should not be in the stock market. It should be in the bank it should be in short-term T-bills. It should be in cash equivalents because the next couple of years are going to be challenging for those with shorter-term time horizons,” he said.

So, what assets is he interested in? Bonds are attractive, but it’s important to stick to quality.

“You have investment-grade bonds that are yielding 6% and you can do that without taking much duration risk by buying shorter-term durations….And you can buy a short-term, two-year treasury and get a yield of four and a half percent and get some attractive Munis too. So fixed-income land, with shorter durations, I believe, is more attractive. Longer-term trade durations, I’m still more suspect on,” says Boockvar.

And in equities? “Value stocks are much more attractive than growth, the tech stocks. I think commodity stocks are much more attractive than they’ve been over the past five years. Certainly energy, precious metals, even industrial metals like copper stocks.”

If the dollar has peaked and pulls back as the Fed gets closer to the end of its hiking cycle, then Boockvar likes the look of foreign markets, particularly in Asia, and gold and silver once the central bank begins cutting rates.

Finally, the one thing he’s certainly not keen on are techs former darlings. “Just buying Google
GOOGL,
+1.45%
and Amazon
AMZN,
+1.00%
and Apple
AAPL,
+0.59%,
while they’re all great companies, that ship has sailed and the baton in terms of market leadership is going to be passed to other parts of the market,” says the analyst.

Markets

Stocks were in line to start the last trading of the week on the front foot, with S&P 500 futures
ES00,
-0.14%
up 0.2% to 4039 and 10-year Treasury yields
TMUBMUSD10Y,
3.732%
were little changed at 3.709%. U.S. crude futures fell 0.7% to $79.50 a barrel.

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

The buzz

It’s a half-day of trading for Wall Street as many traders also extend their Thanksgiving break. Expect very thin volumes.

Still, analysts and investors are on the lookout for guidance on how the Black Friday sales are going. How is the U.S. consumer holding up in the face of high inflation and sharp increases in borrowing costs? Shares in Amazon
AMZN,
+1.00%
and Walmart
WMT,
+0.48%
were relatively steady.

Shares in Tesla
TSLA,
+7.82%
are up about 2% in premarket action despite news the car company is recalling around 80,000 cars in China.

Activision Blizzard shares
ATVI,
+0.94%
are off more than 3% after a report late on Wednesday that the Federal Trade Commission might block Microsoft’s purchase of the videogame maker.

Fed’s Bullard set to talk inflation, interest rates in MarketWatch Q&A Monday. Sign up here to watch the program and pose a question.

China’s central bank eased monetary policy as the country struggles with further COVID-19 outbreaks.

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China is investing billions in Pakistan buts its workers there are under attack.

In the court of Mar-a-Lago, ‘King’ Trump still reigns supreme.

Activists aggravate art insurers climate headache.

The chart

Here’s an interesting observation on stock volatility from Benedek Vörös, director of Index Investment Strategy at S&P Dow Jones Indices.

“It has been a turbulent year, but a degree of relative calm has returned to U.S. equity markets in the past few weeks, and participants in the options market look even more relaxed than their cash counterparts,” Vörös writes in his latest bulletin. “VIX, having averaged 3 points above the 21-day realized S&P 500 volatility over the past year, has slipped 6 percentage points below it as of yesterday’s close. Historically, that has had some predictive power for lower volatility to come.”

Source: S&P Dow Jones Indices

Top tickers

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

Ticker
Security name

TSLA,
+7.82% Tesla

GME,
+1.52% GameStop

AMC,
+4.37% AMC Entertainment

NIO,
+5.49% NIO

COSM,
-2.29% Cosmos Holdings

AAPL,
+0.59% Apple

APE,
-3.97% AMC Entertainment preferred

BBBY,
+4.88% Bed Bath & Beyond

AMZN,
+1.00% Amazon.com

MULN,
-10.01% Mullen Automotive

Random reads

Japan fans show the world how it’s done.

Coin study suggests ‘fake emperor’ was real.

Someone’s been going on a gold-buying bender.

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 reporter Charles Passy and economist Stephanie Kelton

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November 25, 2022

‘We have a deal’: EU bans new gas-fueled cars starting in 2035

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The European Union reached a deal Thursday to effectively ban new gas-powered cars beginning in 2035.

It’s a move seen as a key part of a broader plan to reduce carbon emissions across economic sectors — and a major policy achievement to carry into high-profile United Nations climate-change talks in Egypt early next month.

Speculation about a deal, which had been heavily debated, was reported earlier this week and confirmed Thursday via a tweet from the spokesperson for the rotating presidency of the bloc, currently held by the Czech Republic.

Broadly, the agreement is part of a plan that requires a 55% cut in emissions across transportation, buildings, power generation and other sources this decade. That halfway mark is seen as a major milestone as the EU aims to reach net-zero emissions by 2050.

The announcement comes as the U.N. climate arm has released a series of updated reports this week. One chastised the “highly inadequate” steps to date by rich nations to cut emissions of Earth-warming greenhouse gases, such as those from burning fossil fuels. The window to act is closing but is not quite shut yet, according to the Emissions Gap report from the U.N. Environment Programme. “Global and national climate commitments are falling pitifully short,” U.N. Secretary-General Antonio Guterres said Thursday. “We are headed for a global catastrophe.”

The EU is the world’s largest trade bloc, and its moves could push other major economies to also set firm cutoff dates for gasoline
RB00,
-0.52%
and diesel engines. Volkswagen AG
VOW,
+0.88%
and Daimler Truck Holding AG
DTG,
+2.67%
are already moving deeper into electric vehicles. Volkswagen this week said it would stop selling internal-combustion-engine cars in Europe between 2033 and 2035.

Other major economies, including the U.S., have set similar goals, but the U.S. has not set any federal-level restrictions on vehicle manufacturing. Some individual automakers, including General Motors
GM,
+0.79%,
have set their own timelines. And California approved plans in August to mandate a gradual phasing out of vehicles powered by internal-combustion engines, with only zero-emission cars and a small portion of plug-in gas/electric hybrids to be allowed by 2035.

As the world’s fifth-largest economy, California can create ripple effects with its moves. At least 15 other states have signed on to California’s existing zero-emission vehicle program or have shown interest in and are working toward codifying the change. Among them, Washington, Massachusetts, New York, Oregon and Vermont are expected to adopt California’s ban on new gasoline-fueled vehicles.

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October 27, 2022
Ford reins in hopes for self-driving cars as Argo AI shuts down

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After betting big on self-driving cars — including $1 billion on soon-to-be shuttered startup Argo AI — Ford Motor Co. is softening its expectations on vehicles that don’t require drivers.

Ford
F,
-0.08%
executives on Wednesday said they were winding down their investment in Argo, which confirmed an earlier report of its plans to shut down, saying there were too many challenges to running a profitable network of fully self-driving vehicles anytime soon. That resulted in a $2.7 billion impairment on the startup, disclosed when Ford reported third-quarter results earlier in the day.

“We still believe in Level 4 autonomy, that it will have a big impact on our business of moving people,” Ford CEO Jim Farley said on the company’s earnings call, referring to cars that are autonomous enough not to need handling from a driver. “We’ve learned, though, in our partnership with Argo, and after our own internal investments, that we will have a very long road.”

“It’s estimated that more than $100 billion has been invested in the promise of Level 4 autonomy,” he continued. “And yet no one has defined a profitable business model at scale.”

Executives described hurdles with building out technology and auto fleets, as well as the vast infrastructure of non-technological services, to turn a profit on self-driving cars. And they said the talents of the staff they have today would be better spent on less-sophisticated driver-assistance systems.

Argo AI told MarketWatch that some of its 2,000 employees would be able to continue working on the vehicle technology with Ford and Volkswagen AG. Volkswagen
VOW,
+0.41%
was Argo’s other big backer.

“In the third quarter, Ford made a strategic decision to shift its capital spending from the L4 advanced driver-assistance systems being developed by Argo AI to internally developed L2+/L3 technology,” executives said in Ford’s earnings release. “Earlier, Argo AI had been unable to attract new investors.”

The remarks came as the auto industry deals with more immediate concerns about both production and demand, as ongoing supply-chain contortions lead to parts shortages and higher prices. Some signs have emerged that those supply-chain hitches have eased. But higher prices risk spooking potential car buyers.

During the call on Wednesday, executives said they’d seen a slight downtick in commodity prices. But Farley painted a mixed portrait of pricing and demand trends.

Demand for commercial vehicles and electric vehicles was “through the roof,” he said. But he noted a “slight uptick” from the prior quarter on 84-month customer financing, as customers stretch out car payments. And he said some of Ford’s rivals had boosted spending on incentives.

Meanwhile, Ford’s third-quarter results beat analysts’ estimates, though the auto maker forecast full-year adjusted profit at the low end of its expectations.

Ford reported a net loss of $800 million for the third quarter, or 21 cents a share, contrasting with a $1.8 billion profit, or 45 cents a share, in the prior-year period. The auto maker’s sales were $39.4 billion, compared with $35.7 billion in the quarter last year.

Adjusted for gains and losses on pensions, investments and costs related to things like staff and dealerships, Ford earned 30 cents a share, compared with 51 cents a year ago.

Analysts polled by FactSet expected adjusted earnings of 27 cents a share, on sales of $37.46 billion.

Executives said they expected full-year earnings before interest and taxes to be about $11.5 billion. In September, the company said it expected that figure to land within a range of $11.5 billion to $12.5 billion.

Ford also raised its full-year outlook for adjusted free-cash flow to $9.5 billion to $10 billion. It ended the third quarter with operating cash flow of $3.8 billion, and adjusted free-cash flow of $3.6 billion.

Shares fell 1% after hours.

Ford in September warned that tighter supplies of auto parts would leave it with 40,000 to 45,000 unfinished vehicles sitting in its inventories at the end of the third quarter, with “inflation-related supplier costs” running about $1 billion higher than expected. But the company, at that time, stuck with its full-year adjusted-profit outlook.

Ford, as with other auto makers, is putting more effort behind developing electric cars and trucks, including an electric version of its popular F-150. But it is laying off thousands as part of a split into two businesses — one devoted to electric vehicles, called Ford Model e, and one devoted internal combustion engines, called Ford Blue.

A day earlier, rival General Motors Co. noted signs of its supply chains loosening up.

On Tuesday, executives at General Motors
GM,
+2.30%
noted easing in its supply chain and production improvements despite a difficult economic backdrop. GM stuck with its full-year outlook, cited strong demand, and said the company had landed some supply agreements and was working with chip makers to loosen up the flow of car parts and components.

Shares of GM fell 0.2% on Wednesday.

The auto market has been roiled by a semiconductor shortage that gummed up production and drove up the price of new cars, and then used ones, as new vehicles got too expensive for buyers. Used car prices have trended lower since. UBS analysts have said that an auto undersupply could balloon into an oversupply, as higher prices threaten to suppress consumer shopping and raise concerns of a recession.

Edmunds last month said it expected new-vehicle sales in the U.S. to fall 0.9% in the third quarter when compared with the period in 2021. The auto-data provider said auto inventories have expanded, as chip supply chains open up.

Ford stock is down 38% so far this year. By comparison, the S&P 500 index
SPX,
-0.74%
is down 20% over that time.

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October 26, 2022
A Tesla stock plunge could destroy ‘zombie stocks’ such as GameStop and Peloton, warns equity research firm New Constructs

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Tesla shares could decline dramatically — and that could mean disaster for a number of stocks that have already seen deep share-price cuts, according to equity research firm New Constructs.

The research firm, which uses machine learning and natural language processing to parse corporate filings and model economic earnings, called the stocks in danger “zombie stocks,” and defined them as companies with poor business models that are burning cash at an alarming rate and are at risk of seeing their stock decline to $0 per share.

The research firm estimates there could be some 300 zombie companies across the marketplace.

“The Federal Reserve’s aggressive rate hikes so far in 2022 have ended the era of free money and exposed a worrisome dynamic throughout capital markets: zombie stocks,” wrote New Constructs CEO David Trainer, in a note.

See Now: Tesla earnings are coming, but do record deliveries mask a demand problem?

New Constructs does not define Tesla Inc.
TSLA,
+7.01%
as a “zombie stock,” citing CEO Elon Musk’s ability to raise capital, but does see the electric car manufacturer as a bellwether for the sector. “It shares many of the common characteristics of a zombie stock, such as an outrageous valuation and high cash burn,” wrote Trainer. “We believe Tesla’s unrelenting share price rise over the past three years – where investors completely ignored company fundamentals – inspired the birth of many of today’s zombie stocks.”

Tesla reports its third-quarter results after the closing bell on Oct. 19.

The company’s stock was trading around $220 on Monday, an increase of over 1,000% compared to three years ago. But Trainer feels that Tesla is at risk of falling more than 80% to $25 a share.

Tesla’s Optimus bot: ‘High school science project’ or robotics game changer?

Tesla’s stock has fallen 37.6% in 2022, outpacing the S&P 500 Index’s
SPX,
+2.65%
decline of 22.7%.

“Its valuation remains nosebleed high because the cash flow expectations baked into the stock price are unreasonably optimistic,” Trainer wrote. “Our message to investors is to take profits in Tesla and avoid zombie stocks at all costs.”

New Constructs recently added cloud-based communication company RingCentral Inc.
RNG,
+6.49%
to its list of “zombie” stocks. Other companies on the list are Freshpet Inc.
FRPT,
-2.03%,
Peloton Interactive Inc.
PTON,
+7.04%,
Carvana Co.
CVNA,
+6.30%,
Snap Inc.
SNAP,
+6.01%,
Beyond Meat Inc.
BYND,
+0.64%,
Rivian Automotive Inc.
RIVN,
+6.93%,
DoorDash Inc.
DASH,
+6.15%,
Shake Shack Inc.
SHAK,
+4.01%,
Chewy Inc.
CHWY,
+10.76%,
Uber Technologies Inc.
UBER,
+4.98%,
Robinhood Markets Inc.
HOOD,
+3.24%,
Tilray Brands Inc.
TLRY,
+7.32%,
Affirm Holdings Inc.
AFRM,
+6.72%,
SunRun Inc.
RUN,
+1.70%,
Blue Apron Holdings Inc.
APRN,
+3.26%,
and meme stocks AMC Entertainment Holdings Inc.
AMC,
+6.00%
and GameStop Corp.
GME,
+5.40%.

See Now: RingCentral added to ‘zombie’ stocks list by equity research firm New Constructs

“Investors are now fed up with these kinds of companies, especially amid this year’s stock market volatility,” wrote New Constructs’ Trainer. “If investors start to give up on Tesla and take profits on the stock, which is up over 1,000% over the past three years, that spells terrible news for all of the other zombie stocks that don’t have the cash-raising luxury that Tesla has.”

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October 17, 2022

This industry could be worth $180 billion by 2040. Citigroup offers four stock names to play it, and a few more to think about.

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Investors are bracing for some choppiness on Wall Street, with oil prices falling as growth worries rattle around the globe. That’s as the clock ticks down to CPI and the start of a earnings season later this week, and in the backdrop a war is intensifying in Europe.

Tough times don’t last, but tough investors do right? Maybe, hopefully. In any case, focusing on the distant future might offer some comfort right now.

And that’s where we’re headed with our call of the day from Citigroup, whose strategists have stock ideas to play what they expect will be one of the ten fastest-growing markets through 2040.

They are talking about the global fuel cell industry, a direct play on the green energy debate, and “reaching the part that batteries cannot.”

“Fuel cells enable both de-carbonization and energy resilience, and we see them as crucial in harder-to-abate sectors like commercial vehicles and marine,” a Citi team led by research analyst Martin Wilkie told clients in a note on Tuesday.

Their base case sees this market reaching 50 gigawatts (GW) and $40 billion by 2030, offering a compound average growth rate of more than 35% in dollar terms, with further acceleration to 500GW/$180 billion by 2040.

They admit they’re on the bullish side with these projections, and note fuel cell stocks are on average down around 70% since their January 2021 peaks .

“The fuel cell equity story has had false starts before, but we see the impetus from emissions policy as well as announced hydrogen plans as creating attractive opportunities,” said the Citi analysts, highlighting policies such as the U.S. Inflation Reduction Act, which aims at beefing up renewable energy and a recent EU move to offer more green-energy research and development subsidies.

While passenger cars were a big source of demand for the growing fuel cell market in 2021, they don’t think it can be a big competitor to battery electric. However, stationary power, such as distributed and backup power generation and heavy-duty transport, think commercial vehicles, off-road and later marine are set to become key fuel-cell markets.

U.K.-based Ceres Power
CWR,
-1.69%,
Plug Power
PLUG,
-0.25%,
Belgium’s Umicore
UMI,
-1.69%,
and Japan’s Toyota
7203,
-0.96%

TM,
-0.73%
are Citi’s buy-rated stocks with high exposure to the fuel-cell theme.

Other names they mention, include Daimler Truck
DTG,
+1.32%
and Volvo
VOLV.B,
+0.21%

VOLV.A,
+0.12%,
which are working with Germany’s Traton
8TRA,
-2.09%
on a joint venture called Cellcentric that aims to develop that technology for trucks, with a production goal of 2025. Others are outsourcing fuel-cell tech, such as Italy’s Iveco Group
IVG,
+0.10%,
which has teamed up with South Korea’s Hyundai
005380,
-4.27%,
and U.S.-based Paccar
PCAR,
+0.23%
with Toyota
TM,
-0.73%.

The markets

Stock futures
ES00,
-0.38%

YM00,
-0.22%

NQ00,
-0.46%
have pared some losses, while bond yields
TMUBMUSD10Y,
3.927%

TMUBMUSD02Y,
4.307%
are mixed, and the dollar
DXY,
-0.14%
has turned lower. Oil prices
CL.1,
-1.42%
are also pressure.

The buzz

Shares of the world’s biggest chip maker, TSMC
2330,
-8.33%,
fell 8% in Taiwan
Y9999,
-4.35%,
where stocks dropped more than 4% following new limits by the U.S. imposed on exports of semiconductors and chip-making equipment to China.

The Bank of England made the second move this week to calm jittery markets, saying Tuesday it will expand its bond purchases to index-linked U.K. bond. But the program still ends Friday, something the pensions fund industry wants to see extended. Those yields
TMBMKGB-10Y,
4.448%
TMBMKGB-30Y,
4.718%,
meanwhile, continue to creep higher.

The National Federation of Independent Business small-business index showed confidence rising in September, but inflation a nagging problem. At noon Eastern we’ll hear from Cleveland Fed President Loretta Mester.

Subscription-based private aviation company Flexjet plans to go public through a merger with SPAC Horizon Acquisition
HZON,

valuing it at $3.1 billion.

The U.S.’s third-biggest railroad union will be back at the negotiating table with employers on Tuesday, after rejecting a deal and raising the possibility of crippling strikes.

The Kremlin’s war hawks were thrilled at the devastating strikes across Ukraine on Monday. Now they want more. G-7 leaders are holding an emergency meeting to discuss the ramping up of the war.

Amazon’s
AMZN,
-0.78%
second Prime-Day like event kicks off Tuesday.

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U.K. spy chief says Russians are starting to realize the cost of Putin’s war in Ukraine

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The chart

This graphic by Visual Capitalist’s Truman Du, shows Disney’s
DIS,
-2.06%
streaming empire — Disney+, Hulu, ESPN+ — is “giving Netflix
NFLX,
+2.33%
a run for its money.”

Visual Capitalist, Disney, Netflix quarterly reports

The tickers

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

Ticker
Security name

TSLA,
-0.05% Tesla

GME,
-1.38% GameStop

AMC,
-2.76% AMC Entertainment Holdings

AAPL,
+0.24% Apple

NIO,
-3.49% NIO

BBBY,
-2.21% Bed Bath & Beyond

APE,
-6.53% AMC Entertainment Holdings preferred shares

NVDA,
-3.36% Nvidia

TWTR,
+2.40% Twitter

AMD,
-1.08% Advanced Micro Devices

Random reads

Everyone hail to this 2,560-pound pumpkin.

“Where’s Tony gone?” Supply-chain woes hit (shudder) Frosted Flakes.

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 reporter Charles Passy and economist Stephanie Kelton.

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October 11, 2022

Ford stock is now a ‘sell’ at UBS as an oversupply problem looms

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Shares of Ford Motor Co. were hit hard Monday by UBS analyst Patrick Hummel’s recommendation that investors sell, as the auto industry is facing a worrisome U-turn from undersupply to oversupply.

Hummel also cut his ratings on several other global auto makers, including General Motors Co.
GM,
-5.59%,
saying that as a recession concerns grow, “demand destruction is no longer a vague risk.”

In addition to all of the data suggesting the economy is slowing, Hummel said growing U.S. dealer inventories, weak used-car pricing, used-car dealer profit warnings and signs indicating deteriorating orders and shorter delivery times make him more cautious on the overall auto industry.

Don’t miss: CarMax stock suffered biggest selloff since the year 2000, as inflation, low consumer confidence lead to big profit miss.

“We think it will only take 3-6 months for the auto industry to end up in oversupply, which will put an abrupt end to a 3-year phase of unprecedented OEM [original equipment manufacturer] pricing power and margins,” Hummel wrote in a note to clients.

As part of his negative industry outlook, he cut his rating on Ford
F,
-7.38%
to sell from neutral and his stock price target to $10 from $13, with the new target implying about 11% downside from current levels.

Ford’s stock sank 7.6% in morning trading. It was trading up just 0.6% month to date, after plunging 26.5% in September to suffer its worst monthly performance since it plummeted 30.6% during pandemic-stricken March 2020.

Hummel noted that Ford has already warned about having more vehicles in inventory than expected, and above payments to suppliers running about $1 billion higher than projected, so he sees little margin left for negative surprises in terms of fourth-quarter deliveries and supply costs.

Hummel cut his 2023 adjusted earnings-per-share estimate by 61% to 52 cents a share, to reflect a $6.5 billion drop in price and sales mix. The compares with the current 2023 FactSet EPS consensus of $1.87.

“This sounds very negative, but Ford gains $19 billion in price alone since the beginning of 2020,” Hummel wrote.

Also read: Ford again raises price of F-150 Lightning electric pickup.

Read more: Ford September sales fall as drop in trucks offsets near tripling in EVs.

Meanwhile, GM’s stock dove 6.9% in morning trading toward a three-month low, and shares have shed 2.5% so far this month after tumbling 16% last month.

Hummel downgraded GM to neutral from buy, and dropped his price target by 32%, to $38 from $56.

The rating remains above Ford’s, because unlike its rival, Hummel noted that GM has had “no hiccups” in its third-quarter production schedule and therefore a “solid” quarterly report is expected. However, the downgrade reflects the fact that GM is “not immune” to a downturn in the industry.

Separately, Hummel also cut his stock-price target on Tesla Inc.
TSLA,
-0.16%
to $350 from $367, saying that following a third-quarter volume report that was below expectations, it will be “more challenging” for the electric-vehicle maker to meet its 2022 delivery growth target.

However, Hummel reiterated his buy rating on Tesla, as he believes the EV maker is best positioned to use pricing as the tool to fill its factories.

“Overall, the recession outlook should result in moderately lower margins for Tesla than previously expected, but we’re highly confident that by keeping the top line [revenue] momentum, Tesla will even widen the gap vs. competitors in terms of profitability,” Hummel wrote.

Ford’s stock has fallen 3% over the past three months, while GM shares have lost 3.1% and Tesla’s stock has dropped 11.8%. In comparison, the S&P 500 index
SPX,
-1.08%
has declined 7.5% the past three months.

Among other auto makers, he also downgraded both Renault SA
RNO,
+2.41%

RNLSY,
+1.17%
and Volkswagen AG
VOW,
-3.29%
to neutral from buy. He also downgraded auto parts makers Continental AG
CON,
+0.10%
and Faurecia SE
EO,
-3.77%

FURCF,
-3.67%
to neutral from buy.

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October 10, 2022
Rivian Recalling Nearly All of Its Vehicles

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Rivian Automotive is recalling nearly all of its vehicles to address a potential problem that could cause customers to lose steering control, the company said Friday.

The electric truck and SUV maker said the recall was made after it discovered a fastener connecting the upper control arm and steering knuckle may have been improperly installed. In rare cases, the problem could lead to a loss of steering control, the company said.

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October 7, 2022
Want to buy Porsche stock in the U.S.? It’s complicated.

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Porsche shares
P911,

have traded higher on Thursday after a well-received initial public offering in Germany’s biggest new issue in decades.

If you’re a U.S.-based investor interested in purchasing shares of the German automobile maker, the bad news is that there’s no offering on the New York Stock Exchange or the Nasdaq.

But U.S.-based brokerages do offer the ability for investors to buy stocks on foreign exchanges, such as the Frankfurt exchange, where Porsche shares trade. These trades are harder to place and typically carry extra fees.

Charles Schwab, for example, doesn’t allow such trades online but does permit them through a broker. Fidelity doesn’t allow U.S. investors to buy foreign stocks on margin, bars short sales and limits order instructions.

Also, there is an over-the-counter offer of Porsche Automobil Holding
POAHY,
-13.72%.
That investment vehicle now holds a 25% stake in Porsche, plus some 53% of Volkswagen
VOW3,
-6.85%

VWAPY,
-8.57%.

Also read: Here’s what to know about the Porsche IPO

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September 29, 2022
Volkswagen’s Porsche IPO prices at top of its range

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Volkswagen AG said late Wednesday that it priced Porsche AG’s initial public offering at the top of its range, setting the sports-car maker’s IPO on a course to be among the largest ever in Europe.

VW
VOW,
+1.77%
priced the IPO at EUR82.50 a share, or about $80, valuing Porsche
P911,

at more than $70 billion. In a nod to Porsche’s iconic 911 two-door car, first introduced in the mid-1960s, 911 million shares were made available.

See also: Porsche IPO is set for Thursday. Here’s what to know.

Porsche shares are expected to trade on the Frankfurt Stock Exchange on Thursday.

VW is planning to distribute 49% of the proceeds in a special dividend, and set a December meeting to put the proposal to a shareholder vote.

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September 28, 2022

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Ticker	Security name
TSLA, +7.82%	Tesla
GME, +1.52%	GameStop
AMC, +4.37%	AMC Entertainment
NIO, +5.49%	NIO
COSM, -2.29%	Cosmos Holdings
AAPL, +0.59%	Apple
APE, -3.97%	AMC Entertainment preferred
BBBY, +4.88%	Bed Bath & Beyond
AMZN, +1.00%	Amazon.com
MULN, -10.01%	Mullen Automotive

Ticker	Security name
TSLA, -0.05%	Tesla
GME, -1.38%	GameStop
AMC, -2.76%	AMC Entertainment Holdings
AAPL, +0.24%	Apple
NIO, -3.49%	NIO
BBBY, -2.21%	Bed Bath & Beyond
APE, -6.53%	AMC Entertainment Holdings preferred shares
NVDA, -3.36%	Nvidia
TWTR, +2.40%	Twitter
AMD, -1.08%	Advanced Micro Devices