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  • Making sense of the markets this week: September 15, 2024 – MoneySense

    Making sense of the markets this week: September 15, 2024 – MoneySense

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    Trump’s down, Oracle’s up

    Tuesday’s earnings call was the best day that Oracle shareholders have seen in a while. 

    Oracle earnings highlights

    All figures in U.S. currency in this section.

    • Oracle (ORCL/NYSE): Earnings per share came in at $1.39 (versus $1.32 predicted), and revenues of $13.31 billion (versus $13.23 billion predicted). 

    Share prices rose more than 13% after the tech giant showed profits that were up nearly 20% from last year. Revenues across the company’s cloud services division continue to increase. And CEO Safra Catz said, “I will say that demand is still outstripping supply. But I can live with that.”

    Founder Larry Ellison (who recently passed Mark Zuckerberg to become the second richest person in the world) excitedly predicted that Oracle would one day operate more than 2,000 data centres, which is up from the 162 today. The current project that he highlighted is a massive data centre that will use three modular nuclear reactors to produce the needed gigawatts of electricity.

    In other U.S. stock market news, Trump Media and Technology Group (DJT/NASDAQ) investors face a big decision this week. The stock plummeted from highs of $66 per share on March 27, to $16.56 after the debate on Wednesday. Don’t say we didn’t warn you

    That’s not the worst news for DJT investors though. Next week, a potentially crippling event occurs: the entity that owns 57% of the shares can sell the stock for the first time. If it were to sell all its shares (in order to get as much money as possible out of a business venture that loses millions of dollars every month), the share price would tank. 

    What is the “entity”? It’s actually a question of who not what: Donald Trump. 

    Even at reduced share price levels, Trump’s slice of Truth Social is worth about $1.9 billion. It’s not like he needs money for pressing issues or anything like that…

    Dell and Palantir kick American Airlines and Etsy out of the S&P 500

    In other big events to look forward to, September 23 will see major U.S. market indices experience a reweighting. Given that trillions of dollars are now passively invested into indice-based index funds, whether your company is a member of a specific index or not can make a big difference in its share price. That said, these indice moves are largely anticipated by the market, so a lot of the value movement has already been priced in.

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    Kyle Prevost

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  • Making sense of the markets this week: September 8, 2024 – MoneySense

    Making sense of the markets this week: September 8, 2024 – MoneySense

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    Macklem says we could see a soft landing

    For the third straight month, the Bank of Canada (BoC) decided to cut interest rates. The quarter-point cut takes the Bank’s key interest rate down to 4.25%.

    The news that’s perhaps bigger than the widely anticipated rate cut was how aggressive BoC governor Tiff Macklem sounded in his prepared remarks. Macklem stated, “If we need to take a bigger step, we’re prepared to take a bigger step.” That sentence will be focused on by financial markets looking to price in larger potential cuts in the months to come. As of Thursday, financial markets were predicting a 93% probability that October would see another 0.25% rate cut. Several economists believe interest rates would fall to around 3% by next summer.

    While describing a potential soft landing to the bumpy pandemic-fuelled inflation flight we’ve been on, Macklem stated, “The runway’s in sight, but we have not landed it yet.” It appears that the real debate is no longer if the BoC should cut interest rates, but instead, how quickly it should cut them, and whether a 0.50% cut may be in the cards sooner rather than later.

    With unemployment rates increasing, it follows that the inflation rate of labour-intensive services should continue to fall. Lower variable-rate mortgage interest payments will automatically have a deflationary impact on shelter costs across Canada as well.

    You can read our article about the best low-risk investments in Canada at Milliondollarjourney.com if lowered interest rates have you thinking about adjusting your portfolio.

    Will Couche-Tard go global?

    Last week we wrote about the Alimentation Couche-Tard (ATD/TSX) proposed buyout of 7-Eleven parent company Seven & i Holdings Co. If the buyout goes through, ATD would go from being Canada’s 14th-largest company to being in the running for third-largest company. That’s a big if: on Friday morning, just hours before we went to press, Seven & i said it is rejecting ATD’s $38.5-billion cash bid on the grounds it was not in the best interests of shareholders and was likely to face major anti-trust challenges in the U.S. (All figures in this section are in U.S. dollars.)

    It’s interesting to note that 7-Eleven has been much better at running convenience stores in Japan (where it has a 38% profit margin) versus outside of Japan (where it has a 4% margin). That’s partly due to the fact that locations outside of Japan sell a large amount of low-margin gasoline. Couche-Tard, however, has been able to unlock margins in the 8% range in similar gasoline-dominated locations, indicating substantial room for growth. With 7-Eleven’s overall returns falling far behind its Japanese benchmark index over the last eight years, there is clearly a business case to be made to current shareholders.

    The political dimensions to the acquisition are much harder to quantify than the business case. While Japan did change its laws to become more foreign-acquisition-friendly in 2023, it still classifies companies as “core,” “non-core” and “protected,” under the Foreign Exchange and Foreign Trade Act. Logically, it seems that a convenience-store company would fit the textbook definition of “non-core.” However, Seven & i Holdings has asked the government to change the classification of its corporation to “core” or “protected.” That would effectively kill any wholesale acquisition opportunities.

    There is also an American legal aspect to the deal. The Federal Trade Commission (FTC) would have to rule on whether ATD’s resulting U.S. market share of 13% would be too dominant. Barry Schwartz, chief investment officer and portfolio manager at Baskin Wealth Management, speculated that the most likely outcome might be a sale of 7-Eleven’s overseas assets to ATD, with the company holding on to its Japan-based assets.

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    Kyle Prevost

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  • Rivian CEO explains why he made ‘a very intentional effort’ not to copy Tesla’s strategy

    Rivian CEO explains why he made ‘a very intentional effort’ not to copy Tesla’s strategy

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    Rivian CEO RJ Scaringe spoke about Elon Musk and Tesla on the “Grit” podcast.Phillip Faraone/Chesnot/Getty Images

    • Rivian CEO RJ Scaringe spoke about Elon Musk and Tesla on the “Grit” podcast.

    • Scaringe said Tesla is “inspiring,” but Rivian did not follow Musk’s playbook.

    • He said it’s important that Rivian wasn’t “covering the same ground as Tesla.”

    Rivian CEO RJ Scaringe didn’t want his EV company to become Tesla 2.0.

    Scaringe discussed his and Elon Musk’s automotive companies on Monday during Kleiner Perkins’ “Grit” podcast. Tesla is still a dominant player and has a leg up on Rivian, which Scaringe founded in 2009 at age 26.

    Musk’s tenure as CEO of Tesla began in 2008, the same year customers first received Tesla’s Roadster sports car.

    “Tesla has been absolutely inspiring,” Scaringe said during the podcast. “One of the things that was so important to me with Rivian was to make sure we weren’t covering the same ground as Tesla.”

    When the host pointed out that Rivian initially followed Tesla’s playbook and had plans to create an electric sports car, Scaringe said he made an “intentional” choice to forge their own path.

    “If you think about starting a car company, you want to build a brand that draws in enthusiasts,” he said.

    Scaringe said he’s a fan of sports cars, so the “logical place to start is to build a sports car, use it to build the brand, and follow it with more mass-market vehicles.”

    “That was, of course, how Tesla’s strategy played out, and it worked wonderfully well for them,” he said.

    Scaringe added that his decision to pivot to a different type of EV product, vehicle topology, and experience was “a very intentional effort to also create a new story.”

    “Not only for us as a company or a brand but, importantly, to help shift more mindsets around what sustainable transportation could look like,” he said.

    Representatives for Rivian and Tesla did not immediately respond to a request for comment from Business Insider.

    Rivian currently sells the R1S SUV and the R1T pickup truck. Scaringe announced two more vehicles on the way — the R2 SUV and the R3 SUV — in March.

    The EV industry experienced a slowdown in sales and growth this summer. In July, Scaringe told The Verge he thinks the issue is a “truly extreme lack of choice.”

    “If you want to spend less than $50,000 for an EV, I’d say there’s a very, very small number of great products,” he said.

    Read the original article on Business Insider

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  • Stock market today: Most of Wall Street slips as S&P 500 stays on track for worst week since April

    Stock market today: Most of Wall Street slips as S&P 500 stays on track for worst week since April

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    NEW YORK (AP) — Most U.S. stocks fell Thursday following a mixed round of data on the economy, keeping them on track for their worst week since April.

    The S&P 500 slipped 0.3% for a third straight drop, and the Dow Jones Industrial Average lost 219 points, or 0.5%. The Nasdaq composite held up better than the rest of the market and added 0.3% thanks to gains for Tesla and a handful of other Big Tech stocks.

    Treasury yields also slipped a bit in the bond market following the mixed economic reports. One suggested U.S. companies slowed their hiring last month, falling well short of economists’ forecasts for an acceleration. Another report, though, said fewer U.S. workers filed for unemployment benefits last week than expected. That’s an indication layoffs remain low.

    A report released later in the morning offered more optimism, saying growth for businesses in the finance, health care and other services industries was stronger last month than economists expected.

    “Generally, business is good,” one respondent said in the survey compiled by the Institute for Supply Management. “However, there are concerns of slowing foot traffic at restaurants and other venues where our products are sold.”

    Stocks have struggled this week after another dud of a report on U.S. manufacturing reignited worries about the slowing U.S. economy and how much it could hurt corporate profits. That has raised the stakes for a highly anticipated report scheduled for Friday.

    That’s when the U.S. government will say how many jobs U.S. employers added last month, and economists are expecting an acceleration of hiring. The job market’s performance could dictate how big of a cut to interest rates the Federal Reserve will deliver at its next meeting later this month.

    After keeping its main interest rate at a two-decade high to stifle inflation, the Federal Reserve has hinted it’s about to begin cutting rates in order to protect the job market and keep the overall economy from sliding into a recession. The question on Wall Street is if that ends up being too little, too late.

    In the bond market, the yield on the 10-year Treasury eased to 3.73% from 3.76% late Wednesday. It’s down from 4.70% in April, which is a significant move for the bond market.

    Perhaps more importantly for investors, the 10-year yield is flirting with the end of a more than two-year stretch where it was lower than the two-year Treasury yield. That’s an unusual occurrence called an “inverted yield curve.” Usually, longer-term yields are higher than shorter-term yields.

    Many investors see an inverted yield curve as a warning of a coming recession, and the inversion since the summer of 2022 has been a key talking point for market pessimists. Often, an inverted yield curve flips back to normal ahead of a recession as traders cement their expectations for coming cuts to interest rates by the Fed. But the 2020 pandemic created a recession and resulting recovery that have often defied predictions and conventional wisdoms.

    The two-year Treasury yield was sitting at 3.74%, just above the 10-year yield.

    On Wall Street, Old Dominion Freight Line fell to one of the sharpest losses in the S&P 500 after reporting discouraging revenue trends for August. It cited “softness in the domestic economy,” along with lower fuel surcharge revenue for the weakness. The freight company’s stock fell 4.9%.

    Verizon’s stock slipped 0.4% after it announced it’s buying Frontier Communications in a $20 billion deal to strengthen its fiber network. Frontier Communications, which soared nearly 38% the day before, gave back 9.5%.

    On the winning end of Wall Street was Tesla. It rose 4.9% after laying out a roadmap for upcoming artificial-intelligence developments, including the possibility of full self-driving in Europe and China.

    JetBlue Airways flew 7.2% higher after raising its forecast for revenue in the summer. It said it’s seeing better performance in the Latin America region particularly and that it picked up business when technology outages in July forced rivals to cancel flights.

    All told, the S&P 500 dipped 16.66 points to 5,503.41. The Dow dropped 219.22 to 40,755.75, and the Nasdaq composite rose 43.36 to 17,127.66.

    In stock markets abroad, indexes were mixed across Asia and Europe.

    Japan’s Nikkei 225 fell 1.1% after strong data on growth in wages there raised expectations for another hike to interest rates.

    ___

    AP Writers Matt Ott and Zimo Zhong contributed.

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  • Making sense of the markets this week: September 1, 2024 – MoneySense

    Making sense of the markets this week: September 1, 2024 – MoneySense

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    Couche-Tard takes aim at Slurpee King

    Because I grew up in near Winnipeg, the Slurpee Capital of the World, I thought I knew everything the 7-Eleven universe had to offer. Then, I visited Japan and Thailand last year. I realized that I hadn’t seen anything yet. (All figures in U.S. dollars in this section.)

    In much of Thailand and Japan (among other places in Asia), the convenience store is a daily touchstone stop. In Tokyo, there are more than 3,000 7-Eleven stores, a large part of the country’s 56,000-plus convenience store locations. While 7-Eleven was a big part of my childhood, it pales in comparison to the role it plays within many Asian communities. 

    So, it quickly caught my attention when Canadian corporate darling Alimentation Couche-Tard (ATD/TSX) announced it was making a friendly takeover bid for Tokyo-based Seven & I Holdings Co (SVNDY/NIKKEI). The possible deal is historic for many reasons.

    1. The acquisition of Seven & I Holdings Co is the largest-ever Japanese target of a foreign buyer. 
    2. It’s the first test of new 2023 takeover rules by Japan’s Ministry of Economy, Trade and Industry (METI), designed to make foreign acquisitions more welcoming and Japanese companies more internationally competitive. 
    3. It would likely top Enbridge’s $28 billion acquisition of Spectra Energy Corp back in 2016, to become Canada’s largest-ever corporate takeover.
    4. It would combine Couche-Tarde’s convenience store empire of 16,700 stores in 31 countries, with 7-Eleven’s 85,800 stores in 19 countries.
    5. By combining ATD’s and 7-Eleven’s U.S. market share, Couche-Tard would control more than 12% of the U.S. convenience store market, with the closest competitor being Casey’s General Stores at only 1.7%.
    6. It’s a massive bite to take for ATD, currently valued at about $56 billion, since 7-Eleven is currently worth about $38 billion.
    7. The potential acquisition is so large that many analysts believe ATD would have to raise $18 billion in new equity to complete the deal. That would be the biggest stock offering in Canada by a wide margin. It would also be in addition to the $2 billion in cash on hand ATD has, and its ability to borrow about $20 billion. There’s speculation that Canadian pension plans would be a key source of capital in order to get a deal done.

    Neither company disclosed the precise terms of the deal, but Couche-Tard described the offer as “friendly, non-binding.” That’s a key differentiator from a “hostile takeover.” (A hostile takeover is when a company tries to purchase more than half of another company’s shares on the free market against the wishes of the targeted company’s management, thus taking over operational control.)

    This move is not totally out of the blue for ATD, as the company has taken big acquisitional swings before. The Quebec-based operator has a long history of successfully integrating new acquisitions. Its attempt three years ago to purchase French grocery chain Carrefour for $25 billion was scuttled at the last minute by the French Finance Minister citing food security issues. Similar protectionist governmental instincts could prevent this massive deal from getting done. 

    That said, Couche-Tard has been circling (Circle K-ing?) 7-Eleven for over two years now. Perhaps it believes it has what it takes to navigate the new Japanese corporate legal waters and get the deal done.

    While there will likely be some nervous customers of 7-Eleven (nobody wants to see change at their favourite corner store), Seven & I Holdings’ shareholders must be happy. Shares were up 22% upon announcement of the proposed acquisition.

    1900 vs. 2023 stock markets

    It’s always worth keeping the long run in mind when thinking about trends and market forces. When we consider just what an incredible run the U.S. stock market has achieved over the last few years, it’s important to remember that it’s unlikely to continue that outperformance forevermore.

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    Kyle Prevost

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  • Making sense of the markets this week: August 25, 2024 – MoneySense

    Making sense of the markets this week: August 25, 2024 – MoneySense

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    On Tuesday, Statistics Canada stated that the Consumer Price Index (CPI) measured inflation of 2.5% for July. That’s down from 2.7% in June, and is the lowest inflation rate recorded since 2021.

    Deceleration in headline inflation led by shelter component , 12-month % change

    CPI basket items June 2024 July 2024
    All-items Consumer Price Index 2.7% 2.5%
    Food 2.8% 2.7%
    Shelter 6.2% 5.7%
    Household operations, furnishings and equipment -0.9% -0.1%
    Clothing and footwear -3.1% -2.7%
    Transportation 2% 2%
    Health and personal care 3.0% 2.9%
    Recreation, education and reading 0.6% -0.2%
    Alcoholic beverages, tobacco products and recreational cannabis 3.1% 2.7%
    Source: Statistics Canada

    In fact, if you take shelter out of the equation, we’re getting close to zero inflation. And that’s significant for two reasons:

    1. The shelter-inflation rate (primarily a measurement of rent and mortgage expenses) did come down substantially between June and July.
    2. As the Bank of Canada (BoC) cuts interest rates, the inflation component of the CPI will inevitably go down as Canadians will have access to mortgages with lower rates.

    Notably, passenger vehicle prices were down 1.4% in July. Clothing and footwear was also down by 2.7%. Food and gas were up by 2.7% and 1.9% respectively. British Columbia and New Brunswick had the highest inflation rate growth, while Manitoba and Saksatchewan had the lowest.

    It’s pretty clear there’s no longer an overall inflation crisis in Canada. It’s now simply a home affordability issue at this point. Economists were widely predicting that this continuing trend of a downward inflation rate would clear the way for continued interest-rate cuts in the coming months. Money markets are now predicting a 0.25% cut minimum on September 4, with a 4% probability that the cut will be 0.50%. Looking further down the road, those same markets are predicting there is a 76% chance we will see a 2% decrease by October of 2025. 

    I hope you locked in those guaranteed investment certificates (GICs) or bonds when you could still snag those high rates Check out MoneySense’s list of the best GIC rates in Canada, and my article on low-risk investments over at MillionDollarJourney.com.

    A bullseye for Target

    Target Corporation posted a big earnings beat on Wednesday and shareholders saw its shares increase in value by 11.20%. The Minneapolis-based discount retailer is the seventh-largest in the U.S.

    Retail earnings highlights

    All numbers are in U.S. dollars.

    • Target (TGT/NYSE): Earnings per share of $2.57 (versus $2.18 predicted). Revenue of $25.45 billion (versus $25.21 billion estimate).
    • Lowe’s Companies (LOW/NYSE): Earnings per share of $4.10 (versus $3.97 predicted), and revenues of $23.59 billion (versus $23.91 billion predicted).

    Same-store sales for Target grew 3% last quarter, after five straight quarters of declining sales. More purchases of discretionary items like clothing were responsible for the positive reversal to the declining sales trend.

    Target’s COO Michael Fiddelke had a very cautious tone, though. “While we’ve been pleased with our performance so far this year, our view of the consumer remains largely the same. The range of possibilities and the macroeconomic backdrop in consumer data and in our business remains unusually high.” And Target CEO Brian Cornell cited price reductions and a value-seeking consumer as reasons for increased foot traffic in the quarter.

    It was very much a mediocre earnings report for Lowes, though, as it beat earnings expectations decisively but cut its full-year forecast. Shares were down by about 1% on Tuesday after the earnings announcement. 

    Lowe’s CEO Marvin Ellison said consumers were waiting for cuts in interest rates before taking on large home improvement projects. Because 90% of Lowes’ customers are homeowners (as opposed to contractors), they are particularly sensitive to movements in interest rates, he shared. Same-store sales were down 5.1% year over year.

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  • NTSB sends team to investigate California crash and lithium-ion battery fire involving a Tesla Semi

    NTSB sends team to investigate California crash and lithium-ion battery fire involving a Tesla Semi

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    A crash and large fire along a California freeway involving an electric Tesla Semi has drawn the attention of federal safety investigators.

    The U.S. National Transportation Safety Board said Thursday it’s sending a team of investigators from the Office of Highway Safety mainly to look into fire risks posed by lithium-ion batteries.

    The team will work with the California Highway Patrol to “examine the wreckage and gather details about the events leading up to the collision and the subsequent fire response,” the agency said in a statement.

    The Los Angeles Times reported that the Tesla rig was traveling east on Interstate 80 around 3:15 a.m. Monday near Emigrant Gap, about 70 miles northeast of Sacramento, when it went off the road and collided with trees near the right shoulder.

    The battery caught fire, spewing toxic fumes and reaching a temperature of 1,000 degrees, forcing firefighters to wait for it to burn out, the Highway Patrol told the newspaper. The Tesla driver walked away from the crash and was taken to a hospital, and the freeway was temporarily closed.

    The battery burned into the late afternoon while firefighters tried to cool it down for cleanup, and the freeway didn’t reopen until 7:20 p.m., authorities said.

    A message was left Thursday seeking comment on the crash and fire from Tesla.

    After an investigation that ended in 2021 the NTSB determined that high-voltage electric vehicle battery fires pose risks to first responders and that guidelines from manufacturers about how to deal with them were inadequate.

    The agency, which has no enforcement powers and can only make recommendations, called for manufacturers to write vehicle-specific response guides for fighting battery fires and limiting chemical thermal runaway and reignition. The guidelines also should include information on how to safely store vehicles with damaged lithium-ion batteries, the agency said.

    Tesla began delivering the electric Semis in December of 2022, more than three years after CEO Elon Musk said his company would start making the trucks. Musk has said the Semi has a range per charge of 500 miles when pulling an 82,000-pound load.

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  • Making sense of the markets this week: August 18, 2024 – MoneySense

    Making sense of the markets this week: August 18, 2024 – MoneySense

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    The U.S. is set to cut rates—finally

    After much speculation about when the U.S. will finally begin cutting its interest rates, the CME FedWatch tool reports a 100% chance that the U.S. Federal Reserve will cut its rates in September. Market watchers are pretty confident, with a 36% chance that the U.S. Fed will go right to a 0.50% cut instead of nudging the rate down. And looking ahead, the futures market predicts a 100% chance of 0.75% in rate cuts by December this year, with a 32% chance of a 1.25% rate decrease. The forecasts became stronger this week as the annualized inflation rate in the U.S. slowed to 2.9%, its lowest rate since March 2021. There are a lot of percentages here, but the gist is people are expecting big interest rate cuts.

    Those probabilities should take some of the currency pressure off of the Bank of Canada (BoC) when it makes its next interest rate decision on September 4. If the BoC were to continue to cut rates at a faster pace than the U.S. Fed, the Canadian dollar would substantially depreciate and import-led inflation would likely become an issue.

    Source: CNBC

    Here are some top-line takeaways from the U.S. Labor Department July CPI report:

    • Core CPI (excluding food and energy) rose at an annualized inflation rate of 3.2%.
    • Shelter costs rose 0.4% in one month and were responsible for 90% of the headline inflation increase.
    • Food prices were up 0.2% from June to July.
    • Energy prices were flat from June to July.
    • Medical care services and apparel actually deflated by 0.3% and -0.4% respectively.

    When combined with the meagre July jobs report, it’s pretty clear the U.S. consumer-led inflation pressures are receding. As the U.S. cuts interest rates and mortgage costs come down, it’s quite likely that shelter costs (the last leg of strong inflation) could come down as well.


    Walmart: “Not projecting a recession”

    Despite slowing U.S. consumer spending, mega retailers Home Depot and Walmart continue to book solid profits.

    U.S. retail earnings highlights

    Here are the results from this week. All numbers below are reported in USD.

    • Walmart (WMT/NYSE): Earnings per share of $0.67 (versus $0.65 predicted). Revenue of $169.34 billion (versus $168.63 billion predicted).
    • Home Depot (HD/NYSE): Earnings per share of $4.60 (versus $4.49 predicted). Revenue of $43.18 billion (versus $43.06 billion predicted).

    While Home Depot posted a strong earnings beat on Wednesday, forward guidance was lukewarm, resulting in a gain of 1.60% on the day. Walmart, on the other hand, knocked the ball out of the park and raised its forward guidance and booked a gain of 6.58% on Thursday.

    Walmart Chief Financial Officer John David Rainey told CNBC, “In this environment, it’s responsible or prudent to be a little bit guarded with the outlook, but we’re not projecting a recession.” He went on to add, “We see, among our members and customers, that they remain choiceful, discerning, value-seeking, focusing on things like essentials rather than discretionary items, but importantly, we don’t see any additional fraying of consumer health.”

    Same-store sales for Walmart U.S. were up 4.2% year over year, and e-commerce sales were up 22%. The mega retailer highlighted its launch of the Bettergoods grocery brand as a way to monetize the trend toward cheaper food-at-home options, and away from fast food. 

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  • UAW files labor charges against Trump and Musk after X interview, claiming worker intimidation

    UAW files labor charges against Trump and Musk after X interview, claiming worker intimidation

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    The United Auto Workers on Tuesday filed federal labor charges against former President Donald Trump and Tesla CEO Elon Musk, accusing the duo of trying to “intimate and threaten” workers during an interview on the latter’s social media platform X.

    Trump returned to X on Monday night for an interview with Musk, who has voiced support for the Republican presidential candidate. The two-hour conversation between the two billionaires, which started more than half an hour late due to glitches, ranged from Trump’s views about what he called a “zombie apocalypse” of immigration to his praise for Musk’s labor practices.

    During the interview, the pair advocated for the firing of striking workers, the UAW claimed in a statement. Under the National Labor Relations Act, it’s illegal to fire striking workers as well to threaten to terminate workers who go on strike.

    “I mean, I look at what you do,” Trump told Musk on Monday night. “You walk in, you say, ‘You want to quit?’ They go on strike. I won’t mention the name of the company, but they go on strike, and you say, ‘That’s okay. You’re all gone. You’re all gone. So every one of you is gone.’”

    Trump made the remarks in response to Musk pitching himself as playing a potential role in a future “government efficiency commission,” with the Republican nominee calling Musk “the greatest cutter.”

    Musk did not directly respond to Trump’s talk about striking workers, pivoting instead to government spending. 

    Filed with the National Labor Relations Board, the UAW’s complaint targets Musk as a representative of Tesla, the electric car company where Musk serves as CEO and is its biggest individual shareholder. 

    Musk’s SpaceX has also challenged the structure of the NLRB, with the rocket maker’s lawsuit now with a federal appeals court in Texas. 

    The UAW, which been trying to organize Tesla employees, has also recently endorsed Vice President Kamala Harris’ run for the White House, while members of the union met with the Democratic presidential nominee in Michigan last week. 

    Shawn Fain: “Disgusting, illegal” comments

    In a statement, UAW President Shawn Fain decried the comments, saying “Both Trump and Musk want working class people to sit down and shut up, and they laugh about it openly.” He added, “It’s disgusting, illegal and totally predictable from these two clowns.”

    The AFL-CIO, a federation of 60 national and international labor unions, offered its own take on the exchange on X, posting: “Scab recognize scab.”


    UAW’s Shawn Fain unpacks labor charges against Trump, Musk

    09:01

    The Trump campaign dismissed the UAW action as a “shameless political stunt,” with Trump campaign senior advisor Brian Hughes accusing the union of trying to erode what he called “Trump’s overwhelming support among American workers.”

    Musk, who has said he previously voted Democratic, has thrown his weight — and his wealth — behind Trump. Tesla did not immediately respond to a request for comment.

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  • UAW Files Federal Labor Charges Against Donald Trump and Elon Musk, Alleging They Tried to ‘Threaten and Intimidate Workers’

    UAW Files Federal Labor Charges Against Donald Trump and Elon Musk, Alleging They Tried to ‘Threaten and Intimidate Workers’

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    The United Auto Workers union, which represents some 400,000 workers in the automobile, aerospace, and agriculture industries, on Tuesday said that it filed federal labor charges against Donald Trump and Elon Musk. The charges follow what the UAW describes as “attempts to threaten and intimidate workers” that arose during a conversation between Trump and Musk, hosted on X Spaces Monday evening, in which Trump appeared to praise X owner Musk for firing workers who strike.

    “Well, you’re the greatest cutter,” Trump told Musk, the CEO of Tesla and SpaceX. “I mean, I look at what you do. You walk in and you just say, ‘You want to quit?’ They go on strike. I won’t mention the name of the company, but they go on strike and you say, ‘That’s okay. You’re all gone. You’re all gone.’” Musk did not respond specifically to Trump’s statements, but laughed as the former president spoke, and said he would “be happy to help out” on a government efficiency commission.

    US workers—both unionized and nonunionized—cannot be fired for engaging in protected strikes, according to the National Labor Relations Board. In his comments, Trump “stated a position which is a violation of law, flat and simple,” says William B. Gould IV, a professor at Stanford Law School and former chair of the NLRB. Trump could be seen as acting as an agent for Musk’s companies, Gould says, and his words could potentially interfere with votes to unionize at companies.

    The NLRB will need to investigate the claims and then decide how to move forward if it feels the charges have merit.

    “When we say Donald Trump is a scab, this is what we mean. When we say Trump stands against everything our union stands for, this is what we mean,” UAW president Shawn Fain said in a statement. “Both Trump and Musk want working class people to sit down and shut up, and they laugh about it openly. It’s disgusting, illegal, and totally predictable from these two clowns.”

    The UAW has endorsed Vice President Kamala Harris for president, and previously called Trump “a scab and a lapdog for the billionaires.” The union did not provide a copy of the charges it filed Tuesday when requested by WIRED; they were not yet docketed on the NLRB website as of press time.

    Musk’s companies have a blighted record when it comes to workers’ rights. Trump did not name the Musk company he was referring to, but Musk is CEO of Tesla, SpaceX, Neuralink, and the Boring Company. Musk has said in the past that unionization at Tesla would result in a loss of stock options, and he slashed staff at X (then Twitter) when he bought it, ultimately even canceling services from janitors who went on strike. Meanwhile, SpaceX is currently sparring with the NLRB in court.

    The UAW previously tried to unionize Tesla workers, but fell short. The union is trying still to do so. Tesla and SpaceX did not respond to requests for comment. Trump’s campaign did not respond to a request for comment either.

    Shortly after the UAW announced the charge, Musk posted to X: “The last two UAW presidents went to prison for bribery & corruption and, based on recent news, it looks like this guy will join them!” (Two former UAW presidents were sentenced to prison time in a large corruption probe, but they were not the two most recent union presidents.)

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    Amanda Hoover

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  • Donald Trump admits EV flip-flop was a quid-pro-quo to secure Elon Musk’s support: ‘I have no choice’

    Donald Trump admits EV flip-flop was a quid-pro-quo to secure Elon Musk’s support: ‘I have no choice’

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    Republican presidential nominee Donald Trump admitted to tempering his strident opposition to electric vehicles in order to gain the endorsement of billionaire Elon Musk, the CEO of Tesla.

    The former president, well known for the transactional nature of his politics, has championed an economic agenda relying heavily on cheap, plentiful energy through fracking and mining of U.S. fossil fuel deposits that drive climate change. Tesla’s stated mission however is to accelerate the world’s transition to sustainable energy.

    Speaking to supporters in Atlanta, Trump now said EVs aren’t all that bad, adding they could continue being a small slice of the U.S. car market should he retake the White House. 

    “I’m for electric cars. I have to be, you know, because Elon Musk endorsed me very strongly,” he said in comments shared widely throughout Musk’s fanbase by accounts like John Stringer’s Tesla Owners Silicon Valley and blogsite Teslarati. “So I have no choice.”

    Last month the New York real estate mogul pledged to roll back President Biden’s EV subsidies, which he labelled a “green new scam,” on day one of a second Trump administration.

    Speaking to Maria Bartiromo on Thursday, Trump explained all the electric cars in the future will be made in China, since the United States doesn’t have the mineral resources of its rival, the world market leader in processing battery-grade lithium.

    “They don’t go far [and] they cost too much,” he said, referring to EVs. “I like Tesla, but you know what? It’s limited.”

    His vice presidential pick, J.D. Vance, meanwhile has pushed a bill called the “Drive American Act” that would repeal Biden’s $7,500 federal tax credit for EVs and hand them instead to conventional combustion engine cars.

    This has put Musk on the backfoot, forcing the EV champion to claim late last month Trump’s hostility to EVs would harm his competition more than it would Tesla itself.

    Musk’s brand sells roughly as many EVs in the U.S. as all its other competitors combined. Along with China’s BYD, it is one of the only two carmakers in the world to build EVs profitably at scale.

    Consumers fleeing brand in Europe

    Nevertheless, Elon Musk’s brand of right-wing politics, increasingly ardent since he acquired Twitter at the end of October 2022, has fractured the Tesla community into those that support its mission to phase out fossil fuels and tech enthusiasts that back Musk first and foremost.

    Anecdotal and empirical evidence suggests this has contributed to a small but growing number of customers abandoning the brand for competitors like Rivian, especially in Tesla’s own stronghold of California

    Europe, whose EV market is 60% larger than the U.S., has seen a plunge in Tesla demand as the tycoon embraced the continent’s far right, an ally of Trump, who is highly controversial on the continent. As president, Trump cozied up to Russia’s Vladimir Putin while branding European Union as America’s real “foe” in the region.

    Musk’s engagement with political fringe parties like the AfD, under official observation by Germany’s domestic intelligence service as a danger to democracy, has soured support for the brand in an EV-friendly market where consumers are already spoiled for choice.

    On Monday, registration data published for Germany, the UK and France—the three largest EV markets in Europe—showed Tesla sales in the first seven months drop 41%, 13% and 28%, respectively, over the previous year’s period.

    By comparison the most recent continent-wide data showed EV sales edged 1.6% higher in the first half of this year, implying all other brands dramatically outperformed Tesla.

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    Christiaan Hetzner

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  • Making sense of the markets this week: August 4, 2024 – MoneySense

    Making sense of the markets this week: August 4, 2024 – MoneySense

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    Mixed results for Magnificent 7 

    The narrative around the Magnificent 7 mega-cap technology stocks has become mixed, even in the face of mostly positive earnings news.

    Microsoft stock sold off on Tuesday even after the company narrowly beat Wall Street expectations for its fiscal fourth-quarter results and handily surpassed results from a year ago. Investors have been scrutinizing figures for AI operations in particular; Microsoft’s Intelligent Cloud revenue rose 19% year over year and contributed 8 percentage points of growth to its Azure and other cloud services revenue, which grew 29%. Evidently, that wasn’t enough.

    Facebook and Instagram owner Meta Platforms, by contrast, easily bested analyst forecasts for the second quarter. It boosted net income by 73% over the same quarter last year and is gaining advertising market share over archrival Alphabet. Compared to its Mag 7 peers, Meta has been a stock-market laggard since 2022 but undertook a cost- and job-cutting campaign that now appears to be paying off.

    Apple likewise surpassed expectations for revenue and earnings, posting particularly strong results in its iPhone and iPad divisions. Cloud services, computers and wearables were in line with estimates.

    Amazon was punished after missing the analyst consensus for revenue, even though it beat estimates for earnings. Though Amazon Web Services performance was strong, the company’s core retail and advertising businesses disappointed.

    Microsoft, Meta, Apple, Amazon earnings highlights

    Currency figures in this section are reported in USD.

    • Microsoft (MSFT/NASDAQ): Earnings per share of $2.95 (versus $2.94 predicted). Revenue of $64.7 billion (versus $64.5 billion estimate).
    • Meta Platforms (META/NASDAQ): Earnings per share of $5.16 (versus $4.63 expected). Revenue of $39.07 billion (versus $38.31 billion estimate).
    • Apple (AAPL/NASDAQ): Earnings per share of $1.40 (versus $1.35 expected) . Revenue of $85.78 billion (versus $84.53 billion estimate).
    • Amazon (AMZN/NASDAQ): Earnings per share of $1.26 (versus $1.03 expected). Revenue of $147.98 billion (versus $148.56 billion estimate).

    The U.S. Fed stands pat for now

    There were no assassination attempts or presidential nominees dropping out of the race for the White House this week. The news out of Washington, D.C. on Wednesday, however, was just as closely watched by markets. 

    The U.S. Federal Reserve elected to hold its overnight lending rate at 5.5%. In a statement, the central bank’s Open Market Committee acknowledged signs of a slowing economy but said it would not cut rates “until it has gained greater confidence that inflation is moving sustainably toward 2%.” The market continues to pin its bets on a rate cut in September, which would be the first since 2020.

    That leaves the Bank of Canada, which has cut rates in both of the last two months, a full percentage point below the U.S. Fed. The Canadian dollar nonetheless gained slightly against the greenback, at USD$0.72485, in the wake of the announcement, suggesting the policy decision was expected.

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    Michael McCullough

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  • South Pasadena’s all-Tesla police fleet saves money, fights crime and cuts emissions

    South Pasadena’s all-Tesla police fleet saves money, fights crime and cuts emissions

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    In South Pasadena, new police cars are patrolling to reduce crime and cutting emissions at the same times.

    The South Pasadena Police Department unveiled Monday what the city says is the first all-electric vehicle police fleet in the country, sporting 10 Tesla Model Ys for patrol and 10 Model 3s for detectives and administration.

    The city will pay $1.85 million overall for the electrified fleet, officials said in a release. Over half of the project’s cost are covered by multiple partners that have agreed to build city-managed electric vehicle chargers and contingencies.

    “This transition reflects the city’s vision of a sustainable future, based on both sound fiscal management and environmental stewardship,” Mayor Evelyn Zneimer said in the release. “We will have a 21st Century police force that is safe, clean and saves taxpayer dollars.”

    The new zero-emissions police force will save the city more than $400,000 in gas and maintenance costs over 10 years, according to the Electrify South Pasadena website.

    Fuel costs alone were about $4,355 a year for the department, compared to the estimated cost of $336 per year to charge all of the new cars, according to a September 2022 staff report.

    The fluctuating cost of gas could impact the city’s savings, South Pasadena Police Department Sgt. Tony Abdalla said. The $312,282 figure was calculated using September 2022 gas prices, which were $5.27 a gallon in California, according to the U.S. Energy Information Administration. Gas prices have fallen since then, down to $4.47 a gallon this month.

    The fuel savings are not the only advantage to the zero-emission vehicles.

    The 2022 report presenting the plan to the city council cited “significant maintenance and reliability issues” over the gasoline-powered fleet.

    One gas-powered police vehicle overheated during a pursuit. Another was out of service due to a blown head gasket. Yet another had electrical and brake issues. Two had air conditioning problems, one with a note that the vehicle’s AC was “insufficient” for the K9 assigned to it.

    South Pasadena police had been considering for years whether to replace the fleet of 22 vehicles, six of which were out of commission. “We were looking for a creative solution,” Abdalla said.

    The department looked to the 35 other police departments all over the country that had added electric vehicles to see if going all-electric was possible. No other agency, however, had transitioned the whole force, according to the city.

    The new vehicles require a new infrastructure, which lead to the construction of 34 Level 2 electric vehicle chargers at South Pasadena City Hall, funded by the Charge Ready program from Southern California Edison. An additional Level 3 charger, which can fully charge an electric vehicle in about an hour, will also be installed in the police department parking lot.

    The city is also expected to benefit from the revenue generated by 14 public-facing EV chargers at City Hall plus Low Carbon Fuel Standard credits from the state’s Air Resources Board, which could translate to thousands of dollars a month.

    A backup solar and battery storage system that was provided by the Clean Power Alliance’s Power Ready Program protects the department from running out of power during electricity outages and grid failures.

    The project expects to reduce 1,850 metric tons of smog-creating carbon dioxide by 2030, greatly surpassing the city’s current plan for the police department to reduce 23 metric tons by 2030.

    The move to the Tesla fleet reduces 10% of the city’s overall emission cuts needed to meet the state’s 2030 climate action plan to reduce greenhouse gas emissions by 40% below 1990 levels statewide.

    City Councilmember Michael Cacciotti may be the strongest advocate for the clean-air alternatives.

    The genesis of the plan had its start two decades ago, Cacciotti said, after he read studies about the harm of air pollution and decided to trade in his sports car, asking car dealers, “What’s the cleanest car you have available?”

    Cacciotti, who is also the vice chair of the South Coast Air Quality Management District, said he bought a Toyota Prius that is still running strong after 20 years and 188,000 miles. It recently needed its very first change of brakes and rotors — a testament to how little maintenance hybrid and electric cars require, he said.

    Protecting public health, Cacciotti said, was a driving factor for the change. Police cars idle, while cops write tickets at traffic stops or respond to emergency calls. During that time, gas-powered cars release emissions that impact the health of children and elders and worsen the climate crisis. “We can’t ignore these things,” he said.

    Now that the infrastructure for electric city vehicles is in place, Cacciotti said, he is looking into replacing the city’s fire trucks with zero-emission versions in the next few years.

    But South Pasadena is not the first to turn to zero-emission vehicles. The city of Irvine recently added a Cybertruck to its fleet, though it won’t be used on patrol, and Anaheim added Teslas in a pilot program in April.

    Meanwhile, tune-ups, oil changes and spark plug replacements are now things of the past at the South Pasadena Police Department. Lower long-term maintenance costs are part of the savings plan.

    In preparing the project over the last four years, Abdalla said, city officials had to reconsider crashes involving police cars.

    The Tesla Model Y and Model 3 are some of the safest vehicles on the market, boasting the highest rating possible from the Insurance Institute of Higher Safety.

    “We reached this decision because we wanted the safest and most capable vehicle for the job,” the South Pasadena Police Department wrote in an X post.

    The department’s announcement earned a handshake emoji from Tesla’s North American X account.

    But Tesla’s safety features, like lane assistance and emergency stopping, might work against patrol officers when they are chasing a suspect and must navigate through traffic at high speeds or perform a maneuver to bump a fleeing car, forcing it to spin out or stop.

    For maneuvers that involve bumping fleeing cars, Abdalla said, it’s hard to test because it would require crashing a car. Lane assistance can be turned off in the Tesla’s settings, and the department has run into no issues since testing the first police Tesla last December.

    Abdalla said he is optimistic that the experiment will be a success.

    “It’s been years of work,” he said, “and it’s exciting to see it come to fruition.”

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    Sandra McDonald

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  • Tesla Recalling More Than 1.8 Million Vehicles – KXL

    Tesla Recalling More Than 1.8 Million Vehicles – KXL

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    (Associated Press) – Tesla is recalling more than 1.8 million vehicles because of a hood issue that could increase the risk of a crash.

    Billionaire Elon Musk’s Tesla is recalling certain 2021-2024 Model 3, Model S, Model X, and 2020-2024 Model Y vehicles because the hood latch assembly may fail to detect an unlatched hood condition after the hood has been opened.

    The unlatched hood can fully open when the vehicle is in motion, potentially obstructing the driver’s view and increasing the likelihood of a crash.

    More about:

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    Grant McHill

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  • Tesla recalls 1.8 million vehicles because of hood problem

    Tesla recalls 1.8 million vehicles because of hood problem

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    Car repair and maintenance costs vary by brand, Porsches are expensive, Teslas not so much


    Car repair and maintenance costs vary by brand, Porsches are expensive, Teslas not so much

    01:25

    Tesla is recalling more than 1.8 million vehicles because of a faulty hood.

    In a regulatory filing on Tuesday, the National Highway Traffic Safety Administration said the electric automaker reported that the latch assembly for 17 of its new and used cars might not detect that their hood is open. That could obstruct a driver’s view, raising the risk of a crash. 

    The recall affects the following models, according to the agency:

    • 2021-2024 Model 3
    • 2021-2024 Model S
    • 2021-2024 Model X
    • 2020-2024 Model Y

    The company is unaware of any crashes, injuries or deaths related to the issue.

    To fix the problem, Tesla is releasing a free software update. Owners will be notified by mail on September 22 and may contact the company’s customer service line at (877) 798-3752. The associated recall number is SB-24-00-012. 

    Consumers may also contact NHTSA’s safety hotline at (888) 327-4236 or go to www.nhtsa.gov.

    In February, Tesla also recalled 2.2 million vehicles — nearly all of the cars it had sold in the U.S. at the time — because the instrument panel font for some warning lights was too small. 

    In May the automaker recalled 125,000 cars because the seat belt warning signal could fail. And In June Tesla recalled its Cybertruck pickup for the fourth time since it went on sale last fall to repair trim pieces that can come loose, along with potentially defective windshield wipers.

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  • Making sense of the markets this week: July 28, 2024 – MoneySense

    Making sense of the markets this week: July 28, 2024 – MoneySense

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    Biden’s withdrawal soothes bond market, deflates “Trump trade”

    Compared to the way U.S. President Joe Biden’s decision not to run for a second term shook the political world, the markets seemed nonplussed—on the surface, at least. 

    Biden’s U-turn took some air out of the “Trump trade” in stock, bond and cryptocurrency markets. Stock markets overall rebounded the day after the announcement, with mega-cap technology stocks leading the way. But oil and gas stocks and cryptocurrencies—foreseen to fare better under a Donald Trump administration—retrenched. 

    The Republican nominee is seen as a bigger deficit spender than whomever the Democrats might settle on, so a Trump/Vance administration is expected to usher in higher inflation. That recently translated into a steeper yield curve for bonds as polls showed him ahead of Biden. However, that expectation of Trump as an inevitable shoo-in has now deflated and bond yields have flattened somewhat.

    However, Kristina Hooper, chief global market strategist at Invesco, warned investors to stay braced for more short-term volatility, “as the significant uncertainty about the new Democratic ticket might not be resolved until the party’s convention in August.” She also suggested that investors should pay closer attention to the U.S. Federal Reserve moves with respect to interest rates. (More on Canada’s recent rate cut below.)

    Something for Canadians and investors to ponder: As a senator, Vice President and Democratic front-runner Kamala Harris voted against the U.S.-Canada-Mexico trade agreement (USMCA), the successor to NAFTA (North American Free Trade Agreement) that was concluded by the Trump administration in 2020. At the time, she cited the lack of environmental protections for her decision.

    Bank of Canada cuts rates again

    Speaking of monetary policy, on Wednesday Bank of Canada (BoC) governor Tiff Macklem announced a second quarter-point cut to interest rates in as many months bringing the overnight lending rate down to 4.5%. Further, Macklem hinted there would be more cuts to come this year; provided inflation continues to subside towards the Bank’s 2% target. The country’s Consumer Price Index (CPI) increased 2.7% year-over-year in June, down from a 21st-century high of 8.1% two years earlier.

    The rate cut was widely expected by markets. 

    “Today’s decision to cut was consistent with our call, and that of broader market consensus which had upped the odds of reduction following a cascade of recent data which showed decelerating inflation, slack in the labour market and underperforming economy.”

    – Brian Yu, AVP and chief economist for Central1 Credit Union.

    The BoC is forecasting 1.2% GDP growth this year, 2.1% in 2025 and 2.4% in 2026, which sounds OK until you consider population growth is currently running at 3%. Regardless, the rate cut provides some relief to mortgage holders and support for bond markets.

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    Michael McCullough

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  • 3 reasons tech stocks, once hot, are suddenly not

    3 reasons tech stocks, once hot, are suddenly not

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    A selloff in technology stocks Wednesday drove the Nasdaq and S&P 500 indices to their worst performances since 2022. The slump in high-tech follows a year-long rally by the “Magnificent Seven,” a group of seven industry giants that have led markets into record terrain.

    The slump continued on Thursday, with the tech-heavy Nasdaq index slipping 0.5% in morning trade. Chipmaker Nvidia shed 1.4% and Google-owner Alphabet fell 1.2%, while four other members of the group — Amazon, Apple, Meta Platforms and Microsoft — also lost ground. The only member of the group to gain on Thursday morning was Tesla, which rose about 3%.

    The Magnificent Seven (sometimes called the “Mag Seven”) fueled two-thirds of the S&P 500’s growth last year, with investors betting that these companies would profit from their investments in artificial intelligence. But investors are now increasingly questioning whether the billions in capital funneled into the emerging technology will pay off anytime soon.

    “The Magnificent Seven stocks now look like the “Lag” Seven,” noted Piper Sandler analysts in a research note.

    Here are three issues weighing on tech stocks.

    Questions about AI profitability 

    First and foremost, investors are increasingly concerned about whether the tech giants’ massive investment in artificial intelligence will boost their bottom lines. Companies, as well as utilities and governments, are expected to spend a total of more than $1 trillion in the next few years on AI, according to Wedbush analyst Dan Ives. 

    “[P]eople are starting to ask more questions about the economics of AI (what is the ROI on all this investment?),” wrote analysts at Vital Knowledge on Thursday. 

    These questions were weighing on investors amid earnings reports this week from Tesla and Alphabet. While their quarterly earnings weren’t disasters, they raised questions among investors about which other market heavyweights’ financial results could fall short of expectations, said Sam Stovall, chief investment strategist at CFRA.

    “How many disappointments are we likely to see? Maybe let’s sell first and ask questions later,” he said.

    Great expectations can be hard to meet

    Profit expectations are high for U.S. companies broadly, but particularly so for the Magnificent Seven. Alphabet, Amazon, Apple, Meta Platforms, Microsoft, Nvidia and Tesla need to keep delivering powerful growth after being responsible for most of the S&P 500’s run to records this year.

    Tesla was one of the biggest drags on stocks Wednesday, tumbling 12.3% after reporting a 45% drop in profit for the spring, and its earnings fell short of analysts’ forecasts.

    “[W]ith great outperformance comes great expectations, and the bar for this group was extremely high – therefore, what may look like a ‘beat and raise’ report on paper might actually be disappointing” for some stocks such as Alphabet, the owner of the Google search engine, Vital Knowledge said. 

    An investor shift to smaller stocks

    Lastly, investors are shifting money as part of a strategy called “sector rotation,” according to John Lynch, chief investment officer for Comerica Wealth Management. This strategy involves investing assets based on changes in the business cycle, with investors switching into different types of stocks based on trends like inflation and profit growth. 

    “Equity market leadership has experienced a dramatic shift in recent weeks,” Lynch wrote in a recent report, noting that small-cap stocks have enjoyed a “significant’ rally this month. 

    The most recent inflation report, which showed U.S. prices cooling faster than expected, spurred some investors to shift money into smaller stocks because of the expectation that the Federal Reserve could soon cut rates. That could provide an outsized benefit to these businesses since they are more reliant on borrowing than bigger companies, Lynch noted.

    —With reporting by the Associated Press.

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  • Elon Musk says a Trump presidency ‘would be devastating’ to Tesla’s competitors

    Elon Musk says a Trump presidency ‘would be devastating’ to Tesla’s competitors

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    Tesla CEO Elon Musk is firmly in former President Donald Trump’s corner politically, but what a potential Trump Administration could mean for the electric vehicle maker that pays Musk billions is unclear—even to Musk himself.

    During a call with financial analysts on Tuesday, Wells Fargo director Colin Langan asked Musk to explain the impact of a Trump win and the potential wipeout of a federal $7,500 tax credit for electric vehicles.

    “I guess there would be some impact,” said Musk. “It would be devastating for our competitors, and it would hurt Tesla slightly.”

    The CEO also noted that because Trump has promised heavy tariffs on vehicles produced in Mexico, Tesla would pull back on investing in a factory it had planned to open in Monterrey in 2026. “If that’s going to be the case, we kind of need to see how things play out politically,” he said. Yesterday, Musk denied reports that he would pump $45 million per month into Trump’s campaign.

    Speaking on CNBC before the earnings call, Wedbush Securities tech analyst Dan Ives said that a Trump presidency could be negative for the overall EV market because Trump could eliminate the Inflation Reduction Act and with it the tax credits for EVs and certain plug-in hybrids. That would mean an administration under Kamala Harris, the presumptive Democratic party nominee, could be a positive for the EV industry.

    Yet, Trump might be better for the regulatory agenda needed to promote full-self driving and autonomy, which is a key component of Tesla’s growth strategy, said Ives.

    “Musk has been background noise under the Biden Administration and in a Trump administration, is that something that will be more front and center?” said Ives. “That’s why I would say Tesla is part of that Trump trade.”

    Musk dismissed the notion that regulators might balk at a fleet of Tesla-made, self-driving robotaxis without steering wheels and pedals. An analyst asked Musk to explain why regulatory risk wasn’t an issue for Tesla, when General Motors had paused production of its Origin vehicle that doesn’t have a steering wheel, in favor of its Chevrolet Bolt, in part because of regulation. The Cruise Origin autonomous vehicle would need approval from the National Highway Traffic Safety Administration because it doesn’t have traditional manual controls like a steering wheel and pedals, which are required by current safety regulations, and were written for cars with human drivers and not fully autonomous vehicles.

    “The main reason with switching from the Origin to the Bolt is we extinguish the regulatory risk,” GM CEO Mary Barra said, according to a Reuters report.

    “The real reason they canceled it is because GM can’t make it work,” said Musk, adding that the automaker’s technology “is not up to par.” He said blaming regulators was “misleading.”

    Jim Cain, an executive director at GM, told Fortune Musk is flat wrong.

    “All of those statements are categorically false,” said Cain, who listened to Musk’s comments during the earnings call. “The Origin vehicle faced a lot of hurdles getting certified because it doesn’t have a steering wheel, it doesn’t have a brake pedal, and it has a unique seating layout that requires a federal motor vehicle safety waiver—full stop.”

    Cain said Cruise technology improves every day because of the way it leverages its data set with AI. “And so far, they have driven more than 5 million fully autonomous miles and Tesla has driven exactly zero.”

    Musk has an unshakeable faith in Tesla’s power to “solve autonomy,” which he reiterated Tuesday, even as Tesla reported financial results showing net profits dropped 45%, marking its second quarter of sluggish growth and fourth straight quarter of falling quarterly earnings. Car industry data also showed that Tesla continues to lose popularity in California, where sales fell 24% in the second quarter. Meanwhile, Trump has pledged to end what he referred to as the “green new scam,” promising to abolish “the electric-vehicle mandate on day one.”

    According to Ives, if autonomy is the strategic future of Tesla, it might be more beneficial for Tesla to have less regulation, which is likelier under a Trump presidency versus a Harris presidency.

    “The cherry on top of what could be the sundae” for investors is how the company will impact the robotics market and its efforts on full-self driving and autonomy, said Ives. Ultimately, that’s how the company could potentially reach a $1 trillion or even $2 trillion valuation, he added.

    Recommended Newsletter: The Fortune Next to Lead newsletter is a must-read for the next generation of C-suite leaders. Every Monday, the newsletter provides the strategies, resources, and expert insight needed to claim the most coveted positions in business. Subscribe now.

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    Amanda Gerut

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  • Don’t Hold Your Breath for Elon Musk’s Robotaxi

    Don’t Hold Your Breath for Elon Musk’s Robotaxi

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    Photo: ETIENNE LAURENT/AFP via Getty Images

    Elon Musk doesn’t seem to know what he wants Tesla to be. At its core, the company makes electric vehicles, and it has done exceptionally well at that. But the Tesla of 2024 is in a kind of corporate limbo. Instead of discussing its flagship EVs, Musk likes to talk about Tesla’s newer, flashier products, like its nascent artificial-intelligence system and its humanoid robot. But the biggest new business, the one that Musk says will fundamentally change what Tesla does, is the Robotaxi. Musk has all but pinned Tesla’s future to a vision of his cars becoming Ubers, propelled by his AI network acting as the brain behind the wheel, bringing riders wherever they need to go on demand. Wall Street loves the idea so much that Musk has once again become the world’s richest man, and by a pretty wide margin, as the stock has surged higher on the plan. “By far, the biggest differentiator for Tesla is autonomy,” Musk said on an investor call Tuesday.

    That future, though, appears to be on hold. In Tesla’s newest quarterly earnings, released on July 23, there were a few bad pieces of news for the autonomous future. The first was that the “timing of Robotaxi deployment depends on technological advancement and regulatory approval.” Translation: Reliable Robotaxi technology doesn’t exist, and we don’t have government approval for it, either. (Unspoken is that Tesla is reportedly under a federal criminal investigation for its “Full Self Driving” technology being faulty). This was previewed a few weeks ago, when Tesla moved back the unveiling of the Robotaxi from August to October, a delay that Musk attributed to wanting to “improve the Robotaxi as well as add a couple of other things.” There also appears to be a manufacturing snag that investors think can set back the Robotaxi back to 2027, investors told Bloomberg. Overall, the company spent $600 million — which would be a rate of $2.4 billion a year — on the AI technology it would use to power these self-driving cars, an absolutely bonkers amount of money even for Musk.

    Usually, Musk does pretty well during investor calls. This is the venue, after all, where he’s on the phone with people who tend to be his biggest supporters, those who want to link their fortunes to his. But this one did not go so well. About 15 minutes in, Musk was asked when the first Robotaxi ride would come. His answer was rambling and disjointed, and hinged on Tesla’s FSD technology improving, but he said it could be as early as the end of this year. But, he hedged, “my predictions on this have been overly optimistic in the past.” While he was talking, the company’s shares fell about 4 percent in after-hours trading — a clear sign that Wall Street did not like what it was hearing.

    Look — Tesla is not failing. It is a $770 billion company, by far the biggest EV seller in the U.S. It made $25 billion in revenue during the past three months. And it has rebounded somewhat from its abysmal first quarter. But the company’s profits are down 45 percent from last year, competitors are eating into its market share, and there just seems to be no direction. Musk first started promising a Robotaxi in 2016. He said there would be 1 million of them on the road by 2020. It’s possible, of course, that he could oversee some other technological breakthrough that the likes of Apple weren’t able to pull off with their own self-driving cars. But at some point, it seems more likely that he’s going to lose the patience of his biggest fans who just want him to make cars again.

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    Kevin T. Dugan

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  • Making sense of the markets this week: July 21, 2024 – MoneySense

    Making sense of the markets this week: July 21, 2024 – MoneySense

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    Inflation continues to fall as temperature rise

    As we’re moving through summer’s dog days and heat records are being broken around the world, Canadian inflation is moving in the opposite direction. Statistics Canada released that the year-over-year Consumer Price Index (CPI) increase cooled to 2.7% in June. As inflation continues its downward trend, it generally indicates that the Bank of Canada’s monetary policy is working.

    Source: Statistics Canada

    Consumer price index June 2024 report highlights

    The main takeaways from the monthly CPI report are:

    • Core CPI (excluding food and energy) stayed stubbornly higher than the headline CPI, coming in at an annualized 2.9%.
    • Shelter continues to dominate the overall inflation picture, as prices were up 6.2%.
    • Services, another major inflation concern, were up 4.8%.
    • Durable good prices have substantially deflated, as they fell at an annualized rate of 1.8%.
    • Similarly, prices for clothes and shoes were down 3.1%.
    • Gas prices were down 3.1% from May to June, and have been pretty stable over the last year.
    • Grocery prices went up at an annualized rate of 2.1%, lower than the overall CPI figure.

    The business and individual sentiment surveys point to decreasing inflation expectations going forward, and are significant indicators that the Bank of Canada (BoC) has succeeded in curbing the scariest runaway inflation scenarios. The early 1980s saw the rise of denim and ultra-high interest rates. While ’80s fashion might be back, it’s pretty clear that the era’s monetary policy isn’t.

    Decreased inflation is welcomed news by many Canadians, but it’s probably cold comfort to those with mortgages due for renewal this month. The country as a whole might be happier that demand-pull inflation is down, but that just really means: “People have way less money to spend on most things because their mortgage or rent payments just went through the roof.”

    The lower inflation rates and decreased inflation sentiments should empower the BoC to continue to slowly but surely cut interest rates in the coming months. It would be shocking if the BoC didn’t lower interest rates by 0.25% when it makes its decision next week.

    To check out the effects of inflation rates right now, use this table. 

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    Read more: Canada’s inflation rate falls to 2.7% in June, driving hopes for July rate cut

    Netflix subscribers must be nostalgic for TV commercials

    Earnings day went largely as predicted for Netflix last Thursday, as earnings and revenues were quite close to the company’s guidance last quarter.

    Netflix earnings highlights

    Currency figures in this section are reported in USD.

    • Netflix (NFLX/NASDAQ): Earnings per share of $4.88 (versus $4.74 predicted). Revenue of $9.56 billion (versus $9.53 billion estimate).

    Netflix sold more memberships than was predicted (277.65 million versus 274.40 million). The bulk of that subscriber growth was in its advertising-supported platform. The markets seemed to take the news in stride, as share prices were largely flat in after-market trading.

    Netflix co-CEO Ted Sarandos highlighted the company’s focus on ads going forward, saying that the streamer would no longer partner with Microsoft. Instead, it’s investing in its own platform. He also mentioned that Netflix’s push into live sports would attract more ad dollars, specifically mentioning the NFL games on Christmas Day as important opportunities. He summed up the company’s push into live sports saying, “We’re in live [TV] because our members love it, and it drives a ton of engagement and a ton of excitement… and the good thing is advertisers like it for the exact same reason.”

    With Netflix up over 43% this year, and at a price to earnings (P/E) ratio of over 44, one could make the argument the stock is priced appropriately, and that it will have to expertly execute future growth plans to have any chance of justifying that high price tag.

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    Kyle Prevost

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