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- 📈 Ford's $1.2B EV Lesson
📈 Ford's $1.2B EV Lesson
US rules limit investment in China tech, VW closing factories, BP posts weak earnings, TGI Friday heads to bankruptcy, Ford makes a hybrid pivot
Evelio Silvera
October 29, 2024
Good morning.
⚡ The Fast Five → US rules limit investment in China tech, VW closing factories, BP posts weak earnings, TGI Friday heads to bankruptcy, Ford makes a hybrid pivot
And now…
⏱️ Your 5-minute briefing for Tuesday, October 29, 2024:
MARKET BRIEF
Before the Open
As of market close 10/28/2024.
Pre-Market
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Fear & Greed
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Trends
Markets in Review:
Dow surged 0.7% to 32,387, with S&P 500 and Nasdaq both climbing 0.3% — setting the stage for a crucial week of tech earnings.
The Big Picture:
Wall Street's showing renewed appetite for risk as tech titans prepare to drop Q3 numbers. With over a third of S&P 500 companies already posting solid beats (profits up 3.6% YoY), the stage is set for what could be a defining moment in this year's bull run.
Meanwhile, geopolitical tensions are creating unexpected opportunities: crude oil's 5.3% plunge to $68/barrel could be a gift to inflation-watchers and consumption-driven tech stocks.
Go Deeper:
The Magnificent Seven's report card: All eyes on $AAPL, $MSFT, $GOOG, $AMZN, and $META as they prepare to show their hands. Their combined market cap represents roughly 25% of the S&P 500 — making this week's earnings a potential market inflection point.
Old-school revival: Traditional players are making moves, with 3M ($MMM +4.4%) leading the Dow's charge after JPMorgan's bullish price target boost to $165.
Hidden inflation killer: The steep oil decline could be the Fed's unexpected ally, potentially easing pressure on interest rates just as tech earnings season heats up.
What They're Saying:
"We're seeing a remarkable resilience in corporate America, with revenue growth outpacing inflation and profit margins holding strong," says Oppenheimer Asset Management in their latest client note.
The Bottom Line:
This week's tech earnings tsunami could confirm what bulls have been betting on: the AI boom and digital transformation aren't just hype — they're driving real profits.
WHAT WE’RE WATCHING
Events
Today: Conference Board - Consumer Confidence, 10:00AM
Why You Should Care: Financial confidence is a leading indicator of consumer spending, which accounts for a majority of overall economic activity.
Earnings Reports
Today: Alphabet, Visa, Novartis, McDonald’s, Pfizer, Stryker, Anheuser-Busch
Tomorrow: Microsoft, Meta, Eli Lilly, AbbVie, Caterpillar, Amgen, Starbucks
MARKET BRIEF
Leading News
Ford's EV Dreams Meet Gravity
Why it matters: Ford's latest earnings report offers a stark reality check on the auto industry's transformation, highlighting the growing pains of legacy automakers trying to thread the needle between profitable traditional vehicles and money-losing EVs.
The big picture: Ford is trimming its 2024 profit forecast to $10 billion from a previous range of $10-12 billion, even as it beat Wall Street's Q3 expectations. The company's traditional business remains robust, but rising costs and EV investments are eating into margins.
Traditional vehicles and fleet sales are carrying the load:
Ford Pro (commercial) and Ford Blue (traditional vehicles) units raked in $3.44 billion combined
Meanwhile, the Model e EV division hemorrhaged $1.22 billion this quarter
Company's hybrid strategy emerges as a potential bright spot amid slowing pure EV demand
Go deeper:
Quality concerns continue haunting Ford, with warranty costs still elevated despite recent improvements
Supply chain issues persist, with Hurricane Helene's impact likely to ripple into future quarters
China operations surprisingly contributed $600+ million to earnings, bucking the trend of struggling Western automakers in the region
What they're saying: "Our focus continues on cost and quality, which are holding back our progress and represent tremendous upside potential," says Ford CFO John Lawler, hinting at untapped efficiency opportunities.
The bottom line: While Wall Street frets over Ford's 91-day inventory levels and EV unit losses, savvy investors might spot an opportunity. The company's pivot to hybrids, strong commercial business, and China success suggest Ford isn't just surviving the auto industry's transformation – it's pragmatically adapting.
Headlines
US Rules to Limit Investment in China’s Chips, Quantum and AI (link)
Biden announces $3 billion investment for US ports (link)
British oil giant BP posts weakest quarterly earnings in nearly four years (link)
JPMorgan Chase starts suing customers who allegedly stole funds in ATM glitch scam (link)
Volkswagen to close three German factories and lay off thousands of workers (link)
Vera Therapeutics Breaks Out On Promising Results For Kidney Drug (link)
TGI Fridays abruptly closes dozens more locations as a reported bankruptcy nears (link)
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