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📈Japan's Auto Giant Merger Crash
SoftBank posts $2.4B loss, Spirit Airlines rejects another acquisition, Zelle payments tops $1T, Apple TV now on Android, Nissan and Honda call off $60B merger
Evelio Silvera
February 13, 2025
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Good morning.
⚡ The Fast Five → SoftBank posts $2.4B loss, Spirit Airlines rejects another acquisition, Zelle payments tops $1T, Apple TV now on Android, Nissan and Honda call off $60B merger
🔎 Market Trends → S&P 500 ends down as hot US inflation data hints at fewer rate cuts; US Futures Gain Ahead of More Earnings, PPI
And now…
⏱️ Your 5-minute briefing for Thursday, February 13, 2025:
MARKET BRIEF
Before the Open
As of market close 02/12/2025.
Pre-Market
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Fear & Greed
Markets in Review
Inflation Surprises, Markets Stumble as Yields Jump
The Dow fell 0.5% to 44,368.6, while the S&P 500 slipped 0.3% to 6,052 after a hotter-than-expected consumer inflation report. The Nasdaq was flat at 19,650, as investors weighed the Fed’s next move. Energy stocks sank 2.7%, while consumer staples were the only sector in the green.
The Big Picture:
Inflation is proving to be stubborn. The CPI rose 0.5% in January, accelerating from 0.4% in December, while core inflation (excluding food and energy) increased 0.4% sequentially and 3.3% annually, exceeding expectations.
With price pressures still elevated, Treasury yields spiked, sending the 10-year up 8.8 basis points to 4.63% and the 2-year climbing 6.7 basis points to 4.36%. Investors recalibrated their rate-cut expectations as Fed Chair Jerome Powell reiterated that policymakers are “close but not there” on taming inflation.
Despite the inflation jitters, CVS Health (CVS) surged 15% after a bullish earnings outlook, highlighting that select sectors are proving resilient despite macro uncertainty.
Market Movers:
CVS Health (CVS) soared 15%, leading the S&P 500, after the healthcare giant posted a strong Q4 and guided for higher 2025 earnings.
Generac (GNRC) climbed 7.6%, after the backup power solutions firm delivered an earnings beat amid continued strength in residential demand.
Westinghouse Air Brake (WAB) fell 9.1%, the worst S&P 500 performer, as Q4 earnings disappointed due to supply chain and cost pressures.
Biogen (BIIB) slid 4.3%, as the biotech firm guided for lower 2025 earnings, citing headwinds in its multiple sclerosis business.
What They’re Saying:
"The first CPI report of 2025 shows inflation isn't going quietly. The Fed will remain patient, and rate cuts are likely to come later rather than sooner," TD Economics noted.
WHAT WE’RE WATCHING
Events
Today: Bureau of Labor Statistics - Core Finished Goods PPI m/m - 8:30am
Why You Should Care: Consumer prices account for a majority of overall inflation. Inflation is important to currency valuation because rising prices lead the central bank to raise interest rates out of respect for their inflation containment mandate.
Today: Bureau of Labor Statistics - Producer Price Index m/m - 8:30am
Why You Should Care: It's a leading indicator of consumer inflation - when producers charge more for goods and services the higher costs are usually passed on to the consumer.
Today: Department of Labor - Unemployment Claims - 8:30am
Why You Should Care: Although it's generally viewed as a lagging indicator, the number of unemployed people is an important signal of overall economic health because consumer spending is highly correlated with labor-market conditions. Unemployment is also a major consideration for those steering the country's monetary policy.
Earnings Reports
Today: Unilever, Sony Corporation, John Deere, Duke Energy, Airbnb, Republic Services, Coinbase, Pacific Gas and Electric Company
Tomorrow: Honda, Moderna, TreeHouse Foods, AMC Networks, LiveOne, Enbridge
MARKET BRIEF
Leading News
Japan's Auto Giant Merger Crash: Why Honda-Nissan's $60B Deal Collapse Signals EV Disruption Alert
Why it matters:
The failed Honda-Nissan tie-up exposes the existential challenge facing legacy automakers as Chinese EV makers like BYD reshape the competitive landscape. This power shift could create both risks and opportunities for investors eyeing the auto sector's transformation.
Zoom Out:
Japanese auto titans Honda ($HMC) and Nissan ($NSANY) just hit the brakes on what would have been a $60 billion merger, scuttling dreams of creating the world's fourth-largest automaker. The deal's collapse hinged on corporate governance tensions – specifically Honda's desire to make Nissan a subsidiary, echoing painful memories of the Ghosn era.
The failed courtship illuminates a broader truth: Traditional automakers are scrambling to adapt as Chinese EV manufacturers leverage superior software integration and lower production costs to capture market share. BYD ($BYDDY) has emerged as the new bogey, forcing established players to reassess their standalone viability.
Key Insights:
Scale or Fail: Legacy automakers face a brutal calculus – merge to achieve economies of scale or risk being left behind in the EV race. Honda's relatively strong position (P/E ratio of 8.5x) contrasts sharply with Nissan's struggles (trading at 0.4x book value).
Tech Stack Gap: Chinese competitors have mastered the art of treating cars as software platforms first, mechanical devices second. This paradigm shift suggests traditional auto valuations may need a complete rethink.
Market Pulse:
"Honda is pretty confident and has a lot in their favor, whereas Nissan is in a bad place. They don't have a dance partner right now," notes Christopher Richter, CLSA's Japan auto analyst.
Bull’s Take:
While market pessimism around Nissan might be overdone, the real opportunity lies in identifying winners in the EV supply chain ecosystem. Smart investors should consider exposure to battery tech, semiconductor manufacturers, and software platforms powering the next generation of vehicles.
Headlines
Anduril is taking over Microsoft's $22 billion IVAS project (link)
Apple brings its TV streaming service to rival Android platform (link)
SoftBank posts loss of $2.4 bn in Q3 on fall in 'Vision Fund' valuations (link)
Spirit Airlines rejects another Frontier Airlines acquisition worth $2.16B (link)
Carrefour Bids $920 Million to Take Full Ownership, Delist Brazil Business (link)
Zelle payments top $1 trillion in 2024 as network's growth outpaces rivals including PayPal (link)
CRYPTO
Fear & Greed
Headlines
DAILY SHARE
On the Socials
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