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CATL To Become Ford’s Primary Battery Supplier
In his podcast addressing the markets today, Louis Navellier offered the following commentary. There were big declines in Treasury yields yesterday. The…
In his podcast addressing the markets today, Louis Navellier offered the following commentary.
There were big declines in Treasury yields yesterday. The Fed has to follow market rates longer term, so these big declines in Treasury yields will basically ensure the Fed will not increase rates going forward. The Fed funds rate is currently at 4.75% which means they are restrictive and over a hundred basis points above short-term treasuries.
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Q4 2022 hedge fund letters, conferences and more
Unscripted Yellen
The thing that’s making the market volatile is our treasury secretary. Treasury Secretary on Thursday tried to correct her previous comments and testified in front of Congress that “Certainly, we would be prepared to take additional actions if warranted.”
Unfortunately, Yellen’s comments apparently re-ignited recent banking fears and caused the stock market to sell off, so she is now 2 for 2 in spooking the stock market this week. As a result, I propose that Treasury Secretary Yellen sticks to her prepared testimony since her unscripted comments during Congressional hearings keep getting her in trouble.
Powerful Dimon
As I’ve said before, Jamie Dimon of JP Morgan is more powerful than Janet Yellen or Jerome Powell, and he will make sure that no banks default. I think the banking crisis is grossly overblown, but because it has a foreign component to it now, it creates a little bit more uncertainty.
Weak Transportation
The Commerce Department announced on Friday that durable goods orders declined 1% in February due to a 2.8% decline in transportation orders for autos and commercial airplanes. Excluding transportation, durable goods orders were unchanged.
Shipments of durable goods declined 0.6% in February, while unfilled order backlog declined 0.1%. Overall, durable goods have been dragged down by a weak transportation sector, which has declined in three of the past four months.
There is no doubt that higher interest rates are now impeding vehicle sales, so hopefully, lower interest rates will help stimulate vehicle sales in the upcoming months.
Ford Expects Losses From Its EV Business
Ford Motor Co (NYSE:F) on Thursday disclosed that it expects to lose about $3 billion on its electric vehicle (EV) business in 2023. Finance chief John Lawler described Ford’s EV business as essentially a startup inside the 119-year-old company.
Then Lawler said, “Startups lose money as they invest in capability, develop knowledge, build volume, and gain share.” Interestingly, Lawler said the Model e-business will gradually erase its losses and achieve an operating profit margin of 8% by the end of 2026.
Ford is #2 in U.S. EV sales, so if Ford is struggling to reach profitability, this bodes very poorly for other EV startups like Rivian and Lucid. I stand by my previous statement that Rivian will run out of money later this year and likely go bankrupt.
CATL To Become Ford’s Primary Battery Supplier
In my opinion, China’s CATL will gradually take over Ford as its primary battery supplier. CATL is not the only foreign company taking over major U.S. companies so they can receive money from the Inflation Protection Act to build U.S. factories. South Korean battery giant LG Energy is the primary battery supplier for GM and is building a new U.S. plant.
Virginia-based AES is waiting to be deemed a “U.S. manufacturer” before it can fulfill a $1 billion solar panel order with its Chinese partners since otherwise, it will not qualify for money from the Inflation Protection Act.
So essentially, the Inflation Protection Act is “onshoring” U.S. manufacturing, but it is also allowing Chinese and South Korean companies to effectively take over major U.S. companies behind the scenes.
Another example of why CATL wants to onshore in the U.S. is that the cheapest Tesla Model 3 has a lithium iron phosphate battery from CATL made in China.
As a result, Tesla reportedly informed its employees that its most affordable EV (standard range and rear wheel drive) may lose eligibility for recently revamped U.S. federal tax credits that became effective in 2023 because it utilizes a battery pack made in China. All the other Tesla models utilize lithium-ion batteries made predominately by Panasonic in the U.S.
Coffee Beans
Two inmates in a Virginia jail used tools made from a toothbrush and a metal object to create a hole in the wall of their cell and escape, only to be found hours later at an IHOP restaurant nearby when other patrons called the police. The sheriff’s office said it is investigating to help prevent further escapes. Source: AP News. See the full story here.
