Sep 10, 2019 Ford's bonds reach a low blow: Junk status Read More An $11B makeover... Ford wants one. It's all part of the car company's aggressive turnaround plan to become more sexy, electric, and self-driving. So to pay for the new look, Ford issues billions in IOUs (bonds). Before you invest in bonds, a credit ratings agency jumps in:
Ratings agencies evaluate the likelihood a bond-issuer (like Ford) will pay you back.
Based on the company's financial health, the ratings agency sticks a rating on it.
AAA, AA, A, BBB — Anything BB or lower is considered "junk." Ford just got downgraded to that.
Ford was created in 1903... But this situation goes back to 2009. The Big 3 Detroit car companies needed a bailout — except Ford. It even gave its blue oval logo as collateral for a loan to stay bailout-free. Since surviving the car-pocalypse, Ford's bonds have been rated "investment grade." Then it fell behind rival GM's innovation and Ford is now worth less than Tesla. Junk happens.The Takeaway:"Junk" makes almost everything Ford does more expensive... Even though Ford's enjoying huge profits ($22B over the past four years), the credit ratings agencies are worried about where Ford will be 10 years from now. Because of this downgrade, investors will demand a higher interest rate from Ford because its debt is considered riskier. Aug 13, 2019 The car industry begins going all-in on electric, phasing out hybrids Read More Can I borrow your car charger?... GM and Volkswagen are ditching the hybrid technology that Toyota made famous with the Prius back in the 90s. Here's a cheat sheet on conventional vs. hybrid vs. electric as they go long on plug-ins.
Conventional: An engine burns gasoline, which pumps pistons up and down, which spins your wheels (we skipped over some physics and engineering).
Electric: A battery powers a motor which vrooms you forward. The downside — pricey batteries make e-cars $6K-10K more expensive than conventional ones on average (but tax incentives and gas savings make up for some/all of that).
Hybrid: A little bit of both. Drivers want to help Mother Earth, but crave the warm-fuzzy feeling of an engine. Hybrid tech costs about $2K extra compared to a conventional car.
Hybrid upped America's MPG... but barely. According to the WSJ, the carmakers are realizing hybrid isn't cutting greenhouse gases enough for the future, especially with Europe and China's aggressive environmental plans. Ford, Volvo, and Toyota though are sticking to hybrid because some customers aren't ready to go cold turkey with regular unleaded.The Takeaway:Companies can only make so many bets... A car CEO has a ridiculous menu of expensive things she could invest in — autonomous driving, car sharing, pickup trucks, hybrids, and electric. Each buck spent on hybrid tech is a buck not spent on those other things. More car bosses believe hybrid's era is coming to a close soon. Oct 17, 2019 GM's longest strike in 49 years is about to end — and markets reacted rationally Read More You're gonna have to fix that carburetor solo... 48K car-crafting General Motors employees spent the last 30 days on strike — GM's longest walkout since 1970. The union and the car giant reached a tentative labor contract after CEO Mary Barra finally intervened last weekend. But here are the key $$$ numbers:
$2B: That's the estimated hit GM's business suffered while employees picketed.
$800M: That's the size of the United Automobile Workers union's “strike and defense fund” — it's been paying out-of-work union humans $275/week during the strike.
So what's in the trunk?... Details aren't public yet (and Union members still have to vote in favor of the deal). But early reports show the month-long strike got the union 3%-4% annual raises/bonuses for workers, a $9B investment by GM in American factories, and thousands of new jobs. And temp workers will have a path to become full-time ones.The Takeaway:GM’s stock price during the strike shows that markets are rational... Investors punished GM shares by almost the perfect amount — the same amount as the lost profits caused by the strike. Here's how the numbers break down:
Losses to GM: $2B. We mentioned that the strike cost the company an estimated $2B in losses while cars weren't being produced.
Losses to GM's stock: $2.5B. GM's stock price dipped 5% during the strike, meaning the company lost $2.5B in market value (5% of GM's $52B market cap = $2.5B)
Stock markets often seem emotional and erratic, but they can be rational, too. Sep 17, 2019 Strike Day #3: General Motors is losing up to $100M/day Read More 30 US factories
0 cars produced in 2 days
We haven't seen production that low since Tebow... General Motors' unionized workers are practicing their right to assembly with a nationwide strike. 14K vehicles could've been produced in its American plants Monday & Tuesday, but weren't — the United Auto Workers wants better pay, fewer factory closures, and more job protection first.
This goes back to the financial crisis... That's when GM went bankrupt. It was reborn thanks to a government bailout and workers agreeing to sacrifice pay and job guarantees for the greater good. 9 years later, GM issued a press release titled "GM Accelerates Transformation" in which it "unallocated" 5 plants.
Translation: GM's laying off 14K American workers.
Salt in the wound: GM also announced it'll produce its new Chevy Blazer in Mexico.
The Takeaway:Companies don't love organized labor... Negotiating a pay raise is tough 1:1 with your manager. It's easier when you're represented 46K-strong in awesome union T's. But we rarely see labor strikes in America because of the long, steady decline of unions. Here's how much the percentage of US workers who are union members has fallen:
30% in the 1950s
20% in the 1980s
10% from the 2000s through today Sep 26, 2019 Amazon challenges rivals with Alexa-infused everything (and a 1-mile-radius tech cloud) Read More So. Many. Connected. Gadgets... Another Alexa-palooza arrived yesterday from Amazon HQ in Seattle. Bezos & Co. whipped up 15 Alexa-fluent devices. Some totally new, some just improved:
Echo Studio: A $199 smart speaker, challenging Apple HomePod and Sonos (the speaker icon's stock fell 5%).
Amazon Sidewalk: Basically extends your wifi signal 1-mile for low connectivity devices, like a dog tag (aka "Echo Fetch").
New voices: Samuel L. Jackson is voicing over Alexa, with more celebs to fill the airwaves (each costs $0.99).
Apple & Google have 1 advantage in the voice assistant wars... Smartphones — you've probably got Siri (iPhone) or Google Assistant (Android) in your pocket. Now you can take Alexa to-go:
In the car: GM announced all models will support an Alexa app.
In your ears: Echo Buds — The AirPod knockoffs are cheaper ($129), but don't look as sharp.
On your face and on your finger: Echo Frames and Echo Loop let you ask Alexa questions and listen for her responses through glasses and a finger ring (these last two are so new they're available by invitation only).The Takeaway:Alexa's goal = make you 1% more Amazon... These devices might not make Amazon money at first. Long-term, Amazon's putting Alexa everywhere so you're that much more likely to be loyal to Amazon or even order through Alexa via voice (aka "v-commerce"). If the percent of your paycheck going to Amazon rises from 20% to 21% because of Alexa, that's a win.