GM swings to a loss in the fourth quarter as 40-day strike erodes profits - CNBC

General Motors CEO Mary Barra

Bill Pugliano | Getty Images

DETROIT – General Motors lost $194 million in the fourth-quarter heavily due a 40-day labor strike against the company that cost it four weeks of vehicle production and eroded any profit.

The strike, according to the automaker, cost it $2.6 billion in earnings before interest and taxes during the three months ended Dec. 31, shaving $1.39 per share off of its EPS on an adjusted basis. The impact for the year was $3.6 billion.

The company still beat Wall Street's earnings expectations for the fourth quarter, but its revenue came in slightly below expectations.

Here's what GM reported on Wednesday compared to what Wall Street expected, according to Refinitiv consensus estimates:

• Adjusted earnings: 5 cents per share compared to 1 cent per share expected.
• Revenue: $30.8 billion compared to $31.04 billion expected.

GM's operating profit remained healthy. The company reported an operating profit, which is earnings before interest and taxes, of $8.4 billion for the year, including $105 million in the fourth-quarter. That's down from $11.8 billion compared to 2018 and $8.4 billion for the fourth-quarter of that year.

The company's 2020 guidance includes adjusted earnings of $5.75 per share to $6.25 per share and adjusted operating cash flow of $13 billion to $14.5 billion.

Wall Street's attention is expected to be on the Detroit automaker's operations in China, which experienced a 15% sales decline last year, as well as the company's 2020 outlook amid growing challenges in North America and China.

GM reported its fourth-quarter and 2019 earnings ahead of an investor day from 10 a.m.-2 p.m. Wednesday from the New York Stock Exchange. GM executives, including CEO Mary Barra, will discuss the company's operations and outlook at-length as it pivots toward all-electric vehicles, including at least 20 new EVs globally by 2023.

GM's earnings come a week after the automaker confirmed plans to resurrect Hummer, best known as a gas-guzzling, military-style SUV, as an all-electric "super truck" with massive horsepower, acceleration, and torque.

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2020-02-05 12:23:00Z
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Elon Musk asks Twitter if Tesla should build Texas gigafactory - CNET

Tesla's next gigafactory might be in the Lone Star State.

James Martin/CNET

Elon Musk seems to be eyeing the second largest US state for Tesla's third American gigafactory. The electric car company's CEO put the idea to his 31 million Twitter followers late Tuesday.

"Giga Texas?" he tweeted, with the poll options "Hell yeah" and "Nope."

As of early Wednesday, the reaction seemed overwhelmingly positive: "Hell yeah" stood at nearly 80%. Musk also confirmed to a follower that he'll be at the SpaceX development facility in Boca Chica, Texas, on Thursday for the "Starship career day" he previously invited people to. This suggests he could be using the Texas trip to build hype around a Tesla announcement.

Tesla already has US gigafactories in Reno, Nevada, and Buffalo, New York, and its Chinese one is in Shanghai. Last November, Musk used similar language -- "GIGA BERLIN" -- to back up reports that Tesla's European gigafactory would be built in Germany. 

Tesla didn't immediately respond to a request for comment about Musk's tweet.

First published at 3:58 a.m. PT.
Updated at 4:20 a.m. PT: Adds more detail.

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2020-02-05 12:20:00Z
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The market’s trading like it’s the end of the cycle, and here’s how an analyst says to position for it - MarketWatch

Tesla is TSLA, +13.73%  parabolic. The yield on the benchmark 10-year Treasury note TMUBMUSD10Y, +2.15%, even before the coronavirus outbreak, couldn’t top 2%, and the yield curve even when it isn’t inverted has been very flat.

Commercial construction has tapered off. Vehicle sales have peaked. Banks plan to tighten lending standards at the same time as they expect a flattening of demand, according to a survey released this week. Even those loss-making initial public offerings, or near IPOs in the case of real-estate company WeWork, are starting to run a tighter ship.

Over two years, zero-coupon Treasurys EDV, -2.01%  have produced nearly double the return of the S&P 500 SPY, +1.52%.

“It is the type of stuff you see at the end of credit and economic cycles,” says Mike Larson, senior analyst at Weiss Ratings. “I am concerned about the durability of this market and economic expansion.” He is dismissive of the three interest-rate cuts from the Federal Reserve, calling them both too late and too timid to make a major difference, though he concedes the housing market has stabilized in response.

Data through the end of January.

Larson says over two years, “boring” stocks like utilities, real-estate investment trusts and consumer staples have done well, and in the call of the day he expects those sectors to continue to perform, even if they are overbought in the short term. Larson says these sectors offer high dividend yields and protection from economic weakness—even if talking about utilities may put you to sleep.

He also likes precious metals, including gold GC00, +0.15%  and silver SI00, +0.14%. “Metals sat out most of the bull market, there’s catch-up potential there,” he says.

The buzz

Traders took an optimistic view toward the coronavirus, which has killed 494 as of Thursday morning from nearly 25,000 confirmed cases, on reports from China and the U.K. on progress toward treating it. A World Health Organization spokesman said there’s no known therapeutics so far against the virus.

If you missed the State of the Union—U.S. President Donald Trump didn’t shake House Speaker Nancy Pelosi’s hand, Pelosi tore up the speech, and cancer-stricken radio-talk-show host Rush Limbaugh received the Presidential Medal of Freedom (the nation’s highest civilian honor). The speech itself focused on the economy and recent trade agreements. Trump is expected to be cleared by the Senate of impeachment on Wednesday.

Earnings season continues with 16 S&P 500 firms reporting results. Late on Tuesday, mass media conglomerate Walt Disney DIS, +2.41%  exceeded forecasts on subscriber growth for its streaming service, while car maker Ford Motor Company F, +2.23%  missed expectations as volumes fell and costs rose.

The economics calendar features the ADP private-sector jobs report as well as the nonmanufacturing index by the Institute for Supply Management.

The markets

It was full risk-on mode for markets—U.S. stock futures ES00, +0.74%  rallied, and crude-oil CL.1, +2.48%  and copper HG00, +1.93%  futures gained.

The yield on the 10-year Treasury rose 2 basis points.

Asian ADOW, +0.71%  and European SXXP, +1.17%  stocks rose.

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Actress and television host Whoopi Goldberg is out of the cannabis business.

A crime was solved using DNA profiling—on a cow.

Need to Know starts early and is updated until the opening bell, but sign up here to get it delivered once to your email box. Be sure to check the Need to Know item. The emailed version will be sent out at about 7:30 a.m. Eastern.

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2020-02-05 11:59:00Z
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'The punch bowl has been aggressively spiked': $1 billion asset manager sounds the alarm after Tesla's 30.. - Business Insider

REUTERS/Mike Blake

• Tesla's stock soaring 300% in six months shows markets are messed up, VGI Partners says.
• "When a market cap of that size can go hyperbolic in a short period of time for no real reason, it is certainly symptomatic of an environment that is not normal."
• However, the asset manager hasn't shorted Tesla stock because of its huge potential customer base and its "billionaire genius" CEO, Elon Musk.
• VGI hasn't bought shares either as the electric carmaker faces intense competition and an uncertain future.
• Visit Business Insider's homepage for more stories.

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Tesla's stock has skyrocketed more than 300% in six months, boosting the electric carmaker's market capitalization to about $160 billion.

The astronomical rally is a sign that markets are messed up, according to VGI Partners Global Investments, an Australia-based asset manager with nearly $1 billion invested across stocks such as Amazon, Spotify, and Mastercard.

"Do I think that this is an indication of euphoria or an indicator of a party where the punch bowl has been aggressively spiked later in the night?" Robert Luciano, VGI's portfolio manager, asked rhetorically on an earnings call this week.

"It certainly feels like it," he continued. "When a market cap of that size can go hyperbolic in a short period of time for no real reason, it is certainly symptomatic of an environment that is not normal."

Luciano may be skeptical of Tesla's rally, but he's wary of betting against a company with a huge number of potential customers and a super-rich, brainiac CEO in Elon Musk.

"Tesla has multiple total addressable markets and it's founded and managed by a billionaire genius," Luciano said. "We find that a highly difficult combination to short."

He added that the multiple strands of Tesla's business — electric vehicles, energy storage, solar panels — mean it could also be considered a "platform business" that is "highly scalable."

However, Luciano explained why VGI doesn't own any Tesla shares either.

"At various points in time, the mathematics and the outlook for the business has made little sense to us," he said. Fierce competition in electric vehicles and Tesla's other business areas poses another risk, he added.

Tesla's stock surge has boosted Musk's net worth by nearly $18 billion this year, vaulting him into the 20 wealthiest people in the world, according to the Bloomberg Billionaires Index.

The polarizing executive has been celebrating the run up, despite using a Warren Buffett analogy to dismiss the stock price as a "distraction" last year.

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2020-02-05 11:15:32Z
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Elon Musk asks Twitter fans to vote on new Tesla Gigafactory in Texas - CNBC

Elon Musk, chief executive officer of Space Exploration Technologies Corp. (SpaceX) and Tesla Inc., speaks during an event at the SpaceX launch facility in Cameron County, Texas, U.S., on Saturday, Sept. 28, 2019. Musk gave space fans an update Saturday evening on the status of "Starship," the next-generation vehicle his SpaceX plans to use to eventually take humans to Mars. Photographer: Bronte Wittpenn/Bloomberg via Getty Images

Bronte Wittpenn | Bloomberg | Getty Images

"Giga Texas?" That was the question Tesla CEO Elon Musk posed to his followers on Twitter late Tuesday, asking them if they would like a new Gigafactory in Texas.

By 9 a.m. London time on Wednesday, over 131,000 people had voted with 79.2% of voters choosing the "Hell yeah" option, and the remainder voting for "nope."

Gigafactory is the name Musk has given to Tesla's production plants. Currently there are two in the U.S. and one in Shanghai, China. Musk announced last year that Tesla's first European factory would be built around Berlin, Germany.

On the company's fourth-quarter earnings call last week, Musk explained the need to ramp up battery production to meet the demand for Tesla's cars.

"We got to scale battery production to crazy levels that people cannot even fathom today. That's the real problem," he said.

That's where these additional factories can help. Musk did not give any further details on his Twitter feed.

Tesla's shares have seen a meteoric rise recently. In the past five days, shares of the electric carmaker are up over 38% and have more than doubled since the start of the year.

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2020-02-05 09:55:00Z
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Major US airlines add Hong Kong to China flight suspensions - Yahoo News

The coronavirus outbreak has hit air travel, with dozens of carriers suspending flights to mainland China to help stop the spread of the disease (AFP Photo/Brendan Smialowski)

United and American Airlines on Wednesday both announced plans to temporarily suspend flights to Hong Kong following the outbreak of a deadly new coronavirus.

United said it would halt flights to the international financial hub from Saturday until February 20, citing a sharp drop in passengers.

American Airlines said it had already suspended flights through to February 20.

Both carriers had previously said they were halting flights to mainland China where the outbreak of the new coronavirus began late last year and has since killed nearly 500 people and infected more than 24,000.

Dozens of major airlines have stopped flying to the Chinese mainland in a bid to slow the spread of the virus, which has been detected among a small number of people in more than 20 countries.

The inclusion of Hong Kong in the flight ban comes as the city struggles with its own outbreak, with 18 people testing positive for the disease, including one who died.

On Tuesday, health officials in Hong Kong warned there was now growing evidence of local transmissions -- cases where people have become infected without travelling to China.

Hong Kong has one of the world's busiest airports and is a major transit point for China.

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2020-02-05 09:01:34Z
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Macy’s closing Cincinnati headquarters, 125 stores - Dayton Daily News

Macy’s is closing its national headquarters in Cincinnati, shifting from a dual headquarters with New York City to a single corporate hub, and shutting down 125 stores nationwide.

The publicly-traded department store chain announced Tuesday several sweeping changes would be coming to the retailer as it navigates a retail environment in upheaval.

FOX19 NOW reports that the move will mean 500 jobs lost but some of those jobs will move to Mason and Springdale.

JUST IN: New restaurant coming to Troy this spring

Macy’s said in a statement that it plans to close about 125 of its “least productive” stores over the next three years, including about 30 stores that are in the process of closure now.

The specific stores were not named. Macy’s also will continue its “growth treatment” to the remaining store portfolio, including upgrading an additional 100 stores this year, which includes boosts like renovations, new tech, and local marketing.

Macy’s has stores anchoring the Dayton Mall and the Mall at Fairfield Commons.

MORE: 5 things to know about the grand opening of local Macy’s outlet store

Besides New York City becoming the sole corporate headquarters, the company will also close its Tempe, Arizona, customer contact center and consolidate customer service work at its Mason and Clearwater, Florida sites.

The company also will close its San Francisco and Lorain offices.

The company states on its website that it has about 130,000 employees and is in 43 states, and had $24.971 billion in sales for fiscal year 2018.

Jeff Gennette, chairman and chief executive, stated he was confident the strategy announced Tuesday will allow Macy’s to stabilize margin in 2020 and set the foundation for sustainable, profitable growth.

“We will focus our resources on the healthy parts of our business, directly address the unhealthy parts of the business and explore new revenue streams,” he said.

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2020-02-05 05:20:23Z
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