Morning Reads


Open Interest Changes



Automakers have been debating the future of the industry for years, with the starting point just as confusing as the finish line. It's a question as old as the Toyota (TM) Prius and General Motors (GM) EV1, mixed with a large dose of subsidies, practicality, demand and regulations. Rising competition across the globe, especially from China, is also upending many prior presumptions and is even bringing traditional rivals closer together.

Quote: "If there are ways that we can partner with others, especially on technologies that are not consumer-facing, and be more efficient with R&D as well as capital, we're all in," GM CEO Mary Barra announced at the Wolfe Research Global Auto and Auto Tech Conference. "If you cannot compete fair and square with the Chinese around the world then 20% to 30% of your revenue is at risk," Ford (F) CEO Jim Farley added at the same event, noting that the situation might push the company into battery partnerships "with another OEM [automaker]."

The two auto giants, along with Tesla (TSLA) and others, have been feeling some serious heat from China's top electric vehicle makers. Chief among them is Berkshire Hathaway-backed BYD (OTCPK:BYDDY), which has been completely obliterating rivals on price and even topped Tesla in sales last year. While subsidies have played a part in its path to success, the new EV industry leader also owns the entire supply chain for its batteries and benefits from cheaper manufacturing costs in China. "If there are no trade barriers established," CEO Elon Musk said on a post-earnings call last month, "they will pretty much demolish most other car companies in the world. They're extremely good."

Other worries: High tariffs on China imposed during the Trump administration have helped keep BYD out of the U.S., but the company is eyeing a plant in Mexico that American carmakers fear can be used to make inroads under the USMCA trade agreement. "Last year, 25% of all vehicles sold in Mexico were sourced in China," Ford's Farley declared. "The world is changing." The Detroit automaker also recently pulled back on EV investment after losing $4.7B on its battery-powered car unit in 2023, and it may lead it to adopt more of a plug-in hybrid strategy or diversified approach long-advocated by the likes of Toyota. "The EV growth slowdown is good for Ford," wrote SA Investing Group Leader JR Research, "allowing it more time to milk its more profitable core business and work on its next-gen products." (6 comments)

Spending signs

After months of consumer spending surprising to the upside, is the consumer ready to take a break? Retail sales fell 0.8% M/M to $700.3B in January, more than the 0.1% decline expected and a turnaround from December's 0.4% M/M increase, in a development attributed to seasonal issues and a holiday hangover. U.S. stocks still ended higher on Thursday, with traders shrugging off the new data, as well as the hot CPI report earlier this week. The data "shows that retail sales, not seasonally adjusted, were up 2% Y/Y, and with inflation adjustments, were up by more," said SA analyst Wolf Richter. "So for now, I’m not worried about our consumers." (85 comments)

Space weapon

The White House has confirmed reports of Russia developing a space-based "anti-satellite capability," though it didn't disclose if it was nuclear in nature. "I am limited by how much I can share about the nature of the threat," said National Security Communications Advisor John Kirby, but "we're not talking about a weapon that can be used to attack human beings or cause destruction here on Earth." He also noted that President Biden directed additional briefings to Congressional leaders, as well as direct diplomatic engagement with Russia and U.S. allies. The White House was forced to make the disclosure earlier than planned after House Intelligence Committee Chair Mike Turner (R-OH) called on Biden to "declassify all information" relating to the "serious security threat." (3 comments)

Trump Media

Trump SPAC Digital World (DWAC) is in the spotlight again after getting the SEC's approval for its business combination with Trump Media & Technology, the parent of the former president's social media platform Truth Social. Digital World expects to announce the date of the special shareholder meeting to vote on the combination within two business days. Shares soared 16% after the news, and have been edgy since the beginning of the presidential primary season. "With a major cash infusion after the merger, Truth Social may finally be able to capitalize on the Trump name and create a powerhouse social media platform," according to SA analyst WYCO Researcher. (26 comments)

Today's Markets

In Asia, Japan +0.9%. Hong Kong +2.5%. China closed. India +0.5%.
In Europe, at midday, London +1.1%. Paris +0.6%. Frankfurt +0.7%.
Futures at 7:00, Dow -0.1%. S&P +0.2%. Nasdaq +0.6%. Crude -1% to $76.82. Gold +0.2% to $2,019.30. Bitcoin -0.3% to $52,257.
Ten-year Treasury Yield +2 bps to 4.26%.

Today's Economic Calendar

8:30 Housing Starts and Permits
8:30 Producer Price Index
9:10 Fed’s Barr Speech
10:00 Consumer Sentiment
12:10 PM Fed's Daly: "Navigating Geopolitical Turbulence and Domestic Uncertainty"
1:00 PM Baker Hughes Rig Count

Companies reporting earnings today »

What else is happening...

Roku (ROKU) tumbles as traders sell revenue beat, strong guidance.

MicroStrategy's (MSTR) $10B bitcoin stash sits on 70% unrealized profit.

Coinbase (COIN) jumps as crypto exchange returns to profitability.

Google (GOOGL) in spotlight as OpenAI works on search product.

More AI: Apple (AAPL) tool to rival Microsoft’s (MSFTGitHub Copilot.

U.S. regulator ends another Wells Fargo (WFCconsent order.

Up to $6B: Bezos sells more Amazon (AMZN) stock after Miami move.

Deere (DE) slides as cut in full-year profit guidance disappoints.

Shake Shack (SHAK) rallies after comparable sales, margins impress.

NYCB (NYCB) discloses $18.7B in reciprocal deposit capacity.

Known to most as Uranium Pinto Beans, Jason has more than 15 years under his belt of trading stocks, options and currencies. His expertise primarily lies in chart analysis, and he has a strong eye for undervalued stock. Because he’s got the ability to identify great risk/reward trades he usually enjoys taking the path less traveled and reaping the benefits from the adventure.

He is a co-founder of Option Millionaires, and he is best known for his weekly webinars with Scott, as well as his high level training webinars and charts found in the forums.

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