Economics

Summary

Honda and Nissan are reportedly in merger talks to form a single holding company, potentially including Mitsubishi Motors, to create a major auto group.

This move, aimed at competing with Tesla and Chinese EV leaders like BYD, comes amid pressure on Japanese automakers to catch up in the EV market.

Both companies previously announced plans to deepen collaboration on EVs, with Honda committing $65 billion to EV development by 2030.

Analysts note Japan's focus on hybrids has hindered progress in the growing global EV sector, where demand is rising despite challenges.

Summary

Thousands of Amazon workers across the U.S. are preparing to strike starting Thursday, just days before Christmas, in protest of Amazon’s refusal to negotiate union contracts.

Workers at facilities in Staten Island, Queens, Southern California, and Illinois have authorized strikes, with additional threats in Atlanta.

The Teamsters union accuses Amazon of exploiting workers, while Amazon claims the union has used intimidation tactics, prompting legal disputes.

The strikes mark a significant escalation in the ongoing labor conflict, as workers demand improved conditions and union recognition.

Summary

US economic output grew at its fastest pace in nearly three years at the end of 2024, with S&P Global’s composite PMI rising to 56.6 in December, driven by strong growth in the services sector.

The services PMI hit 58.5, its highest in 38 months, while manufacturing PMI fell to 48.3, reflecting ongoing declines in that sector.

GDP is projected to grow at an annualized rate of over 3% for Q4.

Optimism in business outlook remains high post-election, though concerns over tariffs and rising costs persist. Fed projections on interest rates and inflation are anticipated.

Summary

Western firms are struggling in China as economic stagnation, rising local competition, and geopolitical tensions hurt their prospects.

Sales for U.S. and European companies like Apple, Starbucks, and Volkswagen have fallen since peaking in 2021.

Companies face slowing demand due to China’s housing crisis and deflation, while Chinese competitors like Huawei and BYD dominate markets.

Additionally, U.S.-China trade tensions, including new American chip restrictions and retaliatory measures by China, are escalating risks.

Foreign firms increasingly see China as a challenging market, with growth prospects dimming amid mounting political and economic headwinds.

Summary

Trump’s proposed tariffs on imports are dividing U.S. businesses.

Domestic manufacturers like Tower Extrusions support tariffs as a way to combat foreign competition, particularly from countries like China and Mexico, which supply cheaper aluminum products.

Importers such as Bobby Djavaheri, who sells Chinese-made appliances, fear steep tariffs will drastically raise prices for consumers, with some racing to stockpile goods or considering relocating factories.

Retailers like Peter Elitzer, who runs discount clothing stores, worry tariffs will force price increases, hurting already cautious shoppers and worsening inflation.

Many businesses brace for economic disruption if the tariffs are implemented.

Summary

Albertsons ended its proposed $24.6 billion merger with Kroger, citing Kroger’s alleged failure to secure regulatory approval and filing a lawsuit seeking $600 million in termination fees and additional damages.

The breakup follows court rulings in Oregon and Washington blocking the merger over antitrust concerns, including reduced competition and higher consumer prices.

Kroger denied Albertsons’ claims, blaming the latter for breaching the merger process.

Initially proposed in 2022 to compete with giants like Walmart, the deal’s collapse leaves Albertsons facing challenges due to debt and higher pricing structures.

Summary

A U.S. District Judge in Oregon blocked Kroger’s $25 billion merger with Albertsons, siding with the FTC’s concerns about reduced competition and harm to consumers and workers.

Judge Adrienne Nelson ruled that the merger would unlawfully consolidate the supermarket market, reducing consumer choices and workers’ bargaining power.

Kroger argued the deal was essential to compete with Walmart, Target, and Amazon, but the court deemed supermarkets a distinct market requiring scrutiny.

The decision marks a win for the Biden administration and FTC Chair Lina Khan’s aggressive antitrust stance.

Summary

Retail returns in 2024 are projected to reach $890 billion, up from $743 billion in 2023, driven by practices like “bracketing” (ordering multiple sizes/colors) and “wardrobing” (buying for one-time use).

Rising return rates burden retailers, costing up to 30% of an item’s price to process, while contributing to landfill waste and carbon emissions.

To address the issue, 81% of retailers tightened return policies in 2023, with some implementing fees or offering “keep it” refunds.

Sustainable resale programs and customer-friendly policies are emerging as strategies to balance costs and consumer expectations.

Summary

Volkswagen CEO Oliver Blume faced boos from workers during a speech at the Wolfsburg plant as he defended cost-cutting measures, including potential plant closures and job cuts.

Speaking to 20,000 employees amid ongoing union walkouts, Blume emphasized the challenges posed by high manufacturing costs, sluggish EV sales, and competition from China, stressing that the company must adapt to a “rapidly changing environment.”

Unions and workers have been resisting these plans, intensifying tensions since the company announced its restructuring efforts in September.

Summary

China launched an antitrust investigation into Nvidia, accusing the US chipmaker of violating anti-monopoly laws and commitments made during its acquisition of Mellanox Technologies.

The investigation is seen as retaliation against the US’s latest curbs on the Chinese chip sector.

Nvidia’s shares fell following the announcement, highlighting the escalating tensions between the two tech superpowers.

Summary

The average U.S. 30-year mortgage rate fell to 6.69%, its lowest since October, down from 6.81% last week and 7.03% a year ago, according to Freddie Mac. Rates on 15-year mortgages also declined to 5.96%.

Mortgage applications have risen, boosted by lower rates and increased inventory, though high home prices continue to challenge affordability.

The Federal Reserve's recent interest rate cut has influenced borrowing costs, and further cuts are anticipated.

Economists predict mortgage rates will remain near 6.5% through 2025, limiting relief for many potential buyers.

KEY POINTS

• 24 Exchange, a new stock exchange, announced Wednesday that it will launch next year.
• The exchange could eventually offer 23-hours-a-day stock trading, pending final regulatory approval.
• The 24X National Exchange will debut in the second half of 2025, with trading from 4:00 a.m. ET to 7:00 p.m. ET on weekdays, the Stamford, Connecticut-based platform said.

Summary

Small businesses are preparing for potential tariffs on imports from Mexico, Canada, and China by stockpiling inventory, negotiating with suppliers, and considering price increases.

Some businesses are exploring alternative suppliers or reducing product offerings to mitigate the impact of tariffs.

While some businesses see an opportunity to promote domestic production, others are concerned about the potential for increased costs and reduced profits.

Summary

Eurozone inflation rose to 2.3% in November, up from 2% in October, exceeding the European Central Bank’s (ECB) 2% target.

Core inflation remained steady at 2.7%, while energy prices dropped 1.9% but were offset by a 3.9% rise in services costs.

Despite the uptick, inflation is far below its 2022 peak of 10.6%.

Markets expect the ECB to cut interest rates by 0.25% in December, prioritizing economic growth over inflation control amid forecasts of modest GDP growth for 2023 (0.8%) and 2024 (1.3%).

Summary

Donald Trump plans to impose tariffs of 25% on imports from Canada and Mexico and 10% on China, targeting the U.S.’s largest trading partners.

Tariffs, taxes on imports, are paid by American companies and likely to raise consumer prices.

Trump aims to reduce the trade deficit and encourage domestic manufacturing, though experts argue such shifts are impractical in the short term.

Retaliation from affected countries is expected, potentially escalating a trade war.

Previous tariffs during Trump’s first term led to economic backlash, including higher inflation and costly bailouts for U.S. farmers.

Summary

New research from the Transamerica Center for Retirement Studies shows most Americans retire earlier than planned, often due to health issues or job loss.

The median retirement age is 62, leaving many financially unprepared for decades of retirement as life expectancy increases.

This often leads to early Social Security claims, locking retirees into reduced benefits, with only 4% delaying until age 70 for maximum payouts.

Despite financial challenges, most retirees report high satisfaction, prioritizing freedom and relationships over financial independence.

Summary

Workers at a Whole Foods store in Philadelphia have filed for a union election, citing low pay, high workloads, and intense productivity demands.

Amazon, which acquired Whole Foods in 2017, has aggressively opposed unionization efforts and is challenging the constitutionality of the National Labor Relations Board.

The union drive comes as workers feel overworked and under pressure from management.

Summary

Macy’s delayed its earnings report due to a single employee’s $132–$154 million in erroneous accounting entries for nearly three years.

Forensic investigation uncovered irregularities amid Macy’s broader financial struggles, with quarterly sales down 2.4% compared to 2023.

While Macy’s core stores face declining consumer spending, its Bloomingdale’s and Bluemercury brands show modest growth.

Macy’s also plans to close 150 stores by 2027, reducing its footprint to 350 locations.

His book with Michael. C. Klein, "All trade wars are class wars" is an excellent book I recommend anybody who wants to understand the persistent trade imbalances around the world and their impacts (low consumption in China, deindustrialisation and debt in America, etc.)

Summary

U.S. jobless claims dropped to 213,000 last week, near seven-month lows, but continuing claims rose to 1.91 million, the highest in three years, showing some workers are struggling to find jobs.

Layoffs remain low, but slower hiring suggests weakening labor demand.

The Federal Reserve, focusing on jobs over inflation, has cut interest rates multiple times this year.

Inflation is nearing the Fed’s 2% target, but recent job growth has slowed, with October adding just 12,000 jobs amid strikes and other disruptions.

The Chinese yuan has plummeted since U.S. President-elect Donald Trump's victory, and finance experts are questioning why the Chinese government is not doing more to defend the currency.

Summary

Despite Trump’s pledge to lower gas prices by increasing oil production, energy companies prioritize profitability over pumping more oil.

US oil and gas companies have excess capacity and are focused on managing resources efficiently.

Even if oil producers increase production, refiners have limited capacity to process shale oil into gasoline, potentially increasing prices.

Summary

Boeing is issuing layoff notices to 17,000 employees, about 10% of its workforce, with job cuts effective in mid-January.

The layoffs follow a labor union strike that halted production of key aircraft like the 737 Max and 777s.

Boeing cited financial challenges and structural changes to remain competitive. The company also announced it will end 767 production by 2027 and delayed the 777X rollout to 2026 due to a defective part.

Boeing raised $24 billion to stabilize finances amid a turbulent year marked by safety concerns, production delays, and leadership changes.

Summary

General Motors is laying off around 1,000 white-collar employees globally to reduce costs and enhance efficiency amid challenges in transitioning to electric vehicles (EVs).

The layoffs, announced Friday, align with GM’s goal to cut $2 billion in fixed costs by year-end. GM has been balancing investment in EV development with updating gas-powered models.

U.S. EV sales grew 7.2% through September but remain slower than last year’s 47% surge.

This follows earlier voluntary buyouts of 5,000 employees in April, which GM previously said might prevent future layoffs.

Summary

The consumer price index rose to 2.6% in October, indicating a bumpy path towards lower inflation levels.

Despite a decline in inflation, many Americans remain under pressure due to years of price increases.

The Federal Reserve has cut interest rates to combat inflation, but the job is not yet complete.