In his podcast addressing the markets today, Louis Navellier offered the following commentary.
More UAW Layoffs
The Labor Department on Thursday announced that weekly unemployment claims declined slightly to 243,000 in the latest week, down from a revised 245,000 in the previous week. Continuing unemployment claims declined to 1.415 million in the latest week, down from a revised 1.434 million in the previous week.
So on the surface, unemployment is not a problem yet, even though the four-week moving averages of both weekly and continuing claims rose slightly.
Q2 2022 hedge fund letters, conferences and more
Speaking of unemployment, on Wednesday, I was talking to a friend in Dearborn, Michigan who is a major auto supplier and I asked him what the morale was at Ford Motor Company (NYSE:F) since they recently announced 3,000 more layoffs in addition to the 8,000 announced when the CATL battery deal was announced. He, unfortunately, told me that morale was horrible at Ford and that the EV transformation is being subcontracted out to CATL, LG Chem, and SK Innovations, which are Ford’s primary battery suppliers.
Although teaming up with CATL will allow Ford to offer less efficient iron-phosphate batteries as Tesla does in China and Europe, its current lithium-ion battery suppliers, namely LG Chem and SK Innovations, remain constrained by the acute shortage of cobalt as well as the high prices of lithium and nickel.
So Ford is gearing up to comply with the California new mandate to switch to 100% EVs (by 2035) as well as the federal government’s recent EV incentives that will not be available until there are more domestic battery plants. Unfortunately, the downside of the EV transformation is that many Ford executives are losing their jobs.
Furthermore, since EVs have fewer parts than vehicles with engines, fewer manufacturing jobs will be needed in the future, so there will also be undoubtedly mass UAW layoffs in the upcoming years as the EV transformation unfolds.
EV Problems
I should add that my family’s Audi e-tron EV has been at the dealer for over 5 weeks, waiting for the approximately 740-pound battery pack to be removed for further diagnosis. For our e-tron EV to fail after only 22,000 miles is scary, plus all the other e-tron battery failures at our Audi dealer.
The problem is our e-tron EV will not charge anymore. I will be very curious what the problem is, but I am very relieved the e-tron is under warranty, otherwise the e-tron would be essentially worthless, kind of like an old cell phone.
One last thing, electricity is so expensive in Britain, that it makes more sense for many British citizens to pay $10 per gallon for gasoline, rather than to charge an EV at home. Furthermore, electricity rates are due to go up on October 1st, unless the new British Prime Minister (will be announced on September 5th) intervenes to stop the impeding electricity rate hike. As the cost of EVs rise continues to rise due to high lithium, nickel and cobalt prices, the EV revolution is not unfolding as many hoped.
I find it very interesting that Tesla still does not pay U.S. taxes, since it only makes money on its Shanghai plant as well as selling EV tax credits. Right now, EVs are toys for affluent people and mass adoption is expected to be curtailed due to higher prices for batteries as well as high electric prices in many countries.
Nat Gas And Crude Oil Surging
Natural gas prices at a 14-year high and crude oil prices surging. Naturally, energy and commodity-related stocks have strong forecasted sales and earnings, despite the fact that the analyst community is trimming their earnings estimates for many stocks, especially large multi-national stocks that are being hindered by a strong U.S. dollar because approximately half of the S&P 500's revenue is outside of the U.S.
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Coffee Beans
According to the Federal Reserve, the level of outstanding student debt in the United States reached $1.75 trillion by the end of 2021. The student debt burden has more than tripled over the past 15 years. U.S. President Joe Biden is set to cancel $10,000 of student debt for millions of Americans and as much as $20,000 for low and middle-income groups who have received a Pell grant in the past. Source: Statista. See the full story here.
