💝 GM renews its vows with Detroit
Hey Snackers,
"The sound of the 3,000 year-old Egyptian priest..." Not something you hear every day. Scientists have recreated the voice of a mummy. It's... interesting.
It's also the busiest earnings week of the season: almost 1/3 of the top 500 companies in America are set to report results. But US stock indexes had their worst day since October as coronavirus fears intensify.
GM was set on divorcing Detroit — now it's renewing its vows in an electric way
Turn me on with your electric wheel... (or lack thereof). General Motors will build its new self-driving robotaxi ("Origin") in Detroit. Surprised? GM's Detroit-Hamtramck (not a typo) plant is the auto giant's last remaining Detroit factory. GM was actually going to close it down. Then, in October, it changed course after workers at its US factories went on a 40-day strike (remember?).
Time to invest in your hometown again... Here's GM's plan:
- Cash: GM's dropping $2.2B on the Detroit factory site, and $800M on nearby projects.
- Jobs: Since the plant is no longer closing, people won't lose their jobs. GM's new investment in Detroit combined with Fiat Chrysler's new factory there — which is currently being built — are expected to create 9K jobs. Ford is based in neighboring Dearborn, but is building a self-driving tech hub in Detroit's Corktown.
- Potential: GM has chosen Detroit as the hub of its electric, driverless future. That's right — Detroit is where GM's robo-taxis, electric trucks, and potentially a rumored electric Hummer will be born.
Employees saved GM Detroit... Detroit (aka the "Motor City") is Earth's historic car-making hub. It's where Ford introduced moving assembly lines for car manufacturing in 1913. 100 years later, Detroit filed for bankruptcy with the highest unemployment rate of any major American city. GM's investment in its last Detroit plant is both a symbolic and economic win for the city, made possible by GM's unionized employees, who reversed GM's plans via strike.
Coronavirus hits global markets — and some sectors get a double whammy
Spreading fast ... Coronavirus. The contagious respiratory illness is alarming the world and dragging down global markets. It first broke out in Wuhan, China, but has expanded far beyond the fish/meat/live animal market where it originated:
- Over 2,700 people infected, with over 100 deaths
- The virus has spread to 13 countries, with 5 cases confirmed in the US
- Nearly 50M people are under quarantine in China — Travel restrictions are an attempt to contain the spread of the disease (as surgical masks are selling out across Asia)
Stocks take a hit... As fears of coronavirus intensify, US markets have been jolted out of the blissful serenity they've enjoyed since October. The Dow and the S&P 500 both fell Monday by 1.6% and the Nasdaq dropped 1.9%. Some sectors are feeling it more than others:
- Travel-related companies (think United Airlines, Marriott hotels, and Carnival cruises) were hit hardest and all traded lower — oil prices have also fallen because of reduced travel demand.
- Luxury fashion companies that rely heavily on Chinese buyers (like Burberry and LVMH also took a tumble — in 2018, Chinese consumers spent $115B on luxury goods
- Nike and Estée Lauder dropped too, since both now get nearly 1/5 of their revenues from China
- Some investors ditched stocks and bought into "safe haven" assets like gold and treasury bills
The world's 2nd largest economy is China... No surprise that a viral outbreak there hurts global markets. Oh, and this is all happening during the Lunar New Year holiday, China's busiest travel season (3 billion trips were expected) — the holiday was just extended to keep stores closed, and US companies that do business in China are suffering as well (like Starbucks). FYI, 2002's SARS outbreak cost the global economy around $40B.
Big Milk probe: when American dairy giants want to merge
Remember Dean Foods?... It's America's biggest milk processor, and it filed for bankruptcy back in November. It also owns dairy-full brands like Friendly's ice cream and TruMoo chocolate milk. Dean may now merge with another major American dairy cooperative, Dairy Farmers of America, just to survive. The WSJ reports that regulators are now investigating the possible marriage. Here's the low-fat low-down:
- Dairy wary: American milk consumption has fallen around 40% in the past four decades — now milk is being produced by a smaller number of big plants (in 1980 there were 1,066 milk processing plants — in 2018, there were 459)
- Concerns: Some farm groups are worried the merger will hurt their businesses and lower the price they get paid for selling milk (already low)
- Investigation: The Justice Department wants to know how this merger would hit milk prices and competition, hence the probe
Overall US dairy consumption... is actually increasing (Americans love their cheese and yogurt). But, actual milk-drinking continues to decline (thanks to oat, almond, and the rest of the alt-milk gang). The bankruptcies of milk giants like Dean and Borden Dairy are keeping farmers on edge.
Big Milk regulation... The decision of this probe might determine the fate of many other milk-processing plants. If the deal goes through, DFA will gain a larger share of the milk market. That could mean less competition and fewer options for farmers, who might have to sell their milk for less. But some farmers think the deal might be good, if it saves a huge milk-buyer like Dean from collapsing.
What else we’re Snackin’
- More Plus: Apple's not-too-talked-about streaming service Apple TV+ reportedly has 10M more subs than Disney's highly-hyped Disney+
- Ex-Unicorn: Mattress icon Casper's IPO value has been marked down to no more than $768M — big downgrade from its previous $1.1B valuation
- Throwback: Motorola's Razr — a high-tech version of your flippable, middle-school Razr phone (the new phone has a foldable screen) — goes on pre-sale for $1,499
- Oh: Netflix's 'The Witcher' is its most popular debut series ever (buuut... Netflix recently changed its view-reporting metrics: watching only 2 minutes counts as a "view," instead of watching at least 70% of the show)