Will $RIVN rise after reporting earnings?
Rivian reports earnings after the bell today. Do you see the stock surging after $F dumped over $200 million worth of Rivian shares?
Validated to: Yes
$RIVN will be over $23/share on 5/12/2022
15 Votes
Plunging used car prices are probably why $CVNA and $KMX have plunged significantly
Even if the decrease in used car prices is small, it is a sign that used car dealers are going to see themselves losing their pricing power fast. That's why investors are pulling out of $KMX $CVNA and other used car dealers.

Does it signify that the chip shortage is going away soon? No. Companies like $F are reporting sales declines because they can't produce more vehicles.

Meta/FB Earnings, Pending Home Sales: Daily Contrarian (April 27)
Good morning contrarians! Stock futures are rising a day after a brutal sell-off on Wall Street. Tech saw the worst of it yesterday, with the Nasdaq down 4% to slip deeper into bear market territory. Other U.S. indexes were down 2%-plus.

Today’s issue is reprinted here in its entirety for the CommonStock community. You may also listen to the podcast here.

State of Play
As of 0620, stock futures look to rebound with major indexes up 1%. Among individual stocks, $MSFT and $V are rallying after earnings yesterday, both up 5%. Losers include $GOOG and $TXN, both down about 3%.

Commodities are mostly flat, with WTI crude up about 0.5% to trade around $102/barrel. Bonds aren’t doing much either with the 2-year yield sitting on 2.58% whilst the 10-year is 2.77%, both roughly unchanged. Cryptos are dropping again, with bitcoin off 3% to trade around $39,000.

$FB is the main event today but that’s not until after the close at 1600.
$GSK and $BG just reported a beat of top- and bottom-line estimates. $SPOT revenues missed expectations but MAUs and premium subscribers grew by 19% and 15%, respectively. Not sure what was expected but Spotify is moving higher this morning, up 2%.

We’re waiting to hear from $KHC, $BA, and $TMUS before the market opens at 0930. After the close we’ll also get $AMGN, $QCOM, and $F.

Economic Data
Pending home sales are out at 1000. Economists surveyed expect a 1.6% drop month-over-month in March, less than the 4.1% decline seen in February. Yesterday’s new home sales were in-line with estimates, at least on the headline number.

U.S. Trade Balance is out at 0830. Last month the trade deficit was $107 billion. U.S. trade deficits are a good thing where the health of the global economy is concerned. If Americans are buying more stuff (especially stuff they don’t need) then that means factories in China and elsewhere are churning out more stuff, which means those factories are ordering more raw materials from developing markets, which makes for a healthy global supply chain. Of course there are periodic hiccups in this global supply chain, such as when China shuts down over Covid concerns as they have done recently. Not sure that will work its way into this data yet. It could.

Retail inventories are also out at 0830. Crude oil inventories at 1030. Seeing how it’s Wednesday we’ll also get MBA Mortgage Applications at 0700.

The Bottom Line
Yesterday’s sell-off was as brutal as Monday’s rally was encouraging. Lately it seems the sell-offs have more velocity than the rallies. That’s typical for a bear market. We aren’t there yet for the S&P or Dow, but we are (again) for the Nasdaq.

There doesn’t seem to have been a catalyst for yesterday’s selling either. That too is typical of bear markets. Unless acted upon by an outside force, markets take on the direction of their spirit bull (bear or bull).

If there is a sign of encouragement, it’s that the global economy looks to be in good shape
(certain supply chain issues notwithstanding). But for now stocks have a few precious days left to salvage a positive month for April. So much for it being such a great month for stocks. Consider that your reminder that past performance does not equal future results.
Should $GM and $F spin-off their electric vehicle business segments?
On February 18, 2022, $F shares surged as CEO Jim Farley was looking at the benefits and risks of spinning-off their Ford's vehicle business.

Unlike Ford, $GM chose not to cater Wall St.'s demands in spinning off their electric vehicle business.

Investors want these automakers to spin off their electric vehicle businesses because they believe that it will unlock value. Auto executives are hesitant to spin off their electric vehicle business for two reasons:
  1. their electric vehicle business is young and still relies on the resources of their parent company to survive and build a foundation
  2. if ever electric vehicles do go mainstream, then shareholders of the ICE-vehicle business could essentially see their stake go to zero

Regarding the second point, the advantage that the ICE-vehicle business would have is that they have the infrastructure to make any vehicle that has many moving parts. Even if cars of the future could stop running on gas, they can run on other fuels like hydrogen. And regarding hydrogen vehicles, they still have many moving parts.

Back in 2018, Hyundai saw the move to hydrogen-powered vehicles as a way to preserve many jobs in the automotive supply chain. Since a fuel cell engine closely resembles petrol engines, there wouldn't be many changes to the automotive supply chain if the industry moves towards producing hydrogen vehicles. Until refilling infrastructure ramps up, consumers are going to continue to remain hesitant in adopting a hydrogen-powered vehicle.

With everything, the debate on whether these big automakers should spin off their electric vehicle business segments is still difficult. The surge in interest rates and concerns over the supply of rare earth metals and other metals essential to electric vehicle production is making investors hesitant in investing in electric vehicle stocks. At the same time, these brands come with high notoriety, and with that, they'll have an easier time selling vehicles to consumers. They're not young brands like $RIVN and $LCID, who've been covered negatively by the press over their issues with production. At least with the Big Automakers, their relationships are more established, they hold more influence in the overall automotive supply chain, and the people working there have a lot more experience with the issues that the industry is currently dealing with compared to those working in the startups.

Me personally, I think that Ford's electric vehicle business is more established and thus, I think they should consider a spin off. As for GM, their electric vehicle business is less established as the company is currently transitioning away from producing the Bolt and ramping up production for the Hummer EV and the Cadillac Lyriq.
$TSLA chose to cut corners in order to grow their deliveries amid a chip shortage. It will bite them in the future.
When watching a video by Cheddar on how Tesla navigated through the chip shortage, one thing that stood out was how $TSLA was willing to cut corners and deliver cars that weren't fully finished and at the same time, rewrote the code of the microchips they had to make their cars as functional as possible.

Meanwhile, $F $GM and other legacy automakers chose to not cut corners because
  1. they don't have a team of coders that can rewrite the code on the microchips and
  2. they weren't willing to deliver unfinished vehicles to customers

in the short term, Tesla has benefited significantly by being able to record high delivery numbers. But in the long run, it's going to lead to massive problems. By cutting a steering component, there's a concern about the safety of driving the car on the road. Tesla's engineers might think that the component isn't important. Only time will tell if it's truly important.
Actually there’s a paragraph on what $GM did in the cnbc article you’re referring to: “For example, in March 2021, General Motors said it was building some of its 2021 light-duty pickup trucks without a fuel management module, a move that hurt those trucks’ fuel economy. It blamed the chip shortage for the move.”
I’m surprised the NTSA or other country safety boards haven’t picked up on the $TSLA issue yet. But most mainstream press also push down harder on $TESLA than they do on legacy automakers…so I’m not surprised if the articles you link to are a written with a little exaggeration.
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What to watch for the week of 4/11/22
Are you prepared to take on the markets this week? If not, here is a graphic that I created of some of the most anticipated potential catalysts for the week beginning April 11th. Hopefully this can help you navigate your investing and trading decisions. Feel free to save this post for reference. Let me know what’s on your watchlist in the comments. Follow my page so that you never miss any upcoming scheduled market events. If you find this helpful and would like to view more of my work, consider subscribing to my Patreon. Link in my bio. $SPY $F $WFC $QQQ $ALLY $BBBY $KMX $PGR $C $GS $MS $JPM
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