NIO - Wall Street Breakfast Podcast: U.S. Credit Card Debt Nears $1T Mark

2023-06-12 07:14:29 ET

Summary

• US credit card debt reaches a record $988B, driven by high inflation and increased non-discretionary spending on cards.
• Chinese automaker Nio cuts prices for all models and ends free battery swapping services to new buyers.
• UBS closes Credit Suisse takeover, imposing strict curbs on Credit Suisse bankers to address financial and non-financial risks.

Listen on the go! Subscribe to Wall Street Breakfast on Apple Podcasts and Spotify U.S. credit card debt nears the $1T mark: Is there a reason to worry (00:27)? Nio ( NIO ) cuts prices for all models, ends free battery swapping - report (01:40). UBS ( UBS ) closes Credit Suisse ( CS ) takeover, reportedly sets strict curbs for staff (02:38).

This is an abridged transcript of the podcast.

U.S credit card debt reaches the $1T mark. NIO is reportedly cutting prices and ending it’s battery swapping program and Novartis is making a $3B purchase

Americans are turning more and more to plastic.

According to the Federal Reserve Bank of New York, consumers now owe a record $988B on their credit cards, up 17% from a year earlier, or about $5,700 per person.

This number took a break during the pandemic years but as you can see it is flirting with the $1T milestone.

Driving the spike: High inflation is pushing more consumers to put non-discretionary spending on cards. Higher interest rates are alo compounding the issue.The average annual percentage rate is now over 20%.

SA analyst Wolf Richter also discusses the current landscape, but says that "despite Fed tightening and bank collapses, it's still an astoundingly loose financial situation ."

While economists have been predicting a recession for over a year, it has not yet appeared, in part due to consumer spending . Which brings us to our survey.

We’re asking you, Rising credit card debt is just one of the factors in sizing up economic growth, but is the U.S. still headed for a recession in 2023? Take the poll and share your thoughts about it in the comments section.

Nio (NYSE: NIO ) will lower prices for all its models and end free battery swapping services to new buyers.

Reuters reported that the Chinese automaker will cut prices by 30K yuan ($4.2K) for all models starting today including its revamped ES6 and ES8 SUVs.

Also, it will no longer provide free battery swapping services to buyers who place deposits today and beyond, the report added .

Nio's ( NIO ) investments in battery swapping stations have raised concerns as net loss widened in Q1. The company missed top-line expectations for Q1 and forecast further delivery declines .

Hong Kong-listed shares of Nio rose 6% on Monday.

Premarket NIO shares on the NYSE are up more than 3%.

Just last month, about two weeks ago, you may have noticed a warning on Nio's dedicated page on Seeking Alpha. It says Nio is at high risk for performing badly.

Right on schedule, UBS (NYSE: UBS ) has completed its $3.25B deal to buy troubled rival Credit Suisse ( CS ), close to two months after the deal was brokered by the Swiss government to avoid the smaller bank's bankruptcy.

Pending further integration, UBS ( UBS ) will manage two separate banks – UBS AG and Credit Suisse AG. UBS' ( UBS ) board and executive team will oversee the consolidated group.

UBS ( UBS ) is also imposing strict curbs on Credit Suisse ( CS ) bankers to address 11 financial and 12 non-financial risks, the Financial Times reported citing unnamed sources.

These include a ban on new clients from high-risk countries such as Afghanistan and Russia, as well as launching new products without UBS ( UBS ) managers' approval. Ukrainian politicians and state-run entities will also be blocked.

Other headlines to look out for:

Federal Reserve is poised to skip a hike, but don't call it a pivot or a pause

OPEC output cuts will lift crude oil into the $90s this year, Goldman says

Alzheimer’s disease market expected to reach $14B globally in 2030

Glencore approaches Teck Resources over a deal for coal business - WSJ

JetBlue, American try to rework Northeast Alliance after court block

Is the regional bank stock rout overdone? Insiders seem to think so

This week will see the consumer inflation report for May and the Federal Reserve's monetary policy committee meeting. According to the CME FedWatch tool, markets are still pricing in a solid chance of no rate hike.

I asked Seeking Alpha’s Kim Khan what could happen if CPI comes in hot.

“If it does come in hot and, and we see strong inflation, I think it's gonna be up to Powell to make that call and others will follow. He's gonna have to make that executive chairman decision and say, okay, look, we thought we could pause. I'm not gonna let no one number change our mind. Or he could say, look, we got flatfooted. I'm not gonna stop hiking. Let's go for another one.”

On our catalyst watch for the day, the FTC regulatory review on the Seagen ( SGEN )-Pfizer ( PFE ) merger will expire. The closely-watched Manheim Used Vehicle Value Index for May will be released. Used auto prices cooled slightly in April. Salesforce ( CRM ) will hold an AI Day event. A description of the event says that CEO/Co-Founder Marc Benioff and other AI visionaries will discuss the future of trusted enterprise AI and present live demos.

U.S. stocks on Friday wavered through a largely muted trading session

The Nasdaq ( COMP.IND ) closed 0.2% higher. The S&P 500 ( SP500 ) added 0.1% and the Dow ( DJI ) gained 0.1%.

Turning to the performance of the 11 S&P sectors, six retreated, led by Materials and Energy. Tech and Consumer Discretionary topped the gainers.

For the week, the major averages managed to end in positive territory. The Nasdaq was up 0.1% while the Dow was up 0.3% and the S&P was up 0.4%.

Now let’s take a look at the markets as of 6:20 am. Ahead of the opening bell today, Dow, S&P and Nasdaq futures are in the green. The Dow is up 0.03%, the S&P 500 is up 0.2% and the Nasdaq is up 0.5%. Crude oil is down 2.5% at more than $68 a barrel. Bitcoin is up 0.8%.

In the world markets, the FTSE 100 is up 0.02% and the DAX is up 0.5%. Australia markets are closed.

On today’s economic calendar, at 2pm the treasury statement.

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