STLA - Wall Street Breakfast Podcast: Union Trouble For Major Automakers

2023-08-11 06:46:06 ET

Summary

• GM, Ford, and Stellantis stocks slide as tensions rise between manufacturers and the United Auto Workers union.
• The US Supreme Court will examine the legality of a $6B bankruptcy settlement that shields Purdue Pharma's Sackler family.
• Hawaiian Electric falls after a deadly wildfire in Lahaina, with the death toll expected to rise.

Listen below or on the go on Apple Podcasts and Spotify GM, Ford (F), Stellantis ( STLA ) slide as union president tosses proposals in the dustbin. (00:26) Supreme Court to hear arguments on Purdue Pharma $6B bankruptcy settlement. (2:04) Hawaiian Electric ( HE ) falls 12% in two days after deadliest U.S. wildfire in five years. (03:19)

This is an abridged transcript of the podcast.

General Motors Company (GM) , Ford (F) and Stellantis N.V. (STLA) slid Thursday amid worries that a strike or big union wage increase may be imminent.

It probably didn’t help that the United Auto Workers union president tossed STLA’s contract proposals in the garbage on Tuesday.

GM was down 5.8% while F fell 4.5% on Thursday. STLA was down 1.8%.

Tensions remain high between manufacturers and the United Auto Workers union as contract negotiations continue. Should a contract not be agreed upon, the union could strike next month.

The UAW is reported to be pushing for at least a 40% pay increase over the four-year contract, which would include a 20% jump in wages from the start.

STLA broke a pledge not to seek givebacks in this round of talks, UAW President Shawn Fain said in a statement.

Last week, GM traded shots with the UAW ahead of the September 14 expiration of the current four-year labor contract. The company said it expects to offer unionized workers higher wages, but warned that granting the United Auto Workers' contract demands for large pay rises would hurt its ability to make sound business decisions.

Stellantis (STLA) is the lead negotiator with the UAW, but the union has also presented demands to General Motors (GM) and Ford Motor (F) .

Bloomberg reported, citing people familiar with the companies’ estimates, The UAW demands would add more than $80B to each of the biggest U.S. automakers’ labor costs.

The US Supreme Court in December will hear arguments in a case that will examine the legality of a $6B bankruptcy settlement that shields Purdue Pharma's Sackler family from further exposure over its role in the nation's opioid crisis.

In an order , the High Court also stayed any further bankruptcy proceedings against Purdue.

In a March 2022 court filing with the U.S. Bankruptcy Court for the Southern District of New York, the Sackler family said they would pay at least $5.5B and as much as $6B . However, that settlement is contingent on the Sacklers receiving protection from any further civil suits.

Purdue is no longer controlled by the Sacklers as the company declared bankruptcy in 2019. The Biden administration, which brought the suit to the Supreme Court, has accused the family of taking billions of dollars from Purdue prior to agreeing to the $6B settlement.

The core issue is whether the Sacklers can be subject to legal protections under bankruptcy even though the family itself has not filed for bankruptcy.

Johnson & Johnson (JNJ) , Teva Pharmaceutical Industries (TEVA) , Cardinal Health (CAH) , and McKesson (MCK) have all reached agreements with states over alleged roles in the opioid crisis .

A raging wildfire has devastated the island of Maui and killed at least 55 people. The death toll is expected to rise.

The fire has been fueled by a dry summer and strong winds from a passing hurricane. It started Tuesday and took residents and tourists in the historic Lahaina area by surprise.

Hawaiian Electric (HE) has warned affected customers to plan for extended outages, as access to many impacted areas is limited due to safety and emergency response concerns.

The full extent of loss will not be known until officials can assess the damage.

Hawaiian Electric (HE) fell 7.4% in Thursday's trading to its lowest close in nearly three years.

Other headlines to look out for on Seeking Alpha:

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Aluminum prices seen rebounding with low global inventories, Century CEO says

U.S. stocks on Thursday ended a volatile session with slight gains, after an initial jump following the latest consumer inflation report was tempered by hawkish-leaning comments from a Federal Reserve speaker.

The Nasdaq (COMP.IND) added 0.12%. The S&P (SP500) rose 0.03%, while the Dowb (DJI) finished 0.15% higher.

Of the 11 S&P sectors, six ended in positive territory, led by Communication Services. Utilities and Real Estate topped the laggards.

Treasury yields were higher. The longer-end 10-year yield (US10Y) was up 10 basis points to 4.11%, while the 2-year yield (US2Y) was up 5 basis points to 4.85%.

Meanwhile, San Francisco Fed President Daly in an interview with Yahoo Finance acknowledged that recent inflation data had been moving in the right direction. But she said that there was still more work to do and that the central bank had not yet determined its future rate actions.

Thursday's economic calendar also showed that the number of Americans filing for jobless claims the past week rose to 248K, higher than the anticipated 230K figure. This was the second straight week of larger-than-expected claims, boosting hopes that the highly resilient labor market was demonstrating signs of cooling.

Now let’s take a look at the markets as of 6 am. Ahead of the opening bell today, Dow, S&P and Nasdaq futures are in the red. The Dow is down 0.02%, the S&P 500 is down 0.05% and the Nasdaq is down 0.2%. Crude oil is flat at more than $82 a barrel. Bitcoin is down 0.6%

In the world markets, the FTSE 100 is down 1.1% and the DAX is down 0.4%. The market in Japan is closed for a holiday.

Our biggest stock movers for the day premarket: First one of the biggest gainers Archer Aviation (ACHR) is up more than 22% after the air taxi manufacturer received a $215M equity investment from top industry players like Stellantis, Boeing, and United Airlines

And for one of the biggest losers, Cano Health (CANO) is down more than 45% after missing the top-line and bottom-line consensus targets in Q2.

On today’s economic calendar, at 830am the producer price index and at 10 am consumer sentiment.

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