🚘 Dissecting Chinese EV market

and changing rates

Good morning investors! We’re back after the long weekend and since the US market was closed yesterday, we’ll mainly talk about international happenings in today’s issue.

Today we cover:

  • Strikes galore

  • Something about international rate cuts

  • A look at the Chinese e-vehicle industry

📊 Economy and News 

Strikes everywhere

Strikes seem to be on the rise. Following the Canada rail debacle, major companies in the U.S. are now facing significant challenges.

Boeing, which has encountered numerous setbacks over the past six years, may soon add another to the list—a potential strike involving 32,000 workers.

The contract between Boeing and the International Association of Machinists is set to expire at 11:59 p.m. PT on September 12. If a new agreement isn’t reached, workers in Washington state could launch the company’s first strike in 16 years. The likelihood of a deal appears slim, according to the local union leader.

While both Boeing and the union express a desire to avoid a strike, the frustration among union members over recent contract concessions and the company’s ongoing struggles makes reaching an agreement within the limited time frame a challenging task.

Meanwhile, in Baltimore, hotel workers have joined a massive nationwide strike targeting three major hotel chains during one of the busiest travel holidays of the year.

Unite Here, the union representing these workers, announced that around 200 hotel employees at the Hilton Inner Harbor in Baltimore walked off the job this morning. Hotel workers are now on strike in 25 U.S. cities, with more than 10,200 workers at various hotels from Boston to the West Coast to Hawaii joining the strike early Sunday morning.

The workers are demanding higher pay, better working conditions, and increased staffing levels. The union is also calling for the restoration of several benefits cut during the pandemic, such as daily room cleaning. According to the union, while the travel and hotel industries have rebounded, worker wages have not kept pace with this recovery.

This surge in unrest isn’t confined to the U.S. In Israel, protests have erupted in the streets as the nation braces for a potential nationwide strike.

Global hits:

Rate cuts: The European Central Bank meets again later this month, and Goldman Sachs expects the central bank to ease monetary policy once more having started its rate-cutting cycle in June. 🌍

On the other hand, analysts at Citi Research suggest that the U.S. job market continues to be robust, despite indications of a slowing economy. Citi anticipates that the Federal Reserve may begin a cycle of rate cuts, possibly reducing rates by 50 basis points (bps) as soon as this month. 🇺🇸 

Elsewhere, a poll of analysts predicted that the Central Bank of Egypt (CBE) will keep its overnight interest rates steady during its monetary policy committee meeting on Thursday, as inflation continues to decrease. 🇪🇬 

Furthermore, Nomura expects India's central bank to begin cutting interest rates next month as inflation in the South Asian nation edges lower and economic growth weakens, the investment bank said on Monday. 🇮🇳 

Lastly, Russia's central bank is expected to raise its benchmark interest rate by 100 basis points to 19% at its Sept. 13 meeting to combat inflation and cool the overheated economy, a Reuters poll of analysts showed on Monday. 🇷🇺 

What Brazil’s doing 🇧🇷: Brazil's Finance Ministry plans to propose measures to Congress this year to tax major tech companies and introduce a 15% global minimum tax on multinational corporations. These steps aim to ensure the country meets its 2025 fiscal target in case of a revenue shortfall.

Meanwhile, Brazil's economy continued to grow at a steady pace last quarter, driven by household spending, according to a Reuters poll. However, the country's growth may have been dampened by an increase in imports of goods and services, which outpaced less vigorous exports at the start of 2024 due to a strong exchange rate that has since weakened.

The second-quarter gross domestic product (GDP) figures, set to be released on Tuesday, are expected to show a 0.9% growth compared to the January-March period, when the economy grew by 0.8%, according to a median forecast from 18 analysts surveyed between August 28 and September 2.

Additionally, Brazil’s supreme court has unanimously voted to maintain the ban on X after Elon Musk's refusal to comply with local regulations led to the social network being blocked in one of its largest markets.

📈 Stocks

S&P 500 5,648.40 (+1.01%)
DJIA 41,563.08 (+0.55%)
NASDAQ 17,713.62 (+1.13%)
BRENT CRUDE 77.32 (-0.01%)
* Prices as of Mar 3rd, 12:20 AM UTC

A look at Chinese electric cars

Chinese electric vehicle leader BYD achieved a record in August, with passenger vehicle sales hitting an all-time high, driven by a stronger increase in hybrid sales compared to fully electric cars. The company reported a 30% year-on-year increase, reaching 370,854 passenger vehicles sold in August.

In contrast, several emerging new energy vehicle startups experienced a decline in deliveries last month. Li Auto, recognized for its range-extender models, reported 48,122 deliveries in August, down from a peak of 51,000 in July.

Nio delivered 20,176 vehicles in August, a slight decrease from July, though it marked the fourth consecutive month with deliveries exceeding 20,000.

Nio’s more affordable brand, Onvo, inaugurated 105 stores on Sunday as it prepares to deliver its first model, the L60 SUV, later this month. Nio is also set to release its earnings report on Friday.

Xpeng reported 14,036 deliveries in August, making it the best month of the year so far for the company.

On Friday, Xpeng announced it had begun initial deliveries of its newly launched, budget-friendly Mona M03 electric car, priced under $20,000 in China.

Zeekr, backed by Geely, reported a month-on-month rise in August with 18,015 deliveries, although this was down from 20,206 deliveries in June.

Xiaomi revealed that it delivered over 10,000 cars in August, maintaining this level for the third consecutive month. In mid-July, CEO Lei Jun stated the company’s goal to deliver 100,000 units of its SU7 electric sedan by the end of November.

The smartphone giant began mass deliveries of the SU7 in April, pricing it about $4,000 below Tesla’s Model 3.

Zeekr announced on Friday that it will launch its first SUV this month, priced over $1,400 less than Tesla’s Model Y. The U.S.-listed Chinese company plans to deliver the SUV worldwide by the end of this year, although it has not specified the target regions or countries.

BYD also reported selling 31,451 vehicles overseas last month, bringing the year-to-date total to 264,869, surpassing the 242,765 cars it sold internationally throughout last year.

If BYD continues its current pace of overseas sales through December, the company is on track to sell just under 400,000 vehicles outside China this year.

Surprising: Huawei looks to upstage Apple with product launch just hours after expected iPhone 16 unveiling.

Controversial: Disney pulls ABC, ESPN and other channels from DirecTV in carriage standoff.

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💵 Personal Finance

People should buy gold, say experts

The world is changing and in such times, gold is considered a safe haven.

Price: Currently trading at $2,500.32, it is close to its all time high of $2531.70, it hit last month. Most traders expect it to trade around $2,700 in the next 12 months.

Returns: For the last 5 years, the average annualized return on gold has been 11.8%. Last year, gold offered a return of 13.80%, versus a return of 26.29% offered by the S&P. But, if you look at 2022 figures, you will see that gold fell -0.43%, whereas the S&P Index fell - 18.11%.

Gold has been on a phenomenal run this year as well, rising by 12% YTD and outpacing most major asset classes.

What experts say: “The Big Short” traders Danny Moses, Vincent Daniel and Porter Collins are focused on one of their top long bets: gold.

“I just don’t think Americans have enough gold in their portfolio,” Collins said on CNBC’s “Fast Money”.

The three investors are known for their successful bet against the housing market ahead of the 2008 crisis.

Collins, who is co-founder of Seawolf Capital with Daniel, referred to massive central bank buying around the world and the U.S. budget deficit as reasons to buy gold.

Daniel and Collins’ firm highlighted gold in their annual note to shareholders this month.

Danny Moses, founder of Moses Ventures, is also bullish on gold. In a special email to “Fast Money” on Monday, Moses wrote he has a “large long” in the Sprott Physical Gold Trust.

Investing in gold: There are various ways to benefit from it. You can buy physical gold, invest in companies that deal in gold, and even include it in your IRA, as explained in this free gold IRA guide.

💰 Be a Better Investor

“Your economic security does not lie in your job; it lies in your own power to produce—to think, to learn, to create, to adapt. That’s true financial independence. It’s not having wealth; it’s having the power to produce wealth.”

Stephen Covey

Resources:

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👩🏽‍⚖️ Legal Stuff
Nothing in this newsletter is financial advice. Always do your own research and think for yourself.