Manufacturing Surprise

Manufacturing activity expanded in New York State for the first time since November of last year, according to the September survey. The general business conditions index rose sixteen points to 11.5. The new orders index climbed seventeen points to 9.4, a multi-year high, pointing to a modest increase in orders, while the shipments index rose eighteen points to 17.9, its highest level in about a year and a half, signaling strong growth in shipments. (…)

The index for number of employees came in at -5.7, pointing to another month of modest employment reductions. After a steep drop last month, the average workweek index recovered to 2.9, signaling a slight increase in hours worked.

Price indexes were little changed: the prices paid index was 23.2, and the prices received index remained low at 7.4.

Firms grew more optimistic that conditions would improve in the months ahead. The index for future business activity moved up eight points to 30.6, with 45 percent of respondents expecting conditions to improve over the next six months. However, the capital spending index fell eleven points to -2.1, dipping below zero for the first time since 2020.

This snapshot shows the rare uptick:

@ceteraIM

New orders also ticked up:

Another flash in the pan? The next two charts show expectations six months ahead. Note how rising expectations for new orders in 2021-22 faded rapidly.

Record US household wealth may increase chance of soft landing

By some financial measures, U.S. consumers are better off than they’ve been in decades.

This financial cushion could increase the likelihood that the economy’s descent will be more glide than crash. And it suggests that the take-off in the economy and markets that follows could be quicker and steeper than in previous cycles.

Federal Reserve figures last week showed that increases in home prices and the stock market lifted households’ net worth in the second quarter by $2.8 trillion to a record $163.8 trillion. Overall, household net worth soared by nearly $47.0 trillion from the pre-pandemic peak less than five years ago.

A closer analysis of the numbers behind the latest headline figures points to even stronger underlying foundations.

Net wealth as a share of disposable personal income – a broad, relative measure of the household sector’s financial wellbeing – has climbed to 785%, the highest point in two years, while household debt as a share of GDP has fallen to 71%, the lowest level in 23 years.

Even though credit card and other forms of delinquencies are on the rise, most households aren’t struggling with large debt burdens.

In short, U.S. households as a whole have generally had little trouble withstanding the 525 basis points of Fed rate hikes between March 2022 and July 2023. (…)

In the U.S., 25% of assets are held by 1% of the population and almost 80% is held by 20%, meaning rising house and stock prices have benefited a relatively small cohort of the population.

The lagged impact of multiple years of negative real wage growth and the running down of pandemic-related stimulus is starting to show. The national saving rate fell to 2.9% in July, approaching the historical lows recorded in the 2005-2007 run-up to the Great Financial Crisis.

Many households can no longer rely on excess savings and may be reluctant to borrow to fund future expenditures. Does that mean consumption will soon crater?

Probably not. For better or worse, the consumer spending engine driving the U.S. economy is fueled by the well-off. Economists at BNP Paribas estimate that the top 20% of income earners account for nearly 40% of total spending, and the richest 40% account for more than 60% of all spending.

In fact, rising stock and house prices – which, again, only benefit a sliver of the population – are expected to lift consumer spending this year by $246 billion, according to BNP Paribas economists’ estimates earlier this year. That would be the third-largest boost to U.S. consumer demand in 25 years, adding roughly 1 percentage point to 2024 GDP growth.

“Ultimately it is the labor market that will matter much more for a larger slice of households, and in aggregate, there are no significant signs of stress,” says BNP Paribas’ senior U.S. economist Andrew Husby.

Economists at Goldman Sachs reckon that consumers’ disposable personal income is actually being understated by nearly $400 billion. If so, the saving rate is an estimated 5.2%, suggesting downside risks to spending are more limited than perhaps thought. (…)

History shows that, unsurprisingly, Wall Street tends to do well after the Fed starts cutting rates. While the record is slightly mixed, U.S. stocks on average drift higher in the year after the Fed’s easing cycle ends and typically rise by as much as 20% if there is no recession, according to analysts at Raymond James.

Spending – and thus corporate earnings – could obviously slow sharply if the labor market were to crater. But that’s not most people’s base case. Even if that were to occur, the response by the Fed would likely be a reasonably solid shield for financial markets.

Consider that markets are currently pricing in 250 basis points of rate cuts between now and the end of next year – and that’s with the expectation that there won’t be a severe recession. If there is, markets could get even more help from the Fed.

So even if economic turbulence puts consumers under stress, households appear to be in as strong a position as they could hope, meaning they – and markets – are relatively well positioned to face these potential headwinds.

The “wealth defect” as I dubbed it in September 2023,  continues to sustain consumer spending in spite of the “unmistakable slowing in the labor market”.

Not only are real wages unwavering, household wealth keeps climbing well above trend, allowing the savings rate to stay historically low. The cushion is not in the savings account, it’s in housing and equities.

Importantly, the Pew Research Center found that “the wealth of lower-income households increased at a faster rate during the pandemic – 101% vs. 15% for upper-income households. Middle-income households saw their net worth increase by 29% from 2019 to 2021.

• In 2021, 62% of U.S. households lived in homes they owned as their primary residence. In 2021, homeowners typically had $174,000 in equity in their homes.
• Ownership of retirement accounts, such as individual retirement accounts (IRAs) and 401(k) accounts, is about as prevalent as homeownership. Overall, 60% of U.S. households had at least one person with a retirement account in 2021. The typical retirement account was valued at $76,000 in 2021.
• 44% of households possessed both assets.

These relative trends have likely persisted post pandemic.

Bank of America data reveal that “after-tax wage growth remains highest for lower-income households in August 2024” …

… and that households’ savings and checking balances remain well above inflation adjusted 2019 level for all income groups:

As Reuters notes, Goldman Sachs economists find that the savings rate is understated:

On the surface, a very low savings rate raises concerns around the sustainability of consumer spending, but we see several reasons why the saving rate level is probably not really as low as currently measured.

First, we estimate that two measurement biases are understating disposable personal income (DPI) by 1.7%. Interest income is understated by around $350bn (1.5% of DPI) due to the BEA’s extrapolation method to estimate net interest payments, while the BEA’s failure to fully capture immigrants in employment statistics is lowering labor income by around $40bn (0.2% of DPI).

Second, employers’ contributions to future pension entitlements have declined by around 0.4% of DPI, thereby lowering measured income but not affecting household cashflow that is relevant for saving.

Third, election-related spending by non-profits is currently raising PCE spending by 0.2% (and lowering the saving rate by 0.2pp). While such spending is recorded appropriately under the national accounts’ framework, it is probably not affecting household saving decisions and anyways should fully reverse after November’s election.

Our estimates suggest a 4.6% saving rate currently after accounting for measurement biases and a 5.2% saving rate after also accounting for adjustments that align income and spending with cashflow relevant to households. These estimates are only slightly below the average saving rate from 1990-2019 (5.8%) and support our view that downside risk to spending is more limited than commonly feared.

Another unreliable BLS data series!!! Pithy those FOMC members deciding monetary policy almost blindly.

Ed Yardeni: “In our opinion, lowering the FFR too much too fast could trigger an economic boom, in which real GDP grows at a brisk pace but with higher inflation risks. It could also trigger a 1990s style meltup in the stock market.”

Rates Markets Are Pricing in a Recession

Despite surveys showing that the consensus is expecting a soft landing, rates markets are pricing in a full-blown recession, see chart below.

BTW:

Market odds are just about equally split between a 25 or a 50-point cut Wednesday. So 50% will be happy and 50% not so.

The only significant economic indicator to be released before Powell’s presser will be August’s retail sales report on Tuesday, which we expect will be stronger than expected. That might sway the FOMC to cut by 25bps rather than 50bps, which might disappoint bond investors and traders. But for stock investors such good news should be greeted as good news. (Ed Yardeni)

Remember that the retail sales stats are in nominal dollars, up 2.7% YoY in July, in line with Q2 (+2.5%) but up from Q1 (+2.0%).

But my retail inflation proxy (.35x CPI-Durables + .65x CPI-Nondurables) went from +0.2% YoY in Q1 to –0.3% in Q2, –0.6% in July and –1.5% in August (durables –4.2%, ND 0.0%).

We could thus get a seemingly weak print in nominal terms, but a strong month in real terms.

Bank of America concurs: “We usually see a bump in spending in the build-up to back-to-school season, however, this year the trend is slightly more muted compared to 2023. Some of this is likely due to deflation in certain key back-to-school items (e.g., children’s apparel).”

BofA’s internal card data show August retail spending down 0.2% seasonally adjusted in August after +0.3% in July. Importantly, services are continuing to strengthen:

A familiar picture of services strength and relative retail weakness persisted in August. Services spending (including restaurants) contributed over a percentage point to total card spending growth YoY, while retail was a slight drag.

Travel-related spending remains a bright spot, according to Bank of America internal card data. Looking at travel-related restaurant spending this month, we find that the percentage share that occurred in another country or 500 miles or further from home (our proxy for long-distance domestic travel) continued to grow, although at a slower pace than this time last year.

Looking at the underpinnings of the US consumer, the picture remains fairly healthy. While data from the Bureau of Labor Statistics shows that jobs growth is cooling, our internal data on after-tax wages and salaries growth is not showing signs of a slowdown, and, in fact, accelerated in August for all income groups. After-tax wage growth remains highest for lower-income households in August 2024, though there has been some notable acceleration in higher-income wage growth since last year.

  

Is Monetary Policy Restrictive?

Many FOMC members argue that the Fed funds rate at 5.5% is very restrictive because the Fed’s r-star model says that neutral monetary policy would mean a Fed funds rate at 3%.

But maybe this r-star estimate of the terminal Fed funds rate is wrong. At least that is what the incoming data suggests.

If monetary policy is very restrictive, why are default rates going down?

If monetary policy is very restrictive, why is the Atlanta Fed GDP Now estimate for third quarter GDP at 2.5%, well above the CBO’s estimate of long-run growth at 2%?

If monetary policy is very restrictive, why is weekly data for consumer spending still strong?

The bottom line is that the Fed funds rate at 5.5% does not seem very restrictive.

What about the labor market, the new Fed focus?

And wage growth seems to have found a floor at 4.5%, overall and for both job stayers and switchers:

The surge in immigration boosted labor supply in the last 18 months, probably slowing wages a little, but a new Brookings analysis suggests the supply surge is behind us:

2023 was an atypical year for migration. Immigration more than caught up from the slow-down of 2020 and 2021, with unexpectedly high numbers of arrivals in twilight status categories. Inflows have declined this summer, and it seems likely that there will be lower numbers of migrants coming to the U.S. in 2024 than there were in 2023.

This brings us back to the now widely discussed Sahm Rule which states that a 0.5 percentage points increase in the 3-month moving average of the unemployment rate over its 12-month minimum has historically been a harbinger of a recession. NBF illustrates its pretty good record: since 1970, the rule correctly indicated every recession and did not trigger outside of one (although 1976 was a close call). In 1959 and 1969, the Sahm rule was triggered outside of a recession, but a recession followed within six months.

Here’s how the dynamics work per Claudia Sahm in an August 7 piece on Bloomberg:

The Sahm rule relies on a powerful feedback loop: Relatively small increases in the unemployment rate can turn into large ones. Workers without paychecks weigh on consumer demand, leading to more workers without paychecks. A rising unemployment rate also affects more than just the unemployed, since it normally coincides with fewer raises and job opportunities, as well as heightened uncertainty overall.

In US recessions from 1947 to 2007-09, the unemployment rate rose gradually in the early months and then increased substantially. On average, the peak unemployment rate is almost 3 percentage points above the pre-recession level. The increase in the unemployment rate over the past year fits within the range of earlier recessions. The level of unemployment is not decisive — it’s the change that matters most.

As the indicator was rising towards its 0.5 signal level, I was one to observe that the rise in unemployment was due to an unusual rise in the labor supply from surging immigration rather than a more ominous increase in layoffs. Now that the Rule has been triggered, Mr. Powell calmed investors in his Jackson Hole speech:

so far, rising unemployment has not been the result of elevated layoffs, as is typically the case in an economic downturn but rather of a substantial increase in the supply of workers and a slowdown from the previously frantic pace of hiring.

Claudia Sahm had said exactly that in her Bloomberg article:

The rise in the unemployment rate in July to 4.3% brought the Sahm rule to 0.53 — just above its trigger. Even so, there is good reason to view the current rise in the unemployment rate as overstating the recessionary dynamics. (…)

The increase in the labor force, particularly the surge in immigration, would contribute substantially to the rise in unemployment.

A rise in the unemployment rate due to weakening demand for workers gains momentum in recessions, which is why the Sahm rule has worked well historically. But a rise in the unemployment rate due to an increase in the supply of workers is different. The rate will decrease once the jobs “catch up” with the new job seekers and more workers allow the economy to grow more. The Sahm rule does not distinguish between these two dynamics, and can look more ominous when the labor force is expanding rapidly.

There are signs that stronger labor supply, not just weaker labor demand, helped push the Sahm rule past its 0.50 percentage point threshold. Unemployed entrants to the labor force (new or returning) accounted for about half of the increase. That’s a notably higher share than in recent recessions, when most of the contribution came from unemployed workers who had been laid off temporarily or permanently. The current Sahm rule reading is likely overstating the weakening in demand and not at recessionary levels.

But the sharp strategists at NBC Economics and Strategy smartly argue why we should not be too complacent:

To us, two reasons stick out as to why Powell’s argument about the rise in the unemployment rate being less impactful is not persuasive. For one thing, a look back in the past shows that the idea behind the Sahm rule – taking the 3-month moving average of the unemployment rate and comparing it with its 12-month minimum, has originally been introduced by economist Ed McKelvey, with the difference that the threshold had then been set at 0.3%.

That threshold had been crossed in December 2007, but, in a Wall Street Journal interview, McKelvey stated that “the rule may not hold this time around, because the dynamics of job loss have changed”, as they represented “reduced hiring rather than increased firing”.

The National Bureau of Economic Research later determined that the a recession had started that exact month in the U.S.

For another, while it is true that unemployment claims have not drastically risen in recent months, we’d note a sharp rise in the number of people unemployed after losing their jobs or finishing a temporary contract, meaning that at least a portion of the current rise in the unemployment rate is attributable to job losses

The unemployment rate is perhaps the most visible economic statistic, widely seen as a gauge of a nation’s economic health. The 0.9 percentage point rise in the U.S. unemployment rate between April 2023 and July 2024 has never occurred outside of recessions in the USA (not even close). Moreover, a 26% YoY jump in the unemployment rate, from 3.4% to 4.3% must be a true shocker for the average American and most corporate decision makers.

It is the feedback loop this prominent gauge can cause that we must be concerned about. Workers can become worried for their job, consumers can retrench and pay down their debt and corporate officers can cut expenses to protect their bottom line should a slowdown occur.

Consider:

• The U. of Michigan Consumer Sentiment Index had recovered from its late 2023 lows of 60 to 80 in early spring. It has declined to 70 since, normally a recession reading.
• A NY Fed July survey showed that 4.4% of polled workers expected to lose their job in the following 4 months, up from 2.8% last March.
• The same survey revealed that 40.1% of workers 40-59 years (prime working age) expected higher unemployment one year out, up from 33.8% last February.
• And 13.6% of polled consumers, the high end of the range since 2013, forecast that they would miss a debt payment in the next 3 months, up from 11.4% last February.

In all, nothing critical yet but trends to keep monitoring. Unemployment and caution rise gradually, then suddenly…

On the positive side:

• August unemployment rate ticked down to 4.2%.
• While employment growth slowed, wage growth held up and inflation receded, keeping real weekly income healthy.
• Spending remains reasonably strong so far.

NBF concludes:

Finally, while the Federal Reserve’s incoming rate cut cycle can be seen positively for company earnings and can seem to indicate that a soft landing is currently playing out, we need to keep in mind that this maneuver has historically proven very tricky. Since the 1990s, only one of six easing cycles has avoided a sharp decline in the S&P500, with four of those episodes coinciding with a recession.

Fed Enters Tricky Terrain: Rate Cuts in a Decent Economy

(…) Every rate-cutting cycle is different, and the economy’s response is both long and variable. Milton Friedman, speaking before Congress in 1959, likened changes in Fed policy to “a water tap that you turn on now and that then only starts to run six, nine, 12, 16 months from now.”

What’s more, there isn’t a clear historical template for the current situation. Usually, by the time the Fed starts cutting rates, the economy is already in pretty big trouble. That isn’t the case now. The labor market has cooled but still looks decent, and the economy has been posting solid growth.

In fact, it is a better economy than it was even in 1995—arguably the one time the Fed convincingly achieved a so-called soft landing, where inflation comes down but unemployment doesn’t spike.

“We don’t have a lot of examples of cutting in a healthy economy, in one that’s not showing serious signs of distress,” said Jon Faust, who until early this year was senior special adviser to Fed Chair Jerome Powell.

That could make for atypical economic responses to the Fed’s expected cut Wednesday.

For example, because the Fed isn’t trying to turn around a rapidly deteriorating economy—one in which lots of people are living in fear of imminent job losses, for example—lower interest rates could boost spending more quickly. On the other hand, valuations for stocks and other assets still look pretty elevated, so it isn’t clear they can provide much additional oomph. (…)

Even after Wednesday, rates likely still will be restrictive. A trio of models maintained by the Atlanta Fed indicate that the level of rates that would currently neither stimulate nor slow the economy ranges from 3.5% to 4.8%. (…)

John Authers:

(…) The Fed also needs to think about how its move will affect companies’ decisions. A sharp rise in the share of US businesses that described monetary policy as too restrictive, according to the National Association for Business Economics’ recent survey, adds to pressure for a big cut. Small businesses’ reliance on short-term or variable-rate bank loans, Gavekal Research’s Tan Kai Xian says, explains why they suffered after the 2022-23 rate hikes, even as big corporations prospered: “It is possible that such companies will sit on their hands until rates are duly low enough for such leveraged investments to pass the profits test.” (…)

On Wednesday, regardless of how much the fed funds rate reduces, it will join its peers on its way down from Table Mountain. Powell will no longer be lonely at the top. For other central bankers, this should bring relief to their economies and domestic currencies. Just remember that for mountaineers, the descent is statistically much more dangerous than the ascent. With mission accomplished, it’s easy for your guard to drop and to make a fatal mistake. This is just the start of a long process, and we don’t know exactly where it ends.

China Slowdown Spurs Calls for Stimulus Before It’s Too Late Production, consumption and investment cool more than expected

(…) “The August data basically rules out the chance to attain the official target of 5% growth in 2024, unless the top leadership is willing to launch a bazooka stimulus package,” said Raymond Yeung, chief economist for greater China at Australia & New Zealand Banking Group Ltd.

Home prices fell at the fastest pace since 2014, [-5.7% YoY, the steepest decline in 9 years], reflecting weak confidence that’s weighing on demand and threatening to draw China into a deflationary spiral. A string of rate cuts has done little to stimulate borrowing, indicating anemic consumer and business sentiment. (…)

Industrial output expanded at a slower rate than economists had expected, extending a weakening streak to the fourth month, the longest stretch since September 2021.

That suggests the main driver of the Chinese economy this year — bolstered by exports and government support — is losing steam. More challenges may yet arise as trade tensions intensify over complaints about Chinese overcapacity by the US and other major partners. (…)

Private investment fell 0.2% on year in the January-August period, registering its first decline this year, data showed.

• Industrial output rose 4.5% in August from a year ago, down from 5.1% in the previous month and below economists’ median forecast of 4.7%
• Retail sales increased 2.1%, slowing from July’s 2.7% and missing projection of 2.5%
• Fixed-asset investment gained 3.4% on year in the January-August period, down from the 3.6% growth in the first seven months. Economists had forecast a 3.5% expansion
  • Property investment fell 10.2% in the period, unchanged from July and slightly worse than prediction of a 10% drop
• The surveyed unemployment rate in urban areas climbed to 5.3%, up from 5.2% in July and the highest since February

  

More on China housing:

New home prices fell by -0.73% MoM, versus a -0.65% MoM dip in July. Secondary market prices fell by -0.95% MoM versus a -0.80% MoM move in July. The drop in new home prices was the steepest monthly decline of this cycle, while the decline in secondary market prices was the steepest since May.

Breaking down the 70-city sample, for the new home market, 67 out of 70 cities continued to see falling new home prices, Xi’an was stable, and 2 cities (Shanghai and Nanjing) showed a slight price increase.

In the secondary market, 69 cities saw price declines, with Jilin the lone city seeing a miniscule price uptick of 0.1%. Disappointingly, the green shoots of stabilisation that we saw in tier 1 cities faded, with Beijing (-1%), Shanghai (-0.6%), Shenzhen (-1.3%), and Guangzhou (-0.7%) all seeing fairly notable declines this month. We place a greater weight on secondary market prices as they more directly impact household confidence and balance sheets. (ING)

Overall credit demand is tepid, to say the least:

S&P 500 Is Surviving Big Tech’s Slide as ‘Other 493’ Catch Up Real estate and utilities are beating the Magnificent Seven

Since the S&P 500 peaked on July 16, the so-called Magnificent Seven tech stocks — Nvidia, Microsoft, Apple Inc., Alphabet Inc., Amazon.com Inc., Meta Platforms Inc. and Tesla Inc. — have mostly slumped, with the Bloomberg Magnificent 7 Index falling 5.3%. And while the broader equities benchmark is down less than 1% over that time, largely due to the S&P’s outsized weightings of those fast growing tech giants, usually sleepy sectors have led the index by a wide mark, with both real estate and utilities gaining 11%. (…)

The rotation has been aided by expectations for monetary policy easing. But it’s also a testament to the improving outlook for profits in the rest of the market at a time when big spending by tech giants is raising concerns about their margins. (…)

Another factor helping sectors outside of tech is improving earnings outlooks. Take health care as an example: After seven consecutive quarters of shrinking profits, earnings from health-care companies rose 16% in the second quarter, according to data compiled by Bloomberg Intelligence. That expansion is expected to continue through the remainder of the year, with profit growth projected to hit 45% in the first quarter of 2025. (…)

The Magnificent Seven companies posted profit growth of 36% in the second quarter. That’s impressive, but down from more than 50% in the prior three quarters. And earnings are projected to expand between 17% and 20% in the next four quarters, according to BI data. (…)

I highlight below sectors expected to beat the S&P 500 ex-Energy growth rates over the next 4 quarters. If analysts are right, sectors other than Tech and Communication Services will only start beating in Q1’25. Q3’24 actually is not broadening much, is it?

Projections show that Tech and Comm. Services will account for 33.8% of S&P 500 earnings in 2025, up from 32.5% in 2024. Revenues: 19.1% vs 18.4%.

FYI: “Tech stock margins are at a cyclical and structural high, and are notably higher vs ex-tech.” (Callum Thomas)

What Scared Ford’s CEO in China Jim Farley is changing strategy to combat what he calls an ‘existential threat’ from  China’s electric carmakers

Jim Farley had just returned from China. What the Ford Motor chief executive found during the May visit made him anxious: The local automakers were pulling away in the electric-vehicle race.

In an early-morning call with fellow board member John Thornton, an exasperated Farley unloaded.

The Chinese carmakers are moving at light speed, he told Thornton, a former Goldman Sachs executive who spent years as a senior banker in China. They are using artificial intelligence and other tech in cars that is unlike anything available in the U.S. These Chinese EV makers are using a low-cost supply base to undercut the competition on price, offering slick digital features and aggressively expanding to overseas markets.

“John, this is an existential threat,” Farley said. (…)

In the span of a few years, Chinese EV maker BYD, backed by Warren Buffett, and other domestic brands have clawed away gobs of market share in China from once-dominant foreign rivals, through a combination of lower prices, high-tech interiors and rapid vehicle updates. Today, they are quickly expanding in Europe, the Middle East and other Asian markets. (…)

“Executing to a Chinese standard is going to be the most important priority,” Farley said. (…)

BYD’s cheapest EV, the Seagull, starts around $10,000 and features a fashionable cabin; a rotating, iPad-like touch screen; and more than 300 miles of driving range, comparable to EVs from legacy automakers that are priced three times higher. It is currently for sale in China and Latin America and BYD plans to start selling it in Europe next year for around $20,000. (…)

WTO rules prohibit manufacturers from pricing below their local market price. The BYD Seagull profitably sells for USD$9,700 in China. The proposed U.S. and Canada tariffs would lift N.A. pricing to nearly $20,000. The cheapest new ICE cars in the USA are the Nissan Versa ($18,000, manual transmission) and the Mitsubishi Mirage ($18,200) that do not come close to the quality and features offered in a Seagull (range up to 230 miles with fast charging).

The least expensive EV car in the U.S. is the Nissan Leaf at $28,140 for the basic S trim and a range of 149 miles. The Leaf SV Plus starts at $36,190 and offers an increased range of 212 miles.

In Europe next year, the Seagull will offer premium features like a rotating touch screen and wireless phone charging. After tariffs and modifications to meet European standards, BYD executives expect to sell the Seagull for less than €20,000 ($21,500) on the continent, thousands below electric cars from Stellantis and Renault.

Incumbent European carmakers are considering unorthodox steps to counter the challenge, including new alliances. Renault is openly shopping around for partners to cut costs on a small-car platform, while Stellantis will start sales in September of cars made through its joint venture with China’s Zhejiang Leapmotor Technologies Ltd.

“We have no intention to let this price band open for our Chinese competitors,” Stellantis Chief Executive Officer Carlos Tavares said last week about the upcoming European Seagull, dismissing calls for tariffs. “We don’t think that protectionism will give us a long-term way out of this competition.” (Bloomberg)

Last week, BYD said that “it now expects its sales to reach 4M (prev 3.6M) for 30%+ YoY growth. BYD’s Chinese NEV market share is mid-30% as well as export of ~500K vehicles in ‘24. “BYD is now 2x+ TSLA and accounts for 1 out of 4 NEVs sold GLOBALLY!” (EvrISI)

Oh! and BYD is a world leader on batteries.

Robert Caro Reflects on ‘The Power Broker’ and Its Legacy at 50

When Covid-19 started, I accidentally stumbled on Robert Caro’s “Working”, a book detailing how the biographer does his research and writing for his books. It prompted me to read “The Power Broker” and his four-volume bio of Lyndon Johnson. Among the very best readings of my life. I am eagerly waiting for Caro’s fifth book on Johnson. The man is 88…

Here’s Axios on The Power Broker:

When Robert Caro was writing “The Power Broker,” his 1974 biography of the urban planner Robert Moses, he often heard a deflating refrain.

“I must have heard a hundred times, nobody’s going to read a book about Robert Moses,” Caro said on a recent morning. “And I really did believe what people said, that nobody would read the book. I did believe that.

“Now they tell me it’s in its 74th printing,” he added brightly. “That’s a lot of books.”

Five decades after its publication, “The Power Broker” endures as a revered classic, prized as much for its elegant, novelistic prose as its blunt lessons on the uses and abuses of political power. The book that Caro feared might never be published went on to win the Pulitzer Prize, sell hundreds of thousands of copies and influence generations of journalists, historians and politicians.

Now, in an astonishing turn for a 50-year-old book and its 88-year-old author, “The Power Broker” seems more popular and relevant than ever. Caro’s iconic portrait of Moses — a megalomaniacal city planner who reshaped New York City with his bridges and expressways, often destroying communities that stood in his way — has inspired video and board games, a Broadway play and a “Repeal Robert Moses” movement, led by an organization that aims to reclaim the city from cars.

This year, “The Power Broker” is being celebrated with an installation at the New-York Historical Society, which features a selection of handwritten notes, photographs and edited manuscript pages from Caro’s archives. A viral podcast series about the book, created by the “99 Percent Invisible” host and “Power Broker” superfan Roman Mars, has drawn an enormous audience, with more than four million downloads. So far this year, “The Power Broker” — which spans 1,286 pages — has sold more than 40,000 copies, far outpacing its sales in recent years and beating many new releases. Some cultural critics have declared that 2024 is “the Year of ‘The Power Broker’.” (…)

The exhibit holds just a sliver of Caro’s copious notes and research. To document Moses’s outsized impact on the infrastructure of New York City and the lives of its residents, Caro conducted 522 interviews and pored over thousands of personal and public documents. His reporting, rendered into gripping prose, revealed how Moses, an unelected official who wielded power for 44 years, had reshaped the city, ejecting more than half a million people from their homes to make way for new highways and often leaving traffic congestion and worse living conditions in his wake.

The installation stirred up memories of the difficult years when Caro and his wife, Ina, almost went broke while he was writing the book, and had to sell their home to get by. He was reminded of the desperate people he interviewed who had lost their own homes when Moses built expressways through their neighborhoods. (…)

Walking through the exhibit, Caro was also reminded of his clashes with Moses, who hated the book, and abruptly ended an interview when Caro brought up evidence of Moses’s corruption. The two never spoke again. (…)

Caro is currently focused on finishing the fifth and final volume of a biography of Lyndon Johnson, which still doesn’t have a release date. (…)