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  • Writer's pictureMike V.

Weekend Reading

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Bloomberg: GM and Fiat Chrysler Unmasked as Tesla's Secret Source of Cash

For years, Tesla Inc. has hauled in revenue by selling credits to other carmakers that needed to offset sales of polluting vehicles to U.S. consumers. These sorts of transactions have largely been shrouded in secrecy -- until now. General Motors and Fiat Chrysler disclosed this year that they reached agreements to buy federal greenhouse gas credits from Tesla. The deal with GM will come as a surprise to those who thought years of sales of plug-in hybrid Chevrolet Volts and all-electric Chevy Bolts would leave the largest U.S. automaker in the clear with regard to regulatory compliance. But while sales of those models have put GM in a position where it doesn’t need extra credits today, demand for its battery-powered vehicles are dwarfed by its gas-guzzling trucks and SUVs. “This might not be a bad hedge,” said Mike Taylor, the founder and president of Emission Advisors, a Houston-based environmental credit consultant and broker. “GM may need the credits and prices may go up.” “Until demand catches up with regulatory requirements, and there is regulatory relief, we will use credits as appropriate.” Tesla has generated almost $2 billion in revenue from selling regulatory credits since 2010. Its home state of California has a mandate that requires carmakers to sell zero-emission vehicles, or ZEVs, in proportion to their share of the state’s auto market, which is the largest in the country. If manufacturers don’t sell enough non-polluting vehicles, they have to purchase credits from competitors like Tesla to make up the difference.

Barron’s: Gold Looks Headed Toward a New High

Gold has moved higher for the year. All the factors for the metal to rally to record levels are finally be falling into place. “Gold does well in a period of dollar weakness, inflation, and economic uncertainty,” says Peter Schiff, chief global strategist at Alliance Global Partners. “We are about to get all three.” Gold prices were held back by expectations that the Federal Reserve’s monetary tightening cycle would continue for years, argues Schiff. “Everyone now recognizes that the Fed is done tightening and that the bias is in the other direction, but few understand just how far and how fast [the Fed] will have to loosen monetary policy in the coming months,” he adds. In Schiff’s view, the economy is approaching a “severe recession” that will prompt the central bank to launch another round of quantitative easing, or asset buying, to drive down interest rates. He predicts that the next round of QE will be much larger than prior ones. “Given that, gold should be rocketing upward,” he says. Gold settled at $1,333.60 an ounce on Wednesday, their highest finish since Feb. 20, when they hit a 10-month high. For gold’s latest rise to stick, Brien Lundin says prices will have to top $1,375. Getting past that hurdle will be difficult, he maintains, but might clear the way to $1,500 by year-end. Schiff’s price forecast is even rosier. “When sentiment finally changes, gold could rocket from its currently well-established base to levels much higher than the prior highs established almost a decade ago,” he says. Prices topped $1,900 an ounce in September 2011.

FCA's U.S. sales chief sues company for wrongful retaliation

Some fresh controversy is brewing at Fiat Chrysler Automobiles as the head of U.S. sales has filed a federal whistleblower lawsuit against the company. Reid Bigland, who's also in charge of the Ram truck brand, alleges that FCA made him a scapegoat for wrongful sales inflation practices and fixing vehicle sales statistics, which are currently under investigation by federal agents. Bigland claims that FCA executives punished him for cooperating with the federal investigators in the case by cutting his pay by more than 90 percent. The plan apparently was to use the money saved to pay for fines following any settlements made with the Securities and Exchange Commission. So far, FCA cost Bigland over $1.8 million in income. Bigland claims he just cooperated with the SEC investigation by testifying about FCA's sales reporting, from the time he took the position to the period prior to being appointed the company's U.S. sales chief. The investigations also date back as far as February of 2016 after two Illinois-based Fiat Chrysler dealerships sued the automaker for civil racketeering, accusing the corporation of offering dealerships money under the table to report unsold vehicles as sold in an effort to buff up statistics.

Electric Car Owners In Illinois Must Pay $248 A Year To Make Up For Lost Gas Tax Revenue

$100 more than what owners of gas burning cars pay. The higher fee is part of the state's road legislation. The fee is a large hike from the $17.50 a year that EV owners currently pay, but significantly lower than $1000 fee that lawmakers proposed last month in a bid to compensate for the loss of state gas tax revenue.

Big tech's giant power could be challenged in blockbuster antitrust probes

Reports in recent days suggest that the wheels are turning on blockbuster antitrust investigations into Apple, Amazon, Facebook, and Google. The Federal Trade Commission and Department of Justice have carved up which of the big tech companies they would examine when they begin antitrust proceedings. This could transform the big tech landscape, potentially resulting in seismic breakups or giant fines.

Carnival slapped with a $20 million fine after it was caught dumping trash into the ocean, again

Carnival Corp will pay a $20 million settlement after Princess Cruises, a Carnival subsidiary, admitted to violating the terms of a 2017 settlement for improper waste disposal.

According to a court filing: Carnival released food waste and plastic into the ocean, failed to accurately record waste disposals, created false training records, and secretly examined ships to fix environmental-compliance issues before third-party inspections without reporting its findings to the inspectors.

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