Bloomberg: Ford Expects Health-Care Costs to Top $1 Billion in 2020
Ford Motor Co. expects the cost of health insurance for its 56,000 hourly workers in the U.S. to top $1 billion for the first time next year, highlighting a growing expense for automakers. Those mounting health-care costs represent a potential sticking point in this year’s contract talks between the United Auto Workers and the three U.S. automakers that tried and failed four years ago to address an expanding outlay that threatens profits and jobs. At Ford, General Motors Co. and Fiat Chrysler Automobiles NV, the tab for health insurance topped $2 billion in 2015 and has only grown since. Bargaining negotiations get underway this summer on contracts that expire in September with each of the three automakers. Some experts say divisive issues including cost-sharing for health care benefits may lead to striking. The UAW must balance its protection of benefits with the need to keep workers on the job at a time when GM is shuttering five North American factories and Ford is slashing shifts and cutting jobs as part of an $11 billion restructuring. The three automakers remain profitable and are bracing for a slowdown while spending billions to prepare for a future dominated by electric and self-driving cars.
Facebook Criminal Investigation
Facebook is under criminal investigation over deals that gave Apple, Amazon, and other companies access to user data. Facebook is under criminal investigation over data-sharing deals it signed with Apple, Amazon, and other major tech companies, reports the New York Times. The partnerships, first reported in June, gave those outside companies to data including friends lists, contact information, and even private messages — and not always with the user's consent. Two of Facebook’s top executives — one regarded as the company’s No. 3, and the other the head of its WhatsApp messaging service — are leaving after disagreements with Mark Zuckerberg, the chief executive, over the social network’s future direction. The differences stemmed from Mr. Zuckerberg’s asserting control over his company and its apps — Instagram, WhatsApp and Facebook Messenger — by rolling out a plan to integrate the services into a single privacy-focused platform, according to six people involved in the situation. Executives at Facebook who had run the various services were concerned that knitting together the apps would take a toll on the popularity and growth of their individual products. And with Mr. Zuckerberg exerting more control over customer data, the executives were also fearful of losing autonomy and power. Chris Cox, Facebook’s chief product officer and a member of Mr. Zuckerberg’s inner circle, is one of the two executives leaving. “As Mark has demanded, we are turning a new page in our product direction,” wrote Mr. Cox. “This will be a big project and we will need leaders who are excited to see the new direction.”
SoftBank nears deal to invest in Uber's self-driving unit. SoftBank’s Vision Fund and other investors, including at least one unnamed auto maker, may invest $1 billion or more in the unit with a valuation of between $5 billion and $10 billion. The move would help the ride-hailing firm make its pitch to investors ahead of its eagerly anticipated IPO.
'Don't trust the strong rally': Morgan Stanley warns
Stocks in the US have enjoyed a dramatic, V-shaped recovery since the depths of the late-December sell-off. The S&P 500 has staged an impressive 11% rally for so far this year.
The gains have come amid not only disappointing corporate results, but also falling earnings expectations, said Morgan Stanley's equity-strategy team. And that's reason enough to expect a treacherous road ahead. "The S&P 500 is down 7% from its highs, about the same as 19 EPS forecasts," a team led by Michael Wilson, the firm's chief US equity. "Evidence grows that these forecasts have more downside risk." "Don't trust the strong rally on bad 4Q results." Investors are emerging from an "unusual" earnings season, Wilson's team said, in that shares of companies that lowered their guidance tended to move higher in both the immediate and longer-term. While this kind of behavior may suggest confidence in a trough, the strategists aren't so sure. "We note that the last time the market saw guidance dips being bought in this way was around guides for 1Q15, a period which ultimately did not reflect the trough for earnings revisions," Wilson said. Last fall, the firm began calling for an earnings recession, and now expects stocks to fall just over 1% by year-end, to its S&P 500 price target of 2,750. Morgan Stanley's earnings-recession call is mostly borne from the view that the "business/profits cycle has run its course and was actually truncated by the fiscal stimulus (tax cuts) enacted in late 2017." "The bottom line for us is that the earnings recession is real and it's broader than the one we experienced in 2015-16," Wilson and his team wrote.