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  • Writer's pictureMike V.

Weekend Reading

FT: Fiat Chrysler joins open pool with Tesla to avoid paying EU emissions fines

Fiat Chrysler has agreed to pay Tesla "hundreds of millions of euros" in order to pool their fleets together in Europe. This move will reportedly allow FCA to use Tesla's zero-emission vehicle sales to offset fines it would have to pay for failing to meet European Union carbon emissions rules, which fall to 95 grams per kilometer starting next year. FCA joined a so-called open pool with Tesla on February 25. The electric car company created the pool and gave other automakers "the chance to join" three days prior. The pool will be valid "for several years," director at the Transport & Environment lobbying group. Toyota and Mazda apparently created a similar pool on the same day, but that agreement doesn't elicit quite the same eyebrow raise since Toyota owns a five-percent stake in Mazda. FCA will pay Tesla through this arrangement, but similar deals have been part of Tesla's financial strategy for years. Tesla earned more than $100 million by selling electric vehicle credits in the United States last year and close to $300 million the prior year.

Bloomberg: China Is on a Big Gold-Buying Spree

China’s on a bullion-buying spree as Asia’s top economy expanded its gold reserves for a fourth straight month, adding to investors’ optimism that central banks from around the world will press on with a drive to build up holdings. The People’s Bank of China raised reserves to 60.62 million ounces in March, in tonnage terms, last month’s inflow was 11.2 tons, following the addition of 9.95 tons in February, 11.8 tons in January and 9.95 tons in December. China, the world’s top gold producer and consumer, is facing signs of a slowing economy. Should China continue to accumulate bullion at the current rate over 2019, it may end the year as the top buyer after Russia, which added 274 tons in 2018. The longer-term outlook is more bullish as central-bank demand will help support prices, with inflows running as high as last year, according to Goldman Sachs, which expects a rally to $1,450 an ounce over 12 months. Governments worldwide added 651.5 tons of bullion in 2018, the second-highest total on record, according to the World Gold Council. Russia has quadrupled its reserves within the span of a decade amid President Vladimir Putin’s quest to break the country’s reliance on the dollar, and data from the central bank show holdings rose 1 million ounces in February, the most since November.

Toyota is Granting Royalty-Free Licenses to Almost 24,000 Patents for Their Electric Vehicle Technology

As a means of encouraging the automotive industry’s shift towards sustainability, Toyota is granting royalty-free licenses on almost 24,000 of their electric and hybrid vehicle technology. With consideration for the amount of time, money, and resources needed to help combat rising emissions through electric transportation, this is just one of the measures that Toyota is taking further promote the widespread use of electrified vehicles. Toyota will provide fee-based technical support to other manufacturers developing and selling electrified vehicles when they use Toyota’s motors, batteries, PCUs, control ECUs, and other vehicle electrification system technologies as part of their powertrain systems. Ultimately, by granting royalty-free patents and providing technical support on its vehicle electrification systems, Toyota aims to help further promote the widespread use of electrified vehicles, and in so doing, help governments, automakers, and society at large accomplish goals related to climate change.

Worst earnings season in 3 years could test 2019′s market rally

The quarterly numbers will be the most contentious in three years, and he’s worried they could spark the next stock market downturn. “Right now expectations are for a negative 3.9% compared to last year. That’s the first negative comp since 2Q of ’16,” DataTrek Nicholas Colas. Analysts have been taking their numbers down dramatically over the course of the quarter so companies can say they “beat expectations”. Even though Wall Street has been taking down their earnings forecasts, most investors aren’t prepared for disappointing numbers. “This market has really been dominated by a rate narrative. Interest rates have come down materially over the course of the year. And, that has buffered stocks against some worries about earnings, ” said Colas. “But once you have to face the actual earnings results, I think the story is going to change.”

Despite his cautious view, Colas sees a few sectors bucking the first quarter negative earnings trend. “Only four sectors are expected to show earnings growth. And, they’re all defensive groups that have been working recently,” Colas said. “Utilities, real estate, health care and industrials should basically be flat. Everything else is going to be negative. ”

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