“GM Falls Victim to Trump’s Trade War as Metal Prices Sink Profit.”
General Motors Co. has become the highest-profile American company to fall victim to Donald Trump’s trade wars, cutting its profit forecast this year on surging prices for steel and aluminum.
Adjusted earnings will drop to about $6 a share, down from a previous projection for as much as $6.50 a share, the Detroit-based company said Wednesday. Raw material costs probably will be a $1 billion headwind this year — roughly double GM’s previous expectation — while the Argentine peso and Brazilian real are likely to drag on results through the remainder of 2018. The carmaker’s shares plunged at the open of regular trading.
The hit to GM’s profit underscores the risk that Donald Trump’s policies pose to automakers. While the U.S. president is moving to weaken fuel economy mandates, his tariffs on steel and aluminum — and potentially on imported cars — is undercutting what was shaping up to be a near-record year for an iconic American company that weeks ago was riding high on a $2.25 billion investment in its autonomous-driving unit.
GM had increased profit three years in a row, a streak punctuated by the record $6.62 a share earned last year. Record income in China, market share gains at home and strong results at its lending arm were positioning the company for more growth until those gains were spoiled by the surge in steel and aluminum prices linked to the U.S. slapping tariffs on the metals in June.
“Our execution continues to be strong,” Chief Financial Officer Chuck Stevens told reporters at GM’s headquarters. “We expect some of these headwinds to continue in the second half. GM shares dropped as much as 7 percent as of 9:35 a.m. in New York, the steepest intraday decline since August 2015. The stock was down 3.7 percent for the year through Tuesday’s close.
“China Said to Quickly Withdraw Approval for New Facebook Venture.”
For Facebook, success in China was brief. Very brief. For several hours, a Chinese government database showed that Facebook had gained approval to open a subsidiary in the eastern province of Zhejiang. Facebook said it would use the company to set up an innovation hub there.
Then the registration disappeared and references to the subsidiary were partially censored in Chinese media. Now the approval has been withdrawn, according to a person familiar with the matter who declined to be named because they were not authorized to speak on the record.
While the about-face does not definitively end Facebook’s chances of establishing the company, it makes success very unlikely, the person said. The decision to take down the approval, the person added, came after a disagreement between officials in Zhejiang and the national internet regulator, the Cyberspace Administration of China, which was angry that it had not been consulted more closely.
The strange incident underscores how much of a challenge it has become for the globe-spanning social network to get into China — even just to open an innovation center.
Its main platform has been blocked in China for almost a decade. Its other services, such as Instagram, were once popular in China, but have since also fallen behind the government’s filters. Google, which has also long had its services blocked in China, has recently made progress there, opening an artificial-intelligence center and releasing a game in the market. Other American tech companies, like LinkedIn, have maintained a presence by censoring content at Beijing’s request.
The kerfuffle also illustrates how complicated China’s bureaucracy can be. Foreign companies seeking to expand here must navigate a vast and decentralized government in which provinces, cities and ministries all vie for influence and power. While one part of the government may be happy to support a foreign company like Facebook, that could ruffle feathers elsewhere. Facebook seems to have fallen victim to such a scenario.
“Liquid water ‘lake’ revealed on Mars.”
Researchers have found evidence of an existing body of liquid water on Mars. What they believe to be a lake sits beneath the Red Planet’s south polar ice cap, and is about 20km across. Previous research found possible signs of intermittent liquid water flowing on the martian surface, but this is the first sign of a persistent body of water on the planet in the present day.
Lake beds like those explored by Nasa’s Curiosity rover show water was present on the surface of Mars in the past. However, the planet’s climate has since cooled due to its thin atmosphere, leaving most of its water locked up in ice.
The discovery was made using Marsis, a radar instrument on board the Mars Express orbiter. «It’s probably not a very large lake,» says Prof Roberto Orosei from the Italian National Institute for Astrophysics, who led the study. Marsis wasn’t able to determine how deep the layer of water might be, but the research team estimate that it is a minimum of one metre. «This really qualifies this as a body of water. A lake, not some kind of meltwater filling some space between rock and ice, as happens in certain glaciers on Earth,» Prof Orosei added.
“U.S. Stocks Mixed on Earnings, Trade; Dollar Drops: Markets Wrap.”
U.S. equities were mixed in early trading as investors digested the latest raft of earnings, and before key trade talks between America and the European Union. The dollar declined against most of its major peers.
The S&P 500 Index was little changed Wednesday morning, while the Dow Jones Industrial Average declined amid lower-than-average volume. Coca-Cola’s results beat forecasts, while Fiat Chrysler’s came in below expectations. General Motors shares plunged after the carmaker cut its profit forecast on surging metals prices. And AT&T hit a six-year low after adding fewer wireless customers than expected.
“We’re down to the fundamental analysis of these on a company-by-company basis, with really only a couple of major themes,” tariffs and China, JP Gravitt, chief executive officer and market strategist for Market Realist, said by phone. “Clearly, the tariffs are hitting people. You can look at the obvious ones — GM, Whirlpool, Boeing — and then the ones that people don’t talk about a whole lot. Across the board, tariffs are hitting people.”
The picture was similar in Europe, and the Stoxx Europe 600 Index retreated. Asian equities advanced earlier, though Shanghai stocks finished lower as positive sentiment spurred by Beijing’s willingness to support the Chinese economy showed signs of fading.
The greenback slipped as traders await developments from the meeting between U.S. President Donald Trump and European Commission chief Jean-Claude Junker in Washington. The yen edged up after the Bank of Japan refrained from scaling back its bond purchases at a regular operation Wednesday. Most European government bonds rose alongside Treasuries ahead of Thursday’s European Central Bank meeting.
Markets are struggling to build on Tuesday’s upbeat session as trade relations between the world’s biggest economic powers return to the fore. The meeting between Trump and the man he once described as a “brutal killer” takes place after the U.S. president sent a Twitter message demanding both sides drop all tariffs, barriers and subsidies, before claiming the Europeans wouldn’t. The talks threaten to overshadow the steady stream of company earnings, with numbers still due from Facebook.
Elsewhere, Turkey’s lira regained some of the previous session’s losses, sustained after the central bank unexpectedly kept rates unchanged. Gauges of emerging-market currencies and shares climbed. Texas crude ticked up on stockpile decreases and gold headed for the biggest advance in three weeks.