Autoworkers put down their tools
Thousands of autoworkers walked off the job on Friday morning at three Midwest plants in an unprecedented strike, as the United Automobile Workers and Detroit’s three big carmakers remained miles apart on contract talks.
The move could be the most costly yet in a “summer of strikes.” Thousands of workers in many sectors have joined picket lines to demand higher wages, job security and clarity on how employers will deal with disruptive technologies like artificial intelligence. For President Biden, who is trying to revive his poll numbers by talking up his handling of the economy to help the working class, the strike presents a political challenge heading into the election next year.
The carmakers are already feeling some pain. Ford and General Motors were down in premarket trading. Shares in Stellantis, which makes Dodge, Chrysler, Jeep, and Ram vehicles, fell at the open in Amsterdam, only to recover their losses.
A lengthy strike could dent the Big Three’s profits, analysts say, at a time when the companies are investing heavily in electric vehicles to catch up to Tesla and Chinese rivals. Mary Barra, G.M.’s chief, warned that meeting all or most of the union’s demands could hobble the company’s prospects. “Make no mistake: If we don’t continue to invest, we will lose ground, and it will happen fast,” she said. “Nobody wins in a strike.”
The unions are using new tactics. As The Times’s Neal Boudette reports, this is the first time the U.A.W. has called a strike at all three big carmakers simultaneously. (Typically it’s just one, as in 2019 against G.M.). Union leaders are also focusing on factories that make the most profitable models, including the Ford Bronco and the Chevrolet Colorado pickups.
They’ve also warned that they could expand the strike at any moment. “It’s going to keep them guessing on what might happen next,” Shawn Fain, the U.A.W.’s president, said. “And it’s going to turbocharge the power of our negotiators.”
The union’s demands include:
A 40 percent pay raise over four years, which would bring wages for many full-time workers to roughly $32 per hour.
Reinstate cost-of-living adjustments, which have become a central plank in contract negotiations amid high inflation.
A four-day workweek, a demand that’s grown in popularity since the pandemic scrambled workplace culture.
The political costs loom large. A 10-day strike could send Michigan into recession, according to a recent economic analysis. If the work stoppage were to last six weeks — the 2019 strike at G.M. lasted 40 — it could push the U.S. economy “close to the edge of a recession,” Mark Zandi, an economist for Moody’s, told The Times.
The strike is a big test for Biden. He often speaks of his pro-union roots, but doesn’t have a deep relationship with Fain, a relative newcomer in D.C. circles.
The White House is doubling down on its messaging that Bidenomics is creating jobs for the working class. On Thursday, Biden took a big swipe at Republicans, calling their vision for America “MAGAnomics” — an agenda that he said benefits the wealthy, not workers.
HERE’S WHAT’S HAPPENING
Disney reportedly explores selling ABC to Nexstar. The media giant has held early talks about a deal to divest the broadcast network, according to Bloomberg, after its C.E.O., Bob Iger, suggested such traditional television assets may not be core to Disney’s business. It isn’t clear whether Disney would ultimately pursue a sale or if it did, whether it would do so with Nexstar, a broadcasting giant.
Ray Dalio floats the idea of reasserting control at Bridgewater Associates. The billionaire financier has raised the possibility of starting a new investment vehicle at the hedge fund, after retiring nearly a year ago, according to The Times. Some Bridgewater executives fear that Dalio might use the new fund as a way to take back control; he denied wanting to come back “to run” Bridgewater.
China removes its defense minister, U.S. officials say. Li Shangfu was taken away for questioning and stripped of his duties, according to news reports that cited American intelligence; Biden administration officials didn’t specify why they believed he was forced out. It’s the latest sign of a power shake-up in Beijing as the country grapples with a sputtering economy, including falling apartment prices and a slowing pace of construction.
The European Central Bank suggests it’s done raising rates. After announcing on Thursday its 10th consecutive increase in borrowing costs, this time by a quarter of a percentage point, the central bank suggested that rates were now high enough to eventually bring down inflation. Investors will look to see whether the Fed will do the same when its rate-setting committee meets next week.
Arm gives the I.P.O. market a shot of confidence
If the fervor for Arm’s market debut is any indication, the business of initial public offerings may be well on the road to recovery. Shares in the chip designer jumped 25 percent on Thursday, giving the SoftBank-owned company a valuation of nearly $68 billion.
That pop — it’s up again in premarket trading on Friday morning — is welcome news to other companies looking to go public after the I.P.O. markets largely shut over the past year, as well as to the bankers who advise on those deals. But whether that momentum can be sustained remains to be seen.
SoftBank is breathing a sigh of relief. After taking an uncharacteristically conservative approach to pricing Arm’s I.P.O., the Japanese tech investor is claiming a much-needed win. Its shares were up as much as 4.6 percent on Friday.
SoftBank, which is retaining a 90 percent stake in Arm, is bullish about its future. “I think the value is gonna have a good upside, really long term,” Masa Son, the investment firm’s founder and C.E.O., told CNBC. “Our intent is to hold as much as possible as long as possible.”
The question is whether Arm can sustain investor enthusiasm. The chip designer was the most popular stock on Fidelity’s retail trading platform on Thursday, closing at a price-to-earnings ratio of 170. That’s far higher than what Nvidia, the biggest name in A.I. chips, trades at — and comes after Nvidia saw its stock price triple this year. (Consider also that Nvidia earned $6.2 billion in its most recent quarter, while Arm earned $524 million in its latest fiscal year.)
Still, Arm executives argue that their company is at the technological vanguard, with its chip designs becoming a bigger part of both A.I. data centers and semiconductors for A.I.-enabled smartphones and other devices.
All eyes are on the next big I.P.O.s. On deck for next week are Instacart, the grocery delivery service that’s now also an advertising business, and Klaviyo, an ad-tech company. The hearty welcome for Arm’s debut may have given those stock offerings a boost: Instacart raised the price range for its I.P.O. by $2 a share, potentially valuing the company at nearly $10 billion.
If those deals also perform well, bankers predict that others will dust off their listing plans. But some investors cautioned against getting too excited: Arm’s offering “was priced within its range, which tells me that investors are price sensitive and boards and investment banks are showing a little bit of humility,” Jordan Stuart, a portfolio manager at the asset manager Federated Hermes, told Reuters.
— The budget surplus Ireland’s government is predicting for this year. The windfall could soar to €16 billion ($17 billion) in 2024 as government coffers overflow with corporate tax revenue, mainly from U.S. tech and pharmaceutical companies that have set up subsidiaries in the low-tax country in recent years.
‘One of the most hated people in the world’
Sam Bankman-Fried, the founder of the collapsed cryptocurrency exchange FTX, was once a prolific voice on Twitter. But after his arrest and detention at his parents’ house in Palo Alto, Calif., last year he wrote a 15,000-word series of tweets that he never posted.
The unsent messages offer self-justifications, criticism of former colleagues and an insight into Bankman-Fried’s state of mind while he was under house arrest, The Times’ David Yaffe-Bellany reports. (Bankman-Fried’s bail was revoked last month and he was sent to jail.) The messages are part of a trove of previously unreported documents that he shared with Tiffany Fong, a social media influencer who has a YouTube channel about the crypto industry.
Bankman-Fried knows he is in a predicament. “I’m broke and wearing an ankle monitor and one of the most hated people in the world,” he wrote at the end of the unsent Twitter thread. “There will probably never be anything I can do to make my lifetime impact net positive.”
He added: “And the truth is that I did what I thought was right.”
Bankman-Fried blames some of his top lieutenants for the fall of FTX. He criticized Caroline Ellison, the former girlfriend he appointed to run Alameda Research, the hedge fund that he founded, as not up to the job. “She continually avoided talking about risk management — dodging my suggestions — until it was too late,” he wrote. “I’m sure that being exes didn’t help.”
Ellison declined to comment to The Times.
The unsent tweets also offer clues about his potential legal defense. This includes his views on Sullivan and Cromwell, the law firm overseeing the FTX bankruptcy that Bankman-Fried had previously hired to do work for his company.
Some of the documents expand on arguments that his lawyers have made in court. Bankman-Fried, for example, has asserted that Sullivan & Cromwell were behind the narrative that he misappropriated user funds. “They’ve played it incredibly well,” he wrote in the unsent tweets. “Were it not destructive to just about everything I care about in life, I would tip my cap to them.”
A spokesman for Sullivan & Cromwell declined to comment to The Times, but prosecutors have called Bankman-Fried’s comments “innuendo.”
THE SPEED READ
The Miami-based investment firm 777 Partners agreed to buy Everton F.C., putting another English soccer club in the hands of North American owners. (Bloomberg)
The founder of Abcam, a British supplier of lab equipment for life science companies, said he planned to vote against the company’s $5.7 billion sale to Danaher. (FT)
Speaker Kevin McCarthy, Republican of California, withdrew a Pentagon spending bill from consideration in the House, making a government shutdown in two weeks more likely. (NYT)
The I.R.S. froze a pandemic-era employer tax benefit that has been a magnet for fraud and has cost the federal government billions of dollars. (NYT)
The Senate Finance Committee approved a bill that would deepen economic ties between the United States and Taiwan, potentially further inflaming tensions with China. (NYT)
Best of the rest
Nearly seven million Americans were under a tropical storm warning on Friday as Hurricane Lee moved north across the Atlantic. (NYT)
The software giant Salesforce plans to hire 3,300 workers, months after laying off 10 percent of its employees. (Bloomberg)
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