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FOMC meeting concludes and investors gain clarity

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The most important economic event of the month concluded today. The FOMC meeting concluded today, and the Federal Reserve released a statement along with a press conference from the Fed Chairman Jerome Powell. The clarity in regards to the details of the Fed’s revamped monetary policy that market participants had waited for was answered.

In his opening statement made at the press conference immediately following the conclusion of today’s meeting Chairman Powell said, “Good afternoon, At the Federal Reserve, we are strongly committed to achieving the monetary policy goals that Congress has given us—maximum employment and price stability. Since the beginning of the pandemic, we have taken forceful actions to provide some relief and stability, to ensure that the recovery will be as strong as possible, and to limit lasting damage to the economy. Today, my colleagues on the Federal Open Market Committee and I made some important changes to our policy statement, including an update to our guidance for the likely path of our policy interest rate.”

The statement released by the Federal Reserve began by saying, “The Federal Reserve is committed to using its full range of tools to support the U.S. economy in this challenging time, thereby promoting its maximum employment and price stability goals.

The COVID-19 pandemic is causing tremendous human and economic hardship across the United States and around the world. Economic activity and employment have picked up in recent months but remain well below their levels at the beginning of the year. Weaker demand and significantly lower oil prices are holding down consumer price inflation. Overall financial conditions have improved in recent months, in part reflecting policy measures to support the economy and the flow of credit to U.S. households and businesses.”

While the Federal Reserve has gone to great lengths to convey that they are in this for the long run, and will do whatever it takes, it was the release of the September “dot plot” which gave market participants the greatest  amount of clarity. As you can see from the chart above voting members of the Federal Reserve unanimously agreed to keep interest rates near zero for the remainder of 2020, and 2021.

It indicated that all voting members with the exception of one voted to keep interest rates where they are during the entirety of 2022. With the exception of four voting members the remaining Federal Reserve members voted to maintain interest rates where they are in 2023. In other words, many members of the Federal Reserve do not anticipate a raise in interest rates until the end of 2023.

In essence the Federal Reserve made it crystal clear that it will keep its revised monetary policy of interest rates near zero and expects this action will continue until two events occur. First that the labor market conditions return to “maximum employment,” and secondly raise rates only after inflation has risen to 2% and “it is on track to moderately exceed 2% for some time.”

The predictions by analysts were spot on. Bloomberg polled 31 economists in which they came to the following conclusion; “The Federal Reserve may hold interest rates near zero for three or more years, and its balance sheet will soar above $10 trillion as policymakers seek to revive the U.S. economy from recession.”

The uncertainty as to what the actual timeline was is no longer uncertain. The Federal Reserve continues its commitment to do whatever it takes to revitalize the economy and move towards maximum employment and it will be a long road to recovery.

For those who would like more information on our service simply use this link.

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Another Billion-Dollar Oil Merger Is On The Horizon – OilPrice.com

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Can The UK Auto Industry Bounce Back? | OilPrice.com

Ag Metal Miner

MetalMiner is the largest metals-related media site in the US according to third party ranking sites. With a preemptive global perspective on the issues, trends,…

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We may be coming out of the first pandemic lockdown and business does, broadly, appear to be picking up; however, but some sections of manufacturing, including U.K. car manufacturing, are still suffering badly.

U.K. car industry, supply chain face challenges

An article in the Financial Times starkly outlines the continued pain the U.K. car industry is experiencing and, by extension its extended supply chain.

U.K. car manufacturing fell 44% last month compared with a year earlier. Domestic orders and exports remain severely depressed. Last month’s performance marked the sector’s second-worst since car plants restarted after lockdown.

The Financial Times went on to advise that just 51,039 cars rolled off British production lines. The total fell from 92,153 in August 2019. Meanwhile, August output for U.K. buyers fell 58% to just 7,795 vehicles. The number of cars made for export fell 41% to 73,443 cars.

To be fair, several plants working during summer 2019 boosted August 2019 performance. Summer output followed a three-week closedown in the spring to prepare for the expected Brexit in 2019, which in the end did not transpire.

So, looking at the first half of each year gives a fairer comparison. Yet, even in that view, the decline remains dramatic.

Between January and August, the U.K. produced 40.2% fewer cars than in the same months a year earlier. The period included several weeks of complete stoppages during the first lockdown in March and April.

Year-to-date production is now down by 348,821 units worth more than £9.5 billion to U.K. carmakers, according to the Society of Motor Manufacturers and Traders (SMMT). Furthermore, projections suggest U.K. car manufacturers are now on track to produce just below 885,000 cars this year – down 34% on 2019.

Job losses in the sector

The SMMT reported at least 13,500 jobs have been cut across the U.K. automotive sector this year. The body warned up to one in six positions may be at risk in the future.

Manufacturers are hoping the government’s latest job retention scheme will help employers keep skilled workers. Skilled workers will be needed if, or when, demand comes back, but many of them are currently facing redundancy.

Rising coronavirus cases, tightening restrictions, and Brexit

Yet with virus cases increasing in the U.K. and containment measures ramping up, the SMMT is if anything more pessimistic now than it was in the early summer.

Related: The World’s Most Expensive Crudes Get Expensive Again

The SMMT says business restrictions look set to make the industry’s attempts to restart even more challenging, with the prospect of Britain’s exit from the European Union also now just 100 days away.

The industry is not in a good state to handle the country’s imminent exit from Europe on Jan. 1. In addition, the automotive industry has been at the forefront of demanding a free trade deal between the U.K. and the E.U., saying last week that “no deal” would cost the pan-European automotive industry some £100 billion in lost trade over the next five years.

Europe, though, is proving very unwilling to retain the open-door, free-trade environment for electric vehicles – which it sees as the future – as it currently does for internal combustion engine (ICE) vehicles.

The future of U.K.-E.U. auto trade

The Financial Times recently reported E.U. diplomats said the European Commission is wary of agreeing to U.K. car manufacturers being allowed to source a large number of components from other countries while still exporting electric vehicles tariff-free to the E.U.

Four out of five cars made in the U.K. are exported. Of those exports, more than half goes to the E.U. British car plants owned by Nissan, Toyota and PSA are all reliant on European sales for more than half of their business.

Last year, Nissan sold more than 30,000 U.K.-built Leaf electric cars to Europe. Toyota exported close to 120,000 hybrid models across the channel. Europe is keen to keep the U.K. as a market for components and finished vehicles but not so keen on allowing these plants to sell into the E.U. tariff-free after Brexit.

Coming on top of already challenging times this year, some foreign owners of U.K. car plants may begin to wonder whether continuing to invest in the U.K. is as desirable as it once was.

By AG Metal Miner 

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Some Ontario casinos open as province reports COVID-19 surge – CP24 Toronto's Breaking News

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TORONTO – Several Ontario casinos reopened on Monday as the province reported a surge in new cases of COVID-19.

Great Canadian Gaming Corporation says it reopened 11 of its properties, including Casino Woodbine in Toronto and Casino Ajax.

Ontario allowed casinos to reopen as parts of the province moved into Stage Three of their pandemic response this summer.

The province has, however, prohibited table games at the establishments.

Great Canadian Gaming said it will have a limit of 50 guests indoors at its casinos and is focused on reopening safely.

Ontario reported 700 new cases of COVID-19 on Monday, the highest daily increase recorded since the start of the pandemic.

This report by The Canadian Press was first published Sept. 28, 2020.

This story was produced with the financial assistance of the Facebook and Canadian Press News Fellowship.

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Ford sweetens deal for autoworkers in Canada, Unifor ratifies contract – Detroit Free Press

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Phoebe Wall Howard
 
| Detroit Free Press

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SUVs and electric power star at the Los Angeles auto show

High-profile debuts include Ford’s electric Mustang SUV, a sub-$20,000 Chevy SUV, Land Rover Defender and Bollinger Motors electric SUV and pickup

Ford Motor Co. reached a three-year deal with Unifor National that includes wage increases, bonuses and other benefits for its factory workers in Canada plus a massive financial investment in battery electric vehicles, the company announced Monday.

The union voted 81% in favor of the collective bargaining contract, which includes $1.5 billion (U.S.) in investments to bring battery electric vehicle production to Oakville and a new engine derivative to Windsor, Unifor confirmed.

“This is the single biggest investment in the Canadian auto industry in years,” said Jerry Dias, Unifor National president. “The vote … shows Unifor members have a clear vision of a strong and prosperous Canadian auto sector.”

Highlights include $1.4 billion (U.S.) to retool and build new battery electric vehicles in Oakville, “including a crossover utility vehicle, and $148 million for Windsor powertrain facilities,” Unifor said. “Ford has committed to source new 6.X L engines to the Windsor Engine Plant and sole source 5.0L engine assembly and current component machining to the Essex Engine plant, along with any derivatives,” Unifor said.

Engines used for the Ford Mustang and Ford F-Series are built in Canada currently.

The union spotlighted these elements:

  • A 5% wage increase over the life of the agreement, along with a 4% lump sum.
  • A productivity and quality bonus of $5,418 .
  • Inflation protection bonuses and major changes to the New Hire Program, including an eight-year wage grid, and reinstatement of afternoon and midnight shift premiums.
  • A 20% wage differential (re-instated) for skilled trades workers.
  • Paid domestic violence leave.
  • Racial justice advocacy.

“… It’s safe to say we hit a home run on both fronts,” said John D’Agnolo, chair of the Unifor Master Bargaining Committee, in prepared remarks. “… Members … showed unwavering solidarity through some very intense weeks of bargaining.”

Ford goes all in

Ford issued the news first, touting the agreement as a victory for all involved.

“Based on the collective agreement ratified by employees today, Ford is committing to transform its Oakville Assembly Complex from an internal combustion engine (ICE) site to also become a BEV manufacturing facility, starting in 2024, as well as introducing a new engine program at its Windsor operations,” Ford said in a statement.

Ford said increased efficiency measures now include competitive alternative work schedules to maximize production flexibility.

Ford of Canada’s provided additional detail in the contract for its hourly employees:

  • 2.5% wage increase twice over the life of the agreement
  • $5,418 (U.S.) ratification bonus for full-time permanent employees and  $374 (U.S.) for temporary employees
  • Reduced grow-in period for new hires from 11 years to eight years

“Working collaboratively with Unifor, and as discussions continue with both the federal and provincial governments, this agreement is an important step toward building a stronger future for our employees, our customers and our communities,” Dean Stoneley, president and CEO, Ford of Canada, said in prepared remarks.

“By introducing battery electric vehicle production at Oakville Assembly Complex, we are cementing our Canadian operations as a leader in advanced automotive manufacturing,” he said. 

The pattern collective bargaining agreement will be used as a baseline now for discussion with Fiat Chrysler Automobiles and then General Motors. The agreements cover about 17,000 Unifor members at the Detroit Three, although the union actually represents more than 19,000 workers at the companies — 9,000 at Fiat Chrysler Automobiles, 6,300 at Ford and 4,100 at GM.

The Ford agreement, which had tentative approval on Sept. 22, involves investment of both the automaker and Canadian government officials. The package, mostly paid by Ford, is meant to transform the auto industry in Canada into a major player in electrification, Dias said previously.

Details of the deal have not been revealed by the company or elected officials.

Auto industry forecasters had indicated Ford might close Oakville, where it builds the Ford Edge SUV. Production of the Edge and Lincoln Nautilus are scheduled into 2023.

The investment plan involves building five models of electric vehicles, making Canada a player in the rapidly growing electric vehicle market for the first time. Retooling will start in 2024 with the first vehicle rolling off the assembly line in 2025, Dias said.

More: Ford reaches ‘home run’ labor deal with big investment from Canadian government

More: Autoworkers refuse to fight over scraps during wage talks in Canada, union leader warns

More: Ford’s secret weapon has a passion for batteries and came from NASA

“We generally have a good bargaining relationship with Ford,” Dias told the Free Press after the ratification. “We ended up with major investment from Ford in 2016, too. Ford has a history of finding solutions.”

He noted that Ford is the top-selling brand in Canada.

“This deal with Ford is incredibly important,” Dias said. “When we went into bargaining with Ford, we had no product beyond 2024.”

While global demand for electric vehicles now is in the single digits, he noted, California and other markets are shaping public policy that directly impact the future of internal combustion engines. 

Looking ahead, Dias has pointed out Fiat Chrysler’s Windsor Assembly plant needs additional product. The company cut its third shift at Windsor as the company ended Dodge Grand Caravan production in August.

The focus, he said, “is definitely going to be job security. We lost the entire third shift in Windsor Assembly — 1,500 people laid off. We need one or two vehicles in Windsor to get back that shift. It’s really going to be about stabilizing the footprint over the next three years.”

Targeting Ford for the pattern was the right move, Dias said. “The fact that the economic pattern is already established will save us from fighting with the other two” automakers.

Contact Phoebe Wall Howard at 313-222-6512 or phoward@freepress.com. Follow her on Twitter @phoebesaid. Read more on Ford and sign up for our autos newsletter.

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