Traders work on the floor of the New York Stock Exchange during afternoon trading on October 03, 2024 in New York City.
Michael M. Santiago | Getty Images
This report is from today’s CNBC Daily Open, our international markets newsletter. CNBC Daily Open brings investors up to speed on everything they need to know, no matter where they are. Like what you see? You can subscribe here.
No more jumbo cuts After last week’s expectation-busting jobs report for September, there’s virtually zero chance the U.S. Federal Reserve will reduce interest rates by half a percentage point at its next meeting, strategists told CNBC. Traders agree. A week ago, they bet on a 34.7% chance of another jumbo cut by the Fed; today, it’s 0%, according to the CME FedWatch Tool.
AI demand is still high The artificial intelligence boom “still has some time to go,” Foxconn Chief Executive and Chairman of Foxconn Young Liu told CNBC. Foxconn, which reported better-than-expected earnings for the third quarter, manufactures electronics for technology giants like Apple and Nvidia. Demand for Nvidia’s latest chip Blackwell is “much better than we thought,” said Liu.
Tensions push oil prices higher Oil prices jumped around 3.7% on Monday on worries Israel will attack Iran’s oil production facilities. If Israel hits Kharg Island, it could disrupt the transport of 90% of Iran’s crude exports, said an analyst. Last week was the best for West Texas Intermediate and Brent oil prices in more than one-and-a-half years. They surged 9.1% and 8.4% respectively.
[PRO] Goldman’s getting more bullish The S&P 500 is in the red in October so far. But Goldman Sachs raised its 2024 target for the S&P to 6,000 from 5,600, making it the second-highest forecast on Wall Street, according to the CNBC Market Strategist Survey. Goldman also increased its 12-month S&P target to 6,300 from 6,000. Here’s why the bank is so bullish on stocks.
The bottom line
September’s blockbuster jobs report, released Friday, lifted sentiment and stocks enough that major indexes reversed their losses and ended last week in the green, but just barely.
That halo has now faded away. Markets are back to contending with rising oil prices, inflation possibly reaccelerating, fewer-than-expected rate cuts and potentially even a distant recession.
Oil prices spiked yesterday after having their best week in over a year. And September’s blockbuster jobs report, the futures market is pricing in a 13.7% chance the Fed will not cut rates at all at its November meeting. That’s a drastic change from a week ago when traders thought there was a 34.7% chance of a 50-basis-point cut.
But a recession?
Admittedly, that’s speculation on my part. But it bears pointing out that the yield curve between the 10- and 2-year Treasurys is “getting close to flipping back into danger territory,” as CNBC’s Jeff Cox noted.
Simply put, when the 10-year yield is lower than that of the 2-year, the yield curve is inverted – which has almost always preceded a recession since the mid-1970s. The yield curve inverted in early July 2022 and normalized in early September.
After Monday, however, the gap between the 10- and 2-year yields is now just 3.5 basis points. It’s not inconceivable, then, for investors who take stock in what the yield curve signals to panic a little.
That said, strategists think a recession is a far-fetched idea, considering the health of the U.S. economy.
As David Roche, founder and strategist at Quantum Strategy, put it, “the economy is fine, thank you very much.”
So much so that “the probability of the American economy going into recession, at least in the fourth quarter of this year, and probably in the first quarter of next year, is close to zero,” said Bob Parker, senior advisor at the International Capital Markets Association.
Concrete numbers are driving market movement. But there’s an undercurrent of fear that can perhaps run contrary to what some of those numbers are saying.
– CNBC’s, Jeff Cox, Lisa Kailai Han and Jesse Pound contributed to this story.
Toyota is now a battery supplier? That’s the plan. Honda will use Toyota’s batteries to power up its around 400,000 hybrids sold in the US.
Toyota will supply batteries for Honda hybrids in the US
Toyota’s $14 billion battery plant in North Carolina is ready for business. The facility will begin shipping out batteries next month, and it looks like Toyota already has its first customer.
According to a new Nikkei report, starting in fiscal 2025, Toyota will supply batteries for the roughly 400,000 Honda hybrids sold in the US.
Honda currently uses batteries from China and Japan for vehicles sold in the US, but the company is (like most) preparing for changes under Trump.
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Honda’s electrified vehicles, including EVs and hybrids, accounted for over a quarter of US sales last year. The company sold over 308,500 hybrids and 40,400 electric vehicles in the US in 2024. The batteries will likely be used in the CR-V and other Honda hybrid vehicles.
Honda Prologue Elite (Source: Honda)
Earlier this month, an extra 10% tariff on imports from China took effect. And that’s on top of the 10% imposed in February.
With more expected, including a 25% increase in vehicles imported from Japan, automakers are tightening up their supply chains.
Toyota’s new bZ4X AWD model introduced in Europe (Source: Toyota)
A 25% tariff on Japanese vehicles, up from 2.5% currently, is estimated to cost the six major Japanese automakers about $20 billion in the US.
Tariffs on imports from Mexico and Canada could cost Honda roughly $4.7 billion alone. Teaming up with Toyota to use its batteries for its hybrids is part of Japan’s broader global plans to ween off dependence on China and others for batteries and other emerging tech.
(Source: Toyota)
The new US plant, Toyota Battery Manufacturing North Carolina (TBMC), is over seven million square feet, or about the size of 121 football fields.
As Toyota’s first in-house battery factory outside of Japan, the plant could be a game changer as Trump’s tariffs take effect. Securing Honda as a buyer will already help Toyota cut costs as it ramps up output.
Toyota plans to ramp up electrified vehicle (EV, PHEV, and hybrid) sales in North America from around 40% last year to 80% by 2030.
Electrek’s Take
Trump’s tariffs are already causing havoc, with nearly every automaker warning that they put the US further behind. Overseas automakers are not the only ones feeling the heat, either.
The “Big Three,” GM, Ford, and Jeep maker Stellantis all build vehicles in Canada and Mexico. GM cut output at its plant in Mexico in January, where the electric Chevy Equinox, Blazer, and Honda Prologue are made. Stellantis halted operations at its Brampton Assembly Plant in Canada last month, where it was expected to launch the Jeep Compass EV production. What’s next?
For Toyota, it looks like its $14 billion bet to build batteries in the US is already paying off. Now, we just need it to introduce more EVs.
After unveiling three new electric SUVs in Europe last week, including the updated bZ4X, Toyota hinted more is on the way for the US. Check back soon for updates.
What do you think? Do you want to see more Toyota EVs in the US, like the new C-HR+? Let us know your thoughts in the comments.
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U.S. President Donald Trump looks on as military strikes are launched against Yemen’s Iran-aligned Houthis over the group’s attacks against Red Sea shipping, at an unspecified location in this handout image released March 15, 2025.
White House | Via Reuters
Oil prices rose on Monday after President Donald Trump said the U.S. would hold Iran responsible for any future attack by the Houthis, a militant group in Yemen that has launched missile strikes on commercial shipping in the Red Sea and on Israel.
U.S. crude oil futures rose 40 cents, or 0.6%, to $67.58 per barrel. Global benchmark Brent traded higher by 44 cents, or 0.62%, at $71.02 per barrel.
“Every shot fired by the Houthis will be looked upon, from this point forward, as being a shot fired from the weapons and leadership of IRAN,” Trump said in a post on social media platform Truth Social. “IRAN will be held responsible, and suffer the consequences, and those consequences will be dire!”
Trump’s threat comes after the U.S. launched a new wave of airstrikes against the Houthis over the weekend. Defense Secretary Pete Hegseth said Sunday the U.S. campaign will continue until the militant group halts its attacks.
“This campaign is about freedom of navigation and restoring deterrence,” Hegseth told Fox News’ “Sunday Morning Futures.” “The minute the Houthis say we’ll stop shooting at your ships, we’ll stop shooting at your drones, this campaign will end. But until then, it will be unrelenting.”
The Houthis began targeting commercial shipping traversing the Red Sea in late 2023 in support of Hamas, after the Palestinian militant group launched a surprise attack on southern Israel and Israel responded with a ground and air campaign in Gaza. The Houthis and Hamas are both allied with Iran.
The Houthi missile strikes have forced international shipping companies to reroute container ships that would normally pass through the Red Sea and the Suez Canal.
Trump has reimposed a “maximum pressure” campaign against Iran with the goal of driving down the Islamic Republic’s oil exports. Treasury Secretary Scott Bessent recently said the Trump administration’s goal is to collapse Iran’s economy.
The White House believes Iran is pursuing a nuclear weapon, an allegation the Islamic Republic denies. Trump’s national security advisor, Mike Waltz, said Sunday that “all options are on the table” to ensure Iran does not acquire a nuclear bomb.
“We cannot have a situation that would result in an arms race across the Middle East in terms of nuclear proliferation,” Waltz said on ABC’s “This Week.”
Elon Musk wants to sell Tesla cars to conservatives, but if that’s the strategy, the automaker should start with having stores and service centers in red states and rural areas.
It’s no secret that Elon Musk’s approval ratings with progressives have been plummeting over the last few years and even more so in the previous few months.
Since he has control over Tesla and he is the only official spokesperson since he let go of the PR department in 2020, the CEO is dragging the automaker along for the ride.
This is a problem for Tesla as Democrats are much more likely to buy electric vehicles than Republicans:
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Tesla’s sales have been crumbling over the last few months, and after the stock crashed 15% last Monday, President Trump held a controversial commercial for Tesla with Musk on the steps of the White House on Tuesday.
It could be that people see through Musk and Trump’s quid pro quo and, therefore, don’t value Trump’s “Tessler” endorsement seriously. Still, there’s also a more practical reason why Trump’s fans and conservatives generally don’t buy more Tesla vehicles: the locations of Tesla’s stores and service centers (hat tip to Ben).
Even if some Trump fans were interested in buying a Tesla after the White House commercial last week, they might have been turned off by the idea of having to drive several hours to a store or service center.
Tesla does not have stores or service centers in Alabama, Arkansas, North and South Dakota, Kansas, Montana, Nebraska, or Wyoming.
In some cases, it’s not entirely Tesla’s fault, as some of these states have laws against Tesla’s direct sale models. They force automakers to go through third-party franchise dealerships. This is an abuse of old state laws aimed at protecting dealers against unfair competition from the automakers they represent.
Car dealer lobbies use their influence on state legislatures to use these laws to block Tesla, Rivian, Lucid, and other automakers who never had franchise dealerships from operating their own stores and service centers.
But on top of not having locations in several red states, Tesla also primarily has locations in urban areas, whereas conservatives disproportionally live in rural areas.
The automaker has several dead zones and doesn’t operate locations in smaller cities and towns where there are several Ford, GM, Toyota, and other car dealers:
While it certainly does happen, it’s hard to convince someone to buy a car if they have to drive several hours to pick it up and have it serviced.
Electrek’s Take
In short, it’s not only harder to convince conservatives, on average, to buy an electric vehicle, but Tesla is also not correctly set up to sell and service cars in conservative regions of the US.
Though, I think that’s a small part of the problem.
Cars are not supposed to be political.
Even if Tesla successfully converted a significant percentage of conservatives to electric vehicles, it wouldn’t stop the company’s brand destruction.
Tesla’s reputation amongst Democrats and independents has sharply decreased over the last few years, and especially over the last few months, and that’s thanks to Elon Musk alienating them.
It’s tough to be a successful consumer product company when you have alienated 50% or so of your market.
Tesla is basically becoming the MyPillow of Trump’s second term.
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