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GM earnings: Why one analyst is 'skeptical' of EV profit claims

On Tuesday morning, General Motors (GM) reported its fourth-quarter pretax profit fell by 54% to $1.8 billion. In a letter to shareholders, CEO Mary Barra affirmed the company's position for their future by writing, "In our EV business, we expect our US portfolio will become variable profit positive in the second half of the year based on our current expectations for EV demand and production growth, strong interest in our vehicles, lower commodity prices and other factors." In an exclusive interview with Yahoo Finance Executive Editor Brian Sozzi, Barra reaffirmed that sentiment and discussed GM's performance, focus, and goals for the future. Garrett Nelson, CFRA Research VP & Equity Analyst, joins the Live show to give his insights to GM's proposed goals for the future. When asked about EV goals and outlook on profit margins, Nelson states: "There are no question the margins are strong from the gas-powered vehicles. The internal combustion engine business is strong. But it's just that they're gonna have to pivot in term of their capex and operational plans. They've indicated that they're in the process of making that pivot. They took a very shareholder-friendly action in terms of announcing a $10 billion stock buyback in November and as a result the 2024 EPS guidance, the growth that they're forecasting, is almost entirely a reflection of a reduced share count driving that EPS growth... It's really a question of how they navigate this transition to EVs and it's going to be gradual probably over the next 10 to 15 years, whereas before they were planning on making a more aggressive shift to EVs. The problem is that the EV market is oversaturated right now." For more expert insight and the latest market action, click here to watch this full episode of Yahoo Finance Live.Editor's note: This article was written by Nicholas Jacobino


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What To Watch: Federal Reserve Meeting

A busy January ends with a Fed decision high on expectations, despite zero chance of any actual move on rates. The central bank is likely to hold its benchmark rate steady at a 22-year high of 5.25 percent to 5.5 percent for the fourth straight meeting. Here’s what you need to know: #1 The Economic Backdrop: The Fed’s first meeting of 2024 comes at a time of economic expansion. It may be backwards looking, but 3.3 percent GDP growth in the fourth quarter has us asking yet again: what recession? Then there’s inflation, we know it’s finally heading back down toward that much sought after 2 percent level. Sounds like the perfect recipe for cuts - but is it? #2 March is the Word: Investors have put the second meeting of 2024 on the table for the first rate cut, but will the Fed nod in that direction? The Cleveland Fed’s Loretta Mester says that’s "probably" too early. Fed Governor Christopher Waller seems to agree, this month effectively saying ‘fools rush in’ - and cuts should be implemented ‘methodically and carefully.’ Then there’s Austan Goolsbee of the Chicago Fed; he needs to see more data… #3 The Balance Sheet: It may not be the most exciting part of the Fed’s activities, but it does have potentially serious implications for investors. At the start of the pandemic the Fed started boosting its balance sheet - in part through buying lots of treasuries. That’s known as Quantitative Easing. The reversal of that process - known as QT or quantitative tightening started in 2022. Now the future of that policy is increasingly becoming a talking point for investors. We’ll be across all the action in a critical meeting for the Fed right here on Yahoo Finance. Don’t miss it.


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