almost 2 years ago • 3 mins
Japan’s Sony and Honda announced on Friday that they’re partnering up to make electric vehicles (EVs) – and not a moment too soon.
What does this mean?
Sony announced plans to push into the EV space back in January, and now it’s found the perfect partner to work with: Honda, the first Japanese carmaker to pledge to phase out traditional cars completely by 2040. The pair have a lot to teach each other: Honda has decades of experience in making and selling vehicles, while Sony’s a global leader in producing entertainment systems and sensors for self-driving cars. Better yet, the PlayStation-maker has been collaborating with TSMC to build a new chipmaking plant in Japan, which suggests sourcing parts for the chip-heavy machines won’t be an issue.
Why should I care?
The bigger picture: Better late than never.
You won’t be able to get your hands on one of these electric masterpieces for a while, mind you: they won’t be hitting car lots till 2025. Honda and Sony will no doubt be itching to join the party by then, given that this year alone could see a rush for EVs as prices at the gas pump continue to rise. The oil price hit an eight-year high of $111 last week, after all, and JPMorgan reckons it could hit $185 a barrel by the end of the year if Russian supply disruptions continue.
Zooming out: Sustainable debt.
EVs aren’t cheap to develop, which might be why Honda announced on Friday that it sold $2.8 billion worth of green bonds – those used to fund environmental initiatives – to help finance the push. It’s not the only one: Ford issued a record $2.5 billion worth of green bonds in November, in hopes of funding its own electrically powered expansion. In fact, sales of green bonds hit a record $513 billion last year, and analysts are expecting that figure to hit as much as $1 trillion in 2022.
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Data out on Friday showed that the US added way more jobs than expected last month, and aren’t you going to hear about it…
What does this mean?
The US was past the worst of Omicron last month, which helped companies really get down to business: the US added 678,000 jobs, compared to the 440,000 economists were expecting. That’s the biggest monthly uptick since July, and means the total number of Americans in employment is now around 1 million short of where it was before Covid. The leisure and hospitality sector – which was hit hardest by pandemic restrictions – kept up its strong showing from the month before with 179,000 new starters, but sectors like professional services, healthcare and construction all posted tidy numbers too.
Why should I care?
For markets: Once the Fed pops, it won’t stop.
The Federal Reserve (the Fed) said last week that it’s still planning to hike interest rates this month, and Friday’s data suggests the economy’s strong enough for it to do just that. And since the central bank said it’s expecting the Russian invasion to push prices even higher, it didn’t rule out even tougher measures: the Fed said it might hike rates a number of times this year, and potentially by more than the normal 0.25%. That might be why traders are now betting that rates will be around 1.5% higher by the end of 2022.
The bigger picture: Europe does a U-turn.
The European Central Bank (ECB) isn’t on such sure footing: the region’s economic growth isn’t just at risk from rising inflation, but also from a war that’s hampering trade and investment. The ECB hadn’t intended to raise interest rates anytime soon like the Fed did, but it had intended to roll back its bond-buying program. Now, though, some economists think the ECB might put that plan on hold.
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