Breakfast News: Japan Seeks Tesla Deal

Breakfast News: Japan Seeks Tesla Deal

February 21, 2025

Imaage created by JesterAI.

1. Nissan Tie-Up With Tesla Suggested

Nissan (NSANY 4.50%) stock jumped over 10% following a Financial Times report that a plan has been drawn up for Tesla (TSLA 2.46%) to invest in the car maker. The plan comes from a high-level Japanese group, including a former Tesla board member plus a previous Prime Minister of the country. Tesla hasn't previously invested in car companies, but Nissan has large U.S. plants that would enable a huge boost in production for Tesla.

• 9,000 job cuts and a 50% CEO pay decrease: The plan comes after Nissan walked away from the merger proposal with Honda (HMC 0.87%). Nissan launched an emergency turnaround plan late last year, but is ripe for a merger or acquisition as it tries to recover from posting a quarterly loss.
• Boosting domestic production to offset tariff impact: Tesla could benefit from tapping into Nissan's Tennessee and Mississippi plants, which have an annual production capacity of a million vehicles. Tesla hasn't commented on the speculation, with the recent pivot toward autonomous driving and robotics potentially decreasing the interest in this deal.

2. Block and Nu Holdings Stumble

Both Block (XYZ +3.28%) and Nu Holdings (NU 2.83%) are down over 6% ahead of the market open. The two Rule Breakers recs posted disappointing results after yesterday's closing bell, but investors need to be careful about making rash decisions based purely on the initial market move.

• 21% operating profit margins but modest revenue gains: Despite sales growing 4.5% versus the same period last year, the increase was smaller than expected, with some investor concern that increased competition is eating away at market share. Analysts see lending as a way to diversify revenue away from traditional point-of-sale system revenue.
• Lower activity but international growth: Nu Holdings saw purchase volume fall, raising concerns around the level of transaction activity on Nu's platform. However, highlights included a 91% customer increase in Mexico, alongside a 615% jump in lending in Brazil.

3. Why Gold and Stocks are Rallying Together

Gold is heading for an eighth week of consecutive gains, closing in on $3,000 per oz. The rise comes as the stock market has also rallied, which typically doesn't happen together, leaving investors to try and figure out what's going on.

• Gold up 44% versus the S&P 500's 20% over past year: One explanation is that investors believe the U.S. economy is performing well, fueling a rally across the board, from stocks to commodities. Others point to the fact countries are diversifying their sovereign holdings away from the U.S. dollar and into gold.
• Valuation and geopolitical risk: Investors should note the potential warning sign the rising gold price offers. It could signal people are buying the precious metal as a safe haven, in part concerned that U.S. stocks are becoming overvalued.

4. Energy Stocks Keep Pumping

Energy continues to be one of the best-performing sectors in the market this year, with the S&P 500 Energy ETF up over 7%, almost double the overall index. The Trump administration's "drill, baby, drill" and a cold weather snap have contributed to the rally.

• Gas pipeline stocks leading the charge: Initiatives from the President's early days in office include plans to deregulate the industry, including accelerating permit access for natural gas and liquid natural gas (LNG). Plains All America Pipeline (PAA +0.78%) and Baker Hughes (BKR 0.50%) have risen over 10% this year.
• "In the oil and gas space right now it's all about capital discipline, it's about returning cash to shareholders": Rob Thummel, senior portfolio manager at Tortoise, noted why the sector could outperform going forward. Some have been snapping up mature oil and gas stocks based on promises of increased stock buybacks and dividends.

5. Foolish Fun

If you have a binary choice in front of you, would you prefer to invest for the long term in drugmakers targeting diabetes and obesity, OR consumer discretionary stocks producing cheap, convenient comfort food? Debate with friends and family, or become a member to hear what your fellow Fools are saying.