By on June 27, 2016

FCA

After Britain referendumed themselves right out of the European Union last week, there was plenty of talk about how the country’s automakers would fare in the wake of the Brexit.

But what about an Italian-American automaker? Today, investment bank Goldman Sachs removed Fiat Chrysler Automobiles from their “conviction” buy list, citing uncertainty over the fate of the EU, Bloomberg reports.

The list names stocks that the bank’s investment braintrust expect to outperform. When a company gets on the list, investors can’t be far behind, hoping for a larger-than-expected return on their investment.

Goldman Sachs said it removed FCA from the list due to fear that Britain’s exit from the EU would lower economic growth throughout the EU, hampering vehicle sales. This, despite the fact that FCA claimed the Brexit would have little impact on its operations, despite having relocated its tax residency to the UK in 2014.

Ten days ago, FCA CEO Sergio Marchionne downplayed worry about the looming referendum in a media scrum, saying a potential “Leave” vote was “not that disastrous” for his company.

This morning, Marchionne spoke about the issue at a Fiat launch in Italy. “We don’t like the (outcome of) the vote, but a clear idea was expressed about the EU and so this should be revised,” he told an Italian wire service, adding that the vote should serve as a wake-up call to the EU to pay more attention to individual countries’ appeals for reform.

Marchionne essentially called for everyone to keep calm and carry on.

Despite being removed from the list, it wasn’t all bad news for Marchionne today. Goldman Sachs kept a “buy” rating on FCA’s stock.

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41 Comments on “Bad News for Sergio: Brexit Catapults Fiat Chrysler Off Key Stock List...”


  • avatar

    The storm always passes.

  • avatar
    CoreyDL

    Awful lot of market panic for a nonbinding vote, which the people of the UK are already questioning.

    Choice quotes like, “I don’t know what the EU is…” and “I didn’t think my vote mattered, that’s why I did it.” seem prevalent.

    • 0 avatar
      highdesertcat

      I believe that England will be better off not being a part of the EU. England and Germany were keeping the EU alive and financially carrying Greece, Portugal, Italy, Spain, etc.

      In the US, the wealthier states keep the poorer states (like MS and NM) alive and funded. Ditto in the EU. Now Germany has to carry the financial burden by themselves.

      If I had been a citizen of the commonwealth, I would have voted to leave. Imagine Canadians or Mexicans telling the US government what it can and cannot do? NFW!

      Trade is what trade is. If people want your product, they’ll find a way to buy it. Remember when Russia destroyed all the imported European goods during their intransigence? Russians found all sorts of novel ways to get European goods they wanted.

      But honestly, I did not see this coming. I thought the majority would vote to remain. I was surprised.

      Yet, ignorance of the issue is no excuse for Bregret.

      • 0 avatar
        FreedMike

        “If I had been a citizen of the commonwealth, I would have voted to leave. Imagine Canadians or Mexicans telling the US government what it can and cannot do? NFW!”

        Right, but what you’re missing is that there is no North American equivalent to the EU for us to reject, and never has been. We have trade agreements with Mexico and Canada, but there is no overarching North American government, and we were never part of one because it was never created. England joined the European government system willingly.

        So, yeah, I get the populist, sovereign reaction to this, but honestly…any American perspective on this has to be somewhat skewed by the fact that we were never part of anything like this to begin with. England joined of its own free will.

        • 0 avatar
          highdesertcat

          We may see The Republic of Texas try to secede from the United States. It’s been tried before. It could happen again. And I think it SHOULD happen!

          I also think that The Republic of California should secede from the United States. Even more so than Texas!

          But as to England joining the EU of its own free will, IIRC, there was much debate before that happened, and the compromise was that England retained the Sterling as its national currency.

          Back then, the joiners won. This time the leavers won.

          To me it makes no difference. I do not have a dog nor a pony in this show.

          My perspective is that I would not have joined in the first place. I’m not a joiner unless there’s clearly something good in it for me.

          There was NOTHING good in joining the EU for Britain. The money they sent to Brussels every year could have been used for their own purposes at home.

          It’s one thing to be a United States of America.

          There is no such thing as a United States of Europe. Too diverse. No commonality.

          Not until Napoleon Bonaparte was there any kind of unity or kinship in what’s now called “Europe.”

          • 0 avatar
            VoGo

            “Nothing good in joining the EU”? I’m not so sure. The ability to pursue job opportunities and mates across a continent? That seems pretty good. Free trade? Bonus. Oh, prevention of catastrophic world war? That sounds pretty good.

            So maybe there were some benefits for the UK to be in the EU, just not ones that matter to you.

          • 0 avatar
            87 Morgan

            @Highdesertcat

            I love the Texas secede talk. I believe that many down that way fail to realize the impact of all the federal dollars pumped into their economy via the large military and other various gubment contractors.

            Every now and then you have to remind them that those jobs and teh do,Lars that follow leave if they leave…

          • 0 avatar
            highdesertcat

            “So maybe there were some benefits for the UK to be in the EU, just not ones that matter to you.”

            In case you missed it, the majority of Brits who chose to vote, elected to leave the EU.

            Nothing of what happens there matters to me. I have no vested interest in the EU.

          • 0 avatar
            highdesertcat

            87 Morgan, I live in New Mexico and being a retired military man, I understand the importance of the Federal dollars that come in to Texas through the various Agencies and Departments.

            In fact, my youngest son lives and works in SW Texas and my daughter lives and works in El Paso, TX.

            Like many other Texans, they do not agree with policies that originate in DC or on Wall Street and that force Texans to adopt a “foreign” way of thinking that’s often in direct conflict with Texas tradition and values. Gun ownership is just one example.

            As far as the dollars leaving if Texas secedes? There’s no need for that. After WWII the US maintained a global network of military and Federal agencies in foreign countries. And still does to some extent to this day.

            The Feds can do the same if Texas secedes. Keep all Federal agencies in place.

            But will Texas actually secede if put to a vote? I doubt it.

            It would be too involved and might cause mass-migration out of TX, starting with the illegal aliens working for scratch now.

            That said, I believe both Texas and California should be two sovereign nation-states. They do not mesh well with the other states. In fact, both carry the rest of the US with the help of NY and FL.

            Both CA and TX are big, wealthy, hard-working, productive states and both pump up the rest of the US with the massive amount of money they sent to DC to be mismanaged. NY and FL do the same.

          • 0 avatar
            mason

            “Both CA and TX are big, wealthy, hard-working, productive states and both pump up the rest of the US with the massive amount of money they sent to DC to be mismanaged. NY and FL do the same.”

            California is routinely in the top ten in debt in the US.

            Somebody gotta take care of all them illegals.

          • 0 avatar
            highdesertcat

            mason, I agree on CA debt being enormous but that debt is outweighed by future income potential because of the state’s consistent productivity and output.

            We’ve got a guy in the US right now running for POTUS who manages enormous debt to his advantage and has created a financial empire based on debt. It takes money to make money. It doesn’t matter whose money it is.

            CA does the same debt-management each year, robbing Peter to pay Paul, kiting checks, all based on deferred income.

            In fact, even nations do that, if they can’t print more of their own money like the US can.

            Some CA-state contractors have told me that CA is often as much as 120 days in arrears in paying them. But I haven’t checked lately.

          • 0 avatar
            mason

            I don’t know about the state level but getting paid quarterly is pretty much the norm in the industrial sector. My previous job I was a foreman for an industrial contractor and part of my job was looking at a potential project and submitting time and material estimates to my supervisor. I got an inside look at what it took to keep the doors open day to day while completing 6 (and on occasion 7) figure jobs. The dollar signs really add up quick when you dont see a penny for 4 months. Some days it made my head spin, and I didnt even have any skin in the game so to speak. It’s not like we were a big outfit either, our average crew consisted of 6-8 welders/fitters, about as many pipefitters, 2 painters/sandblasters, and a handful of laborers depending on what we had going on.

          • 0 avatar
            highdesertcat

            mason, I know exactly what you mean. But that is the name of the game.

            Between 1985 and 2015 I helped some fellow contractors bid on Federal contracts (out of the CBD) and wrote the successful bid on quite a number of them.

            The Feds have a rule in place that requires contractors to be paid not later than 30 days after billing, if all the supporting paperwork is in order. And if you follow the billing instructions to the letter, the documents are always in order.

            But states don’t have that rule, and several of my friends were financially dinged because of the delay, delay, delay game that states played when they had no more money to honor contracts.

            Some contractors have a revolving line of credit that they draw on to offset these lapses of income (that they pay interest on any outstanding balances) and some contractors were self-funded.

            In the real estate maintenance, repair, remodel, refurbishing work I did, my wife’s family business self-funded each project.

            This meant that if my crews and I were doing an extensive and costly repair/upgrade remodel to fit code, we would stop work if the money ran out (as it often did).

      • 0 avatar
        CoreyDL

        “Imagine Canadians or Mexicans telling the US government what it can and cannot do?”

        We let China do it instead. ;)

        • 0 avatar
          highdesertcat

          You can blame the administration that allowed this to devolve, but you also have to keep in mind that trade with Mexico, China and Asia improved the living standards of millions of Americans because of those cheaply made goods.

          The Wal-Mart lifestyle sure raised my living standard.

          So I think that certain pacts and agreements, like NAFTA and TPP help more Americans than hurt Americans.

          And majority still rules in America, so the Majority should have it their way.

          And their way is open and free trade stacked against the US.

        • 0 avatar
          Lou_BC

          FTA’s in some cases allow outside party’s to have a say. The USA does try to tell Mexico and Canada what to do. It can go the other way as well.

      • 0 avatar
        28-Cars-Later

        Greenspan happened to comment Charles DeGaulle and Konrad Adenauer were planning a political union from the start. Since the Treaty of Rome dates to 1957 and Adenauer was only West German Chancellor to 1963 (and subsequently dead by 1967) that is how long the plan was in the making. A common market which became a trade union and is intended to become a superstate of unelected leaders evidently of at least partial French and German design. Where have we heard of something like this before?

        Oh but sheeet let’s watch the Battle of the Bulge again and pretend “we” still won.

        • 0 avatar
          highdesertcat

          “Konrad Adenauer”

          They sure named a lot of streets, boulevards and places after him in Germany.

          Last year when I was there I typed in Adenauer into my Garmin for directions and up popped all these different local possibilities, no matter where I was at in Germany.

          With directional arrows and distances to match, for each.

        • 0 avatar
          VoGo

          Given the extraordinary damage France and Germany had experienced at each other’s hands in the previous 50 years, I think I can understand why they might seek an alliance to prevent future world war.

          • 0 avatar
            28-Cars-Later

            @VoGo

            A trade union keeping good flowing from one nation to another is just as effective and less onerous. Hell a loose confederation similar to the Swiss may even work, but a permanent and monolithic “United States of Europe” with nuclear weapons and joint currency is an act of lunacy unless you wipe out most of the existing populace and culture who desire to remain sovereign.

          • 0 avatar
            VoGo

            Hang on. I’m not advocating for the “United States of Europe” (not that my opinion matters).

            Europeans will make their own decisions, and don’t need my advice. Since 1945, I think they’ve done a pretty good job. With the exception of the breakup of Yugoslavia, the continent has in general moved towards democratic, peaceful nations with free enterprise economies. Standards of living are high; violence and disease low.

          • 0 avatar
            28-Cars-Later

            That’s what a political union of European states could be called, and according to Greenspan (who may be wrong) this is what they have been working toward since the late 1950s.

            http://www.cnbc.com/2016/06/24/alan-greenspan-says-british-break-from-eu-is-just-the-tip-of-the-iceberg.html

          • 0 avatar
            VoGo

            I haven’t given Greenspan much thought for the last 2 decades since he retired from the Fed. That’s not about to change.

            I also don’t lose much sleep over the supposed intentions of 2 leaders from foreign countries who have been dead for over 30 years.

          • 0 avatar
            28-Cars-Later

            Greenspan didn’t retire until Jan 2006, which isn’t two decades ago. Much like Kissinger, who is still very active in international politics, I highly doubt Greenspan is truly “retired”. He certainly knows far more about what is going on at the highest levels than any of us, thus when he does speak it makes sense to listen (even if he is a mother******).

        • 0 avatar
          RobertRyan

          WW1 and WW2 have been great motivators for the formation of the EU.
          Eventually England will comeback,I think pressure from Ireland and especially Scotland, will force them and the Welsh to reconsider

          • 0 avatar
            28-Cars-Later

            Boris penned this fourteen years ago.

            http://www.telegraph.co.uk/comment/personal-view/3578741/Whats-Hitler-got-to-do-with-the-euro-Everything.html

      • 0 avatar
        RobertRyan

        HDC,
        There have been quite a few winners out of the EU formation, unlikely places like Ireland and Lithuania. Overall the EU,is the world’s largest economy. UK,has never really joined the Club, having it’s own Currency and border checks.
        Leaving has caused huge headaches for Scotland and Northern Ireland, who want to stay

        • 0 avatar
          highdesertcat

          RobertRyan, In the case of Ireland, restructuring their tax policy is what acted like a magnet for foreign multinationals to nest in Ireland. Brought in tons of money!

          Lithuania was a basket case under USSR oppression and has made marvelous strides in “Westernizing”, much to the chagrin of Vlad.

          So, yes, there have been a number of winners out of the EU formation. I did not imply it was all bad, all the time, for everyone. Just not good for the UK.

          As you may already know, my mom was German (born in Germany) and my wife is German (born in NM), so I have a lot of natural German relatives living in Germany today.

          Each one of them has changed their tune on the EU (and immigration, I might add).

          At first, when the Euro was introduced, it seemed like a good thing – a common currency.

          Whooopppeeee! No exchanging of money at the borders.

          Ah, but then reality kicked in. What costs one Euro in Holland, may cost two Euros in Germany. Hmm, they said. It was cheaper before the Euro was accepted.

          And so many things have come to pass, too numerous to address on ttac because ttac is a car enthusiast venue, that have revealed the reality of the truth of the inequality within the EU.

          As I wrote earlier, England drops 70Billion Sterling on the EU each year. Germany far more than that. France less than that because most of their people don’t work and live off government handouts.

          Holland pays more than they should and Belgium pays less than they should. Greece is a financially failed wreck, as are Italy and Portugal. Spain is economically flaky and now rallying behind their “Great Spanish Hope Professor with a pony tail.”

          My German relatives are tired of high prices, high taxes, and footing the bill to carry the weaker sister of the EU sisterhood. And they are tired of illegal immigration sucking them dry.

          The Brits, to their credit, did something about it. They voted to get the hell out of Dodge.

      • 0 avatar
        Big Al from Oz

        highdesertcat,
        I’m being a little picky here;

        1. You state the EU is similar to the US system of States, ie;

        “In the US, the wealthier states keep the poorer states (like MS and NM) alive and funded. Ditto in the EU. Now Germany has to carry the financial burden by themselves.”

        2. You then change the scenario to;

        “If I had been a citizen of the commonwealth, I would have voted to leave. Imagine Canadians or Mexicans telling the US government what it can and cannot do? NFW!”

        Citing your first example, then Canada and Mexico will not be a part of any decision you are making.

        You would of more correctly stated “If NY, CA, or any other State, within the Union”, without any reference as I stated to Canada or Mexico.

        The odd issue here is the UK is a major stepping stone for US companies making transactions within the EU. Even major banks ie, HSBC is considering moving thousands of people back to the continent.

        I have read that the auto manufacturers are now looking into vehicle production within the UK.

        The UK needs external trade, like all nations.

        Now the UK will find out that the Scots and Irish will not want to be a part of the UK.

        Well, it appears Britania has hit an iceberg and will sink.

        • 0 avatar
          highdesertcat

          ” it appears Britania has hit an iceberg and will sink.”

          I doubt it.

          Everything you wrote is true. No one denies it. But leaving the EU does not mean an end of the UK. It means sovereignty over their own destiny.

          The Brits would be no worse off than before they joined the EU.

          The Brits are pretty resilient and they voted for progress, which means they will find a way to create jobs, put people to work and increase trade. And in spite of Obama’s biased meddling, the UK will continue to trade with the US.

          The future demand for cars? Now, that may be a bit of a rough spot.

          But they’ll work through it. The Brits survived WWII and rebuild. Leaving the EU is flea-fart compared to that.

          • 0 avatar
            Big Al from Oz

            highdesertcat,
            First, Britannia. My fault. Again I’m typing what isn’t visible to me. Then I must post quickly before TTAC crashes …… as always.

            There’s one problem, trade.

            The UK is reliant on EU trade. This trade will be reduced. With the backing of the EU due to it’s size and power had placed the UK in a better position.

            Look at a country like a business. The larger the business the more it can influence the outcome that of better value. This is similar to the position the US finds itself in. The US is a large “business” and it can “dictate” terms better.

            The UK is going to lose this position without the backing of the EU.

            I agree the UK will survive, but so has other previous great powers, Spain, Portugal, Italy, etc. Where are they now?

            People of the UK must understand their independence will cost them a drop in their standard of living and influence they had.

            I see Texas bandied about in regards to succeeding from the US. If this occurred do you think Texans will be better off. If this occurred don’t you think that the other States within the Union will be a little unhappy?

            So, the Tundra and Taco are made in Texas, will the chicken tax apply? Will Texas be apart of NAFTA? You can state “yes”, but what if the the rest of NAFTA disagrees as is the case concerning the UK “succeeding” from the EU.

            The UK will not be granted the same status as it once had.

            Even look at the auto industry in the UK, it was the EU that allowed for the British marques to remain. Would this had of occurred if the UK was not apart of the EU.

            As I mentioned London is the world’s largest finance centre. Why? Because of the trade directly related to the EU. Will some of this trade now move to Frankfurt, Paris, Amsterdam, etc.

            All that is needed are a few percentage points to disrupt the UK.

          • 0 avatar
            highdesertcat

            It may turn out that you are right in your assessment, but I’m much more optimistic for the UK’s future success.

            I know my relatives in Germany wished they could leave the EU. But that’s probably because they are still feeding that tax-kitty and not receiving anything worthwhile in return.

            On an overseas SkyNet feed today I watched Nigel Farage do a gaggle with several journalists and what came out of his mouth was pretty much the same as what I was thinking. And I don’t even know who this guy is. But he must be somebody important.

            Hey, the Brits voted. No Bregrets!

            Anyway, time will tell. I think that life in the UK will go on as usual during the next two years that this divorce from the EU will take place.

            Were I still in the stock market, I would see this as an opportunity to buy stock, cheap. But I’m all divested, so no speculation for me.

            The big losers were the ones who invested heavily in the belief that the Brits would vote to stay. Yup, they were wrong.

    • 0 avatar
      DweezilSFV

      If you are referring to that so called petition, it’s been exposed as a fraud. Tens of thousands of votes from Vatican City [population 800 ] and from N Korea, VietNam, Uganda, etc. A prank by hackers 4Chan and Anonymous.

      See:
      http://www.zerohedge.com/news/2016-06-28/brexit-do-over-petition-exposed-scam

  • avatar
    runs_on_h8raide

    July 4th, 2016 – FCA announces today that the RAM pickup will not be redesigned until the year 2029. However, RAM will add 24 more different styles of RAM pickup, including the new Rebel Yell Edition. This baby comes “stacked” and tuned for rolling coal, lifted 10 inches and fitted with 38″ mudders. It comes with three selectable “on-the-fly” tunes….Eco Coal, Coal, and Bro Coal. All Rebel Yell Editions will be available in one color only…Dark Coal Gray Mayhem.

  • avatar
    SCE to AUX

    This may be a blessing for FCA stock. FCA is in good company; Apple and Google have been removed from the CBL from time to time also.

    https://www.quora.com/How-good-is-the-performance-of-Goldman-Sachs-conviction-buy-list-How-does-its-performance-compare-to-that-of-competitors-buy-lists

    Best quote: “…it would seem that stocks rally after being removed from the CBL publicly.”

  • avatar
    28-Cars-Later

    CNBC reports Dieselgate settlement will be $15B.

    http://www.cnbc.com/2016/06/27/volkswagen-us-diesel-emissions-settlement-to-reach-nearly-15b.html

  • avatar
    Vulpine

    This past weekend was merely the Gust Front–the wind before the storm. Let’s now wait and see how the storm itself plays out.

  • avatar
    Pch101

    The Brexit vote was stupid, but it probably won’t become official policy.

    Can’t imagine that any automaker that doesn’t have a Brit nameplate is going to be eager to expand its UK operations now. Between the uncertainty and the possibility of a 10% EU import tariff on cars built in Britain, why would Nissan et. al. want to double down on British production?

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