Just as surging gas prices during the 1970s provided Japanese carmakers with an opportunity, Japan Inc. is ready to capitalize on the greatest fear on American roads today: running out of charge. 

Toyota, Mazda, and Subaru are forging a new path in the fledgling era of all-electric vehicles. On Tuesday, the three automakers revealed prototypes of smaller combustion engines that will work in tandem with battery-powered engines and can run on standard gasoline as well as hydrogen and a variety of other fuels.

You Can Go Your Own Way

Many manufacturers had plans for all-electric lineups in the next decade or so, but most have scaled down those ambitions as EVs struggle with low adoption rates. Toyota’s Prius helped popularize hybrid cars, sales of which have become a real boon for the Japanese automaker. And now, instead of trying to take a page out of Tesla or BYD’s book, the company is looking to evolve its hybrid design toward a carbon-neutral future:

• Toyota announced Monday it was partnering with petroleum companies Idemitsu Kosan, Eneos, and Mitsubishi to develop carbon-neutral fuels and make them available in Japan by 2030. Biofuels can be considered carbon-neutral as they release fewer emissions than gasoline, and the CO2 they set off could be absorbed by the plants (corn, soybeans, sugarcane) that produce the fuel.
• During a presentation Tuesday, Subaru CEO Atsushi Osaki said the companies are committed to “preserving the Earth’s precious environment for future generations.” However, the auto industry must make “steady, realistic progress toward carbon neutrality” and that it’s “ultimately up to customers to decide what car is best for them.”

Buford Barr, COO of New Day Hydrogen, sees passenger cars as part of building the clean hydrogen market, but he knows it will take a while.

“The problem with passenger vehicles is just getting enough of them on the market and that they’re using enough hydrogen to justify the stations,” he told The Daily Upside. “If you have three fueling stations in the entire state of Colorado, is that enough for you as a private vehicle owner to feel comfortable with? The answer is probably no. But for commercial fleets that have the same routes day-in-and-day-out, those three stations can give plenty of coverage.”

Electric Boogaloo: This isn’t to say Toyota has checked out of the EV game. Sure, the company hasn’t been an EV juggernaut, having only one model and opposing tailpipe emission requirements proposed by the Biden administration last year, but it sees some writing on the wall. Toyota’s Chief Technology Officer Hiroki Nakajima told the Financial Times that the company’s investment into the new engines would be a “magnitude smaller” than the money going toward electric vehicles and battery development. EV sales, while slow, are still going up. By 2030, one out of every four new passenger cars sold will be an EV, according to S&P Global, so it wouldn’t be the wisest move to ditch the solely battery-powered vehicles altogether.

Oh, do you not have an advertising business? How embarrassing for you. 

PayPal has joined the ever-growing list of companies with a new offshoot advertising business, announcing on Tuesday that it hired a former Uber ads boss, Mark Grether, to run it. It’s not the only payments company to get into the ad game, but it does seem to be going bigger than its compatriots by working with advertisers who don’t actually use PayPal.

Shopping Lists

Digital advertising is built on data — mountains of it. A lot of that data is sourced from your general online habits, but the catch is that the data generated by your endless doomscrolling doesn’t necessarily indicate what you might actually buy. Payment services like PayPal have something a little more forensic: your purchase history. 

A PayPal spokesperson told The Wall Street Journal the company has already started testing a new advertising product called Advanced Offers, which uses AI (obviously) to target PayPal users with ads for discounts and special deals from merchants that use PayPal. The spokesperson said it has been testing this on eBay and Zazzle. Chase Bank announced a similar idea in April, although its ads are fairly confined to in-house platforms like its banking app, whereas PayPal has the advantage of being more of a roving presence on the internet. Plus, it’s looking to broaden its horizons:

• Per the WSJ, PayPal is planning to sell customer data to advertisers who don’t use PayPal as well, which means that ads informed by the data could pop up pretty much anywhere, closer to the classic digital advertising formula of following you around the internet.
• PayPal’s spokesperson said that PayPal users would automatically be signed up to have their purchase data hoovered up, but they can choose to opt out. Privacy activists, start your engines.

“If you’re someone who’s buying products on the web, we know who is buying the products where, and we can leverage the data,” Grether told the WSJ.

It’s Free Real Estate: Companies entering the ads business understandably start rooting around for any extra advertising space they can sell. Earlier this month, Amazon Prime, which launched an ad tier to its streaming service in January, announced that it was rolling out some new types of ads, including ones that pop up next to — you guessed it — other ads. Welcome to the Ad-ception. 

You may as well have been shaking a Magic 8 ball.

The so-called inverted yield curve — when yields on short-term treasuries are greater than those of long-term government bonds — has long been one of Wall Street’s favorite and most reliable recession indicators. But according to a Wall Street Journal analysis published Tuesday, the yield curve has now been inverted for around 400 trading sessions, and there’s no recession in sight. So what gives?

Inverted Expectations

The logic behind the yield-curve weathervane is pretty sound, reflecting Wall Street’s expectations that the Fed will generally start cutting interest rates to revive a flagging economy, which tends to make long-term bonds more attractive and drives their interest rates lower.

According to the WSJ analysis of the trend going back to 1968, an inverted yield curve has preceded a recession anywhere from between nine and 24 months. This time around, it’s been nearly two years since the emergence of the latest inverted curve, and there’s still no recession on the horizon:

• US employers added 175,000 jobs in April, according to Labor Department data reported earlier this month. While that’s a sizable dip from March, the unemployment rate remains below 4%.
• That’s been good for consumer confidence; on Tuesday, the Conference Board reported that US consumer confidence rose in May for the first time since January. Meanwhile, economic growth this quarter is expected to surpass the same period from last year and, on Tuesday, the Nasdaq hit an all-time high.

New Normal: All of which is to say Wall Street is still mostly optimistic about the Fed’s chance of pulling off a soft landing, whether the yield curve is inverted or otherwise. That may be a positive thing in the long run, even according to Campbell Harvey, the Duke University finance professor who first identified the indicator in the 1980s and told the WSJ: “It is naive to think that you can just forecast the complex US economy with a single measure from the bond market.”