Raphael Nam

Yes, these are definitely two big companies, especially in the U.S. The CR-V from Honda, for example, is one of the best-selling cars in the country. And Nissan has cars like the Rogue SUV. And the reason why these talks are happening is because of these two transformative changes you just mentioned, Sarah. Let's tackle the first one, the pivot to electric vehicles.

Nissan and Honda have had trouble recognizing producing the kind of buzzy EVs that Tesla or South Korean automakers like Hyundai and Kia have produced. So a combination would make sense. It allows the two companies to pool their expertise and their production together. And the hope is that they will become stronger.

It's why both companies said this week they are exploring a merger and talks have started. Although both Honda and Nissan are well-known, they're not among the very, very top players in the industry. A merger, though, would change that. It would make them the third biggest automaker in the world, behind just Toyota and Volkswagen.

Yes, indeed. It would make them more competitive both in China and outside of China. And it's important because I think for people in the U.S., it's kind of hard to see the threat posed by Chinese automakers like BYD because the U.S. has managed to prevent them from coming in with big tariffs and other restrictions.

But in Europe, where I'm from, you can really see how successfully Chinese companies have pivoted. to producing EVs, the future of the car industry I was telling you about. You can see it literally from the time you land at an airport, where you can see their ads everywhere. And of course, you're seeing more and more of their EVs on the roads.

They are not only selling these EVs cheaper, their quality has improved dramatically. And they're also hyper-focused on software, which is becoming critical for cars.

Yes, except now it's the Japanese automakers that are playing defense. But it's not just Japan. Just like the 80s, companies in the U.S. and Europe now see Chinese rivals as existential threats. Here's how Sam Abuel-Samid, an auto analyst based in Detroit, put it to me.

So the name of the game could be size. Get bigger or get left behind. It's why analysts believe we could see more deals happening over the next few years. It may be the best way to tackle these two seismic changes taking place, the pivot to electrification and the emergence of China.

Thank you, Sarah.

Good question. A lot of people don't get bonds, but it's actually pretty simple.

The way it works is that the government sells bonds to investors We're talking banks, other countries, individual people Think of it as a loan The government needs to borrow money to function And to afford all of its spending These investors are the bank And they're lending their money to Uncle Sam Then Uncle Sam promises to pay back these investors with interest And when bond investors get spooked They demand more interest from the government And that's exactly what's happening now

Well, there are two critical things to the economy that could get worse under a new Trump administration, inflation and the government's finances. Now, let's tackle inflation first. Although Trump has promised to lower inflation, many bond investors believe he could actually do the opposite and take tariffs. Trump is proposing a wide range of tariffs. And the U.S. imports a lot of things.

Clothes, toys, shoes, tech gadgets, you name it. Tariffs obviously make those things more expensive. Trump also wants to cut taxes. For example, he wants to exempt workers in restaurants and other places from paying taxes on tips. All of that could make the country's finances a lot worse. And they're already pretty bad.

The budget deficit in the last fiscal year was $1.8 trillion, the third highest on record.

Because they can essentially tell the government, we won't be lending you any more money. And that would put the government in a pinch. Now, if the interest of the U.S. pays on its bond surges, and it can also create a lot of pain to the country's finances. And these fears in bond markets can spread to other markets like stocks, finance.

Fear is pretty contagious after all, and it has happened before around the world. About two years ago in the United Kingdom, bond investors revolted. It helped create a financial storm, and it took down the prime minister in a matter of weeks. There's even a term for bond investors that wield their power this way, bond vigilantes. These investors could stop buying bonds.

It's effectively telling the government, like I was telling you, we're not going to lend you any more money unless you reconsider some of your policies. Now, the U.S. is obviously much bigger than the U.K., and we also don't know what Trump is actually going to do. But things could get rocky very quickly if he does all the things he's promised.

Yes, because the U.S. bond market influences all kinds of interest payments, from credit cards to auto loans to mortgages. So when there's pain in the bond market, it's not just the Trump administration that will feel the impact. It could be people like you and me.

Thank you.