Tesla's latest earnings release contained some unexpected good news, but also showed the firm reporting its largest-ever quarterly loss at $717 million. The big surprises to the plus side were a revenue beat and a better-than-expected rate of cash burn ($739m versus $900m expected) while on the negative side, Tesla revised production targets lower (from 1m to 750,000 for 2020) and missed on earnings-per-share at $3.06, $0.14 lower than the analyst estimate of a $2.92 loss per share.
"I don't understand how the conference call did not feature more questions," says Saxo Bank head of Equity Strategy Peter Garnry.
"Tesla is talking about a $5-10 billion expansion into China as well as a potential factory in Europe," reports Saxo's equities head, who adds that "nothing about the current balance sheet supports these plans, not even at 10,000 Model 3's per week".
Tesla now says it expects to be producing 6,000 Model 3's/week by late August.
TSLA shares rose 9.36% to $328.99 after hours Wednesday.
Beyond TSLA, Garnry reports that Chinese equities are down 3% on trade war escalation fears while the US economic data continue to support expectations of strength.
This was certainly the Federal Open Market Committee's view yesterday, with the Fed's largely "copy and paste" statement changing its description the US economy from 'solid' to 'strong'.
"The dollar remains firm post-FOMC," says Saxo Bank head of FX Strategy John Hardy, "but USDJPY is doing its own thing... a look across the major yen pairs, in fact, [shows the potential for a reversal]".
Today's forex focus, however, will shift from the yen to sterling as the Bank of England reports its 'Super Thursday' inflation and interest rate decisions.
"We could be seeing some light at the end of the tunnel in Brexit terms; new reports are showing that German chancellor Merkel may be receiving some pushback from within her CDU party on European inflexibility [with regard to Brexit]", Hardy says.
Hardy also reports that the 10-year Japanese Government Bond yield stands at 12 basis points versus 2.99% for the US 10-year Treasury.
Finally, Saxo Bank Head of Commodity Strategy Ole Hansen tells us that industrial metals and oil are both feeling the weight of trade war and growth concerns, but says copper may see a rebound on mid-August strike activity at the world's largest copper mine in Chile.
Wheat, meanwhile, continues to rally as global production forecasts adjust lower.
For more on equities, commodities, and forex, view today's Morning Call in full.
Quarterly Outlook Q3 2022: The Runaway Train
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Tangible assets and profitable growth are the winnersWith US equities officially in a bear market, the big question is where and when is the bottom in the current drawdown?
Understanding the lack of investment appetite among oil majorsThe everything rally seen in recent quarters has become more uneven, as its strength is driven by commodities in short supply.
The pressure is on as the wind leaves the sailsWith cryptocurrencies in sharp decline, are we entering a crypto winter or is the bear market a healthy clean-up of the crypto space?
Why the Fed can never catch up and what turns the US dollar lower?Many other central banks are set to eventually outpace the Fed in hiking rates, taking their real interest rates to levels higher than the Fed will achieve.
Bank of Japan: Swimming against the tideThe Japanese economy has gone from the age of deflation to rapidly rising prices in no time, leaving the Bank of Japan in a pickle.
Green transformation detour and bear market hibernationWith the impending risk of global econonomic derailment, we share the five things investors need to consider in this new half year.
Crisis redux for the eurozone?Whether there's going to be a recession in Europe or not, the path towards a stable economy will be agonizing.
Technical Outlook: Gold, Oil and a remarkable multi-decade perspective on EquitiesThe Nasdaq bubble pattern, USDJPY resistance, crude oil uptrend losing steam and the technical outlook for USD.
China: the train of new development paradigm left the station two years agoChina is transiting to a new development paradigm, as they are hit by deteriorating terms of trade, a slower global economy and an uncertain future while continuing attempts to contain the pandemic.