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 CSU/CDU coalition 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.
Q4 Outlook 2022: Winter is coming
- Winter is coming to the financial markets as central banks are tightening their grip. How spring will look is still a question.
European energy crisis: it will get worse before it gets betterThe winter in Europe will be tough, but whether the result is political chaos or sustainable, innovative solutions is still undecided.
A difficult and volatile quarter awaitsAs the year draws to an end, commodities continue to be at centre stage of the world with growth pockets political uncertainty.
The bright side: crises drive innovationThe positive spin on crises is that they come with solutions. It is worrisome that deglobalisation may be a response to this crisis.
Green transformation in China: renewable energy and beyondGoing green, China needs to span numerous energy sources to ensure stability, as every source comes with a challenge.
Asia: Intermittent solutions, but a faster renewable adoption curveAsian energy supply is being squeezed. This and the adoption of renewables may change the investment sentiment in the region.
FX: A Fed thaw needed to deliver a sustained USD turn lowerThe US Dollar can keep momentum when the Federal Reserve continues to tighten, leaving the rest to play to their drum.
Autumn can become ugly for equities and bond holders. Comfort for Dollar longsTechnical analysis suggests that equities could face a tough Q4 as could fixed income. US Dollar positions could provide some upside.
The next stock market sector to watch, with stocks going nuclearAs the world scrambles to find affordable, sustainable energy, nuclear is getting attention from politicians and investors alike.
The crypto space is getting cold when the hype disappearsCryptocurrencies face a winter of their own as retail investors and governments are asking tough questions.