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.
The market is trying to get back to the pre-Covid and pre-war times, but that model is broken. A new dawn is here and the financial world needs to adapt.
Steen Jakobsen,
Chief Investment Officer
A political switch in China towards less tough control of its people and companies may kick things back into gear.
Redmond Wong,
Market Strategist
While the economic situation in Europe may not be as bad as feared, there's still a plethora of things to fix.
Chris Dembik,
Head of Macroeconomic Research
As the world turns increasingly bipolar, equity markets face harsh times as they transition into the new reality.
Peter Garnry,
Head of Equity Strategy
New alliances and collaborations outside of China may lead to prosperous times in Asia.
Charu Chanana,
Market Strategist
For years, it was thought that the balanced portfolio was a thing of the past. But recent developments may have changed that.
Peter Siks,
Investment Coach
Following a dramatic and volatile 2022 with good returns, a lot of this year's commodity performance may be driven by Chinese politics.
Ole S. Hansen,
Head of Commodity Strategy
2023 could be a tough year for currencies but EUR and JPY may have some upside.
John J. Hardy,
Head of FX Strategy
The commodity-heavy Australian market may have a good start to 2023, as the Chinese focus on growth signals demand for Aussie resources.
Jessica Amir,
Market Strategist
From a near-perfect environment for speculative assets before 2022 to the opposite, crypto faces fundamental challenges.
Mads Eberhardt,
Cryptocurrency Analyst
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