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.
2024: The wasted year
Markets are driven by election optimism, overshadowing growing debt and liquidity concerns. The 2024 elections loom large, but economic fundamentals and debt issues warrant cautious investment.
As US economic slowdown hints at a shift away from exceptionalism, USD faces downside with looming Fed cuts. AUD and NZD set to outperform as their rate cuts lag. JPY gains on carry unwind bets and BOJ pivot.
Amid AI and obesity drug excitement, equities see varied prospects: neutral on overvalued US stocks, negative on Japan due to JPY risks, positive on Europe. European defence stocks gain appeal.
With the economic slowdown, quality assets will gain favour, especially sovereign bonds up to 5 years. Central banks' potential rate cuts in Q2 suggest extending duration, despite policy and inflation concerns.
Commodities poised for rebound. The "Year of the Metal" boosts gold and silver, copper awaits rate cuts. Grains may recover, natural gas stabilises. Gold targets $2,300-$2,500/oz, copper's breakout could signal growth.
Markets are driven by election optimism, overshadowing growing debt and liquidity concerns. The 2024 elections loom large, but economic fundamentals and debt issues warrant cautious investment.
As US economic slowdown hints at a shift away from exceptionalism, USD faces downside with looming Fed cuts. AUD and NZD set to outperform as their rate cuts lag. JPY gains on carry unwind bets and BOJ pivot.
Amid AI and obesity drug excitement, equities see varied prospects: neutral on overvalued US stocks, negative on Japan due to JPY risks, positive on Europe. European defence stocks gain appeal.
With the economic slowdown, quality assets will gain favour, especially sovereign bonds up to 5 years. Central banks' potential rate cuts in Q2 suggest extending duration, despite policy and inflation concerns.
Commodities poised for rebound. The "Year of the Metal" boosts gold and silver, copper awaits rate cuts. Grains may recover, natural gas stabilises. Gold targets $2,300-$2,500/oz, copper's breakout could signal growth.