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Tesla miss

Shares in Tesla fell after the carmaker reported lower-than-expected revenues and tried to assure investors that demand for electric vehicles is holding up. Elon Musk tried to brush off concerns about rising competition and falling demand from a weakening global economy. Revenues rose 56% to $21.45bn, a record, but a little short of analyst expectations. Gross profit rose 47% but margins fell on supply bottlenecks and rising input costs. EPS of $1.05 was above the 99 cents expected. Musk stressed there is still “excellent demand” for cars but warned of recessionary forces in Europe and China. In after hours trading shares fell 6% to $208. Meanwhile Musk said he’s “excited” about the Twitter situation and admitted that he’d probably overpaid...we shall see next week. 

Hanging on

Liz Truss’s government is hanging by a thread after the resignation/sacking of Home Secretary Suella Braverman. If it looks like a coup and smells like a coup, then surely it is a coup, right? Chairman Hunt is in charge, if anyone could be said to be in control of this unholy mess. Surely an election is coming? Or is Rishi the anointed one? Electoral wipeout seems the only way this ends for the Tory party. I said on the day of the Budget that it could lead to the fall of the government; I had no idea it would lead to such an earthquake in the Conservative Party, which could split Peel-style. As I said yesterday, don’t rule out a Lazarus-like comeback for Boris – the only one who can save probably 50-100 Tory seats.

Amazing comments from the Bank of England's Cunliffe: - "Clearly a UK component" when you look at what happened to the gilt market after Sep 23rd - “We did not receive a full briefing on the Treasury's mini-budget before its announcement.” UK 30yr yields moved lower again as the calm in the market seemed to be restored, down to 4% from 4.3% on the day...which is another large move by normal standards. But up to 4.1% or so this morning with all the swirling uncertainty. 

Stocks down

The DAX led the decliners in Europe this morning as German producer prices rose 45.8%! And the 10yr Bund accordingly rose to its highest since 2011. European bourses were generally trading in the red at the start of the session. The FTSE 100 traded flat around the 6,900 level.Stocks on Wall Street fell yesterday as the underlying narrative of the year reasserted itself - The 10-year Treasury yield rose to 4.136%, its highest since 2008. The S&P 500 fell two-thirds of a percent to close under 3,700. Asian stocks were weaker led by a 3% decline in Hong Kong, where the Hang Seng slipped to its lowest since 20009.

Yen hits lowest since 1990

USDJPY breached 150 this morning, the weakest for the yen since 1990. It’s been a tough year - the yen is down 23% against the dollar in 2022. Bank of Japan governor Kuroda recently said rates would be keep at current levels for 2-3 years, pushing the cross above 146 and prompting the first market intervention by the central bank since 1998. The BoJ meets next week.

Today

Fed speakers Cook, Bowman and Jefferson. Also watch for the Philly Fed manufacturing index, weekly unemployment claims and existing home sales data from the US. 

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