EV stocks: legacy marques hit the electric accelerator

Tesla might be the face of electric vehicles, but long-standing manufacturers are matching its spending. Here are some EV stocks to watch.

EV stocks

2021 & electric vehicles

Electric vehicles really do look like the future.

Sales volume tripled year-on-year in H1, according to Woods Mackenzie research. WoodMac predicts 6 million electrically-powered vehicles will be sold by the end of 2021. That’s even with chipset supply constraints.

No year to date will have seen such internal combustion engine sales displacement should WoodMac’s forecast prove true.

We all know of Tesla’s electric vehicle market dominance. Many newcomers in the EV space are in danger of being left in Tesla’s shadow. While the likes of NIO and Li Automotive are attempting to put up a fight, as new brands go Tesla is driving far into the distance.

But what about legacy carmakers? These, in theory, have the supply chain capability, resources and existing market presence to potentially dwarf Tesla going forward. It’s only a matter of time before the sleeping or drowsy giants wake up and put their full industrial might behind EVs.

We’ve already seen the likes of Citroen and Volvo spin off their electric offer into new brands (DS and Polestar in this instance). Indeed, Polestar looks like it’s becoming very much its own entity and is even planning a $20bn SPAC IPO sometime soon.

Even Ferrari, which has resisted the call of pure electric power, for so long is following in the wake of luxury automakers Porsche and Aston Martin in offering a fully EV supercar by 2025.

But not all car manufacturers are created equal. There are those that dominate with their major global presence. These are the ones responsible for the global prevalence of motor vehicles to begin with. And it’s these that have enormous potential.

The largest automakers and conglomerates are pouring billions into electric vehicle research. Some are better prepared than others, but this level of investment can pay dividends in terms of positive stock price movements.

Traders and investors thinking about diversifying their portfolios with EV stocks may find some inspiration below.

Legacy EV stocks to watch

Ford

Henry Ford pioneered mass auto manufacturing as we know it. Now the company he started is keen to add his level of ingenuity to their model line-up.

Ford recently announced it was planning on spending $30bn on EV R&D by 2025 and expected 40% of its total sales to come from this market segment by 2030. Its goal is to launch 16 fully electric vehicles by 2022.

Pre-orders for the electric F-150, the truck that the company is essentially built on, have already reached 150,000. Oh, it also has plans afoot to invest $11.5bn in a battery-making facility to support the F-150 exclusively.

F-150 sales average 100 trucks sold per hour. Mr Musk with your Tesla Cybertruck: Ford is coming for you.

In terms of share price performance, Ford is up nearly 2% in day trading at the time of writing.

As well as its electric plans, Ford has been boosted across the previous months by its Q2 2021 earnings. During this time, the brand recorded a surprising $1.1bn profit, readjusting its earnings per share from a loss of $0.03 per share up to EPS of $0.13.

Ford raised its expectation for full-year adjusted earnings before taxes by about $3.5 billion, to between $9 billion and $10 billion.

Additionally, since CEO Jim Farley took control in October 2020, Ford’s share price has soared 113%.

General Motors

According to its website, General Motors plans to invest $35bn between now and 2025 towards creating a fully electric future.

With this 30% rise in dedicated electric vehicle spending, the US’ number one carmaker certainly has Tesla and other rivals squarely in its crosshairs.

In practical terms, this means a complete model overhaul and construction of dedicated production facilities. That includes two new battery megafactories. One of these is already underway in partnership with Korea’s LG Energy Solutions, while another site is being prepped in Tennessee.

GM confirmed in November it would speed up the rollout of new EVs, with plans to offer 30 models globally by 2025, up from a prior target of 20 by 2023. Chief Executive Mary Barra said the automaker wants to exceed annual sales of 1 million EVs in the United States and China by 2025.

General Motors also recently announced it plans on investing $300m into Chinese auto-pilot developers Momenta to help grow develop self-driving technologies. This could also help GM get its own slice of the lucrative Chinese automotive market – the largest in the world.

In terms of share price outlook, Goldman Sachs recently came out as saying it thinks GM is undervalued.

“General Motors (NYSE:GM) is seen as an attractive stock that captures the benefit from an industry recovery in production as well as opportunities to benefit from EVs and advanced driver-assistance systems,” Goldman analyst Mark Delaney said.

GM started the week on a good footing, rising 2.25% on Monday 27th September. It has subsequently flattened but there are reasons to look at the stock in a bit more depth.

Its E/P ratio of 6.04 makes it undervalued. Additionally, analysts expect its earnings to fall by 5.3% this year before rising at an average annual rate of 13.25% over the next five years. Might be worth a look in the short term.

Volkswagen

Volkswagen’s own spending plans dwarf those of the American rivals above.

Across the next five years, the Wolfsburg-based marque will have spent $86bn on a fully comprehensive overhaul of its production capabilities and model collection. Looking further afield, it plans to make 70 fully electric vehicles by 2030.

231,600 VW EVs were sold in 2020. It has plans to double that to 500,000 by the end of 2021. Adding in plug-in hybrid models, overall sales target for vehicles involving some modicum of electric power comes to 1.5m.

VW also has its eyes on the Chinese prize. It has announced it is launching its ID.3 and ID.4 models in China soon. The ID.4, an electric SUV, will be key to Volkswagen’s Asian expansion plans as this particular car style is a favourite amongst Chinese consumers.

The company’s stock has increased 120% from 2018 up until now, although Forbes believes it is currently reaching the limits of its mid-term potential.

Future earnings will be key in accruing decent performance for VW.

Forbes’ breakdown of the FY2022 outlook is as follows:

  • Revenues – €254 billion
  • Net income – €13.8 billion
  • EPS – €2.75
  • Stock price valuation – $47

Of course, VW’s work also includes that of Audi which is launching its own range of luxury EV models. All of its eggs are currently in one big electric basket, but it could pay off as the world moves away from fossil fuels.

Stocks pick up some bid after textbook S&P 500 bounce

European stock markets were modestly higher on Thursday after a rebound in the US and another dip for Asian equities overnight. Hong Kong down 1.7% as casino stocks fell again, and is now testing the lows struck in July and August, down about 20% from its Feb peak. Indebted real estate group Evergrande fell another 7%. Gold struggled to hold the $1,800 level as Treasury yields climbed a touch. The dollar is a bit stronger after yesterday’s decline. 

 

FTSE 100 in the middle of the range after the decline of last week. Industrials and healthcare to the top, basic materials the only sector in the red. Ashtead is the top gainer, up 3%, after reporting Q1 revenues of £1.85bn and said it sees the full-year performance ahead of previous guidance. The company now expects growth of 13-16%, ahead of the 6-9% prior guidance. Rolls Royce also rallied 3% after the UK struck a security deal with Australia and the US to help supply the former with nuclear submarines. BAE Systems, another mentioned in the press statement from the government, also rose.

 

Buy the dip: The S&P 500 rallied 0.85% as it found support once more at the 50-day simple moving average, taking it back to where it was a month before – still down almost 1% MTD. The bounce off the 50-day line was pure textbook. Mega cap growth delivered, but cyclicals also got a boost as breadth was solid. Microsoft did some serious heavy lifting after announcing a mega buyback programme. The company will launch a share buyback programme of up to $60bn and raise its quarterly dividend by 11%. A mild gain for MSFT added almost 5pts to the S&P 500, even more to the NDX. Energy led the sectors with a gain of almost 4% as oil prices continued their ascent. Natural gas made another 8-year high. 

 

We’ve digested a couple of inflation readings this week and it’s clear it’s stickier than central bank Panglosses told us. It comes to down to there being too much money – aka liquidity – and not enough stuff to match. People can moan about the supply chain problems and labour shortages, and claim ‘there’s nothing the Fed can do about bottlenecks at ports, or ‘what can central banks do about chip shortages?’, but this is all about the inflationary environment unleashed by governments and central banks through their printing vast sums of cash during the pandemic and failing to suck it all back in afterwards. Instead, they run it hot in the vain quest for jobs when there are plenty of jobs out there, and let inflation get higher to eat into any wage growth and make people poorer. Meanwhile the asset rich get richer. 

 

I talked about this in May, referring to comments made a year before: “Ultimately it goes back to the question asked by the great Paul Tudor Jones about a year ago: can the Fed suck all this money back out of the system as quickly as it injected it. The answer then was almost certainly no, and post the recent policy shift and vast pro-cyclical stimulus it is clearly absolutely no. So we have inflation worries and, as described on multiple occasions last year, the worry is that the Fed allows inflation expectations to become unanchored as per the 1970s.” 

 

Briefly: 

 

Ray Dalio on Bitcoin – if it gets really successful, they’ll kill it and they have ways to kill it. Neatly sums up my long-standing position. Price higher today, but the rally off the Monday dip is losing momentum as it runs into near-term resistance around $48,500.

 

Bank of Japan boss Kuroda – If necessary, BOJ will further relax monetary policy such as by reducing interest rates. The comments ahead of the government’s first cut to its economic outlook in 4 months. USDJPY steady around 109.30 after touching its weakest since Aug 17th yesterday.

 

Cathie Wood reducing Tesla exposure: A $3,000 price target on the stock, but Ark Investment Management has sold more than a million shares in Tesla in the last 5 months, according to a Bloomberg report. 

 

WTI is holding onto gains after briefly rising above $73 after the EIA reported US inventories fell by 6.4m barrels last week, though the impact of Hurricane Ida is to blame.  

Risk on to start the week as inflation looms

Stocks are trading a tad firmer in the early part of the session, after a toughish week. US indices fell for a fifth straight day on Friday, weighed down by Apple’s setback, the stock falling over 3% after a court dealt a big blow to its app store payment model. Tesla shares fell 2.5% after Cathie Wood’s Ark group sold down its holdings. More than a whiff of mega cap tech/growth fading – question is whether we get the rotation into cyclicals to keep the market grinding higher. Dip buyers failed to come in last week so looking perhaps to see whether there are further losses to come. Futures are this morning trading in the green. Meanwhile inflation is still a problem, with US producer prices rising 8.3%. China’s regulatory crackdown on big tech continues, with Beijing planning to break up Ant’s mobile platform Alipay, sending Alibaba shares down 5% in Hong Kong and the broader Hang Seng down by 2%. 

 

Nevertheless, there is a mild risk-on feel to the start of the new trading week. The FTSE 100 is up half of one percent after it tested the 7,000 support last week, which has held for now. The index is slap in the middle of the range it’s treaded since April, failing to break out in any meaningful way. Utilities, energy and financials doing the lifting this morning, with Royal Mail and National Grid at the top of the leader board. ABF fell to the bottom despite raising its profit target for the year on improved margins as supply chain problems hurt sales. SThree shares jumped another 6% after it also said profits would be ahead of expectations – staffing shortages playing into the hands of recruiters.

Inflation ahead

Stagflation: The US PPI reading for August was hot, with prices up 0.7% month-on-month and sending the annual increase to 8.3%, the biggest since records began in 2010. Whilst some may argue that this is transitory, and due to supply chain bottleneck, shortage of vessels etc etc, and therefore ‘nothing the Fed can do about it’, you have to ask yourself whether expansionary monetary policy is actually doing more harm than good right now.

 

Light day for data so all eyes on the US consumer price index tomorrow. The key inflation reading for the month of August is set to come in at 5.3%, according to consensus. In July, inflation steadied at 1 13-year high of 5.4%. Core inflation rose 4.3%. But there was some moderation in the month-on-month increase, with core at +0.3% vs +0.9% in June. Vehicle prices have been one of the main drivers of the increase, but the pace of price increases slowed almost to a halt in July. A hotter-than-expected reading tomorrow could see the market adjust its view of when the Federal Reserve begins tapering asset purchases. Cooling in inflation pressures would be positive for market sentiment.

Oil prices advance

Crude oil prices are firmer with WTI (spot) nudging its head above $70 again. Supply remains affected by Hurricane Ida. OPEC is due to release its monthly outlook later today. In FX, the dollar is firmer, with the euro dropping to its weakest since the end of August. GBPUSD is just about holding on to 1.38. Hard to talk meaningfully about FX trades right now with everything so range bound and trading sideways. Elsewhere, Bitcoin is lower again around $4k and chart action looks dicey. 

Tesla share price worth $3,000 ‘if they execute really well’

Tesla boss Elon Musk said in an email to staff that the stock could be worth $3,000 per share if the company achieves all its aims.

Musk told employees he agrees with Ark Invest’s ‘valuation’ as long as the company executes “really well”.

The company’s stock was last trading around $733, implying a roughly 300% improvement. Ark is a long time investor in Tesla and is very bullish on the stock.

Watch our interview with Stanphyl Capital’s Mark Spiegel, a long-term Tesla bear, talking about the reasons why he’s still shorting the stock.

Tesla is facing scrutiny over its Auto Pilot system after a number of crashes, many fatal, which has led to an official investigation by regulators. Meanwhile, it’s struggling on the production side with the Cybertruck launch pushed back to late 2022 and the launch of its second-generation roadster also delayed.

Analysts remain split on the path the Tesla share price will take:

Tesla analyst sentiment 06.09.2021

Tesla share price recommendation 06.09.2021

Are EV stocks running out of juice?

With some EV stocks running into the red, we take a look at the sector to see if it’s electric vehicles’ time to step on the gas or hit the accelerator.

EV stocks

Electric vehicle stocks drop

Several electric vehicle stocks were running out of juice at the start of the week.

Chinese stocks, such as Xpeng, Nio and Li Auto all started trading poorly, although it should be noted that Xpeng and Li are both up 0.93% and 1.01% respectively at the time of writing. Nio remains down 1.37%.

Even Tesla, Elon Musk’s shining beacon of electric vehicle innovation, is subdued, down 2.96% in pre-market trading on Wednesday 18th August.

But why?

In the case of Tesla, a new NHSTA probe into the safety of the carmaker’s autopilot system has once again caused a wobble in its share price. The agency highlights 11 crashes that occurred when Autopilot or Traffic Aware Cruise Control systems had been engaged. In fact, Tesla has been under NHSTA investigation since 2016.

Not a great look when Tesla is attempting to position itself as an AI innovator as well as an EV champion.

Nio is also under the crash cosh. A prominent Chinese entrepreneur was tragically killed while testing a Nio ES8 equipped with automatic motorway lane changing software.

Such measures are meant to remove the human element in order to boost safety. Naturally, there will be teething issues if that’s not too glib a term at this early stage in development. But if said features are resulting in car crashes and a loss of human life, then EV stock prices are going to fall. Investor confidence is everything, after all.

Then there are supply chain and logistical considerations to consider. The worldwide computer chip shortage has impact production and vehicle delivery numbers for pretty much all car manufacturers. That includes both internal combustion-powered and electric vehicles.

If you’re unable to build and deliver cars in line with demand, your revenues will probably fall and take your share price with it.

Even companies like Tesla, which delivered a record number of vehicles in the last quarter, will feel the pinch going forward. Developing and manufacturing proprietary chipsets was ruled out by Tesla CEO musk as being too costly.

Can you still ride the EV boom?

Of course. The fact is electric vehicles are pretty much guaranteed to be the future. Even if the course steers ICEs to hybrids to fully electric vehicles, the world is moving away from fossil fuel power.

The UN’s Code Red climate report could precipitate a more rapid move to EVs. We’ve also seen plenty of mandates from the EU, UK and now the US to force legislation toward a purely electric-powered future.

The Biden Administration, for instance, is pushing for half of all new vehicle sales to be EVs by 2030. Similar directives are in place in Britain and the European Union.

EV marques are doing their best to improve their offers. Tesla has committed to a massive expansion programme of new mega factories and updated models. Xpeng has plans afoot to double its annual production capabilities from 100,000 to 200,000 vehicle deliveries per year. It’ll be expanding its line-up to include a new SUV too – a car class that’s a favourite of the Chinese middle class.

The appeal of EVs is still strong for institutional investors. A number of banks and investment firms have upped their holdings in Chinese manufacturers for instance, including:

  • Baillie & Gifford – Now holds 14.83m shares in Li Auto
  • Goldman Sachs – Now holds 21.44m shares in Nio
  • Fidelity Investments – Now holds 13.35m shares in Xpeng

With any major sector, however, you can’t just look at one segment, no matter how large it is. Electric vehicles rely on a massive ecosystem of battery suppliers and chipset/semiconductor manufacturers. It’s here where canny traders and investors may be able to diversify their portfolios when looking at EV stocks.

Analysts have identified several stocks that could offer strong upsides as the electric vehicle industry expands.

These include:

  • NXP Semiconductors – This company derives half its annual revenues from the auto industry
  • Skyworks Solutions – Has plans afoot to greatly expand its EV offer after purchasing peer Silicon Labs’ auto and infrastructure segment
  • TE Connectivity – Swiss censors firm recently posted a 52% year-on-year increase in revenues, totalling $3.8bn. EPS came in at $1.79.
  • Aptiv – Ireland-based vehicle components manufacturer has a market cap of $44bn and generated $13 in revenues across 2020.
  • Freeport-McMoRan – An Arizona-based mining firm with a speciality in copper, Freeport-McMoRan represents the wider infrastructure needed to build electric cars. It has plans to invest in growth projects, which prompted Deutsche Bank to rate the stock as a “buy” in July.

This is just a small snapshot of the types of stocks that could thrive in a world dominated by electric power.

So, while EV stocks are currently on a bit of a negative trajectory, this could all very well change as the industry progresses. It’s one segment to watch closely in the future.

European indices slip after weak Asian handover, Wall St hits new high

Stocks are down in early trade on Tuesday after European markets finished lower yesterday, with the FTSE 100 leading the decliners with a fall of almost 1% to around 7,150. The DAX finished off 0.5% at a whisker below 15,900. They were off around 0.3% and 0.6% respectively this morning before paring losses. Concerns that growth has peaked is worrying investors – today’s BofA European Fund Manager Survey showed just 44% think the European economy will further improve over the next 12 months – the lowest since last June and well down on the 80% last month. Rising covid concerns and inflation worries are the main culprits. Nevertheless, FMs are still bullish on European stocks and think there is still room for the inflation trade to run. It’s mirrored in the Global FMS which shows global growth expectations cut to net 27%, the lowest April 2020 and profit expectations are the weakest since last summer. After peaking at 62% in April, global equity allocation has slipped to 54% though there is ‘no appetite to rotate into bonds’.

 

US stock markets managed to shed any negativity around cyclicals with mega cap tech doing the heavy lifting to take the S&P 500 to a new record, rising 0.3% on the day. The Dow Jones erased an early decline of more than 200pts to finish up by more than 100 for the session. Futures are however pointing to a weaker open after a weak session in Asia, as further tightening of China’s competition rules left tech shares in the doldrums. The Hang Seng declined 1.8%, whilst shares on the mainland dropped around 2%. 

 

ARK’s Innovation ETF declined 2.6% as Michael Burry of Big Short fame disclosed a short position on the fund. Now it makes sense given the kind of momentum plays Cathie Woods has been in. And we know Burry has had a short on Tesla since the start of the year, which is the biggest holding in the ETF. Burry is still mega short Tesla so seems to be doubling down on his bearish momo bet. Scion Asset Management bought 2,355 put contracts and increased his bet against Tesla – 10% holding in the ARKK fund. 

 

Tesla shares fell more than 4% as the company faces a formal government investigation into its Autopilot driving system. In a post Monday, the National Highway Traffic Safety Administration announced it has identified 11 crashes since 2018 involving a Tesla vehicle either on Autopilot or Traffic Aware Cruise Control. The investigation covers the models Y, X, S and 3 from 2014 through to 2021 model years. 

 

Big changes at BHP: Shares popped 8% in London, adding a full 14pts to the FTSE 100, as it announced it’s out of petroleum, into potash and scrapping its dual-listing structure. Performance over the year was very strong as BHP benefitted from a global commodity boom and economic recovery. Profit from operations rose 80% to $25.9 billion, up 80%, while underlying EBITDA hit $37.4 billion at a record margin of 64%. Attributable underlying profit rose to $17bn from $9bn last year. The board also announced a $2 final dividend. Elsewhere on the FTSE, JustEatTakeaway shares rose after it reported revenues rose 52% to €2.6bn in the first six months of 2021, compared with €1.8bn in the first half of 2020. 

 

The Empire state manufacturing index was weak – coming in at 18.3 vs the 29 expected, way down on the record high 43 last month, albeit activity is continuing to expand. The usual inflation warning flashed red as the survey reported that input prices continued to rise sharply, and the pace of selling price increases set another record. The prices received index climbed seven points to 46.0, setting a record. Another growth has peaked, inflation is here to stay type report.

 

Taper talk: The picture is almost complete. Chiming with the views of a number of Fed officials aired over the last fortnight, Boston Fed President Eric Rosengren said it would likely be appropriate to start tapering bond purchases in the autumn, though the timeline for raising rates is still uncertain and dependent on the labour market recovering. It’s increasingly clear there is a broad consensus for the Fed to announce its taper in September (or at Jackson Hole), and to commence in November. Of course, there are dissenters, and some doves may prefer to wait longer. The key to it all is Jay Powell – his town hall event tonight (18:30 BST) will be closely monitored for any signals. Even if there is broad agreement to taper the Fed still faces a question of whether to go early and slow, or later and fast. And as soon as the Fed sets the timeline for tapering the market will swivel its focus to the timing of the first rate hike, which is when we start to see some bond market action again.  The BofA FMS shows 84% expect the Fed to taper this year but lift-off for rates not until 2023 with risks around the Delta variant, asset bubbles and China growing as risks.

 

OPEC+ sees no need to pump more oil into the market now beyond what is already intended despite US calls to open the spigots, according to four OPEC+ sources. Nevertheless, the cartel is increasing output: Platts says OPEC’s 13 members pumped 26.83m bpd in July, up 640k bpd from June. API inventory in focus later today after the EIA said US shale output is on the rise, expected to hit 8.1m bpd in September. WTI (Oct) trades at $66.50 this morning, a little off yesterday’s lows around $65.50, but the bears are still in control. 

Earnings season: Tesla steps on the gas with earnings beat

Tesla once again posts strong quarterly earnings figures and clears some major milestones.

Tesla earnings

Tesla’s headline stats

Released yesterday after US market close, Tesla’s Q2 2021 earnings beat Wall Street expectations.

The world’s foremost electric fortunes surged this quarter. Net income for 2021’s second quarter reached $1.14bn – surpassing the $1bn mark in a quarter for the first time. It’s also a ten-fold increase against Q2 2020’s net income levels.

Revenues generated from Tesla’s core automotive business clocked in at $10.21bn. Total revenues reached $11.96bn – nearly double the $6.04bn registered a year ago.

The company broke its previous vehicle delivery records too. Deliveries, a metric akin to sales when gauging Tesla’s success, amounted to 201,250 in the quarter ending June 30th 2021.

Production volumes stood at 206,421.

While the vast bulk of its revenue stream came from vehicle sales and associated services, Telsa also made money selling its government-sourced regulatory credits.

Regulatory credits are awarded to manufacturers as an incentive to develop electric vehicles. As Tesla only manufactures EVs, it gets these for free, which it then can sell on for a massive profit to other marques that have yet to meet regulatory requirements.

Sales of regulatory credits contributed 3.5% of revenues, equating to $354m.

Servicing looks like it is becoming a major money spinner for Tesla. With more vehicles on the roads, some 121% year-on-year, Tesla has boosted its service offer. It now operates 598 stores and service centres worldwide. According to its latest reports, service and maintenance generated $951 million this quarter.

One aspect where Tesla took a hit was its Bitcoin holdings. You may recall, the automaker caused consternation earlier in the year, when it snapped up $1.5bn in BTC tokens in March. Questions were raised around the validity of this strategy: is Tesla an auto manufacturer or a crypto trader?

CEO Elon Musk is famous for his enthusiasm for cryptocurrencies. However, he and his company were instrumental in instigating one of BTC’s famous price wobbles. First Tesla announced they were going to accept Bitcoin as payment for its vehicles in May. A week later, the company reneged on this, citing environmental concerns.

A $23m impairment on the value of Tesla’s BTC holdings was noted in this quarter’s report. This was filed under a “restructuring and other” operating expense.

Tesla’s post-earnings share action

Tesla shares rose 2% in after-hours trading following the earnings release.

As of Tuesday, pre-UK lunchtime, Tesla was trading for around $648 per share.

EPS beat Wall Street estimates. Forecast at $0.98, real earnings-per-share was valued at $1.45.

Upon this Street-beating report, sentiment on Tesla is naturally very positive.

Tesla senitment indicator.

Analyst recommendations rate Tesla as a “buy”.

Tesla analyst sentiment.

Where next for Tesla?

Despite having a bumper Q2, there still remains lots of challenges for the brand.

The largest is the global shortage of chips necessary for EV production. Volume production will be limited, Musk said on a call with investors yesterday, depending on whether supply shortages can be overcome.

This year, Tesla is aiming to boost deliveries by 50%.

Despite market suggestions, Musk dismissed ideas of Tesla setting up its own chip hub. “That would take us, even moving like lightning, 12 to 18 months,” he said.

Tesla claims it is on track towards building its first Model Y models in new facotires based in Berlin, Germany and Austin, Texas. Model Y cars should start rolling off production lines in these locations by the end of 2021.

However, the launch of its commercial semi-truck programme has been delayed. This is again due to supply chain snags, specifically the availability of battery cells.

No indication was given by Tesla as to when it will start production of its futuristic Cybertruck pick up platform.

Essentially, the next months will rely on the global chip status. Rising input costs in US and European plants, caused by rising worldwide commodities prices, may put the brakes on rapid expansion as the year progresses.

Volgende week: Fed vergadert terwijl inflatie toestaat

De Fed komt weer bijeen nu de inflatie zijn tanden zet in de Amerikaanse economie. Kunnen we grote wijzigingen verwachten van Powell en co? Ook het Amerikaanse bbp staat in de schijnwerpers: de prognoses gaan uit van nieuwe recordgroei op kwartaalbasis. Ondertussen trapt Tesla het gaspedaal in tijdens de drukste week van het Amerikaanse winstseizoen tot dusver.

Afgezien van winstcijfers is de belangrijkste gebeurtenis van deze week de vergadering van de FOMC in juli.

Inflatie en een oververhittende economie zullen waarschijnlijk de belangrijkste onderwerpen op de agenda zijn. We hebben onlangs van voorzitter Powell de belofte van “krachtige steun” gekregen voor de Amerikaanse economie post-pandemie tegen een achtergrond van oplopende inflatie.

Volgens Powell zijn de toenemende consumentenprijzen het gevolg van de heropening van de economie en zal dit effect weer verdwijnen. In zijn verklaring voor het Amerikaanse Huis van Afgevaardigden hield Powell vast aan het banenverhaal en wees hij erop dat er nog steeds 7,5 miljoen minder banen zijn in de Amerikaanse economie dan voor de pandemie.

Van afbouw van de steunmaatregelen is volgens Powell voorlopig nog geen sprake. Het obligatie-opkoopprogramma van $ 120 miljard per maand van de Fed zal waarschijnlijk ook niet worden aangepast. Zoals hierboven gezegd, hangt het allemaal af van de arbeidsmarkt. Het opkopen van obligaties en steun van de Fed zal waarschijnlijk zo lang duren als nodig is om de arbeidsmarkt te laten herstellen.

Tot 2023 wordt er dan ook geen renteverhoging verwacht.

Maar ondanks alle discussie van de Fed over breed gedragen inflatie als gevolg van verhoogde economische activiteit, zijn veel mensen niet overtuigd van het plan om de economie op volle toeren te laten draaien.

De CPI bedroeg in juni 5,4 procent, hoger dan we in bijna dertien jaar hebben gezien. Marktwatchers aan zowel de Democratische als de Republikeinse kant zullen hopen dat hier relatief snel verandering in komt.

Powell heeft belooft dat als de inflatie uit de hand loopt, “beschikbare middelen zullen worden ingezet om de inflatie terug te dringen.”

Het zou echter “een fout zijn om prematuur te handelen.”

Wat de Amerikaanse economie betreft, verwachten we donderdag de eerste lezing van het bbp voor het tweede kwartaal.

De verwachtingen zijn tot dusver goed. Volgens Deloitte kan technologische vooruitgang helpen de VS weer een uitstekend kwartaal te bezorgen, met groeicijfers hoger dan voor de pandemie.

The Conference Board voorspelt dat de Amerikaanse economie op jaarbasis met 9 procent zal groeien in het tweede kwartaal van 2021.

“Nu de economie volledig heropent en het consumentenvertrouwen blijft toenemen, verwachten we dat consumentenuitgaven het herstel zullen stimuleren – zeker als we het hebben over uitgaven aan persoonlijke diensten,” aldus TCB. “Deze uitgaven zullen worden ondersteund door een aantrekkende arbeidsmarkt en een grote reserve aan spaargeld, het resultaat van drie ronden van fiscale stimuleringscheques die in het afgelopen jaar zijn verdeeld.”

In eerdere PMI-publicaties hebben we daarnaast gezien dat de verwerkende industrie en de dienstensector na een sterk april en mei ook in juni zijn blijven groeien. Drie maanden robuuste PMI-cijfers zou de groei van het Amerikaanse bbp dit kwartaal moeten steunen.

Maar nogmaals, het ontketenen van al deze opgebouwde vraag zorgt mede voor de hogere prijzen van consumptiegoederen waarmee de VS momenteel te kampen heeft. Daarnaast wijzen de eerste rapporten erop dat de hoge invoerprijzen een effect beginnen te krijgen op de productiviteit. De PMI van de verwerkende industrie was in juni zelfs iets lager dan in mei.

Maar als de verwachtingen uitkomen, zal de VS een van de beste periodes van driemaandelijkse groei tegemoet gaan sinds de Tweede Wereldoorlog.

Afgezien van de macro-economische gegevens, wordt dit ook de drukste week van het cijferseizoen voor dit kwartaal.

Bijna 40 Amerikaanse large caps zullen deze week hun cijfers voor het tweede kwartaal publiceren. Hieronder ook de meerderheid van de FAANG-aandelen. Netflix kwam vorige week al met cijfers en deze week zijn techgiganten Alphabet (Google), Amazon, Facebook en Apple aan de beurt.

Tesla zal maandag echter het startschot geven door na het sluiten van de Amerikaanse markt de samengevatte resultaten te publiceren.

Het is vooral interessant omdat het aandeel Tesla 330 procent in prijs is gestegen tussen mei 2020 en mei 2021, en de prijs historisch gezien vaak is gestegen voorafgaand aan het vrijgeven van nieuwe winstcijfers. Gemiddeld bedroeg deze stijging de afgelopen drie jaar 1,6 procent voor alle kwartaalpublicaties.

De automaker van Elon Musk heeft dit kwartaal veel te vieren. Voor het eerst werden er meer dan 200.000 auto’s afgeleverd in drie maanden tijd. Daarnaast heeft Tesla een aantal nieuwe automatiseringsdiensten aangekondigd in de vorm van een abonnement dat $ 199 per maand moet kosten.

De vooruitzichten zijn rooskleurig, maar maandag zullen we meer weten.

Bekijk onze Amerikaanse winstcijferkalender voor meer informatie over alle large caps die met resultaten zullen komen.

Belangrijke economische data

Date Time (GMT+1) Asset Event
Mon 26-Jul 9.00am EUR German ifo Business Climate
 
Tue 27-Jul 3.00pm USD US Consumer Confidence
 
Wed 28-Jul 2.30am AUD CPI q/q
  2.30am AUD Trimmed Mean CPI q/q
  1.30pm CAD CPI m/m
  3.30pm OIL US Crude Oil Inventories
  7.00pm USD FOMC Statement
  7.00pm USD Federal Funds Rate
  7.30pm USD FOMC Press Conference
 
Thu 29-Jul 1.30pm USD Advanced GDP q/q
  3.30pm GAS US Natural Gas Inventories
 
Fr 30-Jul 9.00am EUR Germany Preliminary GDP q/q
  1.30pm CAD GDP m/m
  1.30pm USD Core PCE Price Index m/m

 

Belangrijke cijfers deze week

Mon 26 Jul Tue 27 Jul Wed 28 Jul Thu 29 Jul Fri 30 Jul
Tesla 3M Automatic Data Processing CME AbbVie
General Electric Boeing Keurig Dr Pepper Aon
Advanced Micro Devices McDonald’s Mastercard Caterpillar
Alphabet (Google) Pfizer Merck Chevron
Apple Shopify Amazon Exxon Mobil
Microsoft Spotify Gilead Procter & Gamble
Mondelez Facebook Liberty Global Takeda Pharmaceutical
Starbucks Ford Pinterest Berkshire Hathaway
Teladoc Health PayPal Twilio
Visa Qualcomm

 

Cryptocurrency update: BTC hits accelerator on Telsa u-turn

After hitting the brakes on BTC payments, Tesla appears to have changed its tune, while El Salvador is fully in the cryptocurrency fast lane with a daring new strategy.

Crypto update

Musk’s Tesla Bitcoin handbrake turn

Bitcoin hit the accelerator this morning following yet another market-empowering tweet from Elon Musk.

The Tesla CEO and ardent cryptocurrency supporter has partially u-turned from the automaker’s decision to stop accepting Bitcoin as payment owing to crypto mining’s environmental impact.

Musk said Sunday 13th June that Tesla will resume bitcoin transactions once the electric vehicle maker confirms there is “reasonable” clean energy usage by miners.

In response to a tweet from cryptocurrency news aggregator Coin Telegraph, Musk confirmed his stance, while also addressing questions over Tesla’s own BTC holdings.

It’s not clear how exactly Musk and co. plan to vet crypto miners, or how they would check their green energy credentials. However, this is the first indicator we’ve had that Tesla is shifting its stance following its self-imposed BTC payment ban.

Tesla still owns a substantial number of Bitcoin tokens, valued at anywhere between $1-2bn. In selling a 10% stake in Q1 2021, the carmaker allegedly made more profit from BTC sales than from selling actual cars.

As is commonplace when Musk powers up the Twitter app on his smartphone, this latest tweet has acted as propellant for BTC prices. As of Monday morning, Bitcoin was looking to test the $40,000 level after a few weeks of sideways trading – a 12% leap. We’re still someway off April’s $65,000 record highs, though, and it might take time for the token to reach those levels again.

The environmental cost of cryptocurrency mining has been under intense scrutiny in recent weeks. China has cracked down on mining operations citing massive energy consumption concerns. Iran has banned all such activity until September as blackouts in capital Tehran were triggered by mining operations guzzling up power.

Again, there has been no real indicator as to how Tesla ensures its supply of Bitcoin tokens come from environmentally friendly miners. But green power and clean energy are at the core of Tesla’s philosophy. Ensuring its crypto strategy is in line with basic principles is good for brand image, but it does leave you questioning with a carmaker is dabbling with crypto trading anyway.

That’s legal tender! El Salvador pushes ahead with ambitious BTC plan

El Salvador has become the first country in the world to accept Bitcoin as legal tender.

Under Millennial meme-loving President Nayib Bukele, the Central American state has taken the radical step of turning the world’s most popular crypto into actual, legal currency. It will gain full legal tender status in 90 days’ time.

Merchants were already free to accept payment in BTC at their own discretion, but now they must do so unless they lack the proper technology.

The US dollar will remain El Salvador’s primary currency. Prices for goods and services will be listed in USD rather than BTC for instance. But BTC can now be used for everyday purchases and even for paying taxes.

It’s an interesting move, especially for a digital currency that revolves around decentralised finance. How would paying taxes work exactly – especially when regulators worldwide are keen to crack down on crypto-led money laundering and tax evasion?

What about energy and mining? While the bill that passed BTC into law does not specifically mention mining, President Bukele tweeted a drone-shot video showing a geothermal powerplant in action. Bitcoin by volcano anyone?

The government has set about guaranteeing convertibility of BTC to dollars through a $150 million trust created at the country’s development bank BANDESAL.

Why has El Salvador taken this path? Bukele says the move will help foster financial inclusion, investment, tourism, innovation and economic development.

Bukele is particularly hopeful remittance, i.e. payments sent back home from citizens living overseas, can pick up. Using BTC to pay these would cut out the middleman, and possibly result in billions of extra cash by negating conversion fees.

Others are wary of the decision.

The IMF, with which El Salvador is hashing out a $1bn economic relief deal, states the Central American country’s move “raises a number of macroeconomic, financial and legal issues that require very careful analysis”.

We’ve seen institutional digital currency support rise in recent months – but we’ve also seen numerous regulatory bodies urge caution. An entire country taking the leap to legitimising BTC has legal tender is entirely new ground. Cryptocurrencies, and especially Bitcoin, are inherently volatile. What El Salvador is doing could have considerable blowback.

El Salvador is thus a Central American guinea pig with its legal tender experiment.

FTSE hits post-pandemic high, Bitcoin leaps on Musk tweet

European stock markets rose in early trade Monday, with the DAX in Frankfurt hitting a new all-time high and the FTSE 100 making a fresh post-pandemic high above 7180 as the broadly positive mood in equity markets continued to override concerns about inflation. Travel shares like IAG and EasyJet fell as it appears all but certain England’s full reopening will be delayed by another 4 weeks. Markets are now caught between last week’s big inflation reading and this week’s Fed meeting. Despite the big inflation reading from the US, inflation expectations are not really rising which should allow the Fed to keep its dovish stance. Treasury yields have held under 1.5%, indicating investors are buying the transitory story for now. Nevertheless, I’d expect these to take offer at some point and for 10s to retest 2% in the coming months. 

 

Wednesday’s statement from the Federal Reserve is not expected to feature any fireworks, but it is an important meeting as it will offer clues about the reaction function of the central bank to rising inflation. We know the Fed is happy to let inflation run a little hot over the summer as it pins everything on its employment mandate. So, labour market data is arguably more important than inflation numbers right now. On that front the last NFP jobs report was something of a Goldilocks number – not too hot to worry about an early taper of the Fed’s $120bn-a-month bond buying programme, but not so cool as to fret about the recovery. The truth is the Fed is looking at both and this meeting comes at a time of great uncertainty over whether inflation will indeed prove to be as transitory as policymakers believe.  

 

Minutes from the FOMC meeting in April had the Fed floating a trial balloon, as these indicated some policymakers are thinking about thinking about tapering asset purchases. “A number of participants suggested that if the economy continued to make rapid progress toward the Committee’s goals, it might be appropriate at some point in upcoming meetings to begin discussing a plan for adjusting the pace of asset purchases,” the minutes said. Members of the FOMC also stressed the importance of “clearly communicating its assessment of progress toward its longer-run goals well in advance of the time when it could be judged substantial enough to warrant a change in the pace of asset purchases”. The question remains: when does the Fed think it’s hit the landing area for the economy, and does inflation take off in the meantime? This week’s meeting is not expected to deliver any surprises – the jobs numbers are positive right now, but the labour market is some way off the Fed’s goal, whilst the inflation story is fairly-well understood for now. Anything to suggest the Fed could tighten earlier would lead to volatility. 

 

Meanwhile Bitcoin shot higher this weekend to trade close to $40k after Elon Musk indicated Tesla could accept the crypto asset for purchases. “When there’s confirmation of reasonable (~50%) clean energy usage by miners with positive future trend, Tesla will resume allowing Bitcoin transactions,” the ‘Technoking’ of Tesla tweeted. Tesla’s decision last month to stop accepting Bitcoin led to considerable volatility in the asset, whilst it was the company’s big investment announced in February that helped propel it to an all-time high near $65k. This latest tweet only confirms what a crazy relationship Musk has with Bitcoin and his incredible influence on prices. 

 

Oil prices made fresh highs as the outlook for demand improves and supplies remain on the tight side. WTI broke out clear of $71, its highest in almost 3 years. It comes after the International Energy Agency (IEA) called on OPEC and its allies to increase production. “OPEC+ needs to open the taps to keep the world oil markets adequately supplied,” it said last week. 

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