Traders Market Weekly: Avoid Whiplash, Fasten Your Seatbelts

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    April 26, 2024 FEAR NOT Brave Investors Where have we been and where are we going? Join our weekly market thread on Traders Community… Image: ECTmonst
    [See the full post at: Traders Market Weekly: Avoid Whiplash, Fasten Your Seatbelts]

    #74055
    TradersCom
    Keymaster

    Elon Musk flies in to meet China’s premier as Tesla fights local rivals

    Billionaire arrives in world’s largest car market as he makes push on ‘robotaxis’ in bid to revive fortunes

    Elon Musk made an unexpected visit to Beijing on Sunday to meet China’s number two leader, Premier Li Qiang, as Tesla contends with declining sales and data security concerns in the world’s biggest car market.

    Musk landed in the Chinese capital on Sunday afternoon and met Li, as the electric vehicle maker’s chief sought to overcome recent setbacks — including in China — by refocusing Tesla on artificial intelligence with a planned “robotaxi” service.

    China, Tesla’s second-biggest market after the US, is particularly significant, since sales have been sliding this year and Musk’s ambitions to boost Tesla’s appeal with new autonomous driving capabilities have been curtailed owing to Chinese restrictions on the use of customer data.

    The country’s national broadcaster reported that Li described Tesla’s business in the country as a “successful example” of economic and trade co-operation with the US — emollient language at a time when trade tensions between Beijing and Washington have increased, particularly over technology.

    State media also reported that Musk said Tesla wanted to deepen its co-operation with China and praised its Shanghai facility as its best-performing factory.

    “Honoured to meet with Premier Li Qiang,” Musk said in a post on X, his social media platform. “We have known each other now for many years, since early Shanghai days.”

    Li was the Communist party boss in Shanghai in 2018 when Musk decided to invest in the eastern Chinese city.

    The Tesla chief also met Ren Hongbin, chair of the China Council for the Promotion of International Trade, a commerce ministry group, according to Chinese state media.

    No further details of the meetings were available and Tesla did not immediately respond to questions.

    The visit came little more than a week after Musk abruptly cancelled a trip to India, where he had been expected to meet Prime Minister Narendra Modi, as the group explored starting production in the country.

    Tesla’s share price has fallen by almost a third so far in 2024, as it has lost ground to local rivals in China, the world’s biggest car market by units. At the same time it is grappling with a global slowdown in EV sales growth that has forced it to cut thousands of jobs.

    The group’s Chinese sales fell 4 per cent year on year in the first quarter, to 132,420 cars, according to data from Automobility, a Shanghai consultancy, even as total production of new energy vehicles — a category that includes hybrids — rose 32 per cent.

    The figures indicate that Tesla’s local market share in the sector is 7.5 per cent, far behind the 33 per cent notched up by BYD, the Warren Buffett-backed Chinese EV manufacturer.

    Tesla’s performance in China contributed to a worse than expected drop in first-quarter profits, as Musk pledged to bring forward the launch of “more affordable” models.

    On an earnings call last week he said Tesla was hoping to obtain regulatory approval for more autonomous driving capabilities in China.

    However, the group’s ambitions to roll out more advanced self-driving technology in China are complicated by requirements to store locally the user data needed to improve its systems, which are largely developed in the US.

    The powerful Cyber Administration of China has raised concerns about Tesla’s data collection in the past.

    The world’s second-biggest economy is Tesla’s biggest market outside the US and a vital part of the supply chain for its electric vehicles.

    Musk’s decision to build a multibillion-dollar gigafactory in Shanghai is credited with helping to spearhead the rapid growth of China’s EV industry.

    But Tesla’s recent loss of market share in the country comes after a decision to slash prices in China in late 2022 sparked a price war that has driven intense competition in the domestic auto market. The group has also released new models more slowly than its competitors.

    Recommended
    The Big Read
    The ambitions of China’s BYD stretch well beyond electric vehicles
    Wang Chuanfu, centre. surrounded by BYD solar panels, bus, truck and car

    Beyond BYD, which has rivalled Tesla as the world’s biggest EV producer and is currently only just behind in terms of units sold globally, Musk also faces emerging competition from Chinese tech groups such as Huawei and Xiaomi, which are increasing bets on EVs.

    Analysts have also warned that Musk’s business in China could be vulnerable to geopolitical retaliation from Beijing’s security hawks.

    X, the Musk-owned social media platform formerly known as Twitter, is banned in China. Officials have also expressed concerns about ties between SpaceX, Musk’s commercial rocket and satellite business, and the US military.

    This story has been amended to correctly attribute the fall in Tesla’s share price to this year

    https://www.ft.com/content/8211f79e-b9aa-4635-8c61-56a617d59713

    #74058
    Truman
    Participant

    Equity indices in the Asia-Pacific region began the week on a higher note while Japan’s Nikkei was closed for Showa Day.

    Hong Kong’s Hang Seng: +0.5%,
    China’s Shanghai Composite: +0.8%,
    India’s Sensex: +1.3%,
    South Korea’s Kospi: +1.2%,
    Australia’s ASX All Ordinaries: +0.9%.

    #China
    March Industrial Profit 4.3% YTD (last 10.2%)
    China’s Ministry of Commerce said that export controls that have been proposed by Japanese officials will undermine the stability of global supply chains.

    Property names in Hong Kong built on their recent newfound strength.

    Japan
    There was speculation that the Bank of Japan intervened in the currency market after the yen briefly weakened below 160 per dollar, followed by a rapid spike.

    #74059
    Truman
    Participant

    Major European indices are mixed.

    STOXX Europe 600: +0.3%,
    Germany’s DAX: UNCH,
    U.K.’s FTSE 100: +0.5%,
    France’s CAC 40: +0.1%,
    Italy’s FTSE MIB: UNCH,
    Spain’s IBEX 35: -0.6%.

    Eurozone
    April Business and Consumer Survey 95.6 (expected 96.9; last 96.2)
    European Central Bank policymaker Wunsch pushed back on speculation about a June rate cut that would be larger than 25 bps, adding that the central bank should be cautious about cutting again in July.

    Italy
    non-EU trade surplus EUR5.60 bln (last surplus of EUR6.89 bln)

    Spain
    April CPI 0.7% m/m (expected 1.0%; last 0.8%); 3.3% yr/yr (expected 3.4%; last 3.2%)
    Spain’s Prime Minister Sanchez said that he will not resign even though his wife is being investigated for corruption and influence peddling.
    BBVA reported solid results for the quarter and increased its profit guidance for the year.

    #74060
    Truman
    Participant

    Apple (AAPL 173.31, +4.00, +2.4%): upgraded to Outperform from Market Perform at Bernstein
    lululemon athletica (LULU 359.14, -5.56, -1.5%): downgraded to Equal Weight from Overweight at Barclays

    #74061
    Truman
    Participant

    Tesla (TSLA 185.73, +17.36, +10.3%): secured China approval for self driving service, according to WSJ
    Meta Platforms (META 439.02, -4.27, -1.0%): will be investigated by EU over handling of Russian disinformation, according to FT

    #74062
    Truman
    Participant

    Domino’s Pizza (DPZ 520.02, +20.95, +4.2%): beats by $0.18, reports revs in-line; US comps +5.6%; reaffirms long term guidance
    SoFi Technologies (SOFI 8.03, +0.16, +2.0%): beats by $0.01, beats on revs; guides Q2 revs below consensus; raises FY24 adjusted revenue and GAAP EPS guidance
    Paramount (PARA 12.52, +0.61, +5.1%): shareholders have concerns about proposed Skydance merger, according to WSJ; could fire CEO today, according to CNBC

    #74063
    Truman
    Participant

    Market Morning
    Dow 38312.51 +72.85 (0.19%)
    Nasdaq 15953.03 +25.13 (0.16%)
    SP 500 5109.06 +9.10 (0.18%)
    10-yr Note +25/32 4.623
    NYSE Adv 1957 Dec 748 Vol 182 mln
    Nasdaq Adv 2645 Dec 1427 Vol 2.2 bln

    Industry Watch
    Strong: Utilities, Real Estate, Consumer Discretionary, Materials, Industrials, Energy, Health Care
    Weak: Communication Services, Consumer Staples

    Moving the Market

    — Carryover momentum after rebound last week
    — Tesla (TSLA) up 10% after getting approval in China for self-driving service
    — Apple (AAPL) up 3.5% after upgrade to Outperform from Market Perform at Bernstein
    — Losses in oher mega caps (NVDA, GOOG, META, MSFT, AVGO) weighing over broader market
    — Muted action in Treasuries
    — The real estate and utilities sectors are benefitting from a drop in market rates. The 10-yr note yield is down five basis points to 4.62%.

    #74064

    Dow 38,386.09 146.43 0.38%
    S&P 500 5,116.17 16.21 0.32%
    Nasdaq 15,983.08 55.18 0.35%
    VIX 14.67 -0.36 -2.40%
    Gold 2,347.60 0.40 0.02%
    Oil 82.69 -1.16 -1.38%

    #74065

    and a few BONUS tracks to celebrate strong markets closing.

    And also on the GOAT playlist 🙂

    #74077
    Truman
    Participant

    Major European indices are mostly lower.

    STOXX Europe 600: UNCH,
    Germany’s DAX: -0.4%,
    U.K.’s FTSE 100: +0.6%,
    France’s CAC 40: UNCH,
    Italy’s FTSE MIB: -0.3%,
    Spain’s IBEX 35: -1.3%.

    Data reported this morning showed above-consensus Q1 GDP from Germany, France, Italy, and Spain, which is weighing on rate cut expectations.

    Mercedes and Volkswagen missed Q1 profit expectations, but both reaffirmed their outlooks for the year, while Lufthansa said that summer travel demand will be strong.

    Markets in the region will be closed for Labor Day tomorrow.

    Eurozone
    Q1 GDP 0.3% qtr/qtr (expected 0.1%; last -0.1%); 0.4% yr/yr (expected 0.2%; last 0.1%).
    April CPI 0.6% m/m (last 0.8%); 2.4% yr/yr, as expected (last 2.4%).
    April Core CPI 0.7% m/m (last 1.1%); 2.7% yr/yr (expected 2.6%; last 2.9%)

    Germany
    March Retail Sales 1.8% m/m (expected 1.3%; last -1.9%); 0.3% yr/yr (last -2.7%).
    March Import Price Index 0.4% m/m (expected 0.1%; last -0.2%); -3.6% yr/yr (expected -3.8%; last -4.9%).
    April Unemployment Change 10,000 (expected 7,000; last 6,000)
    April Unemployment Rate 5.9%, as expected (last 5.9%). Q1 GDP 0.2% qtr/qtr (expected 0.1%; last -0.5%); -0.2% yr/yr, as expected (last -0.2%)

    U.K
    March BoE Consumer Credit GBP1.577 bln (last GBP1.429 bln).
    March Mortgage Approvals 61,330 (expected 61,000; last 60,500)

    France
    Q1 GDP 0.2% qtr/qtr (expected 0.1%; last 0.1%); 1.1% yr/yr (expected 0.9%; last 0.8%).
    March Consumer Spending 0.4% m/m (expected 0.2%; last 0.1%).
    April CPI 0.5% m/m, as expected (last 0.2%); 2.2% yr/yr (expected 2.1%; last 2.3%).
    March PPI -0.2% m/m (last -1.7%); -7.5% yr/yr (last -5.5%)

    Italy
    Q1 GDP 0.3% qtr/qtr (expected 0.1%; last 0.1%); 0.6% yr/yr (expected 0.4%; last 0.7%).
    April CPI 0.2% m/m (expected 0.3%; last 0.0%); 0.9% yr/yr (expected 1.0%; last 1.2%)

    Spain
    Q1 GDP 0.7% qtr/qtr (expected 0.4%; last 0.7%); 2.4% yr/yr (expected 1.9%; last 2.1%).
    February Current Account surplus EUR1.90 bln (last surplus of EUR5.13 bln)

    Swiss
    April KOF Leading Indicators 101.8 (expected 102.1; last 100.4)

    #74078
    Truman
    Participant

    Equity indices in the Asia-Pacific region ended Tuesday on a mixed note.

    Japan’s Nikkei: +1.2%,
    Hong Kong’s Hang Seng: +0.1%,
    China’s Shanghai Composite: -0.3%,
    India’s Sensex: -0.3%,
    South Korea’s Kospi: +0.2%,
    Australia’s ASX All Ordinaries: +0.3%.

    End-of-month economic data from the region showed below-consensus March Retail Sales from Japan and Australia while China’s Manufacturing (actual 50.4; expected 50.3) and Non-Manufacturing PMIs (51.2; expected 52.3) decelerated from their March levels, but remained in expansion. However, Caixin Manufacturing PMI (actual 51.4; expected 51.0) accelerated in April.

    Markets in China, South Korea, Hong Kong, India, and Singapore will be closed for Labor Day tomorrow.

    China
    April Manufacturing PMI 50.4 (expected 50.3; last 50.8)
    Non-Manufacturing PMI 51.2 (expected 52.3; last 53.0).
    April Caixin Manufacturing PMI 51.4 (expected 51.0; last 51.1)
    Domestic travel spending in China was up 17% yr/yr in Q1.

    Japan
    March Housing Starts -12.8% yr/yr (expected -7.6%; last -8.2%)
    Construction Orders 31.4% yr/yr (last -11.0%)
    March Industrial Production 3.8% m/m (expected 3.4%; last -0.6%)
    March Retail Sales 1.2% yr/yr (expected 2.5%; last 4.7%).
    March Unemployment Rate 2.6% (expected 2.5%; last 2.6%
    Japanese officials refused to confirm whether a currency intervention took place yesterday.

    South Korea
    March Industrial Production -3.2% m/m (last 2.9%); 0.7% yr/yr (last 4.6%).
    March Retail Sales 1.5% m/m (last -3.0%)
    March Service Sector Output -0.8% m/m (last 0.5%)

    Singapore
    Q1 Unemployment Rate 2.1% (last 2.0%)

    Australia
    March Retail Sales -0.4% m/m (expected 0.2%; last 0.2%)
    March Private Sector Credit 0.3% m/m (expected 0.4%; last 0.5%).
    March Housing Credit 0.4% m/m (last 0.4%)

    #74079
    Truman
    Participant

    Paramount Global (PARA 12.13, -0.12, -1.0%): announces that Bob Bakish, President and CEO, is stepping down from his role as CEO and from the Board of Directors; beats by $0.27, reports revs in-line; CEO stepping down
    Eli Lilly (LLY 790.20, +53.00, +7.2%): beats by $0.11, misses on revs; raises FY24 EPS guidance above consensus, revs above consensus
    NXP Semi (NXPI 256.01, +8.88, +3.6%): beats by $0.05, reports revs in-line; guides Q2 EPS in-line, revs in-line
    3M (MMM 99.38, +7.22, +7.8%): beats by $0.29
    Archer-Daniels (ADM 60.56, -0.13, -0.2%): beats by $0.09, misses on revs; reaffirms FY24 EPS guidance
    Coca-Cola (KO 61.80, -0.24, -0.4%): beats by $0.02, beats on revs; guides FY24 EPS in-line
    McDonald’s (MCD 271.00, -2.55, -0.9%): misses by $0.02, reports revs in-line; Global comps increased +1.9%; US comps increased +2.5%
    GE HealthCare (GEHC 82.27, -6.67, -7.5%): misses by $0.01, misses on revs; guides FY24 EPS in-line
    MicroStrategy (MSTR 1200.99, -91.98, -7.1%): misses by $2.54 (two ests), misses on revs
    Yum China (YUMC 37.76, -2.28, -5.7%): beats by $0.06, misses on revs; comps -3%
    Logitech Int’l SA (LOGI 83.27, +3.36, +4.2%): beats by $0.33; beats on revs; sees FY25 revs in-line with consensus

    Tesla (TSLA 190.04, -4.01, -2.1%): CEO Elon Musk planning additional layoffs, according to The Information

    #74080
    Truman
    Participant

    Employment costs for civilian workers increased 1.2% (consensus 1.0%), seasonally adjusted, for the 3-month period ending in March 2024, versus 0.9% for the 3-month period ending in December 2023. Wages and salaries increased 1.1% and benefit costs increased 1.1% from December 2023. On a year-over-year basis, compensation costs for civilian workers were up 4.2%.

    The key takeaway from the report is that compensation costs accelerated from the fourth quarter, lending to concerns about general price inflation sticking above the Fed’s 2% target for longer than expected.

    #74081
    Truman
    Participant

    FHFA Housing Price Index showed a 1.2% increase in February following a 0.1% decline in January.

    S&P Case-Shiller Home Price Index jumped 7.3% in February (consensus 6.7%) following a 6.6% increase in January.

    The Chicago PMI dropped to 37.9 in April (consensus 44.5) from 41.4 in March.

    The Consumer Confidence Index dropped to 97.0 in April (consensus 104.0) from a downwardly revised 103.1 in March (from 104.7).

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