Tesla: Positive Outweighs Negative

Lousy review isn’t hurting the stocks as its China production number in August provides joy to investors.

First, the Automotive data provider Edmunds provided a poor review of Tesla’s Model S Plaid edition, such as difficulty managing on slick surfaces for the yoke steering wheel. Also, a poor comment was given on the handling of curves, and the user interface and experience were lacking. This sum up the video” Why Tesla’s Plaid’s a Waste of Money”.

Yet on the flip side, as Pika World had previously updated that investors need not worry about China’s poor delivery figures, there is a bright spot. Tesla had shipped a record 44,264 vehicles from its China factory, and 31,000 were exported to Europe and 13,000 were sold locally. This is an improvement from July’s figure.

Is US Growth Evaporating?

While Pika World has favoured the European stocks, analysts are now downgrading US growth prospects as the paring of stimulus seems to be a near term headwind. The Fed tapering schedule is a wild card, although most expected tapering to begin in December.

Most importantly, we would need to monitor the GDP figures to see any trend up momentum despite the Delta variant causing trouble to reopen trade. Nonetheless, the stock market appears to take a breather from its high and Russell 2000 is taking the biggest hit thus far.

IronNet: The next Squeeze?

The shares have risen sharply on Tuesday. There has been robust discussion on Reddit as it might become the next “gamma squeeze” as traders are buying into the bullish options that can create more buying pressure, as seen in other episodes such as AMC and GME.

The company had merged with SPAC LGL Systems Acquisition Corp last month. Can the momentum continue? It depends if a new candidate of squeeze has arrived.

European Central Bank Next Move

The ECB is set to meet again to adjust its QE program. There is a growing expectation that the central bank is likely to lower its pace of asset purchase that was activated to cope with the Covid pandemic impact on European economies.

Nonetheless, Pika World expects Christine Lagarde to maintain on the dovish side, given that the fragile recovery will need more support. The uncomfortable side effect of the stimulus, the inflation, does make people feel worried. Eurozone inflation is around 3% on an annual basis. There is also an expectation that ECB will likely release new GDP growth from 4.6% to 5.0%. All this may result in a build-up of inflation pressure.

Like the US situation, a consensus is converging as the narrative to support bond buying is withering, and any paring down may follow the US trajectory. The current level of purchase is around 80 billion euros. However, ECB bought only about $65 billion of assets in August, which is seen as a tapering signal.

Pika World will be monitoring closely on European outlook as we maintain overweight on European equities.

What’s on the Menu Today?

At 8.30 pm, we will receive the Initial Jobless Claims, which is expected to maintain stability at 2744K.

At 11 pm, the Crude Oil Inventories is expected to see a reduction of 3.832M.

At 11.05 pm, FOMC Member Daly will speak. This is followed by Bowman speaking at 1 am. Finally, William will speak at 2 am too. It is increasingly vital for us to understand the tone of the FOMC members’ speech as the market predicts the odds of tapering during the next few FOMC meetings.

It is 9 September, Thursday, at 7.18 am in Singapore and 7.18 pm in New York. We hope you have a profitable week!