Week Commencing 28th August 2023

Tesla In The Headlines


Major Indices

Index Performance
S&P 500 +2.5%
DOW Jones +2.43%
NASDAQ +3.67%
FTSE 100 +1.72%
DAX +1.33%
Nikkei 225 +3.44%
Shangai Composite +2.26%

Global Performance

US Labor Market: July Job Openings and Labor Turnover Survey

Job openings fell by 338,000 to 8.8million in July which is the lowest since March 2021. This is good news for inflation- suggesting less wage demands. Pre-pandemic levels ere much lower though at 7million in February 2020. Unemployment remains at 5.8million (66% of available jobs).Now the probability of avoiding a rate hike in the next FED decision is 87%

Core PCE Release

Core PCE measures inflation by tracking the changes in prices of goods and services purchased by consumers, excluding food and energy. The FED prefer the core index because it provides an image of long term inflation, without noise from volatile food and energy prices.
Consumer prices rose 3.3% YoY in July, higher than the 3% rate seen in June, though this is likely due to the peak being last June at 7%. The inflation measure has risen 0.2% from June as expected. The PCE index shows slightly higher rise in inflation than CPI did earlier this month. On a monthly basis, personal income grew 0.2% and personal spending rose 0.8%.
How the markets reacted: the DXY dropped slightly, the 10Y Treasury Bond yield remained at around 4.1% and the probability of no further rate hikes this year remains at around 50/50.

US Core PCE Price Index Annual Change

China Update

China have decided to stop publishing youth unmployment figures soon after they reached an all time high. With a struggling real estate market, consumer confidence is rock bottom. Chinese consumers appear to be delaying large purchases due to belief that they will just become cheaper in the future. On Monday, China halved a 0.1% tax on stock trading to boost investor confidence. July 2023 Retail sales YoY are up 2.5%, but autombile purchases are down 1.5%, and jewellery down 10%. This consumer behaviour leads to a hard-to-escape cycle of price cuts. Interestingly as you can see, household appliance purchases were down 5.5% and furniture up only 0.1% which point to a weakening real estate market. Beijing and Shanghai have now lowered mortgage rates for first time buyers. Smaller down payments are required and borrowing rates are lower. Property developer Evergrande have lost 80% in share value on their first day trading in a year and a half, after posting a 33bn Yuan loss for the first half of 2023.

China Retail Sales YoY Breakdown

Hectic Week For Tesla

Tesla shares surged over 7% on Tuesday, before falling 5% on Friday. They announced an 'AI supercomputer' named Dojo, which is powered by over 10,000 Nvidia GPU's, and is designed to accelerate the development of self-driving control systems. The Friday fall however was due to price cuts in China for the second time in two weeks as demand struggles to keep up with booming supply. Their Model Y was discounted by 4.5% for the long-range version and 3.8% for the performance version. BYD are proving to be difficult competition in China, though it is worth noting that BYD supply batteries to Tesla, and have said they do not intend on entering the US market. The graph below shows their quarterly sales for Battery Electric Vehicles (BEVs). With Chinese deflation and geopolitical tension, there are threats to the supply chain. Tesla have already began diversifying the risk though by launching car production in India, and supposedly by planning to build their biggest Gigafactory in Mexico which will have an annual capacity of 1 million vehicles.

Tesla vs BYD Sales

Other Headlines

Coming Up Next Week...