Return to Insights

Morning Update

Musk Fails to Impress Investors in Texian Presentation

Yesterday, Tesla’s share price fell 6% as investors remained unenthused after Elon Musk’s presentation at the company’s investor day in Texas. Tesla continues to be the most valuable car company, but yesterday investors were expecting Musk to unveil a hotly anticipated smaller, lower price car which it is hoped will enable them to capture more of the mass market. This comes a few years after Musk unveiled Tesla’s hopes to develop a cheaper proprietary battery – the 4680 – which he claimed would enable the company to deliver a car for around $25,000 by 2023. Nevertheless, production of the 4680 batteries has failed to gather sufficient steam, and the company have just unveiled plans to move their battery production chiefly to the US, from Germany to further boost production.

Tesla’s electric cars currently have base price ranges between $43,990-$129,990 with the Model 3 – which has a range of 267 miles – being the least expensive. Thus, investors consider Tesla’s ability to bring the entry level price down as critical to tapping into the mass market. According to the Guardian: “Tesla’s chief financial officer, Zach Kirkhorn, estimated the company would need to invest six times more than it has to date to hit its long-term target of increasing output to 20m vehicles annually, a 10-fold increase from current capacity. The bill could be $175bn, he said. Capturing the mass market is critical to Tesla’s goal of increasing deliveries 15-fold – to 20m vehicles – by 2030.

Hence, given yesterday’s deflated reaction, all eyes are on whether Tesla’s reshoring of their battery production will enable them to increase production of the 4680 and the extent to which the company will be able to raise capital for the investment needed to crack the mass market.

Blinken Crosses Paths with Lavrov

Yesterday saw the US Secretary of State and Russian foreign minister Sergei Lavrov meet face-to-face for the first time since the full-scale Russian invasion of Ukraine a year ago. The two diplomats met in Delhi for the G20 meeting of foreign ministers. It is understood that Blinken expressed to Lavrov his concern that Russia had suspend itself from New START, as tensions between the two countries’ continue to sour. According to Reuters “The Russian foreign ministry said Lavrov and Blinken spoke “on the move” for less than 10 minutes at the end of the closed-door session, and did not engage in any negotiations, Russian news agencies reported.”

Blinken’s encounter with Lavroz follows the US Secretary of State warned against the CCP providing military support to help bolster the Russian campaign at the Munich Security Conference last month. According to Blinken, Beijing already provides “non-lethal support”, though a new report suggests that they are considering sending “lethal support” to their neighbour. While China continues to weigh up the extent to which its interests are served by its involvement in the Ukrainian conflict, shortly before the invasion Xi Jinping said that there are ‘no limits’ between China and Russia’s relationship and thus Western leaders fear China’s involvement could escalate the conflict further. Of course, Sino-US relations continue to remain frosty having been exacerbated by the recent diplomatic tensions over surveillance balloons.

As the recent rally on T-note yields eased yesterday, equities saw some upside with the S&P 500 closing 0.75% higher while the tech heavy Nasdaq and Dow Jones also rose 0.73% and 1.05% respectively. Across the Atlantic European shares were also buoyed by the relative ‘risk-on’ move, with the Stoxx 600 rising half-a-percent over the session.

Pressure on sterling helped push the FTSE 100 higher given that around 2/3rds of the index’s constituents earn the majority of their revenues overseas with the blue-chip finishing 0.4% higher. Meanwhile the FTSE 250 closed 0.1% lower.


If you would like a PDF of this commentary, please contact us and we'll be in touch.

Contact us


Find out how we have helped our clients meet their hedging requirements.

USDCAD – 7 June 2023

USDINR – 7 June 2023

JP Morgan’s Opinion in Focus

JP Morgan have made some interesting points in the last couple of days: speaking about the Fed meeting next week, they’re concerned that if the FOMC do press the pause button, but were then forced to resume rate hikes either in July, or after the summer, in the face of stubborn inflation, what would this do to risk appetite in the market, because it might be a bit unnerving to see that the central bank hasn’t got a firm grasp on the problem.

Halifax Index: UK House Prices Fall for First Time Since 2012

According to the Halifax house price index, the price of residential property fell for the first time since 2012. The 1% depreciation between May 2022 and May 2023 came in line with expectations as analysts assess the impact of higher interest rates on households.

Nova Khakovka Dam Destroyed in Kherson, Ukraine

The vast Ukrainian Nova Khakovka Dam has been destroyed in the Russian occupied region of Kherson, Ukraine releasing a torrent of water as concerns for residents and nuclear power facilities up and downstream grows.

Think Tank Seeks Backing for UBI Trial

Plans have been unveiled for a Universal Basic Income (UBI) trial in the UK, with the think tank Autonomy currently seeking financial backing. It is hoped that the trial will span over two years with participants receiving £1,600 each month and being in control of how they spend or save the funds.

All Eyes on US Labour Market Data

Today all eyes are on US labour market data where the markets will be looking to gain an insight into the health of the US economy and the extent to which the jobs market is feeding into inflationary pressures ahead of the Fed’s meeting on 12 June.

House Passes Debt Ceiling Bill

Last night, the House comfortably passed the debt ceiling bill in arguably the most important stage in the process to ensure that the world’s largest economy averts a technical default. The House of Representatives cleared the Fiscal Responsibility Act by 314-117, the bipartisan deal assembled by President Joe Biden and House Speaker Kevin McCarthy.

Find out more about our foreign exchange solutions
Contact us