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Video / 03 October 2017 at 7:34 GMT

From the Floor: Model 3 bottlenecks hit Tesla shares — #SaxoStrats

   • Riksbank governor Stefan Ingves out at 0930 GMT
   • 'EURSEK is at interesting levels': Hardy
   • Strong US Manufacturing PMI data not reflected in USD
   • Spanish shares under pressure as Catalan crisis continues
   • Tesla bulls focus on strong quarter for Model S, Model X

By Michael McKenna

Tesla shares are widely regarded as a bellwether for electric car industry as governments around the world look to push the move away from polluting internal combustion engines. On Monday, the California-based firm reported deliveries largely in line with expectations for 2017's third quarter (26,150 versus 26,086 expected by consensus) while Model 3 production stands well below forecasts at 260 versus 1,500 expected due to what the company calls "bottlenecks".

"There are no fundamental issues with the Model 3 production or supply chain [...] and we are confident of addressing the manufacturing bottleneck issues in the near-term," said Tesla in a statement after yesterday's release post- the New York close.

Tesla shares dropped 2% in the after-hours session with bears focusing on the Model 3's teething issues. Bulls, says Saxo Bank head of equities strategy Peter Garnry, will likely choose to focus on strong Q3 sales for the company's established Model S and Model X variants.

Tesla shares:
Source: Saxo Bank  

This morning sees newly reappointed Riksbank governor Stefan Ingves out in Gothenberg where Saxo head of FX strategy John J Hardy says that the market focus is on EURSEK downside.

"EURSEK is at interesting levels and we expect to see it continue to consolidate lower if today's speech offers no big surprises," Hardy adds.


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Source: Saxo Bank 

Beyond SEK, Hardy points to the lack of a pronounced dollar reaction to Monday's Manufacturing PMI data from the US, where the index stood at 60.8 – the highest level in a long time and the second-highest print seen since 1987.

"The subcomponents [of yesterday's headline print] were impressive but the USD reaction was not all that enthusiastic," says Hardy; "it's do-or-die time for USD".

Peter Garnry pointed to Catalonia-driven volatility in the Spanish IBEX index but added that the potential for big swings is currently somewhat hemmed in Spanish prime minister Mariano Rajoy's robust polling data as well as the European Union's cautious response to calls for Catalonian independence.

For more on Spain, the euro, US data, and the AUD, listen to Tuesday's morning call in its entirety above.

Tesla shares are caught between strong sales of the firm's older models and difficulties with Model 3 production. Photo: Shutterstock

Michael McKenna is senior editor at Saxo Bank


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