Today's edition of the Saxo Morning Call features the SaxoStrats team discussing the continuing weakness of the US dollar as commodity prices recover ground and in the wake of key US equity indices hitting all-time highs Thursday.
Short term
Trade view / 02 October 2015 at 14:22 GMT

#SaxoStrats: BMW beset by double dose of woe

Head of Equity Strategy / Saxo Bank
Instrument: BMW:xetr
Price target:
Market price:

Shares in BMW are down 12% this year as investors have sold off the German carmaker due to a continuing slowdown in China and lately, the escalating VW diesel scandal.

The estimated cost of the fraudulent emissions at VW is growing daily with one estimate now reaching $87bn in total costs for VW compared to $107bn in its total equity as of Q2 2015. As a result the tail risk has increased dramatically.

Can VW really be the only one that cheated on diesel emissions? We find it very unlikely and suspect that other German carmakers may have disguised their true emissions rates too.

Management and risk description

Sell BMW:xetr at market with trailing stop (stop price at €91 and steps of €1.50).
Key risks are Q3 earnings release (Nov 3), better China macro data, evidence of no emission cheating.



— Edited by Clare MacCarthy

Non-independent investment research disclaimer applies. Read more
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