Chief Investment Strategist
Tesla shares are up 23% over the past week as the EV maker reported Q2 deliveries of 443,956 beating estimates of 439,302. While EV deliveries are still down 5% YoY the EV production was down 14% YoY signalling weak demand persists in the EV industry. Investors did not pay attention to this fact but instead the small beat creating the hope that Tesla is past the worst. If momentum continues it could extend all the way to its 8 August robotaxi event which is the next catalyst for Tesla shares.
This week has been all about the Biden to pull from presidential ticket narrative fuelled by a disastrous first presidential debate against Trump. Biden’s poor performance has sparked a panic in the Democratic Party and intensified discussions about finding a new candidate to run for president at the election in November. As the PredictIt market is showing the probability of a Biden victory has plunged to around 20% compared to Trump’s implied probability of 58%. Biden has an important ABC interview tonight at 8 p.m. EDT (Eastern Daylight Time) which is 2 a.m. CEST (Central European Summer Time). Depending on his performance and whether the party can control the unfolding narrative that Biden is not up for the task this weekend will be critical for Biden.
Labour delivered a landslide victory, 409 seats in latest count vs 119 seats for Conservative, in the UK election due to how the UK electoral system works. Measured on popular vote Labour got around 33.8% vs 23.7% for the Conservative Party. The election turnout came in at only around 60% which is lowest in many decades. Yes, Labour got a landslide victory, but it is not an outright clear popular mandate. However, the outright majority means that the political landscape might provide UK with the political calmness it needs. It could turn out to be a blessing for UK equities as lower political uncertainty tends to have a positive impact on equity valuations. Back in July 2023 we highlighted the attractiveness of UK equities in our analysis UK equities offer high expected returns for the bold investor. As the table below shows, the long-term expected real rate return for UK equities is very high relative to European and US equities. UK equities have a dividend yield of 4% and buyback yield of 1.9% in addition to low real earnings growth expectations.
Macro will dominate the week ahead trading action and below we highlight the key events to watch.
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