1. Gold Prices Remain Supported As Global Trade Tensions Escalate
Gold prices remained supported by a weaker dollar and rising global trade tensions. Gold prices edged somewhat higher on Monday, but later stabilized at 1,268.0 as of 7:30 GMT as a buoyant euro kept the dollar off its 11-month highs. At the trade war front, the U.S. is considering to declare China’s investment in U.S. technologies companies a threat to economic and national security, according to reports on Monday. The reports further noted that U.S. Treasury Secretary Steven Mnuchin would suggest administering the law in a report scheduled to be released on June 29. Meanwhile, last Friday, U.S. President Donald Trump threatened to impose a 20% tariff on all U.S. imports of European Union-assembled cars, escalating trade tensions with Europe.*
2. Crude WTI Retreats From Last Week’s Highs
Crude WTI/USD retreated in early Monday morning trading, after noting a long rally last week. Crude WTI (USOIL) noted excellent gains ending last week’s session at $68.58 but slipped this morning to trade 0.2% lower at $68.41 as of 7:30 GMT. The slide in crude prices followed an expected output increase that was agreed at OPEC’s headquarters in Vienna on Friday. Specifically, OPEC and non-OPEC partners including Russia said that their previously agreed output cut by 1.8 million barrels per day (bpd) would now be reversed by supply rises especially from OPEC leader Saudi Arabia.**
3. Tesla -4% As Analysts Question Company Data
Tesla (TSLA) tumbled 4% after Bernstein analyst Toni Sacconaghi raised concerns about how the company may be allocating its expenses across different businesses. TSLA closed at 333.63 on Friday after a steep dive as Sacconaghi wondered how TSLA‘s gross profit margin for its Services and other segments declined to -45% in Q1 2018 from +5% in its Q3 2016 report when the company’s data pointed to a buildout in services infrastructure but not a sales climb. Sacconaghi also noted that there could only be 3 possibilities for this inexplicable inconsistency between data and performance: “(1) some portion of warranty expenses are being accrued in ‘Services and Other’, though we note that TSLA‘s overall warranty accruals appear generous vs. other manufacturers, and the company states that it includes all warranty expenses in its Automotive segment; (2) post warranty work is high and being done for free, resulting in limited Services revenues but escalating COGS; or (3) there is some other incremental service cost associated with Model 3 (given that Service revenues and COGs appeared to diverge at the time of Model 3 ramp).” ***
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*Source: Investing Jun 24, 2018 11:53 PM ET
**Source: FXStreet Jun 24, 2018 04:39 GMT
***Source: Seeking Alpha Jun. 22, 2018 2:48 PM ET
Upcoming Earnings Reports This Week:
28/62018 – Nike Inc. (#NKE) to report post-market
