Ford Motor Q3 China Sales Rise 25%, Biggest Jump Since 2016; Target Price $10 in Best Case

Ford Motor Co, an American multinational automaker, said its vehicle sales climbed 25% in the third quarter of this year, the biggest year-over-year increase since 2016, as demand gradually recovered from the COVID-19 pandemic slowdown in the world’s second-largest economy.

Ford and its joint ventures, Changan Ford, JMC and Ford Lio-Ho, sold 164,352 vehicles in Greater China in the third quarter. Sales of Ford, Lincoln and JMC brand vehicles achieved year-over-year growth of 12.5%, 64.8% and 38.3%, respectively, the company said.

Ford Motor shares closed 0.66% higher at $7.62 on Thursday; however, the stock is down about 20% so far this year.

Executive comments

“Ford is strengthening its sales momentum in China by building on growing consumer preference for our iconic brand and favourable product mix of luxury and near-premium utility vehicles,” said Anning Chen, president and CEO of Ford China.

“Our localization strategy to produce in China world-class Ford and Lincoln vehicles, including the newly launched Ford Explorer, Lincoln Corsair and Lincoln Aviator, has further enhanced our competitiveness in delivering the best products and services that Chinese consumers are looking for.”

Ford Motor stock forecast

Twelve analysts forecast the average price in 12 months at $8.03 with a high forecast of $10.00 and a low forecast of $4.90. The average price target represents a 5.38% increase from the last price of $7.62. From those 12 equity analysts, four rated “Buy”, seven rated “Hold” and one rated “Sell”, according to Tipranks.

Morgan Stanley gave a base target price of $8 with a high of $12 under a bull scenario and $4 under the worst-case scenario. The investment bank gave the company an “overweight” rating. Deutsche Bank raised their stock price forecast to $9 from $8 and Benchmark introduces a price target of $10.

Several other analysts have also recently commented on the stock. Barclays lifted their price target on Ford Motor to $7 from $4 and gave the stock an “equal weight” rating in July. Nomura reiterated a “sell” rating in August. Citigroup increased their target price on shares of Ford Motor from $5.50 to $7.50 and gave the stock a “neutral” rating. At last, UBS Group increased their price target on Ford Motor to $6.70 from $4.30 and gave the stock a “neutral” rating.

Analyst view

“Auto market recovery in China – which happens to be Ford’s second-largest market- positions the firm well. The company’s efforts to strengthen product line-up, with more customer-centric products and focus on customer experiences are likely to have yielded results. These measures along with improving economic conditions in China are likely to continue the sales growth in the country, going forward,” noted equity analysts at Zacks Research.

“Ford’s focus on SUVs and trucks along with EV launches are likely to boost its long-term prospects. (But) Depressed demand for vehicles amid weak consumer confidence and elevated leverage is likely to dent Ford’s sales and earnings in the near future,” Zacks Research added.

Upside and Downside Risks

Upside: 1) More detail around restructuring actions. 2) Positive share gains in pickups, Ford’s strongest segment 3) Decomplexification actions. 4) Launch execution. 5) Further announcements around EVs or AVs – highlighted Morgan Stanley.

Downside: 1) US SAAR resiliency (2020 base case 14.0MM). 2) Further COVID-19 impacts. 3) The F-150 pickup truck loses market share. 4) Slowdown in key oil-dependent end markets. 5) Launch / Warranty issues continue to remain a problem.

Check out FX Empire’s earnings calendar

Ford Motor U.S. Auto Sales Recovered in Q3; Target Price $7.54

Ford Motor Co, an American multinational automaker, said on Friday that its third-quarter U.S. auto sales were up 27.2% as the industry recovered at a stronger than expected pace from the COVID-19 demand slowdown, sending its shares up over 2%.

The U.S. producer of cars and trucks said with the help of stronger retail sales and rapidly recovering commercial sales, Ford retail share of the industry grew by an estimated 0.2 percentage points, while Ford’s Q3 total share expanded by 0.8 percentage points. Excluding discontinued cars, Ford retail sales were up 1.3%.

Ford’s overall Q3 pickup sales of combined F-Series and Ranger totalled 249,997 pickups. This represents Ford’s best Q3 pickup sales since 2005, with combined sales up 4.0% over a year ago. F-Series Q3 retail sales up 10.1% over a year ago and are back above pre-coronavirus sales levels. Total F-Series sales of 221,647 for the quarter were up 3.5%, the company said.

The second-largest U.S. automaker, which announces its quarterly sales volumes a day later than the rest of the industry, said it sold 551,796 vehicles in the country in the quarter, down from 580,251 a year earlier. Its sales were, however, up 27.2% when compared with the preceding quarter, Reuters reported.

At the time of writing, Ford Motor’s shares traded over 2% higher at $6.89 on Friday; the stock is also down about 30% so far this year.

Executive comment

“Despite the challenging pandemic environment, our retail unit sales were down only 2% and we had our best third quarter of pickup truck sales since 2005. F-Series finished the quarter on a high note with September sales up 17.2% with over 76,000 F-Series pickups sold. This is a testament to our winning product portfolio and the performance of our great dealers,” said Mark LaNeve, Ford vice president, U.S. Marketing, Sales and Service.

Ford Motor stock forecast

Ten analysts forecast the average price in 12 months at $7.54 with a high forecast of $8.00 and a low forecast of $4.90. The average price target represents an 11.13% increase from the last price of $6.79. From those 10, three analysts rated ‘Buy’, six analysts rated ‘Hold’ and one rated ‘Sell’, according to Tipranks.

Morgan Stanley target price is $8 with a high of $12 under a bull scenario and $4 under the worst-case scenario. Evercore ISI raised the price target to $8 from $5; Citigroup upped their stock price objective to $7.5 from $5.5 and Ford Motor had its target price raised by Credit Suisse Group to $8 from $7. The brokerage currently has a neutral rating on the auto manufacturer’s stock.

A number of other equities research analysts have also recently issued reports on the stock. Barclays upped their price objective to $7 from $4 and gave the company an equal weight rating. Royal Bank of Canada dropped their price target to $5 from $6.50 and set a sector to perform rating.

It is good to hold now as 50-day Moving Average and 100-200-day MACD Oscillator signals a selling opportunity.

Analyst views

“We raise our 2020 Ford EPS forecast to ($0.90) vs. our prior forecast of ($1.30), while for 2021 and 2022 our EPS rises to positive $0.75 and $1.25 vs. our prior forecast of $0.30 and $0.80 respectively. On our revised price target of $8, Ford trades at just over 10x our 2021E EPS. Currently, the stock trades at just over 9x our revised 2021 EPS forecast,” Adam Jonas, equity analyst at Morgan Stanley noted in June.

“We raise our 3Q N. American Ford volume forecast to negative 12% Y/Y vs. down 15% previously. Our 4Q volume is revised to down 3% vs. down 5% previously. This slight upward adjustment reflects stronger than expected US SAAR, a rebound in used vehicle prices, and more supportive auto credit vs. our prior forecasts,” he added.

Upside and Downside Risks

Upside: 1) More detail around restructuring actions. 2) Positive share gains in pickups, Ford’s strongest segment. 3) Decomplexification actions. 4) Launch execution. 5) Further announcements around EVs or AVs- highlighted by Morgan Stanley.

Downside: 1) US SAAR resiliency (2020 base case 14.0MM). 2) Further COVID-19 impacts. 3) The F-150 pickup truck loses market share. 4) Slowdown in key oil-dependent end markets. 5) Launch / Warranty issues continue to remain a problem.

Ford Motors to Invest C$1.95 Billion in Canada Operations Under Unifor Union Deal

Ford Motors, an American multinational automaker, will invest 1.95 billion Canadian dollars in its Oakville and Windsor plants in Canada, Unifor union National President Jerry Dias said.

Unifor National President, Jerry Dias said: “I’m very pleased to announce that on behalf of the more than 6,000 members who work at Ford Motor Company, we have negotiated $1.95 billion of investments to retool the Oakville complex to build five models of electric vehicles and bring a new product to the engine plant in Windsor.”

“Today is an historic day. We are not only talking about solidifying the footprint of the auto industry in the short-term but for the long term. I think it’s fair to say that as an organization we hit a home run,” said Dias.

Dias added that up until today, of the $300 billion announced globally in EV investments as the auto industry transforms from combustible engines to battery-electric vehicles, not one nickel had been allocated Canada. But with today’s announcement, that changes.

Ford shares closed 1.31% lower at $6.78 on Tuesday; the stock is down about 30% so far this year.

Ford stock forecast

Eleven analysts forecast the average price in 12 months at $7.46 with a high forecast of $8.00 and a low forecast of $4.90. The average price target represents a 10.03% increase from the last price of $6.78. From those 11 equity analysts, three rated “Buy”, seven rated “Hold” and one rated “Sell”, according to Tipranks.

Morgan Stanley target price is $8 with a high of $12 under a bull scenario and $4 under the worst-case scenario. Evercore ISI raised the price target to $8 from $5; Citigroup upped their stock price objective to $7.5 from $5.5 and Ford Motor had its target price raised by Credit Suisse Group to $8 from $7. The brokerage currently has a neutral rating on the auto manufacturer’s stock.

A number of other equities research analysts have also recently issued reports on the stock. Barclays upped their price objective to $7 from $4 and gave the company an equal weight rating. Royal Bank of Canada dropped their price target to $5 from $6.50 and set a sector to perform rating.

It is good to hold now as 50-day Moving Average and 100-200-day MACD Oscillator signals a selling opportunity.

Analyst views

“We raise our 2020 Ford EPS forecast to ($0.90) vs. our prior forecast of ($1.30), while for 2021 and 2022 our EPS rises to positive $0.75 and $1.25 vs. our prior forecast of $0.30 and $0.80 respectively. On our revised price target of $8, Ford trades at just over 10x our 2021E EPS. Currently, the stock trades at just over 9x our revised 2021 EPS forecast,” Adam Jonas, equity analyst at Morgan Stanley noted in June.

“We raise our 3Q N. American Ford volume forecast to negative 12% Y/Y vs. down 15% previously. Our 4Q volume is revised to down 3% vs. down 5% previously. This slight upward adjustment reflects stronger than expected US SAAR, a rebound in used vehicle prices, and more supportive auto credit vs. our prior forecasts,” he added.

Upside and Downside Risks

Upside: 1) More detail around restructuring actions. 2) Positive share gains in pickups, Ford’s strongest segment. 3) Decomplexification actions. 4) Launch execution. 5) Further announcements around EVs or AVs- highlighted by Morgan Stanley.

Downside: 1) US SAAR resiliency (2020 base case 14.0MM). 2) Further COVID-19 impacts. 3) The F-150 pickup truck loses market share. 4) Slowdown in key oil-dependent end markets. 5) Launch / Warranty issues continue to remain a problem.

Will Tesla Stock Price Crash?

Just today, Tesla surpassed Walmart’s market cap – how is that possible? Walmart has 534.66 billion in sales versus just 25.71 billion for Tesla.

TESLA DAILY CHART

The trend in TSLA is overbought. The MACD and the RSI (14) are diverging negatively, suggesting waning momentum. The stock is behaving like a commodity – not a business. I see the potential for a “buy the rumor sell the news” event after the stock splits. I think prices will correct at least 50%, and that is extremely conservative.

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Another way to measure Tesla’s ludicrous valuation is through total revenue – let me explain. Hypothetically speaking, let’s say a company paid 100% of its annual revenue to shareholders as a dividend. Of course, this is not possible, but it helps make my point. In the example below, we will measure how many calendar days it would take to recover your initial investment if each company paid 100% of their profits to shareholders at today’s stock price.

Time to recover initial investments:

Ford Motor Company (F) $6.66

Revenue 130.4 billion

Revenue Per Share $32.87

Time to recover initial investment 74-days

General Motors (GM) $28.56

Revenue 115.79 billion

Revenue Per Share $80.94

Time to recover initial investment 128-days

Walmart (WMT) $131.65

Revenue 534.66 billion

Revenue Per Share $188.23

Time to recover initial investment 255-days

Tesla (TSLA) $2042.41

Revenue 25.72 billion

Revenue Per Share $141.64

Time to recover initial investment 5263-days or over 14-years.

Lastly, the combined market cap of Ford, GM, and Fiat Chrysler (the big three) is 90-billion, and in 2019 they produced 7,470,370 vehicles. Tesla’s market cap is 300% greater than all three (307 billion), and they delivered only 195,000 vehicles – ASTONISHING.

What goes up – must come down. Will Tesla prices crash soon? Maybe – it is hard to say. Whatever the case, I think we will get a generational buying opportunity in TSLA next year or early 2022.

AG Thorson is a registered CMT and expert in technical analysis. He believes we are in the final stages of a global debt super-cycle. For more information, please visit here.

Ford Motor’s China Vehicle Sales Rebound 3% in June Quarter as Coronavirus Restrictions Ease

Ford Motor Co, an American multinational automaker, said that its vehicle sales in mainland China rebounded in the June quarter, growing 3% from the same period last year, driven by strong demand following the lifting of COVID-19 pandemic restrictions.

That would be the first time in nearly three years, the automaker has registered a rise in quarterly sales. Total of 158,589 vehicles were sold during the second quarter, representing a 3% growth year-over-year and 78.7% sales increase compared to the first quarter of 2020.

Transit commercial vehicles experienced solid y/y growth of 60.9%, as did Lincoln luxury vehicles on gains of 12.0%, the company said. In the U.S., where business has been hit hard by the coronavirus pandemic, Ford’s sales fell more than 30% during the quarter.

On the other hand, Ford’s rival, General Motors’ sales declined 5.3% during the quarter in the world’s second-largest economy. Ford’s sales plunged 26% in 2019 and 37% in 2018.

Ford outlook and price target

Eleven analysts forecast the average price in 12 months at $6.24 with a high forecast of $8.00 and a low forecast of $3.50. The average price target represents a 2.46% increase from the last price of $6.09. From that eleven, three analysts rated ‘Buy’, six rated ‘Hold’ and two rated ‘Sell’, according to Tipranks.

Morgan Stanley target price is $8 with a high of $12 under a bull scenario and $4 under the worst-case scenario. Ford Motor had its price target lifted by UBS Group from $4.30 to $6.70. UBS Group currently has a neutral rating on the auto manufacturer’s stock. JP Morgan raised the target price to $7 from $6. Ford Motor was given a $7.50 price target by analysts at Jefferies Financial Group Inc. The firm currently has a buy rating on the stock.

It is good to hold now as 50-day Moving Average and 100-200-day MACD Oscillator signals a selling opportunity.

Analyst view

“We raise our 2020 Ford EPS forecast to ($0.90) vs. our prior forecast of ($1.30), while for 2021 and 2022 our EPS rises to positive $0.75 and $1.25 vs. our prior forecast of $0.30 and $0.80 respectively. On our revised price target of $8, Ford trades at just over 10x our 2021E EPS. Currently, the stock trades at just over 9x our revised 2021 EPS forecast,” Adam Jonas, equity analyst at Morgan Stanley noted in June.

“We raise our 3Q N. American Ford volume forecast to negative 12% Y/Y vs. down 15% previously. Our 4Q volume is revised to down 3% vs. down 5% previously. This slight upward adjustment reflects stronger than expected US SAAR, a rebound in used vehicle prices, and more supportive auto credit vs. our prior forecasts,” he added.

Stock Pick Update: July 1 – July 7, 2020

The broad stock market has extended its short-term consolidation in the last five trading days (June 24 – June 30). More than three months ago on March 23, the S&P 500 index sold off to new medium-term low of 2,191.86. It was a stunning 35.4% below February 19 record high of 3,393.52. The corona virus and economic slowdown fears have erased more than a third of the broad stock market value. Then we saw huge come-back rally, as the index got back above 3,200 mark. In the first half of June the broad stock market has broken below its short-term upward trend line. Since then it has been trading within a consolidation following bouncing off 3,000 mark.

The S&P 500 index has lost 0.45% since last Wednesday’s open. In the same period of time our five long and five short stock picks have lost just 0.04%. Stock picks were relatively slightly stronger than the broad stock market last week. Our long stock picks have lost 0.23% and short stock picks have resulted in a gain of 0.16%. The overall results remain relatively better than the S&P 500 index over last months.

If stocks were in a prolonged downtrend, being able to profit anyway, would be extremely valuable. Of course, it’s not the point of our Stock Pick Updates to forecast where the general stock market is likely to move, but rather to provide you with stocks that are likely to generate profits regardless of what the S&P does.

This means that our overall stock-picking performance can be summarized on the chart below. The assumptions are: starting with $100k, no leverage used. The data before Dec 24, 2019 comes from our internal tests and data after that can be verified by individual Stock Pick Updates posted on our website.

Below we include statistics and the details of our three recent updates:

  • June 30, 2020
    Long Picks (June 24 open – June 30 close % change): WY (+0.36%), CTSH (+3.76%), HIG (-0.57%), BSX (-2.39%), COP (-2.28%)
    Short Picks (June 24 open – June 30 close % change): EW (-1.51%), WMB (0.00%), ETR (-0.27%), CCI (+2.04%), ADBE (-1.07%)Average long result: -0.23%, average short result: +0.16%
    Total profit (average): -0.04%
  • June 23, 2020
    Long Picks (June 17 open – June 23 close % change): BA (-3.41%), DLR (-0.81%), WLTW (+1.27%), BMY (+2.05%), HSY (-2.03%)
    Short Picks (June 17 open – June 23 close % change): DHR (-0.23%), CLX (+1.76%), AEP (-1.58%), MMM (-1.47%), PLD (-6.67%)Average long result: -0.58%, average short result: +1.64%
    Total profit (average): +0.53%
  • June 16, 2020
    Long Picks (June 10 open – June 16 close % change): SLB (-11.06%), IEX (-4.63%), L (-10.45%), BSX (-4.33%), KR (-1.69%)
    Short Picks (June 10 open – June 16 close % change): ABBV (-0.96%), COST (-1.67%), ADBE (+3.02%), VLO (-7.62%), NOC (-4.84%)Average long result: -6.43%, average short result: +2.41%
    Total profit (average): -2.01%

Let’s check which stocks could magnify S&P’s gains in case it rallies, and which stocks would be likely to decline the most if S&P plunges. Here are our stock picks for the Wednesday, July 1 – Tuesday, July 7 period.

We will assume the following: the stocks will be bought or sold short on the opening of today’s trading session (July 1) and sold or bought back on the closing of the next Tuesday’s trading session (July 7).

We will provide stock trading ideas based on our in-depth technical and fundamental analysis, but since the main point of this publication is to provide the top 5 long and top 5 short candidates (our opinion, not an investment advice) for this week, we will focus solely on the technicals. The latter are simply more useful in case of short-term trades.

First, we will take a look at the recent performance by sector. It may show us which sector is likely to perform best in the near future and which sector is likely to lag. Then, we will select our buy and sell stock picks.

There are eleven stock market sectors: Energy, Materials, Industrials, Consumer Discretionary, Consumer Staples, Health Care, Financials, Technology, Communications Services, Utilities and Real Estate. They are further divided into industries, but we will just stick with these main sectors of the stock market.

We will analyze them and their relative performance by looking at the Select Sector SPDR ETF’s.

Based on the above, we decided to choose our stock picks for the next week. We will choose our top 3 long and top 3 short candidates using trend-following approach, and top 2 long and top 2 short candidates using contrarian approach:

Trend-following approach:

  • buys: 1 x Technology, 1 x Consumer Discretionary, 1 x Materials
  • sells: 1 x Utilities, 1 x Financials, 1 x Energy

Contrarian approach (betting against the recent trend):

  • buys: 1 x Utilities, 1 x Financials
  • sells: 1 x Technology, 1 x Consumer Discretionary

Trend-following approach

Top 3 Buy Candidates

INTC Intel Corp. – Technology

  • Stock broke above month-long downward trend line
  • Potential medium-term uptrend continuation
  • The resistance level of $61-65 (initial upside profit target level)

F Ford Motor Co. – Consumer Discretionary

  • Stock is above its June downward trend line
  • The resistance level and upside profit target level at $65
  • The support level is at $5.75

PPG PPG Industries, Inc. – Materials

  • Potential advance after breaking above downward trend line
  • The resistance level of $115 (short-term upside profit target)
  • The support level is at $100

Summing up, the above trend-following long stock picks are just a part of our whole Stock Pick Update. The Technology, Consumer Discretionary and Materials sectors were relatively the strongest in the last 30 days. So that part of our ten long and short stock picks is meant to outperform in the coming days if the broad stock market acts similarly as it did before.

We hope you enjoyed reading the above free analysis, and we encourage you to read today’s Stock Pick Update – this analysis’ full version. There, we include the stock market sector analysis for the past month and remaining long and short stock picks for the next week. There’s no risk in subscribing right away, because there’s a 30-day money back guarantee for all our products, so we encourage you to subscribe today.

For a look at all of today’s economic events, check out our economic calendar.

Thank you.

Paul Rejczak
Stock Trading Strategist
Sunshine Profits – Effective Investments through Diligence and Care

* * * * *

Disclaimer

All essays, research and information found above represent analyses and opinions of Paul Rejczak and Sunshine Profits’ associates only. As such, it may prove wrong and be a subject to change without notice. Opinions and analyses were based on data available to authors of respective essays at the time of writing. Although the information provided above is based on careful research and sources that are believed to be accurate, Paul Rejczak and his associates do not guarantee the accuracy or thoroughness of the data or information reported. The opinions published above are neither an offer nor a recommendation to purchase or sell any securities. Mr. Rejczak is not a Registered Securities Advisor. By reading Paul Rejczak’s reports you fully agree that he will not be held responsible or liable for any decisions you make regarding any information provided in these reports. Investing, trading and speculation in any financial markets may involve high risk of loss. Paul Rejczak, Sunshine Profits’ employees and affiliates as well as members of their families may have a short or long position in any securities, including those mentioned in any of the reports or essays, and may make additional purchases and/or sales of those securities without notice.

 

Ford Motor Join Hands With Vodafone for 5G Network in The UK

Ford Motor Company, an American multinational automaker that has its main headquarters in Michigan, has signed a deal with Vodafone Group Plc to install a fifth-generation technology network at its electrified powertrain facility in Essex, both the companies said in a joint statement on Thursday.

This will be the part of a 65-million-pounds or around 80-million-dollar investment in the fifth-generation technology network (5G) supported by the British government. This deal will replace current Wi-Fi networks to quicken the production of electric vehicles.

Chris White, Ford’s 5GEM project lead said: “Connecting today’s shop floor requires significant time and investment. Present technology can be the limiting factor in reconfiguring and deploying next-gen manufacturing systems. 5G presents the opportunity to transform the speed of launch and flexibility of present manufacturing facilities, moving us towards tomorrow’s plants connected to remote expert support and artificial intelligence.”

Vinod Kumar, CEO of Vodafone Business, said: “5G mobile private networks act as a springboard for organisations, allowing them to rethink the way they do business. In this case, MPN technology makes the factory of the future possible. It allows machines and computing power to coordinate in real-time, improving precision, efficiency and safety. We’re excited to help Ford plan for the future of its business.”

Ford outlook and price target

Eleven analysts forecast the average price in 12 months at $6.19 with a high forecast of $8.00 and a low forecast of $3.50. The average price target represents a 4.03% increase from the last price of $5.95, according to Tipranks. From that eleven, three analysts rated ‘Buy’, six rated ‘Hold’ and two rated ‘Sell’.

Morgan Stanley raised price target to $8 from $7. Ford Motor was given a $7.50 price target by analysts at Jefferies Financial Group Inc. The firm currently has a buy rating on the stock. JP Morgan raises target price to $7 from $6. Goldman Sachs raises target price to $7. Evercore ISI raises price target to $5 from $3.5.

On the other hand, it is good to sell at the current level as 50-day Moving Average and 100-200-day MACD Oscillator signals a strong selling opportunity.

Analysts’ comments

“We have marked-to-market our Ford earnings assumptions to account for what we expect to be a surprising level of pricing and mix for the remainder of 2020, driving an early EPS upgrade and our target to $8. Reiterate Overweight,” noted Adam Jonas, equity analyst at Morgan Stanley.

“Longer term, we remain extremely focused on the VW partnership, as we view this evolving relationship as arguably the #1 driver of Ford’s ability to improve efficiency, reduce waste and successfully pivot from ICE to EV. While investors may not see deep significance here, we believe these three areas are defining vectors of innovation and competitive strength as the industry transitions to Auto 2.0 and can make the difference between Ford having a cost of capital of greater than 20% or <10%,” he added.

John Butters, senior earnings analyst at FactSet in his June 19 note wrote, “despite the decline in expected earnings, this sector has witnessed the second-largest increase in price (+31.7%) of all eleven sectors since March 31.”

“However, Ford Motor (to -$1.25 from -$0.31), Amazon.com (to $1.39 from $6.14), General Motors, and Carnival have been the largest contributors to the decrease in expected earnings for this sector since March 31.”

USD/JPY Price Forecast – US Dollar Continues To Grind Against Japanese Yen

The US dollar has rallied a bit during the trading session on Friday, breaking above the ¥110 level but has also given back quite a bit of the gains. This being the case, the market is sluggish and probably pulls back a bit to try to find some type of momentum. Quite frankly, it looks as if the market is overextended and doesn’t have anywhere to be, and now that we have gotten past the US/China trade situation, there isn’t much to move the markets. Volatility is completely dead, and market simply aren’t moving.

USD/JPY Video 20.01.20

If that’s going to be the case, this pair won’t be any different either. If we do pull back it’s very likely that the ¥109.50 level offer support, and probably brings in more buyers to try to push this market to the upside. Ultimately, we make yet another high, the market probably stalls and doesn’t have anywhere to be either. At one point, it looked as if the market was going to make a huge move but perhaps it has ruined the possibility of breaking out with any strength due to the fact that about so hard into this new high. That being said, I don’t have any interest in shorting but I do think that picking up value on dips probably works but you have to keep your expectations realistic here, the markets are doing anything so we are seeing the average true Range dropped drastically around the world. Eventually things will change, but right now there isn’t much going on.

Please let us know what you think in the comments below

Stock Market: The Earnings of Microsoft, Amazon And More

Ford Motor

EPS forecast: $0.26

Revenue forecast: $36.73B

Ford has been going through a hard time during the past few years as the demand for its cars, particularly sedans, fell. Now one of America’s largest automakers is undertaking an $11 billion restructuring plan which implies layoffs, closing factories overseas, and building capacity to manufacture electric and driverless cars. As a result, investors will want to see what progress the company made in these areas.

The stock has been within the general downtrend since 2014. In the first half of 2019, the price tried to recover but met resistance around $10.50, formed a double top and turned lower. In October, Ford managed to show a bullish correction recovering from $8.45 to the 200-day MA at $9.30. Last week the stock closed above the 50-week MA ($9.214). All in all, if the financial results are decent enough, there’s technical potential for an extension to $9.64 (September high) and $10.00 (resistance line, 200-week MA). This area, in turn, will be a great obstacle for buyers. Support lies at $8.70 and $8.45.

Ford.png

Microsoft

EPS forecast: $1.24

Revenue forecast: $32.14B

According to analysts’ forecasts, Microsoft’s earnings will rise by 9%, while revenue will increase by 10.5% y/y. Noticed that during previous quarters, the company tended to beat expectations. Microsoft has a variety of products that generate solid income. Pay special attention to the dynamics of Azure, its cloud computing service – the figures should once again be pretty impressive as the tech giant added new capabilities to its product.

The stock has been trading sideways between $142 and $131 since the end of June. The price consolidated after a long-term uptrend. Currently, it’s in the $137 area, near the middle of the horizontal range. Its edges, mentioned earlier, are the initial targets.

Microsoft.png

Tesla

EPS forecast: $-0.45

Revenue forecast: $6.47B

Tesla is expected to show the third unprofitable quarter in a row despite selling a record number of cars. At this point, bad figures will be a surprise to no one, so investors, on the contrary, will look for glimpses of light: a forecast for future profit, a positive free cash flow, evidence that demand remains solid. If the electric vehicle maker doesn’t provide these sources of hope, the negative pressure on the stock will mount.

After the selloff in the first half of the year, Tesla bottomed in June and then managed to stabilize. Most recently, the price met the resistance of the July high ($266). On the upside, there are also obstacles at $268 and $273.6 (50- and 200-period MAs) ahead of $278 (50% Fibo retracement of the 2018-2019 decline). Support lies at $235 and $231 (daily MAs) as well as $225 (support line).

Tesla.png

eBay

EPS forecast: $0.64

Revenue forecast: $2.65B

Analysts have positive expectations about eBay’s financial results. The company’s putting a lot of effort into the technological enhancement of its core e-commerce business. On the downside, the increased investment may hurt earnings. In addition, notice that the competition with Amazon and Wal-Mart is a big challenge for eBay. Investors will also look for the news regarding the potential sale of StubHub or eBay Classifieds, a contentious issue for the company that provoked the departure of its CEO last month.

The stock has been on the rise since the end of 2018. However, at the end of September, the price slipped below $39 – this level tends to be an important border for eBay during the whole year. A return above $39.50 (100- and 50-day MAs) is needed to open the way up to $41 and 42.50 (78.6% Fibo retracement of the 2018 decline). Support is at 37.65 (200-day MA), $36.50 and $35.50.

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Thursday, October 24

Amazon.com

EPS forecast: $4.59

Revenue forecast: $68.82B

According to Wall Street, Amazon’s adjusted earnings will decline by about 20% y/y showing the first decline in nine quarters. The company’s revenue, however, is seen increasing by 22%. During the last few months, Amazon was pressured by lower-than-expected earnings, volatile equity markets, political criticism, and antitrust allegations. In this report, investors will look at the numbers for Amazon Web Services (the company’s cloud segment), the signs that the Prime delivery speed increase is boosting sales growth in North America as well as Amazon’s guidance for the next quarter.

Although Amazon remains one of the best long-term performers among both tech and consumer goods stocks, it is behind other the other so-called FAANG stocks during the past year. In August, the stock violated the uptrend from the end of 2018. The price then started trading below $1,835/50, limited by the 100- and the 50-day MAs. The most recent attempt of the price to get higher ran into an obstacle just below $1,800, near the 200-day MA. All the mentioned levels will act as resistance. Below $1,740 support is at $1,700 and $1,670 (June low).

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Intel

EPS forecast: $1.23

Revenue forecast: $18.02B

During the previous quarter, Intel benefited from rising demand for personal computers and sales of higher-priced server chips. Investors will want to see whether the positive trend continues and what the semiconductor producer projects for the rest of the year. So far, the stock has been resilient enough despite the trade war between the United States and China, an important market for the chipmaker, although the threat of higher tariffs has obviously limited its upside.

The stock of Intel is trading within an ascending triangle. The resistance that has been keeping the price from getting higher lies at $53.20 (61.8% Fibo retracement of the April-May decline). The break above this obstacle will open the way up to $55 and $56 (78.6% Fibo). Support lies at $50 (200-day MA, support line) and $49.20/00. The loss of 48.50 will make the price vulnerable for a decline to $46.75.

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Visa

EPS forecast: $1.43

Revenue forecast: $6.08B

For years, Visa’s stock has been slowly but surely appreciating – a reflection of the fact that digital payment is replacing cash. This tendency has all the chances to continue pushing the price higher, although there may be corrections on the way. This time, Wall Street sees Visa earnings rising by 18% y/y and revenue grows at 12%. Notice that Visa has a tendency to beat forecasts during the earnings releases.

Visa’s long-term uptrend ran in September into the resistance at $187.00. Since then, the price has consolidated around $175.00. The further resistance is at $190 and $200. On the downside, support lies at $169.00 and $163.80 (200-day MA). The fall below $160 will question the uptrend.

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4th Quarter GDP Numbers and the FED Put the Dollar in the Spotlight

Earlier in the Day:

Economic data released through the Asian session includes December retail sales figures out of Japan and 4th quarter inflation numbers out of Australia.

For the Japanese Yen, retail sales rose by 1.3% year-on-year in December, following on from a 1.4% rise in November, and coming in ahead of a forecasted 0.9% rise.

The Japanese Yen moved from ¥109.401 to ¥109.402 against the Dollar upon release of the figures, before rising to ¥109.34 at the time of writing, up 0.05% for the session.

For the Aussie Dollar, consumer prices rose by 1.8% in the 4th quarter, year-on-year, with the rate of inflation easing marginally from the 3rd quarter 1.9%, whilst coming in ahead of a forecasted 1.7%.

According to figures released by the ABS, the consumer price index rose by 0.5% in the December quarter of 2018, picking up from a forecasted and 0.4% rise in the 3rd quarter.

  • The largest contribution came from a 9.45 rise in prices for tobacco, a 6.2% rise in prices for domestic holiday travel and a 5% rise in prices for fruit.
  • Dragging on inflation included a 2.5% fall in prices for automotive fuel, a 3.3% fall in prices for audiovisual and computer equipment, a 1.9% fall in prices for wine and a 1.5% fall in prices for telecom equipment and services.
  • There was significant volatility in the prices for automotive fuel, which had risen by 3.3% in October, before sliding by 10.8% in November and then by the 5th in December to end the quarter down by 2.5%.

The Aussie Dollar moved from $0.71518 to $0.71811 upon release of the figures, before rising to $0.7193 at the time of writing, a gain of 0.53% for the session.

Elsewhere, the Kiwi Dollar was up by 0.13% to $0.6843, the gains coming in spite of a bearish start to the day in the equity markets.

The Day Ahead:

For the EUR, economic data scheduled for release through the day include French 1st estimate GDP numbers for the 4th quarter and December consumer spending figures and German’s January inflation numbers and February consumer confidence numbers.

On the stats, we will expect France’s GDP numbers and consumer confidence figures out of Germany to have the greatest influence, which is forecasted to be EUR negative.

Outside the stats, it’s a big day for the global financial markets, with the U.S – China trade talks set to resume and the FED to deliver its first monetary policy decision of the year.

Added to sentiment through the day will be the market response to the Brexit Plan B Parliamentary vote.

At the time of writing, the EUR was up 0.05% to $1.1439.

For the Pound, a quiet day on the economic calendar continues to leave the Pound in the hands of Brexit chatter.

Tuesday’s Parliamentary vote gives the British PM another journey to Brussels in order to make amendments to the Irish backstop, which has been the Brexit bugbear since negotiations began. The Pound took a hit, giving up $1.31 levels in reaction to the vote, though whether Britain will leave without a deal remains to be seen. Assuming the EU doesn’t budge on the Irish backstop, an extension, and a possible 2nd referendum could be on the cards.

At the time of writing, the Pound was up 0.21% to $1.3094, with the markets continuing to respond to the Parliamentary vote, early support coming on the expectation that a no-deal scenario is not an option for Parliament.

Across the Pond, it’s a busy day ahead for the Dollar. On the data front, key stats scheduled for release include January ADP nonfarm employment change figures, 1st estimate GDP numbers for the 4th quarter and December pending home sales.

Outside of the numbers, a resumption of trade talks between the U.S and China could provide further direction should updates be forthcoming, with the FED’s first monetary policy decision of the year also in focus.

The uncertainty will be whether there will be sufficient progress on trade talks to support market risk appetite through the week. Of greater certainty, but far from assured, is that the FED will continue drumming the more dovish drum beat. Softer growth in the 4th quarter would most likely give the doves the upper hand at the start of the year.

At the time of writing, the Dollar Spot Index was down 0.06% to 95.767.

For the Loonie, yet another quiet day on the data front will leave the Loonie in the hands of market risk sentiment and, in particular, any updates from the heavily anticipated trade talks between the U.S and China.

Positive updates would provide support to crude oil prices, which would be Loonie positive though, with many differences to be ironed out, there’s unlikely to be an agreed way forward within the 1st day of talks.

The Loonie was up 0.05% to C$1.3263, against the U.S Dollar, at the time of writing, supported by Tuesday’s bounce in crude oil prices.

Growth Worry Weighs On Asia, Merkel To Step Aside, US Equities Up On Earnings

Asian markets were mixed at the close of their Monday session. The Shang Hai Composite led decliners with a loss greater than -2.0% followed the Kospi with a loss near -1.50% and the Nikkei with a loss near -0.15% but not all indices moved lower. The Australian ASX rebound more than 1.0% as election woe subsides and the Hong Kong Heng Seng posted a small gain near 0.40%.

News released after the close of the Asian session may have the region moving higher tomorrow. According to a report in Bloomberg, China is contemplating a reduction in the car tax from 10% to 5%. The move was requested by the China Automobile Dealer Association in an attempt to spur stronger car sales. The news had an effect on automakers around the world who are all having a hard time growing sales in China. Shares of GM (GM), Ford (F) advanced near 5% in the pre-market session while Tesla (TSLA) rose a more tepid 1.0%.

EU Market Up On Earnings, Merkel To Step Aside

EU markets were up in the early half of the day on earnings and edged higher on the news from China. Shares of Daimler and BMW were both up about 5.0% and leading the market on positive sentiment. Not only will lower car tax in China stimulate sales of vehicles around the world, but it may also aid with US trade frictions which is the largest fear underlying the market at this time.

In Germany, Angela Merkel’s coalition government saw heavy losses in a recent election. The results were so poor Merkel has decided to step aside as party leader come the December conference less than two months away. Germany’s Chancellor says she wants to remain the country’s leader until the next federal elections in 2021 but that may not happen if she can’t maintain the support of her party. The EUR/USD held steady on the news and traded within a very tight range as traders are more focused on this week deluge of data than they are German politics.

In the EU traders will be watching for the first read on third-quarter GDP as well as the all-important Consumer Price Index. Consumer prices are expected to hold steady from the last month at 1.0%, 2.0% YOY, a miss could have the EUR/USD moving lower. Also on tap for the EU is a meeting of the BoE. The bank is not expected to alter rates but could indicate a change of position regarding the outlook.

US Equities Up On Earnings 

The US futures indicated a positive open for the equities market on Monday morning. The broad market S&P 500 was indicated to open with a gain near 1.0% with automakers leading the way. While the peak of earnings season has passed there are still about 50% of the S&P 500 to report over the next few weeks. So far the reports have been better than expected. The blended rate of earnings growth is now 22.%, up to a full percent over the last week, and likely to continue expanding into the end of the season. There are 139 companies reporting this week, 27.8% of the index.

USD/JPY Fundamental Daily Forecast – Stock Market Weakness Making Yen Attractive Safe-Haven Asset

The Dollar/Yen is trading lower on Friday with the selling being fueled by safe-haven buying of the Japanese Yen in reaction to sharply lower U.S. equity markets. Stocks are under pressure again after shares of Amazon fell in the aftermarket session due to misses on revenue and guidance in its quarterly earnings report.

The weaker stock market is also driving the carry trade whereby investors sell stocks to raise the money to pay back ultra-cheap loans from Japanese banks. This means they are selling dollars and buying Yen.

Furthermore, flight-to-safety buying into Treasurys is driving down yields. This is tightening the spread between U.S. Government bonds and Japanese Government bonds, making the Yen a more attractive investment.

At 1020 GMT, the USD/JPY is trading 111.974, down 0.423 or -0.37%.

Heightened volatility in the stock market on Friday is likely to keep the pressure on the Dollar/Yen throughout the session. Additional resistance is being provided by political and economic uncertainties including tensions between Saudi Arabia and the West, uncertainty surrounding Italy’s budget, and Brexit.

In U.S. economic news on Thursday, Core Durable Goods Orders came in lower than expected at 0.1%, missing the 0.5% forecast. Durable Goods Orders, however, beat the -1.3% forecast with a 0.8% reading.

The Goods Trade Balance rose to -76.0 Billion. This was worse than the -74.9 Billion forecast. Preliminary Wholesale Inventories rose 0.3%, better than the 0.5% estimate. The previous reading was revised higher to 1.0%.

Weekly Unemployment Claims were 215K, slightly above the 214K forecast. Pending Home Sales improved nicely by 0.5%. This beat the -0.1% forecast.

In Fed news, Federal Reserve Vice Chairman Richard Clarida, in his first major policy speech since being seated at the central bank, said more interest rate increases are likely warranted as the economy continues to gather strength. In assessing current conditions, Clarida said growth broadly and with the job market in particular has surprised him.

In Japan, Tokyo Core CPI came in at 1.0% as expected.

Forecast

While the primary focus will be on the volatility and direction of the stock market, traders will get a chance to reaction to a couple of key U.S. reports. Advance GDP is expected to come in at 3.3%, down from the previously reported 4.2%. The Advance GDP Price Index is forecast at 2.1%, down from 3.0%.

Revised University of Consumer Sentiment is expected to dip slightly to 98.9 from 99.0.

There are three downside levels to watch on the USD/JPY chart. The first is 111.984. This is followed by a main bottom at 111.622 and a retracement level at 111.607. The daily chart indicates there is plenty of room to the downside under 111.607 so be prepared for a potential acceleration to the downside.

The Driverless CopyPortfolio Investment Strategy is Your Chance to Invest in the Future of the Automobile Industry

The “smart” revolution is all around us, as a growing number of common items are becoming highly technological. It happened with the telephone, it happened with TV, it happened in numerous fields of industry – and now it’s happening in the automotive industry. Self-driving cars are very much a reality, and we will be seeing them in rising numbers on the road within the next few years. This evolution of the personal car, which over the years incorporated more and more technology into it, has resulted in a vehicle that no longer needs a human driver – and the financial potential is incredible.

The driverless car will be one of the most tech-heavy products available to consumers, and as such, will combine numerous components from both automakers and high-tech companies. To learn more about the different aspects of the autonomous car industry, projected to become a $7 trillion market(1) eventually, read this blog post.

Being such an innovative field on the one hand, yet being developed by some of the world’s largest, and most recognizable, companies on the other, the driverless car industry presents an interesting thematic investment opportunity. However, since it involves companies from different industries, operating in various markets around the world, building a thematic investment portfolio to track the industry can be challenging. That is why, here at eToro, we are launching the Driverless investment strategy, through which the members of the eToro community can invest in this sector.

The Driverless CopyPortfolio: Composition

This managed portfolio strategy contains an array of global companies, ranging from automakers, through hardware manufacturers, to software companies developing computer vision, navigation systems and other solutions relevant to the sector. The companies span several industries and have an overall impressive global presence – and are all part of the trend that will make driverless cars a common part of our daily lives in the coming years:

Car Manufacturers

  • Tesla (TSLA) – Elon Musk’s electric car company has established itself as one of the most intriguing players in both the tech and automotive industries in the US. The company is developing driverless cars and trucks and is one of the pioneers in automotive innovation.
  • Fiat Chrysler (FCA.MI) – One of the largest automotive corporation in the world, Fiat Chrysler has a strong presence in both the North American and European automobile markets, and is working on its own self-driving car.
  • Toyota (TM) – The world’s largest automakers, Japanese Toyota is known to be a highly reliable carmaker, have a strong international presence, and pioneering innovative technologies, such as one of the world’s first mass-produced hybrid personal cars.
  • Honda (HMC) – Another Japanese carmaker, Honda’s name has also become synonymous with quality, for both family cars and high-end sports cars and luxury sedans. Honda is also working on a driverless car, declaring 2025 as the target year for a nearly fully-autonomous vehicle.
  • Ford (F) – The world’s first automotive company is still one of the most influential carmakers out there. The company has announced plans for robot cars for ride-hailing and delivery purposes and will be testing them in Miami in the near future.
  • Renault (RNO.PA) – The French car giant has taken great strides in the autonomous car department: Its Symbioz concept model has generated positive reviews, both for its extremely advanced artificial-intelligence-assisted driving and its innovative approach of including the smart car as an integral part of the smart home of the future, positioning it as a notable player in the industry.
  • BMW (BMW.DE) – The German luxury car maker is a prominent player in driver-assistance technology, such as self-parking systems, which exist in some of its high-end brands. Therefore, it is no wonder that the company has been very public about its plans for creating a completely autonomous vehicle in the future.
  • Volkswagen (VOW3.DE) – Pledging to add electric motors to all of its models by 2030(2), this German giant is also researching completely autonomous cars. The VW I.D. Vizzion concept model unveiled by the company is a fully self-driving car, that doesn’t even have a steering wheel or pedals – it is designed to do all of the driving for the passenger.
  • General Motors (GM) – The largest car manufacturer in the US, GM is no stranger to innovation. In the early 1990s, GM completed the development of the world’s first serial electric car, the EV1. Despite later being pulled from production, GM has proved that it is ready for big changes in serial manufacturing – a quality that will serve it well when the market tilts towards the driverless.
  • Tata Motors (TTM) – India’s largest car manufacturer, which is part of a $151 billion conglomerate, is actively testing autonomous micro-cars. According to Tata, it might be one of the first companies to roll out mass-produced self-driving cars.
  • Caterpillar (CAT) – One of the largest heavy industry vehicle manufacturers in the world, Caterpillar is developing driverless trucks that could revolutionize many industries. In fact, the company is no stranger to automation, as several of its products already include self-driving trucks and other heavy vehicles, used by mining and construction companies around the world.
  • Delphi (DLPH) – This auto parts company is one of the world leaders when it comes to electrical systems and software for vehicles. Its products could play an instrumental part in the linking of cars to advanced computer system required for autonomous driving.
  • Ferrari (RACE) – The Italian supercar’s name is synonymous with luxury and speed. While it has distanced itself from the autonomous car space, it did declare that it is working on a fully electric supercar, which will rival the likes of Tesla.
  • Volvo (VOLV-A.ST) – Swedish carmaker Volvo already has high-tech driver-assistance solutions in some of its models, which is a significant step in the direction of a fully autonomous vehicle.

Software Companies

  • Alphabet (GOOG) – Google’s parent company is also the owner of Waymo, a company who already has self-driving cars roaming the streets of Silicon Valley. Unlike some other tech companies, who’ve kept their progress under wraps, Waymo has been very public with its driverless car prototypes and their performance.
  • Alibaba (BABA) – The Chinese retail giant is known for its massive interest in technological innovation. Therefore, it is no wonder that the company has confirmed that it is also in the race for developing a self-driving car, alongside other tech companies.
  • Baidu (BIDU) – Perhaps one of the strongest competitors in the race of launching the first road-ready autonomous car, Baidu has enjoyed the support of the Chinese government and is manufacturing and testing autonomous cars and buses. According to the company’s Apollo project timeline, Baidu will have a fully autonomous car ready for mass production by 2021.
  • Microsoft (MSFT) – One of the largest tech corporations in the world, Microsoft is also heavily involved in implementing its technology in driverless cars. Some of the cars that use Microsoft’s technology are already being tested in several locations around the world.
  • Blackberry (BBRY) – The former smartphone giant has pivoted into other areas in recent years, including software development. Blackberry is developing software that will be used in the autonomous car industry and has a partnership in place with Chinese giant Baidu.
  • Intel (INTC) – According to the company, Intel has a chip in virtually every self-driving car that is being tested today. Moreover, the company strengthened its grip on the market by acquiring Mobileye, a startup which develops computer vision driver-assisting technology, for a whopping $15 billion.

Hardware Manufacturers

  • Apple (AAPL) – The world’s largest company has a strong presence in numerous fields of technology – and autonomous driving is no exception. Apple has been quite secretive about its driverless plans, but reports suggest the company is developing a brand new self-driving car of its own.
  • Nvidia (NVDA) – Since an autonomous car requires great computing power, it is in need of strong processors. Nvidia is one of the world’s leading manufacturers of processors for some of the most performance-based computer functions, such as the real-time rendering of graphics-heavy computer games. Therefore, it is only natural that the company will also be taking part in making processors for self-driving cars.
  • STMicroElectronics (STM.MI) – Europe’s largest semiconductor manufacturer, ST is also one of the companies taking part in creating the computerised “brains” that will steer the cars of the future.
  • Infineon (IFX.DE) – This German chipmaker is developing semiconductors used in both driver-assistance systems and driverless cars. Teaming up with leading car makers, such as German luxury brand Audi, Infineon could serve a major role in the future of the automotive industry.
  • Texas Instruments (TXN) – Developing semiconductors and various sensors for more than 80 years, Texas Instruments is making its way into the autonomous driving realm. In 2017, the company unveiled a new array of sensors that can be used for autonomous cars, drones and more(3).
  • Advanced Micro Devices Inc (AMD) – A power player in the microchip industry, AMD is known for offering computing solutions that are more affordable than its main competitors, without compromising on performance. The company started hiring personnel for its AMD automotive department, which strongly suggests it is venturing into the field.
  • Dialog Semiconductor (DLG.DE) – This German semiconductor manufacturer has reportedly been involved in the early stages of Apple’s self-driving cars. While currently it seems that Apple chose to go another way, Dialog does have the capability to become a leading developer of hardware for autonomous vehicles.
  • MaxLinear (MXL) – Developing hardware such as semiconductors and radio transmitters, this American company is directing some of its efforts into developing components to serve the self-driving car industry.
  • NXP Semiconductors (NXPI) – This Dutch semiconductor manufacturer already has a strong foothold in the autonomous car industry, as it is one of the companies chosen by Chinese Baidu to help construct its driverless cars.
  • Skyworks (SWKS) – Based in the US, Skyworks Solutions has manufactured some wireless transmitters that are being used for autonomous features in current cars. The company’s experience in the field could serve as a strong foundation for its future business in the driverless car space.
  • HELLA (HLE.DE) – A well-known supplier of parts and subsystems for the automotive industry, HELLA has announced that it is strategically entering the driverless space in 2018(4).
  • EnerSys (ENS) – This battery producer has its products powering numerous cars and aerospace vehicles. As the automobile market shifts towards being driverless and electric, EnerSys could be a dominant player, producing the batteries powering these vehicles.
  • Visteon (VC) – This car electronics and computing company spun off from Ford in the year 2000. Visteon has developed a unique platform for driverless cars, which enables the car’s computer to decipher its surroundings and drive itself.

Each stock within the investment strategy’s composition is given equal allocation, and it is rebalanced by the eToro Investment Committee periodically. The minimum investment using the Driverless investment strategy is $5,000.

Investing in the self-driving car industry

It is obvious that there are numerous players and various companies operating in the driverless car space. In coming years, it is likely that more companies, both existing and new, will join the industry, while the autonomous car becomes a mass-produced, global phenomenon. As the industry takes form, eToro enables you to become part of the first wave of investors to take part in this exciting new automotive/technology sector. Using the Driverless CopyPortfolio, you can access a fully allocated, managed investment portfolio and gain exposure to the autonomous car industry.

Major Institutional Investor Says Tesla Stock Price Could Hit $4000 in 5 Years

An institutional investor with a $164 million stake in Tesla (TSLA), held through 158,000 of the electric car manufacturer’s Nasdaq-listed shares, has publically pleaded with CEO Elon Musk to re-think his move to privatize the company.

Representatives of ARK Investment Management, the investor in question, have urged the reassessment through an open letter to Musk, on the grounds that they believe that Tesla’s stock price has the potential to reach $4000 within 5 years. On that basis, ARK argues that Musk’s stated intent to take the company private at a valuation of $420 a share.

Why Did Musk Want to Take Tesla Private?

Elon Musk has grown frustrated in recent months with what he considers the short-termism of capital markets. The entrepreneur, who first rose to prominence as co-founder of the online payments platform PayPal, has never quite fit the mold of a Wall Street CEO. Breaking that mold has been a huge part of his success in managing to sell his grand vision for Tesla to investors and achieving a capitalization and resources far beyond what the company’s revenue would suggest should be possible.

Tesla’s lofty valuation, higher than both traditional auto manufacturers Ford and GM with a fraction of their revenues and none of their profits, has been achieved to a large extent through the force of Musk’s personality and his ability to sell a long-term vision. However, despite the fact that the Tesla stock price (TSLA) has for years marched to a different tune than that of companies many analysts argue should be considered its peers (auto manufacturers rather than tech companies), capital markets still have their demands. Patience with Tesla continuingly missing Musk’s usually overambitious targets and timelines, and the amount of cash the company burns through, has recently grown thin. Tensions recently surfaced when Musk refused to answer fairly standard financial questions put to him by an analyst at a recent quarterly earnings report, dismissing them as ‘boring’.

While subsequently apologizing for what Wall Street media described as a ‘meltdown’, the event seems to have crystallized Musk’s growing suspicion that being a public company might not be the most conducive way for Tesla to reach its goals. Capital markets demand quarterly improvement in specific growth metrics and Musk’s argument for taking the company private is that this creates a short-term mentality that is hindering achieving longer-term ambitions.

The Argument Against Tesla (TSLA) Going Private

ARK’s representatives argue that being a public company provides Tesla with more advantages than disadvantages. The public letter signed by the investment firm’s founder and chief executive, Cathie Wood lists these as:

  • More ‘rapid’ ability to capitalize on competitive advantages – argued as key to network effects and natural geographic monopolies that will characterize autonomous taxi and truck networks.
  • Increased public profile – argued as key to launching an autonomous taxi network.

The investor also believes that the proposed buy-back of Tesla (TSLA) stock at $420, with a $100 a share premium on current price, denies investors who have backed the company the opportunity of realizing huge future returns. The ambitious $4000 a share target ARK argues Tesla can achieve within 5 years, is built on the high-margin future business model of Tesla offering driverless taxi and truck services.

It has been reported that Musk has hired Morgan Stanley to manage the reprivatization process of Tesla. However, as much as the idea to privatize Tesla was appealing, Musk and the Tesla’a management realized that “the better path is for Tesla to remain public”. Tesla shares dropped and did not yet recover after Musk’s decision to keep the electric car maker public.

This article was written by eToro

Ford Motor Company (NYSE:F) To Increase Production In China

Lincoln will build the cars in China, the largest market in the world for vehicles, with a view to blunting the effects of trade spats between the world top two economies. Additionally, Ford will manufacture a new SUV for the Chinese market by the close of next year. Beyond that, however, Ford has not revealed its future production plans with regards to the Lincoln brand.

“Our localization plans to support the China market are on track and will serve to further drive Lincoln’s growth in China. Beyond that, it would be premature to discuss our future product and production plans or timing,” said a spokesperson for the Lincoln brand, Angie Kozleski.

Lincoln Aviator

According to sources who spoke with Reuters, Ford expects to start the production of a new Lincoln Aviator vehicle in China late next year or early 2020. This will be done alongside replacements for other brands such as the MKZ sedan and the MKC crossover. In 2021 production of the new Nautilus is expected to start and this is expected to serve as a replacement of the Lincoln MKX. The production of the fifth model which will be a crossover resembling a small coupe is expected to start in 2022.

The Dearborn, Michigan-based auto manufacturer has a lot to lose should the trade spat between the United States and China progress into a full-blown trade war. In 2017 Ford shipped around 80,000 cars manufactured in North America to China. Over 50% of these cars were Lincolns. Currently, all the Lincoln cars that are sold in China by Ford are made in North America.

Import tariff

Though China has indicated that it could reduce the 25% tariff it imposes on vehicle imports, there are no guarantees that the move would result in a large sustainable rise in the number of Lincolns and Fords made in the United States being shipped to China. The long-term plans of Ford are to manufacture more cars in the world’s most populous country in order to serve a market which is now roughly 60% bigger than the market in the United States.

Ford is, however, trailing domestic rival General Motors as well as luxury brands from Germany such as Mercedes-Benz, BMW, and Audi which have made heavy investments in China in order to protect themselves from currency, political and trade gyrations as well as to reduce the price points of their premium vehicles.

Behind rivals

Last year the total number of cars imported to China rose to 1.2 million but that figure is less than 5% of all the vehicles that were sold in the world’s second-largest economy according to  China Automobile Dealers Association figures. Less than 25% of the vehicles that China imported, about 267,000 were from the United States per Statista.

With a tariff rate of 25%, the American premium brands of Ford cannot compete effectively with Germany’s luxury brands as well as GM’s Cadillac since they are built locally in China and thus avoid the tax.