— Tesla Unveils Refreshed Model 3; China Rolls Out More Economic Stimulus; US Nonfarm Payrolls Beat Forecasts; Booking’s Etraveli Deal Blocked; Corporate Bonds Signal Trouble; Klarna Readies for IPO; US Crude Reclaims $85
1. Tesla Unveils Refreshed Model 3
Today, Tesla Inc. officially unveiled the updated entry-level Model 3 sedan.
The new Model 3 features significant design changes, and its tested driving range has increased to 377 miles — a 9% improvement. Other upgrades include an 8-inch rear-seat touchscreen and a new audio system.
Just hours after the launch, Tesla slashed prices for its Model S and Model X in both China and the US and cut the price of its Full Self-Driving (FSD) system by $3,000 to $12,000.
The base prices for Model S and Model Y are now $74,990 and $79,990 respectively — down sharply from $104,990 and $120,990 earlier this year.
Model X now qualifies for a $7,500 federal tax credit after its price fell below $80,000.
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2. China Rolls Out More Economic Stimulus
Today, the People’s Bank of China (PBOC) announced it will cut the foreign exchange reserve requirement ratio for banks to 4%, starting September 15.
This move will increase the supply of foreign currency in the market, indirectly boosting the appeal of the renminbi.
Just hours before the announcement, the government also introduced new support measures for the property sector and unveiled tax breaks for childcare and elderly care.
As China continues to introduce more stimulus, markets have begun to show signs of stabilization — equities, commodities, and the renminbi have all gained some ground.
An index tracking Chinese property developers rose 1.2%, while the CSI 300 gained 0.7%.
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3. US Nonfarm Payrolls Beat Forecasts
The US Bureau of Labor Statistics reported today that nonfarm payrolls increased by 187,000 in August, though the unemployment rate rose to 3.8%.
Job losses in the film and trucking industries — due to major strikes and company closures — accounted for a combined 54,000.
While job openings and wage growth have cooled in recent months, the labor market and pay levels are still strong enough to support consumer spending.
The combination of rising unemployment and slowing wage growth makes it increasingly likely that the Fed will pause rate hikes this month.
Fed officials have previously indicated there may still be one more hike before year-end.
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4. Booking’s Etraveli Deal Blocked
Four sources revealed that European regulators plan to block US travel company Booking Holdings’ acquisition of Sweden’s Etraveli Group, citing concerns that the merger would significantly reduce market competition.
One year ago, the UK’s Competition and Markets Authority approved the deal — making the EU’s decision a sharp reversal.
Etraveli, owned by private equity firm CVC, operates brands such as Gotogate and Mytrip, and specializes solely in flight bookings.
Antitrust experts fear that the deal would increase Booking’s dominance in hotel reservations and strengthen its bargaining power with hotels.
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5. Corporate Bonds Signal Trouble
Salman Ahmed, Global Head of Macro Strategy at Fidelity International, warned that many US corporate bonds will require refinancing in the next six months, and that 2024 may reveal the full impact of the Fed’s rate hikes on capital markets.
Ahmed still believes the US economy is headed for a recession, and that if the Fed doesn’t quickly reverse course, borrowers will be burdened by prohibitively high interest rates.
During the pandemic, near-zero rates made capital effectively free, but refinancing at today’s rates could plunge many firms into crisis.
As borrowing costs rise, companies will have less to invest or pay wages. Current high equity valuations do not yet fully reflect recession risks.
Similarly, commercial real estate loans will face significantly higher rates when refinancing.
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6. Klarna Readies for IPO
Buy-now-pay-later firm Klarna is preparing for an IPO once market conditions improve, according to CEO Sebastian Siemiatkowski in an interview with the Financial Times.
He said Klarna now meets three key IPO criteria: it is established in the US, has a sustainable operating model, and possesses long-term growth potential.
During last year’s tech stock crash, Klarna’s valuation plunged 85% to $6.7 billion, and continued losses forced the company to lay off 10% of its workforce.
Founded in 2005, Klarna had been profitable until 2018, when it began spending heavily to expand in the US.
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7. US Crude Reclaims $85
Today, US crude futures surpassed $85 per barrel — the highest since November of last year — driven by supply cuts from OPEC and its allies.
Over the summer, both Saudi Arabia and Russia tightened supply just as global demand rose. Strong economic data from China and the US have further boosted oil demand and prices.
WTI crude rose as much as 1.9%, with Brent crude also posting gains.
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This content is sourced from Financial Times, Bloomberg, and The Real Deal, among other financial news outlets.