—— Tesla Sales May Drop for First Time; Gold Jumps to Record High Again; UPS Awarded Government Contract; $2tn Property Debt to Mature; US Manufacturing Activity Expands; Shein Profit Doubles Before IPO
1. Tesla Sales May Drop For First Time
Tesla Inc. appears to be approaching a significant milestone amidst declining demand for electric vehicles and the impact of higher interest rates on sales.
Analysts have swiftly adjusted their forecasts for this week’s delivery report as the quarter concludes. Some on Wall Street are even preparing for what could be Tesla’s first sales decline since the early stages of the pandemic.
On average, analysts surveyed by Bloomberg project Tesla delivered 453,964 vehicles in the quarter. This would represent a decrease of more than 6% from the company’s record performance in the fourth quarter, typically the strongest period for sales.
The crucial aim is to exceed the 422,875 deliveries achieved in the first three months of 2023 and avoid experiencing a year-over-year drop for the first time since the second quarter of 2020.
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2. Gold Jumps to Record High Again
Gold surged to a historic high amid signs that the Federal Reserve is moving closer to reducing interest rates, further propelling a rally fueled by geopolitical tensions and strong demand from China.
On Monday, bullion soared to as high as $2,265.73 an ounce, marking a 1.6% increase from Thursday’s closing price, following a string of record peaks in recent sessions.
Recent data revealed a cooling in the Federal Reserve’s preferred measure of underlying inflation, the core personal consumption expenditures index, in February, coinciding with a period when many markets were closed. This development strengthens the case for a decrease in borrowing costs, even though the central bank has maintained a cautious stance.
Several positive factors have propelled bullion prices up by approximately 14% since mid-February. The anticipation of monetary policy easing by major central banks, coupled with heightened tensions in regions such as the Middle East and Ukraine, has provided strong support for this rally.
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3. UPS Awarded Government Contract
UPS has announced that it secured a contract to replace FedEx as the primary air cargo provider for the US government, ending FedEx’s more than 20-year tenure in this role.
FedEx had been responsible for handling most of the United States Postal Service (USPS) air cargo nationwide. However, FedEx revealed in a statement on Monday that it will part ways with USPS after the current contract expires on September 30. This decision came after both parties failed to reach agreement on “mutual terms” during contract renegotiations.
When FedEx extended the agreement in 2017 to last until 2024, it anticipated generating approximately $1.5 billion in revenue annually from the contract. FedEx mentioned on Monday that it will address the elimination of structural costs associated with supporting postal service volume. The company expects profitability to improve starting in fiscal year 2025.
In pre-market trading on Monday, shares of UPS saw a 1.9% increase, whereas shares of FedEx experienced a decline of 1.6%.
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4. $2tn Property Debt to Mature
According to a leading US brokerage, banks will need to reduce their exposure to commercial real estate due to a significant $2 trillion “wall” of property debt coming due in the next three years. Barry Gosin, CEO of Newmark, stated that banks will face pressure to handle this situation.
Post-financial crisis regulations may require some lenders to liquidate their loans, find ways to reduce their real estate exposure, or cease new lending to the sector.
Newmark, a real estate advisory and brokerage company, highlighted that an estimated $2 trillion of US commercial real estate debt maturing between this year and 2026 will need to be refinanced at significantly higher interest rates.
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5. US Manufacturing Activity Expands
In an unexpected turn, US factory activity expanded in March for the first time since September 2022. This growth was driven by a significant rebound in production and stronger demand, despite climbing input costs. The Institute for Supply Management reported that its manufacturing gauge rose by 2.5 points to 50.3 last month.
Although just above the threshold of 50, which distinguishes expansion from contraction, this marks a halt to 16 consecutive months of shrinking activity. Moreover, the March index surpassed all estimates in a Bloomberg survey of economists.
Production rebounded significantly from the previous month, registering a gain of 6.2 points, marking the largest increase since mid-2020. Output growth reached 54.6, the strongest it has been since June 2022.
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6. Bayer-Backed Boundless Bio Falls 9%
US home insurance rates are projected to reach a record high in the current year, particularly in states susceptible to severe weather events, as per a recent analysis.
Insurify, a Massachusetts-based insurance-comparison platform, forecasts that the average premium for homeowner insurance in the US will rise to $2,522 by the year’s end.
This surge is primarily attributed to escalating natural disasters, heightened reinsurance costs, and increased fees for home repairs. It marks a 6% increase over the average premium at the end of 2023 and follows a roughly 20% rise over the past two years.
Home insurance is becoming a contentious issue in the US due to the escalating damage caused by thunderstorms and the amplified frequency and severity of natural disasters resulting from climate change.
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7. Shein Profit Doubles Before IPO
Online fast-fashion retailer Shein has seen a significant increase in profits, more than doubling its earnings as it awaits regulatory approval from Beijing for its anticipated listing in New York or London.
The company, originally founded in China but now headquartered in Singapore, achieved record profits exceeding $2 billion in 2023, with a gross merchandise value of around $45 billion. This surpasses its previous net income of $700 million in 2022 and $1.1 billion in 2021, as per a financing document obtained by the Financial Times.
In their most recent fiscal years, competitors H&M and Zara owner Inditex reported net profits of SKr8.7 billion ($820 million) and €5.4 billion ($5.8 billion) respectively.
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The content of this article comes from various financial news media such as The Wall Street Journal, Financial Times, and Bloomberg.