Storage drums stacked in the Keihin industrial area of Kawasaki, Kanagawa Prefecture, Japan, on Wednesday, Oct. 11, 2023.
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The International Energy Agency on Thursday said that oil markets are likely to remain on edge as the Israel-Hamas war persists, with investors closely monitoring the potential for output disruption in the Middle East.
The world’s leading energy watchdog said in its latest monthly oil market report, that while the conflict had not yet had a direct impact on physical supply, energy market participants would “remain on tenterhooks” as the crisis unfolds.
“The Middle East conflict is fraught with uncertainty and events are fast developing,” the IEA said in its report.
“Against a backdrop of tightly balanced oil markets anticipated by the IEA for some time, the international community will remain laser focused on risks to the region’s oil flows,” the energy agency added.
Noting a “sharp escalation in geopolitical risk,” the IEA said it would continue to closely monitor oil markets and “stands ready to act if necessary to ensure markets remain adequately supplied.”
In the event of an abrupt oil supply shortage, the IEA’s response includes member countries releasing emergency stocks and/or implementing demand restraint measures.
Israel is not a major oil producer and no major oil infrastructure runs close to the Gaza Strip.
The IEA notes, however, that the Middle East accounts for more than one third of global seaborne oil trade, and the Israel-Hamas conflict has ratcheted up fears the fighting may affect regional energy production.
Israel-Hamas war
The IEA report comes as the Israel-Hamas conflict enters its sixth day and follows a devastating and coordinated assault from Palestinian militant group Hamas on southern Israel over the weekend. Israel has since pulverized Gaza with airstrikes and is expected to launch a ground offensive against Hamas in the region in the coming days.
Israel has also ordered the “complete siege” of the Gaza Strip, seeking to stop the supply of electricity, food, water and fuel to the already blockaded population of roughly 2.3 million people.
As a result of the ongoing Israeli-Hamas war, at least 1,200 Israelis have been killed, with more than 2,700 injured, according to Israel’s military. Meanwhile, the Palestinian Ministry of Health says 1,203 people in Gaza have been killed, with 5,763 injured.
‘A major concern to the market’
“The conflict has certainly raised geopolitical tensions in the Middle East, and this is something that we at the IEA are watching very closely,” Toril Bosoni, head of the oil markets division at the International Energy Agency, told CNBC’s “Street Signs Europe” on Thursday.
“For now, there has been no direct impact on supplies. We’re watching this. If it spills over and spreads to the wider Middle East this is, of course, a great concern,” Bosoni added. “This is something that is a major concern to the market.”
Asked whether the IEA was worried about the prospect of OPEC kingpin Saudi Arabia or other oil producers weaponizing oil exports in support of Hamas, Bosoni replied, “What we’re hearing from the OPEC+ alliance is that they stand ready to do what they can to stabilize the market, and this is really reassuring.”
“Of course, the IEA also has its tools to respond should there be a disruption to supply. For now, that is not something that we’re expecting,” she added.
When oil markets opened following the surprise attack by Hamas on Israel on Oct. 7, the IEA said traders priced in a $3 to $4 risk premium. However, prices have since stabilized.
Most Wall Street analysts covering Tesla’s stock (TSLA) badly misread the automaker’s delivery volumes this quarter. Some of them have started releasing notes to clients following Tesla’s production and delivery results.
Here’s what they have to say:
According to Tesla-compiled analyst consensus, the automaker was expected to report “377,592 deliveries” in the first quarter.
Truist Securities maintained its hold rating on Tesla’s stock, but it greatly lowered its price target from $373 to $280 a share. They insist that while their earnings expectations have crashed because they overestimated deliveries, investors should focus on Tesla’s self-driving effort, which they see as “much more important for the long-term value of the stock.”
Goldman Sachs lowered its price target from $320 to $275 a share. The firm expected 375,000 deliveries from Tesla in Q1 and therefore had to adjust its earnings expectations with almost 40,000 fewer deliveries.
Wedbush‘s Dan Ives, one of Tesla’s biggest cheerleaders, called the delivery results “disastrous”, but he reiterated his $550 price target on Tesla’s stock.
UBS has reiterated its $225 price target which it had lowered last month after adjusting its delivery expectations in Q1 to 367,000 – one of the more accurate predictions on Wall Street.
CFRA‘s analyst Garrett Nelson reduced his price target from $385 to $360 a share.
Electrek’s Take
I find it funny that most of them are maintaining or barely changing their expectations after they were so wrong about Tesla in Q1.
If you were so wrong in Q1, you should expect to be incorrect also for the rest of the year, and readjust accordingly.
But Cantor is invested in Tesla, and the firm is owned by Elon’s friend, who happens to now be the secretary of commerce. Truist still believes Elon’s self-driving lies, Goldman Sachs overestimated Tesla’s deliveries by the equivalent of $2 billion in revenues, and Dan Ives is Dan Ives.
Covering Tesla over the last 15 years has confirmed to me that most Wall Street analysts have no idea what they are doing – or at least not when it comes to companies like Tesla.
Do you know any who have been consistently good lately? I’d love suggestions in the comment section below.
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The global market rout on Thursday, sparked by President Donald Trump’s announcement of widespread tariffs, had an outsized effect on fintech companies and credit card issuers that are closely tied to consumer spending and credit.
Affirm, which offers buy now, pay later purchasing options, plunged 19%, while stock trading app Robinhood slid 10% and payments company PayPal fell 8%. American Express and Capital One each tumbled 10%, and Discover was down more than 8%.
President Trump on Wednesday laid out the U.S. “reciprocal tariff” rates that more than 180 countries and territories, including European Union members, will face under his sweeping new trade policy. Trump said his plan will set a 10% baseline tariff across the board, but that number is much higher for some countries.
The announcement sent stocks reeling, wiping out nearly $2 trillion in value from the S&P 500, and pushing the tech-heavy Nasdaq down 6%, its worst day since the start of the Covid-19 pandemic in 2020.
The sell-off was especially notable for companies most exposed to consumer spending and global supply chains, including payment providers and lenders. Fintech companies that rely on transaction volume or installment-based lending could see both revenue and credit performance deteriorate.
“When you go down the spectrum, that’s when you have more cyclical risk, more exposure to tariffs,” said Sanjay Sakhrani, an analyst at Keefe, Bruyette & Woods, citing PayPal and Affirm as businesses at risk. He said bigger companies in the space “are more defensive” and better positioned.
Dan Dolev, an analyst at Mizuho, said bank processors such as Fiserv are less exposed to tariff volatility.
“It’s considered a safe haven,” he said.
Affirm executives have previously said rising prices might increase demand for their products. Chief Financial Officer Rob O’Hare said higher prices could push more consumers toward buy now, pay later services.
“If tariffs result in higher prices for consumers, we’re there to help,” O’Hare said at a Stocktwits fireside chat last month. Affirm CEO Max Levchin has offered similar comments.
However, James Friedman, an analyst at SIG, told CNBC that delinquencies become a concern. He compared Affirm to private-label store cards, and pointed to historical trends in credit performance during downturns, noting that “private label delinquency rates run roughly double” in a recession when compared to traditional credit cards.
“You have to look at who’s overexposed to discretionary,” he said.
Affirm did not provide a comment but pointed to recent remarks from its executives.
Wait, Mazda sells a real EV? It’s only in China for now, but that will change very soon. The first Mazda 6e built for overseas markets rolled off the assembly line Thursday. Mazda’s new EV will arrive in Europe, Southeast Asia, and other overseas markets later this year. This could be the start of something with a new SUV due out next.
Mazda’s new EV rolls off assembly for overseas markets
The Mazda EZ-6 has been on sale in China since October with prices starting as low as 139,800 yuan, or slightly under $20,000.
Earlier this year, Mazda introduced the 6e, the global version of its electric car sold in China. The stylish electric sedan is made by Changan Mazda, Mazda’s joint venture in China.
After the first Mazda 6e model rolled off the production line at the company’s Nanjing Plant, Mazda said it’s ready to “conquer the new era of electrification with China Smart Manufacturing.”
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The new global “6e” model will be built at Changan Mazda’s plant and exported to overseas markets including Europe, Thailand, and other parts of Southeast Asia.
Mazda calls it “both a Chinese car and a global car,” with Changan’s advanced EV tech and Mazda’s signature design.
Mazda 6e electric sedan during European debut (Source: Changan Mazda)
Built on Changan’s hybrid platform, the EZ-6 is offered in China with both electric (EV) and extended-range (EREV) powertrains. The EV version has a CLTC driving range of up to 600 km (372 miles) and can fast charge (30% to 80%) in about 15 minutes.
Mazda’s new EV will be available with two battery options in Europe: 68.8 kWh or 80 kWh. The larger (80 kWh) battery gets up to 552 km (343 miles) WLTP range, while the 68.8 kWh version is rated with up to 479 km (300 miles) range on the WLTP rating scale.
At 4,921 mm long, 1,890 mm wide, and 1,491 mm tall, the Mazda 6e is about the size of a Tesla Model 3 (4,720 mm long, 1,922 mm wide, and 1,441 mm tall).
Mazda said the successful rollout of the 6e kicks off “the official launch of Changan Mazda’s new energy vehicle export center” for global markets.
The company will launch a new SUV next year and plans to introduce a third and fourth new energy vehicle (NEV).
Although prices will be announced closer to launch, Mazda’s global EV will not arrive with the same $20,000 price tag in Europe as it will face tariffs as an export from China. Mazda is expected to launch the 6e later this year in Europe and Southeast Asia. Check back soon for more info.
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