Nicolai Tangen, chief executive officer of Norges Bank Investment Management, during a news conference in Oslo, Norway, on Tuesday, Jan. 30, 2024.
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The chief executive of the world’s largest wealth fund says there are many wild cards in financial markets right now, butthe “big worry” for investors is what a commodities rally could mean for the inflation outlook.
Nicolai Tangen, CEO of the Norges Bank Investment Management (NBIM), told CNBC’s “Squawk Box Europe” on Tuesday that soaring energy and raw material prices could prove to be a significant headache for major central banksas they continue to fight inflation.
As of Tuesday afternoon, the S&P GSCI, a benchmark index that tracks the performance of global commodities, had jumped 9% since the start of the year, outpacing the broad S&P 500 index.
Oil and copper prices have climbed around 13%, respectively, year-to-date, while gold has repeatedly notched fresh record highs in recent months.
Asked whether he had any concerns about hot commodity markets, NBIM’s Tangen replied, “Yes, the big worry is just what that could mean for inflation right?”
He added, “So, if energy and raw material prices continue to move up, that is going to feed through to end-product prices, which are going to be higher. And that could be the real wildcard when it comes to inflation expectation.”
NBIM manages the so-called Norwegian Government Pension Fund Global. The world’s largest sovereign wealth fund, which was valued at 17.7 trillion kroner ($1.6 trillion) at the end of March, was established in the 1990s to invest the surplus revenues of Norway’s oil and gas sector.
To date, the fund has put money in more than 8,800 companies in over 70 countries around the world, making it one of the largest investors across the globe.
Fewer rate cuts
European Central Bank President Christine Lagarde had also signaled the impact of commodity prices last week, in the broader context of the institutions next monetary policy steps. She said the central bank remains on course to cut rates, barring any major shocks — but stressed that the ECB would need to be “extremely attentive” to commodity price movements.
“Clearly on energy and on food, it has a direct and rapid impact,” Lagarde said.
Euro zone inflation slowed by more than expected to 2.4% March, bolstering expectations of a near-term rate cut. Market pricing for interest rate cuts, which has been highly volatile in recent weeks, now also points to the ECB appearing set to ease monetary policy before the U.S. Federal Reserve.
With most readings putting U.S. inflation at around 3% and not moving appreciably for several months, traders on Tuesday afternoon were pricing in a 13% chance of a U.S. rate cut in June, according to the CME Group’s FedWatch tool. That’s down from nearly 70% last month.
A worker supervises the furnace in the foundry at the ZiJIn Serbia Copper plant in Bor, Serbia, on Thursday, April 18, 2024. Copper prices have rallied recently, driven by an improving outlook for global manufacturing and mine disruptions.
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Tangen said Norway’s wealth fund continued to believe it would be “tough” for central banks to get inflation down toward target levels, and major central banks would move differently, depending on local inflationary pressures.
Acknowledging multiple factors that now underpin inflation, Tangen said, “You have some of the geopolitical tensions, you have near-shoring, you have the climate effect on food through the world’s harvest, you’ve got some changes in trading routes and so on, and wage inflation is also higher than perhaps we had expected.”
He added, “We are expecting fewer rate cuts than the market did, of course, earlier in the year. I have to say my surprise is that the market has taken it so well. I would have expected the market to have reacted more negatively to this postponement of interest rate cuts.”
Tesla (TSLA) has introduced a new direct discount for the Model Y in China as the latest of a series of incentives to boost demand during this critical end-of-quarter push.
The automaker regularly offers discounts at the end of every quarter, but the incentives to boost demand have been the most wide-ranging ever this quarter.
Over the last month, we have been documenting the many sale incentives and discounts that Tesla has put in place to ensure it creates the demand for a record quarter.
Tesla aims to deliver a record number of more than 515,000 vehicles in Q4 in order for its sales not to be down for the whole year. That’s ~30,000 more vehicles than Tesla’s last record quarter, which was Q4 2023.
And everywhere, Tesla is heavily subsidizing loans with lower interest rates. That has been the main incentive in China, Tesla’s biggest market, until now.
Tesla’s New Discount in China
Today, Tesla announced that it is offering a ¥10,000, the equivalent of $1,380 USD, discount on the final payment for new Model Y vehicles:
The new discount can be combined with Tesla’s subsidized 0% interest financing, which has been Tesla’s main incentive in China all year.
Electrek’s Take
Based on insurance data, Tesla is tracking ahead of last year’s deliveries in China, but it is going to need to beat its last record by a significant margin to make sure not to be down for the whole year.
Model Y is Tesla’s most popular vehicle, but Tesla is also going against the expectation of the design refresh coming early next year, which can negatively affect demand.
This discount is likely to combat that and maintain Tesla’s current good momentum in China.
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We now have more details on the massive recall, which just keeps growing. Hyundai and now Kia are recalling more than 208,000 electric vehicles in Canada and the US to fix a problem with the loss of driving power, which can increase the risk of a crash.
For the second time this year, the automakers are recalling huge swathes of EVs and other “electrified” vehicles in North America, citing concerns about a loss of driving power, the National Highway Traffic Safety Administration (NHTSA) said on Friday.
In the US, Hyundai is recalling 145,235 EVs, including the 2022 through 2024 Ioniq 5, the 2023 through 2025 Ioniq 6, GV60 and GV70, and the 2023 and 2024 G80. In Canada, Hyundai is recalling 34,529 vehicles that were produced between March and November of this year, according to Automotive News Canada.
As for Kia, the recall includes close to 63,000 Kia EV 6 vehicles from 2022 through 2024 in the US, but the company has yet to offer details on its Canada recall.
It looks like the issue stems from “the integrated charging control units in these vehicles, which may become damaged and fail to charge the 12-volt battery. This malfunction could lead to a complete loss of drive power, posing safety risks for drivers,” the NHTSA stated.
Back in March, Hyundai, Kia, and Genesis issued a similar recall for 147,110 electric vehicles – that recall centered, again, around damaged integrated charging control units failing to charge the battery.
The South Korea automaker has said that all owners of affected vehicles will be notified by letter mail on the next steps to take. This will involve bringing your vehicle to one of the company’s dealers to inspect and replace the charging unit and its fuse if necessary, along with performing a software update for the charging units.
Importantly, no crashes, injuries, fatalities, or fires due to this issue have been reported in the US or Canada, Hyundai reported.
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A group of Tesla vehicles spotted under covers at the automaker’s test track at the Fremont factory is raising some questions.
Tesla has a very small test track on the ground of its first factory, Tesla Fremont, in California.
Now and again, people fly drones over the factory and catch glimpses of new cars being tested. Youtuber ‘Met God in Wilderness’ is one of those drone pilots who regularly fly over the factory and while he didn’t catch vehicle being tested, he did catch some curious vehicles under covers next to the track:
The vehicles are all covered, and therefore, it’s hard to tell exactly what they are, but the different shapes are intriguing and raise some questions.
It looks like three, maybe four, different kinds of vehicles:
We know that Tesla is working on three new specific vehicles: a Model Y design refresh, and two new cheaper models based on Model 3 and Model Y.
All three vehicles are expected to be unveiled early next year.
Electrek’s Take
At the risk of stating the obvious, getting much information from vehicles hidden under cover can be hard. It’s even possible that some of those have shape camouflage, which is sometimes used by automakers – although I don’t remember Tesla ever using that.
So here are my best guesses. Take them for what they are: guesses.
The most interesting ones to me are the first two on the left in the picture above. The last vehicle on the left looks like it could be a smaller Model 3.: