Elon Musk’s electric vehicle manufacturer Tesla (NASDAQ: TSLA) delivered a total of 250,000 new cars in the second quarter of the year, compared to the first quarter of 2022, the number of deliveries slumped by 18%.
As Wilson notes, looking at the most recent disappointing macro data including poor durable good, capital spending and Markit PMIs, "recent data points suggest US earnings and economic risk is greater than most investors may think."
Supporting that claim is the fact that our US Cycle indicator moved into a downturn phase based on the April data which was before the trade talks broke down in early May (Exhibit 1). The OECD leading indicator also fell to its lowest level since the last recession. In addition, we are now hearing from many leading semiconductor (INTC, MCHP) and industrial companies (CAT, DE) that the second half recovery many are counting on is looking less likely. Like the weaker macro data in April, we don’t think these softer outlooks are the result of the uncertainty in the US/China trade negotiations. In the past week, our economists have lowered their 2Q US GDP forecast to 0.6% from 1.0%. We suspect this could deteriorate further if trade negotiations don’t improve soon.
Source: Morgan Stanley Cross Asset Research
And since all of these reflect April data - which means it weakened before the re-escalation of trade tensions - the latest trade war will only make a dismal economic picture worse. In addition, Wilson claims, "numerous leading companies may be starting to throw in the towel on the second half rebound", something the Morgan Stanley strategist has repeatedly warned about even though "many investors are not."
In short, "get ready for more potential growth disappointments even with a trade deal."
Global markets started the week on a relatively quiet note on Monday, the volatility is expected to pick up later this week, and the main attractions going to be the FED and ECB meeting minutes. The focus will also turn to the Non-farm payroll report on Friday, which should prompt even more volatility.
Shares of the home goods retailer Bed Bath & Beyond (NASDAQ: BBBY) plunged more than 20% on Wednesday following the release of disappointing first-quarter earnings results.
The sneaker giant Nike (NYSE: NKE) delivered better-than-expected financial results for the fourth quarter on Monday after market close. “Nike’s results this fiscal year are a testament to the unmatched strength of our brands and our deep connection with consumers," Nike CEO, John Donahoe said.