News & Analysis at your fingertips.

We use a range of cookies to give you the best possible browsing experience. By continuing to use this website, you agree to our use of cookies.
You can learn more about our cookie policy here, or by following the link at the bottom of any page on our site.



Notifications below are based on filters which can be adjusted via Economic and Webinar Calendar pages.

Live Webinar

Live Webinar Events


Economic Calendar

Economic Calendar Events

Free Trading Guides
Oil - US Crude
Wall Street
More View more
Real Time News
  • Weakness in equity markets continued last week as losses built and technical patterns hint further bearishness might be ahead. Get your #equities update from @PeterHanksFX here:
  • Forex liquidity makes it easy for traders to sell and buy currencies without delay, and also creates tight spreads for favorable quotes. Low costs and large scope to various markets make it the most frequently traded market in the world. Learn more here:
  • There is a great debate about which type of analysis is better for a trader. Is it better to be a fundamental trader or a technical trader? Find out here:
  • #Gold prices succumbed to selling pressure as the US Dollar soared this past week What is #XAUUSD facing these next few days and can these fundamental forces extend its selloff? Check out my outlook here -
  • GDP (Gross Domestic Product) economic data is deemed highly significant in the forex market. GDP figures are used as an indicator by fundamentalists to gauge the overall health and potential growth of a country. Learn use GDP data to your advantage here:
  • Many people are attracted to forex trading due to the amount of leverage that brokers provide. Leverage allows traders to gain more exposure in financial markets than what they are required to pay for. Learn about FX leverage here:
  • Key levels in forex tend to draw attention to traders in the market. These are psychological prices which tie into the human psyche and way of thinking. Learn about psychological levels here:
  • The price of #oil may continue to trade in a narrow range as the rebound from the September low ($36.13) appears to have stalled ahead of the month high ($43.43). Get your #commodities update from @DavidJSong here:
  • The Australian Dollar may extend its slide lower despite the planned easing of Covid-19 restrictions, as the market continues to price in an RBA rate cut on October 6. Get your #currencies update from @DanielGMoss here:
  • The Indian Rupee may be at risk to the US Dollar as USD/INR attempts to refocus to the upside. This is as the Nifty 50, India’s benchmark stock index, could fall further. Get your USD/INR market update here:
What We Can Learn About the Market from Tesla Overtaking Ford

What We Can Learn About the Market from Tesla Overtaking Ford

2017-04-04 02:52:00
John Kicklighter, Chief Strategist

Talking Points:

  • On a production guidance update from electric car producer Tesla, the company's market-based value overtook that of Ford
  • In this discrepancy, we find value is afforded to growth potential versus business stability and revenue
  • This story highlights common features of speculative appetite over traditional value seen throughout the system

Sign up for the live NFPs release coverage and see what other live coverage is scheduled to cover key event risk for the FX and capital markets on the DailyFX Webinar Calendar.

After a promising production report from electric automaker Tesla, the company's shares surged to a record high. Not only did this surge in share price push the company's stock to a record high, it pushed Tesla's market valuation (market capitalization) higher than that of Ford Motor Company. That is remarkable given the new entrant is shooting for a six-month production run of 50,000 cars versus a Ford output that is vastly larger and a profitability backdrop whereby Tesla has yet to prove consistent revenue. This comparison evokes many of the remarkable asymmetries in the broader financial system. Value and risk are skewed towards speculative appetite and appraisal.

As with the S&P 500's charge to record highs - despite its fundamental limitations and historical precedence - there is a shift in what dictates value in the market at large. Rather than steady revenue, growth and proven stability; the focus is speculative leverage. Which company, sector or asset class has the ability to draw the most capital in the shortest amount of time? Such a charge promises capital gains for which an opportunistic market participant can position in front of to make faster returns than the slow accumulation of income in a record-low rate environment. This is another means of highlighting the influence of a particular investor type: speculator over investor. For the former, holding period is much shorter and the anticipated rate of return far more aggressive. Given the latter's comparable time frame, stability is far more important. Given such priorities in investment choices, shares like Tesla, Twitter or Snap flourish. Further, emerging markets outperform developed markets; and currencies with notionally higher yields (like the Australian and New Zealand Dollar) outpace lower-rate stalwarts.

Similar to nutrition or psychological needs, there is a hierarchy to speculation. Stability of your investment is the foundation. At the other end of the spectrum are extraordinarily high return / high risk options - what some in the tech industry would consider 'moonshots'. Either an extraordinarily robust economic and financial backdrop or deep complacency are needed to support this environment. What we see in the financial system lately falls into the latter category. It is important to recognize the primary participant and motivation. With that information, we know better how and when to select our trades. Furthermore, we can better determine when the gears shift on a drastically mispriced market view. In this eventuality, we find another comparison to the Tesla story: founder Elon Musk's calling out those holding short positions in his company's shares. How does Tesla represent the avatar of a market-wide reality? We discuss that in today's Strategy Video.

What We Can Learn About the Market from Tesla Overtaking Ford

To receive John’s analysis directly via email, please SIGN UP HERE

DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.