Kaohoon Morning Brief – 21 April 2022

1) Deustche Bank sees slower economic growth with concerns of recession

Deustche Bank expected global growth at or slightly below its 3 to 3-1/4% trend rate over 2022 and 2023, citing the war in Ukraine and more aggressive monetary tightening have dampened the outlook. Meanwhile, emerging market growth is expected to slow in 2022, led by a slowdown in China to 4.4% and India to 7.0%.

The bank warned that if expectations become unanchored and inflation does not recede as expected, this would likely necessitate even more aggressive central bank tightening and a deeper economic slowdown and recession.


2) Tesla earnings beat expectations, eyeing 50% annual growth

Tesla Q1 EPS was far better-than-expected at $3.22 vs. $2.26 expected. Revenue for the first quarter was $18.76 billion vs. $17.80 billion expected. Automotive revenue reached $16.86 billion, representing an increase by 87% YoY. Meanwhile, automotive gross margins jumped to a record of 32.9% with a gross profit of $5.54 billion. 

Tesla CEO Elon Musk said that the company expects 50% annual growth on a multi-year basis.


3) Elon Musk says inflation is worse than reported

Tesla CEO Elon Musk said after the 1Q financial report that he thinks inflation is worse than what it has been reported and is likely to last throughout this year. 

“What’s keeping costs down at least in the short term is that we have locked in contracts with suppliers. Those modular contracts will obviously run out, and then we’ll start to see potentially significant cost increases,” Musk said.

The U.S. reported its 40-year high inflation in March at 8.5% on rising energy cost. 


4) ECB could raise interest rate as soon as July

The European Central Bank (ECB) may raise interest rates as soon as July amid significant inflation risks that will probably require further tightening later in the year, according to Governing Council member Martins Kazaks. 

Traders are betting on two quarter-point ECB rate hikes by December.