When Expectations Fall Short: The Bitter Reality of EVs, Trading the Debt Ceiling, & Anemic China

Complete Intelligence

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In this episode of the Week Ahead, Tony Nash hosts a panel discussion with Albert Marko and Adem Tumerkan, covering the economics of electric vehicles (EVs), trading the debt ceiling, and China’s post-Covid opening.
Albert delves into the economics of EVs, highlighting Ford’s significant losses of $2.1 billion in their EV unit for FY 2022 and an additional $722 million loss in Q1 2023. Tony references insights from Robert Bryce, revealing that Ford incurs a hefty loss of $66,000 on each EV produced. The panel discusses the EV drive on Capitol Hill and among car manufacturers, linking it to influential donors invested in ESG and carbon credits. Tony raises questions about companies’ motives, while Adem expresses concerns about the saturated EV market, Ford’s losses, and Tesla’s price cuts. They explore strategies such as spinning off EV units and meeting emissions standards with carbon credits.
Shifting the focus to trading the debt ceiling, Tony highlights a sense of optimism and hope despite previous negative news. Reuters suggests a debt ceiling rally is on the horizon. The panel anticipates an agreement unlikely before mid-June and assures that a default is not expected. They interpret Janet Yellen’s varying statements as a strategy to create market turmoil and pressure Republicans for a better debt ceiling deal. The influx of California’s income taxes in mid-June may affect the Republicans’ stance. The panel predicts market volatility and suggests a potential stimulus package later in the year to appease voters during the election season. Adem analyzes the impact of the debt ceiling on bank reserves and liquidity, predicting potential fragility in the system. He recommends focusing on the longer end of the yield curve and discusses the possibility of a credit crunch and its consequences.
Adem sheds light on China’s disappointing post-Covid opening, highlighting structural issues, high debt levels, defaults on infrastructure projects, and a weak consumer base. Tony emphasizes Adem’s recent tweets revealing the reasons behind China’s weak reopening. Adam elaborates on China’s weak reopening, explaining the negative impact of its current account surplus on consumer demand. Tony contrasts Asian economies with high savings due to historical volatility to credit in the West, which is based on stability. Adem highlights the Chinese government’s repression of consumption, leading individuals to save, which funds state-owned enterprises and infrastructure projects.
Looking ahead, Albert focuses on the debt ceiling while also mentioning the importance of monitoring oil prices and the potential for a secondary inflation event. Adam emphasizes the significance of China’s retail sales and current account data, as well as the crowded trades in the tech and regional bank sectors. He expresses contrarian views on shorting tech and recommends investing in longer-term bonds.
Key themes:
1. Economics of EVs
2. How to trade the Debt Ceiling
3. Anemic China
This is the 66th episode of The Week Ahead, where experts talk about the week that just happened and what will most likely happen in the coming week.
Follow The Week Ahead panel on Twitter:
Tony: https://twitter.com/TonyNashNerd
Albert: https://twitter.com/amlivemon
Adem: https://twitter.com/RadicalAdem

Watch this episode on Youtube: https://youtu.be/49Eg5GV8io0