Tesla Recoil Stacks Up Against Turkey Takedown: Taking Stock

Tesla will undoubtedly be at the forefront in today’s session, already dipping below $300 per share in pre-market trading after Friday’s plunge completed its worst week since 2016. U.S.-China trade-related headlines were sparse and the crisis in Turkey failed to make material headway toward resolution. Turkey observes a week-long public holiday for Eid al-Adha, which could be a blessing and a curse after ratings agencies S&P and Moody’s both cut the Government’s rating further to junk after markets closed Friday. Qatar’s investment may serve to stem some of the bleeding, but with markets closed, the currency could still be subject to volatility with thin volumes and unknown headline risk as the U.S. and Turkey continue discussions.

Last week’s Taking Stock previewed possible scenarios for the Turkey crisis, and it appears the closest version to #2 occurred. Defensives led the way last week with telecoms and consumer staples recording gains in excess of 3.2 percent as the 10 year yield continued its drift lower. That being said, money still came in to equities, and S&P futures appear poised to open even higher this morning, within 20 points of the year’s highs set all the way back in January. European equities are broadly higher with a more risk off tone which could bode well for the sectors that didn’t perform as well last week. Though staples were a standout last week, we could still see a bit a bid today on the back of M&A sentiment in the beverage space after PepsiCo.’s $3.2 billion deal to buy SodaStream earlier.