Here is what you need to know.
Volkswagen has another emissions scandal. The German automaker announced an internal investigation has discovered “irregularities in CO2 levels” in as many as 800,000 vehicles. Volkswagen does not yet know if the irregularities are related to the recently discovered emissions scandal related to NOx testing. “Under the ongoing review of all processes and workflows in connection with diesel engines it was established that the CO2 levels and thus the fuel consumption figures for some models were set too low during the CO2 certification process,” Volkswagen said in a statement. “The majority of the vehicles concerned have diesel engines.”
Tesla is flying high after its latest outlook. Shares of Tesla were up 10% in after-hours trade after the company announced it expects to deliver 17,000 to 19,000 vehicles in the fourth quarter, outpacing the Wall Street consensus. For all of 2015, Tesla said it will deliver between 50,000 and 52,000 vehicles, narrowing its range from its previous estimate of between 50,000 and 55,000. On the earnings front, the electric-car maker lost $US0.58 per share, which was slightly worse than the $US0.56 loss that was anticipated. Revenue jumped 33.4% to $US1.24 billion, in-line with estimates.
US auto sales are at the highest level in a decade. The latest Autodata showed US auto sales rose at an annualized pace of 18.24 million in October, the best in a decade. The number easily surpassed the 17.7 million vehicle Wall Street consensus. Mazda (+35.4%) saw the biggest gains while GM (+16%) and Ford (+13%) posted solid results. BMW USA (-6.6%) was the lone decliner.
Honda is dumping Takata airbags. The AFP reports, Takata’s largest client, Honda, has severed its relationship with the company after US authorities announced a $US200 million fine against the airbag maker. Takata airbags have been linked to eight deaths and even more injuries around the world. “On a global basis, no new Honda and Acura models currently under development will be equipped with a front driver or passenger Takata airbag inflator,” Honda said in a statement. Shares of Takata were down as much as 20% in Tokyo.
Iceland raised rates. Iceland’s central bank raised its benchmark interest rate 25 basis points to 5.75%. The central bank noted domestic demand is expected to increase by more than 7% this year and GDP forecast to grow at 4.6%. As for inflation, “It is still expected that large pay increases will cause inflation to rise above the target as 2016 progresses and the effects of low global inflation taper off. Inflation will not return to target until 2018,” the central bank said. The Icelandic krona is weaker by 0.2% at 128.90 per dollar.
European services data was strong. October Services PMI for the eurozone was released, and showed every country outpaced expectations except for Germany. Spain saw the biggest month-over-month increase, as its reading climbed from 54.6 in September to 55.9 in October and easily beat the 54.6 that was expected. Germany’s number ticked up to 54.5 from 54.1, but missed the 55.2 that economists were expecting. The eurozone as a whole improved to 54.1 from 53.7. The euro is down 0.3% at 1.0935.
Bitcoin has gone parabolic. On Tuesday, Bitcoin rallied 10% to close just shy of the $US400 mark. On Wednesday morning, Bitcoin is up another 15% near $US454. The digital currency has surged 89% since the beginning of October.
Stock markets around the world are higher. China’s Shanghai Composite (+4.3%) surged after the People’s Bank of China released some dated comments from governor Zhou Xiaochuan. In Europe, Spain’s IBEX (+1.2%) leads the gains. S&P 500 futures are higher by 2.75 points at 2105.75.
US economic data is moderate. ADP Employment Change is due out at 8:15 a.m. ET before the trade balance crosses the wires at 8:30 a.m. ET and ISM Services is released at 10 a.m. ET. Crude oil inventories will be announced at 10:30 a.m. ET. The US 10-year yield is down 1 basis point at 2.20%.
Earnings reporting remains heavy. 21st Century Fox, Allergan, CDW, Honda Motor, Michael Kors and Time Warner highlight the names scheduled to release their quarterly results ahead of the opening bell. Facebook, Marathon Oil, MetLife, Prudential, Qualcomm, Strum Ruger and Whole Foods are among the companies reporting after markets close.
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