Breakfast Bites - US Q4 GDP ahead

ECB meeting; Tesla tanks; Fed to end BTFP on time; German business sentiment lower; Turkey hikes and signals end

Rise and shine everyone.

The talk of the town is Tesla missing on earnings. Revenues came in light at $25.17B vs. $25.64B est. EPS missed by $0.02 coming in at $0.71. Gross margin was down 30bps QoQ. But, most importantly, they guided to notably lower vehicle volume growth in 2024 compared to what was achieved in 2023, as the company's teams work to launch the next-generation vehicle at Gigafactory Texas.

Today's big news is the ECB meeting and rate decision at 8:15 am ET. No policy changes are expected and we think ECB President Lagarde will continue to remain cautious. Fiscal policies, energy subsidies, and wage growth continue to remain a threat leading to higher inflation. Not to mention base effects are likely to make achieving the 2% target longer than expected. There are wage negotiations coming up in Q1 and much of the results won’t be known until Q2 so any talk of rate cuts will likely follow that line of thinking, i.e., around June. Markets are pricing in a 50% probability of an April cut.

Macro Focus for the US will be the preliminary Q4 Real GDP Growth numbers to be released at 8:30 am ET. The consensus estimate is 2%. The latest Atlanta Fed’s Nowcast estimates 2.4%.

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