Morning Roads

Morning Reads





Tesla (TSLA) is steadily moving ahead with its plan to roll out its self-driving technology in China, reportedly reaching a deal with Baidu (BIDU) to access the local search giant's mapping license for data collection on Chinese roads. Baidu is expected to also provide its lane-level navigation system to Tesla. The news sent shares of Tesla jumping around 8% before the bell on Monday, while Baidu's ADRs soared close to 6%. To note, both companies already have a partnership, under which the automaker's vehicles use the Chinese company's navigation map in China.

Musk in China: The latest agreement was a result of Tesla CEO Elon Musk's trip to China, where he met with Chinese Premier Li Qiang and other officials, just over a week after the billionaire cancelled his planned India visit citing "very heavy Tesla obligations." Musk also reportedly sought approvals for the launch of Tesla's driver assistance system - Full Self Driving - in China and permissions to transfer local data abroad. Transferring data is an important part of training Tesla's algorithms for self-driving. Since 2021, Tesla has kept data collected in China on servers in Beijing and hasn't sent it to the U.S. to comply with Chinese regulation.

Dig deeper: China requires that all driving assistance systems get a mapping service license before operating on public roads in the country. For this, foreign companies need to partner with any of the dozen local firms that are licensed. Baidu is among the Chinese companies that have this license. The license would legally allow Tesla to operate its FSD software on Chinese roads, and gather data on road layouts and nearby buildings. It is not immediately clear if the collected data will belong to Tesla or Baidu.

FSD hopes: In the backdrop of slowing demand and growing competition, Tesla last week slashed FSD prices by a third to $8,000 in the U.S. Launching FSD in China would be a significant step as Chinese EV makers pose a real threat to Tesla's market share. Musk recently said Tesla may bring the software to China very soon. "While the company has yet to have successes that justify its valuation, a breakthrough with FSD or something else, could turn that around," Investing Group Leader The Value Portfolio recently said. (18 comments)

Yen intervention?

The Japanese yen strengthened against the U.S. dollar on Monday, a public holiday, with traders speculating that it's likely due to intervention by authorities to support the currency after it hit its lowest level in over three decades last week. The yen strengthened to trade around 155 against the dollar (USD:JPY), from as high as 160 earlier today. "... these moves have all the standard characteristics of currency intervention: the 'line in the sand' at 160, the sharp increase in volume and the size of the move," said Francesco Pesole, FX strategist, ING. It remains unclear if this was a one-off move or part of an intervention campaign. (1 comment)

AI-powered iPhone

Apple (AAPL) and OpenAI resumed talks on integrating the startup's generative AI capabilities into the new iPhone, expected later this year. The discussions mark a renewed attempt by the tech giant to add the AI features to iOS 18, the next iPhone operating system. Talks with Microsoft (MSFT)-backed OpenAI about a potential deal began earlier this year, following similar discussions with Alphabet (GOOGGOOGL) to add Gemini to the iPhone. Apple may opt for a deal with both OpenAI and Alphabet, or prefer one over another. Apple's Q2 results are due on Thursday, and traders will closely watch for comments on its strategy to integrate genAI functionality into the iPhone. (46 comments)

Final offer

Skydance Media reportedly made its "best and final" offer in its bid to merge the company with Paramount Global (PARA), whose shareholders have opposed the deal and called for the consideration of other offers. The Redstone family and David Ellison made concessions to make a change in control at Paramount more amenable to smaller investors. The company's CEO Bob Bakish is also expected to be fired as early as this morning over his reported opposition to the merger. Paramount’s special committee is still undecided about agreeing to a deal with Ellison. The media giant is scheduled to report Q1 earnings after the close on Monday. (49 comments)

Today's Markets

In Asia, Japan closed. Hong Kong +0.5%. China +0.8%. India +1.3%.
In Europe,
 at midday, London +0.5%. Paris +0.1%. Frankfurt -0.1%.
Futures at 7:00, Dow +0.1%. S&P +0.2%. Nasdaq +0.3%. Crude -0.2% to $83.65. Gold +0.2% to $2,352.10. Bitcoin -1.9% to $62,400.
Ten-year Treasury Yield -1 bp to 4.63%.

Today's Economic Calendar

10:30 Dallas Fed Manufacturing Survey

Companies reporting earnings today »

What else is happening...

Biden administration imposes sweeping regulations on power plants.

U.S. to rush Patriot missiles to Ukraine as part of $6B aid package.

BHP may improve Anglo American (OTCQX:AAUKF) bid after rejection.

Republic First Bank (OTC:FRBK) shut in 2024's first bank failure.

Disney (DIS) character workers in California move to unionize.

WHO picks dominant variant JN.1 for next set of COVID vaccines.

Turkey, Exxon (XOM) in talks for multibillion dollar LNG supply deal.

Elliott Management builds big stake in Warren Buffett-backed Sumitomo.

Credit card delinquency rates fall in March as consumers keep spending.

Cannabis retailer MedMen (OTC:MMNFF) files for bankruptcy in Canada.

Known to most as Uranium Pinto Beans, Jason has more than 15 years under his belt of trading stocks, options and currencies. His expertise primarily lies in chart analysis, and he has a strong eye for undervalued stock. Because he’s got the ability to identify great risk/reward trades he usually enjoys taking the path less traveled and reaping the benefits from the adventure.

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