Your Thursday Market Blip 12/19/19

Your Thursday Market Blip 12/19/19

Stocks posted solid gains to new all-time highs on trade optimism. At the close the Dow was up 137 at 28,376. Trading volume was off a bit. The impeachment process had no effect on markets as a slew of trade news and budget legislation took center stage.

For the first time (and to the disbelief of many) Tesla stock traded above $400 per share for the first time. Reasons for the climb include signs that the company is becoming more fiscally disciplined plus it is now producing cars in China, improved versions of the solar roof and getting orders for the Tesla grid sized battery pack. One order of note is from the rural electric utility that services Homer Alaska. What is interesting about the Tesla battery pack is that early rates of return on these are astounding. One wind energy in Australia paid $66 million for one of these over a year ago and according to reports they have already booked over $50 million in revenue. If this were the equivalent to buying an apartment building the cap rate would be over 70! No wonder more companies are wanting to buy and install these things. Anyway, some gurus think Tesla stock is high because of short sellers are having to cover before their wives divorce them which is partly true but the bigger reason could be that Tesla has several different product lines that appear to be finally gaining traction.

Nike reported good earnings as the company posted 7% revenue growth and a jump of 28% in net income. Sales in North America were up 5% and in China the company saw a 20% jump in sales. Shares of Nike hit all-time highs prior to the earnings release.