The “pshyco market” continues to do its thing as geopolitical forces battle against solid fundamentals. The Dow traded off nearly 400 points at the opening bell but then a bounce in manufacturing led by Boeing and an easing of geopolitical risk brought the Dow to a closing gain of 5 points on heavy trade to 23,930. BTS is still in “green light” mode and IBD continues to indicate that the rally, while still intact, is under some pressure.
Tesla reported earnings and I have to say that with Elon Musk there is never a dull moment. News outlets talked about how odd the earnings conference call with Musk was but I suspect that when you are sleeping on the factory floor with investors breathing down your neck you cannot expect a love fest. This call was more like Shakespeare’s play where Henry V gives a stirring St. Crispin’s Day speech before the battle of Agincourt as the Brits faced long odds against the French. Tesla reported a 26% increase in revenue but still lost $3.35 per share. Last year at this time Tesla lost only $1.33 per share. The numbers posted by Tesla were better than expected however and the net backlog of Model 3 orders came in at 450,000 with production currently at 2,270 per week. These are tense and exciting times at the Tesla! The company as a whole is doing so many innovative things it is hard to keep up. The Gigafactory is now producing 3,000 battery packs per day. The solar roof segment revenues were up 161% yoy. If Tesla can get through the next two months and get Model 3 production to 5k per week then a major hurdle will have been cleared. Process engineering is key at this juncture.
US oil production hit a fresh record high of 10.62 million barrels per day. With prices in the mid $60’s, US producers are bringing DUC wells online and increasing drilling activity. While global economic growth is trending higher and supporting current prices, all eyes in the oil patch are on US - Iran relations to see if the 2015 nuclear deal will be scrapped by the Trump Administration resulting in sanctions on Iran and affecting their oil output. The new wildcard in this saga is evidence of a past secret Iranian nuke weapons program revealed by Israel spies who seem to be like honey badgers and are able to “just take what they want”. The internal and external pressure on Iran is mounting and higher oil prices might be a direct result of all the brouhaha. WTI crude prices closed today at $68.48 up a tad.
Boeing received an order for six 787-9 Dreamliners from Qantas Airlines which announced it was retiring its remaining fleet of 747 Jumbo Jets in 2020. The new Dreamliner’s will replace the jumbos which were purchased in 1971 and this move will most likely mark the end of the 747 era for Qantas.