The age of disruption rolls on. Trade tensions with China are causing the Chinese markets to fall with the Shanghai Index down 2.2% after the US upped tariffs to 25% in response to China manipulating its currency lower. The interesting thing about this “game” is that while Chinese markets trade off hard, US markets, while volatile, edge higher signaling that US investors seem to favor what is happening. At the close of a wild session the Dow was down 7 points at 25,326. The trading volume was higher. The NASDAQ posted a solid gain thanks to strength in tech.
Tesla reported earnings (or lack thereof) and the markets responded positively. While the company posted a huge loss of over $700 million they also saw a 43% rise in revenue. Model 3 production is on track toward 6,000 cars a week and some gurus are saying that this report signals a turning point for the company. The stock was up big and short sellers were taking a “banana up the tail pipe” as the biggest short squeeze in recent market history might be set to unfold. The most interesting aspect of the earnings conference call however was Elon’s’ apology to Bernstein analyst Toni “Bonehead” Sacconaghi who, on the last quarterly call was accused by Musk of asking boring boneheaded questions. On the call this time however, Elon apologized to Toni and the market gave a sigh of relief as the “Elon Musk is off his rocker” risk premium all but vanished. The gurus are calling this the “billion-dollar apology”! Make no mistakes about it. If Tesla is successful, then the entire auto industry, as we have known it for the past century will begin to fade away! A rep for a big investor in Tesla noted that what Elon Musk and his team are doing in manufacturing will lower the cost of production by 20 times! I still cannot believe I heard him right but after asking him three or four times to repeat that figure he got a little impatient with me.
Apple stock continued to move higher following a good earnings report and as a result it became the first company ever in history to crest $1 trillion in market capitalization. Now that’s a lot of apples!