It seems as if stocks were due for a bit of a pull back after 4 days of gains. Negative news internationally led the markets lower as currency issues and Chinese tariffs were the story. A report out of D.C. said that Trump still intends to apply an additional $200 billion in tariffs, while trade talks with Canada drew one day closer to their Friday deadline without a deal. The Dow gave back 137 points to close at 25,986.
Argentina might be a great soccer nation, but their currency is a “Messi”. Ha-ha. The Argentine peso has now fallen 50% over the past year due to internal financial problems and it is not the only emerging market currency to experience recent significant declines. The Turkish lira and the South African rand are at record lows as is the Indian rupee. Currencies in other nations like Venezuela have almost disappeared and the tumult is pushing people toward the US dollar. The “king dollar” has now captured 48% of the world’s $30 trillion cross boarder loan market up from 40% a few years ago. Countries are now issuing “dollar denominated bonds” to gain access to global bond markets. Local currencies are not cutting the mustard these days and with China pushing “debt imperialism” on nations along the silk road trade route we could see more rough waters for EM currency valuations.
An article in Clean Technica shed some light on Tesla’s Model 3 manufacturing line and it was very interesting. Two reporters who cover the auto space were given a tour of the “Tesla Tent” at the Fremont, CA factory under which Model 3s are made. These two guys concluded that Tesla has figured out how to assemble a car in only 42 steps which is a fraction (25% to 30%) of the number of steps required at a traditional car company. This information dovetails with reports from T. Rowe Price, Fidelity and other investors saying that Tesla has figured out how to manufacture a car so efficiently that it will prove disruptive to the traditional auto industry.