Your Tuesday Market Blip 10/23/18

Your Tuesday Market Blip 10/23/18

The Dow opened with a 500-point loss then crawled back and almost went positive before closing with a 125-point decline on heavy trading volume at 25,191. Bloomberg noted the pullback was “fear over facts” and said investors seem to be actively looking for reasons to sell stocks in the face of strong earnings.

Earnings reports came flooding in and markets reacted negatively to Caterpillar and 3M which mentioned on their respective calls that higher material costs were a concern and both issued mild forward guidance. Cat posted a revenue gain of 18% and profit growth of 47% which, while good, was “disappointing”. In other reports, McDonald’s beat estimates and global sales of Big Mac’s were apparently not affected by trade tariffs. Verizon also posted solid numbers and shares hit a 52-week high and an 18 year high as the company grew the top line by 3% and the bottom line by 24%.

In 2014, Mitsubishi Heavy Industries built a flight test center in Moses Lake, WA as part of its plan to build a regional passenger jet. Mitsubishi today announced it will inject an additional $2 billion dollars into this project after the subsidiary's debts exceeded assets. Mitsubishi hopes to have the jet in commercial operation by 2020. The MRJ “Mitsubishi Regional Jet” will carry about 75 to 80 passengers. Mitsubishi has hired several ex Boeing and P&W employees to work on the project and Moses Lake has benefitted from the money coming into the area. You can occasionally see the MRJ buzzing around the skies over Eastern Washington.

Lefty goes Long! Tesla reports earnings tomorrow and Tesla short seller Andrew “Lefty” Left announced he has suddenly switched sides and is a bull. After bashing Tesla for 5 years Lefty said “TSLA is not just pulling customers from BMW and Mercedes but also from Toyota and Honda. Like a magic trick, while everyone is focused on Elon smoking weed, he is quietly smoking the whole automotive industry," Tesla possess a risk for several companies and countries. Canada is the biggest traditional auto supplier to the US followed by Japan and Germany. Tesla’s success could disrupt these supply chains along with their respective car industry players like Ford, GM, BMW, Honda etc. etc. It will be interesting to see how this plays out, but it looks like Tesla is here to stay. Tesla buyers sure seem to like them and Lefty even noted that Tesla does not have any real competition in the EV market.