The equity markets continue to dazzle as the Dow gained 160 points on heavy trading to finish the day at 23,590. BTS indicators are in cash while IBD has markets in rally mode. The difference between the two readings is that the bond markets (BTS) tend be much more sensitive to certain conditions than stocks (IBD) and, while not always right, can signal potential volatility much earlier.
Several big companies are lining up to buy Tesla’s new truck. Wal-Mart, JB Hunt and Ryder have placed orders for the revolutionary rig. While this is happening the gurus are pointing to an acceleration of losses at Tesla with some saying the company is burning cash faster than a new Tesla Roadster. What I think however is that when you have a revolutionary leader like Elon Musk, bottom line profitability is not the immediate concern because they are looking years down the road. It reminds me when Amazon came public and was losing money hand over fist. One analyst queried Jeff Bezos about when or if the company would ever be profitable and the answer was “you will just have to trust me”. Turned out he was right in a big way.
Brian Wesbury, economist at First Trust and honorary member of the Westport Mafia, recently commented on the US economy. Here is what he said: “Halfway through the fourth quarter, monthly data releases show real GDP growing at a 3%+ annual rate. If that holds, it would make for three consecutive quarters of growth at 3% or higher. Believe it or not, the last time that happened was 2004”. Brian also noted that factory output surged 1.3%, factory production was up 2.5% and existing home sales were up 2% despite high costs and tight inventory. It seems the plow horse economy could be morphing into the “Race horse Economy”.