Stocks continue to show strength as the market started the day down as much as 200 points, but it gradually rebounded throughout the day, eventually taking a 5 point loss. The Dow finished the week at 23,995, which was a little more than a 2% gain. The morning sentiment focused on the government shutdown that has now hit 21 days. Departments like the FDA, FAA, and SEC are examples of “non-essential” departments, but the lack of production results in approval delays which could lead to revenue shortcomings. Additionally, federal employees officially missed their first paycheck today, putting a potential strain on the consumer buying. By noon EST today, Congress had already left for the weekend, thus declaring themselves “non-essential” government employees.
GM shares jumped up as much as 9% today as they reported better than expected guidance for 2019. Interestingly, CEO Mary Barra also announced that GM plans to have 20 electric vehicle models by 2023. The fascinating thing about this is that some of the most bullish GM investors (i.e.. David Einhorn, a.k.a. Silky Seamore) are also short Tesla. The narrative on Tesla is that the EV market is not profitable, and if that’s the case then it will be interesting to see what they do with their shares of GM now. So, either the EV market is not profitable, and companies like GM are investing in money pits while limiting their return on investment from their current money making assets, or the EV game can be profitable, in which case they’re counting on GM to outperform the likes of Tesla with vastly inferior technology. This will be an interesting story to follow.
President Jair Bolsonaro approved the partnership between Boeing and the Brasilian plane maker, Embraer. The new administration is shooting for a more pro-business environment, and they are expecting a 30% gain in mergers and acquisitions this year. The Brasilian stock market has already seen a 6.5% gain since President Bolsonaro took office at the beginning of the year.