Image Credit: NBCNews.com

By: Economic & Finance Report

Breaking News: Tesla Inc market value has now surpassed both legendary Ford Motors and General Motors company market values combined.

January 8, 2020 (Wednesday) Tesla Inc had a market cap of $89 billion, approx 2 more billion dollars then Ford Motors ($50 billion) and General Motors ($37 billion) combined.

Many of Tesla Inc’s attributes for rising market cap has to be with a profitable 3rd quarter the electrical auto maker had; also surpassing auto deliveries in the Chinese market, while also having its stock more then double over the past few months. These all seem to be contributing factors to its increased market cap currently.

With all the accolades Tesla has achieved, there are skeptics in the investment community who believe the company will not able to sustain cash flow nor provide more profitability in the next few years.

All this remains to be seen...SB

6 January 2020

1) The U.S. manufacturing sector contracted the most in December, more than for a decade. Order volumes crashed to a near eleven year low with factory employment falling for a fifth straight month. The index of national factory activity fell to 47.2 last month from 48.1 for November and is the lowest reading since June 2009. A value of 50 or above indicates expansion, while below is contraction.

2) The electric auto maker Tesla sold more cars in 2019 than the two previous years combined. Tesla sold 367,500 cars in 2019, although its on the low end of the 360,000 to 400,000 cars the company estimated at the beginning of 2019. Its newly opened plant in China will sell its Model 3 automobile in China thus avoiding transport and import cost. China promises to be a major increase in Tesla sales for next year.

3) Despite worries by experts expecting a decline of spending by American consumers, many consider the consumer will keep the economy humming through the next year. This Christmas shopping season appears it will set new records in spending, despite trade tensions, Washington being absorbed in impeachment and oil prices creeping up. With the economy always on the minds of voters, a good economy bodes well for incumbents with 2020 being a presidential election year.

4) Stock market closings for – 3 JAN 20:

Dow              28,634.88    down    233.92
Nasdaq            9,020.77    down       71.42
S&P 500         3,234.85    down      23.00

10 Year Yield:    down   at    1.79%

Oil:    up   at    $63.04

31 December 2019

1) The automaker of electric cars Tesla has made its first deliveries of their Model 3 that were manufactured in China. The gigafactory in Shanghai is Tesla’s first outside the U.S., which is expected to significantly boost Tesla sales in China, which Tesla considers will become its largest market for the Model 3. Production will soon be 1,000 cars a week, eventually reaching an annual production of 150,000 a year.

2) The national average price for gasoline increased by 1.6 cents to $2.57 a gallon. Gas prices had been dropping for seven consecutive weeks prior to the upswing. The price increase is a result of the drop in oil inventories while oil prices are above $61 a barrel. Gas prices are above $3 a gallon in Hawaii, California, Nevada, Alaska and Washington, while Missouri, Oklahoma, Mississippi, Texas and Louisiana are the five states with the lowest priced gas states.

3) Vietnam is switching from producing and selling raw robusta beans on the commodity markets, to producing instant coffee for the burgeoning Asian market. Instant coffee brings more profit with less risk while also bringing protection from large swings in international commodity prices. Vietnam aims to overtake Nestle as Vietnam’s biggest pure instant coffee supplier in the next five years, and doubling its coffee exports to $6 billion dollars a year.

4) Stock market closings for – 30 DEC 19:

Dow              28,462.14    down   183.12
Nasdaq           8,945.99    down     60.62
S&P 500          3,221.29    down     18.73

10 Year Yield:    up   at    1.90%

Oil:    down   at    $61.68

30 August 2019

1) The American trucking industry is in trouble with many major trucking firms such as J.B. Hunt, Knight-Swift and Schneider cutting their annual outlooks. In a growing wave of trucking firms bankruptcies, 3,000 truck drivers have lost their jobs. One positive point is the trucking volume seems to be rising, although trucking is a highly cyclic business with wide swings in high and low peaks. With about 1.8 million American truckers, there is the rising threat of automated robot trucks, which the automatic driving technology industry is eyeing and experimenting already with UPS and the post office.

2) More troubles for Tesla’s SolarCity solar-panels and fires with people’s houses being set on fire resulting in extensive damage. Both Walmart and Amazon.com are suing, claiming Tesla’s solar energy systems have caused fires at their stores and warehouses. Tesla is telling home owners their need to do preventive maintenance on their solar power systems, but with 400,000 solar customers, one of the largest customer bases in America, this may not be a strategy to avoid law suits.

3) Disney’s Disney+ is penetrating NetFlix market share with very aggressive pricing and promotion programs that undercuts NetFlix rates, offering with rates that are as much as one third of NetFlix, while locking customers into contracts for as long as three year. When Disney+ announced its entry into the streaming market, Netflix grew its customer base by 2.7 million, instead of the 5 million that had been forecast. The increased competition from Disney+ and other streaming services is forcing NetFlix to use large amounts of capital to create new video content and so remain a viable competitor.

4) Stock market closings for – 29 AUG 19:

Dow 26,362.25 up 326.15
Nasdaq          7,973.39 up 116.51
S&P 500 2,924.58 up 36.64

10 Year Yield: up at 1.52%

Oil: down at $56.61

26 July 2019

1) Tesla, the manufacture of all-electric automobiles, has suffered a worse than expected loss. Additionally, there has been another major management shakeup, all of which is casting doubts on the future of the unique automaker. While Tesla delivered a record number of cars in its second quarter, its stock dropped 14% with a loss of $1.12 per share. Nevertheless, Tesla has opened twenty-five new stores and service centers.

2) Concerns grow that the trade tensions may be pushing U.S. economic growth downwards. Fears that the gross domestic product figures due out this Friday will show business investment has weakened. Additional factors stem from slow global growth and falling oil prices. The gains in jobs and wages are preventing growth from sinking. It’s anticipated that the Federal Reserve will lower interest rates by a quarter point to check softening of the economy.

3) Nissan, the world automobile manufacture, has announced the layoff of 12,500 employees worldwide, or about 10% of its work force. Nissan is striving to rein in the costs increases incurred during the former CEO Carlos Ghosn tenure and alleged financial misconduct. Japan’s number two automaker has suffered a collapse in its quarterly profits, a result of sluggish sales and rising cost. This is another indication of the world’s depressed auto market with other renowned automakers like Ford suffering similar major financial problems.

4) Stock market closings for – 25 JUL 19:

Dow             27,140.98    down    128.99
Nasdaq          8,238.54    down      82.96
S&P 500         3,003.67    down      15.89

10 Year Yield:    up   at    2.07%

Oil:    down   at    $55.91

4 June 2019

1) The electric car manufacturer Tesla has been getting significant revenues by selling credits to other car makers who need to offset sales of polluting vehicles. General Motors and Fiat-Chrysler disclosed that they have reached agreements to buy federal greenhouse gas credits from Tesla. These companies want to bank their green credits for use later when emission rules get tougher, especially if democrats regain the White House.

2) Bond yields are dropping at the fastest rate since th 2008 global financial crisis, in anticipation that the Federal reserve will cut interest rates to counter the fallout from the trade tensions. The two year Treasury yield has fallen for five straight days. This is likely to have damaging effects on business confidence as businesses become more concerned with future growth.

3) The U.S. Manufacturing Purchasing Managers’ Index fell by more than 2 points in May, the lowest level since September 2009, 6 points over the last year. This index reflects a drop in new orders or postponement of orders due to the uncertainty of the economic future. Manufactures are having to hold selling prices lower because of diminished sales, which in turn is squeezing profits.

4) 3 JUN 19 Stock market closings:

Dow             24,819.78   up            4.74
Nasdaq          7,333.02   down   120.13
S&P 500         2,744.45   down        7.61

10 Year Yield:    down   at    2.08%

Oil:    down   at    $52.85

30 May 2019

1) Presidential hopeful Bernie Sanders is pushing for measures to give workers a greater ownership in companies, thus transferring power and influence. This would be accomplished by requiring companies to periodically transfer stocks to a fund controlled by employees, giving workers a vote in managing the company while also receiving dividends. Nothing has been said on how to prevent companies from simply moving off shore, as has happened in the past.

2) Tesla, the manufacturer of electric automobiles, is gearing up for production of the Model Y, a crossover SUV with a simpler interior and longer range batteries with a reported 400 mile range. Tesla stock fell more than 10% last week over concerns of demand, profitability and the China-U.S. trade war.

3) Reportedly, China will use rare earths to retaliate against the U.S. in the trade war. This is a group of 17 chemical elements used in a wide range of products, from consumer electronics to military equipment. Chinese newspapers are filled with rhetoric asserting that the U.S. will have no option but to acquiescent to China’s economic policies. Eighty percent of U.S. rare earth imports come from China. However, this strategy by China may accelerate mining of rare earths in California and Australia.

4) 29 MAY 19 Stock market closings: Markets down over concerns of slowing economic growth.

Dow              25,126.41    down    221.36
Nasdaq           7,547.31    down      60.04
S&P 500          2,783.02    down      19.37

10 Year Yield:     down   at    2.24%

Oil:     up   at    $59.21

21 May 19

1 ) The stock for electric auto maker Tesla fell today as the car maker faces an uphill battle to become profitable in the second half of the year. Delivery of its new cars are way down from sales forecast, with Tesla stock closing down 2.7%, the lowest in two and a half years. Additionally, Tesla may be facing severe financial consequences from a fatal crash involving their Autopilot system.

2) The fallout from Huawei being blacklisted in America has caused the stock market to fall. Huawei uses electronic components in their product line, high technology parts that can’t be procured from other vendors. The down side is these vendors have significant sales from Hauwei, which lowers their revenues.

3) The trade wars with China is threatening to close as many as 12,000 stores in America this next year. For the last two years, the closing of retail stores in America had been accelerating before the trade war started, the result of falling store traffic. Tariffs would cause price increases at a time when consumers are increasingly reluctant to spend their money. All ready, the closure of 6,400 retail stores have been announced.

4) 20 MAY 19 Stock market closings:

Dow              25,679.90    down     84.10
Nasdaq          7,702.38    down   113.91
S&P 500         2,840.23    down      19.30

Year Yield:    up   at    2.42%

Oil:   up  at  $63.30

9 April 2019

1) In ten years, the US debt to GDP ratio will be equal (100%). The debt to GDP ratio is presently 78%, the highest since the end of World War II, but it’s anticipated to be 96% by 2028. To bring this into perspective, countries with sever economic problems such as Greece have a ratio of 188%, Italy 130%, Portugal at 120% and Spain with 97%. On the positive side, Germany has a ratio of 59%. The IMF is warning of the problem for America if the ratio is left to continue as is. A high ratio hinders a government’s ability to counter any economic downturn. America’s entitlements is the principle cause for the increase, because when Social Security was started, there were 16 workers to support each retiree, now there are just 2.6 workers.

2) European Union borrowers are eager to see how a Brexit extension will effect markets, by possibly reducing the uncertainty that Brexit has brought on. This spring, the IMF and World Bank will be meeting for their annual conference on world economic matters.

3) Tesla, the maker of electric automobiles, is starting its new quarter with another round of cuts of sales staff following poor deliveries. The company is closing some of it’s show rooms in favor of online sales. These actions are rattling investors by stoking confusion.

4) 8 APR 19 Stock market closing:

Dow                          26,341.02     down     83.97
Nasdaq                       7,953.88           up     15.19
S&P 500                      2,895.77           up       3.03

10 Year Yield:    up   at    2.52%

Oil:    up   at    $64.46

23 January 2019

1) The electric car manufacturer Tesla announced a 7% cut of their full-time staff. The company faces very difficult times ahead in selling affordable renewable energy products, in part because the ending of some tax credits.

2) China economic growth slows down to 6.6%, the lowest in 25 years, with a forecast of 6.3% for this year. China constitutes one third of the global growth.

3) The International Monetary Fund cuts world economic growth forecast because of the risk stemming from Brexit as well as China’s slowing growth.

4) 22 JAN 19 Stock market closings:

Dow                      24,404.48             down     301.87
Nasdaq                   7,020.36             down     136.87
S&P 500                  2,632.90             down       37.81

10 Year Yield:      down   at    2.73%

Oil:     up    at    $53.02