23 March 2021

1) Some analysts expect Tesla Inc. stock to hit $3,000 by 2025, up from its current price of $655. This would make the company worth almost $3 trillion dollars. This is based on expectation of a 50% chance of Tesla achieving fully autonomous driving systems within five years. This would allow the company to scale up its planned robotaxi service quickly. Additionally, Tesla’s insurance business adds value to the company, believing the offering could be rolled out to more states in the next few years with better than average margins, thanks to highly detailed driving data the company collects. Presently, their insurance is currently available only in California. Forecasts are for Tesla’s unit sales to be between 5 million and 10 million vehicles in 2025, assuming increased capital efficiency.

2) Intel made small waves by launching an ad campaign featuring none other than the “I’m a Mac guy” himself . . . Justin Long to explain why PCs are better than Macs. Intel’s five YouTube videos have racked up over a million views, but the ad campaign extends to a website extolling the benefits of PC over Mac. In the real world, a PC with an 11th Gen Intel Core mobile processor offers users more, with real research and test results to prove it. Many Apple M1 claims don’t translate to real world usage and appear questionable. When compared to a PC with the 11th Gen Intel Core mobile processor, the M1 MacBook features just don’t stack up.

3) After years of outcry about corruption and wasteful spending, Congress banned earmarks, the legislative maneuver of having special budget items that allow members to funnel money to projects in their districts. Earmark spending went away in 2011 after corruption scandals, but now it’s back on the table. Leaders in both parties are taking steps to allow limited earmarks on spending legislation, opening the door to the sort of ‘horse trading’ that Democrats hope could lead to GOP support for Biden initiatives on issues ranging from infrastructure to the annual federal agency funding bill. Republicans are leery of what type of taxes and revenue-raising devices the Democrats are considering to finance a legislative package that could top $1 trillion dollars. With $28 trillion dollars worth of debt, and on the way to a $30 trillion debt, the Congress ought to be focused on how to save money.

4) Stock market closings for – 22 MAR 21:

Dow 32,731.20 up by 103.23
Nasdaq 13,377.54 up by 162.31
S&P 500 3,940.59 up by 27.49

10 Year Yield: down at 1.69%

Oil: up at 61.47

19 March 2021

1) American military officials are warning that, in the next few years, China could invade Taiwan. The island nation has long been a sore subject of U.S.-China relations. China’s rapid military build-up, are recent indications that Taiwan could unilaterally declare its independence from the mainland. An invasion could throw the whole region into chaos and potentially culminate in a shooting war between China and the United States, who is treaty bound to help Taiwan defend itself against Beijing. The Chinese army’s capabilities have matured to such a degree that this is no longer a dilemma we can afford to brush off. The Biden administration must signal its willingness to ‘go to the mat’ for Taiwan and help ensure the island can defend itself, but without further spooking Beijing. China has commissioned 25 advanced new ships, including cruisers, destroyers and ballistic missile submarines, with capabilities designed to keep America and its allies, who might interfere on Taiwan’s behalf, at bay. Meanwhile, China is integrating its new equipment into an increasingly sophisticated force

2) Production at U.S. manufacturers unexpectedly declined in February, representing a pause in recent momentum as factories were beset by severe winter weather and supply-chain challenges. The 3.1% decrease in output was the first since April, following an upwardly revised 1.2% gain in January. Total industrial output reflected a 7.4% surge at utilities, that was the largest advance since March 2017, also driven by increased demand for heating. Manufacturers continue to battle supply shortages and shipping challenges, but lean business inventories, steady demand from consumers and solid capital spending should push manufacturing back up.

3) A Tesla Model Y electric car, with its Autopilot engaged, crashed into a Michigan police car that had pulled over with its lights on. The driver was using Tesla’s Autopilot system when he crashed into the police vehicle, but there were no injuries, according to police. The 22-year-old driver was issued citations for failure to move over and driving with a suspended license. Tesla’s Autopilot system allows the car to brake, accelerate, and steer automatically. The electric car maker also sells its full self-driving software as a $10,000 one-off add-on and plans to release it as a subscription model this summer.

4) Stock market closings for – 18 MAR 21:

Dow 32,862.30 down by 153.07
Nasdaq 13,116.17 down by 409.03
S&P 500 3,915.46 down by 58.66

10 Year Yield: 1.73%

Oil: down at $59.53

17 February 2021

1) General Motors boldly announced plans to make only battery-powered vehicles by 2035, breaking from more than a century of internal combustion engines. However, the future for 50,000 GM workers, whose jobs could become obsolete far sooner than they realize, was not considered. The manufacturing of electric cars is simpler than conventional cars, which means fewer man-hours to make and therefore fewer jobs. Ford and Volkswagen executives estimate that EVs will reduce labor hours per vehicle by 30%. Electric vehicles contain 30% to 40% fewer moving parts than petroleum-run vehicles, which also translates into fewer failures, and in turn that also will mean fewer jobs for auto mechanics. Most vulnerable in the transition will be roughly 100,000 workers at plants that make transmissions and engines for gas and diesel vehicles.

2) Apple Inc is increasingly serious about entering the auto market because even though the smartphone is large, it is dwarfed by the opportunities in transportation. The smartphone market is worth about $450 billion dollars, while analyst estimates the global market for new vehicles, including cars, light trucks, commercial vehicles, and semi-trucks to be about $2.8 trillion dollars. There are three criteria that must be met for Apple to enter a market: vertical integration ability, a massive market, and a profitable market. While the vertical integration and massive market conditions are met, profitability is uncertain as the automotive industry has thin operating margins, indeed they’re in the mid-single digits. The electric car maker Tesla Inc is suppose to have margins in the 20% range, but with so many other companies getting into the market, competition will most likely narrow those margins.

3) With the big push to electric vehicles, with their exotic batteries having a finite useful life, new businesses are emerging to deal with salvaging used batteries. Li-Cycle Corp is one of those recyclers who is going public through a merger with the blank-check acquisition company Peridot Acquisition Corp in a deal valued at $1.67 billion dollars. This is a bet on the growing need to recycle used batteries as well increasing demand for lithium-ion power sources for emerging products like electric vehicles. Li-Cycle plans to use $615 million in additional funding to build more facilities to recycle and repurpose batteries. About 1.2 million tons of batteries are expected to end their life cycle in 2025, followed by 3.5 million tons in 2030. Investors are showing increasing interests in companies involved with lithium-ion technology, especially in recycling components which are harmful to the environment.

4) Stock market closings for – 16 FEB 21:

Dow 31,522.75 up by 64.35
Nasdaq 14,047.50 down by 47.98
S&P 500 3,932.59 down by 2.24

10 Year Yield: up at 1.30%

Oil: down at $59.76

TESLA PURCHASES $1.5 BILLION DOLLARS WORTH OF BITCOIN……….

By Economic & Finance Report

Tesla boss Elon Musk put his money where his mouth is, literally. Tesla in SEC regulatory filing; indicated that the company invested $1.5 billion in bitcoin on January 2021 (last month). The company also indicated they will be accepting bitcoin as a payment option, for their products and services in the future.

The announcement puts Tesla as one of three major tech companies collecting bitcoin as a form of currency in the upcoming future. The other two technology companies that accept bitcoin are Paypal and MicroStrategy.

The $1.5 billion dollar bitcoin amount purchased by Tesla is approx. ten percent of the company’s financial reserves; which indicates that Musk and Tesla are in the long haul when in comes to cryptocurrency. It also indicates that Musk values crypto as an alternative to the standard USD dollar. Bitcoin (BTC) leaped upward 14% on Tues Feb. 8, 2021; from the news that Tesla invested $1.5 billion in bitcoin. -SB

Image Credit: GulfNews.com

1 December 2020

1) Amazon’s cloud-computing unit, Amazon Web Services, suffered an outage, for such services as Adobe and Roku, who rely on Amazon for their websites, while major clients like Apple and Slack appeared to be unaffected. Amazon status page said it was experiencing problems with Kinesis, its service that processes large streams of data, causing increased error rates for a number of websites. Other services affected are Amazon’s smart security subsidiary Ring, software maker Autodesk, the lending company Affirm, Target’s Shipt delivery service and the subway status site operated by New York City’s Metropolitan Transportation Authority.

2) Elon Musk says the Tesla semi truck could go 621 miles on a battery charge, while paying a small weight penalty. Production is due to start this next year. Driven by four electric motors, one for each wheel, the same used on the Model 3 truck, and also uses the regenerative braking that gives quasi-infinite brake life. Tesla claims the truck can go 400 miles on a 30-minute charge using a Megacharger. Musk further claims that from day one a conventional diesel powered truck is 20% more expensive than a Tesla. One main problem is the size and weight of a battery pack to go those distances, so that means a 1-ton penalty compared to diesels. Trucks in the U.S. have a total weight limit of 40 metric tons or 80,000 pounds including their load. Regulations allows 11 hours of driving a day during a 14-hour window, so if a truck averaged 50 mph over that time, it would move 550 miles in a day. For 60 mph it would be 660.

3) The Philippines’ defense secretary has warned that increasing tensions in the South China Sea between the United States and China could easily spill over into war. If a shooting war happens, the Philippines will be involved whether she likes it or not. The crux of the threat is a confrontation of the U.S. and its allies against China for the South China Sea. An example is a Chinese destroyer recently coming threateningly close to an American warship who was conducting a ‘freedom of navigation’ patrol in the South China Sea. Also, China continues its threatening actions against Taiwan by staging amphibious landing maneuvers for invasions of islands like Taiwan.

4) Stock market closings for – 30 NOV 20:
Dow 29,638.64 down by 271.73
Nasdaq 12,198.74 down by 7.11
S&P 500 3,621.63 down by 16.72
10 Year Yield: unchanged at 0.84%
Oil: up at $45.14

9 October 2020

1) The airlines around the world are expected to lose $77 billion dollars in the second half of 2020 as Covid-19 continues to crush air travel demand. There are desperate efforts to cut cost by cutting jobs, grounding aircraft and consolidating work, but all their efforts are not enough. The first half of 2020 has been brutal for airline business and the rest of the year isn’t looking much better despite modest increase in air travel. This translates into losing $13 billion dollars a month or $300,000 a minute. At the start, U.S. airlines were burning about $100 million per day, which they reduced to about $30 to $40 million at the end of the third quarter. The airlines hope to reach zero ‘cash burn’ by year’s end using workforce reductions and operational consolidation. Air travel in America is down roughly 70% from 2019.

2) As another hurricane is approaching through the Gulf of Mexico, oil workers are evacuating oil rigs in the gulf ahead of Hurricane Delta, in turn causing oil prices to rise in anticipation of lower available oil. Oil prices had been falling Wednesday, but started rising as the storm came into the Gulf and the off shore evacuations began. So far, 183 offshore oil facilities have been evacuated which has halted nearly 1.5 million barrels per day of oil output. In July, the Gulf of Mexico produced oil at 1.65 million barrels per day, which is 17% of U.S. crude oil output. The demand for oil at refineries is 13.2% lower than a year earlier, a result of the virus crisis.

3) Electric car maker Elon Musk is pushing his company to boost production to build half a million cars in one year. That means producing 170,000 cars in the fourth quarter, a 17% increase from the third quarter. A half a million cars would be a milestone for Musk’s company, a first in the history of Tesla. So far, Tesla has produced 330,000 cars while also posting profits for its fourth consecutive quarter. Additionally, Tesla is pushing production numbers up by adding more production capacity.

4) Stock market closings for – 8 OCT 20:

Dow 28,425.51 up 122.05
Nasdaq 11,420.98 up 56.38
S&P 500 3,446.83 up 27.38

10 Year Yield: down at 0.76%

Oil: up at $41.27

24 September 2020

1) California’s annual bout of fires has just added a new dimension to the state’s history. The Creek Fire has become the state’s single most massive wildfire in history by burning 286,519 acres in Fresno and Madera counties. Ignited on September the fourth, it has so far destroyed 855 structures and damaged 71 others. There are now 50 major fires across the West coast this week, so far claiming 26 fatalities, while consuming 2.2 million acres. There are forty crews with 3,100 personnel who are fighting the fires, but only about 32% of the Creek fire blaze has been contained. No estimates yet of just how much monetary damages the state has suffered.
2) As the remnants of Sally continue moving across the southeastern United States, the first estimates are in for the damages. Sally made landfall as a category 2 storm near Gulf Shores, Alabama bringing a storm surge that caused major flooding in places like Pensacola with several feet of water. Damages are expected to cost upwards of $2 billion dollars. NOAA’s aerial imagery is being evaluated to more accurately determine the extent of flooding and damages in Florida and Alabama. Major beach erosion is also apparent too.
3) Tesla’s much touted Battery Day appears to have disappointed most of the average people, with Tesla (TSLA) stock tumbling down 8.6% in midday trading, on track for its lowest close in two weeks. Investors fear that promised new batteries will take years to fully develop and be available for automobiles. Tesla unveiled a new battery design that is 56% cheaper and more efficient for use in automobiles, which should be a big step towards the viability of fully electric cars. Additionally, the company announced a future robot car for $25,000 that will be fully autonomous, and available in the next three years. The new battery technology will enable sleeker affordable cars that can travel much longer distances on a single charge. Investors had expected announcements of two big innovations, the first one is a ‘million mile’ battery that would be good for ten years or more, as well as a cost reduction, a target specified as dollars per kilowatt-hour, which would finally drop the price of an electric vehicle below that of a gasoline car.
4) Stock market closings for – 23 SEP 20:
Dow 26,763.13 down 525.05
Nasdaq 10,632.98 down 330.65
S&P 500 3,236.92 down 78.65
10 Year Yield: up at 0.68%
Oil: up at $39.59

18 September 2020

1) The batteries in electric cars don’t last forever, so therefore they must be replaced from time to time. That leaves defunct batteries which must be disposed of. One company engaged in the recovery and recycling of electric vehicle batteries, as well as other lithium-ion batteries and e-waste, is Redwood Materials run by former Tesla executive Mr. Staubel. Amazon is investing in Redwood Materials as part of Amazon’s $2 billion dollar Climate Pledge Fund. The retail giant Amazon is a major consumer of batteries including its own growing fleet of electric logistics vehicles. In recycling, the company is already recovering most of the metal, lithium, nickel and cobalt from batteries.
2) Some are calling for publicly owned companies to include ‘climate related risks’, since climate change will have a major effect on a companies’ profits and the value of their assets. Therefore, investors want companies to publish these factors in their annual financial reports in accordance to the guide lines from the International Accounting Standards Board. Accounting standards play a key role in calculation of a company’s profits, solvency and remunerate senior executives. Therefore, this information is relevant when judging a company’s likely prospects.
3) Commercial properties in the Asia-Pacific arena is suffering as investors flee the market. Global investors have reduced their spending on commercial real estate in the Asia Pacific area disproportionately compared with other world areas. The total volume of commercial property acquisitions, such as office, retail and hotels, is about 65% of levels in the last two years. The shift is due in part from the Convid-19 crisis. Another fear is the increasing troubles from China across the realm, as China strives to dominate the world by 2050.
4) Stock market closings for – 17 SEP 20:
Dow 27,901.98 down 130.40
Nasdaq 10,910.28 down 140.19
S&P 500 3,357.01 down 28.48
10 Year Yield: down at 0.68%
Oil: up at $40.96

9 September 2020

1) It’s not just American businesses who are feeling the effects of the Covid-19 crisis from reduced sales, American charities are also suffering a major drop in revenues for the same reason. With the recession straining household budgets, people are less able to contribute resulting in charities losing billions of dollars since this spring. Furthermore, traditional money raising methods such a concerts, festivals and galas have been canceled or scaled back to a fraction of their previous size. Many charities are now working to make the holiday season productive to make up shortfalls in revenue.

2) The repressiveness of the Hong Kong police was further exposed when police chased down and tackled a 12 year old girl in a shopping mall. Video footage of several police officers pinning the hapless girl down on the floor went viral worldwide with a public outcry over the excess use of force against political dissenters. The incident touched off angry shouts from onlookers. The police tactics are being criticized as an indiscriminate treatment of children who are not taking part in protest. The girl complained she felt targeted because of her age, that being young has become a crime in Hong Kong, further increasing concerns that the regime is targeting their young for repression.

3) The markets continue their decline after a five week winning streak as investors begin to worry about stretched valuations. The decline is being lead by the technology stocks, which has met a heavy decline for the tech-heavy Nasdaq. Remarks by President Donald Trump to decouple the U.S. economy from China further added to the market’s jitters. The high flying technology company Tesla has suffered it worst one day loss since March with an 18% drop in the price of its stock.

4) Stock market closings for – 8 SEP 20:

Dow 27,500.89 down 632.42
Nasdaq 10,847.69 down 465.44
S&P 500 3,331.84 down 95.12

10 Year Yield: down at 0.68%

Oil: oil down $36.62

21 July 2020

1) Another major U.S. airline, Southwest Airlines, is facing reduction in staff as the airline business continues to contract with little expectation of returning to its pre-corona days of business. About 24% of Southwest pilots and 33% of flight attendants have agreed to early retirement or long term leaves of absence. This accounts for about 4,400 employees who have decided to leave permanently with another 12,500 for extended emergency time off. Southwest is trying to avoid its first involuntary job cuts in its 49 year history. The company says that passenger numbers will have to triple by year end to eliminate the need for layoffs. There is growing evidence that the airline business is fundamentally changing.

2) The freight truck company TuSimple is building the world’s first network of self driving delivery trucks by 2024. The autonomous semi truck-trailers will operate across the America. TuSimple has partnered with UPS, Penske Truck Leasing, US Xpress and McLane for this autonomous freight network project. TuSimple is creating digital routes, terminals and a monitoring system in three phases that tracks its truck. Phase I is until end of 2021 to bring autonomous trucking services to Phoenix and Tucson in Arizona, plus El Paso, Dallas, Houston and San Antonio in Texas. Phase II, from 2022 till 2023, will expand the network coast to coast with a line from Los Angeles to Jacksonville in Florida. Finally, phase III between 2023 and 2024, will expand service nation wide to 48 states.

3) Both automakers GM and Ford have lost 27% of their market value this year, while electric car maker Tesla continues its unbelievable rise in the market. The reasons for the decline are different for the two companies. Ford sales relied too heavily on the F-150. While GM continues to sell more cars in the U.S. and worldwide, it’s hammered by the pandemic and failure in China, the world’s largest car market.

4) Stock market closings for – 20 JUL 20:

Dow 26,680.87 up 8.92 %
Nasdaq 10,767.09 up 263.90
S&P 500 3,251.84 up 27.11

10 Year Yield: down at 0.62%

Oil: up at $40.70