WASHINGTON – Just like Thursday, we’re watching a modest stock market downdraft gather steam. Like yesterday, today’s market rumblings are worsening just prior to the noon hour, ET. Causes? A recognition that America’s hoped-for V-shaped recovery could morph into a less appealing U-shaped melt-up. Plus, disturbing news Tesla (trading symbol: TSLA), Robinhood and that always worsening new China Syndrome.
Presto! Red ink to end the week.
Market rumblings take Tesla shares down. Hard.
We’ve been after Tesla shares for years in this column. Mechanically, these costly models have loads of innovative high tech and a pretty impressive battery system. But they’re poorly built and prone to spend too much time in the shop. Worse, these vehicles are costly. Which is okay, except that taxpayers have been subsidizing even these high prices. Taxpayers, we might add, who could never afford one of these impressive clunkers themselves. Why is this a good idea?
Give Tesla’s manic CEO, Elon Musk, credit for this. He sucked up to the
global warming climate change fanatics in the Obama administration who were eager to eliminate fossil fuels yesterday, thus earning that swell per-car subsidy you and I have been paying. Worse, he dumped his money-losing solar company into the Tesla stable to subsidize IT, courtesy of loony shareholders’ tolerance. Ever since, his crack accountants have been gaming the system to show impressive profits that, in all reality, do not exist.
But, after driving TSLA shares to extra-terrestrial Tesla’s latest stellar numbers up to extra-terrestrial heights earlier this week, eager traders and short-sellers lowered the boom on this nonsense Thursday and again today. The Tylers of ZeroHedge duly note this fact in an article entitled:
TSLA Enters Bear Market: Are Investors Finally Realizing The True Lack Of Growth?
Bold and italic text via ZeroHedge.
“Tesla shares are slumping early on Friday morning, two days after the company reported yet another “profitable” quarter helped along by a massive sale of over $400 million in regulatory credits.
“In fact, TSLA is now down over 21% from its recent record highs, officially entering a bear market in many investors’ minds…
“And Robinhooders are surging in as the price tumbles…
“It seemed like yet another story of Tesla playing with its numbers – whether it be regulatory credits, A/R or warranty reserves – to turn a profit during a quarter when it most certainly shouldn’t have. We outlined Tesla’s results in this full report and also noted analyst Gordon Johnson’s analysis of how Tesla posted the numbers it did here.
“But after this quarter – and especially after CFO Zach Kirkhorn said on the company’s conference call that Tesla would not be selling nearly as many regulatory credits next quarter, it appears that focus could actually be turning to the company’s auto sales growth. And if that’s the case, look out below.”
More Market Rumblings: The Merry
Men Persons of Robinhood
Yes, those devil-may-care Jolly Roger millennials trading over at upstart discount brokerage Robinhood are apparently behind much of this stock’s massive, virtually parabolic rise since Mr Market’s spring bottom. That’s according to ZeroHedge and other sites that can monitor this kind of trading, although professionals might be aiding any incoming buildup of buying interest again. Could be another Big Short in the making.
ZH worries because Tesla’s baseline business remains lousy, not good.
“So far, in the second quarter, we have seen nothing but Tesla slashing demand – of both its Model 3 in China and its Model Y. This would indicate to use that the automaker may once again be having issues getting vehicles out the door.”
Musk seems to be doing okay on the outer space front these days. That venture could really make some money. But as for those Rodeo Drive-ready fashionable subsidized cars? We frankly don’t know.
It’s up! It’s down! Robinhood rides again
CNBC offers some facts and figures on the recent boomeranging action in TSLA shares.
“The stock dropped 9%, building on a 5% decline from the previous session. Friday’s losses put Tesla on track for its first back-to-back weekly decline since early May; the shares were also headed for their worst day since May 1. This would also be the stock’s third one-week loss in 10 weeks.”
But a company that either makes no money at all or only funny money in a pinch is still not worth the current $1430+ share price that all those ever-so-smart traders are currently paying. A drop from this week’s high of $1994.99 to today’s share price could just be a taste of carnage to come. But likely, only after fanatical global warming climate change buyers goose TSLA shares back up again.
Meanwhile, the young trading hoods over at Robinhood seem as if they’re mindlessly setting Tesla shares up for another big swan dive. We wish we knew when the trap will get sprung.
Even More Market Rumblings. As in the latest China Syndrome…
Worse even than Tesla and Robinhood and their merry bands is the monster creeping up on Mr Market from afar. We’re talking about our own current version of the China Syndrome. We’ve been squawking to whomever will listen about the way the Clintonistas sold American technology secrets (or gave them away for something in-kind) to the Chicoms way back in the 1990s. But hey, no investigations there. But from at least the time of the Clinton presidency, our government has either given away key US technical and military secrets, or has allowed their outright theft. All of this absolute idiocy was likely predicated on the fact that if we were nice to China, they’d become nice, more or less friendly capitalist competitors, like, say, Canada or the UK.
One thing people must always remember about Communists and Marxists (BLM and Antifa included): They always lie. And they always steal stuff. Stealing, after all, is much faster than having your own scientists invent stuff from scratch. And, from the time of Stalin in the old U.S.S.R., Commies almost always need to steal technologies, since they have a bad habit of killing or imprisoning their best scientists.
How to deal with Commies
Bottom line, the best way to deal with Communist governments is to keep them at arms length, never believe anything nice they say. And, if you ink an agreement with them, as a great American once said, “Trust. But verify.” We’ve done neither from at least the late 1980s. With the Trump administration’s swift action against the spy ring in China’s Houston consulate, to the apprehension of another crooked Chinese spy / scientist hiding in San Francisco, the American government seems finally determined to end the Chi-coms’ free ride on our technical and industrial might.
Now all we need to do is get all our Chinese slave labor-run factories, and jobs, back in the US. And maybe we can get everyone here back to work again at long last. Why it took some 30 years or more to figure out this move is beyond our ken here at CDN. But in the end, it’s all likely connected with the malignancy known as “globalism.” But more on this in another column.
As for today, what we do know is that this week’s profoundly unfortunate developments involving our ongoing China Syndrome will, short term, have a profoundly negative effect on the American economy. And, we think, you can kiss that Phase I US-China trade agreement good-bye. No fault of Trump. But from the start, the Chinese never held up their part of the bargain anyway. They just exported the Wuhan coronavirus — for free — to help us out in the meantime.
It’s a wrap
We’re going to try to take a break from all these market rumblings this weekend. But may have something more for you on stocks and bonds this weekend. Maybe on the latest developments of the ongoing China Syndrome. And maybe on Robinhood, too. But whatever we find, it had better be interesting. Stay tuned.
And have a good one.
– Headline image: Tesla Roadster 2020 prototype at the launch event on November 2017. Photo attributed to Smnt via Wikipedia entry on Tesla. Licensed under CC Attribution-Share Alike 4.0 International license. Modified to fit format.