General Motors Trading Higher Despite Horrific Quarter

General Motors Co. (GM) is trading higher ahead of Wednesday’s U.S. opening bell after posting a loss of $0.50 per-share, beating estimates by an impressive $1.26. Revenues matched expectations at $16.8 billion, which marked a stomach-churning 53.4% year-over-year decline.  U.S. sales fell 34% compared to the same quarter in 2019 but improved sequentially between April and June, rising from a 35% to 20% decline at quarter’s end.

General Motors Cyclical Downturn

Traditional auto manufacturers were under pressure prior to the COVID-19 pandemic, with slumping comparative sales raising fears of a cyclical downturn. The outbreak has confirmed those suspicions, with most automakers reporting steep declines. Tesla Inc. (TSLA) has been a notable exception in this equation, but the EV upstart could face similar headwinds when mass production ramps up in coming years.

Chief Financial Officer Dhivya Suryadevara pointed out strong demand for trucks in a post-release interview, noting tight inventories in this successful product line. He stated the automaker should be able to repay some debt in the second half of the year, lowering anxiety about liquidity that’s taken a hit in the crisis. The CFO also pointed out the sequential improvement but wrapped up his comments by warning the ‘situation with COVID-19 is very fluid”.

Wall Street And Technical Outlook

Wall Street consensus rates the stock as a ‘Moderate Buy’, based upon 8 ‘Buy’, 3 ‘Hold’, and 1 ‘Sell’ recommendations. Price targets currently range from a low of $15 to a street-high $39 while the stock will open this morning’s session about $3 below the median $30 target. Upside appears limited despite the ‘buy-the-news’ reaction because short covering is probably driving this uptick, rather than investors coming off the sidelines in reaction to a more bullish outlook.

General Motors has underperformed broad benchmarks since posting an all-time high in the 40s in October 2017, caught in a decline that broke 2015 support in the first quarter downdraft. The stock remounted that level in May and stalled out, entering a testing process that’s still in progress, despite this morning’s uptick. It will now take about 5 upside points to confirm support and set the stage for another rally wave.  That seems unlikely without much stronger quarterly revenues.

Markets’ Weather Weekly: Сloud-Computing and Office Software Business Missed Quarterly Estimates.

Overview and trends

U.S. weekly jobless claims hit 1.4 million, the first increase since March, as spiking virus cases halt reopening plans.

Microsoft shares tumbled as much as 2.8% on Thursday after its cloud-computing and office software business missed quarterly estimates. The share price slump caused nearly $46 billion dollars erased from the company’s market capitalization. Intel Corporation (INTC) shares were trading lower yesterday despite the company reported better-than-expected second-quarter EPS and earnings results.

As a result, the tech-heavy Nasdaq Composite finished down 2.3%. The S&P 500 closed down 1.2%. It was their worst performance since June 26. The Dow (INDU) fell 1.3%, or 354 points, its worst day in two weeks.

Stocks weren’t the only assets in the red. The US dollar, as measured by the ICE US Dollar Index, fell 0.2%. The index hit its lowest level since September 2018.

So far quarterly earnings come very mixed. On positive side there are good reports and good responses to the earnings reports from IBM (IBM), Texas Instruments (TXN), Biogen (BIIB), KeyCorp (KEY), as well as yesterday’s miracle from Tesla (TSLA) and upbeat sales commentary from Best Buy (BBY).

Then again, a close candidate for why things are “bad” would be the negative responses to earnings reports from Bank of America (BAC), Netflix (NFLX), Snap (SNAP), Capital One (COF), United Airlines (UAL), and Interactive Brokers (IBKR). Microsoft (MSFT) stock sank over 2% after reporting earnings that beat Wall Street expectations in most ways except in a key business. All these stories prompt us to be extremely vigilant, resourceful and contemplative – correct instrument selection and trade direction is key to trading success through this period!

The week was full of important news. US stocks climbed on Wednesday on positive earnings numbers from Microsoft and Tesla and as traders weighed raging tensions between the U.S. and China, a potential legislative extension to unemployment benefits, and coronavirus vaccine news. Donald Trump’s administration ordered the abrupt closure of China’s consulate in Houston, and official Beijing promptly responded with its intention to close the U.S. consulate in Wuhan in a tit-for-tat game condemned by Beijing as outrageous and unprecedented.

The U.S. government has struck an agreement with Pfizer (PFE) and BioNTech (BNTX) for up to 600 million doses of their COVID vaccine candidate should it be approved. This optimistic expectation and early preparation effort have created positive sentiment in terms of thinking about light at the end of the tunnel down the road.

Trading ideas

The Gold/Silver complex has caught renewed bids this week, which was tipped off by the major gold ETF – SPDR Gold Trust – showing up on the “Doji Week” scan back on Monday. The Doji Week scan is designed to find stocks that are in narrow ranges compared to prior week’s activity that is geared up for a stronger directional move.

There are a number of Gold/Silver – related ETFs and stocks appearing on the Wide Range Breakouts, Power Up, and Overbought results today as the market gets behind their momentum against a sliding US Dollar. As investors’ classics – Barrick Gold (GLD) and Newmont Corp. (NEM) – look increasingly overvalued by both investment multiples and technically, new kids on the block, such as Agnico Eagle Mines (AEM) and Kinross Gold (KGC) look increasingly promising. The two latter stocks unveil single digit price-to-sales ratios as opposed to double-digit ones for Barrick and Newmont.

AT&T (T)

The largest American telecom AT&T (T) beat estimates by 4 cents a share, with quarterly earnings of 83 cents per share. Revenue was in line with forecasts. The company said the COVID-19 pandemic impacted results across all its businesses. Thus, WarnerMedia revenue fell 23% to $6.8 billion as the pandemic shut down film production and movie theaters. Group revenue was down 9% YoY to $41 billion, roughly in line with the $41.1 billion consensus. In contrast, AT&T’s HBO Max boasted by around 36 million active customers (including legacy HBO subscribers), picking up 3 million in the quarter. Cash from operations was $12.1 billion with free cash flow of healthy $7.6 billion.

Total dividend payout ratio remains slightly below 50%. Nevertheless, we must not forget about this telecom’s two extremely important properties: number one, it is the value high dividend stocks. And number two, it is classic defensive countercyclical stock. Given increasing odds of exacerbating recession and noting almost ridiculously cheap valuations at P/E of less than 15, dividend yield of 7% and price-to-cash-flow of just 8 (yes, this is a single-digit number, eight), at the current price level AT&T is perhaps one of very few smart medium term buys.

Vladimir Rojankovski, Grand Capital Chief Analyst

US Stock Market: Investors Dumping Overpriced Tech Stocks, Rotating into Undervalued Cyclical Stocks

The major U.S. stock indexes plunged on Thursday as investors continued to shed high-flying tech shares due to mixed earnings reports and growing signs of a worsening coronavirus pandemic, which could drive the economy into a deep recession. The price action also suggests that investors continued to dump overpriced tech stocks, while rotating into undervalued cyclical stocks.

In the cash market on Thursday, the benchmark S&P 500 Index settled at 3235.66, down 40.36 or -1.34%. The blue chip Dow Jones Industrial Average finished at 26652.33, down 353.51 or -1.41% and the technology-based NASDAQ Composite closed at 10461.42, down 244.71 or -2.58%.

Stock Index Recap

The bellwether S&P 500 snapped a four-day winning streak with its biggest daily percentage drop in nearly four weeks. All three major U.S. stock averages lost ground. The S&P 500 Index, the Dow and the NASDAQ Composite were mostly dragged down by shared components Apple and Microsoft Corp. Heavyweight Amazon.com was also a major drag on the tech-driven NASDAQ.

The Russell 2000 and the S&P Smallcap 600, both small cap indexes, outperformed the broader market.

Earnings Update

Second-quarter reporting season is in full-stride, with 113 S&P 500 constituents having reported. Refinitiv data shows that 77% of those have beaten expectations that were extraordinarily low. Analysts now see aggregate second-quarter S&P earnings plummeting by 40.8%, year-on-year, per Refinitiv, Reuters reported.

Microsoft Corp shares fell after reporting its cloud computing business Azure reported its first-ever quarterly growth under 50%.

Tesla Inc reported a profit for the fourth straight quarter, setting the company up for inclusion in the S&P 500. But the stock slid as analysts questioned whether the electric automaker’s stock price matched its performance.

Twitter Inc advanced after reporting its highest-ever annual growth of daily users.

American Airlines Group Inc jumped after announcing it would rethink the number of flights to add in August and September. Also, it reported an adjusted loss per share of $7.82.

Southwest Airlines said Thursday it lost $915 million in the second quarter compared with $741 million in net income a year earlier and warned that travel demand will likely remain depressed until there’s a vaccine or treatment for the coronavirus.

Economic Data and Fiscal Stimulus Bill Update

The number of Americans who filed for unemployment benefits rose more than expected last week as the coronavirus pandemic inflicted more damage to the U.S. economy.

The Labor Department said Thursday initial jobless claims came in at 1.416 million for the week-ending July 18. Economists polled by Dow Jones expected 1.3 million.

It was the 18th straight week in which initial claims totaled more than 1 million, and it snapped a 15-week streak of declining initial claims.

The number excludes recipients of Pandemic Unemployment Assistance, set to expire on July 31.

Meanwhile, Congress kept working to pass new stimulus before that deadline continued, with Senate Republicans announcing they could present their version of the bill to Democrats as early as this week.

For a look at all of today’s economic events, check out our economic calendar.

U.S. Stocks Mixed As Initial Jobless Claims Suddenly Increase

Continuing Jobless Claims Decline To 16.2 Million

The U.S. has just provided Initial Jobless Claims and Continuing Jobless Claims reports.

Initial Jobless Claims increased to 1.4 million compared to analyst consensus of 1.3 million. This is a negative surprise which highlights the challenging situation in the job market.

Meanwhile, Continuing Jobless Claims declined to 16.2 million compared to analyst consensus of 17.1 million. The material decline in Continuing Jobless Claims may offset the negative suprise from the Initial Jobless Claims report.

S&P 500 futures are mixed in premarket trading after the release of employment reports.

Tesla Beats Earnings Estimates

Shares of Tesla are gaining ground in premarket trading after the company reported a second-quarter profit which put it on path to be included in S&P 500.

In order to get into S&P 500, a company must be profitable for the last four quarters, among other requirements. In case Tesla gets into S&P 500, index funds will be forced to buy its shares, sending them higher.

During the earnings call, Tesla confirmed that it would build the next Gigafactory in Austin, Texas. Elon Musk also urged miners to get more nickel out of the ground since it is needed for batteries used in Tesla cars.

The dynamics of Tesla shares, which were up 280% year-to-date before the release of the second-quarter report, have a significant impact on market mood. Together with other encouraging earnings reports, Tesla’s performance may help the market ignore the continued problems on the coronavirus front and deterioration in U.S. – China relations.

U.S. President Donald Trump Suggests That More Chinese Consulates May Be Closed If Necessary

U.S. – China relations are getting worse day by day, hurting the upside momentum of stocks and putting pressure on oil prices which have recently managed to get above the key resistance level.

Donald Trump stated that it was always possible to close more Chinese consulates in the U.S. while FBI suggested that a Chinese researcher who was accused of visa fraud was hiding in the Chinese consulate in San Francisco.

Previously, China promised to introduce counter-measures but did not reveal any such measures. While the stock market has mostly ignored increasing tensions, oil may find it hard to ignore the feud between the two biggest economies of the world.

For a look at all of today’s economic events, check out our economic calendar.

U.S. Stocks Mixed As U.S. – China Tensions Increase

U.S. Decides To Close Chinese Consulate In Houston

U.S. – China tensions continued to increase as the U.S. decided to close Chinese consulate in Houston. China has already promised to introduce counter-measures. According to a Reuters report, China is evaluating the option of closing U.S. consulate in Wuhan.

The continued increase in U.S. – China tensions signals that a Phase 2 trade deal between the two biggest economies of the world will not be negotiated anytime soon.

This is a worrisome development for the world economy which tries to recover from the unprecedented crisis caused by the coronavirus pandemic.

Not suprisingly, the news put some pressure on the global markets. However, S&P 500 futures managed to deal with the pressure and are mostly flat in premarket trading.

Most likely, traders are anticipating a good second-quarter report from  Tesla, which will publish its earnings today after the market close. Tesla has reached a market capitalization of almost $300 billion, and its stock price dynamics have a significant impact on market mood.

U.S. President Donald Trump Warns That Coronavirus Situation May Get Worse

The world has registered more than 15 million coronavirus cases since the beginning of the pandemic, and the World Health Organization has reported more than 200,000 daily cases for six days in a row.

Meanwhile, the U.S. President Donald Trump warned that the situation could get worse before it gets better, putting some pressure on recent market optimism.

In the U.S., Democrats and Republicans struggle to negotiate the new coronavirus aid package. The potential delay of this package may also serve as a negative catalyst for the markets.

At the same time, the current earnings season may provide support to stocks since analysts have significantly trimmed their expectations, making it easier to beat them.

Housing Data In Focus

Today, the U.S. will provide Existing Home Sales data for June. Existing Home Sales are expected to grow by as much as 24.5% on a month-over-month basis as homebuyer activity rebounded after virus-related restrictions were lifted.

The market will likely pay close attention to the speed of the rebound as the coronavirus situation got worse in July.

An encouraging Existing Home Sales report has the potential to boost stocks despite another increase in U.S. – China tensions and continued problems on the coronavirus front.

For a look at all of today’s economic events, check out our economic calendar.

NIO Drives Higher On Upbeat June Sales

NIO Inc. (NIO) shares charged 22.71% higher Monday after the Chinese electric vehicle maker reported June sales jumped 179% from a year earlier despite challenges from the pandemic. The better-than-expected figure comes on the back of U.S. rival Tesla, Inc. (TSLA) smashing Wall Street quarterly delivery projections.

NIO delivered 3,740 vehicles last month, taking its second-quarter tally to 10,331 vehicles. It marks the first times the Shanghai-based carmaker has exceeded 10,000 quarterly shipments – an impressive feat amid slipping global auto sales.

As well as topping its delivery expectations, the company’s chief operating officer Steven Feng remains confident of meeting operational efficiency targets. ‘We are pleased to deliver solid results driven by our competitive products, superior services, and expanding sales network. Our deliveries in the second quarter of 2020 exceeded the high end of our earlier projection, and we are confident that our goals on gross margin and operational efficiency will be achieved.’ Feng said, per CleanTechnica.

Investors may have already factored in most of the upside, given the company’s American Depositary Receipt (ADR) listed on the New York Stock Exchange has risen a staggering 366% over the past three months as of July 7.

Wall Street View

Goldman Sachs analyst Fei Fang upgraded the stock from ‘Neutral’ to ‘Buy’ in early June but revised his rating back to ‘Neutral’ by the end of the month and slashed his 12-month price target from $7 to $6.4.

Although the analyst still likes the company’s underlying fundamentals, he has grown more concerned about its lofty valuation. Since Fang’s initial upgrade on June 3, NIO shares trade over 100% higher, despite the firm posting an unaudited first-quarter net loss of $243.3 million.

Most other analysts have also taken the ‘wait and see’ approach, with the stock receiving 9 ‘Hold’ ratings. Currently, the consensus price target among analysts sits at $39.01, according to Yahoo! Finance – amazingly representing another 239% upside from Monday’s $11.51 close.

Technical Outlook

Since bottoming out just above $2 in mid-March, Nio shares have trended steadily higher with price accelerating on heavy volume in the past two trading sessions. Investors should be mindful of chasing recent gains as the relative strength index sits deep in overbought territory, increasing the probability of a retracement. Instead, those who wish to buy should look for an entry point near $5, where the stock finds a confluence of support from a horizontal trendline and the 50-day simple moving average.

NIO Chart

Tesla Beats Q2 Vehicle Deliveries; Shares Soar 8%

Tesla Inc, an American electric vehicle and clean energy company based in California, has exceeded analysts’ projection of vehicle deliveries in the second quarter, defying a trend of falling sales amid the ongoing coronavirus pandemic lockdown, sending the shares of the electric carmaker up over 8%.

In the second quarter, Tesla manufactured more than 82,000 vehicles and delivered approximately 90,650 vehicles. It delivered 80,050 units of its new Model Y vehicles and Model 3.

“While our main factory in Fremont was shut down for much of the quarter, we have successfully ramped production back to prior levels. Our net income and cash flow results will be announced along with the rest of our financial performance when we announce Q2 earnings. Our delivery count should be viewed as slightly conservative, as we only count a car as delivered if it is transferred to the customer and all paperwork is correct,” Tesla said in the statement.

Final numbers could vary by up to 0.5% or more. Tesla vehicle deliveries represent only one measure of the company’s financial performance and should not be relied on as an indicator of quarterly financial results, which depend on a variety of factors, including the cost of sales, foreign exchange movements and mix of directly leased vehicles, the electric car maker added.

Following this announcement, Tesla shares surged more than 8% by about $85 in early trading to $1,208.

Tesla outlook and price target

Twenty-six analysts forecast the average price in 12 months at $805.85 with a high of $2,000.00 and a low of $275.00. The average price target represents a -33.46% decrease from the last price of $1,210.99, according to Tipranks. From those 26, eight analysts rated ‘Buy’, nine analysts rated ‘Hold’ and nine rated ‘Sell’.

Wedbush raised the target price to $1,250 from $1,000 with a high of $2000 under a bull scenario. UBS raised the target price to $800 from $420. Morgan Stanley target price is $650 with a high of $1200 under a bull scenario and $190 under the worst-case scenario.

Analyst comment

“We note that 2Q would have benefitted by factors such as pent-up demand for the Model Y, the early China ramp, and relatively ample inventory levels to begin the quarter, but one must also consider their biggest factory (Fremont) was totally shut for the better part of 2 months and all the related distribution disruption related to COVID-19. While still a stretch, some investors are beginning to ask us if Tesla could see positive earnings revisions taking forecasts to levels even higher than pre-COVID. Imagine that,” noted Adam Jonas, equity analyst at Morgan Stanley.

“Using this delivery number in place of our prior Q2 delivery estimate, this would bring our full-year forecast to ~433k, which compares to current consensus in the range of 400-420k. We would expect consensus expectations to rise meaningfully, potentially back toward Tesla’s initial 2020 guidance to “comfortably exceed” 500k units. Right now, we see deliveries meaningfully above 500k as more of a bull case. We now see 400k deliveries as more of a bear case than a base case,” he added.

Tesla Bottoms Popular J.D. Power Vehicles Quality Survey, Shares Down Over 4%

Tesla Inc, an American electric vehicle and clean energy company based in California, came last in the quality ranking of major auto manufacturers survey by J.D. Power. It was the first time Tesla vehicles were profiled by the closely watched survey of customer satisfaction.

Out of thirty-three major automakers brands survey, Tesla was rock bottom with 250 problems per 100 vehicles, way above an industry average of 166 seen this year, according to the annual J.D Power survey, where auto brands like Dodge and Kia topped the list.

Land Rover, a car brand that specializes in four-wheel-drive vehicles, owned by India’s Tata Motors since 2008, scored second-worst performer after Tesla.

“Unlike other manufacturers, Tesla doesn’t grant us permission to survey its owners in 15 states where it is required. However, we were able to collect a large enough sample of surveys from owners in the other 35 states and, from that base, we calculated Tesla’s score,” Doug Betts, president of the automotive division at J.D. Power, said in a statement, CNBC reported.

Following this report, investors’ optimism soared, pushing shares below the $1,000 level. It closed 4.08% lower at $960.85 on Wednesday.

Tesla outlook and target price

Twenty-six analysts forecast the average price in 12 months at $713.40 with a high of $1,250.00 and a low of $275.00. The average price target represents a -25.75% decrease from the last price of $960.85, according to Tipranks. From that, eight analysts rated ‘Buy’, eight rated ‘Hold’ and eleven rated ‘Sell’.

On the other hand, it is good to buy at the current level as 50-day Moving Average and 100-200-day MACD Oscillator signals a strong buying opportunity. Jefferies Financial Group raised the target price to $1,200.00 from $650.00 in a research note released on Thursday.

New Street Research upgraded Tesla from a neutral rating to a buy rating. Wedbush raised the target price to $1,000 from $800. In May, JMP Securities raised the target price to $1,001.00 from $1,020.00.

Analyst comment

“We understand the attraction of the Tesla story, we think investors may have a chance to revisit the stock at a more attractive price. We believe $1,000/share discounts outcomes that, while plausible, may ignore a host of execution/market risks,” said Adam Jonas, an auto analyst at Morgan Stanley.

“We downgraded Tesla from Equal-weight to Underweight on three primary risks: Near term risk to demand/pricing, as well as longer-term risks to the China business and potential competition from other “mega-tech” platforms,” he added.

Tesla Probing All-Time High Despite Deep Skepicism

Tesla Inc. (TSLA) dodged a bullet in the first quarter, reporting a Q1 2020 profit of $1.24 earnings-per-share (EPS), beating estimates by a hefty $1.45. The Shanghai Gigafactory was closed for two weeks during the quarter due to the coronavirus outbreak while the Fremont, California plant shut down in March. The unexpected profit overcame both of those obstacles, prompting a strong buy-the-news reaction.

Tesla Balance Sheet Issues

The electric vehicle manufacturer declined to provide net income or free cash flow guidance during the April earnings presentation, two metrics that are needed to evaluate Tesla’s performance accurately, due to heavy cash burn and high debt levels. In addition, the Fremont plant didn’t reopen until mid-May, adding to anxiety about second-quarter performance. On the flip side, the company just reported record sales in China, countering the continued drag of slumping United States and European revenue.

David Einhorn, head of Greenlight Capital, questioned CEO Elon Musk about the Q1 results, sarcastically commenting “I will continue to be left wondering if not only your accounts receivable are suspect, but your income statement as well”. He points out apparent inconsistencies in the SEC quarterly filing, which he says omit the negative impacts of the lower average selling price, factory shutdowns, interruption costs, margin compression, and currency factors.

Wall Street and Technical Outlook

Wall Street analysts are evenly divided on Tesla’s outlook, with 8 ‘Buy, 9 ‘Hold’, and 11 ‘Sell’ recommendations. The broad distribution of price targets highlights widely conflicting opinions, with a low of $246 and a street high of $1250.  The stock is now trading less than $250 below the high target and nearly $1000 above the low target. All in all, this disagreement translates into an excessive market risk that many investors may wish to avoid.

The stock’s price action has been phenomenal so far in 2020, with a 600-point decline from February high at 969, followed by an equal-sized rally into June. It broke out after completing the round trip but has made little progress so far, consolidating around the first-quarter peak. Accumulation and relative strength readings are solid as a rock, despite mixed analyst calls and skepticism from market insiders, raising odds for even higher prices in the coming weeks.

U.S. Stocks Set To Open Lower As Economy Continues To Lose Jobs

Initial Jobless Claims

The U.S. Initial Jobless Claims report has just been released. It showed that 3.84 million Americans filed for unemployment benefits last week, higher than the analyst consensus of 3.5 million.

Continuing Jobless Claims were lower than expected at 17.99 million. Since the beginning of the crisis, more than 30 million Americans filed for unemployment benefits.

Clearly, this is an unprecedented disruption of the job market. However, the equity market has previously managed to shrug off the bad news. Currently, S&P 500 futures are indicating a lower open of about -0.5% but things may change quickly.

In addition to the employment data, U.S. has also released Personal Income and Personal Spending reports. Both came below expectations at -2% and -7.5% respectively.

The Fed Left Rates Unchanged And Signaled That Economic Recovery Might Be Gradual

Yesterday, the U.S. Federal Reserve decided to leave the interest rate unchanged. This was not a surprise since an additional rate cut would have put the rate into the negative territory.

In this light, the market focused on Fed’s commentary. On the positive side, the Fed promised to support the economy as long as necessary and also hinted that it was not out of ammo to do so.

For now, the Fed will have to wait a bit to see how the measures that have already been implemented impact the economy.

On the negative side, the Fed stated that the near-term blow to the economy was very heavy, and that the current situation also presented risks for the medium term.

Big Tech Earnings Reports May Provide Support To The Market

Earlier, I wrote about good earnings reports from Tesla, Facebook and Microsoft. The rebound from mid-March levels was very strong, and the market certainly needs good reports from big-cap companies to continue the upside trend.

With no new measures announced by the Fed, solid reports from big companies could serve as the main catalyst for market upside in case investors and traders are willing to buy stocks at current levels.

The economic data looks very grim, and it remains to be seen whether the market will continue to ignore the economic reality which will hurt second-quarter results of most companies.

U.S. Stocks To Watch Today

Tesla

Tesla reported earnings of $0.09 per share, beating analyst estimates by a wide margin despite the fact that March was a challenging month for most companies. Revenue of $5.99 billion was also higher than expected.

During the earnings call, Elon Musk promised to increase investment at times when other auto producers were cutting costs and also criticized shelter-in-place policies, calling them “fascist”.

Tesla shares gained almost 10% in the after-hours trading session and will surely have huge trading volume today. Tesla has already had several profitable quarters in a row which is a very bullish catalyst for a company whose investors eagerly tolerated multi-million losses and kept buying its stock.

Today, Tesla may gain even more ground than in the after-hours session, and a test of all-time high levels is possible.

Facebook

Facebook reported earnings of $1.71 per share, slightly beating analyst estimates. The revenue of $17.74 billion was also ahead of analyst expectations. Just like Google, Facebook noted that ad revenue plunged in March but also added that it saw signs of stabilization in April.

Not surprisingly, Facebook reported increase in the number of daily active users and monthly active users as people who were forced to stay at home spent their time online.

The original market reaction to Facebook report was positive, and the company’s shares gained about 10% during the after-hours trading session. Just like in Tesla’s case, Facebook shares are close to all-time highs.

Microsoft

Microsoft was another tech giant who reported its earnings on April 29 after the market close and whose stock will be very active today.

The company reported revenue of $35.02 billion and earnings of $1.40 per share, beating analyst estimates on both earnings and revenue.

Microsoft stated that demand for its Teams chat has increased sharply due to the shift to remote work at times of coronavirus pandemic. Xbox gaming services also experienced healthy gains.

At the same time, the company noted that it was not immune to what was happening in the world so some parts of the business will likely suffer in the upcoming quarters.

In general, the report painted a positive picture, and Microsoft shares gained about 2% in the after-hours trading session. Microsoft is also trading not far from all-time highs, and its report could have an impact on the general market which continues to rise on optimism about monetary stimulus and potential treatment for COVID-19.

The Great Markets Debates

This is likely reflecting the fact that S&P500 and Nasdaq 100 futures are up 0.8% and 1.1% respectively. Asian markets are responding in kind.

Spot gold is down smalls, although gold futures are modestly higher, but the daily chart of spot gold looks bullish and we are watching for the upside closing break of 1738 for a future move into 1800.

Two important market debates

The two big debates that have been most prevalent through the weekend, or at least that I found most interesting, remain the disconnect between the real economy and asset values. And, where to for the USD. There has also been increased focus on the moral hazard argument, where at a simplistic level the Fed incentivised business to over-lever their balance sheet, and now the Fed is bailing them out or supporting them indirectly. We can also look at the number of countries that are opening their economies, gradually, and the market is eyeing the risk of a second wave, which is another factor that makes it hard to chase risk.

Italy has announced they will start to ease lockdown restrictions on 4 May, joining Spain who will ease movement restrictions on 2 May. France will detail a plan to the world tomorrow to end lockdown next month, while Belgium is due to open shops on 1 May. In the US, a number of states are easing restrictions, and we hope this is the start of more normal times ahead, although the post-virus world throws up many challenges and one focal-point that immediately springs to mind is the blame game and the US (and the world’s) ongoing relationship with China.

The disconnect between economics and asset values will be the focal point this week though.

The data and event risk rolls in and I know investors have written off 2020 as a shocker and are looking more intently into the landscape in 2021, but this argument will be seen case in point this week. On the micro-side of considerations, this week we get to hear from some big-name corporations – Amazon, Tesla, Microsoft, Apple, Boeing, FB, Alphabet, McDonald’s, and Exxon, to name but a few. Earnings expectations have come down and FY20 and FY21 consensus stand at $131 and $165, respectively, but it still means we are going into this week with investors paying 21.6x for 2020 earnings – the highest since December 2001. But they are also paying 17.1x 2021 which is still lofty given the challenges ahead.

At this juncture though, in the battle of liquidity vs earnings, liquidity is winning but these are some big names dropping this week, representing a catalyst for index traders. The NAS100 is the strongest market if looking for a vehicle to express a risk-on bias this week (in index land). However, I think the set-up on the US500 needs attention. On the upside we have downtrend resistance, the 6 March gap and 61.8% fibo to clear and a break here needs to be respected, especially when we’re hearing that the systematic funds will be ramping up outright longs on a break of 3007.

However, on the downside we see price has broken the wedge and the head and shoulder neckline kicks in around 2726. A break here will see buying in the USD, JPY and US Treasuries. I am watching inflation expectations (breakevens) extremely closely, as where they go will underpin where equities and gold go.

On the data docket this week we get:

BoJ meeting – we saw the BoJ meeting and as expected they removed the cap and reverted to unlimited JGB buying. There has been limited reaction in the JPY. I continue to like the JPN225 on a break of 19,886 and will wait for price to compel and the structure to suggest the index is ready to trend.

USDJPY is interesting because it is just so dull – there is literally no range and it feels like it will break hard soon. At this juncture, the market feels this is fair value, but I am watching for a change here.

US – Q1 GDP (consensus at -3.9%), jobless claims (3.5m), FOMC meeting, ISM manufacturing (36.1). I would expect no reaction to Q1 GDP, as Q1 is but a relic in time and we are looking at Q2 and beyond. The FOMC meeting is the main game in town this week and after two emergency meetings, we look at the first scheduled meeting that could move markets.

We should see the Fed tweak the interest it pays banks on excess reserves by 5bp, although, the market is going some way to discounting that and it shouldn’t cause much of a move in the USD. We should also hear more about the targeted level of US Treasury and mortgage buying, with the monthly run-rate closer to $150b, but they will retain an element of flexibility towards this.

As mentioned, the debate as to where the USD is headed is key, and I will put out a note tomorrow on this as it is important. For now, the DXY (or USDX) tracks the regression channel and is not going lower despite USD funding costs (blue – 3m FRA-OIS, yellow – EUR cross-currency basis swaps) falling heavily as a result of the Fed’s swap lines, massive balance sheet expansion and excess liquidity.

Next week we get NFPs and consensus currently sits at 20m jobs lost, with the unemployment rate at 15.1%.

Eurozone – The ECB meeting is the highlight, especially given the recent widening of interbank credit metrics, notably the Euribor-OIS spread (see below), which has pushed into 30bp. The ECB will need to do more and granted the PEPP program (Pandemic Emergency Purchase Program) has been seen as a solid step forward from the bank, this program is going to need to be increased from its current E750B size – although, whether it plays out at this meeting is unlikely. We should see some tweaks to what can be offered as collateral to access PEPP funds, and similar to the Fed the ECB may accept bonds that were downgraded to junk since the start of COVID-19 the so-called ‘fallen angels’.

Whether this Thursday’s ECB meeting (21:45aest) proves to be a vol event is yet to be seen, and we see EURUSD 1-week implied volatility at 9.17%, which implies a move (higher or lower) on the week of 116p.

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I am looking at the EURAUD short idea and watching price action very closely. I do not see the ECB meeting being a huge vol event, but I am loath to hold EUR exposures over this meeting.

China – Manufacturing PMI (30 April- 11am) – consensus at 51.0 (from 52.0). I am sceptical this will be a vol event but may get some headlines.

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Chris Weston, Head of Global Research at Pepperstone.

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Stocks Are Falling on April 20 As Oil Prices Plunge

The next significant level of support for oil comes around $10.50, a price not seen in decades. The oil market is telling us that not all is well in the economy and that demand is weak. I talked about this disconnect in the week ahead commentary for subscribers yesterday.

Simple, put, the signals from the commodity, bond, and forex market are not reflecting the same bullish optimism of the equity market.

USOIL Daily Chart

S&P 500 (SPY)

The S&P 500 ETF is merely only giving back part of what they gained on that big closing cross, end of the day buy program into options expiration on Friday.  The first level of support comes at  $273.60, and then $263.40.

Bank of America (BAC)

Bank of America is falling some today, and I still happen to think that the stock is going to refill that gap around $20.

Daily BAC Chart

Tesla (TSLA)

Tesla had a big run last week. But shares are falling a bit today, and they could drop to support and the uptrend around $680.

Daily TSLA Chart

Disney (DIS)

Disney was downgraded today to neutral from buy at UBS. Additionally, the stock price target was cut to $114 from $162. The stock has failed multiple times at resistance around $109, and I think the stock is going to head back to the lows around $78.60.

Daily DIS Chart

Nike (NKE)

Nike has a rising wedge pattern in the chart, and that could result in a gap fill around $78.

Daily NKE Chart

Nvidia (NVDA)

Nvidia is falling today, and I still happen to think this one is heading lower. The stock is sitting on support and an uptrend near $284. A break of that trend could get the shares moving back to $218. Call me crazy.

Daily NVDA Chart

This article was written by Michael Kramer the financial market strategist and the portfolio manager of the Mott Capital Thematic Growth Portfolio.


Mott Capital Management, LLC is a registered investment adviser. Information presented is for educational purposes only and does not intend to make an offer or solicitation for the sale or purchase of any specific securities, investments, or investment strategies. Investments involve risk and, unless otherwise stated, are not guaranteed. Be sure to first consult with a qualified financial adviser and/or tax professional before implementing any strategy discussed herein. Upon request, the advisor will provide a list of all recommendations made during the past twelve months. Past performance is not indicative of future results.

US Stock Market: NASDAQ Hits Record High Even as Apple Deals with China iPhone Problems

U.S. stock markets climbed on Monday as investors shed worries over the likely economic impact of the spreading coronavirus to push the major indexes to record highs. Risk appetite started to climb in the futures markets after a lower opening shortly before the cash market opening.

While Asian investors and to some extent European and U.S. investors are trying to figure out whether the rate of contagion from the coronavirus is stabilizing even as the death toll climbed above 1,000, higher than the SARS outbreak, and one estimate put the mortality rate from the disease at 1%, U.S. investors continued to focus on corporate earnings and individual stocks.

In the U.S. cash market on Monday, the benchmark S&P 500 Index settled at 3352.09, up 24.38 or +0.75%. The blue chip Dow Jones Industrial Average finished at 29276.82, up 174.31 or +0.60% and the technology-based NASDAQ Composite closed at 9628.39, up 107.88 or +1.18%.

US Stock Market Recap

Wall Street picked up where it left off last week on Monday, with the NASDAQ hitting a record high on Monday, as a recent batch of strong domestic economic data and largely upbeat earnings overshadowed fears about the impact of the coronavirus epidemic on global growth.

The price action indicates that some people believe the outbreak may only have a negative impact on growth in China. Meanwhile, corporate earnings and U.S. economic data have been strong enough to instill confidence in U.S. investors.

Of the 324 S&P 500 companies that have reported quarterly results so far, about 71% have beaten earnings estimates, which is above the long-term average of 65%, according to IBES data from Refinitiv.

Amazon Up, Apple Down, Tesla Volatile

Amazon rose 2.6% to a record high, breaking above $2,100 per share for the first time. Netflix and Alphabet both closed more than 1% higher while Facebook eked out a gain. Tesla, meanwhile gained more than 3% in another volatile session for the electric car maker.

Notably absent from this list was Apple. Its shares fell as much as 1.9% on Monday amid concerns the outbreak will hurt production of the tech giant’s bestselling product, the iPhone. Foxconn, one of Apple’s biggest suppliers, got approval to resume production at a key manufacturing plant but only 10% of its workforce has returned, Reuters reported.

iPhone Manufacturing in China in Limbo Amid Coronavirus Outbreak

The ripple effect of the novel coronavirus outbreak in China continues this week, leaving iPhone production in the region in limbo.

Apple supplier Foxconn was approved to resume production in Zhengzhou, a key manufacturing plant in the region, Reuters reported Sunday citing an unnamed source with direct knowledge.

So far only 10% of the workforce, about 16,000 people, have returned, the source told Reuters, adding requests to reopen a plant in Shenzhen were not approved.

The Zhengzhou plant is “the most critical iPhone production site,” making the iPhone 11 series and a new special edition, cheaper iPhone, top Apple analyst Ming-Chi Kuo said in a note to clients Sunday.

Tesla’s Wild Ride Continues as Stock Tops $800

Shares of Tesla climbed as high as the $800 level it hit during last week’s wild swing.

Part of the reason appears to be positive news from China, after the Shanghai municipal government said it would help companies like Tesla “resume production as soon as possible” in the midst of the coronavirus. Tesla’s Shanghai factory has been closed as the Chinese government looks to contain the epidemic.

Tesla’s wild ride is being driven by speculation and a so-called short squeeze, detaching shares from the company’s fundamentals. As a whole, Wall Street is the most pessimistic it’s ever been about Tesla’s stock. Many analysts say Tesla’s valuation looks stretched, with nearly half of analysts having a sell rating on the stock. Just 19% of analysts say to buy Tesla’s stock.

Trade Global Stocks as Markets Rally with Virus Threat Wanes

All U.S. stock exchanges saw gains today, now that the threat has been seemingly reduced.

Multiple investors and strategists acknowledge that although the coronavirus is still a huge threat that is claiming lives, it no longer appears to be an “open-ended risk.” China’s economy is predicted to take a hit, and will undoubtedly drop lower as they continue to feel the full force of this epidemic.

Global markets should bounce back a lot quicker than initially predicted, as already seen with these tentative gains over the past few days.

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Stocks on the rise

As the stock markets closed trading on February 5th, the Dow Jones had risen by 1.68%, S&P 500 rose by 1.13%, and Nasdaq rose by 0.43%.

This is the third day that the S&P 500 rallied, and it has fully recovered after drops caused by the coronavirus over the last couple of weeks. Trading overall was above average, with just over 8 billion shares being traded today, which is up slightly from the average of the past 22 sessions – 7.7 billion.

Cosmetics company Coty saw some of the most significant gains today, with shares increasing by 14.5%. This massive rise was due to an above-expectation in their final quarterly report, earning more than was predicted. Their gains contributed significantly to the overall increase of the S&P 500. The healthcare sector saw significant gains as well.

Not everything was positive, though, and there were also many losses throughout the day. Tesla stocks dropped by 17.18% (27% from Tuesday’s historic heights) after news broke that deliveries on the Model 3 must be delayed due to the coronavirus.

The drop was also the effect of Tesla’s ridiculous appreciation since Friday. This was the second-worst day in Tesla’s seven-year trading history and marked the end of a six-day rally. This massive drop is what limited the gains for Nasdaq, which was hit the hardest by this.

Social media company Snap also saw shares fall by 14% today. These losses were the result of a disappointing quarter, missing the expected sales of $563 million by $2 million (they brought in only $561 million). They also fell short on their predicted average amount of revenue per individual user, which further added to their losses.

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Stock Market: The Earnings of Microsoft, Amazon And More

Ford Motor

EPS forecast: $0.26

Revenue forecast: $36.73B

Ford has been going through a hard time during the past few years as the demand for its cars, particularly sedans, fell. Now one of America’s largest automakers is undertaking an $11 billion restructuring plan which implies layoffs, closing factories overseas, and building capacity to manufacture electric and driverless cars. As a result, investors will want to see what progress the company made in these areas.

The stock has been within the general downtrend since 2014. In the first half of 2019, the price tried to recover but met resistance around $10.50, formed a double top and turned lower. In October, Ford managed to show a bullish correction recovering from $8.45 to the 200-day MA at $9.30. Last week the stock closed above the 50-week MA ($9.214). All in all, if the financial results are decent enough, there’s technical potential for an extension to $9.64 (September high) and $10.00 (resistance line, 200-week MA). This area, in turn, will be a great obstacle for buyers. Support lies at $8.70 and $8.45.

Ford.png

Microsoft

EPS forecast: $1.24

Revenue forecast: $32.14B

According to analysts’ forecasts, Microsoft’s earnings will rise by 9%, while revenue will increase by 10.5% y/y. Noticed that during previous quarters, the company tended to beat expectations. Microsoft has a variety of products that generate solid income. Pay special attention to the dynamics of Azure, its cloud computing service – the figures should once again be pretty impressive as the tech giant added new capabilities to its product.

The stock has been trading sideways between $142 and $131 since the end of June. The price consolidated after a long-term uptrend. Currently, it’s in the $137 area, near the middle of the horizontal range. Its edges, mentioned earlier, are the initial targets.

Microsoft.png

Tesla

EPS forecast: $-0.45

Revenue forecast: $6.47B

Tesla is expected to show the third unprofitable quarter in a row despite selling a record number of cars. At this point, bad figures will be a surprise to no one, so investors, on the contrary, will look for glimpses of light: a forecast for future profit, a positive free cash flow, evidence that demand remains solid. If the electric vehicle maker doesn’t provide these sources of hope, the negative pressure on the stock will mount.

After the selloff in the first half of the year, Tesla bottomed in June and then managed to stabilize. Most recently, the price met the resistance of the July high ($266). On the upside, there are also obstacles at $268 and $273.6 (50- and 200-period MAs) ahead of $278 (50% Fibo retracement of the 2018-2019 decline). Support lies at $235 and $231 (daily MAs) as well as $225 (support line).

Tesla.png

eBay

EPS forecast: $0.64

Revenue forecast: $2.65B

Analysts have positive expectations about eBay’s financial results. The company’s putting a lot of effort into the technological enhancement of its core e-commerce business. On the downside, the increased investment may hurt earnings. In addition, notice that the competition with Amazon and Wal-Mart is a big challenge for eBay. Investors will also look for the news regarding the potential sale of StubHub or eBay Classifieds, a contentious issue for the company that provoked the departure of its CEO last month.

The stock has been on the rise since the end of 2018. However, at the end of September, the price slipped below $39 – this level tends to be an important border for eBay during the whole year. A return above $39.50 (100- and 50-day MAs) is needed to open the way up to $41 and 42.50 (78.6% Fibo retracement of the 2018 decline). Support is at 37.65 (200-day MA), $36.50 and $35.50.

ebay.png

Thursday, October 24

Amazon.com

EPS forecast: $4.59

Revenue forecast: $68.82B

According to Wall Street, Amazon’s adjusted earnings will decline by about 20% y/y showing the first decline in nine quarters. The company’s revenue, however, is seen increasing by 22%. During the last few months, Amazon was pressured by lower-than-expected earnings, volatile equity markets, political criticism, and antitrust allegations. In this report, investors will look at the numbers for Amazon Web Services (the company’s cloud segment), the signs that the Prime delivery speed increase is boosting sales growth in North America as well as Amazon’s guidance for the next quarter.

Although Amazon remains one of the best long-term performers among both tech and consumer goods stocks, it is behind other the other so-called FAANG stocks during the past year. In August, the stock violated the uptrend from the end of 2018. The price then started trading below $1,835/50, limited by the 100- and the 50-day MAs. The most recent attempt of the price to get higher ran into an obstacle just below $1,800, near the 200-day MA. All the mentioned levels will act as resistance. Below $1,740 support is at $1,700 and $1,670 (June low).

Amazon daily.png

Intel

EPS forecast: $1.23

Revenue forecast: $18.02B

During the previous quarter, Intel benefited from rising demand for personal computers and sales of higher-priced server chips. Investors will want to see whether the positive trend continues and what the semiconductor producer projects for the rest of the year. So far, the stock has been resilient enough despite the trade war between the United States and China, an important market for the chipmaker, although the threat of higher tariffs has obviously limited its upside.

The stock of Intel is trading within an ascending triangle. The resistance that has been keeping the price from getting higher lies at $53.20 (61.8% Fibo retracement of the April-May decline). The break above this obstacle will open the way up to $55 and $56 (78.6% Fibo). Support lies at $50 (200-day MA, support line) and $49.20/00. The loss of 48.50 will make the price vulnerable for a decline to $46.75.

Intel.png

Visa

EPS forecast: $1.43

Revenue forecast: $6.08B

For years, Visa’s stock has been slowly but surely appreciating – a reflection of the fact that digital payment is replacing cash. This tendency has all the chances to continue pushing the price higher, although there may be corrections on the way. This time, Wall Street sees Visa earnings rising by 18% y/y and revenue grows at 12%. Notice that Visa has a tendency to beat forecasts during the earnings releases.

Visa’s long-term uptrend ran in September into the resistance at $187.00. Since then, the price has consolidated around $175.00. The further resistance is at $190 and $200. On the downside, support lies at $169.00 and $163.80 (200-day MA). The fall below $160 will question the uptrend.

Visa.png

Dollar Squeezes Competitors Out

The dollar is also growing against the Australian dollar and the Japanese yen. In general, all this pushes the dollar to the area of two-year highs, from where it declined in late April. Strengthening the dollar is often an additional reason for reducing the demand for risky assets, including stocks and currencies of emerging economies.

Stocks

Stock indexes grew yesterday but cannot fully recover from the drop on Monday. Key US indices grew around 0.8% on Tuesday but struggle to rise further on Wednesday morning, according to futures for S&P500. It is worth noting that SPX remains under the 50-day moving average, and the strengthening of the dollar can become an additional factor of pressure on stocks. On the other hand, the four previous trading session, the debt markets show an increase in the yield of 10-year treasuries, which is a positive signal for stock buyers.

EURUSD

The single currency develops a downtrend, showing the 8th day of intraday lower lows and highs. The pressure on the euro is partly due to the decline of the British currency, and partly as a reaction to the increased demand for USD as a safe-haven currency. Europe may well be vulnerable to the Chinese economy sharp slowdown. In addition, the currency crisis continues to smolder in Turkey. The Central Bank attempts to stop the decline of TRY require stronger measures.

Tesla

The company’s stocks during trading on Monday and Tuesday declined below $200, which is the lowest level since December 2016. It is worth noting that this year the company’s stocks were out of stock index rally, and increased the decline in May, dropping below the support level of the previous two years at $250. As for the technical analysis, the current decline impulse is able to send Tesla stocks to the area of $180, to the lows of 2014-2016. On the negative news background, the stock may continue its decline, moving towards $100.

This article was written by FxPro

Space as a business: What Hides Beyond the Rockets Launches

The sky is not the Limit

The modern world will remember Russia not as a superpower, which first organized a manned space flight but as a country that rejected Elon Musk’s proposal.

58 years ago, only world superpowers could construct a rocket of incredible complexity, conduct multistage tests and view the Moon not only from a telescope.

It is not known for certain how much was spent both before Yuri Gagarin’s catchphrase “Let’s Go!” and after his final “I am burning, farewell, comrades!”. The question then was not money, but to do great things – and be the First. Countries fought precisely to end up being the Master of the space. The most important thing was “whose flag will be set earlier on the Moon surface”.

A little later, passion for the sky went to people: anyone could buy a “piece of the moon” or “name the planet” step to the beloved one. Of course, all these deals remained at the level of an innocent game with scammers, while the government was still responsible for the main space launches.

But times have changed, and it happened frighteningly dramatically. Somehow, suddenly, the largest world powers began to seriously give way to progressive and brilliantly equipped corporations. Ordinary companies who have enough money, talented specialists and perseverance in order to make ships – easier to construct, launches – cheaper, and development – faster.

From the heroine country, Russia has become a “cosmic outcast”. When “Roscosmos” decided to cut off the oxygen to the plans of Elon Musk, voicing too much sum for the realization of the only one mission with the plants delivery to Mars. Too much even for him, the billionaire! As a result, he has founded SpaceX and successfully launched “Crew Dragon”. At the same time, the Ural plant of “Roscosmos” has been already without orders for half a year.

Perhaps this whole situation opened the eyes to business: guys, the sky has no doors, so, why not to start flying to the other planets on a commercial basis – just because we can do it?

Space as marketing

Now the international media are full of headlines that “SpaceX, a private company, conducted a successful test launch of the Falcon Heavy rocket.”

This spaceship is capable of delivering up to 64 tons of cargo into Earth orbit, and this is quite a lot. For comparison, Delta-4, the closest analog by Boeing, is able to carry only 28.7 tons. So, Falcon beats competitors to all respects. E.g., its launch will cost only $90 mln, while the Boeing rocket will detach from the launchpad only with $400 mln investments.

It turns out that now it is not enough just to develop a spacecraft: must also ensure that it is going ahead of the competitors. Otherwise, all the perennial works will go down the drain. Moreover, in this case, one may forget about the support of journalists and top Twitter users. Either your company is number one, or you should start over. That is the new law of the Universe.

In fairness, let’s note that SpaceX is not the only company that encroaches on the patrimony of Boeing. Another competitor is Amazon with its New Glenn. Frankly speaking, ordinary citizens did not expect such extraordinary news from Amazon, and this played into the hands of the marketing. According to the company representatives in the media, the spacecraft, putting into orbit up to 45 tons of cargo, will be launched in 2020. Again, see: Amazon is still developing its rocket, whereas SpaceX has already presented it to the market. Believe that after a year, what now seems incredible may turn out to be outdated.

However, it is worth to look deeper: the matter is not in space anymore. Imagine that both Alphabet and Facebook have their own secret projects! Yes, Facebook – yes, the social network.

Formally, behind each such project, there is a recognizable brand and loud (through all the morning newspapers pages) large-scale plans of the Mars colonization. All this is nothing but attempts to gain a foothold in the minds of people with the statement: “Our company is number one, we even fly into space”. Thereby, the demand for the main product promoted is spurred.

The same goal is pursued by all the AI developers and the electro cars constructors.

The impact of each successful launch by SpaceX can be traced via Tesla Motor stock quotes. For example, in the footsteps of a rocket fire test on January 25, they rose vertically by 15%, to $320. Is it not a good investment tool?

It should be noted that all Elon Musk’s projects have a secret ingredient: himself. When some heavy clouds are gathering around Tesla’s reputation, and investors are wondering about the company’s viability, Musk tweets about his new business, or an unprecedented electric car launching, or successful space operation. All this detracts Internet users’ attention and has a positive effect on the rate of stocks. Brilliant strategy, isn’t it!

By the way, the “Steve Jobs’ method” also works out with Musk: impressive presentations of prototypes and emotional communication with potential buyers do their job during speeches. As a result, people are ready to wait for the product for years, how is it still happening (by inertia) with the iPhone fans.

Personal brand as a driver of quotes

However, it’s hard to let the media-dust in the investors’ eyes for a long time. Just a few years ago, they did not demand real achievements from Tesla and were content with the current state of affairs, perceiving plans for mass electric cars production as a beautiful picture in the future. That times, the markets were focused on prospects, and the main driving force was the very statements and tweets by Musk.

So, the “future” has already arrived, and it is time to answer for the words. Investors have remembered about this, and Elon Musk became a “negative factor” for Tesla: it always happens when business is not built around a product but around a personal brand of its CEO.

As a result, he was in the bind of his own unsuccessful statements, the subsequent case of the SEC and the frequent negative comments of former employees of his factories. It would seem that not the most significant corporate news turned for a self-centred Tesla a strong decline since last December. During the last 6 months, stocks have lost more than a quarter of their value.

This is quite curious since usual Tesla Motors’ stocks go right up against the market: they grow at the peak of the general fear on stock exchanges and fall amid the recovery of global index quotes.

Now it’s becoming clearer that Musk’s projects are much more likely to be mega successful. But will Solar system be interesting to him if Tesla goes bankrupt? After all, SpaceX’s business is more difficult to sell on the market by entering an IPO but he is definitely enjoying the role of “master of the sky”, observing the wow-effect and positive social response that he is seeking.

Space and people: reaching out the stars

It is possible that the news about the colonization of Mars is so often exaggerated in press specifically for our brains powdering. The urgent Earth problems do not disappear: moreover, the sums that go to the rockets would not hurt to solve pressing issues we face day-to-day.

The Soviet Union at one time lost its base for growth, being distracted by space wars. It is possible that this time, instead of environmentally friendly and economical cars, as well as the development of the infrastructure of Google or Amazon, all business and marketing forces will be aimed at convincing people to buy shares of development companies. Well, if this is indeed the case, it can be a great investment idea. In any case, the shares #Amazon, Tesla Motors and Boeing definitely worth to consider.

If we talk about a more practical issue, then Musk, with his eye of cost optimization, will most likely be the person who makes space flights available to almost everyone. It is possible that ordinary people, who are dissatisfied with the work of the government and cannot find their place in life, may well sell their real estate on Earth in order to fly to Mars with the first colonies of settlement in the nearest future. Musk tweeted that the cost of such a flight would be from $100K to $500K. Moreover, the return ticket is promised to be free. For those who want (and can) to return.

No doubt, all that will open the doors to crowds of fraudsters. It is possible that they will call themselves “official representatives of space organizations” and offer you to sell your house for a “ticket to space ride.” Guess what will happen next. Whenever it starts, don’t give in.

Therefore, it can be said that from ordinary citizens space is still as far as before.

This article was written by FxPro

How Space Helps Stocks

In all cases, proximity to space improves the public image of companies, including for the investors, becoming the “last chance saloon” in difficult times. Boeing tests software updates, while an error could be a cause for two airplanes crashes in the previous six months in Indonesia and Ethiopia. The news helped the company to find support after a decline to $365, which is 14% below the levels preceding the March airplane crash.

A decrease of 13% can be considered as a relatively modest reaction of investors against the background of almost total suspension of the use of 737 Max – the most popular model from the company. Investors remain confident in the viability of the company because of the stable and large contracts with NASA, providing a good cash safety cushion. Moreover, the administration of the President of the United States has been taking retaliatory steps recently, attacking its key competitor – Airbus. The soft power of the United States helps the company business interests, despite a series of setbacks.

The Tesla prices were regularly supported by the news about the successful launch of the SpaceX ships. In January, the stocks of the electric vehicle manufacturer turned to growth and added 15% in the following days on the background of strengthened confidence in the management genius of Elon Musk and his ability to make technological breakthroughs. But, apparently, investors now need more good news from SpaceX, as Tesla stocks remain part of a broader trend to decline due to the company’s problems with mass production adjustment. Like Roskosmos, Elon Musk’s companies are faced with the fact that inventing the breakthrough idea and implementing it – these are completely different things that require different competencies. And it seems that investors in Tesla stocks began to separate these competencies from each other. However, it is possible that the temporary spikes of Tesla stocks on the news about SpaceX will persist in the foreseeable future.

It is possible that the ambitions of Amazon founder Jeff Bezos, who also founded Blue Space, could have been dictated by the desire to inspire investors. So far, he’s doing well. Amazon’s capitalization exceeded a trillion dollars, making Bezos the richest man on the planet. However, in the last letter for investors, they marked a slowdown in sales of goods, from which the company’s business began. But it seems that it is becoming more crowded on Earth for Amazon. The company gradually switched to the “cloud”: cloud storage and computing power businesses bring the greatest profit. But Bezos aims higher. The launch of the New Glenn rocket is already scheduled for 2020. As in the case of Tesla, the good news from this front is able to create a positive impetus for stocks and, possibly, to keep them from declining, as is the case with Tesla and Boeing.

This article was written by FxPro

2018 – 5 Most Influential People of the Year

It’s been quite a year, with Bitcoin going from close to $20,000 to close to $3,000, the U.S equity markets unraveling to move into the bearish territory, driven by an unprecedented number of events and shifts in both the economic and political landscape through the year.

The selection of the 5 most influential comes amidst heightened market turmoil and a U.S government that has shut down over Trump’s much talked about Wall Street and an ongoing trade war between the U.S and China.

Donald Trump: At the center of a number of events throughout the year, which have jolted the global financial markets, is U.S President Trump and as a result would have to come at the top of the list. In just 2-years, the U.S President has gone from hero to zero, with the U.S equity markets tumbling by more than 10% in December to reverse much of the post-U.S Presidential Election rally to record highs. An ongoing trade war with China, fresh sanctions on Iran, the loss of the Senate to the Democrats and the hiring and firing of members of the administration have been the negatives for the markets. On the positive side, bringing the North Korean leader on the side to deliver peace across the Korean Peninsula has been positive, along with delivering tax relief earlier in the year.

Of greatest influence has undoubtedly been the President’s Twitter account, however, with frequent tweets including the threat of ousting FED Chair Powell, adding to the market angst through much of the year.

Jerome Powell: While relatively new to the job, FED Chair Powell has certainly had an impact on the global financial markets, the FED Chair seemingly less cautious than his predecessor Yellen on handholding the market with carefully worded speeches and statements to avoid rocking the apple cart. It’s hard to lay all the blame on the Fed Chair, but some blame is warranted with his hawkish chatter of late and plans to continue hiking rates coming in spite of some alarm bells ringing over the economic outlook.

Theresa May: Outside of the U.S, Brexit turmoil has seen the Pound swing like an exotic, a 52-week range of $1.2478 – $1.4377 reflective of the successes and failings of the British government domestically and in negotiations with the EU. Theresa May took the PM job that nobody wanted and has delivered a Brexit deal that nobody seems to want. Surviving an

‘in-party” vote of no confidence was of little consolation for the UK PM, with a material loss of support and pressure from the opposition party to oust the Tories a material threat as parliament gets ready to vote on the Brexit deal on 14th January. The uncertainty over what lies ahead for the world’s 5th largest economy is astounding and, while the Pound and the Footsie have been the major victims, a “no deal” outcome will have far wider ramifications in the coming year.

Xi Jinping: Moving across to Asia, few leaders have stood up against the U.S President and an administration hell-bent on reversing years, if not decades, of international diplomacy. China Premier Xi Jinping has been the exception, the ongoing trade war between the U.S and China seeing China retaliate in kind to tariffs imposed by the U.S administration on Chinese goods imported into the U.S.

The U.S President and administration have seen how influential the Chinese government can be on the U.S economy, with the ongoing trade war seeing U.S sentiment slide and U.S economic growth indicators begin to point to slower growth in the coming quarters. Alongside the ongoing trade war has been plenty of chatter on espionage, with two major Chinese corporations, Huawei and Tze, hitting the front pages through the year, the latest being the arrest of Huawei CFO Wanzhou in Canada at the request of President Trump

The Chinese equity markets have tumbled through the year, the CSI300 down a whopping 25.5% for the current year, weighing on the major indexes across the globe and monetary policy across the region.

Mark Zuckerberg: Looking across the corporate world, while there have been a number of significant stories and events that have jolted the markets, including the Elon Musk tweets that rocked Tesla, Mark Zuckerberg’s inability to navigate Facebook through some choppy waters was perhaps the most significant story from the corporate world, Facebook’s market cap sliding by a whopping $120bn in a single day in response to the Cambridge-Analytica privacy scandal. The single-day loss in July was the largest in corporate history. It’s not over for Facebook or Mark Zuckerberg, with social media having also been reportedly used to influence voters during the 2016 U.S Presidential Election and even the Brexit Referendum.