Happy Days Are Here Again, not for TSLA. :-(
Recap.
In my post dated 15 May 2024 (click here ! for details), I have shared $JPMorgan Chase(JPM)$ analysis of the CPI results using 6 mapped scenarios on US market conditions/directions.
How “accurate” has JPMorgan been?
US CPI & Core CPI (April 2024).
CPI - April 2024
(1) CPI MoM and YoY - 0.3% & 3.4%.
MoM inflation came in lower (-0.1%) than estimates of 0.4%.
MoM inflation came in lower (-0.1%) than March 2024 (0.4%).
YoY inflation is the same as estimates of 3.4%.
YoY inflation came in lower (-0.1%) than March 2024 (3.4%).
Core CPI - April 2024
(2) Core CPI MoM and YoY - 0.3% & 3.6%.
MoM inflation is the same as estimates of 0.3%.
MoM inflation came in lower (-0.1%) than March 2024 (0.4%).
YoY inflation is the same as estimates of 3.6%.
YoY inflation came in lower (-0.2%) than March 2024 (3.8%).
With CPI MoM coming in at 0.3%, it falls squarely into JPMorgan’s scenario #3.
Corresponding $S&P 500(.SPX)$ performance was forecasted to swing between -0.5% to +1.0%.
When US market closed on Wed, 15 May 2024, the S&P 500 Index ended mid week at 5,308.15, up +1.17%.
WoW !
JP Morgan was quite accurate in their predictions of S&P 500 performance for the day.
Going forward, maybe just maybe I should be less “skeptical” of JP Morgan’s analysis and forecast ?
Pop Champagne & Celebrate?
With a lighter-than-expected US consumer inflation report, US market went a little “wild”.
By the time 4pm US time came around:
DJIA: +0.88% (+349.89 to 39,908.00). YTD, this is the 18th record high.
S&P 500: +1.17% (+61.47 to 5,308.15). Record high! Breaching the 5,300 level for the first time! YTD, this is the 23rd record high. 65 stocks on the index hit record high on Wednesday.
Nasdaq: +1.40% (+231.21 to 16,742.39). YTD, this is the 8th record high.
Time to celebrate?
I think it is not time to celebrate yet.
For starters, Mr Powell has already pre-empted on Tue, 14 May 2024 at the AGM of the Foreign Bankers’ Association in Amsterdam.
He has said the followings:
His confidence that inflation will keep cooling is not as high as it was at the start of the year and that the central bank will need to be patient before lowering interest rates.
He thinks that it may take longer than expected to do its work and bring inflation down.
Lastly, he seemed to think that getting the last percent or so of inflation back down to 2% could take longer and potentially be more painful than last year’s steady drops month over month.
That is because he believes the supply chain issues that were pushing up prices have largely been resolved. Now it is about tempering consumer demand.
There should be greater clarity from Thu, 16 May 2024 onwards - on Fed’s view about April CPI as 5 Fed members will be taking to different media to socialize.
Hopefully all of them will hum the same tune and provide insight on when the first interest cut might be - September or earlier?
Hold back the champagne popping for now !
On a brighter note, US market is expected to continue its winning streak for yet another day. Will it be yet another record breaking levels for all 3 indexes, its to-be-seen.
Although market sentiments seemed buoyant broadly, the same could not be said about $Tesla Motors(TSLA)$ . (see below)
When US market sentiments are largely “positive”, the electric maker share price actually fell.
On Wednesday Tesla fell by -2.1% to end the day at $173.99 per share.
Based on past 5 trading sessions, Tesla is still in negative terrority of -0.58%.
The Bad Press.
In my post dated 11 May 2024 on Tesla and its staff exits (click here ! for details) I have touched on Mr CEO decision to fire the entire Supercharge team.
Apart from the complications that has set in, in the aftermath, Mr CEO’s obsession with costs cutting (without careful thoughts) is showing cracks.
This is mainly because management of the Supercharge team used to fall squarely on exited staff Drew Baglino, Senior VP in Tesla.
Looks like his role has not been backfilled by someone experienced and knows what he/she is doing.
As details being to unfold in the media (see below), perhaps this had a rub-off effect on investors’ sentiments towards the “once darling” of Wall Street until he has gone rogue and became pure evil in the process.
Tesla fired almost all the people who worked on charging stations (Superchargers).
This happened after a meeting between Tesla's boss and the charging station boss. They disagreed on how many more people to fire.
Tesla said they'd still build more charging stations, but at a slower pace.
This could slow down the spread of electric cars because there would not be enough stations to charge them.
Tesla firing these people also hurt relationships with companies that helped build the stations.
Other companies might build more stations, but it won't be as easy without those relationships.
The strike in Sweden that erupted 6 months (October 2023) has escalated to a higher notch as Sweden largest untion has decided to throw its weight behind IF Metall (national Swedish Trade Union organising blue-collar workers within the manufacturing sector).
Unions see the fight as vital to protect labour model.
Tesla and Musk refuse to sign collective agreements and instead lied that the labour storm had passed, where Tesla's Model Y is the top-selling car.
Unionen may escalate efforts if action is circumvented.
The EU strike outcome will be an important case study for UAW (US labour union) that had won using strikes in 2023 against, $Ford(F)$ , $General Motors(GM)$ and $Stellantis NV(STLA)$ in safeguarding the auto workers welfare.
Tesla is the only major American auto manufacturer not represented by a union in the US.
Perhaps the gravest bad press was Tuesday’s post on poor take up rate for Tesla’s Full Self-Driving (a misnomer) when the trial period expires. (see above)
This as Mr CEO has changed course to re-focus Tesla’s energy:
From building a low cost EV (Model 2).
To taking action on the subject of autonomous driving that has been at least 8 years in the making and talking and talking.
And the big unveil of its Robotaxis on 8 Aug 2024.
According to YipitData’s latest figures:
Nearly 3,500 Tesla owners trialed the company’s Full Self-Driving (FSD) service over the past month.
Only about 50 of these trials converted into FSD subscriptions or purchases.
As of 05 May 2024, this translated to a conversion rate of just under 2%.
The data reveals a cautious approach among Tesla drivers towards paying for subscriptions to Tesla autonomous driving technology.
Who will Mr CEO lay blame next on Tesla’s poor showing as he tries frantically to get into investors’ good books so that they will vote to grant him the indecent $56 billion pay package.
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Do you think CPI data will fall inline with Wall Street expectations?
Do you think you will focus on Utilities stocks or ETFs too, given that its a spillover effect from AI ?
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This is a very well written and balanced article. Call out to JC888.
One more thing to add is the CEO's increasing desperation to get the 2022 $56b reinstated. All this at a time when Tesla has turned cash-flow negative.
And at the same going "hard-core" on employee firing.
Guess this illustrates where the CEO's heart lies.
Biden sanctions China ev!!!
Unfortunately the others opened high but went low
Haha Can TSLA GO BACK TO 200?
Pls help to "Re-post". Tks! Rating is important (to me).
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