Tesla’s Endgame
Tesla’s Numbers Are a Nothingburger
In a case of Mr. Market asking, “So what have you done for me lately?”... shares of Tesla took a 3.5% dump yesterday. (And they’re down another 2% today).
TSLA reported its quarterly vehicles-delivered numbers. They were in line with the expectations of Wall Street analysts — up 6.4% from a year ago.
So what’s the problem? Well, the total for the first nine months of 2024 is still behind last year’s pace. If the company is going to beat 2023’s total, it’s going to have to step on the gas — er, I guess, the accelerator.
What are we to make of Tesla here in late 2024, the share price still well off its 2021 peak?
Your editor has been of many minds about this company over the years, informed by colleagues both past and present who have conflicting — and vigorous — opinions.
One of them first recommended Tesla to his readers in 2010, about six months after it went public. The reaction was largely skeptical, given a readership well aware of Tesla’s reliance on generous government subsidies — including the tax breaks for buyers of electric cars. “Never got so many letters telling us how dumb we were,” this individual recalled.
But they didn’t mind riding TSLA to 1,005% gains by mid-2016.
All along the way, though, skeptical colleagues said something didn’t add up.
They didn’t necessarily agree with the hard-core “Tesla shorts” who asserted Elon Musk is a fraud. But they also said it made zero sense to label Tesla a “tech company” — lumped in with Google and Facebook — when Tesla operates in the very capital-intensive business of building cars.
Thus, they argued, it made even less sense that Tesla’s market cap — currently just under $800 billion — nearly equals the rest of the top 10 global automakers combined.
How can the story end, they ask, other than in tears?
The counter I’ve heard to that argument — and the only one that rings true for me — is this: Tesla isn’t actually an EV company and it’s not trying to compete in the same realm with Toyota and GM.
Rather, Elon Musk launched an automaker with a long-term plan for total domination in a specialized field of AI — an entirely new kind of AI, potentially the most powerful AI humanity has ever seen.
A former colleague likens Musk’s aims to those of Amazon in the 1990s — selling books with a long-term plan for total domination in the field of online retail.
Makes sense. The knock on Tesla for years was that it didn’t make a profit. But still another old friend would remind me that was the knock on Amazon during AMZN’s peak growth years. Amazon could have easily achieved a cushy 10% profit margin during that time if not for Jeff Bezos’ relentless expansion into new lines of business.
With all of that as prologue, Elon Musk is set to make an earth-shaking announcement one week from today — Thursday Oct. 10. “This will be one for the history books,” he says.
And after a careful assessment of his claims, several of my current colleagues — who rarely agree on anything — concur that this is one time Musk absolutely is not blowing smoke.
Yes, Tesla shares should perform well on the heels of this announcement — certainly well enough to make the sell-off yesterday and today a footnote in the company’s history.
But the really big money — the kind of money that could dramatically alter your retirement plans for the better — will come from a tiny AI company that my colleagues believe holds the key to Musk’s plans.
Dockworker Strike: Election Wild Card
To the markets — where the stupid election looms large over both of the economic wild cards dominating the week’s news.
“It is now more likely we are looking at weeks rather than days as a duration for this conflict,” Vespucci Maritime CEO Lars Jensen says of the port strike on the East and Gulf Coasts.
That’s because for the moment, the International Longshoremen’s Association has the tacit support of both presidential candidates.
“American workers should be able to negotiate for better wages, especially since the shipping companies are mostly foreign flag vessels,” says Donald Trump.
Presumably speaking on behalf of the Kamala Harris campaign, White House Press Secretary Karine Jean-Pierre promises that Joe Biden will not invoke the Taft-Hartley Act of 1947 — ordering the 45,000 strikers back to work for an 80-day “cooling off period.”
Taft-Hartley has long been anathema to organized labor; the last time a president invoked it was Dubya Bush during a West Coast dockworker strike in 2002.
With at least wink-and-a-nod support from both presidential candidates, the ILA is unlikely to budge in its talks with the U.S. Maritime Alliance.
And even if everyday consumers aren’t following every detail of the back-and-forth, their collective spidey-sense is making for epic-long checkout lines at Costco…
Colleague Chris Cimorelli of our Microcap Millionaire service points out that all of this comes at a potentially dicey time for the Democrats and organized labor; this year the Teamsters union opted to withhold an endorsement for president for the first time since 1996.
And we’ll add this: Polling data suggests that private-sector unionized workers are leaning Republican to a degree they never have before. Not that there are many of them left: While unionized workers made up over 35% of the private-sector workforce in the mid-1950s, today it’s closer to 7%.
(The political leanings of government union workers? Still overwhelmingly Democratic…)
Whether it’s jitters about the strike and supply chains… or jitters about the Middle East (more about that in Bullet No. 3)... or another factor entirely… something is keeping a lid on the stock market this week.
The S&P 500 is down about a third of a percent on the day. At 5,690 it’s also down about 1% from its record close on Monday.
A more decisive move — up or down — could come tomorrow with the release of the September jobs numbers.
Gold is hanging tough at $2,649 — silver likewise at $31.76. The precious metals’ resilience this week is notable given a rally in the U.S. dollar relative to other major currencies; under ordinary circumstances, a rising dollar would crush gold and silver.
The price of platinum, meanwhile, has sunk below $1,000 — a level that’s been overhead resistance since June. We bring up platinum this morning because a little over a year after Costco started selling 1-ounce gold bars, it’s adding 1-ounce platinum bars to the lineup.
Whether they come from Costco or someone else, platinum might be a bargain right now. At times its dollar price has equaled that of gold; until about 2008, it was pricier than gold. But today gold sells for 2.6 times the price of platinum. If platinum starts playing catch-up, look out.
Bitcoin keeps drifting down, now in danger of cracking below $60,000…
Oil… and More Election Uncertainty
The ever-louder war drums in the Middle East have pushed a barrel of West Texas Intermediate crude past $73 — the highest in nearly a month, up from $67.50 Tuesday morning.
The Axios news site reports that Israel is planning to launch a “significant retaliation” attack on Iran. That’s according to anonymous Israeli sources who acknowledge such a gambit could lead to a full-blown regional war directly involving the United States.
(Brings to mind the old joke about Let’s you and him fight!)
After Iran lobbed about 180 ballistic missiles at Israel on Tuesday, National Security Adviser Jake Sullivan said, "There will be severe consequences for this Iranian attack and we will work with Israel to make sure that is the case."
(Hello? How about working with Congress as the Constitution requires?)
Anyway, among the targets the Israelis have in mind are oil production sites inside Iran. “While Israel is going to respond on its own,” says Axios, “it wants to coordinate its plans with the U.S. because of the strategic implications of the situation.”
Hmmm… From where we sit, it’s hard to imagine Team Biden egging on Israel’s Prime Minister Benjamin Netanyahu to start bombing Iranian oil facilities barely a month before Election Day; the resulting higher gasoline prices would be a major gift to Trump, no?
On the other hand, it’s very easy to imagine Netanyahu going ahead with it anyway, since it’s an open secret he prefers Trump over Harris. Just sayin’.
No Good Deed Goes Unpunished
There’s no disaster on Earth so bad that pettifogging bureaucrats can’t make it worse — as we’re learning in the aftermath of Hurricane Helene.
“An experienced helicopter pilot's mission to rescue flood victims was abruptly halted after he was threatened with arrest,” says a story at Firehouse — a website devoted to news about firefighters and EMTs.
“Hearing about stranded people frantically begging for help, he decided to fly his own helicopter to assist. He knew it was going to be the only way out for many.”
Pilot and volunteer firefighter Jordan Seidhom checked for restrictions in the airspace around Lake Lure — one of the worst-hit areas. There were none.
On Saturday, he and his son/co-pilot rescued four people from Lake Lure. They reached a stranded couple on Sunday as well. Because the chopper landed on an unstable driveway, they wanted to keep the weight down — so Seidhom took the woman first, promising to come back for the man later. Upon landing, Seidhom was greeted by grateful fire and search personnel. "One guy gave me the radio frequencies so we could communicate," Seidhom tells Firehouse.
Then the fire chief — or maybe assistant chief, Seidhom isn’t sure — shows up.
"He told me if I didn't leave the area immediately, I'd be arrested. I told him my background, but he insisted I leave, saying I was interfering with his operation."
Lo and behold, a temporary flight restriction went up over Lake Lure about a half-hour after the confrontation.
Seidhom and his son had to head home to South Carolina. The man was left stranded, separated from his wife.
The flight restriction was lifted on Monday and Seidhom went back to work — this time as part of the Carolina Emergency Response Team. No comment from anyone in officialdom in Lake Lure.
But Seidhom’s still miffed: “I can only imagine what the people were thinking,” he tells the New York Post. “You’ve been stranded for 24, 36 hours. No way to speak with anyone. You don’t know what’s going on and you see a lifeline fly over and they keep going. I can only imagine what they were thinking.”
Sheesh… The level of dysfunction here — and with a few other things in North Carolina — has a certain Maui/East Palestine vibe to it.
Then again, maybe it’s just a Katrina redux?
Mailbag: From JFK to Jeffrey Epstein
“Great piece of work… keep it up,” says the first of many responses to Tuesday’s edition.
“Very good research!” says another. “Sickeningly insightful. Thanks for sharing it.”
“Very thought provoking 5 Bullets,” says a third.
“It is interesting that some historians point out the negative writings about a country's government and culture precede the destruction and disappearance of the country/empire.
“The negative writings of Roman authors and historians preceded the fall of Rome. They could see its future demise in plain sight.”
“I really enjoyed Tuesday’s rant about JFK and Epstein and COVID Fauci,” says a fourth.
“Thank you for stirring the conspiracy pot and making me more paranoid than I was. And giving credence to those I blew off as CTs. And I do want to hear the unabridged Warren Commission details.”
One more: “In fairness, in this political season, could you opine on Kamala's answers concerning the full release of the JFK and Epstein files, as well as Trump's?”
Dave responds: Given the increasing uselessness of Google and Google News in recent years, I posted a query to the Perplexity AI engine. It came up empty.
“Based on the search results provided,” it said, “there is no indication that Kamala Harris has made any statements on the campaign trail about opening up the remaining redacted JFK assassination records.” Ditto for any Epstein records.
As for “conspiracy theories”... I took pains on Tuesday to avoid any contested facts. My critique comes back to the old line about how “it’s not the conspiracy, it’s the cover-up.” Or in the case of COVID measures, the gaslighting.
Meanwhile, I enjoy “fall of Rome” analogies as much as anyone. The problem is where do you place America today relative to the timeline of Rome?
Is it the end of the republic in the first century BCE — the populares fed up with the corrupt and degenerate optimates that presumed to rule over them? (And who, then, would be the Caesar figure that emerges now?)
Is it an already-declining empire’s power struggle reminiscent of the Year of the Five Emperors (193)?
Are we about to be cursed with desperate control freaks and power-trippers like Diocletian and Constantine (turn of the fourth century)?
Or is it really the end of the Western empire?
Even if it were the last of those possibilities, how would we know?
Because as someone once quipped — it might have been newsletter legend Doug Casey — “It’s not as if everyone just woke up one day in A.D. 476 and said, ‘Holy s***, we’re in the Dark Ages now!’”
