Tesla Investor's General Macroeconomic / Market Discussion

[bdy0627]

Not a particularly correlative issue with Tesla
but if some of you are in 401K or other Index funds allocated between large-mid-small Capp --
Note, we finally changed over to projected Corporate guidance of large cap cross-over;
I suspect this will be the case for a while as we enter this next phase of the economy
You might take the moment to have a look at your allocation spread in those funds and make any adjustments you deem appropriate

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Ken, thanks for the info. could you explain this a bit? What is projected corporate guidance of large cap cross-over? Does it simply mean that small cap firms are expected to underperform large caps now?

 

[kenliles]

Ken, thanks for the info. could you explain this a bit? What is projected corporate guidance of large cap cross-over? Does it simply mean that small cap firms are expected to underperform large caps now?

yes- and the trend is accelerating-
The metric of 'expected' is sourced from the actual guidance issued by the companies (rather than market projections);
So it carries more weight obviously-
[This would also indicate a macro market environment that is generally slowing in growth (not dramatically- just slowing), more conducive to staple-large-cap.]
Cross-Over : So Large Caps as a group, are now revising guidance significantly higher than Small Caps group, breaking a 3 year trend otherwise. IOW- internal corp guidance of Large group is projecting itself to be more healthy than Small group is projecting itself (change in guidance relative to the other)
I used this (and some other metrics) to adjust an HSA account to higher allocations of Large Cap funds- moving some Small Cap to Mid-
I wouldn't use it for trading or even cash allotments per se - just Index portfolio re-balancing

 

[kenliles]

In deference to your general macro perspective

Apple owns $52.6 billion in US Treasurys — more than many major countries — CNBC

"<
Apple is way above other big companies like Amazon, which owns less than $5 billion in U.S. government or agency securities combined, according to regulatory filings.
Here's where Apple would fall:
Japan: $1.1113 trillion
China: $1.1022 trillion
Ireland: $295.8 billion
Brazil: $269.7 billion
Cayman Islands: $266.1 billion
Switzerland: $239.5 billion
United Kingdom: $234.4 billion
Luxembourg: $207.7 billion
Hong Kong: $196.3 billion
Taiwan: $181.2 billion
Saudi Arabia: $134.0 billion
India: $127.3 billion
Russia: $108.7 billion
Singapore: $107.9 billion
Korea: $100.1 billion
Belgium: $98.7 billion
Canada: $80.2 billion
France: $74.4 billion
Germany: $68.3 billion
Thailand: $66.5 billion
Bermuda: $60.9 billion
United Arab Emirates: $60.5 billion
Apple: $52.6 billion
Netherlands: $52.2 billion
Turkey: $49.5 billion
Norway: $48.3 billion
Sweden: $40.8 billion
Mexico: $38.9 billion
Philippines: $38.2 billion
Spain: $38.2 billion
Australia: $37.0 billion
Italy: $35.6 billion
Poland: $35.0 billion
Kuwait: $31.6 billion
Israel: $30.9 billion
All other: $455.7 billion
>"

 

[kenliles]

I'm not going to flood this board and certainly not Flux's excellent macro thread with Trump political, and hope others respect that as well. That said on occasion, it must be noted when potential macros may effect TSLA (and equity markets). So I'm posting this here with hopes we can keep it in that context.

Mueller has now impaneled a D.C. Grand jury, brought on a new set of financial and other financial criminal based legal atty's to the team. A number of new subpoenas issued regarding Jr meeting and others and further financial based investigations outside the election (but influential in motive). This is going to be a constant cloud on markets and a piece of the macro scene and associated volitlity.

Let's handle it with professionalism here as it relates to markets (and therefore our TSLA), while we address it, discuss it head-on.
Thanks

Special counsel Robert Mueller's Russia probe heats up

 

[MitchJi]

If trump gets impeached will the market go up or down or stay about the same?

Better place to solicit opinions.

 

[elasalle]

Better place to solicit opinions.

How the Impeachment Process Works

(Note:Just an overview, doesn't say anything about market stuff)

 

[kenliles]

In a 'normal' impeachment (yes that's a joke) - I would guess the market would drop due to uncertainties (of all kinds) but then recover pretty quickly - realizing Pence would be a relief by comparison (similar financial policies without the,... well-- Trump);
However, this supposes a regular process (aka Clinton, and even Nixon)- I have no doubt Trump will instead force the process out of regularity and into dangerous zones on many fronts- that, to me represents the bigger risk (market wise) -
all that said- this can only be opined of course- we are in uncharted here-
my guess is probably less biased than many-- no secret I'm not a Trumpeter

 

[kenliles]

Let's collect these here (agree with Mitch - this would be a better place)

I think it would go down as investors confidence on the economic and political environment would be shaken.
But if the process is done well, then it would be only a short term fall (but still probably consequent, maybe more than 15% fall...), that would last until the replacement government gives positive vibes.

Obviously that's only guesses.

 

[kenliles]

The president has far less of an effect on the economy than people seem to imagine. Too many people picture him as a temporary wizard-dictator who can wave his magic wand and boost the economy. Of course presidents don't mind having the electorate think they really are omnipotent. Even the Congress and Federal Reserve are given too much credit for their economic impact. It is all of us, consumers, workers and businesses who through our collective actions have by far the greatest effect on the economy. Of course many people find it simpler to think of one person as being godlike responsible.

If impeachment and conviction occur, and there is any market drop and all, I would expect it to be minor and last quite briefly: a buying opportunity. However, I wouldn't be surprised if impeachment provides an immediate boost to the market.

 

[kenliles]

reply to Curt's thoughts--

I agree but what you say is true fundamentally : the president affects the financial and economics fundamental far less than what most people think. The problem is the market rarely listen to the fundamentals on the short term. When 9/11 happened, most companies didn't lose much fundamentally, yet the market lost 7% in a day and about 14% at the end of the week....

 

[bdy0627]

Better place to solicit opinions.

From Money website, seems reasonable to me:

The S&P 500 fell nearly 20% in the weeks leading up to special prosecutor Kenneth Starr's report on President Clinton, which ultimately resulted in Clinton's impeachment. And that was in the late 1990s, when the stock market and economy were booming.

"However, after investors concluded that this event would not likely lead to recession, the [market] then went on to recover the entire decline and set a new all-time high" at the end of November, says Stovall, months before the Senate acquitted Clinton in February.

"This time around, while the current crisis may trigger a correction, we do not think it will lead to recession and therefore will not result in a new bear market."

Still, that means a correction — defined as a loss of 10% to 20% of the stock market's value — could be lurking around the corner, depending on what the special prosecutor finds.

 

[Intl Professor]

From Money website, seems reasonable to me:

The S&P 500 fell nearly 20% in the weeks leading up to special prosecutor Kenneth Starr's report on President Clinton, which ultimately resulted in Clinton's impeachment. And that was in the late 1990s, when the stock market and economy were booming.

"However, after investors concluded that this event would not likely lead to recession, the [market] then went on to recover the entire decline and set a new all-time high" at the end of November, says Stovall, months before the Senate acquitted Clinton in February.

"This time around, while the current crisis may trigger a correction, we do not think it will lead to recession and therefore will not result in a new bear market."

Still, that means a correction — defined as a loss of 10% to 20% of the stock market's value — could be lurking around the corner, depending on what the special prosecutor finds.

It's unwise for me to make any predictions about the market since I'm an amateur investor nor about Trump, despite being a political junky. Don't hold your breath about impeachment that will depend, unconditionally, on the results of Mueller's investigation and, if Nixon is a model, only after the implications of **fire!** triggers support by the general populace. Mueller's investigation being a factor will not happen until at least the 2018 elections when it will have maximum effect on Republicans in Congress, obviously. Though early to tell for sure, looks like General Kelly is taking hold in the White House which is good for stabilization of the presidency. Good for the country, on other grounds, is the stiffening of residence by Congress to the President. A measure of that is what happens to health care reform where there is much talk and more expectation a bipartisan resolution will emerge. At least that process will start. That would also be good for the Republicans. McConnell would be wise not to take any more swords for maintaining opposition for what around 70 % of the population wants on war, immigration, health care, etc. The wild card is what Kelly learns or does about policy direction from the White House. And, of course, if Kelly gets the old apprentice shower's "you're fired."

I can't get a grip on Ryan, he's too slimy, er, slippery.

 

[MitchJi]

In a 'normal' impeachment (yes that's a joke) - I would guess the market would drop due to uncertainties (of all kinds) but then recover pretty quickly - realizing Pence would be a relief by comparison (similar financial policies without the,... well-- Trump);
However, this supposes a regular process (aka Clinton, and even Nixon)- I have no doubt Trump will instead force the process out of regularity and into dangerous zones on many fronts- that, to me represents the bigger risk (market wise) -
all that said- this can only be opined of course- we are in uncharted here-
my guess is probably less biased than many-- no secret I'm not a Trumpeter

Excellent point, which hadn't occurred to me.

Thank You, and @Starno, @Curt Renz, @elasalle, @bdy0627, and @Intl Professor for your replies.

In response to the at least eighteen months I think that there will be a reaction if it looks like the process is likely to start.

 

[kenliles]

to wrap up- these are replies to Curt Renz thoughts posted above- having all these together here may help further discussion later as it materializes - thanks Mitch - good discussion

POTUS's removal from office would probably boost the market because Pence is a textbook conservative and mentally stable, reducing a lot of uncertainty. Impeachment, however, would induce a lot of uncertainty. Everyone knows Trump wouldn't go down without a fight, and no one's quite sure how far he'd go to stay in office.

Operational maybe, but strategically that is not the case. The repercussions of appointing billionaire croonies into the positions that start making changes will be felt for a long time. DeVoss in education, Scott Pruit in the EPA etc. To the world this signals that the US is on self-destruct, which does have an impact on where investments go. IMHO impeaching Trump will be a beginning of a reversal and restoring of confidence in a check-and-balance system functioning before its too late.

So while short term it may lead to instability long term it should be healing.

Irregardlessly, TSLA will go up since they are in an excellent position and are just starting to become visible to the wider audience. I have to remind myself sometimes by traveling how much I live here in a bubble of EV awareness in california, yesterday evening in the middle class suburbs I parked at the strip mall and in addition to our Model X there were two Model S already. When I drive to work I see several S, X, even a few Bolts, VW e-Golfs, a lot actually BMW i3, on the same commute. And low and behold once even one hydrogen Mirai.

When I visited New York or New Orleans I am shocked to only see maybe one Model S a day and that is it. Just imagine what will happen when the Model 3 ships in masses to states that don't have a lot of Model S/X yet, and people show each other how great the car is in comparison to everything else around them. That will be teslas iphone moment. Remember when we stood around in groups and showed each other pinch-zoom? In california this already happened, but the other states will wake up big time then too.

Shorted stock value was at $9b recently? Once it hits 10 dont they start buying back to keep it at or below 10? Things are going to be fun... maybe the short squeeze will finally happen. I got a long-term sales order for $1300/share for half my shares just in case

I concur with your statement. If you used a white board eraser and wiped out the executive branch as it exists today, things would be no different tomorrow; other than a name plate change. However, if I injected my full perspective, the Bears would come out peeing on themselves trying to claim their birthright. Just stand strong, pivot backwards only backwards when you have to, and keep one eye focused on where you are going. Most of us here can only control things around us. That is why I try, and fail miserably from time to time, to focus on my footprint. Okay so I include my wife's feet too I am not open minded; I choose not to live in a world of denial

 

[kenliles]

when braun finally succumbed to brains...

 

[neroden]

when braun finally succumbed to brains...
View attachment 240247

That graph is messed up; it's using different scales on the right and the left.

 

[kenliles]

That graph is messed up; it's using different scales on the right and the left.

yeah- note it's comparing relative participation rate - so the skewing of the axis compensates for historical norm. That said I noticed them same thing- it's reflective of the trend rather than absolute- which is also exacerbated by my ill attempt at humor leading the reading to think in terms of absolute---
IOW - your comment is appropriate - mine was not

 

[kenliles]

moved to macro thread
As North Korean tensions simmer, here's how stocks reacted to past crises

OT - but ugh--

 

[kenliles]

for background to a concern I have regarding Fed policy for interest rates in coming months:
Dudley reinforces Fed expectation of US inflation rebound

The Fed has been positioning based on expectation that tight labor markets will increase wages in coming months. I'm not convinced this is a good assumption- but regardless I hope they don't raise rates (and tighten monetary via balance sheet) too fast due to inflation expectation (rather than reacting to data); bears close watch--

Current Yield curve and other data running flat - continue current Yellow watch alert- no change

 

[FluxCap]

Here is a phenomenal synopsis of the North Korea situation on reddit, of all places:

Trump: If North Korea Escalates Nuclear Threat, 'They Will Be Met With Fire And Fury' • r/worldnews