Tesla, TSLA & the Investment World: the Perpetual Investors' Roundtable

[Mengy]

Elon agreed with this take on the fed

https://twitter.com/x/status/1573624036957065217

I too agree with Siegel. I feel the fed is lagging behind the indicators and over reacting in a late fashion, which will likely result in tanking the economy and sending us into a deep recession, one which will take time to dig out of.

With regards to TSLA, this is a huge reason why I feel PE's will continue to compress even while we post record quarters and revenues, and why I suspect the stock price will trade relatively "flat" on average over the next year or two. Sure we'll break out in a huge way once things turn around, but I still think the next leg up is quite a ways off yet.

 

[M|S|M MYP]

I too agree with Siegel. I feel the fed is lagging behind the indicators and over reacting in a late fashion, which will likely result in tanking the economy and sending us into a deep recession, one which will take time to dig out of.

With regards to TSLA, this is a huge reason why I feel PE's will continue to compress even while we post record quarters and revenues, and why I suspect the stock price will trade relatively "flat" on average over the next year or two. Sure we'll break out in a huge way once things turn around, but I still think the next leg up is quite a ways off yet.

Agreed on all fronts....oh well, gives us more time to accumulate more chairs.

 

[Discoducky]

Holy Xi…t!

Might be for the best for China and, possibly, the world.

If true, maybe we’ll hear a reassuring announcement before the markets open so they don’t berserk.

On the other hand, maybe we’ll see a photo op with Xi to dispel the rumor.

Wonder what the atmosphere is like in the Kremlin.

You’d think the Chinese censors would squash this in a heartbeat if false. Anyone know if the rumors are coming out on normally censored internet communications, or just Twitter?

Time in Beijing is 2am...so we wait, but you'd think if it was true that the white house would say something publicly...

 

[capster]

Time in Beijing is 2am...so we wait, but you'd think if it was true that the white house would say something publicly...

Things may still be in flux and the WH may not want to seem to interfere. They may want to wait till the dust settles whether that takes hours, days, or weeks. Presumably this has been gamed out by the powers that be in the West.

Hard to say if it’s true, though it’s credible: The situation is ripe (things aren’t exactly great in China at the mo) and the timing is right.

The PLA might—whatever its connections to the CCP—choose to take out Xi rather than continue on a path that might require it take on the US, especially after seeing what the Ukrainians have done to the Russians on the battlefield with old gear and US hand-me-downs.

 

[adiggs]

I too agree with Siegel. I feel the fed is lagging behind the indicators and over reacting in a late fashion, which will likely result in tanking the economy and sending us into a deep recession, one which will take time to dig out of.

With regards to TSLA, this is a huge reason why I feel PE's will continue to compress even while we post record quarters and revenues, and why I suspect the stock price will trade relatively "flat" on average over the next year or two. Sure we'll break out in a huge way once things turn around, but I still think the next leg up is quite a ways off yet.

An alternative take for you to consider. Not-advice, and just because I think its true, doesn't make it so


If you agree with the premise that a 2.5% interest rate is 'neutral' to the economy (and I do); neither stimulative, nor restrictive, then the entire year of interest rate hikes, up to but not including the most recent, has resulted in moving from an incredibly stimulative position to (finally) a neutral position. Most of this year, despite very high and growing inflation readings, the Fed has maintained a .... stimulative posture relative to the economy. Stimulating the economy, with such strong employment and high inflation, is not typically the game plan

Only with this most recent hike have we, finally, moved from economic stimulation to restriction. If the most recent change had been no change, then the Fed would be in a neutral position with the highest inflation many / most investors have ever witnessed (at least in the US).


The other part of this story that gets nearly 0 air time is QT. The Fed is finally also beginning to reduce liquidity in the market by allowing some of the expiring treasuries and mortgage backed loans to not be repurchased. I've read (but don't have a link handy) that the big banks were taking that big liquidity injection and doubling up by also buying treasuries and mortgage backed loans. So QE was closer to double the headline number - early indications is that trade is being unwound by the banks, meaning that QT is 2x the headline number.

The last time we went through a QE and then QT cycle, the QT didn't go on for very long before it needed to be stopped. I suspect something similar this time, and I suspect that QT is the more likely mechanism to drive a recession.


I guess that the end result is similar - I also see a pretty serious recession to be in the offing. My primary difference is that I don't see the Fed as having done enough yet to get us there, though the QT is sufficiently opaque to me that maybe the Fed really is doing enough, and the target interest rate is the magician's distraction from what really matters.

My take - the Fed hasn't gone far enough with the target interest rate, and I think they're right to be saying and acting as they are. If nothing else they (again MHO) still haven't convinced the investing class that they are really, really serious about inflation. Too many investors have lived for too long with the Fed put and think that's the norm.

 

[Singuy]

An alternative take for you to consider. Not-advice, and just because I think its true, doesn't make it so


If you agree with the premise that a 2.5% interest rate is 'neutral' to the economy (and I do); neither stimulative, nor restrictive, then the entire year of interest rate hikes, up to but not including the most recent, has resulted in moving from an incredibly stimulative position to (finally) a neutral position. Most of this year, despite very high and growing inflation readings, the Fed has maintained a .... stimulative posture relative to the economy. Stimulating the economy, with such strong employment and high inflation, is not typically the game plan

Only with this most recent hike have we, finally, moved from economic stimulation to restriction. If the most recent change had been no change, then the Fed would be in a neutral position with the highest inflation many / most investors have ever witnessed (at least in the US).


The other part of this story that gets nearly 0 air time is QT. The Fed is finally also beginning to reduce liquidity in the market by allowing some of the expiring treasuries and mortgage backed loans to not be repurchased. I've read (but don't have a link handy) that the big banks were taking that big liquidity injection and doubling up by also buying treasuries and mortgage backed loans. So QE was closer to double the headline number - early indications is that trade is being unwound by the banks, meaning that QT is 2x the headline number.

The last time we went through a QE and then QT cycle, the QT didn't go on for very long before it needed to be stopped. I suspect something similar this time, and I suspect that QT is the more likely mechanism to drive a recession.


I guess that the end result is similar - I also see a pretty serious recession to be in the offing. My primary difference is that I don't see the Fed as having done enough yet to get us there, though the QT is sufficiently opaque to me that maybe the Fed really is doing enough, and the target interest rate is the magician's distraction from what really matters.

My take - the Fed hasn't gone far enough with the target interest rate, and I think they're right to be saying and acting as they are. If nothing else they (again MHO) still haven't convinced the investing class that they are really, really serious about inflation. Too many investors have lived for too long with the Fed put and think that's the norm.

Except real rates are speculative. Mortgage rates sitting at 6+% while 5 year CD sits at 3%. Banks are not willing to give you a lock of 3+% on a CD tells me they are expecting rates to adjust down after the fed crashes the economy.

 

[hobbes]

I don't see why people pay much attention to Troy and his estimates/analysis. For example look at this tweet:

https://twitter.com/x/status/1573356568053161984

The Model 3 LR would have to have the price dropped by at least $1k, from when it was last offered, so the purchaser can get the $7.5k rebate and that is somehow going to massively improve Tesla's margins?

As the rebate can be transferred to Tesla, the customer gets a direct price cut when he buys the car. So if Tesla raises the price by 7.5k everything stays the same for the customer. If another manufacturer´s car does not qualify, they can not raise the price without losing customers. Or if they don´t raise the price, the Tesla is suddenly going to be much cheaper than the competitor and demand is going to sky rocket even more - which allows them to raise prices . Any way you look at that, Tesla wins. (Sorry for delayed reply, typed this yesterday but forgot to click post )

 

[Cosmacelf]

Elon agreed with this take on the fed

https://twitter.com/x/status/1573624036957065217

So Siegel was saying the Fed was too accommodative two years ago. Was Elon?

 

[hobbes]

Weekend off topic, order confirmation out without anyone actually placing an order...

https://twitter.com/x/status/1572857198497370114

 

[Gigapress]

I am not proud to write this, but after additional reflection I think my above use of the 'German Tank Problem' is incorrect.

Let me first describe how this proven estimate _can_ be used:
On Sept. 17 2022 Norway had seen 2085 VINs from GigaBerlin - the highest of which was 22625.
The 'German Tank Problem' then estimates the total production to be 22625 * ( 1 + 1/2085) - 1 = 22635.
We see that the estimate is only slightly higher than the maximum observed VIN - this is so because so many VINs have been observed, reducing the likelihood that even higher VINs exist. (Imagine the extreme case where all VINs up to the maximum has been observed, the estimate then equals the maximum).
As an opposite example, GigaBerlin VINs were first observed in Norway on April 13, the VINs 2669 and 2670. With only two VINs, the estimate of 2670*(1+1/2) - 1 = 4004 is (relatively) much higher, because the likelihood that unobserved, higher VINs exist is much higher.

It should be noted that GigaBerlin had a trial production of 2k Model Ys, so it is no great surprise that the first VINs observed are greater than 2k. It was subsequently reported that GigaBerlin received permission to sell also their trial production. And indeed, from May VINs smaller than 2k were observed with the smallest VIN observed being 130. So there is no reason to assume that some initial VIN range has to be ignored when calculating the estimate.

This is were the trouble starts.

Two days after the Sept. 17 maximum VIN was observed, a new maximum was observed: VIN 24561.
With the number of VINs seen having increased to 2195 the 'German Tank Problem' estimates the total production on Sept. 19 to be 24561 * ( 1 + 1/2195) - 1 = 24571. Fine.

However, the maximum VINs observed two days apart are _not_ independent events. Once the new maximum has been observed, this also affects what is the most likely total production two days before - and it would be wrong to assume that the new total production estimate is a result of production having taken place only during the time lapsed between the two observations. As such I have come to the conclusion that trying to deduce production rates based on simple differences of these 'German Tank Problem' estimates taken at face value on different days is _not_ a valid approach.

On a longer time scale, say a quarter of a year, I think the estimates are separated by enough time that one can assume their difference to be (largely) due to actual production during the elapsed quarter.

Unfortunately, no maximum VIN was observed close to the beginning of the current quarter - and as can be seen (more or less) from the attached plot, on June 22 a new max of 7385 was seen and then only on July 14 did it jump - to no less than 11433. So an estimate of the Q3 production (so far) would be strongly dependent on where one would estimate the production to be on July 1st, a number that can range from 7385 (plus 5 for the frequency correction) up to 11433 (plus 8 for the frequency correction).

As such I leave it as an open question what the GigaBerlin production rates are, with the observed GigaBerlin VINs on the attached plot. I am sorry about that.
If anyone can make a convincing argument of how one can deduce production rates from these numbers, then I will be happy to use the approach on the numbers (although the numbers are available to anyone, via e.g. teslastats.no).

I looked also at the GigaShanghai VINs observed in Norway and I would say that due to the strong 'delivery wave' the VINs are not helpful for deducing a production estimate.

To at least provide some modicum of useful information, I looked also at the split between the LR and P (and SR+ from China) for the current quarter in Norway (as of this moment):
CN(2222 VINs): 3-LR=24.3% (540 VINs) 3-P=13.5% (299 VINs) 3-SR+=11.2% (249 VINs) Y-LR=51.0% (1134 VINs)
DE(1757 VINs): Y-LR=32.2% (565 VINs) Y-P=67.8% (1192 VINs)
(Yes, the Ps exported from China to Norway are all Model 3, at least so far).

In principle, one could maybe use other information for the already lapsed Q2 to see how the splits correlate to a (more or less) already known ASP. As such I provide also the same splits for 2022 Q2 in Norway:
CN(1811 VINs): 3-LR=5.2% (95 VINs) 3-P=0.6% (10 VINs) 3-SR+=4.9% (89 VINs) Y-LR=89.3% (1617 VINs)
DE(1208 VINs): Y-P=100.0% (1208 VINs)

Unlike the 'German Tank Problem' estimates, these splits cannot be assumed to apply to the production as a whole, the splits can be different outside of Norway...

For what it’s worth, in my opinion this is something to be proud of writing. This is a great example of what becoming less wrong looks like.

 

[Discoducky]

An alternative take for you to consider. Not-advice, and just because I think its true, doesn't make it so


If you agree with the premise that a 2.5% interest rate is 'neutral' to the economy (and I do); neither stimulative, nor restrictive, then the entire year of interest rate hikes, up to but not including the most recent, has resulted in moving from an incredibly stimulative position to (finally) a neutral position. Most of this year, despite very high and growing inflation readings, the Fed has maintained a .... stimulative posture relative to the economy. Stimulating the economy, with such strong employment and high inflation, is not typically the game plan

Only with this most recent hike have we, finally, moved from economic stimulation to restriction. If the most recent change had been no change, then the Fed would be in a neutral position with the highest inflation many / most investors have ever witnessed (at least in the US).


The other part of this story that gets nearly 0 air time is QT. The Fed is finally also beginning to reduce liquidity in the market by allowing some of the expiring treasuries and mortgage backed loans to not be repurchased. I've read (but don't have a link handy) that the big banks were taking that big liquidity injection and doubling up by also buying treasuries and mortgage backed loans. So QE was closer to double the headline number - early indications is that trade is being unwound by the banks, meaning that QT is 2x the headline number.

The last time we went through a QE and then QT cycle, the QT didn't go on for very long before it needed to be stopped. I suspect something similar this time, and I suspect that QT is the more likely mechanism to drive a recession.


I guess that the end result is similar - I also see a pretty serious recession to be in the offing. My primary difference is that I don't see the Fed as having done enough yet to get us there, though the QT is sufficiently opaque to me that maybe the Fed really is doing enough, and the target interest rate is the magician's distraction from what really matters.

My take - the Fed hasn't gone far enough with the target interest rate, and I think they're right to be saying and acting as they are. If nothing else they (again MHO) still haven't convinced the investing class that they are really, really serious about inflation. Too many investors have lived for too long with the Fed put and think that's the norm.

Great points and yes, QT doesn't get enough airtime and yes, even 3% Fed rate is even somewhat close to neutral.

The problem is that both are being swung so wildly right now (QT is spiking to its highest this month) and rates are going up too steeply (very similar to 04 to 06). Just do massive QT or just do rapid 25 basis hikes; just not both so fast at the same time. Talk about a huge crazy experiment to run on humanity like the burning of fossil fuels.

It just seems that using both of these, at such high velocities is way too big for our current indicators. Might be appropriate for highly lagging indicators which seem to be all the Fed is paying attention to.

We all saw this inflation coming (or at least the vast majority) a year ago and were screaming to raise rates when Powell thought it was "transitory". Now, not only have they moved, they are moving too fast.

As I explained to my 12 year old, "Two wrongs don't make a right."

And again, there is simply no penalty for the Fed to over-correct via the dual mandate.

/on soapbox

Is the economy heated up currently? Yes, but it is slowing organically as covid induced supply chain/logistic throughput issues easing has taken time.

Would the economy have healed on its own with 2% Fed rates? Of course not, it needs to be nearer 4%. But could have been done at 25 basis raises.

Can inflation get out of control? Sure, but we know that this happens when other economic indicators are already in the dumpster burning.

Does the Fed need to remove all the bonds it owns through QE via QT? Yes, but it should just do that first as a big hammer and not swing the rate hammer so flippin' hard.

/off soapbox

 

[hobbes]

Tesla vision doing its job, sure accident without AEB (driver admits, says his mistake; radar disabled by update before), impressive..

I couldn't react anymore and the pedal went completely down and all the wheels locked and the car slipped another 1-2 cm. When I had my foot on the pedal I was already standing.

https://twitter.com/x/status/1572291961431662592

 

[2daMoon]

Weekend off topic, order confirmation out without anyone actually placing an order...

https://twitter.com/x/status/1572857198497370114

So, that's what they mean by "Hedging" your bet?

Or, is this more like going in whole "Hog"?

Very confusing either way... for the critter.

 

[hobbes]

Just found this, EVs now allowed to be transported on Chinese rail, trip takes only 20 days to Europe. Actually the difference is not as big as article makes it sound, takes about a month by ship, see reporting on Glovis Sun by Franco Mosotto, but good to have an alternative for example if Suez Canal gets clogged up again..

Electric vehicles, but not batteries are allowed on China railways

After two years of intensive lobbying for electric cars to be shipped by train in China, it is finally possible. From 17 September, finished vehicles could be transport to, from and through China by rail. Important side note: the legal notice only covers finished vehicles. Do you want to read...

www.railfreight.com

(via

https://twitter.com/x/status/1573299233331052548

)

 

[Singuy]

Tesla vision doing its job, sure accident without AEB (driver admits, says his mistake; radar disabled by update before), impressive..

https://twitter.com/x/status/1572291961431662592

The FB fsd software club are now full of examples people averting accidents on. 69.2. From a person was about to press the accelerator thinking fsd stopped for no good reason but was actually waiting for a bicyclist to a crash of another car which went into the lane of the Tesla and stopped by fsd.

I find my disengagement drives to be more eap/hwy related now than fsd on city streets. Its very impressive.

 

[MP3Mike]

As the rebate can be transferred to Tesla, the customer gets a direct price cut when he buys the car. So if Tesla raises the price by 7.5k everything stays the same for the customer. If another manufacturer´s car does not qualify, they can not raise the price without losing customers. Or if they don´t raise the price, the Tesla is suddenly going to be much cheaper than the competitor and demand is going to sky rocket even more - which allows them to raise prices . Any way you look at that, Tesla wins. (Sorry for delayed reply, typed this yesterday but forgot to click post )

But they can't raise the price of the Model 3, it is already over the limit for the tax credit. And the Model Y would be close, if not over, based on options selected.

And it can't be transferred until 2024. (And you still have to be under the income limit.)

 

[WADan]

I was quite shocked as it was coming from Business Insider. Their bias is pretty bad most of the time.

+1 that the Y is a little too firm, at least the performance trim. Much stiffer than my P3.

Ryan just picked up his 2022, and he’s saying the ride quality is very much improved (compared to 2020).

I wonder if anyone can confirm?

 

[bkp_duke]

Just found this, EVs now allowed to be transported on Chinese rail, trip takes only 20 days to Europe. Actually the difference is not as big as article makes it sound, takes about a month by ship, see reporting on Glovis Sun by Franco Mosotto, but good to have an alternative for example if Suez Canal gets clogged up again..

Electric vehicles, but not batteries are allowed on China railways

After two years of intensive lobbying for electric cars to be shipped by train in China, it is finally possible. From 17 September, finished vehicles could be transport to, from and through China by rail. Important side note: the legal notice only covers finished vehicles. Do you want to read...

www.railfreight.com

(via

https://twitter.com/x/status/1573299233331052548

)

Most of those railways go through Russia. After Elon opened up Starlink to Ukraine, I can't imagine them letting him transit cars through Russia.

 

[Curt Renz]

The Electric Viking - this afternoon:

 

[jw934]

Great to hear FSD beta is performing so well in Washington D.C. cross town, including crowded areas.

Still disabled in downtown Toronto. Whenever I crossed the dotted line, my Tesla flash the big red icon and screams at me as it turns off and disables the FSD feature.

https://twitter.com/x/status/1573751813542649856