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

[Fact Checking]

Is this true even for relatively large blocks like the multi-hundred hectare Tesla site, or is that policy only for relatively small urban locations? As an example, why then would the survey teams thereupon stop at the plot's boundary, as opposed to including at least _X_ meters further out along the peripheral boundaries?

I'd say the primary concern here are inconvenience to the community, such as road closures, plus the handling of high explosives brought in - which would strongly favor doing all the controlled explosions on the same day.

All of this is fairly routine in the general area of Berlin, where up to 100,000 tons of bombs were dropped by the Allies during WWII. Furthermore apparently both the Wehrmacht and the Red Army used the Grünheide area for ammunition storage.

So there are German, U.S., British and Russian explosives in the ground all around Berlin.

Fun fact: during the Cold War the Red Army stored nuclear warheads in the general area as well. (But not at Grünheide - at a base about 20 km away.)

 

[SageBrush]

I will gladly buy any and all Coronavirus related dips.

I've thought about it but if I buy any more TSLA my wife is going to put me on the street.

 

[UnknownSoldier]

So I'm really going out on a limb trying to estimate how long the restrictions are going to last, but the spreading of the SARS coronavirus is probably the closest analogy we have:

View attachment 504631​

December 8 was probably the first case for the Wuhan virus - so if we shift the SARS graph by two months we get a peak in February and an end of new infections somewhere around May.

So all of Q1 would be impacted.

But, if the Wuhan virus is more contagious than SARS, which it appears to be, then this materially changes the speed of the infection wave.

I'd definitely warn against trying to compare SARS which was stopped early, against the WuFlu, which possibly won't be stopped.

If we compare to the regular "flu season", we are talking about months:

View attachment 504634​

But regular flu is usually less contagious and spreading stops in the northern hemisphere in the summer, because the conditions to spread it deteriorate.

An extreme case of influenza was the Spanish Flu which spread in 3 waves until herd immunity reduced its effective R0:

View attachment 504636​

That took 3 years - but travel was much slower back then.

Another possible outcome is that if the symptoms are mild the Chinese authorities will let it run its course. In this case the Chinese economy would be less affected.

Does anyone have any idea how long it will take to develop a vaccine and produce it at scale?

Today's brief epidemiology lesson is brought to you by me, who once took an epidemiology course in college on my way to my biology degree.

Basic reproduction number - Wikipedia

R0, the basic reproduction number, is a statistical value used by epidemiologists to calculate on average how many other people 1 person will infect with a contagion. If R0 is <1, then the outbreak will naturally die off on it's own because each person infects less than 1 other person. If R0 is >1, then outbreaks can become self-sustaining because each person infects more than 1 other person (on average). If R0 is an extremely large value, then the contagion spreads extremely quickly and is hard to contain, because each person could potentially infect a large number of people around them.

The R0 of this coronavirus is of course currently unknown, it's way too early to estimate. I've seen people speculate it's at least 2-3, and some are saying it might be as high as 3-5. If so, then this coronavirus is extremely contagious, on the same level as the 1918 influenza pandemic or even higher. The common seasonal influenza has an R0 of 1.4. However it doesn't seem to be especially fatal, it may have a higher fatality rate than the seasonal influenza variants which kill around 40,000 to 50,000 people every year but it's certainly not on the level of something like SARS or MERS. Humanity has been extremely lucky so far. Some have estimated fatality rate around 3%, which is an order of magnitude higher than the common influenza but also roughly the same as the roughly 3 times a century pandemic influenza caused by H1N1 strains.

If we ever ran into a novel coronavirus which was both extremely contagious and extremely fatal, that would be the 12 Monkeys or Contagion scenario. Quite frankly China's government should be terrified because it's more likely than not this may happen someday and they haven't done nearly enough since the 2003 SARS epidemic (9.6% fatality rate) to try and mitigate the likelihood of this occurring in the future, especially since China is one of the biggest sources of these novel coronaviruses in the world.

 

[SageBrush]

I am stating facts that could be relevant to market macros. Wuhan is under quarantine. It has a population of 11 million. There are more than 10 other cities so far also under quarantine.

You are quoting facts without context. Pro-active decisions should be seen in a much different light than reactive decisions. My take is that the Chinese are being very pro-active. If you are capable you can muse about the effect of these decisions on Tesla production while they are in effect but you should not infer anything about the severity of outbreak based on the steps taken.

 

[Prunesquallor]

...​

Does anyone have any idea how long it will take to develop a vaccine and produce it at scale?

I hesitate to jump into this morass, but I thought this article was fascinating

https://www.washingtonpost.com/scie...oronavirus-with-unprecedented-speed-openness/

“Just 10 days after a pneumonia-like illnesswas first reported among people who visited a seafood market in Wuhan, China, scientists released the genetic sequence of the coronavirus that sickened them.”

“At unprecedented speed, scientists are starting experiments, sharing data and revealing the secrets of the pathogen — a race that is made possible by new scientific tools and cultural norms in the face of a public health emergency.”

“Twelve days after the genome was posted, NIH scientists published their first analysis, showing that the coronavirus used the same door to get into human cells as SARS. About 12 hours later, a Chinese team of scientists who had isolated the virus from patients showed, using the actual virus, that the team was correct.”

“Anthony Fauci, director of the National Institute of Allergy and Infectious Diseases, said in an interview that with the viral genome, researchers have started on developing a vaccine. He is “reasonably confident” that a safety study could begin testing it in people within three months.”

 

[Fact Checking]

For context, the CDC estimates that the flu is responsible for 12,000-61,000 deaths per year since 2010 in the US alone. Some people love to freak out about this stuff and the American entertainment news media will gladly use it to suck viewers in.

I will gladly buy any and all Coronavirus related dips.

Influenza virus is very different from a coronavirus:

There were only two coronavirus outbreaks in history, SARS and MERS, with very high mortality rates: 14% and 25%.

The "corona" are those appendages on the virus which make it so deadly, it attaches very easily to all sorts of cells.

Fortunately current strains of the Wuhan coronavirus appear to be much more mild, but there's significant uncertainties, which is part of the reason of the "freaking out".

 

[HG Wells]

I've thought about it but if I buy any more TSLA my wife is going to put me on the street.

With, or without your tesla.

 

[Navin]

One silver lining in this is that this will hopefully strengthen world ties to China, including America. In times of humanitarian crisis - it’s nice to see the world stage trying to help each other.

 

[defc0n]

One silver lining in this is that this will hopefully strengthen world ties to China, including America. In times of humanitarian crisis - it’s nice to see the world stage trying to help each other.

For five minutes or so sure

 

[SageBrush]

With, or without your tesla.

I would hope with, but I would not put it past her to glue the charger door shut.

 

[Prunesquallor]

With, or without your tesla.

Yeah, being forced to live in your Tesla might not be so bad! NetFlix, video games, e-mail, phone, text.
I wonder if, for tax purposes, I could designate mine a home office?

 

[Fact Checking]

The R0 of this coronavirus is of course currently unknown, it's way too early to estimate. I've seen people speculate it's at least 2-3, and some are saying it might be as high as 3-5. If so, then this coronavirus is extremely contagious, on the same level as the 1918 influenza pandemic or even higher. The common seasonal influenza has an R0 of 1.4. However it doesn't seem to be especially fatal, it may have a higher fatality rate than the seasonal influenza variants which kill around 40,000 to 50,000 people every year but it's certainly not on the level of something like SARS or MERS. Humanity has been extremely lucky so far. Some have estimated fatality rate around 3%, which is an order of magnitude higher than the common influenza but also roughly the same as the roughly 3 times a century pandemic influenza caused by H1N1 strains.

Here's a (very) fresh summary of all scientific Wuhan coronavirus R0 estimates:

The freshest estimate is the highest, by Chinese authors - presumably based on very fresh data.

Here's a specific infection case study from The Lancet:

The important takeaway is that infection in most cases seems flu-alike, and that Patient 6, a young child of the family, remained uninfected due to the use of facemasks.

 

[SageBrush]

The important takeaway is that infection in most cases seems flu-alike, and that Patient 6, a young child of the family, remained uninfected due to the use of facemasks

My bolding. This cannot be emphasized enough.
Thankfully anti-vaxxers and associated morons have not infected China too extensively

 

[mblakele]

TIL there's an auto cluster in Wuhan:

Honda plans to recall its staff in Wuhan | NHK WORLD-JAPAN News

Automaker Honda plans to recall its Japanese staff and their families stationed in Wuhan, which is the epicenter of the coronavirus outbreak.

The decision follows the announcement by Japan's government that it will charter aircraft and take other means to evacuate Japanese people from the city, which is under lockdown.

The company has contacted the Japanese embassy in Beijing and is preparing to recall about 30 people.

The Japan External Trade Organization says about 160 Japanese companies are operating around Wuhan, half of which are related to auto manufacturing.

Other Japanese companies are also expected to consider whether they will recall their staff in Wuhan.​

Anyone know if Tesla relies on parts made in Wuhan, whether in Shanghai or in Fremont?

Macros: Nikkei is down by about 1.6%

 

[deffu]

To those playing with leverage:

I believe you should now seriously be considering the possibility of an early 2020 Asian recession caused by coronavirus and what impact this might have on your position. We are probably at a tipping point over the next month where the crisis will either quietly abate or we are looking at a serious public health emergency. I am not a public health expert but feels to me that the risk of this recession should no longer be priced as a Black Swan but something resembling a stressed base case. None of this it to say that we might be looking at very high mortality rates but it could cause a serious knock to economic confidence if the situation persists into months rather than weeks. A lot depends on whether international agencies are being given accurate information or whether things are worse than is being reported. Difficult to disentangle fact from fakenews given the typical tendencies of authoritarian governments to underplay risk versus the unsourced alarmism prevalent on social media.

To those with a buy-and-hold strategy:

Keep calm and carry on.

I agree there is over optimism sentiment after this bull run.

I wonder if this crisis will have much of an impact on Tesla's production in Q1. Aren't GF3 and its supplying companies closed next week because of the Chinese New Year? That means any transport restrictions for workers will only start having a negative effect in one week's time. GF3 is probably still at max. 1,000 cars per week, with one shift. The second shift, raising that number to 2,000 per week, is supposed to start mid-February, according to some reports. If GF3 would suffer a lock down until mid February (three weeks from now), it would produce 2,000 cars less than planned. Not trivial, but also not hugely important to Tesla's finances in Q1. So not the disaster the shorties are hoping for. Ofcourse it all depends on how long a possible lock down would last, if the virus affects workers and if there are enough parts/supplies when production starts up again.

I doubt GF3's production would be affected by the virus outbreak. I believe most of their workers are from rural area across the country. It is very unlikely that they live in those cities on lockdown. Unless things get much worse, most of them should be able to return to the factory after Chinese new year. As for the MIC M3 demand side, Im not sure what would happen in lie of virus breakout.

 

[ammulder]

Yeah, being forced to live in your Tesla might not be so bad! NetFlix, video games, e-mail, phone, text.
I wonder if, for tax purposes, I could designate mine a home office?

I've been predicting the next major refresh of the Model X will include a built-in Keurig...

 

[Prunesquallor]

I've been predicting the next major refresh of the Model X will include a built-in Keurig...

Yes! Only one thing missing, but that has too many associations with scatalogical short-sellers.

 

[Fact Checking]

Macros: Nikkei is down by about 1.6

Nasdaq futures down about -1.3%.

 

[JustMe]

Can you elaborate as to his exact quote on Tesla (link is paywalled)? I googled around but could not find any other mention of it and he has not updated his blog.

Damodaran has a very big following amongst value investors (and he has been both short and long on Tesla at various times based purely on his financial model). If he is long Tesla at this point it would be amazing.

Crud! I read it for free earlier but now I’m paywalled. The article is not long. That was the gist, I thought

 

[Cherry Wine]

Nasdaq futures down about -1.3%.

A couple percentage point derisking event sounds about right to me. Traders have had all weekend to digest a lot of alarming headlines (and thankfully some decent ones).