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☕ Tesla’s got game and it ain’t over by a long shot

Sep 05, 2024

Good morning! 👋

Both the S&P 500 and Nazzy are in play today.

Cool beans!

The strong feed when the meek retreat.

Here’s my playbook.

1 – More from the Be Careful What You Wish for Department

I’ve been harshly critical of the Fed for a long time, saying repeatedly that trusting JPow and his bunch of merry marauders to get “fixing” inflation right is a mistake.

Remember what we’re dealing with.

Team Powell missed the crisis in formation, got transitory wrong and now cannot recognize the error of their ways when it comes to labor and rates.

Loads of people have told me I was off base, and that the Fed knows what it’s doing.

That’s changing quickly.

Just yesterday, in fact, one of my harshest critics called me to say sheepishly he’d lost his job and that his son couldn’t get one... and that “the Fed should lower rates, d____it.”

Funny how that works.

It’s a very different story when real life hits home.

At the risk of sounding like a broken record, the Fed has already caused the next three crises.

So, as you read this morning's headlines about August payrolls – which rose by the smallest amount since 2021 and which are waaaaaaaaaay below estimates – and layoffs which have increased by the most in 20 months – remember that Powell wanted this.

You can’t cool an economy without hurting lots of people.

What’s next?

Traders will likely interpret this as giving the Fed more reason to cut rates. So, they will try to “front run” the anticipated September rate decision even though inflation is still running higher than Team Powell’s 2% target (which is made up out of thin air, btw); and,
Investors, meanwhile, should continue to focus on buying companies with returns substantially higher than inflation itself and which can succeed despite the Fed.

It’s a very short list.

If you’re part of the OBA Family, you know what this means for your money. If not but you’d like to be, I’ll be here and consider it an honor to welcome you aboard.

2 – Now Bostic wants a rate cut??!! 🤦‍♂️

This is rich.

Atlanta Fed President Raphael Bostic has been one of the most hawkish of all voices, insisting that rates need to be kept higher for longer.

Now he’s done a 180 and apparently wants a rate cut saying that the Fed can’t wait until inflation hits the 2% target because doing so “would risk labor market disruptions that could inflict unnecessary pain and suffering.” (Read)

Makes me wonder if he’s angling for Powell’s job.

Hmmm. 🤔

3 – Tesla, hooyah!

I told you point blank that this April’s swoon would more than likely turn out to be one of the best buying opportunities in recent years.

I hope you paid attention, even if you were part of the bash Elon crew at the time.

Tesla shares have now risen 65.60% from $138.80 to $229.72 where they’re trading as I type.

Short term traders are abuzz over news that Unka Elon will roll out self-driving tech in 2025 in Europe and China but I’m more focused on the bigger picture. (Read)

I believe Tesla retakes $300 by year end and is several multiples higher a few years from now.

Impossible?

That’s what critics have said for a long time, yet Tesla has returned 1,447.93% over the past 5 years while the SPX has turned in 86.90% as I look at my screens.

MyPOV: The game ain’t over by a long shot. Most investors fail because they don’t own enough of the right companies. Simple as that.

4 – Google's $100B headache just got worse

Too little, too late.

That’s what I called Google’s attempt to keep up with ChatGPT when it caught team Pichai flatfooted.

The company’s already lost $100B+ in market value but I think there’s more ahead.

Google’s abused its search dominance, engages in brutal user data collection raising concerns about privacy (because it isn’t), and – this is the biggy in government speak – has favored its own products and services in search results.

Fortune reports that Bernstein is out with a note that seconds my thinking. (Read)

Putskies, short or continue to avoid – Google is still a “one-trick pony” imho.

And if you’re worried about Apple (which uses Google search) don’t be; I’m willing to bet that Team Cook is well ahead of this.

5 – Verizon, what took ya so long?!

Verizon is out with a $20B all-cash offer for Frontier Communications in a bid to boost its fiber network. (Read)

Shares of the former rose while shares of the latter dropped on the news.

I wonder what took ‘em so long.

Verizon’s fiber network is largely based in the Mid-Atlantic and Northeast while Frontier dominates the Midwest and Western US.

The deal is expected to generate at least $500M in what is being billed as “cost synergies”, substantially all of which will be paid for by consumers one way or another.

Verizon has a super attractive dividend yield of 6.45%, btw.

Begs the question if the DOJ will let that stand, though.