Impeachment Panic Overblown: Tesla, Amazon Soaring
Politics and the stock market do not mix.
With all the talk of impeachment and the U.S.-China trade war, I have to remind you to have strong hands.
People let their emotions get the better of them when deciding whether to buy or sell.
But not us.
I’m here to reassure you that there’s nothing to fear when it comes to the stocks and trends that we’re following.
New-world companies that embrace technology are primed to soar despite the political climate. We talk about a few this week, including:
- WeWork: Its step back from its initial public offering (IPO) until next year and why the company’s rebranding will be great news for investors.
- Amazon: How the company is outpacing Apple with 15 new tech inventions for its Alexa technology.
- Tesla: Elon Musk’s leaps forward with his SpaceX tech and how Tesla’s going to keep up.
Check out this week’s Market Talk below:
September 30, 2019
Amber Lancaster: Welcome to this week’s Market Talk. I’m Amber Lancaster, joined by Paul Mampilly and Hudson Cashdan. Each week we look forward to sharing our viewpoints and giving insight into what’s on our radar. Today’s outlook is for the week of September 30, 2019. I’ll being by sharing with you what I’m watching and then we’ll hear from Hudson and Paul.
Today I’ll cover three major topics. The first will be my take on recent and upcoming U.S. economic releases. Then I’ll highlight my innovation story of the week with our Good News Roundup and end with the latest performance numbers on the Disruptification Index. Let’s begin.
First of all, we have much to look forward to this week but this week will be a big week where jobs data is concerned. On Friday, the U.S. September jobs report will post. The number will give us an understanding of the current extent and pace of U.S. hiring. Last week we saw good news on the wage and salary income front.
August’s personal income poste the largest monthly gain since March, coming in at 5.3% year-over-year gain easily beating the rate of inflation. This is all while consumers August personal spending increased 0.1%. This was a smaller gain, the smallest since February. Overall, Americans did spend less than anticipated in August, even after their incomes rose.
It’s also worth noting even though personal spending wasn’t as robust as anticipated, the U.S. personal savings rate ticked higher, reaching 8.1% in August. Despite the apparent tightening of consumers’ purse strings in August, GDP growth is still on track to remain buoyant throughout the year hovering around 2%.
Also last week, the final September print for the University of Michigan consumer sentiment index posted an increase amidst the ongoing tensions surrounding the U.S.-China trade war. The reading was 93.2, a rebound after August’s decline.
This week where economic releases are concerned, there will be eight major economic releases. On Tuesday there will be three releases: September’s final market U.S. manufacturing and purchasing managers index will post at 9:45 a.m., September’s Institute of Supply Management manufacturing index will post at 10 a.m. and August’s construction spending month-over-month will post at 10 a.m.
On Wednesday, August new home sales will post at 10 a.m. On Thursday, August’s final durable goods orders and factory orders will post at 10 a.m. On Friday, we will see the August trade balance and the U.S jobs report at 8 a.m.
Now for my innovation story of the week, get ready for the electric vehicle (EV) you can subscribe to. A Torrence, California electric car startup called Canoo has created a vehicle that is affordable and a subscription-based concept for people who may be hesitant to buy or lease their very own electric vehicle.
This EV thinks outside the box. Check out this photo of the new Canoo. According to this company, there is no need for EVs to look like traditional cars. Hence this seven-seater, pod-like cross between an SUV and minivan. This car subscription is for everyone with a special focus on millennials and Gen Z.
To lease or buy an EV can run around $900 per month including insurance. With a Canoo month-to-month subscription service the company says, “You own the car, we will take care of the car, we will maintain the car, you just pay the monthly fee. You can walk away at any time.”
Plus, their planned affordable subscription includes maintenance, insurance and other fees. The 250-mile battery range, 30 minute fast charge, 300 horsepower Canoo plans to officially launch in Los Angeles in 2021. If you’re interested in joining their waitlist, visit Canoo.com.
Now to our Good News Roundup stories. Good News Roundup story number one: Elon Musk just unveiled the “Holy Grail of space.” He’s referring to the latest iteration of SpaceX’s newly assembled Starship. SpaceX said that the Starship will “provide affordable delivery of significant quantities of cargo and people for moon bases and Mars cities.”
According to Reuters, “Musk’s mission to the moon aligns with Nasa’s mission to put humans on the moon by 2024.” The space agency has tapped SpaceX to figure out how to land vehicles on the lunar surface and help develop systems for refueling rockets in space.
Nasa has awarded SpaceX and Boeing a total of $6.8 billion to build competing rocket capsule systems to launch astronauts in orbit from American soil for the first time since 2011.
Good News Roundup story number two: According to Science Daily, scientists have figured out how to capture heat and turn it into electricity. The discovery could create more efficient energy generation from heat in things like car exhaust, interplanetary space probes and industrial processes.
Good News Roundup story number three: Even though Halloween is several weeks away, it’s not too early to get a preview of what U.S. holiday shoppers plan to spend in 2019. Per a recent survey from Harris Poll, Bloomberg is reporting that U.S. consumers plan to spend $892 per household for the upcoming holiday season.
This is up 5% from 2018. Millennials plan to spend 15% more, coming in at $990 on gifts. Dallas Lawrence, Chief Brand Officer stated, “the recession may seem to be on everyone’s lips, but based on what we’re seeing in the media we can tell you consumers are still confident in their economic situation and this holiday season should be good for retailers.”
Turning to our Disruptification Index, it’s up 19.4% versus 19.7% on the Nasdaq and 15% on the Dow. That’s it from me. Hudson, please tell us what you’re watching for this week.
Hudson Cashdan: Thanks Amber. This week we are going to be watching a new recommendation coming out. It’s very exciting. It’s in the rideshare sector of the economy. Just like the gold rush in the 1800s, there is a lot of money to be made with picks and shovels.
This is more of a picks and shovels company providing service to the massive $100 billion ridesharing industry. It’s really exciting. They’ve grown revenues more than 100% year over year. Their margins are heading in the right direction.
It’s small right now in terms of revenue. Their potential to grow, as they’re the leader in this segment of the market, is huge. We’re excited by this. Look out for this one this week.
Also, over the weekend I was listening to a podcast with a VC named Bill Gurley who is from Benchmark Capital which is one of the biggest VCs out there. He is on the board with Zillow and GrubHub and a lot of others you might have heard of. He was talking about the IPO market.
From what he is saying from the venture capital side is he is pushing very hard for companies to do direct listings. It’s not fair to the companies and their investors when the company goes IPO and the investment bankers and their clients are making money off of the pop of the IPO.
He thinks that’s money left on the table that the company should be getting. I think there’s some merit to what he’s saying but also investment banks have a job to get the valuations to a lower level for their clients who are buying the stock. We are closer to that than the sellers of the stock, which is the company.
I think it’s a healthy thing. VCs are a little bit wolf in sheep’s clothing. They try to act as if they’re a little bit more virtuous than Wall Street but they are selling too and they are trying to get the valuation as high as they can. It’s a good thing when the VCs and investment banks are duking it out.
With WeWork it was a good thing the investment banks beat them up over some of the aggressive valuations they were pushing out. WeWork was floating to the media that they wanted to come at a $40-50 billion valuation and that was just too high. Investors, including us, thought that was too high.
Investment banks beat them up over it as well as some of their corporate structures. Now they are going to go and make those changes. They got rid of the CEO and founder and they are changing some of the stock rights associated with what he owns. They are going to restructure the company and divest. Stop trying to peddle themselves as a tech company when they are more of a tech-forward real estate company.
They are very good at it so they should focus on that. When they come back to the market early next year we think it’s going to be at a much lower valuation and a much healthier corporate structure and a better investment. We’re excited about that. The end result will be positive for us.
That’s what I’m looking at. Paul?
Paul Mampilly: Even with all of this, people should still be focused on the fact that these new companies represent the new world that is being created right in front of us. We can argue this way or that way about these companies, but remember Facebook went public at $40, dropped down to $18 and is near $200.
It’s still growing at 15-20% a year. Keep your eyes focused on the prize. These are big companies that are going to set the future. That is what we’re focused on. Which is why my publisher — here comes our shameless plug — is promoting Hudson’s service IPO Speculator that Hudson and I do where we focus solely on these new companies.
As Hudson mentioned, his pick this week is right in between the Ubers and Lyfts of the world and the rental car business, which is being disrupted. Anyone who owns a car could rent their car out using this platform
This stock is, what, a couple dollars now?
Hudson: Yes. It’s come down to a nice price because of the news out of California and the general sentiment around ridesharing.
Paul: However, we know that’s the cycle of IPOs. The bankers price it high, sometimes low, sometimes the market moves it down. Either way, if you are interested in these companies that are coming public right now, just click on the Strong Hands and that will give you all the details you need to check into IPO Speculator and will give you access to the trade that is coming — when Hudson?
Hudson: I think it’s coming out Tuesday.
Paul: Tuesday is the big moment. We will reveal the trade. Click on the Strong Hands right over here.
On my side, I’m looking at what is on all the big websites. MarketWatch is leading with more doom and gloom. Yahoo! Finance has some regular stuff. I do want to cover impeachment. I was around for the impeachment of President Clinton and I can tell you politics and the stock market generally don’t mix.
It is a mistake to say to set your investing by your politics. Stay invested please. You can follow whatever it is on the political side, but please separate your emotions from the investment side.
Second thing is that last week there was a rumor that the United States was going to stop allowing China to raise money through our capital markets. Today, a Treasury official said there is nothing to that. In other words, there is a lot of panic that is trying to be stimulated into the market.
Please, once again, stay in your stocks, stay in our stocks. We still believe this market has a lot of upside. We know there’s a lot of doom and gloom being put out there. I believe this is manipulation. This is being done by people who are short the market and betting on it going down and the media that gets clicks from it.
Let’s also quickly go into some of the things going on with our well-known companies. Amber brought this up, which is that Tesla has a lot of stuff going on. An unofficial leak says that they might sell 100,000 cars. Elon has an interesting relationship with the SEC. There might be new ways to get the information out rather than Elon’s Twitter account.
They also released a new software update that has Summon. You can stand in a parking lot and the car will come to you. I have just gotten the update and I’m incredibly excited to test it out and see what it can do.
Amazon had a big event where they revealed 15 new devices. They have a ring, glasses — Amazon is really going for it. They also have allowed hundreds of devices to be embedded with Alexa. So there are incredible things going on.
While I’m mentioning incredible things, Amber has Amber’s Macro Monday. We are inaugurating it today. It’s going to be on after Market Talk. All of you who have asked Amber to put on this phenomenal macro update, please check into the YouTube channel and it will be on after.
Second not so shameless plug, please tune into us. We give you the real deal, not the doom and gloom. We’ll tell you about that when the time is right, but we focus on what is actually going on. Please subscribe to this channel, gives it a thumbs up, share it with your friends and family and comment on anything we’ve said. With that, back to you Amber.
Amber: Great insights as always Paul and Hudson. Thank you so much for sharing your thoughts with the viewers today. Thank you to our viewers for tuning into the Paul Mampilly YouTube channel.
As Paul said, if you like it, give it a thumbs up. We’d love to hear your comments as well and share this with your friends and family. Until next time, have a wonderful week and take care.
Starting today, be sure to check out Amber’s Macro Monday on my YouTube channel. It’s a new monthly series where Amber breaks down everything you need to know about the ins and outs of the market.
Editor, Profits Unlimited