Tesla’s Mid-Priced Model Y SUV Will Be Incredibly Popular
In this week’s Market Talk, Ian Dyer and I discuss:
- The latest consumer sentiment report.
- What average hourly wage growth tells us about the economy.
- Why the Bold Profits Disruptification Index is blowing the S&P 500 Index away.
- A new phase for cryptocurrencies.
March 18, 2019
Paul Mampilly: This is Paul with this week’s Market Talk. Amber is on assignment. And so you guys will have to put up with me introducing Market Talk. I will be thrilled and relieved when Amber comes back because, as you’ll be able to tell, Amber is way better at this than I am.
This week we have a few things to cover. Ian is going to start things off by covering what’s on his plate. Ian, to you.
Ian Dyer: Thank you, Paul.
This week I want to go over a few of the macro-trends. Since Amber is out, I’ve been keeping a close eye on this segment of the market. What I’m seeing right now, the first thing I’m going to go over, is the jobs report. In March it was reported that there’s about 7.58 million job openings in the United States.
This is a huge number. It’s more than a quarter of a million jobs higher than what was expected. It’s a lot more than the number of unemployed workers. Actually, it’s the 11th straight month that the number of open jobs has been one million higher than the number of unemployed workers.
Right now in the jobs market we’re seeing a situation where people are comfortable leaving their jobs and looking for other opportunities where they’d be better suited or where they’d be happier. A lot of the time when a lot of people are quitting their jobs people expect that to mean that the economy is not strong, but in fact a lot of the time it means the economy is very strong.
People are quitting because they see there are a lot of openings elsewhere. They find places that they are happier and better suited. And places where they want to work more than their current job. That 11-month span really signaled a huge shift in the momentum of the jobs market. In the past 20 years before that there were more unemployed workers than there were job openings.
Now there’s a lot of demand in the jobs market, a lot of room for people to go into a different area of work and that’s very good for the economy.
Another area of the economy that we’ve recently seen some data come in for is consumer sentiment. We recently saw numbers come in for both current situation as well as what people believe is going to happen over the next year for consumer tendencies. Both of these numbers were much higher than they were in December.
We saw it bottom out in December because of the govern shutdown, the stock market was weak so there were a lot of factors that were making people pessimistic about consumer sentiment. But now we’re back about as high as we were before that. And just to give an overall, to put it in perspective, the consumer sentiment was around 90 whereas in December it was about 75.
Just in these three short months we’ve seen this data really start to ramp up higher. Before that 75 it was around 90 to 95. So, we’re right back up where we were before.
The consumer economy makes up about two thirds of GDP. So, this is a huge segment of our overall economy and the fact it is doing well and that it rebounded so strong is a great sign for the economy, in addition to the jobs report.
One of the driving factors in the consumer economy is how much money people are making. It really depends on disposable income and how much people are spending. Wage growth over the past year has grown 3.4%. This is about 60% higher than inflation, which came in at 2.1%.
That’s hourly average hourly wage growth, by the way — 3.4% higher than it was a year ago — and the fact that it’s that much higher than inflation is very bullish for the economy because it means people have more disposable income. It also means that companies have more income to pay people. The companies are making more, they dish it out to their employees and the employees go and spend it….
It’s just a cycle that keeps the economy moving strong and it’s what we are in the midst of right now.
Looking at the market, over the past 14 months the S&P 500 has not really moved. So, we believe there’s a lot of upside right now in the market. A lot of negative things were priced into the market because of a lot of fear of a recession, unemployment, geopolitical risks and things like that. But we haven’t seen any of these things materialize.
Instead, we’re seeing it go in the opposite direction where the economy is great. People are making more money. Companies are making more money. There’s a lot of open jobs and demand in the job market. All of these things combined, we believe, are very good for the market since it priced in a lot of things that have not materialized yet.
That’s what I’ve been seeing over the past week. Paul?
Paul: Thank you, Ian. Great stuff there. I just want to follow on from some of the points Ian brought up. Ian said the S&P 500 has largely been flat over the last 12 months. We don’t have the numbers today, however you know from Amber’s reporting on the Disruptification Index that we track at Bold Profits that, well, we’re blowing the S&P 500 away.
That’s because the S&P 500 is filled, to some extent, with these old companies that are really fading away. They are in decline and eventually they are going to go to zero. This is one of the reasons that we tell you to invest in the new. We tell you in our Bold Profits Daily — every single day one of our analysts is telling you — to invest in the new through some ETFs.
If you’re not reading Bold Profits, if you know other people who can benefit from it, recommend Bold Profits to them.
The other thing that I want to follow up on that Ian talked about is wage growth. The one really really great thing about wage growth that’s happening right now is the fact that there’s no inflation as a result of it. If you go back in time and study history, when there’s wage growth some of it clearly is fake because you also have inflation simultaneously going up.
Some of this is really just currency manufacturing. In other words, the government is just making money and pushing it out there. However, we are seeing non-inflationary wage growth, which is absolutely incredible. To some extent it’s really the promise of what we’ve been telling you about — it’s the benefit of all this new technology.
Before I go into my updates on industrial production, Bitcoin and Apple, I want to tell you that this video is being sponsored by my publisher. My publisher has a special deal that’s out there where you can get a special report that covers artificial intelligence, blockchain, the Internet of Things (IoT) — three incredible, phenomenal ideas that get to the heart of these mega trends.
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On to my update. I’ve told you in the past that industrial production is something I really track. When I look back through history, if a country is not making things — which is really reflected in the industrial production number — it’s usually a sign that an economy is peaking and trouble is coming. It’s rarely like where it’s in the first month, however if you see an extended period of time where industrial production is flattening out, which as you saw in the late ’90s…and then eventually you saw what happened.
Which is, we went on almost a two-decade decline in terms of actual real wage growth and all the things that really matter to us as people. Industrial production is reported monthly and it was actually up. Now, within that number there were some cross currents where manufacturing was slightly down.
It’s something we’re going to keep track of and we’ll let you know if we really see substantial weakness, because for sure it will be signaling a peak in the market. However, there’s no sign of that right now.
Now, I want to move on from inflation and follow up on something. You’ll see that last week my Tuesday Bold Profits Daily was about bitcoin and I’m really beginning to see the first real signs — the green shoots — of a new bull market in crypto. You could begin to see it this week as bitcoin began to trade for $4,000 for a little while.
You can also begin to see it where there’s a lot of people starting to enter the space. JP Morgan has issued a cryptocurrency. Facebook is working on a cryptocurrency. We ourselves have some ideas on this. Watch out in the future for something to come from us.
The other big news is Tesla revealed its Model Y. Take a look at this picture. This is what the Model Y looks like. It’s their econo-SUV if you will. A mid-priced SUV. You’ll see their pricing starts at something like $46,000. That’s going to be a pricey version of it, but they’ll eventually get to a much lower-priced version of it.
You can see this is going to be a big seller. If you look at what really sells in terms of cars in the United States, and increasingly around the world, it’s SUVs. Tesla entering the SUV market with a mid-priced SUV is great for Tesla. Their pricing, I believe, most people are going to walk into.
Because more and more people realize that an electric vehicle’s price structure is very different than a gas car. You’re front loading most of your expenses. Because you are only going to spend a tiny amount of money to refill your car charging with electricity, versus a gas car where you have to fill your tank once a week, you have to change your oil every three to four months, then there’s all the maintenance that’s associated with it because it’s a much more complicated piece of machinery.
An electric motor is much simpler and requires very little servicing. More people are going to work that out and I believe you are going to see Tesla sales really move up. Especially now that they have an SUV that’s out there.
Finally, I want to mention Apple. I’ve been seeing a lot of stuff on the smartphone market. Many of you will have seen there’s now a foldable phone by a number of Chinese manufacturers. There’s also new competitors that are coming online different ideas. Google is coming out with its own artificial intelligence-oriented phone.
There’s so much competition. You guys know that I have been negative on Apple, now, for the last three years. From the time I joined this publishing company, I’ve been negative on Apple and I’m still negative on Apple even though its price has been going up.
I would still tell you that Apple stock is a sell. They are behind on innovation and all the things they once led. Whether it be Siri or home devices or, for that matter, really even laptop computers. More and more people are beginning to choose other ones.
I still believe that Apple’s stock should be sold into any rallies. I believe their products are pretty disappointing.
Those are the things that we’re looking at for this week. We’ll have unbelievable, great write-ups coming for you this week so watch out for them on Bold Profits Daily. With that, I’m going to say for Ian, Amber and I, this is Paul saying bye.
A few days ago, Tesla unveiled its Model Y.
It’s an electric SUV that will start at $46,000, making it a mid-priced vehicle.
This is an absolutely great move by Tesla. That’s because SUVs are incredibly popular in the U.S., and, increasingly, around the world as well.
It’s also great news for SUV owners. Plugging in and recharging an electric car is much, much cheaper than filling up at a gas station.
We also talk about:
- March is the 11th month in a row where there have been more open jobs than unemployed workers. We explain why this shows us the U.S. economy continues to do really, really well.
- I’ve been negative on Apple stock for a while, and I still believe it’s a sell. We discuss why Apple is falling further and further behind in innovation.
Editor, Profits Unlimited