Why Tesla’s Stock Beats Ford
Tesla Inc. (Nasdaq: TSLA) reported earnings Wednesday — cue the negative headlines!
Forbes: “Ford Beats Tesla, Again”
The Wall Street Journal: “Tesla’s Growth Story Nears Final Chapter”
Today, I want to give you irrefutable evidence that Tesla’s growth story is just beginning. I’ll draw parallels to early Amazon and Netflix to prove why.
Plus, I’ll share my millennial trend of the week: how millennials are changing corporate communication.
Click below to watch this week’s video and get the full scoop.
July 22, 2019Amber 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 with you, our readers, and giving insight into what’s on our radar. Today’s outlook is for the week of July 22, 2019. I’ll begin 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 U.S. economic releases and upcoming releases. Then I’ll highlight major U.S. companies that will be reporting their earnings this week. The second will be the latest performance numbers on our Disruptification Index. Lastly, I’ll wrap this week’s update up with the Good News Roundup. Let’s get started.
U.S. retail sales for June released last Tuesday helped prove our continued sentiment here at Bold Profits. Simply put, U.S. retail sales surpassed expectations and showed consumer spending amongst a strong labor market and noticeable wage gains continues to aid overall economic growth.According to the U.S. Census Bureau and Bloomberg, a study of a subset of consumers and their spending habits is so great that it’s for the record books. This subset is known as the retail control group measures the retail performance of retail sales less food services, car dealerships, gas stations and building materials stores.Over the second quarter, this column chart shows that this special subset of consumer retail sales was so robust it was the strongest sales recording on record since 2005. Also last week we saw the U.S. consumer sentiment gauged by the University of Michigan Consumer Sentiment Index. What we saw is that it moved higher.The preliminary reading for July rose higher to 98.4 versus 98.2 in June, reaching the highest level in 15 years. As this line chart shows, this index’s rise is in step with the continued stock market gains, a tight labor market and better income. In all, consumers predict that they’ll be better off financially this time next year.This week we can look forward to six major economic releases. As you can see in this graphic, on Tuesday existing homes sales for June will post at 10 a.m. On Wednesday, the July preliminary reading for manufacturing PMI will post at 9:45 a.m. Also on Wednesday, new home sales for June will post at 10 a.m.
On Thursday the preliminary prints for durable goods orders and wholesale inventories will be released at 8:30 a.m. On Friday, the second quarter advanced reading for annualized GDP quarter over quarter will post at 8:30 a.m.
Also this week, 202 U.S. companies are on tap to release earnings. Some of the largest companies we’ll hear from are Anthem Incorporated, Boeing Company, Ford Motor Company, Facebook, Google and Comcast.
My innovation story of the week highlights how charging your Tesla will get more convenient when you’re on the go. Electric.co reports that Tesla has recently published a newly updated map showing where upcoming supercharger locations will be located around the world. As this map shows, Tesla has added several stations, including Iceland, Central and Eastern Europe.
Currently, the supercharger network consists of 1,533 stations, with 13,344 superchargers. Tesla has been talking about more than doubling that network over the next year.
Turning to our Disruptification Index, as this chart shows, the index continues to outperform major indices year to date. It’s up 33% versus 22.8% on the Nasdaq and 16.4% on the Dow.
Lastly, here are our three Good News Headlines to carry with you this week. Good News Roundup story number one: A report shows you can now close on your mortgage faster. According to Housingwire.com, LendingTree data shows that homebuyers are now getting in their homes 11 days faster than in 2018.
Part of this acceleration is due to increased digitization and financial technology known as fintech. It’s transforming the industry.
Good News Round number two: From TechnologyNetwork.com, recently reported that researchers are using tobacco crop land to grow medical and industrial proteins. According to the article, researchers at Cornell University and the University of Illinois are growing genetically engineered plants on a large scale outdoors, which they find is beneficial.
The market for biologically derived proteins is forecast to reach $300 billion in the upcoming years.
Good News Roundup story number three: Here’s a great goal to have. According to FinancialAdvisor.com, almost 40% of U.S. homes are mortgage free. According to Zillow data, analysis showed that 37% of U.S households no longer have a mortgage to pay. Per the article, “This number ticked upward after the Great Recession and over the past 10 years the share of homeowners paying off their mortgages has risen 5.5%”
That’s it from me for today. Hudson, tell us what you’re watching.
Hudson Cashdan: Thank you, Amber. This week in the IPO market there’s a couple interesting IPOs coming. Livongo is one. They are helping people manage their health conditions by prompting them and monitoring them in real time.
Health Catalyst is another one. Those are both coming toward the middle or end of the week. Health Catalyst is doing some interesting things trying to take siloed data and trying to find patterns in it and make recommendations from it.
More generally in the IPO market, I saw some interesting stories on SEC Chairman Clayton, requesting comments and in a period of gathering information. They are getting ready to streamline a lot of the different types of IPOs and various forms of exemptions. They want to streamline that to make it easier for companies to raise money at an earlier stage than they are currently raising it on the main markets.
Right now what you’re seeing is a big backlog. You are seeing a lot of companies come public that have been private for a long time. They are essentially very mature and a lot of value has been created and there’s more to come. If you can get in earlier, you can get even more of that upside.
You’ll get some more of the earlier companies coming to the market for their capital instead of going to the venture capital firms. That’s an interesting thing. I’m looking at that to see how it develops. It’s probably several months away.
In crypto news, which I know a lot of people are interested in, including people in this group, I saw that Fidelity got approval for their crypto trust product from the New York State Financial Services, which is a big deal. I know that Bakkt, which is another crypto-clearing player who is backed by Intercontinental Exchange that owns the New York Stock Exchange, also applied.
I imagine they are not very far behind Fidelity in getting their approval as well. That’s very positive for crypto, especially because you need these institutions in place for the big institutional money to come in and start buying it for their clients. That’s a big deal.
The other thing I read about is Swift. Swift is feeling the heat from crypto and they are trying to juice up their clearing. That’s how international banks clear amongst themselves. They’ve tested something that got it down to 13 seconds and they can do that 24/7. That’s positive too.
Crypto is lighting a fire under the existing institutions. They will be around for the foreseeable future, but eventually the new will eat the old as we like to say. I think that’s going to happen. In the meantime, at least the old is trying to up their game to delay the inevitable for a little longer.
That’s what I’m seeing. Paul?
Paul Mampilly: Hey Hudson. I’m glad to see you’ve recovered this week. No jiu-jitsu this week? Did you stay away?
Hudson: No, I just didn’t get scratched by anybody.
Paul: I’m glad to see everything is back. We had readers write in who were concerned for you. Also, there were some big winners last week in the IPO market.
Hudson: Medallia was up big. Right now I’m going to look at Adaptive. It has been initiated by a lot of the banks today. We’re seeing a lot of buys and outperforms. One or two neutrals. I’ll keep a lookout on that. I think it’s going to be positive. It was generally a positive week last week.
Paul: Following on from what you were saying on crypto, Ian used to do Market Talk and is now doing his own videos. He made a well-received video on Bitcoin and crypto. He gave you some of the rationale of what Hudson is talking about and why the government and central bankers are all focusing on it.
They can see the enormous disruptification factor. If you think about what Amber has been talking about for a couple weeks with interest rates, it certainly looks like central banks no longer have control of interest rates on some level.
Hudson: I think shared an article last week about millennials and Gen Z having almost no brand loyalty to their banks. They look at them as a utility and will switch from one to another overnight depending on who is giving them something better.
Paul: I think it’s more than that. Ian talks about using apps instead of banks. In particular, the Cash App among 20-year-olds they have facilitated that. You can store the money within the app and they have issued a debit card. You no longer have to have a bank account. That is becoming a rising practice.
Hudson: Not Amber, but you and I are probably old enough to remember when people would actually look at their banks as a source of income. You could get an interest return. You’d put your money in a bank and actually get paid. Now you’re paying them to hold your money.
Paul: That was my second point. Central banks have lost control over interest rates. Second is that people used to put their money in the bank to make money. Now you essentially pay the bank to keep your money there. On top of that, they used to take your money and lend it to people who needed it.
Banks no longer do that. If you don’t need money, they are happy to lend you money. If you are already rich, already have a ton of money, they will happily give you more at very low interest rates. If you actually need it, you are a growing business, you need it and there’s any element of risk, they are not interested.
Hudson: We’re of course talking about the major banks. The Chases of the world and the Bank of Americas. There’s still local banks that do that a little bit more, but the relationship that people had with their local bankers where they would work with you and they would help you, there’s no personal relationship anymore. There’s zero loyalty.
Paul: That’s right. This gets to my final point on why I believe disruptification is coming like a tornado for finance and insurance. All of these companies have been coddled and protected. They have been responsible for all the bad stuff that’s happened for the last 20 years.
Hudson: The only thing protecting them is the legal system. The banks are protected from competition. We can’t start a Banyan Bank because we have a great idea for a bank and we know how to run it better. We cannot do that. We would have to get a federal banking license, which requires being in the club essentially.
Paul: That’s right. The financial system is now mistrusted. No one believes they act in our interest, that they have our best interest at heart or that they are even willing to do the right thing. For the next several months in all likelihood in Profits Unlimited we are going to focus on getting more fintech, regtech, cryptos even.
I believe that with the Federal Reserve looking to cut, it’s going to light a fire under these stocks, under cryptos. Even if you go back and look at the video I made on my own version of FANG called STUF — Spotify, Tesla, Uber and Facebook — Uber and Facebook are right in the middle of trying to get into the fintech game.
Tesla has said they want to get into the insurance business. Warren Buffet has said to bring it on. I’m telling you, I’d rather bet on Tesla than Warren Buffett. I know those are big words, but that’s what I would do if I were looking at it. Tesla has firsthand data from actual behaviors of drivers versus looking at proxy data.
They know exactly what someone does with their car. They know. They can price risk in a way that no insurance company can. Insurance companies fallback on legacy thinking, old ways of thinking. I’ve made a video saying that I know Warren Buffett has been great, but if you look at the portfolio Berkshire Hathaway has it’s filled with banks, insurance companies, processed food companies, sugar that causes diabetes.
I say personally, no thank you. These are all the things me and a lot of people are looking to avoid.
Hudson: Paul, I think you’re right. Warren Buffett is really misunderstood in terms of what he’s all about as an investor. We could write a whole article on that. He’s figured out one thing early, but it doesn’t work anymore. He leveraged his insurance float. So instead of investing the money in conservative bonds, he invested it in conservative stocks that turned higher.
He leveraged up and did well, but for the last couple decades I think he has been struggling.
Paul: That’s right.
Last thing before this gets too long. The S&P 500 is near this numerical barrier: 3,000. What it tends to do is make people want to bet if it’s going to go over 3,000 or stay under 3,000. There will be some churning that happens around it. The Dow is getting near 28,000 and Nasdaq is past the 8,000 mark.
What we have seen in the past is that when the indices get to these markers, there tends to be churning. People naturally want to bet on these things as purely numerical bets. However, I am incredibly positive on what is going on. I know the news that comes out from earnings will be mixed.
Just remember this one thing that important: The markets are never looking behind, they are looking ahead. They look ahead as much as 12 to 18 months. Whatever you are seeing about this quarter, let it not make you go, “Everything is terrible, let me sell everything!” Remember, we look ahead.
Markets anticipate and when we look ahead what we see is a continuation of the conditions we have now experienced for a number of years now. I am still positive about what is going on. If you belong to one of our services, make sure you stay in our stocks. Come back to Bold Profits Daily where we tell you things as they really are, versus what MarketWatch or Yahoo! Finance.
My experience is they focus exclusively on the negative as far as I’m concerned. Amber, on that note, back to you.
Amber: Thank you, Paul. Thank you, Hudson. Thank you for the positive insights and commentary, we appreciate that. Thank you to our viewers this week for tuning in to the Paul Mampilly YouTube channel. If you like this channel, please subscribe, comment and share. Until next time, take care and have a wonderful week. Bye bye.
Editor, Rapid Profit Trader