Tesla and the S&P500 on top of the world!

Tesla and the S&P500 on top of the world!
Tesla and the S&P500 on top of the world!

While Europe struggles with its calculations to know if France will be governed by technocrats or by a guy from the extreme right named Jordan, the USA finds the strength to mark a new historical high thanks to Powell who is gently transforming himself into a dove and thanks to Tesla who added 75 billion market cap to the bill for having done “less bad” than the expectations of the “Gods of finance”. The American market continues to run on amphetamines and nothing and no one seems able to stop it. At the speed at which it is rising, the 6,000 at the end of the year are practically acquired, as is the drop in rates.

Audio of July 3, 2024


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Bull market forever

On the European side, we remain completely paralyzed while waiting for the verdict of the ballot boxes on Sunday evening. While the political leaders – each one more ridiculous than the last – appear one after the other on TV to explain what must be done to block the National Rally, the media are busy calculating the number of withdrawals in the constituencies to know where and when the RN would lose seats in the National Assembly in order to know if an absolute majority was possible. The list of candidates who were running in Sunday’s election having been completed on Tuesday evening after the market closed, the indices spent the day in the red and spent their time making plans for the comet.

The clown of the Elysée continues to manipulate things behind the scenes, even if the only certainty that these legislative elections seem to bring is that NOBODY wants him and his cardboard doll anymore. According to the latest news and according to the new projections after the closing of candidacies, the RN would recover 260 seats in the Assembly on Monday morning. So clearly not enough to have an absolute majority. It remains to be seen whether “Jordan” will still want the job of Prime Minister if his hands and feet are tied, otherwise the country will be ungovernable and that is ultimately what will please the market the most; neither the left, nor the right, nor the troopers Attal, Darmanin and Le Maire. Bruno can go back to writing books for adults and that’s it. In short, to put it simply, normally on Monday we will see things more clearly and in the meantime, we will move on to something else and then while the French market is depressed, anxious and stuffing itself with anxiolytics, we will note that Total did exactly what it had to do – technically speaking – which is to go and find the bottom of its ascending channel to bounce back as it is written in the books. Another thing that will please Jean-Luc, a CAC40 company that is making money because oil is rising like a cork.

Three axes

In the United States, while everyone is getting ready to go celebrate Independence Day and volumes are plummeting since everyone is stockpiling Budweiser and preparing tomorrow’s barbecue, all the while wondering what the next stupid thing the President is going to do to us, the market took advantage of the opportunity to set new altitude records on the Wall of Excellence on Wall Street. Yesterday, the market was focused on three axes:

1) Powell’s speech from Portugal where he was invited by Dame Christine to celebrate the ECB and do as the FED will do in Jackson Hole in August.
2) Wait for Tesla sales releases.
3) And see if the job market (JOLTS) shows signs of weakness, which would allow us to believe in a sudden rate cut, provided that Friday’s NFPs are also on the ugly side of the strength.

Given that our interests were relatively narrow, I think it’s safe to say that we got more or less what we expected – or at least, things lined up the way we wanted them to. Or at least, let’s say that yesterday’s announcements allowed us to interpret them as needed so that everything started to move upwards as one.

TotalEnergie Chart – Source: Tradingview.com

Powell

As for the head of the American central bank, he expressed himself very clearly and gave us something to eat and drink. We, as usual, took what suited us best. But to summarize, Jerome Powell, said that:

“Recent economic data showed “significant progress” but the U.S. central bank needed more data before it could cut rates.”

There you have it. You will agree with me that it was REALLY worth coming. Basically, he is happy because inflation is starting to go down again, but he will not do anything until he has assurances that we are REALLY going towards 2% – the official target of the Fed. All in all, we can say that what Powell told us touches one of us without moving the other, since the first part of the sentence is DOVISH and the second shows that he is not yet ready to be 100% DOVISH. And when we see the face of oil this month, the price of gasoline and the price of food which is taking the elevator, we are not yet certain that the next inflation figures will be as accommodative as those of last month. BUT IT’S OK, because we, in 2024, have this talent to LOOK FOR the good news, pass it over with a FLUORESCENT YELLOW STABILO and start buying again on just about everything that comes to hand. Moreover, the S&P500 started to rise again as soon as Powell’s speech ended, taking the Magnificent Seven with it. Apple finished at its all-time high, Microsoft, Google and Amazon too. Meta is dragging its feet and will need a little more time. For the other two who remain, it’s a special situation.

Employment in the crosshairs

If there is one thing we are certain of, it is that the FED REALLY wants to see a clear slowdown in employment before lowering rates. And it must be said that this is good timing, because yesterday there were precisely the JOLTS who had the power to confirm this to us. It must be said that here again, we were absolutely MAGICAL! The market was therefore expecting 7.96 million jobs available on the market and it came out at 8.14 million. So, if we have spent a little time on the benches of any school, we know that 8.14 million is BIGGER than 7.96 million. Which tends to mean that the job market is doing better than the experts expected and better than last month. And that is not really what the FED was waiting for to be able to lower rates.

BUT! Yes, because there is a BUT, a big BUT. And this big “BUT” is our ability to find THE GOOD NEWS inside the BAD NEWS, so that it suddenly becomes GOOD NEWS. And yesterday, it was necessary to remember that the JOBS that are offered this month “pay less than those of last month”. In summary, there are more jobs that are offered but FEWER JOBS with high salaries, which means (according to the EXPERTS ON WALL STREET), that the job market is slowing down intrinsically. In truth, it remains solid but it is a facade. In fact, inside everything is going to hell but in a discreet way. In short, it was reassuring on the fact that the FED will be able to lower rates as expected and that, if it turns out, the NFP’s on Friday will be filthy and everything will be for the best in the best of all possible worlds. So the S&P500 ended at an all-time high AND ABOVE 5,500 because employment is slowing and the FED is going to lower rates.

Tesla, on the road again

And then THE THIRD NEWS of the day was TESLA. Again, it’s a question of interpretation. Yesterday, the giant of green and electric cars announced its sales figures and again, it was a HUGE SURPRISE that propelled the stock 10% higher. And again, the stock stopped at 10% because there is a huge resistance that will require a little more than that to give way. Elon Musk’s company therefore announced that it had sold 443,956 cars while their own expectations were 438,000. So they beat their own targets and IN ADDITION, they are “LESS WORSE” than what Wall Street expected, since the “range” of expectations was between 420,000 and 425,000.

In addition, they managed to reduce their inventories, which should reduce the pressure on prices. So yesterday’s announcement triggered a wave of happiness and joy and the stock exploded by 10%, period. Okay. After that, we can still note that over a year, sales are still down 4.8% – but we don’t care about that, just like the fact that used Teslas are selling so badly that it’s almost more interesting to give them away than to sell them. Once again, we have the glass half full strategy and in addition analysts like Dan Ives were quick to say that the worst was behind us and that now “the only way is up, baby”. Not to mention that Musk declared that “as soon as they have solved the autonomy problems of their OPTIMUS robots, they will be able to move to mass production and “KILL” those who are short on Tesla”. We are happy. Maybe Tesla really will go to $3,000 after all, as Mrs. Wood predicted.

The rest

All this to say that even though the S&P500 is up “only” 0.62%, the day was borderline euphoric. This morning Japan is up 1%, Hong Kong is doing the same and Chinese indices lagged, falling 0.4% after mediocre PMI figures. The Caixin Services PMI rose less than expected in June, indicating that China’s services sector is slowing. This raises concerns about a bigger slowdown in Asia’s largest economy. Oil is holding above $83, gold is at $2,344 and Bitcoin has not broken higher and is falling back below $61,000.

In today’s news, it’s very thin, since the USA will close at midday to go prepare for tomorrow’s day off, but in the financial media we are talking about Biden who is still under pressure to withdraw from the race for the White House while more and more voices are being raised in this direction in the Democratic Party. France is also making headlines, but we will stop talking about it until Monday morning. We also learn that Paramount and Skydance have rekindled the flame and there is talk of a merger again. It sounds like the scenario of an American romantic comedy, without forgetting that Rivian has also done better in terms of car deliveries, the stock rose 7%. They announced 13,790 deliveries against 12,000 expected. The annual forecasts are maintained, the company is worth 15 billion and they have sold 13,790 cars. Rivian is worth more than Renault and I think Renault sells a little more cars. Okay, so they’re Renaults, but still.

Numbers

So, today is a semi-cession in New York and there will still be a bunch of numbers. We’ll start with the services PMIs and the composite in Europe, then there will be the ADP employment figures and the Jobless claims, just to warm up for Friday. Then, there will also be the composite PMI and the services PMI in the States, we will add the ISM Non-Manufacturing and the oil inventories. And as if that were not enough, there will also be the Minutes of the last FOMC Meeting, as well as Williams and Lagarde who will speak for the central banks. Even if the US will be closed tomorrow, we will have enough to fill a few pages.

For the moment futures are down 0.07%, it’s Wednesday and I’ll see you tomorrow for a new special Independence Day column. Have a great day everyone and SEE YOU TOMORROW!

Thomas Veillet
Investir.ch

“Never stop investing. Never stop improving. Never stop doing something new.” Bob Parsons

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