Connect with us

Economics

Tesla Beat Earnings But Analyst Still Says Sell

Yes, Tesla Beat Earnings — and Yes, Tesla Stock Is Still a Sell, Says Analyst

Published

on

This article was originally published by TipRanks.

For a day that marked Tesla's (TSLA) fifth straight quarter of reporting positive profits, last week's 0.7% increase in the share price of Tesla stock seemed somewhat underwhelming. Reporting earnings Wednesday night, Tesla closed trading Thursday up only modestly, and really, only barely outperforming the S&P 500's overall 0.5% move. Tesla called Q3 its "best quarter in history," with pro forma earnings coming in 36% ahead of expectations at $0.76 per share, sales of $8.8 billion about 6% better than predicted, and free cash flowing strongly -- $1.9 billion over the past 12 months. Tesla told investors Wednesday that it remains on target to produce and deliver half a million electric cars this year, despite the fact that "this goal has become more difficult" to achieve in the face of Covid-19. Cybertruck deliveries are expected to begin late next year. Even Tesla's "energy" business -- solar roofs and solar storage -- looks "poised for strong growth," said the company. Much of Wall Street applauded the news, with R.W. Baird and JMP Securities both upgrading Tesla shares to "outperform" and Piper Sandler calling Tesla a "must-own" stock, and as both Oppenheimer and RBC Capital raised price targets on the shares. One analyst, however, stood out from the crowd for his continued pessimism on Tesla: Gordon Johnson of GLJ Research says Tesla is still a "sell." Urging investors not to forget the forest for the trees, Johnson reminds Elon Musk fans that Tesla continues to rely heavily upon taxpayer-funded subsidies in the form of tax credits for the production of zero-emission vehicles (ZEV). With automotive giants such as Ford (F), General Motors (GM), and Volkswagen all ramping up their own sales of electric cars, though, soon they will not need to buy ZEV credits from Tesla to hit their fuel efficiency targets set by California and other "green" states. And this could become a problem for Tesla, says Johnson, because the sale of ZEV credits continues to make up literally all of money that has kept Tesla's profits positive these past five quarters. Ultimately, the 100%-profit revenues generated from the sale of ZEV credits will disappear, warns Johnson, noting that "TSLA, itself, describes credit sales as non-recurring in nature." Although the analyst admits that Tesla's gross margins have grown nicely, hitting 25% in the third quarter even discounting the effect of ZEV credit sales, trouble emerges a bit closer to the bottom line. Johnson notes that the company remains GAAP unprofitable but for the effect of ZEV credits.  Back them out, and Tesla would have lost $97 million in Q3. Indeed, back them out and... "TSLA hasn’t been profitable ...since 3Q19." Of course, Tesla is famously viewed by investors as a growth stock. So isn't it possible Tesla can just grow its way out of this problem? Sell more cars, and become so profitable that it no longer needs ZEVs? Maybe. But Johnson isn't optimistic. From Q2 2020 to Q3 2020, Tesla has grown its ability to produce cars to a stated capacity of 840,000 vehicles per year. Despite the added capacity, however, Tesla is only predicting that it might sell 500,000 cars this year. This seems to speak to a lack of demand for the product even at present production levels, and in Johnson's view, this lack of demand explains why Tesla has cut its prices "now 13 times in 2020 alone." Conclusion: Johnson disagrees with those who call Tesla "fairly valued" or even "undervalued" at its current P/E of more than 1,000 times trailing earnings. The analyst rates Tesla stock a sell, and continues to predict a 90% share price decline. (To watch Johnson's track record, click here) Overall, Wall Street is not as bearish on TSLA as Johnson, but is not convinced on this stock, either. TSLA holds a Moderate Buy from the analyst consensus, based on 9 "buy" ratings – but also 9 "holds" and 9 "sells." Shares sell for $420.28, and the $378.39 average price target suggests a 10% downside from current levels. (See TSLA stock analysis on TipRanks)
To find good ideas for stocks trading at attractive valuations, visit TipRanks’ Best Stocks to Buy, a newly launched tool that unites all of TipRanks’ equity insights. Disclaimer: The opinions expressed in this article are solely those of the featured analyst. The content is intended to be used for informational purposes only. It is very important to do your own analysis before making any investment. The post Yes, Tesla Beat Earnings -- and Yes, Tesla Stock Is Still a Sell, Says Analyst appeared first on TipRanks Financial Blog.

Read More

Continue Reading

Government

Pentagon Boss ‘Clarifies’ Russia & China Pose Biggest Threats After Biden Says It’s Climate Change

Pentagon Boss ‘Clarifies’ Russia & China Pose Biggest Threats After Biden Says It’s Climate Change

On Wednesday, President Biden told US troops stationed in the UK that the Joint Chiefs told him "the greatest threat facing America" is…

Published

on

Pentagon Boss 'Clarifies' Russia & China Pose Biggest Threats After Biden Says It's Climate Change

On Wednesday, President Biden told US troops stationed in the UK that the Joint Chiefs told him "the greatest threat facing America" is "global warming" - a curious pivot from "white supremacy."

On day later, the Chairman of the Joint Chiefs 'corrected' Biden, asserting instead that the biggest threats facing the US are China and Russia, according to US News, (and who allegedly had a big role in scamming half of pandemic unemployment funds to the tune of hundreds of billions of dollars).

"Climate change does impact, but the president is looking at a much broader angle than I am," Army Gen. Mark Milley, the chairman of the Joint Chiefs of Staff, told a congressional panel Thursday morning in response to a question by Sen. Kevin Cramer (R-ND) "I'm looking at it from a strictly military standpoint. And from a strictly military standpoint, I'm putting China, Russia up there."

Milley then backpedaled a bit, saying "Climate change is a threat. Climate change has a significant impact on military operations, and we have to take that into consideration."

"Climate change is going to impact natural resources, for example," he told the Senate Armed Services Committee,adding, "It's going to impact increased instability in various parts of the world, it's going to impact migrations and so on."

When asked how his assessment that Russia and China pose the biggest threats, Milley said "This is not, however, in conflict with the acknowledgement that climate change or infrastructure or education systems– national security has a broad angle to it. I'm looking at it from a strictly military standpoint."

On Wednesday, Biden spoke to US forces at Royal Air Force Base Mildenhall, where he recounted an alleged discussion which took place while he was Vice President with the Joint Chiefs in their cloistered "tank" meeting room at the Pentagon.

"This is not a joke. You know what the Joint Chiefs told us the greatest threat facing America was? Global warming," he claimed.

In response to Biden's Wednesday comments, former President Trump issued a statement.

"Biden just said that he was told by the Joint Chiefs of Staff that Climate Change is our greatest threat. If that is the case, and they actually said this, he ought to immediately fire the Joint Chiefs of Staff for being incompetent," said Trump.

Tyler Durden Fri, 06/11/2021 - 19:20

Read More

Continue Reading

Spread & Containment

Middle-aged Americans in US are stressed and struggle with physical and mental health – other nations do better

Adults in Germany, South Korea and Mexico reported improvements in health, well-being and memory.

Middle age was often a time to enjoy life. Now, it brings stress and bad health to many Americans, especially those with lower education levels. Mike Harrington/Getty Images

Midlife was once considered a time to enjoy the fruits of one’s years of work and parenting. That is no longer true in the U.S.

Deaths of despair and chronic pain among middle-aged adults have been increasing for the past decade. Today’s middle-aged adults – ages 40 to 65 – report more daily stress and poorer physical health and psychological well-being, compared to middle-aged adults during the 1990s. These trends are most pronounced for people who attained fewer years of education.

Although these trends preclude the COVID-19 pandemic, COVID-19’s imprint promises to further exacerbate the suffering. Historical declines in the health and well-being of U.S. middle-aged adults raises two important questions: To what extent is this confined to the U.S., and will COVID-19 impact future trends?

My colleagues and I recently published a cross-national study, which is currently in press, that provides insights into how U.S. middle-aged adults are currently faring in relation to their counterparts in other nations, and what future generations can expect in the post-COVID-19 world. Our study examined cohort differences in the health, well-being and memory of U.S. middle-aged adults and whether they differed from middle-aged adults in Australia, Germany, South Korea and Mexico.

A middle-aged woman looking sad sitting in front of artwork.
Susan Stevens poses for a photograph in her daughter Toria’s room with artwork Toria left behind at their home in Lewisville, N.C. Toria died from an overdose. Eamon Queeney/For The Washington Post via Getty Images

US is an outlier among rich nations

We compared people who were born in the 1930s through the 1960s in terms of their health and well-being – such as depressive symptoms and life satisfaction – and memory in midlife.

Differences between nations were stark. For the U.S., we found a general pattern of decline. Americans born in the 1950s and 1960s experienced overall declines in well-being and memory in middle age compared to those born in the 1930s and 1940s. A similar pattern was found for Australian middle-aged adults.

In contrast, each successive cohort in Germany, South Korea and Mexico reported improvements in well-being and memory. Improvements were observed in health for each nation across cohorts, but were slowed for Americans born in the 1950s and 1960s, suggesting they improved less rapidly than their counterparts in the countries examined.

Our study finds that middle-aged Americans are experiencing overall declines in key outcomes, whereas other nations are showing general improvements. Our cross-national approach points to policies that could could help alleviate the long-term effects arising from the COVID-19 pandemic.

Will COVID-19 exacerbate troubling trends?

Initial research on the short-term effects of COVID-19 is telling.

The COVID-19 pandemic has laid bare the fragility of life. Seismic shifts have been experienced in every sphere of existence. In the U.S., job loss and instability rose, household financial fragility and lack of emergency savings have been spotlighted, and children fell behind in school.

At the start of the pandemic the focus was rightly on the safety of older adults. Older adults were most vulnerable to the risks posed by COVID-19, which included mortality, social isolation and loneliness. Indeed, older adults were at higher risk, but an overlooked component has been how the mental health risks and long-haul effects will likely differ across age groups.

Yet, young adults and middle-aged adults are showing the most vulnerabilities in their well-being. Studies are documenting that they are currently reporting more psychological distress and stressors and poorer well-being, compared to older adults. COVID-19 has been exacerbating inequalities across race, gender and socioeconomic status. Women are more likely to leave the workforce, which could further strain their well-being.

A older women hugs her daughter.
Middle-aged people often have parents to take care of as well as children. Ron Levine/Getty Images

Changing views and experiences of midlife

The very nature and expectations surrounding midlife are shifting. U.S. middle-aged adults are confronting more parenting pressures than ever before, in the form of engagement in extracurricular activities and pressures for their children to succeed in school. Record numbers of young adults are moving back home with their middle-aged parents due to student loan debt and a historically challenging labor and housing market.

A direct effect of gains in life expectancy is that middle-aged adults are needing to take on more caregiving-related duties for their aging parents and other relatives, while continuing with full-time work and taking care of school-aged children. This is complicated by the fact that there is no federally mandated program for paid family leave that could cover instances of caregiving, or the birth or adoption of a child. A recent AARP report estimated that in 2020, there were 53 million caregivers whose unpaid labor was valued at US$470 billion.

The restructuring of corporate America has led to less investment in employee development and destabilization of unions. Employees now have less power and input than ever before. Although health care coverage has risen since the Affordable Care Act was enacted, notable gaps exist. High numbers of people are underinsured, which leads to more out-of-pocket expenses that eat up monthly budgets and financially strain households. President Biden’s executive order for providing a special enrollment period of the health care marketplace exchange until Aug. 15, 2021 promises to bring some relief to those in need.

Promoting a prosperous midlife

Our cross-national approach provides ample opportunities to explore ways to reverse the U.S. disadvantage and promote resilience for middle-aged adults.

The nations we studied vastly differ in their family and work policies. Paid parental leave and subsidized child care help relieve the stress and financial strain of parenting in countries such as Germany, Denmark and Sweden. Research documents how well-being is higher in both parents and nonparents in nations with more generous family leave policies.

Countries with ample paid sick and vacation days ensure that employees can take time off to care for an ailing family member. Stronger safety nets protect laid-off employees by ensuring that they have the resources available to stay on their feet.

In the U.S., health insurance is typically tied to one’s employment. Early on in the COVID-19 pandemic over 5 million people in the U.S. lost their health insurance when they lost their jobs.

During the pandemic, the U.S. government passed policy measures to aid people and businesses. The U.S. approved measures to stimulate the economy through stimulus checks, payroll protection for small businesses, expansion of unemployment benefits and health care enrollment, child tax credits, and individuals’ ability to claim forbearance for various forms of debt and housing payments. Some of these measures have been beneficial, with recent findings showing that material hardship declined and well-being improved during periods when the stimulus checks were distributed.

I believe these programs are a good start, but they need to be expanded if there is any hope of reversing these troubling trends and promoting resilience in middle-aged Americans. A recent report from the Robert Wood Johnson Foundation concluded that paid family leave has a wide range of benefits, including, but not limited to, addressing health, racial and gender inequities; helping women stay in the workforce; and assisting businesses in recruiting skilled workers. Research from Germany and the United Kingdom shows how expansions in family leave policies have lasting effects on well-being, particularly for women.

Middle-aged adults form the backbone of society. They constitute large segments of the workforce while having to simultaneously bridge younger and older generations through caregiving-related duties. Ensuring their success, productivity, health and well-being through these various programs promises to have cascading effects on their families and society as a whole.

[Get the best of The Conversation, every weekend. Sign up for our weekly newsletter.]

Frank J. Infurna receives funding from the National Institute on Aging and previously from the John Templeton Foundation. The content is solely his responsibility and does not necessarily represent the official views of the funding agencies.

Read More

Continue Reading

Economics

Inflation In Context: A Liquidity Adjusted CPI Index

First, folks, please send your prayers, thoughts, good feelings, positive energy, miracles, healing touch, whatever you got, and whatever it takes to GMM’s beloved Carol K., who keeps battling, never giving up against a serious disease in Boston at…

Published

on

First, folks, please send your prayers, thoughts, good feelings, positive energy, miracles, healing touch, whatever you got, and whatever it takes to GMM’s beloved Carol K., who keeps battling, never giving up against a serious disease in Boston at one, if not the best hospital in the world.  Even in her critical condition, she contributed to this post — though she may not agree with all its final points.  She’s truly an amazing and incredibly strong human being.  Semper Fi and Godspeed, CK.  

We had a few requests to write up something about today’s hot U.S consumer price inflation data. So we put together a quick note in honor of our friend from down in the Land of Oz, GMac, one of the most decent human beings on earth. He is one proud father of a super studly 18-year son, who is an incredible surfer and someday wants to surf Mavericks.  God. Bless. His. Soul.

Let us preface our inflation note with one of our favorite quotes:

World War II was transitory – GMM

Recall our post in January, Ready For 4 Percent CPI By Mid-Year?, when we speculated the U.S. would be experiencing 4 percent inflation, possibly 5 percent by mid-year.  We were beaten down like a red-headed stepchild (I am at liberty to say that as I have been a ginger most of my life).

GMM was also one of the first to point out the base effects (12-month comps) would kick in April and May 2021 due to the deflation that troughed last year from the COVID crash.  But don’t be gaslighted the lastest few month-on-month core prints essentially negate the base effect excuse for high inflation as three-month core CPI is now running at 7.9 percent on an annual basis.

We don’t know for certain if inflation will stick and move higher or lower but as better folk we are taking the over, however.

Liquidity Tsunami

We do know the major global central banks have pumped in a shitload of high-powered money into the global financial system over the past year — as in around $10 trillion, close 50 percent increse of their collective balance sheets.   Here’s Dr. Ed’s excellent chart,

Moreover, banks now seem eager to start lending, thus creating more endogenous money on top of the trillions upon trillions of base money central banks have already injected.

Transitory?  Yeah, right.   

It’s not a question whether the Fed has the tools to reign it in, it’s do they have the ‘nads?  Given the multiple asset bubbles that would burst, and bust spectacularly, if the Fed draws it word,  we seriously doubt it. 

The following chart from Dr. Ed also illustrates not only has the digital printing press been working overtime, the credit system is just fine and dandy as deposits are expanding.  Don’t be confused by, yes, the base effect, as the money aggregates have a much large base to grow from they did a year ago before the pandemic.

Tough to beat comps after expanding over 25 percent 

Note, these are monetary aggregates, which include cash in circulation, bank deposits among near money and other short-term time deposits, not the expansion of the Fed’s balance sheet, though it does hugely influence the data.  

This image has an empty alt attribute; its file name is yardeni.png

Big spurts from the digital printing press without a credit crisis and an impaired financial system — as was the case after the Great Financial Crisis — will almost always generate inflationary pressures.   Stimulating demand without production during a supply shock is not optimal unless carefully targeted to those who need it most.   

It’s very amusing to us to see the FinTweets, “peak inflation has arrived.”  True, if the financial markets crash.  But what do they base their conclusion on?  A warm feeling in their tummy?   

Show me the money data, Jerry.  

Banks Itching To Lend

Banks now seem eager to start lending, thus creating more endogenous money on top of the trillions of base money central banks have injected.  

Loans are “starting to pick up,” and there’s plenty of borrowing capacity because companies have unused credit lines, {BofA CEO Brian ]Moynihan said. Loan growth has been a challenge across the banking industry because many consumers and businesses are sitting on cash from savings and stimulus during the pandemic. – Bloomberg, June 6

This should send shivers up the Fed’s spine, but we are not so sure.  We are also not so sure they are not flying blind and will again miss the next big one just as they have in the past. 

The Chart: Liquidity Adjusted Inflation. 

It’s late and we want to present the chart in honor of GMac. 

We have taken the non seasonaly adjusted year-on-year change of CPI and subtracted a scaled up version of the Chicago Fed’s  National Financial Conditions Index (NFCI), which measures how loose or tight monetary conditions are in the U.S..  It’s has been running at an extreme historical low — i.e., very loose financial conditions.   

You can see the 105 indicators it is based upon here.

We are trying to give context to the inflation data of how loose and accomodative finnancial market and monetary conditions are currently.   As you can see, today’s year-on-year CPI print less the NFCI is at the highest level since November 1990, which was in the middle of the first Gulf war, Where the Fed was facing spiking inflation due to the run-up in oil and a recession.  

Prior to that our adjusted inflation index hasn’t been so high since the high inflation late 197Os and early ‘80s.  Gulp. 

Clearly, it is a different environment in today’s economy.  In fact, just the opposite – the economy is ready to roar for the next several quarters as consumers are flush with cash, the supply chain is still a mess due to the “bullwhip effect” (more on this in a future post), and new businesses should be looking for credit and loans to rebuild and start new ventures.    

Most of all, folks, the central banks still have their pedal to the metal and balls to the walls, and as we all know (well some of us),

Inflation is always and everywhere a monetary phenomenon in the sense that it is and can be produced only by a more rapid increase in the quantity of money than in output. – Milton Friendman 

The Upshot

Inflation is way too high given exremely easy financial and monetary conditions.  There will be blood. 

Finally 

Life is transitory. 

Inflation has eroded my purchasing power in my transitory life.  Bring back the $.35 Big Mac, which was only about 20 percent of the minimum wage.  Now?  About 40-50 percent.  Enough to spark a revolution. 

Finally, the Democrats should begin to worry.

Stay tuned. 

Read More

Continue Reading

Trending