#93: Tesla in Ludicrous Mode

S2N Spotlight

Yesterday Tesla stock jumped 10.20% after its earnings announcement that growth was down. The news was bad, but not as bad as expected. I created this chart that shows 10% moves both up and down. It turns out that Tesla has had 33 moves of 10% or more in a day over the last 10 years. This is a high-octane stock. Oops, it is electric. I mean, a high-voltage stock.

S2N Observations

The US yield curve inversion is mentioned all the time. I think it is good to see a current picture of the steepness of the spread. To me, it looks like the market remains confused as to what is going to happen with inflation and the way the Fed tackles it. It is pretty easy to see and understand that the natural shape of the curve is for it to steepen. There are instruments to trade the steepness, or you could simply go short on the long end and long on the short end.

A reputable market strategist remains bullish on the Nasdaq Composite Index despite the incredible run we have had. He builds his argument by transforming the Nasdaq into a year-on-year performance, like in the blue line below, and says we are nowhere near the massive year-on-year returns of June 1983, Feb 2000, and March 2021. As of June, our YOY return is 25.67%, which is double the mean but a far cry from the really big years, and he is saying we are at the dawn of a new age with AI.

I don’t buy into the hype around AI. Of course, I believe its a big thing, and it’s going to play an amazing role in future productivity, but there are many other issues in the world. I still think it is important to share opposing views and approaches.

On the subject of hype in the tech sector. I wanted to end with a chart that looks at the performance of the S&P500 tech sector over the broad index. You can see very clearly that the ratio of tech to the broad index has never been this high. I continue to believe in a defensive approach towards tech right now.