Market Morning: IMO 2020 Confusion, Tesla Milestone, EV Skateboards, Boeing CEO Axed

Market Morning

IMO 2020 Causing Energy Market Flux

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New regulations from the Internationals Maritime Organization on maritime shipping will be kicking in next week mandating cleaner fuels for shipping vessels. Maritime shipping accounts for about 5% of global oil demand, and that demand will have to shift from low-demand high sulfur to high-demand low sulfur fuel. The energy market looks a bit confused as to how this is going to affect prices and other interrelated industries, and its consequent effect on world trade. “The market is in complete flux. Nobody seems to have the answers of how this will play out,” Patrik Berglund, CEO of crowdsourcing freight data firm Xeneta, told CNBC. Shipping rates will have to go up, sayis Berglund, and that could further clamp down international trade and raise consume prices. Compliance with the new regulations is expected to be around 90%. Any freighter found in violation risks being impounded.

SEE: Market Morning: US Steel Trouble, Amazon Self Ships, Starliner Fails, American Goes Non-Binary

Tesla Reaches $420, Musk Smirks

Is it Tesla (NASDAQ:TSLA), or is it just stock market fever generally? Tesla holders would mark it a distinction without a difference, since they are flying high with Tesla at new all time highs past $420. The significance of that number has nothing to do with Tesla manufacturing an EV-cannabis hybrid vehicle, which it is not in the process of doing. Rather, $420 was the per-share price tag that Elon Musk threw out in August 2018 regarding a mystery firm (or state) that was offering to take Tesla private. In the end Musk had to pay a fine of $20M for improper disclosure of trade-sensitive information. The move to Musk’s original price target drew a snarky tweet from the CEO, possibly playing off of the infamous 420 cannabis connection while poking fun at the Securities & Exchange Commission. “Whoa…the stock is so high lol,” tweeted Musk yesterday.  Tesla is up about 27% this year, and has seen both profitable and losing quarters.

Speaking of Electric Cars…

EV startup Rivian has successfully raised $1.3B, which included existing investors Amazon (NASDAQ:AMZN), Ford (NYSE:F), and BlackRock (NYSE:BLK). Rivian was founded in 2009 and plans to build an all-electric pickup truck later next year. Its claim to fame is the Rivian “skateboard” which is a one-size-fits-all chassis that combines an electric motor with batteries and controls to cut down on production costs. Rivian had already raised $2.2B and was valued at between $5B and $7B prior to the latest funding round. Amazon, besides leading the previous investment round, made a 100,000-vehicle order for delivery vans from the company, which could be related to Amazon’s recent decision to go it alone on delivery. Ford intends to have a fully electric Lincoln built based on Rivian’s skateboard in 2022.

Boeing Fires CEO Over 737 Frustrations

Heads are rolling at Boeing (NYSE:BA). The head head, in fact. After conceding that 737 MAX would be halted in 2020 when earlier suggesting that the ban on the airplane would be shortly rescinded, CEO Dennis Muilenburg had some egg on his face, and now he’s been ousted. The fallout after two fatal crashes has cost the company around $9B, and Muilenburg has been unable to successfully execute a damage control strategy. Not necessarily that any successor would do a better job, but the company felt that a change of leadership was necessary just to restore confidence. Taking over by January will be Chairman of the Board David Calhoun, formerly of General Electric (NYSE:GE) who has been with the plane maker since 2009. Boeing now admits that it does not know when the plane will be back in the air.

Orders to suppliers for parts will be suspended for a month, and the suspension is expected to knock down US GDP by about half a percentage point. The Federal Aviation Administration has since confirmed that Boeing sent it another package of documents that include a conversation between Boeing pilots that indicated that the company may have intentionally misled the agency regarding the safety systems that were determined to cause the crashes.

After Impeaching Trump, House Threatens To Impeach Trump

The House Judiciary Committee now says that it could recommend a whole new set of impeachment articles against President Trump if it finds new evidence that the President sought to obstruct investigations into his conduct. This, after already impeaching Trump and failing to send the articles of impeachment to the Senate for trial. Whether a new impeachment will be sought depends on testimony from by former White House councel Don McGahn. “If McGahn’s testimony produces new evidence supporting the conclusion that President Trump committed impeachable offenses that are not covered by the Articles approved by the House, the Committee will proceed accordingly—including, if necessary, by considering whether to recommend new articles of impeachment,” Democrat lawyers wrote. Whether this second impeachment will also fail to be passed to the Senate for trial was not directly addressed.


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