Elon Musk Plays Another Round of Twitter Roulette
Tesla (NASDAQ:TSLA) CEO Elon Musk has decided that he hasn’t had enough trouble with the SEC and Twitter regarding financial disclosures about his company, so he’s going for another round. Tweeting “250K” yesterday suggests that Tesla has had 250,000 preorders for its Cybertruck. A preorder costs $100 and doesn’t obligate anyone who buys one to actually buy the Cybertruck. So effectively it might just be 250,000 donations of $100, which translates to a cool $25 million. The terse nature of the tweet however, could be defended, since Musk could theoretically tell the SEC that he was referring to the weather in northern Greenland on the Kelvin temperature scale, or Mars, where somewhere it’s probably -23oC. This may become known as the Kelvin Defense if it comes to it.
Papa of Papa John’s Bemoans Namesake Pizza
John Schnatter, former CEO and Chairman of Papa John’s (NASDAQ:PZZA) who was ousted over matters of political correctness, is crestfallen about the current state of pizza coming out of the company he founded. He’s been eating a lot of pizza just to make sure, and he says he’s pretty sure. “I’ve had over 40 pizzas in the last 30 days, and it’s not the same pizza. It’s not the same product. It just doesn’t taste as good. The way they’re making the pizza is just not fundamental to what makes a Papa John’s pizza,” he said in an interview with WDRB Kentucky. Schnatter was ousted over a role-playing phone call in which he used a racial slur as an exercise in what to do when someone uses a racial slur. He was then accused of racism and forced to resign for playing the role of a racist for training purposes during a private phone call. “I never dreamed that people that I cared about, that I loved, that I made multimillionaires, would do what they did,” Schnatter said. Whether he intends to open up a competing pizza chain perhaps called Father Schnatt’s remains an open question.
Car Sales Falling, Manufacturing Taking the Hit
Fitch Ratings is getting worried about the state of the automobile industry. “The downturn in the global car market since the middle of 2018 has been a key force behind the slump in global manufacturing, and the car sales picture is turning out a lot worse than we expected,” said Brian Coulton, chief economist at Fitch. At the current rate, global auto sales will fall by 3.1 million for the year, a massive 4% decline, and this after a decline last year as well. China is the epicenter of the decline, where sales have fallen by 11% this year as a result of lower government subsidies for electric cars. Coulton sees little prospect of a pickup in sales for 2020. The auto market is heavily dependent on ultra low interest rates, which allow consumers to buy cars they wouldn’t otherwise be able to afford due to the high monthly payments required. Meaning, if and when interest rates rise, the situation will almost certainly get worse. US car stocks are feeling the hit, too. Ford (NYSE:F) for one has been on a downtrend and cut in half since 2013. It now pays over a 6% dividend. General Motors (NYSE:GM) has been treading water since it was bailed out following the 2008 financial crisis.
World Trade Volume Falling Fast
According to the CPB Netherlands Bureau for Economic Policy Analysis, world trade volume decreased 1.3% in September compared to last September. Growth was only 0.5% in August. World industrial production clocked in at an increase of 0.2% after decreasing by the same in August. Momentum in industrial production was also down 0.1%. This is the fourth consecutive month in which global trade volumes have contracted. The decline began last November when the trade war between the US and China started kicking in with tariffs from both sides.
Greenspan Knocks Trade War
Alan Greenspan has emerged from the shadows once again to state the obvious on Fox Business. “There’s no question that the type of tariff structure that we have had and the customs that are flowing in has been a significant deterrent to economic activity,” he told Fox’s Maria Bartiromo. He said that if the world can come together so that there is a maximum amount of interaction and trade, economies will rise faster, which will be reflected in stock prices. In other words, the economy is people exchanging stuff they are efficient at producing in exchange for things that they are unable to produce as efficiently. Hence goods and services circulate on the planet at the lowest possible cost, increasing the standard of living for all. Except if there’s a trade war, it won’t work as well.