by Shane Ormond
On May 10, 2019
Earlier this month, it seemed like the Chinese trade negotiations would come to an amicable end any day now. But after some unexpected pushback from Beijing, the U.S. is ratcheting up the pressure with tariffs of 25% on more than $200 billion of Chinese goods.
- Investors are losing confidence in Musk… Tesla’s stock taking the hit
- Venezuela presidential crisis threatens to become a global crisis
- The West Texas Oil Boom is in full swing… and everyone’s reaping in the profits
- Investing in the biggest new sports phenomenon
Welcome to Camp Something’s Wrong
Even Tesla’s top investors don’t like Elon Musk
Tesla (NASDAQ: TSLA) stocks slumped to a four-month low yesterday, as big-money investors made a sharp U-turn on Elon Avenue.
Tweet Tweet: Over the weekend, billionaire with his foot permanently lodged in his mouth, Elon Musk, unexpectedly announced Tesla’s fifth vehicle, the Model Y SUV (over Twitter, of course). But this “surprise announcement” has done little for investor confidence.
Last night, the head global equities for Baillie Gilford, Tesla’s biggest investor, told Barron’s that Musk no longer needs to be CEO of Tesla. But “they wouldn’t be against him having a different role.”
According to the analysts at Barclays, as surveyed by FactSet, Elon’s publicity move looks less like a fun surprise and more like a bout of not-so-fun desperation.
Rather than reflecting dramatic progress on manufacturing and distribution costs, [the announcement] likely reflects the need to replenish cash after the convert repayment, perhaps exacerbated by the weak first two months of U.S. sales.
In a note yesterday, Morgan Stanley’s Adam Jones said that investor feedback on Tesla has been “firmly in the ‘something’s wrong’ camp rather than the ‘this is a great buying opportunity’ camp.”
“You can put us in the ‘something just doesn’t add up’ camp,” he added.
Why is nobody having fun at Camp Tesla?
- Tesla delivered its largest-ever bond payment last week, probably using up almost a quarter of its cash.
- Elon announced at the end of February that Tesla will not be profitable for Q1 of 2019, as it has been for the previous two quarters.
- Tesla shares have lost 17% in the past 12 months.
Is it time for Elon to go? Email us and let us know.
2 presidents / 0 food / 300,000 million barrels of oil
Venezuela is in crisis.
This ain’t news. The country’s economy took a long walk off a short pier in 2013 and it’s hasn’t recovered since.
The people are starving. President Maduro has gone full dictator (you never go full dictator). And it all came to head last month when the opposition leader Juan Guaido declared himself the actual president of Venezuela.
Did you know? Venezuela has the largest reserves of oil in the world. Which is why everybody is so interested in “resolving” this crisis, one way or another.
But the real danger of the crisis in Venezuela is its potential to spillover. According to our geopolitical expert and economist Jim Rickards, the economic and military fallout could be global:
The Venezuela crisis is far more serious than most realize. The internal humanitarian and political crisis is receiving enormous attention. But, the spillover effects are underestimated.
There is massive migration into Colombia, Brazil, and the U.S.
There is a high potential for a shooting war with Colombia and Brazil.
Russia, China, and Cuba could double-down on their support for Maduro setting up a global confrontation.
Stronger sanctions from the U.S. could drive up the price of oil and lead to massive debt defaults.
This crisis is not being resolved and will only get worse.
Jim’s predictions aren’t your usual economist pomp and bluster. He forms all of his predictions with a powerful tool he developed while working with the U.S. government — a tool capable of predicting surprising economic events and market movements before they happen.
The New Texas Oil Boom
Or how to make $180,000 a year cutting hair
Oil prices have fallen about 25% since October.
But down in Texas’s Permian Basin, the New Texas Oil Boom is alive and well.
Shale we dance? Shale drilling has turned this remote area south of Odessa into America’s hottest oilfield, producing more than 3.9 million barrels of oil a day. Analytics firm IHS Markit estimates production could surpass Iraq in 2023, topping 5 million barrels a day.
With oil production at an all-time high for the Midland region, there’s been a massive influx of workers — and these guys are making serious bank.
It’s only natural that the locals are making sure they get their cut (see: price gouging).
$40 to Cut the Hair, $60 to Cut the Line
Headlines Barber Shop in Odessa sends a pimped-out trailer to the oilfields and charges workers $40 a cut. The line is usually pretty long but if you’ve got somewhere to be you can cut the queue for just $60 (or $75 with a shave).
Headlines owner Pete McGarity told the Wall Street Journal that a barber working for him can make anywhere between $130K to $180K a year depending on tips. (If your co-workers are making $50K more than you in tips you’re probably doing something wrong, right?)
If you want to blow off some steam after a hard day of drilling, head on down to the Odessa’s most popular bar, the Shack in the Back. But don’t forget, it’s only open on Wednesday’s and you need to reserve your table months in advance.
Book your table now: Reserving one of the shacks 60 tables costs just $100 and, according to the bar’s owner, are already reserved well into the next season. If you plan on spending a night in the Shack in late June, now’s the time to book your table.
Booms like these come and go. But this is unlike any boom we’ve ever seen.
Oil field services and pipelines, which are in big demand to cater to the increased flow of oil, are going to make out like bandits. But our researchers are still drilling down to find the best way to play this one. Watch this space.
What would do if you lived in Odessa? Can you see another way to make money from this oil boom? Email me and tell me your idea.
ONE LAST THING
This ain’t your grandpa’s sports league
Yesterday, I challenged you to predict what rapidly growing industry threatens to overtake the NFL as the top earner in the next decade.
If you guessed “tennis for dogs”, like reader Richard M. from New Jersey, then you are… very wrong. But I like the way you think, Richard. Keep it Wavy.
The answer was of course: eSports.
Yup. I’m talking about professional, competitive video games.
I know. Probably not what you were expecting, right?
eSports has been a big thing in Asia for decades. But in the last few years, it’s exploded into a global phenomenon.
Last year, this rapidly growing sports trend brought in a revenue of $906 million. But because it was just silly video games, nobody even noticed.
I’m sure you’ve seen the kids doing their annoying Fortnite dances. Well, this is where that comes from.
Oh, and just so I’m clear, I’m not talking about sweaty teenagers locked in their rooms with their computer.
eSports has taken the leap from mom’s basement to SOLD OUT stadiums around the world. (The sweaty teenagers are still there but there’s more money involved.)
A video game tournament in the 21,000-seat Staples Center — the same place the LA Lakers play — sold out in just one hour.
And this event wasn’t a freak once-off incident.
- A similar event at the 18,000-seat KeyArena in Seattle sold out in minutes.
- Madison Square Garden sold out 20,000 seats two nights in a row.
And those are just the folks in the stadium. The real money comes from the 200 million people who tuned into the event from the comfort of their home.
This trend is about to take off. But because the “serious investors” haven’t been paying close attention to these video games, many folks have no idea how to play it.
But our researchers have been keeping an eye on this trend. And they’ve locked down a play that anyone can make.
Closing Data for 3/5/19:
|Dow Jones Industrial Average||25,822.29||↓ 0.78%|
|S&P Index 500||2,792.81||↓ 0.39%|
- Shares of GE stock continued to tumble today, dropping 7.5% in midday trade due to negative cash flow outlook.
- Wall Street’s three main indexes are on track for the third day of losses.
Click here to send us your comments and tell us what you think. Do you agree with us? Do you think our ideas are stupid? Bring it on. We can take it.
Why would you want to make light of or support something that contributes to the even more concerning issue of obesity?
I’m glad we agree that the obesity crisis is a bigger health issue than legalizing weed. But I’m not the sandwich police. One Last Thing is here to tell you what’s going on in the markets. And where weed is legalized, folks get munchies. That’s just a fact.
- Michael Bloomberg and Hillary Clinton announce they will not be running for president in 2020.
- Forbes lists Kylie Jenner as the youngest self-made billionaire. The internet disagrees that anything about the young heiress is “self-made.”
- Mueller could move as soon as Friday according to former CIA Director John Brennan.
- FedEx is working on a team of robots on Segways to deliver packages. They are looking to get approval to test their robot fleet in New Hampshire.
Editor, One Last Thing