Friday ended a bad week, month and quarter for Wall St. The Dow fell 1.7%, to close below 29,000 for the first time since November 2020.

Yeah, September finally ended and Wall Street chose not to wake up.

The Dow fell -8.8%, the S&P500 -9.3% and the Nasdaq -10.5%, to mark the third consecutive quarter of weakness.

At midday in Sydney all three major US Futures indexes were pointing earthwards.

Via Nasdaq.

US core PCE – the Fed’s go-by measure of inflation, which gets rid of the volatile energy and food numbers, was up by 0.6% in August to an annual rate of 4.9%, up from 4.7% in July.

Lower oil prices trimmed the spice out of the US headline inflation read but with Wall Street further freaked by last week’s freaky UK economic policy the Fed’s target for inflation of under 3% is looking a lot like the kind of dream with a pipe in front of it.

Downgrades to September quarter earnings expectations continue, with US dollar strength a major contributor. The quarterly earnings growth forecast has now fallen to 2.9% annual, down from 9.8% at end-June.

A lot can happen between now and November, but the Fed looks certain to hike by another 75 basis points next month.

Nike’s highly anticipated earnings drop didn’t ease hearts and minds either.


That’s Nike (NYSE:NKE) dropping off a cliff on Thursday night:

Via Nasdaq.

The retail bellwether stock and sporty shoe maker crashed almost 13% on Friday morning in Sydney during after market business on the Dow Jones, the latest top-end retailer to be stuck with too much inventory.

Q1 revenue was a beat, up 4% to $12.69 billion, while net income was not: slumping 22% to $1.5 billion.

Instead of showing the strengths of the indefatigable US consumer, Nike just became the latest classy but discretionary retailer to be stuck with too much inventory, which, on its balance sheet jumped 44% to $9.7 billion, battered by the storm front of supply chain problems.

Meanwhile downgrades to September quarter earnings expectations continue, with the majestic strength in the greenback also now a major factor.

The US quarterly earnings growth forecast has now fallen to 2.9%, down from 9.8% at the end of June.

Some of the ket reports this week in the states include: Helen of Troy, Lamb Wesson, Tilray Holdings, Constellation Brands, Conagra Brands, McCormick, Norwegian Cruise Line Holdings.

And finally, the word is everyone’s favourite cartel, OPEC+ is mulling an oil output cut of more than one million barrels per day (bpd)  in a Wednesday meeting which takes place amid the kind of insane volatility which prompted even Saudi Arabia to call  for a cut in production.

US media is reporting that “OPEC sources” are toying with what would be the biggest cut since COVID-19 and in direct contradiction of a US request to keep pumping.

A lift in production would aid the US and other nations lower painful prices at the pump and also hit Russia where it hurts for escalating its war in Ukraine.


Elon Spelunking

Overnight Tesla reported that it produced 365,923 vehicles for the third quarter, up from 237,823 vehicles in the prior year.

Here are the numbers:

  • Total deliveries Q3 2022: 343,000
  • Total production Q3 2022: 365,000
  • The street forecasted: 364,660 vehicles


This is Tesla’s (TSLA) share price last week:

Via Nasdaq.

Total production lifted on the previous quarter when Elon made 258,580 vehicles. The production of Elon’s Model S/X and Model 3/Y was at 19,935 units and 345,988 units respectively, versus 8,941 units and 228,882 units last year.

The same time last year Elon said he delivered 254,695 vehicles, and produced 237,823 cars but that featured just 8,941 Model S and X vehicles, Elon’s fancier sedan and SUV with falcon-wing doors, respectively.

Elon said there’d have been many more, but production stoppages to update its factory in Shanghai put a spanner into the whole damn plan.

So, Tesla’s market cap is back on the grid a bit, loitering at $840 billion. But it’s worth remembering Elon’s EVs were easily dragging around their $1 trillion market cap back in late 2021.


But for context (envy even) here’s TSLA’s 5 year chart:

Via Nasdaq… yes, that IS a US$23.12 opening price around this time in 2017 (just 5 years).

But you’d do well to leave off the market valuations when it comes to Elon spelunking.

What matters are his numbers and they have cache.

Last quarter, TSLA revenue was up well over 40% year on year to almost $17 billion.

People are buying Teslas, there’s no question. According to the Edwards Parents of French Kids in Sydney (POFKIS) study, there’s heaps of French parents driving and shouting at people in and from Teslas around Maroubra and Sydney’s eastern suburbs.

This to some extent explains TSLA’s recent boost in the average sales price (some 358 basis points or 14.6% in Q2.)

That’s the kind of flighty top-line growth which’d be the envy of all other makers and led to Tesla more than doubling its Q2YoY margin growth  to $2.27 per share (or 57%).

I’m not selling them. I don’t work for Elon. Just worth pointing out.


More Elon Spelunking

I guess you’ve seen the robot?

Elon and some highly-trained Tesla geeks insist the robot was walking around for the first time without any mechanical supports on stage at the company’s AI Day in Palo Alto.

Why comment, Christian, just let them watch. (And read the comments).

The US according to macro

ISM US manufacturing survey

US factory orders, JOLTS

US Aug trade balance
US S&P Global services PMI
US ISM non–manufacturing

US Initial jobless claims

US September non–farm payrolls
US August wholesale inventories
US August consumer credit