JIM COLLINS, 04 June 2021
After today’s brutal miss on the jobs number — 559,000 actual vs. a 671,000 estimate was a 16.7% miss — the normal feedback loop commenced. Economy not that hot = interest rates down (the yield on the 10-year UST has ticked down today to 1.58%) = Nasdaq up. This has been the state of affairs in 2021. Is what it is. I don’t fight it, I just use these mindless bounces to reset my short positions.
Without entering into a long-winded diatribe about Elon Musk, Bitcoin, self-driving, etc., let me just note one key point that has become increasingly apparent to those of us who actually analyze fundamentals this week: the wheels are coming off Tesla (TSLA) . That is true both literally – Tesla has announced two separate recalls this week, the first covering 5,974 Models 3/Y in the U.S. and 734 in China over potentially loose brake caliper bolts and the second covering 7,696 3/Ys in the U.S. owing to potentially loose seatbelt fastener connections – and figuratively.
The figurative loosening in the Tesla story this week was yesterday’s revelation in The Information, apparently based on a source inside Tesla, that Tesla’s orders in China had plunged dramatically in May after the normal first-month-of-the-quarter decline from March to April. Insurance registrations show that Tesla delivered 69,631 cars in China in the first quarter of 2021. If The Information’s information is really correct and Tesla only received 9,800 net new orders in China in May after receiving 18,000 in April, this company is WELL behind the first quarter’s place in China on a book-to-bill basis.