In Markets "In a Nutshell"

Markets “In a Nutshell” for February 11, 2020

Investment Week at a Glance

Stocks were up last week. The Dow Jones Industrial average gained 3.0% while the S&P 500 was also up 3.0%. The New York Stock Exchange Composite (2,000 stocks) rose 1.6%. The “average investor’s index” (Value Line index) was up 2.0%. Foreign stocks (EAFE index) were up 3.0%. Bond yields dropped (bond prices up) as the 10-year Treasury ended at 1.57%. (Data sources: Barron’s Financial, Wall Street Journal)

Wild Ride Continues for Tesla Stock

How can we write about this past week’s investment news without talking about the wild prices moves of Tesla? A controversial company, due to the irascible nature of CEO Elon Musk, Tesla took investors on a ride the last couple weeks and at one time had a year to date gain of nearly 130%. Tesla started the week at $695 a share and within 2 days spiked to $962 a share, a 38% gain. By Thursday however, Tesla plunged back to $696 before finishing the week at $747. Some see Tesla rising to $6,000 a share (Ark Investments) and a $trillion in sales (Baron Investments) while Wall Street Analysts see the stock fairly valued at $506. Which way is Tesla headed? Time will tell.

The U.S. Jobs Machine Chugs Along

The U.S. Labor Dept. reported that the economy produced 225,000 new jobs in January. January’s jobs gains make it 112 straight months of gains, the longest in history by a long shot (prior record was 48 months). Couple that with a record economic growth expansion of 127 months (which eclipsed the prior record of 120 months), and things look good for the U.S. economy.

Are Oil Stocks The “New Tobacco?”

CNBC show host Jim Cramer sees oil and fossil fuel stocks in a “death knell” and he thinks younger investors shun them much like tobacco stocks a generation ago. The past few years would certainly give support to his claims. Oil stocks have been beaten down the past year with a loss of 34%. Oil stock also show losses for 3,5 and 10 years. And as a recent Bloomberg chart show, oil giant and AA+ rated Exxon Mobil now pays, for the first time, a higher dividend yield, at 5.66%, than does the Barclays High Yield (junk bonds) index at 5.41%. With all this “bad news” for oil stocks, it makes us think perhaps news has gotten a bit too bad and the stocks too cheap.

Quiz:

We wrote above of the prediction of $1 trillion in future revenue for Tesla. What was Tesla’s revenue in 2019?

  1.   $25 billion
  2.   $100 billon
  3.   $250 billion
  4.   $500 billion

 

Answer below.

 

 

 

Have a Great Week!

 

 

 

 

 

 

 

 

 

 

Answer to quiz:

         1.   $25 billion