Comment of the Day
Video commentary for November 9th 2022
A link to today's video commentary is posted in the Subscriber's Area.
Some of the topics discussed include: bitcoin extends downward break, Mega-caps breaking lower in absolute and relaitve terms, gold steady, oil weak, China supports property developers, Dollar steadies, bonds steady,
Lucid Stock Is Falling as Reservations for Cars Drop
This article from Barron’s may be of interest to subscribers. Here it is in full:
The EV maker Lucid turned in respectable third-quarter earnings and stuck with its forecast for vehicle shipments this year, but the stock is dropping. Reservations are the issue.
Tuesday evening, Lucid (ticker: LCID) reported a per-share loss of 40 cents from $195 million in sales. Wall Street was looking for a 31-cent loss from $209 million in sales., but earnings and sales don't matter much at this point.
The company is just ramping up production of its first model, the Lucid Air. Importantly, the company didn't change its full-year guidance for vehicle shipments from the 6,000 to 7,000 cars it told investors to expect back in August. The prior guidance, given in May, was for 12,000 to 14,000 units.
What seems to be raising investors' eyebrows is that management says Lucid has 34,000 reservations for its vehicles. The number given in August was 37,000.
Shares were down 3% in after-hours trading.
Lucid delivered 1,398 vehicles in the third quarter, up from 679 in the second quarter of 2022. Lucid produced 2,282 vehicles in the third quarter, which was more than triple the second-quarter production, according to the company.
The company also ended the quarter with almost $4 billion in cash.
Management scheduled a conference call for 5:30 p.m. Eastern time to discuss the results. Investors and analysts will be interested in the reservation number and whatever management has to say about demand for Lucid vehicles.
Through Tuesday trading, Lucid stock was off more than 60% so far this year, while the S&P 500 and Dow Jones Industrial Average had dropped about 20% and 9%, respectively.
Lucid stock has been hit harder than most. The cut to the forecast for deliveries didn't help. Rising interest rates, which reduce the current, discounted value of earnings expected to arrive in coming years, are an additional problem.
Eoin Treacy's view - Flashy ads and attentional grabbing statistics, like the longest range and best battery, encouraged consumers to pay trivial down payments to secure a spot in delivery queues. Now, the question whether one does in fact have the resources to spend six figures on a car are more pressing. For Lucid it represents a significant issue because they are quite a ways from delivering a more affordable model. The share continues to trend lower.
Jeffrey Gundlach with David Rosenberg 10-11-22 Podcast
This video is a little outdated, particularly with regard to crypto, but it does highlight the fact bond investors finally have a yield they can base a total return strategy on.
Eoin Treacy's view - As the hosts point out, the best time to buy bonds is when yields are high and inflation is peaking. The higher yield offers a margin for error even if it takes time for the macro details to work themselves out.
NHS Nurses Vote for Biggest Strike in Over a Century Over Pay
This article from Bloomberg may be of interest to subscribers. Here is a section:
The strikes could start before the end of this year and last until May 2023, the RCN said in a statement. The historic ballot came after nurses were unhappy when the government offered them a package in July that would see the average nurse’s pay increasing 4%.
Strikes are currently sweeping across the UK from rail to ports as the worst inflation in four decades is eroding workers’ real income and living conditions. Workers in the country’s health sector are under particular pressure as the Covid-19 pandemic enters its third year and with many hospitals struggling to cope with long waiting lists of patients needing treatment and packed Accident & Emergency departments.
Industrial action will only take place in health-care settings that met the relevant legal requirements but the majority of NHS employers will be affected, the RCN said.
“Anger has become action - our members are saying enough is enough,” said Pat Cullen, RCN General Secretary & Chief Executive. “Our members will no longer tolerate a financial knife-edge at home and a raw deal at work.”
Unison is currently balloting 350,000 other NHS employees across England, Wales and Northern Ireland to strike over pay. The Royal College of Midwives and the Chartered Society of Physiotherapy are also organizing ballots for their members in November, raising the possibility of the UK facing coordinated strikes across different health unions.
Eoin Treacy's view - Strike action from the NHS was inevitable. It’s a large worker group with strong union representation in a vital sector. That means workers are in a better position to pressure the government into concessions than other interest groups which is all the incentive required to push the issue.
The Chart Seminar London November 21st and 22nd 2022
We are living through fast moving markets so the next venue for The Chart Seminar will be November 21st and 22nd this year in London.
In the meantime, if you have any questions, would like to attend, or have a suggestion for another venue please feel to reach out to Sarah at sarah@fullertreacymoney.com.
The full rate for The Chart Seminar is £1799 + VAT. (Please note US, Australian and Asian delegates, as non-EU residents are not liable for VAT). Annual subscribers are offered a discounted rate of £850. Anyone booking more than one place can also avail of the £850 rate for the second and subsequent delegates.
Eoin's personal portfolio: commodity long initiated and investment position increased
One of the questions subscribers ask most often is how to find details of my open trades. To make it easier I will simply repost the latest summary daily until there is a change.