What We're Reading

With the recent announcement from Volvo that all vehicles will have electric engines in 2019 and phase out combustion engines, it becomes shockingly clear that electric is growing.................and faster than we have previously believed. Clearly Tesla (TSLA) has more competition than ever before so I bring you this piece from McKinsey to give you the breakdown. By the way, what does this mean for crude oil?  Just tossng it out there.

New research on electric mobility reveals Chinese OEMs produced 43 percent of EVs worldwide in 2016 and highlights other trends in supply and demand.

China has increased its lead in electric-vehicle (EV) production, according to new McKinsey research (Exhibit 1). Chinese OEMs produced 43 percent of the 873,000 EVs built worldwide in 2016. And the country now has the largest fleet of EVs on the road, overtaking the US market for the first time (see sidebar, “Our methodology”).

China extends EV industry leadership

Courtesy of a16z

• What BMW’s China sales say about their economy.  “Xubao” or false reporting; who knew!  Quartz
• Pay your bills or we take your cat (seriously)  TheMoscowTimes
• A $1.65 billion buyout, 300 hours of video uploaded every minute,  300 million hours streaming per day, a “farm” of sorts where prominent studios are paying huge sums to acquire companies that bundle together YouTube channels,  an ever-expanding ad platform, a new premium service (Music Key) and a new marketing strategy aimed at turning YouTube starts into, well true stars.  Aand imagine; YouTube is still an experiment. NYTimes
• Why the middle class isn’t as well off as some would have you believe.  According to IRS data, 99% of American households make less than $388,000 a year, and 95% make less than $167,000 a year. The true middle in terms of income — that is, the cutoff to be in the top 50 percent of earners — is roughly $35,000 a year. Salon (and those middle class jobs are disappearing to automation and outsourcing overseas

Bono joining the board of Fender and rumors that Dr. Dre will join the board at $AAPL. What do academics say about share prices and out performance when celebs take a seat at the board room table?  Increased exposure, higher consumer interest, improved sales.........or just a temporary blip on the chart?

Imagine the fight over Steven McQueen if he were alive today.  Ever car manufacturer, including TSLA, would go wild. 

Courtesy of FT

We think BMW have positioned themselves as tech leaders to out-rival premium peers such as Tesla, and investors will increasingly be willing to credit this leadership with higher multiples.”

Tesla Motors Inc showed the world that there is demand for a high quality, low energy vehicle, and now it has to face the consequences of its actions. The San Francisco-based company said its mass market car Gen III will require a third production line, and deliveries are expected to start in 2017. Tesla Motors Inc (NASDAQ:TSLA) said the Gen III car will have a base price of $35,000, but total ASP including options would run to $45,000-$50,000.  (just thinking out loud: could it be investors don't care for a discounted car price?  When you go from luxury to discount retailer, what's the reaction?  Add to the the negative cash flow from due to the cost of the third plant)

BMW is building something different from what Tesla Motors Inc (TSLA) is offering, and the changes its making to the manufactur

This day in 1825: One of the earliest buying frenzies for an American IPO is reported, as the Bank of Southwark goes public in Philadelphia. Investors hire muscular goons to sign their names into the subscription books that confer the right to buy shares, and “noses were smashed, hats jammed in, and the police court was at work over the wounded for weeks after.”  Source: Walter Werner and Steven Smith, Wall Street (Columbia University Press, New York, 1991), p. 223; James K. Medbery, Men and Mysteries of Wall Street (Fields, Osgood & Co., Boston, 1870; reprinted, Fraser Publishing Co., Wells, VT, 1968) p. 291. 

• For you "pirates" at heart, Bloomberg says treasure hunting is the worlds worst investment.
• Massive profit taking still being seen in previous momentum names.  As Kos said previously, she didn't think the "correction" was over for small caps and tech .  If anything Kos is hoping for a move higher to add to her shorts at overhead resistance levels.
• If feels good for actual short

• No shocker here as the FTC issues a blistering rebuke of states limiting sales of TSLA direct consumer sales.
• So much for the peace accord with Russia as they begin military exercises (WSJ)  Markets will not like this continued uncertainty.  Watch crude oil, gold, silver and copper.  You will note that bonds $BND (flight to safe haven) have been holding up.  Not everyone is pouring money into equities.
• The first regulation proposals are coming out on e-cigarettes  $LO currently holds a 42% market share..
• Talk about putting cash to work.  AAPL has bought 24 companies in the last 18 months.  Searching for innovation allthewhile announcing an increase to their stock buyback, stock split and quarterly dividend to keep value investors in the name.  Oh, and an earnings beat once again to a low bar set.  Way to go Tim Cook.
• The FCC said it will propose rules today that could give high-speed Internet providers more power on what content moves the fastest on the Web based on which firms pay th

• New homes sales down -14.5% and if it were the weather, why were they up in the Northeast?  Looking at reality. Mish
• Einhorn warns of a second tech bubble in 15 years.  It's all about overvaluation in certain names and momentum stocks folks.  Oh, for the days of fundamentals. 
• Test your knowledge, take the quiz.  Who's the worst of developed countries?  The U.S.?
• Slap in face to NFLX as AMZN signs a deal with HBO.  Amazon prime lovers, don't get too excited.  The deal does not include shows newer than three years old so you'll still have to tune into HBO to view Game of Thrones.  Still, this move has generated more talk about NFLX and how it's ability to offer new streaming is limited in contrast to what's available due to licensing agreements.
• More talk today about "fringe" energy other than solar.  We've already witnessed Elon Musk (TSLA) transforming the electric car market.  What about the artificial leaf based on photosynthesis and others?  Check out this very interesti