Elon Musk, Freedom Fighter and Stock Sinker

Elon Musk, freedom fighter and stock sinker... It wasn't a 'rant'... 'This is not freedom'... 'Tesla stock price too high'... Everything about antibodies... Doc on COVID-19: Episode 6... An 'X-Y-Z' recovery... Where's 'Rocketman'?... Stranger things have happened...

The mainstream media called it a 'meltdown' and an 'expletive-laden rant'...

It was neither.

Elon Musk's so-called meltdown about freedom on Tesla's (TSLA) earnings call late Wednesday was actually quite measured. Anyone who actually listened to the call could tell you that.

Before I (Corey McLaughlin) listened, though, I was ready to joke that Musk – the polarizing CEO of the electric-car maker – was smoking something again during a public appearance. (Not that it's our business or place to judge, or care, anyway.)

And solely from the headlines, I thought that Musk went on an unpredictable yet entertaining, expletive-laden diatribe about protecting American freedom in the middle of talking about the impact of the coronavirus on Tesla's production of its alphabet soup of car models (the S, X, Y, and 3).

Upon review, while Musk certainly did use his platform to make some personal statements, his words weren't "laden" with f-bombs or any other naughty words.

And although we've often been critical of Musk in the Digest... this time, he made a lot of sense.

Here's exactly what Musk said...

The guy wasn't yelling at anyone or banging the table in his office.

Musk started by noting Tesla has two car factories, one in California – where stay-at-home orders have been extended into May – and one in Shanghai.

He said Tesla's factory in the San Francisco Bay Area produces most of the company's cars. And then, Musk continued...

We are a bit worried about being able to resume production in the Bay Area, and that should be identified as a serious risk.

The extension of the shelter-in-place or frankly what I would call it, forcibly imprisoning people in their homes against all their constitutional rights... my opinion... and breaking people's freedom in ways that are horrible and wrong and not why people came to America or built this country. What the f***. Excuse me.

It's an outrage. So it will cause great harm, not just to Tesla, but to many companies. And while Tesla will weather the storm, there are many small companies that will not.

Everything people have worked for their whole life has been destroyed in real time. We're going to have many suppliers, and are having many suppliers, that are having super hard times, especially the small ones. It's just causing a lot of strife to a lot of people.

Sounds a bit like Porter did in his "Big Lie" Friday Digest two weeks ago...

An analyst then asked what Musk's message to U.S. lawmakers would be...

Specifically, the analyst wanted to know his thoughts about what comes out of this crisis when it comes to electric-vehicle infrastructure and renewable energy. Musk sort of answered the question...

It's high time we invested in infrastructure in this country. Highways and bridges and... it's really quite sad, the U.S. infrastructure, especially our roads and highways, and our airports in a lot of cases are an embarrassment.

Only then did Musk say the words that made the real "clicky" headlines. It's a feeling that clearly has been festering inside of him...

This is a time to think about the future, and also ask, "Is it right to infringe on people's rights?" I think people are going to be angry about this, and are very angry about it.

If somebody wants to stay in their house, that's great... They should be allowed to stay in their house and they should not be compelled to leave. But to say that they cannot leave their house and they will be arrested if they do, this is... this is... fascist.

This is not democratic, this is not freedom. Give people back their g**d*** freedom.

Then, the call moderator said, "OK, let's go to the next question."

With innovators like Musk, you take the 'good' with the 'bad'...

Or better described, the socially acceptable with the not socially acceptable. History is littered with examples. We'll save the space here.

But oftentimes, big things get discussed and done because of the few people who "push the envelope." If not them, who? Then, eventually the masses catch up.

If this didn't happen, we would still be talking on landline phones, wouldn't have access to online-grocery delivery, and would all be watching the same handful of network television channels.

Tesla has served as a punching bag for many folks – including us – for quite a while...

And the company has been a target of short-sellers – and "cult longs" – for years. We noted this concept back in the February 7 Digest, after we saw wild price action in Tesla shares around its last earnings call.

As it turns out, a lot of millennials were hopping on the Tesla bull train back then. That week, traders on SoFi Invest – a stock-trading platform used mostly by millennials aged 25 to 40 – bought 20 times more Tesla stock than is usually traded on the platform. (We wonder if they've stuck with it through the bear market...)

We quoted Whitney Tilson, founder of our affiliate partner Empire Financial Research, back then for some perspective...

Whitney said he suspected that two-thirds of Tesla's stock is "owned by people who will never sell," almost irrespective of how high the price goes. As he put it...

Having so much stock effectively out of the market means that relatively small increases in demand for the stock – much less the huge increases we've seen recently – have an outsized impact on the share price.

And Whitney's longtime colleague, Enrique Abeyta, compared the company's position in the electric-vehicle ("EV") and self-driving, autonomous vehicle ("AV") markets to e-commerce giant Amazon's (AMZN) place in the early days of the Internet. As Enrique explained...

Many investors and pundits are saying that they have never seen anything like the price action in Tesla's stock.

We have, though... Think back to the dot-com bubble, which ran from the mid-1990s through the peak in March 2000 and then subsequently crashed the market.

In any event, it's reasonable to criticize Tesla's business operations... and if the company will ever start reliably making money on all of its cars or be profitable over the long term... or if Musk is smoking something when he tweets.

Let's be clear: We're not suggesting anyone buy Tesla shares or a Tesla vehicle because of the CEO's freedom-loving comments on one earnings call. (Repeat: WE ARE NOT suggesting that.)

In fact, Musk himself apparently tweeted today that Tesla shares are overvalued...

This was bizarre...

"Tesla stock price too high imo," read the tweet from @elonmusk at around 11:10 a.m. Eastern time...

If you're a Tesla bear, you agree, of course. And if Musk were trying to lower his own company's price, it worked – while also strangely destroying billions in shareholder value.

Or if a hacker were trying to do the same thing... it worked, too.

Today, Tesla shares sank roughly 10% immediately following that "stock price too high" message, and a series of tweets that followed...

This was more of a "digital" rant that included the lyrics to "The Star-Spangled Banner"... and "Now give people back their FREEDOM"... and indicated Musk might go live on the street, the office, or in a Tesla car...

So we're not endorsing the company per se. As we planned to do before Musk went wild on Twitter today...

We're simply noting that there's often a hidden, meaningful story beyond the headlines... and that it's nice to hear an unfiltered and realistic take from a CEO every once in a while.

At this point, the quarantines and lockdowns are what they have been...

They will be debated through November's presidential election and as long as anyone remembers the coronavirus outbreak of 2020. People are still getting infected and dying, while the reason folks were told to stay at home – to try to not overwhelm our health care systems – seems to have passed.

For instance, major hospitals like NYU Langone Health in New York City and Johns Hopkins here in Baltimore, are restarting a more regular schedule of "elective surgeries." The same can be said about other facilities around the country for the past week or so.

As the hospitals focused primarily on COVID-19 patients, a huge backlog of these surgeries piled up. Patients have waited for weeks and months for procedures they might otherwise have expected to be recovered from already.

This tells us it's time to think more deeply about the economic recovery...

On this idea and so many others, we urge you to check your inboxes for the latest updates and issues from Stansberry Research's editors and analysts.

For instance, on Tuesday, Stansberry Venture Technology editor Dave Lashmet published an in-depth issue on the topic of "antibody" testing and treatment related to COVID-19. In the issue, Dave also recommended shares of a leading company in this space.

And Retirement Millionaire editor Dr. David "Doc" Eifrig and senior analyst Matt Weinschenk just recorded their sixth special COVID-19 briefing video... As they've done so well for the last month, Doc and Matt took a deep dive into the data to give a real look at what's going on with the pandemic from a scientific and economic view.

You can watch their latest video for free right here or by clicking on the image below.

And from your humble Digest writer's perspective... with my wife once again asking me early this morning, "When might this all be over?"... it got me thinking...

Forget the popular U- or V- or whatever-shaped recoveries that you hear most about. We could ultimately see an "X-Y-Z" recovery, if anything.

In other words, different 'recovery' speeds for different things at different times...

Please note that this idea is not based on what we want to happen. (Faster, quicker, and normal would be great.) Rather, it's based on the behavior of our government leaders, central banks, and the virus itself so far...

With each of our 50 states reopening at different rates and speeds and virus "flareups" likely to occur – based on what has happened in the rest of the world, at least until a safe, reliable vaccine or treatment is in place – different areas of the economy will rebound at different speeds and scales over an undetermined period of time.

Hospitals, which we already mentioned, are used to the expectations of being a controlled, sterile environment. Doctors, nurses, and other staff have been scrubbing in and out and washing their hands while singing "Happy Birthday" for 20 seconds since medical school.

But industries that rely on large public gatherings or groups of unreliable strangers hanging out with one another to generate revenue – like sporting events and flights (and other sectors that rely on travel) – will recover slower.

There are any number of permutations and comparisons you could make between and among many sectors of the economy.

Our world is complex...

While business essentially grinded to a halt rapidly in late February and early March, the recovery is not going to be as simple as flipping a single switch to light up every sector simultaneously.

In their reporting on various earnings announcements throughout the week, our Stansberry NewsWire team has made that clear...

Amazon (AMZN), Apple (AAPL), and Visa (V) were among the companies with revealing reports this week about how COVID-19 has impacted their business and what recovery might look like for them.

Here's what Joe Davis, the global chief economist at the mammoth Vanguard brokerage, wrote yesterday about this topic...

Will recovery be "V-shaped" or "U-shaped"? In fact, we expect it will be a little of both.

A V-shaped recovery, so-called because of the letter it resembles on a chart, is a function of just how rapid a fall we're experiencing, so severe that it's unlikely to continue for long.

[But] getting business activity back to where it was before the pandemic could take two years – a U-shaped recovery – given shocks to both supply (stemming from containment measures) and demand (stemming from consumers' likely reluctance to immediately resume face-to-face activities such as dining out, traveling, or attending large events).

Some parts of the economy will recover more quickly than others.

If you believe this, then you believe the now 30 million Americans who have filed for unemployment over the past six weeks will not all be re-employed on the same day.

And if that's happening, then the buyer-of-last (and now first?) resort, the Federal Reserve, which is mandated by Congress to maintain maximum employment and stable prices, will keep interest rates at zero and go all "easy money" until a recovery is established.

Davis, who is just one man of course, believes that the recovery process could take two years. He doesn't know for sure, but it's becoming increasingly apparent that the damage of the past two months is ongoing and could be long-lasting.

Finally, we end this week with a new game: Where's 'Rocketman'?

International editor Kim Iskyan is your host. He takes us home from here with thoughts on the whereabouts of the secretive North Korean leader Kim Jong-Un ("Rocketman")...

He hasn't shown his face in two weeks... And rumors are swirling about his health amid the coronavirus pandemic. The Economist went all out on the speculation Friday, hypothesizing...

He is dead, or brain-dead, or in a coma following botched heart surgery. He has been deposed in a coup. Maybe he has simply had a chin-lift or a tummy-tuck. Or he might just be hiding from the coronavirus at his seaside villa.

It was just two years ago that U.S. President Donald Trump and Rocketman met up for the first of two heavily hyped summits...

Back then, Kim Jong-Un was able to get an audience with the American president in part because North Korea has nuclear weapons – and has shown every sign of being crazy enough to use them.

Today, though, where is he? It's a lousy time for Kim Jong-Un to play peekaboo.

Between the coronavirus fallout and the collapse in oil, the plates of global leaders – and investors – are overflowing with crises...

The 36-year-old, 5-foot-6-inch Kim Jong-Un allegedly tips the scales at around 300 pounds. And he's reportedly a four-pack-a-day smoker. That, along with a family history of diabetes and heart disease, makes him a bad life-insurance risk.

If in fact he has died, what happens next could be anything from an orderly transition of power to "a full-blown Game of Thrones dynastic crisis," according to leading Asian business publication, the Nikkei Asian Review.

His younger sister, Kim Yo-Jong – who got some global air-time by attending the 2018 Winter Olympics in South Korea – could step up. But the bigger and longer-term concern is that the nation is a diplomatic black box...

No one outside of North Korea knows much of anything about what's happening inside...

But if the country needs a new leader, whoever it would be would need to use a steel boot to show pretenders who's boss...

The next Great Leader would also have to keep out anyone (say, neighbor China) who's concerned about nuclear weapons falling into the wrong hands...

And don't forget that the demilitarized zone ("DMZ") border with South Korea is one of the world's most heavily fortified and armed national boundaries in the world...

Plus, there's the "wag the dog" scenario that the Nikkei Asian Review sets forth, suggesting "that Trump tries to use this situation as a distraction" relative to November's election... Might his White House pivot back to fire-and-fury mode and argue U.S. troops need to secure the nuclear stockpile that Trump's "friend" Kim might leave behind?

But like we said, we have enough crises on our hands.

Instead, let's say that 2020 (finally) gives us a break...

Maybe the rest of this year manages to relinquish its stranglehold on the title – just four months in – as the worst year in living memory.

History shows that crazy regimes don't stay on the dangerous fringe forever. One of the most recent, and heartening, examples of a government "coming in from the cold" is the former Soviet Central Asian country of Uzbekistan.

There, after the 1991 collapse of the Soviet Union, Uzbek leader Islam Karimov competed with North Korea to make an art form out of xenophobia, military brutality, retrograde economic policies, and a nasty brand of isolation.

After I (Kim Iskyan) visited in 1996, let's just say that it wasn't high up on my list of places to go back to.

When Karimov (finally) died about four years ago, his long-serving prime minister, Shavkat Mirziyoyev, took over.

Pretty much everyone who thought they knew anything about Uzbekistan expected Mirziyoyev to deliver more of the same, and keep Uzbekistan in the deep freeze indefinitely.

But a 'stuck in the past' country can change dramatically...

Bucking expectations, Mirziyoyev led a U-turn to economic liberalization and political transparency in his country...

Uzbekistan started to open up, in a "glasnost" – the openness policy favored by the Soviets' final leader, Mikhail Gorbachev... just 30 or so years after most of the rest of the USSR.

The scary secret police stopped terrorizing the population... And in February 2019 the country raised $1 billion in an oversubscribed sovereign bond.

Now you can even invest in a hedge fund that buys the shares of Uzbek companies listed on the local stock exchange...

Long story short, when I went to Uzbekistan a few years ago, it was one of the most welcoming places I had visited in a while. Uzbekistan got off the crazy train...

Of course, every country is different, and it wouldn't be easy for North Korea.

But with the glass half full, maybe we could hope that the departure of Kim Jong-Un would lead to better things for the country.

Stranger things have happened. Like, say, a guy eating a bat in a Chinese city leading to a global pandemic... or a CEO campaigning for a lower stock price for his own company.

Video Update:
More From Dan Ferris on Our Food Supply Chain

In the beginning of yesterday's Digest, Extreme Value editor Dan Ferris discussed the growing concerns that our country's food supply chain is "broken." And in a video with our colleague Jessica Stone, he expanded on his thoughts... and what it means for investors.

To watch this video on Stansberry Research's YouTube channel, click here.

New 52-week highs (as of 4/30/20): Amazon (AMZN), Calibre Mining (CXB.TO), Sea Limited (SE), and iShares 1-3 Year Treasury Bond Fund (SHY).

In today's mailbag, opinions on yesterday's Digest from Dan Ferris about "societal death"... and more feedback on Porter's "Big Lie" essay. Do you have a comment or question for us? E-mail it to feedback@stansberryresearch.com.

"Thank you for writing this essay. I have been a lone voice, not watch[ing] mainstream media but doing tons of research and coming to the conclusions that the numbers were not there based on flawed data.

"I had the virus in February, and even with no testing by mid-March both my Primary Care and Endocrinologist agreed I checked off every single box of symptoms, duration, etc. By mid-March I had done enough research to warrant making a bold statement... this is just a flu and while dangerous to a small segment of society, garnered no more respect than a normal flu season.

"I have reviewed many conspiracy theories and can say, pick one, whatever, doesn't matter. What matters is that it is a media-hyped hoax. I'm not a tinfoil hat-wearing right winger (but I might check out a tinfoil hat if it looks good on me!), but I am open to listen to all points of information...

"Thank you for your rational thoughts and willingness to listen with an open mind. I enjoy reading your reports periodically, and wish I had the wherewithal to do the investments!" – Paid-up subscriber Deb F.

"As a successful small business owner for the last 40 years I cannot disagree with you more. We need a societal shift and if the Covid 19 is the straw that breaks the already broken system so be it.

"I don't want deaths, I don't want bankruptcy's (although I had one and it made a much more successful business person when all was said and done), I don't want rampant misery. I have children and grandchildren and if we must all crawl out of our holes and self-short sightedness to a more balanced and equitable society then this is what I want.

"No more fossil fuels as the effects of climate change will make the Covid 19 look like a nursery rhyme, and I want my grandchildren to be able to breathe clean air and drink clean water and see the stars.

"Let's shift the consciousness of the planet and stop the greed and excess that serves such a narrow slice of the population but does not serve the people and the planet. And, yes, we still can have profit too." – Paid-up subscriber Michael J.

"Porter, your words were a breath of fresh air... like we get from a walk on the beach... oh yes, that was forbidden!

"Thinking back on the evolution of this in the U.S., I should have seen it sooner. When the government sends me a flier telling me how and when to wash my hands, I need to sit up and pay attention as the presumption is only the beginning.

"I started with Stansberry about the time I read your essay on your family dog's demise, having a couple myself. It brought me in and I'm glad I stayed. Thanks." – Paid-up subscriber Scot L.

All the best,

Corey McLaughlin
Baltimore, Maryland
May 1, 2020