The latest insanity on Tesla...
The latest insanity on Tesla... Good news for Extreme Value subscribers... An unusual move in bonds... Another Sjuggerud prediction is coming true... A new way to profit from 'currency wars'...
One of our favorite whipping boys – electric-car manufacturer Tesla (TSLA) – reported earnings yesterday after the market close.
Tesla delivered a record 10,045 cars in the first quarter, up from 10,030 cars in the fourth quarter of 2014. This was 55% more cars than the company delivered in the fourth quarter of 2013. Tesla expects to deliver an additional 12,500 in the second quarter. (For comparison sake, BMW sold more than 45 times the number of cars Tesla did in the first quarter.)
Tesla beat first-quarter expectations... by reporting a $45 million loss. Analysts forecasted that the company would lose $50 million.
That's right... One of the market's most popular companies lost $45 million in the first quarter... and yet shares still trade for an absurd nine times sales and a price-to-book ratio of nearly 32.
We can't say we're too surprised... "Mr. Market" has been irrational about Tesla for a while now.
We've laid out the bearish case for Tesla multiple times in the Digest. And yet, it appears we continue to be in the overwhelming minority. As we wrote in the January 14 Digest...
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In the March 27 Digest, Porter explained why the market's valuation of Tesla – in comparison to luxury car manufacturer BMW – was absurd...
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Though shares have pulled back more than 20% from their September highs, they're still up an astronomical 1,300%-plus since going public in 2010. As Porter said...
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In other earnings news, Extreme Value World Dominator Anheuser-Busch InBev (
Profits rose more than 95% in the first quarter compared with the same quarter a year ago.
And despite a slight decrease in total revenue – from $10.61 billion to $10.45 billion – revenues in China, Brazil, and Russia grew. The beer maker is losing market share in the U.S. (its largest market), but continues to innovate by introducing flavored beers and ciders to appeal to a wider audience.
Anheuser-Busch reported it will buy back $1 billion worth of shares this year, and is open to acquiring other companies. Rumors continue to persist that the company may look to purchase SABMiller, the second-largest brewer in the world.
Extreme Value editor Dan Ferris editor is still bullish. As he explained in an e-mail to me...
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Dan noted that shares have risen too much to establish a new position at current levels. But Extreme Value subscribers who took his advice are sitting on an impressive 161% gain as of yesterday's close.
Plus, as Editor in Chief Brian Hunt has written before, "there's scant risk new technology will make having a beer after work obsolete."
Another Extreme Value holding reported positive earnings yesterday: Canadian asset manager Brookfield Asset Management (BAM). Dan sent us an e-mail with his thoughts...
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Dan's subscribers are up 79% as of yesterday's close.
European bonds just made a surprising move...
Since the European Central Bank (ECB) began its own quantitative easing ("QE") program in March, interest rates have plummeted as bond prices soared. The yield on 10-year German government debt (or "bunds") fell to near 0%, and shorter-term bond yields actually went negative for the first time since the European Currency Union was created.
But last week, something changed. European bonds started plunging and yields started rising...
The 10-year German bund has skyrocketed from 0.05% to as high as 0.78% today. Granted, 0.78% yields are still tiny, but this is an incredible move in such a short period of time. According to Reuters, it's the biggest weekly move in bunds in almost 25 years.
Bonds are now trading close to where they were prior to the start of European QE.
The ECB is still buying 60 billion euros of bonds every month, so the dramatic reversal in bonds caught many folks by surprise. As one investor quoted by the Wall Street Journal said, "It's as though QE disappeared... In one week we had a total unwinding of all QE-related trades."
This move could be great news for Steve Sjuggerud's True Wealth subscribers...
Earlier this week, we noted that Steve's bullish call on China is coming true. Now it appears another one of his big predictions is, too...
Regular Digest readers know Steve is bullish on European stocks. He believes we'll see the "Draghi Asset Bubble" in the Europe... just as he correctly predicted the "Bernanke Asset Bubble" in U.S. stocks following the Federal Reserve's unprecedented easy-money policies.
As Steve often says, "money flows to where it's treated best." Sooner or later, the ECB's easing efforts will lead to a huge rally in European stocks. As he noted in the March issue of True Wealth...
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Once this move begins, Steve thinks investors could easily double their money in European stocks. And this week's plunge in European bonds suggests it could be starting soon.
As we've mentioned time and time again, you can expect these unusual moves in asset prices to become more frequent – and more violent – as the "currency wars" continue.
We're living through an unprecedented global monetary experiment, and it's more important than ever to understand the amazing financial forces at work today. That's why we're urging our readership to take a look at the brand-new service from currency expert Jim Rickards.
Longtime Digest readers know Jim literally wrote the book on currency wars. He's a financial lawyer with a doctorate and multiple advanced degrees. He's also a hedge-fund manager and a New York Times bestselling author.
No one in the world knows more about what's coming next... or what you can do to protect yourself from it. But Jim's new service goes even further...
Jim has developed a proprietary trading system – called "IMPACT" – that will teach ordinary investors to make extraordinary gains as the currency wars unfold. As he says...
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Regards,
Justin Brill
Baltimore, Maryland
May 7, 2015
