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May 3, 2018

Why investors should look past the Tesla noise and buy the dip I MarketWatch - May 3, 2018.18.

marketwatch.com

Why investors should look past the Tesla noise and buy the dip

Barbara Kollmeyer

Rudy Giuliani and Elon Musk have something in common right now — they’re each triggering plenty of face-palms, though probably not quite in the same circles.
There’s more on Rudy’s foot-in-mouth moment below, but the bigger story for investors is the Tesla CEO’s conference call with analysts. That went off the rails as Musk brushed aside their “boring” questions on margins and production, to listen to a YouTuber and bash the press instead.
Not everyone thought including outsiders in the call was a bad idea, by the way:
This kid is great. So happy he is on the call. No more analysts on calls. Should be retail stock owners who really own the company. Not paid shills from wire houses. Tesla conference call. $TSLA @elonmusk
— Ross Gerber (@GerberKawasaki) May 2, 2018
Those shunned analysts are getting their comments in now, including Baird’s Ben Kallo, Tyler Frank and David Katter. In our call of the day, they advise investors to stay focused on the electric car maker’s “solid results” — and buy the shares.
“Importantly, demand for all vehicles remains strong, TSLA lowered its capex estimate, and the company continues to execute on its strategy,” say the analysts, who note the company has successfully ramped up Model 3 and battery production.
But even they acknowledged Musk’s refusal to answer questions he “deemed mundane” may create some pressure on Tesla shares. Note that a late selloff is extending into this morning.

Tesla before and after its conference call
The fact that Tesla burned through another $1 billion may also give some reason to pause.
Still, once the dust settles and focus turns to the results themselves, shares will start moving up again, say the Baird analysts, who rate Tesla outperform with a $411 price target.
Not everyone is feeling as charitable. Blogger Heisenberg, in a post to Dealbreaker , says maybe Musk shouldn’t have told investors concerned about volatility to “definitely not buy our stock.”
Opinion: Tesla’s woes are easy to fix — if Elon Musk’s ego allows it
“This was obviously not a great PR move, and I guess the question now is whether the market will be willing to forgive this latest example of eccentricity on parade, or whether this will only serve to raise further questions about the company,” says Heisenberg.
The market
Dow DJIA, -0.72%  , S&P 500 SPX, -0.72%  and Nasdaq COMP, -0.42%  futures are all moving up. That’s after Wednesday’s post-Fed action, which took the Dow DJIA, -0.72% , S&P 500 SPX, -0.72%  and Nasdaq Composite COMP, -0.42%  lower.
Gold GCM8, +0.60%  is rising, with the dollar DXY, -0.18%  modestly off and crude CLM8, +0.00%  is pulling back some. Asia ADOW, -0.38%  was a mixed bag, with losses led by the Hang Seng HSI, -1.34%  . Europe SXXP, -0.28%  slipped on a surprise drop for eurozone inflation.
See the Market Snapshot column for more.
The chart
Gold is seeing a ripple of excitement these days, as have some industrial metals. That has piqued the interest of Larry Tentarelli, founder of Trend Trading Signals, who keeps an eye on the metals and mining space.
“After a fairly strong run in some aluminum, gold, steel and copper names, the space, which is historically volatile, has pulled back almost 10%. The Gold ETF GLD, -0.05%  is testing its rising 200-day moving average, and XME XME, +0.84%  , the Metals and Mining ETF is close as well,” he says for our chart of the day.

“The overall space is currently in a longer term uptrend for now, and names like AA AA, +2.08%  , NEM NEM, -0.08%  , XME and GLD may offer good longer term entries here, Tentarelli tells MarketWatch.

Gold nearing its 200-day moving average
Read: Global gold demand drops to lowest in a decade
The buzz
Billionaire bond guy Bill Gross thinks all the excitement in bond yields is now behind us. In an interview with Bloomberg, he says the bear market for U.S. Treasurys is “hibernating” and we’ll see a yield of 2.8% to maybe 3.1% or 3.15% for the rest of this year.
DowDuPont DWDP, +0.68% Cigna CI, +0.75% Blue Apron APRN, +0.00% APRN, +0.00% and Kellogg K, -3.57%  are all due to report ahead of the bell.
APRN, +0.00% FireEye FEYE, +0.92% FEYE, +0.92% Square FEYE, +0.92% SQ, +0.95% SQ, +0.95% Spotify SPOT, +3.11% SPOT, +3.11% are all under pressure after earnings late Wednesday. Kraft Heinz KHC, -2.69%  is having a better time, post-results.
Goldman Sachs set to become the first Wall Street bank with bitcoin trading operations.
China smartphone giant Xiaomi has picked Hong Kong to host its $10 billion IPO. That could be the world’s biggest offering this year.
Talking of the Middle Kingdom, Trump’s trade delegation, led by U.S. Treasury Secretary Steven Mnuchin, is getting down to business in Beijing.
Zynga’s ZNGA, +3.41%  founder and former CEO Mark Pincus has set a major example for other tech founders, by giving up voting control of the company.
The quote

Former NYC Mayor Rudy Giuliani and his latest client
“[They] funneled [the money] through a law firm and then the president repaid.” — That was Rudy Giuliani, the newest member of Trump’s legal team.
He told Fox News host Sean Hannity that the president repaid attorney Michael Cohen $130,000 to silence porn actress Stormy Daniels, contradicting what Trump said last month.
While social media eats that up, Trump is tweet-storm responding:
Mr. Cohen, an attorney, received a monthly retainer, not from the campaign and having nothing to do with the campaign, from which he entered into, through reimbursement, a private contract between two parties, known as a non-disclosure agreement, or NDA. These agreements are.....
— Donald J. Trump (@realDonaldTrump) May 3, 2018
The economy
We are just one day away from April employment numbers. Ahead of that come weekly jobless claims, the March trade deficit, productivity and unit labor costs, and the Markit Services PMI and the ISM nonmanufacturing index.
Check out: MarketWatch’s Economic Calendar
Random reads
Release of three Americans being held in North Korea are “imminent” says official
Youngest billionaires in the world haunted by a Nazi past
Sweden’s almost cash-free society ain’t perfect
104-year-old Aussie scientist heads to Switzerland to die
Newsrooms have a message on World Press Freedom Day
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