Tesla as of yesterday’s close has a higher market cap ($373b) than Walmart ($369b), the largest private sector employer in the country and a company with NET INCOME for the year ended July of $18 billion. Tesla had REVENUE of $25.7b in the 12 months ended June. Tesla now has a market cap only exceeded by FAAMG, JNJ ($398b), Visa ($396b) and Berkshire Hathaway($492b). I’m not stating this to give an opinion on Tesla stock but just to point out again the unbelievable market cap moves in the most popular stocks in the market who we all know and to put them into perspective. Tesla’s stock is also 46% above its 50 day moving average, parabola is the term.
Before the Markit’s August measure of the state of the US manufacturing and services sectors at 9:45am est we saw a few from overseas and in the aggregate they were disappointing.
Japan’s composite index saw no change at a still below 50 level of 44.9. Manufacturing rose slightly to 46.6 while services slipped a touch to 45. Markit said “Demand continued to be adversely affected by subdued trade flows and social distancing measures. New orders fell sharply in August, accompanied by a substantial drop in export sales. The downturn remains broad based across the manufacturing and services sectors, with the latter continuing to lead the decline midway through the 3rd quarter.” Employment also fell and “The prospect of a solid recovery remains highly uncertain as Japanese firms were pessimistic about the business outlook on balance during the August.” What is most disappointing about the numbers and commentary is that it’s no longer April and May, it is August where many things have reopened that were closed.
Australia’s composite index dropped a sharp 9 pts to 48.8 so back in contraction driven by a 10 pt decline in services while manufacturing was little changed, still above 50 at 53.9. This is due to some reclosings, particularly with the shutdown of the Victoria region.
The Eurozone composite index softened to 51.6 from 54.9 with most of the decline led by services too as this component fell to 50.1 from 54.7 while manufacturing was down a hair to 51.7 from 51.8. The headline estimate was 55. Markit said “The recovery was undermined by signs of rising virus cases in various parts of the euro area, with renewed restrictions impacting the service sector in particular. Manufacturers continued to post marked increases in output and new orders” likely in part to rebuild inventories. Employment was softer.
The UK in contrast was the bright spot as its composite index rose to 60.3 from 57 and that as 3.4 pts above the estimate with both manufacturing and services higher. The UK has not had any new shutdowns or reclosings but the nervousness is still there. “Survey respondents often noted that it could take more than a year to return output to pre-pandemic levels and there were widespread concerns that the honeymoon period for growth may begin to fade through the autumn months.” This was reflected in the outlook with “confidence about growth prospects dipping for the 1st time since the slump in March.” Employment fell “with survey respondents frequently noting that redundancy programs had been running in tandem with efforts to return some staff from furlough.”
The disappointing number out of the UK was the CBI industrial orders number which only improved to -44 from -46. The estimate was -34. The CBI chief economist said “This has been another difficult month for manufacturers. Activity continues to be poor and order books severely depressed, although the worst of the decline seems to be behind us.”
There is also weakness in the British pound after the EU negotiator today said “At this stage an agreement between the UK and the EU seems unlikely. Too often this week it felt as if we were going backwards more than forwards.” This continues to be the never ending soap opera.
Bottom line, until we have a vaccine there are no easy roads.