The Market, Energy, and Political Page, T+35 -- April 3, 2018

API: weekly crude oil inventory data -- a drawdown of 3.28 million bbls; no forecast provided. WTI up a bit, trading at $63.58 at the close. 

Tesla: another executive move -- it has just been announced that Tesla's Model S&X Program Manager has recently left Tesla to head up VW's North American electric car rollout. Wow!

Tesla: bonds. I know absolutely nothing about bonds (well, maybe a little). Everyone is talking about "Tesla bonds" -- the ones that are now trading for around 88 cents on the dollar with a corresponding rising interest rate. Is it possible to find real-time trading regarding these bonds? I believe the "bonds" they are talking about are the "TSLA 4530907" bonds. These can be followed over at Morningstar at this site.  Today, those bonds rose a bit in price, now selling at about $90 with a coupon rate of 5.3%. I suppose this means that until they come due (8/15/25) Elon Musk will send you $5.30 for every $100 bond (coupon) you hold. So, if you buy one of those coupons for $90 today, well, you will be getting $5.30/$90 or 5.9%. Plus always the chance that these coupons could appreciate back to $100 -- netting you another $10/coupon.

Disclaimer: this is not an investment site. Do not make any travel, job, relationship, investment, or financial decisions based on what you read here or what you think you may have read here.

Auto sales: huge month. Forecast: 17.8 million. Actual 18.4 million. EVs: about 20,000. Twenty thousand / eighteen million = 0.1%. I don't know: one out every thousand cars sold each month is an EV. Is that good? I don't know. Let's look at Ford's sales for March:

• SUV sales +7.5% to 82,395 units, including a 19% gain Edge sales
• truck sales +6.7% to 109,276 units. F-Series sales +7.0% to 87,011 units
• SUVs + trucks + F-Series pick-ups = 278,682 units
• just against "big" Ford vehicles, 20,000 EVs vs 280,000 = 7%
• so, again, I don't know. Two EVs (all makes/models) sold for every 28 big Fords, or one EV for every 14 big Fords sold
• I think the production / sales number is now "understood" by everyone; it's in the eye of the beholder if one EV for every big Fold sold is "relevant(?")" for lack of a better word
• I think a lot of Tesla bulls argue that Tesla can be just like Amazon: continue to flourish without turning a profit year after year
• the problem with that argument: Amazon has a huge positive cash flow which would drop to the bottom line as positive earnings if Amazon did not reinvest the money into their own operations; Tesla does not have a positive cash flow; Amazon operating cash flow: $20 billion / month; Tesla operating cash flow: -$70 million / month; Amazon's cash flow could pay off all of Amazon's debt in less than three months; Tesla's negative cash flow is leading to more debt

Dividends: from the Motley Fool a few days ago -- this 8%-yielder is setting up for big dividend growth in coming years: Targa.

Targa Resources Corp's ]8%-yielding dividend might look attractive, but at the moment it's hanging by a thread. The natural gas pipeline and processing company just managed to generate enough cash flow to cover it last year and expects razor-thin coverage again this year. That's well below the levels of its pipeline peers, which like a margin of safety of 20% to 50% (and above) of cash flow because it gives them a head start on financing expansion projects.

Because Targa Resources doesn't have the luxury of generating excess cash, it has had to be creative in financing expansion projects; it also can't issue more stock to raise money, as this would make its already-tight dividend coverage even worse. While that same scenario led rival Kinder Morgan to slash its dividend and divert that cash to fund capital spending a few years ago, Targa is using a variety of alternative funding sources to finance its growing slate of projects. If this plan works, those expansions could potentially support significant dividend growth in the coming years.

Targa Resources has lined up $3.215 billion of capital projects, which should enter service through 2020, including $850 million of new ones announced this week. That's a large funding requirement for a company that pays out all its spare cash in dividends. However, it has steadily chipped away at that number by partnering on projects with other pipeline companies and private equity funds.

Much more at the article.  

TRGP: 

• share price, 52-week range: $39 - 60; currently: $43 and down a bit today
• yield: 7.66%
• 1-year target est, share price: $54

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Tesla: It Never Quits

From SeekingAlpha --

• Tesla’s Q1 unit sales were flat compared to 4Q: 29,980 compared with 29,967. However, you have to look at the mix and compare with the promises and guidance
• Model S and X combined were 21,800, down 23.3% from 28,425 last quarter. Those are the products with positive gross margin
• Model 3, which carries negative gross margin, fell well short of the 13,800 consensus estimate, at only 8,180 units sold. That’s a miss of more than 40%
• Tesla stated on February 21 that Model S and X were seeing an increase in demand. Considering a 23.3% sales decline, make of that statement what you wish
• this 21% miss on the unit top line ought to mean that we will see reductions in analyst estimates in the coming hours

A couple of points:

• it is my understanding that Tesla does not report "sales." Tesla reports deliveries. Big difference. And I do not know if "deliveries" includes/excludes "rejects." When a Tesla is "delivered" to a Tesla showroom for a customer to pick up, the customer does not have to accept the car. 
•  there is some suggesting that rushing the assembly line to ramp up to 2,000 vehicles per week will have resulted in a lot of quality issues.  

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EV Data Starting To Be Reported

Link here.

Tesla:

• Tesla units:

• Tesla Model 3: we all knew this -- up significantly
• Tesla Model S: this surprised me -- based on media reports I thought deliveries would be lower; in fact, up to 2,922 from 2,050 last month
• Tesla Model X: same thing; this surprised me -- based on media reports I thought deliveries would be lower; in fact, a huge jump, from less than a thousand to almost 3,000 units
• Tesla overall: 10,020

Chevrolet 

• Bolt: basically flat line -- last three month: 1,177; 1,424; 1,774
• Volt: huge jump from 983 to 1,782

• Chevy Bolt/Volt: 3,556

 Nissan Leaf

• 1,500, up from 895 last year

Comment: regardless of the media reports; the twitter tweets; and, the financial situation for Tesla, one has to give bragging rights to Elon Musk based on these early numbers.

The Dow had a huge day, up almost 400 points; Tesla traded up almost 6%.