The Market, Energy, Political Page, T+61 -- April 30, 2018 -- This Is An Incredible Amount Of Red

Wow, wow, wow. The market is incredible. Too much stuff going on. Again, only some very quick notes.

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

Disclaimer: I make a lot of simple arithmetic errors. I often see things that do not exist; I read quickly and miss important points. Sometimes it takes me days (maybe even weeks) to see where I was wrong.

Biggest energy story of the week (so far): MPC (error corrected; reader noted error; thank you) buying Endeavor. The latter is a refining company. Used to be known as Tesoro. Pacific Northwest look more and more like a loser in the 21st century global economy.

Pending: Apple could make huge announcement tomorrow. This is what I posted January 20, 2018. From CNBC today:

• Apple's plan on how it will repatriate its cash hoard of $285 billion to America is expected to be revealed on the May 1 earnings call.
• the company will start buying back even more of its shares as a first step, analysts say. It's already purchased 22 percent of its outstanding shares since 2012.
• bringing Apple funds back stateside could result in a big boost to the company's dividend.

CAFE: EPA will try to thwart Obama's rules, California's rules on gas mileage. We've talked about this before. Will end up in court. Won't be resolved until after Trump's first (only?) term. Could be argued before the court just as gasoline prices spiking (again). Ford, Gm making strategic decisions now that could be fatal. Or incredibly rewarding.

Honda has "car of the year." Can't sell it to Americans -- don't want it. Americans want SUVs and pickup trucks. Tesla? Has lots and lots of sedans for sale S&3. No pickups yet, and the crossover is not doing well.

Sales of the Accord are down 12% in the first three months of the year compared with the corresponding period last year, when dealers were selling the old model. Meanwhile sales of its main competitor, Toyota Motor Corp.’s Camry, are up around 9%. That endangers Honda’s strategy of trying to grab a larger share of the shrinking sedan market and offset its inability to make enough sport-utility vehicles.

Comment: I see why: the Honda Civic competes directly with the Honda Accord, and in that arena, the Civic is better bang for the buck. Counter-intuitive.  Disclaimer: I love our Honda Civic.

Quality is not Job #1 for Tesla. If I remember, I will get back to this with a screenshot.

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Updates

May 2, 2018: chart at original post has been updated based on estimate from an analyst's estimate after the conference call:

The analyst's estimate:

The graph:

May 2, 2018: chart at original post has been updated based on information from letter released by Tesla when it released its 1Q18 earnings:

According to the letter:

Cash outflow from operating activities in Q1 2018 was $398 million primarily due to an increase in inventory and accounts receivable balances as a result of the timing of deliveries. Higher number of Model S and Model X vehicles in transit at the end of Q1 2018 compared to Q4 2017 had a negative impact of about $120 million on our working capital. Additionally, due to a substantial increase in our deliveries in the last few days of the quarter, our accounts receivables negatively impacted our operating cash flow by $169 million in Q1. Both of these factors provided cash inflows during April. 

Apparently the company has about $2.5 billion cash on hand, and is burning about $1 billion / quarter.

Original Post

Speaking of Tesla: burns cash, not fuel. Anyone following this story closely is amazed that Musk Melon has not yet announced another capital raise. The company needs $2 to $4 billion. Yesterday. Why has Musk not announced a new capital raise. The twitter folks think that the SEC won't allow the company to issue more common shares -- standard practice when a company is under SEC investigation. Don't know but it certainly makes sense. There's a story out there (if I find it again, I will link it) -- that Tesla doesn't have enough cash on hand to outlast the year (2018). Also, if true about SEC investigation, it explains why CFO, others jumped ship earlier this year. From Bloomberg:

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Nissan Rogue: speaking of cars, the Nissan Rogue may surprise folks this year.

Relativity: Korean peninsula is "old news" but photo op in June will be top story for the month. But the real story, now? The Mideast. Trump moves at speed of light -- relative to Congress, media, alt-left. The first country Trump visited after taking office -- Saudi Arabia. Saudi is facing an existential crisis. The prince listened carefully to what the Trumps wanted (Jared and Donald). #1 supporter for the Palestinians? Saudi Arabia. Now this: Palestinians need to take what the US offers -- Saudi Crown Prince.