Pro Perspectives 12/9/20

December 9, 2020

There are now seventeen states that have joined Texas in the lawsuit that sits with the Supreme Court, and attempts to delay the Electoral College vote and prevent four states (Georgia, Michigan, Pennsylvania and Wisconsin) from casting their Electoral College votes for Biden.  

The Supreme Court has given the defendants (the four states) a deadline of Thursday at 3pm to respond. 

As a result, we are getting a tick up in the VIX today, and a slide in stocks. 

What would be the first stock to sell if the election outlook were to grow murkier if not overturn?  Telsa.

Tesla has made a huge run since the Pandemic was globally recognized back in early March.  As of this morning, the stock was up 12x from the lows of mid March. 

Why?  If you believed that the Pandemic would derail a Trump re-election, and clear the path for the Green New Deal, then Tesla represented the global climate action cooperation trade — the anti-oil trade.  As such, money has plowed into the stock, from around the world, seemingly indiscriminately. 

Tesla is priced like it is designed to destroy the auto industry.  At the close today, the market value of Tesla is equivalent to Toyota, Volkswagen, Daimler, GM, BMW, Honda and Ford combined.

That has made Elon Musk the second richest person in the world. 

How did he get there?

The Obama administration loaned $465 million to the broke electric vehicle company (at the time) back in 2009, at the depths of the financial crisis (under the strategy of "investing in emerging technology").  Tesla had a new CEO (Elon), was burning cash and amassing liabilities, and had yet to produce a consumer viable car.  The government money changed the game.  When the government money hit, big institutional money aggressively followed it. 

Fast forward eleven years, and we now have the auto industry killer, in Tesla.  

That era also spawned Facebook, the killer of traditional media.  Uber, the killer of the rental car and taxi industry.  Airbnb, the aspiring killer of the hotel industry.  It ignited Amazon, the killer of the retail industry.  And now, with the IPO of Doordash today, we have a company that looks like a partner for restaurants, but more likely designed to be the killer of restaurants.  Doordash in its public trading debut today is valued at $72 billion (worth more than Chipotle, Dunkin Brands, Outback Steakhouse and Darden Restaurants combined).