Inflation Continues to Affect the Market – Closing Bull Oct. 22nd, 2021

Quick Summary:

In this week’s Closing Bull, Tesla hits record profits, inflation continues to rise, Morgan Stanley says “Bitcoin is worthless”, and more.

Key News of the Week:

Market recap

Tesla hits record profits

Inflation continues to rise

Prices of energy skyrocket

Extraction of more than double the number of fossil fuels by 2030

First Bitcoin-linked ETF launched on the US exchanges

Read the Transcript

Welcome to my financial markets’ re-cap for the week.

Before we get to the news, a quick update on the system, after closing a nice win last week, it was a quiet week here. However, we are in a new forecast today, and this will carry forward for a little while. 

We remain quite bullish on the market and see a new all-time high coming for the Nasdaq soon.

So that was the system update; what was the news this week?

This week Tesla posted record sales and profits last quarter despite production slowdowns related to chip shortages and port blockages.

Tesla hit another record last quarter, delivering more than 240,000 cars. 

Tesla raked in $12B in sales in the previous quarter, nearly double from a year ago.

For reference, Nio, Tesla’s biggest competitor in the Chinese market, generated just over $1B in Q2. So Tesla is expanding very fast. Additionally, they only recently launched full self-driving, a fascinating technology for society as a whole. Hopefully, it’s ready!

Inflation continues to worry investors as a recent report showed inflation at around 5%, much higher than the 2% quoted as the benchmark for the fed as a way to control economic policy. They are still saying it is temporary, but not everyone is convinced.

Just this week, P&G, the consumer-goods giant, announced plans to raise prices of skin and bathroom products because of higher costs. Many more companies are being forced to do this. Even the cost of shipping containers to the west has also climbed dramatically in the last little while. So, there is bound to be a knock-on effect from that too.

More bad news for consumers is the price of energy, last week, I spoke of crude oil being up 64% this year, with natural gas prices having doubled over the past six months and heating oil being up 68% this year. Well, coal prices have hit a record too,

Coal is actually at its highest use in 44 years, and it was recently reported that the US will burn 22% more coal in 2021 than it did last year, marking the first YoY uptick in US coal generation since 2014. 

I mean, whatever happened to the green revolution?

All these stats have given the upcoming COP26, the United Nations Climate Change Conference next week food for thought.

An UN-backed climate report found that countries plan to extract more than double the number of fossil fuels by 2030 than they do currently. So, despite the Paris agreement, we are dangerously out of sync with what is required to meet the goals of the scientists is slowing global warming. Scary stuff.

In other news this week, the first Bitcoin-linked ETF launched on the US exchanges, with a few more to follow in the coming weeks. 

Unlike the Chinese markets, which banned bitcoin altogether, the SEC has allowed these to launch as they are tied to the futures market, which launched a US-based bitcoin futures product in 2017 rather than have them linked to the underlying tokens themselves. 

However, not everyone is a fan; Jamie Dimon, the CEO of Morgan Stanley, said he thinks Bitcoin is “worthless” in an investor conference. And he went on to say that:

“No matter what anyone thinks about it, the government is going to regulate it. They are going to regulate it for anti-money laundering purposes, for Bank Secrecy Act purposes, and for tax”

I think we can all agree that digital currencies will be the future of currency, but what is yet to be determined is the players involved, as the central banks have a lot of power, so expect a rocky road in the months ahead.

That’s it from me, it’s the weekend, time to down tools, have a great weekend and thanks for watching, take care and bye for now.

Leave a Comment