Trump’s Record, Tesla’s problem and US Oil Stocks

14 Jan 2021

On Wednesday, the US House of Representatives voted to impeach President Donald Trump, making him the first president in US history to be impeached twice. In any other situation, we could talk about the reaction from the financial markets to this event. But not in a pandemic world where markets have their own laws of behavior. So the US stock market did not think to decline, as well as the dollar.

Yesterday oil did not even think to grow, although it had a reason for this: US oil inventories drop (formally indicates a deficit in the market), which is a bullish signal. Let us express on this occasion the theory that we voiced earlier: when oil was at $ 10- $ 20, US, China, India and other countries actively purchased cheap oil, filling up reserves. And now, when there is a choice to buy oil on the market at $53 or take at $15 from the stocks, they choose the second option. That is, there is no deficit as such, but there is a purely economic calculation and an attempt to save up to $100 million a week.

And where does a serious shortage in the oil market come from now, if there are lockdowns all around? This means that the demand has dropped sharply and is not growing. At the same time, the OPEC + compliance level literally collapsed from 100% + to 75% in December. That is, we are talking about the fact that an additional supply appeared on the oil market under 2 million bbl / d. In total, our mid-term vision for oil has not changed: we are still selling the asset.

Tesla buyers received "great" news yesterday: The National Highway Traffic Safety Administration (NHTSA) on Wednesday asked Tesla (NASDAQ:TSLA) Inc to recall 158,000 Model S and Model X vehicles over media control unit (MCU) failures that could pose safety risks by leading to touchscreen displays not working. This is a rather atypical situation, since usually companies themselves initiate a recall of cars if they find faults in them. Tesla pretends that they do not see any problem. They can be understood, well, the most secure and highest-quality car in the world will have technological problems that provoke a threat to security. Recall that Tesla is a huge bubble that must burst sooner or later. And news like this is essentially a needle that leaves holes in the bubble shell.