Market Round Up: Arriba! Andale! Mexico USA Truce & Elon Rocks Tesla
Arriba! Arriba! Andale! Mexico and U.S. reach trade truce
Who said you can’t turn a mule into a race horse? President Trump announced a new trade deal between Mexico and the U.S., with talks also about to kick off with Canada, to replace his predecessor’s hated North American Free Trade Agreement (NAFTA).
The about-turn has been received very positively by markets all around the world as it shows a willingness to compromise after all. The U.S. and China may still be at each other’s throats but at least there is a sign that something could be accommodated in the near future.
One of the immediate beneficiaries of the trade agreement were car makers with American auto manufacturers share prices such as General Motors, Ford and Fiat Chrysler picking up yesterday – as did German car companies BMW, Volkswagen and Daimler; despite the result of the new deal requiring 75% of car components to be be made inside both countries, plus a requirement that (most) car workers would have to earn at least $16 per hour. Clearly, investors are happy with a clear direction even if costs may need to be absorbed in greater efficiencies inside the two countries.
2. Elon rocks the Tesla
Will he? Won’t he? Well, for now, Elon Musk has said he will keep Tesla public.
Having earlier announced he had ‘secured funds’ to buy up all the shares in Tesla and take it down the privatised route to avoid the graft of quarterly reporting and the ‘mood’ swings of the market, Musk has decided that keeping it public is best for the company – as going down the privatisation route would be “time consuming and distracting”. Still, this doesn’t mean all his problems have gone away: law suits abound.
Short-sellers felt peeved about his original statement that sent the share price rocketing (to the moon!) and therefore knocking them out of the field – some would say it’s just sour grapes because when it comes to investing you win some; you lose some. In short-sellers’ case they lost; but if they had held on to their hats they would be laughing all the way to their banks now since Tesla has taken quite a hit since. For long term investors it’s a matter of holding their breath and hoping Musk can keep of Twitter and just focus on improving car production.
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