1. Venezuelan Sanctions Heat Up
It’s out of the frying pan and into the fire for Venezuela’s active President, Maduro, who has just been slapped with a fresh set of sanctions after domestic security forces used violence to block US humanitarian aid from entering the country. Yikes!
Four of Venezuela’s top brass have been targeted with sanctions in the latest attempt to squeeze Maduro to resign in favour of opposition leader, Juan Guaido.
The US, Canada and a number of nations have banded together against the violence displayed by Maduro’s Chinese and Russian-backed armed forces which left at least three dead and over 300 wounded. While the US has not taken a military response off the table, regional partners Brazil, Peru and Chile are committed to resolve the crisis diplomatically…for now.
However, China and Russia’s vested interest in Maduro makes the situation slightly more complicated. Even though they are yet to offer physical support to Maduro, the possibility of the conflict becoming a proxy war of attrition still remains a scary prospect.
For now, the big guns have yet to clash, but the longer the crisis persists, the deeper the economic damage to Venezuela’s broken economy will be. Guaido will have a hard task ahead of him to reconstruct the nation’s energy-based economy and global supply chain, but with the right reforms the nation could come back in better shape in a matter of years. Only time will tell!
2. Tesla In The Spotlight
So Mr. Musk is in trouble with the Securities Exchange Commission (SEC) for his twitter activity yet again. What else is new?
Musk’s previous run in with the SEC left him banned from mentioning any information that may have a bearing on Tesla’s share price without explicit approval. His latest tweet mentioned the production of 500,000 vehicles in 2019, which has been viewed as a clear violation of the settlement which cost him and Tesla a whopping $20 million each (pocket change for Mr. Musk).
Importantly for the markets, Musk was allowed to stay on as Tesla’s CEO as his leadership was deemed synonymous with the brand. However, his latest antics have put his position at the helm of Tesla in jeopardy once again, and investors are not pleased about it!
Tesla dropped 5% during yesterday’s extended session, breaking below a key support level at $295. Losing Musk as CEO would cause untold damage to the company and long term investors in Tesla are beginning to get frustrated with his expensive social media outbursts.
Negative developments in the proceedings will weigh heavily on Tesla’s share price in the near term, But a positive end result could see the company revisit the $300+ territory again without too much trouble. Now we play the waiting game…
Today we are watching…
1. Home Depot (#homdep)
After Walmart’s bumper earnings announcement, analysts will be paying close attention to the likes of Home Depot, Lowe’s and Macy’s to see if they can all hold the trend against the encroachment of rival, Amazon. The company has performed well since the start of the year and lies approximately 11% below its previous high, which may look to some like a good opportunity for a bit of upside to come. However, some analysts have been revising their earnings estimates lower in the run up to today, which leaves us with a mixed picture of today’s earnings call. The consensus EPS estimate is $2.16 (+27.8%) on revenue of $26.56bn (+11.2%).
2. Sempra Energy (#sempr)
Sempra is looking in top shape ahead of its earnings announcement today, thanks to favourable weather conditions and a number of smart acquisitions and divestures. The company experienced higher demand for its services and completed $1.6bn worth of sales for its solar and battery storage assets which will likely show up on its cash flow statement ahead of today’s report. Analysts are expecting Sempra to post solid results today. So keep an eye on this one!