Monday Takeaways: A Canary in the Markets, and Tesla’s Big Surprise

Shah Gilani|April 29, 2024

Surprise!

Tesla’s back, baby.

Or is it?

The markets cheered Elon Musk’s surprise visit to China and the news that Tesla will partner with Baidu (China’s Google) on autonomous driving software.

The stock has soared today as a result.

But does that mean the Magnificent Seven should welcome the company back into the fold?

You can check out my take in your latest Monday Takeaways video.

Plus, it’s a busy week for earnings AND economic data. And there’s one crucial piece of data I’ll be watching. It will tell us a lot about inflation and future rate cuts.

And reports from the Treasury this week could make or break a market rally.

See what will move markets – and your portfolio – this week in today’s video.

Click on the image below to watch it.

Transcript

Hey, everybody. Shah Gilani here with your Monday Takeaways.

The first takeaway is what happened last week took away a lot of the fear that markets had as far as, well, maybe the Fed cuts (which I’ll get to in a second).

But I think that fear should still be out there because they’re not cutting. What did happen was the fear of earnings not being strong in terms of the leadership companies, the leadership stocks, that kind of got eviscerated, and we saw really good earnings. We saw major pops in big company names and big tech names.

Now, this morning, that crew… Tesla might be back for the moment in the Magnificent Seven boat, at least heading hopefully higher with the tide, given the news that we heard this morning that Tesla, that Elon Musk, flew to China unannounced, supposedly, and made a deal with Baidu to work on the autonomous driving whole setup in China.

Fantastic.

Stock is up big time in premarket here. I have to tell you this is out of left field and, frankly, really good news that Tesla desperately needed. In the premarket, the stock is up 13.5%.

So, again, this is Monday morning’s pre-open. Stock looks like it could open around $190. It closed on Friday at $168 and change.

Big news for Tesla. Is it out of the woods? I’m not so sure. It’s going to be a question about the data that the autonomous vehicles collect.

They collect a lot of data. They’re out and about all the time collecting data from everywhere they are, see all kinds of things. Are the Chinese going to let them Tesla that data, control that data? That remains to be seen.

So I’m not so sure that deal is the be all, end all, and Tesla will now head back to the stratosphere, so be careful out there with that.

We’ve got a busy week, and what we have to be concerned about is, yeah, great rally last week, but can we see follow-on momentum? Will we see follow-on momentum?

Lots of data points this week. One of the ones that’s going to be tricky is Tuesday’s ECI data, the employment cost index. Without getting too wonky on you, we’re looking for about a 1% increase in that. If it’s higher than that, that’s a problem because the employment cost index, a while back, coming out well above expectations, is what triggered the Fed’s change from talking about transitory inflation to, oh, maybe it’s not. So ECI is important. That’s Tuesday.

Takeaway there – If that’s a bad number, it’s 2% or something really crazy above expectations, which are, again, for 1%, then the Fed comes out on Wednesday, with their statement. And are they going to… could they possibly… raise? I doubt it, but anything is possible.

Big week, obviously, because the Fed comes out on Wednesday with their policy statement for rates. Now, the expectation is nothing. The expectation is for slight hawkishness to the statement. Why?

Because things are going really well.

So the takeaway there is it’s going to be a bumpy week. And what could smooth that out? Earnings.

Earnings. Earnings. Earnings.

The mother’s milk of stock market investing.

Earnings.

If earnings are good for Amazon and Apple this week, then guess what? We’re probably going higher, maybe form some kind of base here, and we can maybe try and move higher if earnings continue to do well. But if they disappoint, if Amazon and Apple disappoint, then the market’s going to be nervous yet again, and we may not see any problem.

It’s going to be a tough week. It’s going to be a bouncy week. It could go either way. That’s how fun this week is going to be.

The last thing I want to say, the last takeaway for you guys is, today, the Treasury announces its borrowing estimates.

On Wednesday, they announce the actual refunding schedule.

Now, it was back at the end of October, the last day of October in 2023, when the Treasury said, thank you, Janet. And basically she came out and said, oh, we don’t really think we have to raise as much in the upcoming refunding period because, well, receipts are good.

And that triggered that November 1 stock market rally and bond market rally.

Well, we’ve got a refunding announcement. We’ve got the borrowing needs announcement today. So if the markets key in on that, if they’re positive, the market could key in on that and move higher based on what happened last time.

On November 1, we had this monumental rally. That could be another trigger.

So markets have that possibly working for them, and I doubt that Janet Yellen is going to say anything negative. Maybe it’ll be a plain vanilla announcement. Maybe they won’t move the markets, but they could.

So the takeaway there is to pay attention to the quarterly estimates, borrowing estimates, and then on Wednesday, the refunding schedule. So it’s going to be a busy week. Lots of stuff going on. The takeaway there is from all of this is be careful out there.

We’re not out of the woods, people. We’re not out of the woods by a long shot.

Catch you guys next week. Cheers.