March Blitz Index Update
What is it?
As noted in last month’s Blitz Index update, we use the Index to gauge the economic environment. It takes into account the changes in interest rates, consumer debt, Federal Reserve policy, and broad stock performance.
Why does it matter?
Those factors are still pointing toward a bleak future. There is no change to the Blitz Index score which remains at 0/10. Interest rates continue to rise along with consumer installment debt. The Federal Reserve is maintaining a hawkish stance. What that means is they are talking more about tightening the economy to stabilize prices. Inflation ran rampant and the Fed is not anticipating much growth in 2023.
Tesla Stock Falls as Investor Day Disappoints
What is it?
“Tesla (TSLA) shares moved sharply lower Thursday following its Investor Day presentation the night before, at which the automaker addressed topics like CEO Elon Musk’s ‘Master Plan 3’ and vehicle design but did not reveal a design or specifics about its ‘generation 3’ upcoming car.”*
Looking back we can see that (like Google in a recent market insight) investors were looking for something new. With little new information, investors were underwhelmed and markets responded accordingly.
Tesla announced their next Gigafactory will be in Mexico. However, investors were hoping for more insight on the third generation vehicle. Musk mentioned it would be premature for him to discuss it. With a longer wait until any cash flow from the third generation vehicle than people may have anticipated, this helped send Tesla’s stock price lower.
Why does it matter?
If more well known companies follow suit, then markets could struggle to push higher. Companies are having a hard time keeping investor sentiment high. They are hosting events that keep people engaged, but the companies don’t have much news to share which leaves people unsure of the future. This uncertainty could be a buying opportunity before more positive news comes out. But for now, we see these large names dragging the broader indexes down as investor optimism dries up.
Other articles we found interesting this week:
Bostic: Quarter-point US rate increases best to limit risk to economy
Blackstone defaults on $562 mln Nordic property-backed CMBS
Dollar, yields and stocks rise after US labor market numbers
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Our last 401(k) portfolio reallocation: 5/19/2022.
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Our process attempts to identify trends and momentum in the financial markets. With that information, we align our clients’ portfolio accordingly in the hope to help our clients accomplish their life goals while attempting to lower the risk of a large drop in their portfolio.
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*Pras Subramanian. “Tesla stock down sharply as Investor Day lacks details on next-gen car”. 3/2/2023. https://finance.yahoo.com/news/tesla-stock-down-sharply-as-investor-day-lacks-details-on-next-gen-car-164715469.html
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