iftttwall

Just hours after Elon Musk took to Twitter to reveal to the world that Tim Cook wouldn’t take his phone calls when he was looking for a bailout, Morgan Stanley has now come out and admitted that Apple’s entrance into the self-driving market creates “a new Tesla bear case”. 

Tesla uber-bull Adam Jonas wrote in a note on Tuesday: “Apple’s potential entry into autos represents perhaps the most credible/formidable bear case for Tesla’s stock that investors have had to consider for some time.”

If “Apple were to really throw its weight around,” legacy automakers could have a hard time competing, Jonas said, according to Bloomberg.

And in true sell-side fashion – despite this “formidable” new bear case – Jonas, who has a history of “predicting” Tesla price targets within multiple-hundred-dollar ranges, maintained his $540 price target on the company (reminder, this is a $2700 pre-split price target). 

Jonas also highlighted suppliers that may win from Apple’s entrance into the industry, including Lidar suppliers Luminar Technologies Inc. and Velodyne Lidar Inc.

Recall, we also noted yesterday what other analysts on the street were saying about Apple’s entrance into the market. “Apple has ingredients to be successful in future auto industry: access to capital and talent, proven hardware design and a rich ecosystem to leverage service revenue,” Jonas had said on Monday, prior to yesterday’s note.

Tesla’s stock has looked stuck and stagnant this week after its inclusion into the S&P 500 and after we noted that Apple was throwing its hat into the self-driving car business on Monday. In addition to designing self-driving vehicles, Reuters also reported that Apple’s cars could “include its own breakthrough battery technology”.

Apple’s development project, called “Project Titan” was rumored to have been shelved after first starting in 2014. However, former Tesla executive Doug Field returned back to Apple in 2018 to work on the project before laying off 190 people from the team in 2019. But since then, “Apple has progressed enough that it now aims to build a vehicle for consumers”, Reuters noted.

The saga took another twist on Wednesday when Musk revealed on Twitter he had sought out help from Apple and that Tim Cook wouldn’t take a meeting with him. As we said yesterday, in case anybody was left wondering about whether or not Apple planned to become a Tesla competitor or not, it seems as though that narrative has been sewn. 

The cash market open has triggered panic-selling in bonds and the dollar (GBP impact) and a dramatic divergence in the US equity markets.

Small Caps are ripping out of the gate but Nasdaq is getting puked…

This pushed small caps to their best relative to big tech since March…

The dollar is tumbling (as cable strengthens)…

And bonds are being dumped…

Did we start year-end window-dressing or is liquidity so low that algos can push every market around with some call buying?

By Stefan Koopman, Senior Market Economist at Rabobank

For months’ on end, lawmakers in the US have been struggling to find common ground and reach a compromise on a new Covid-19 relief package. Eventually they found each other at an estimated USD 900bn, which is closer to what the Senate Republicans preferred. See also this piece from Philip Marey for his insights into this deal.  

The deal had been reached minutes before midnight and is attached to the regular spending bill that should fund government operations through next September. Even though it all seemed to be going fine and yet another partial shutdown was averted, President Trump decided in one of his ‘signature moves’ to upset the applecart at the very last moment and, among other things, to suddenly call for higher stimulus payments (USD 2,000 rather than the agreed USD 600) for individuals. Whilst he did not outright say that he would veto the current stimulus bill, which the House and the Senate could in turn override with supermajority votes, there is a risk of a so-called pocket veto. If this bill isn’t on the President’s desk by the end of the day, he could effectively veto it by keeping it in his ‘pocket’ for the next ten days. The President is given this exact ten day window, Sundays excluded, to either sign or veto a bill, but the current Congressional session will end on January 3. After that date, the President simply cannot return the bill to Congress. The upshot is that a decision not to sign the bill would then be a pocket veto and Congress does not have the opportunity to override. This would mean that the much-needed stimulus checks won’t go out in the days after Christmas. Sorry not sorry?

Since the UK-France border closure began on Sunday, nearly 3,000 lorries have been stuck in southern England and it is likely to take days for this situation to be resolved. However, yesterday afternoon the European Commission recommended that critical trade and passenger transport links between the UK and continental Europe should be reopened as soon as possible. Only a few hours later, France followed these recommendations and agreed to end the suspension, yet allowing passage only if the EU citizens stuck in the UK are able to show a negative Covid-19 test. (Note here that Britons could be barred from EU entry on January 1 2021, when the UK becomes a “third country” to the EU, unless their travel is deemed essential).

It is indeed tempting to make the connection with Brexit. Could we regard the Commission’s intervention as an olive branch towards the United Kingdom, which is legally still being treated as an EU member state, or is it a jab towards France, which continues to push for tougher EU negotiating positions on all things Brexit (and may found this situation a little too convenient… sorry not sorry?). The dynamics are the same: France and the UK are at loggerheads over Covid and Brexit, and the European Commission mediates. It once again shows that ‘sovereignty’ is more than the capacity to write your own laws. It is also about being able to manage interdependencies in ways that work out well. From a geographical point of view, the UK will always remain highly dependent on European coastal states in terms of its transport links and its access to international markets. This week’s events have reminded us how delicate this balance is.

So, is there going to be Brexit deal? We still think there is one to be done here, as it is in the best interests of both parties in these negotiations. In fact, if you forget about all the self-assigned deadlines, you would even be inclined to think that the entire process went according to script. Already in February this year, just weeks after ‘Brexit day’, the two negotiating mandates showed that there were some pretty big gaps on level playing field, deal governance, and fisheries. It was expected that one or more political interventions would be needed to bridge these gaps. It was also clear that, at least in relative terms, fisheries would be the strongest card in the UK’s deck. So, here we are, in the final stage of the negotiations, and Prime Minister Johnson is directly calling on President Von der Leyen to mediate between the UK and the EU’s coastal states and to talk fish.-

The hope is that this drawn-out process comes to an end sooner than later and that there’ll be a deal before Christmas eve. In that case there should be just enough time left to get the legal and procedural work in order to allow for provisional application of the new treaty from January 1 onwards. Otherwise the EU and the UK would be really getting in uncharted territories. But if no-deal is the end result, it won’t be because of the process. It will be because of fishy politics.

Back to the US, where the estimate of third quarter GDP was revised up a little bit to 33.4% from 33.1% annualized, which is a relatively minor revision at these growth rates. There were no significant changes ‘under the hood’ either. The consumer confidence numbers were more interesting. The widely held axiom is that there can be no robust economic recovery unless the pandemic is brought under control; and yesterday’s confidence figures were fully in line with this thesis. The Conference Board’s measure declined sharply to 88.6 in December from a downwardly revised 92.9 in November. This was far below the consensus expectation and provided a sombre preview of the Christmas shopping season. It is also another clear signal that rising virus cases, hospitalizations and deaths across the Northern Hemisphere, which aren’t likely to abate anytime soon, will weigh on consumer sentiment until a widespread rollout of the vaccines allows governments to set the reopening of the economy in motion.

By Stefan Koopman, Senior Market Economist at Rabobank

For months’ on end, lawmakers in the US have been struggling to find common ground and reach a compromise on a new Covid-19 relief package. Eventually they found each other at an estimated USD 900bn, which is closer to what the Senate Republicans preferred. See also this piece from Philip Marey for his insights into this deal.  

The deal had been reached minutes before midnight and is attached to the regular spending bill that should fund government operations through next September. Even though it all seemed to be going fine and yet another partial shutdown was averted, President Trump decided in one of his ‘signature moves’ to upset the applecart at the very last moment and, among other things, to suddenly call for higher stimulus payments (USD 2,000 rather than the agreed USD 600) for individuals. Whilst he did not outright say that he would veto the current stimulus bill, which the House and the Senate could in turn override with supermajority votes, there is a risk of a so-called pocket veto. If this bill isn’t on the President’s desk by the end of the day, he could effectively veto it by keeping it in his ‘pocket’ for the next ten days. The President is given this exact ten day window, Sundays excluded, to either sign or veto a bill, but the current Congressional session will end on January 3. After that date, the President simply cannot return the bill to Congress. The upshot is that a decision not to sign the bill would then be a pocket veto and Congress does not have the opportunity to override. This would mean that the much-needed stimulus checks won’t go out in the days after Christmas. Sorry not sorry?

Since the UK-France border closure began on Sunday, nearly 3,000 lorries have been stuck in southern England and it is likely to take days for this situation to be resolved. However, yesterday afternoon the European Commission recommended that critical trade and passenger transport links between the UK and continental Europe should be reopened as soon as possible. Only a few hours later, France followed these recommendations and agreed to end the suspension, yet allowing passage only if the EU citizens stuck in the UK are able to show a negative Covid-19 test. (Note here that Britons could be barred from EU entry on January 1 2021, when the UK becomes a “third country” to the EU, unless their travel is deemed essential).

It is indeed tempting to make the connection with Brexit. Could we regard the Commission’s intervention as an olive branch towards the United Kingdom, which is legally still being treated as an EU member state, or is it a jab towards France, which continues to push for tougher EU negotiating positions on all things Brexit (and may found this situation a little too convenient… sorry not sorry?). The dynamics are the same: France and the UK are at loggerheads over Covid and Brexit, and the European Commission mediates. It once again shows that ‘sovereignty’ is more than the capacity to write your own laws. It is also about being able to manage interdependencies in ways that work out well. From a geographical point of view, the UK will always remain highly dependent on European coastal states in terms of its transport links and its access to international markets. This week’s events have reminded us how delicate this balance is.

So, is there going to be Brexit deal? We still think there is one to be done here, as it is in the best interests of both parties in these negotiations. In fact, if you forget about all the self-assigned deadlines, you would even be inclined to think that the entire process went according to script. Already in February this year, just weeks after ‘Brexit day’, the two negotiating mandates showed that there were some pretty big gaps on level playing field, deal governance, and fisheries. It was expected that one or more political interventions would be needed to bridge these gaps. It was also clear that, at least in relative terms, fisheries would be the strongest card in the UK’s deck. So, here we are, in the final stage of the negotiations, and Prime Minister Johnson is directly calling on President Von der Leyen to mediate between the UK and the EU’s coastal states and to talk fish.-

The hope is that this drawn-out process comes to an end sooner than later and that there’ll be a deal before Christmas eve. In that case there should be just enough time left to get the legal and procedural work in order to allow for provisional application of the new treaty from January 1 onwards. Otherwise the EU and the UK would be really getting in uncharted territories. But if no-deal is the end result, it won’t be because of the process. It will be because of fishy politics.

Back to the US, where the estimate of third quarter GDP was revised up a little bit to 33.4% from 33.1% annualized, which is a relatively minor revision at these growth rates. There were no significant changes ‘under the hood’ either. The consumer confidence numbers were more interesting. The widely held axiom is that there can be no robust economic recovery unless the pandemic is brought under control; and yesterday’s confidence figures were fully in line with this thesis. The Conference Board’s measure declined sharply to 88.6 in December from a downwardly revised 92.9 in November. This was far below the consensus expectation and provided a sombre preview of the Christmas shopping season. It is also another clear signal that rising virus cases, hospitalizations and deaths across the Northern Hemisphere, which aren’t likely to abate anytime soon, will weigh on consumer sentiment until a widespread rollout of the vaccines allows governments to set the reopening of the economy in motion.

The British and their former European partners have been arguing about “the fish” like an Italian family on Christmas Eve for nine months now. But now that people on both sides are insisting that the other major obstacles to a trade deal have been resolved, it appears an agreement over access for European fishermen (and women) is in the offing.

• EU PREPS PROCEDURE OF PROVISIONAL APPLICATION FOR UK DEAL: RTRS

As one might expect, the pound is rallying, even though this wouldn’t be the first time that headline-driven Brexit hopes have been dashed on the unforgiving rocks of reality. But with just days left before the UK is finally cut off from the EU customs union and single market (the country formally departed the EU a year ago, and the two sides have been operating according to the terms of a withdrawal treaty approved by both sides last year (but not before Boris Johnson supplanted Theresa May as PM and successfully gambled on an parliamentary election that delivered an outright majority for the Tories, considerably strengthening BoJo’s hand).

But in recent days, fears of a super-infectious strain of SARS-CoV-2 have prompted more than 30 countries (including most of Britain’s neighbors on the Continent) to freeze travel and trade links with Britain, giving BoJo a brief but painful preview of what might lie in wait for the British people.

Over the past hour, however, GBP has climbed on news from the EU side that an agreement has been reached and that European bureaucrats are putting together the final proposal so the European Council and others can sign off on the new trade deal.

On Wednesday morning, Michel Barnier, the EUs chief negotiator, told a meeting of ambassadors from the EU27 member states Tuesday that there has been progress and that a deal could be signed before Christmas that is, assuming the British are ready to compromise fonn fishing,.

Prime Minister Boris Johnson and European Commission President Ursula von der Leyen intervened personally Monday and Tuesday, holding several phone conversations to try and keep talks going. Talks resumed early Wednesday in the Commission’s Berlaymont headquarters in Brussels.

Other people close to the discussions are now playing down rumors that a trade deal is imminent after 9 months of extremely fraught negotiations.

According to Bloomberg, discussions are focused on two remaining disagreements, both involving fishing rights. They are: what access EU boats will have to British waters, and what rights the EU will have to impose retaliatory tariffs should the UK double-cross Brussels and raise tariffs in the future.

Finally, one anonymous source from the UK side said minutes ago that “there’s no white smoke yet”, while the Sun, a popular British tabloid, reports that a “bizarre” new disagreement over electric vehicle batteries has emerged as a last-minute issue.

While most Wall Street analysts believe a last-minute deal is inevitable, a team of analysts at Morgan Stanley warned clients in a recent note that the market is likely significantly under-pricing the risks of ‘no deal’, just like it under-priced risks of the original Brexit vote.

For about a day, it seemed that the Covid stimulus bill – full to the gills with billions in pork as described here – was set to pass and normalcy would return to Congress where lobbyists and special interests would once again regain control over the “democratic” process… when Trump stunned everyone late on Tuesday when – at the very last moment when – among other things he called for higher stimulus payments ($2,000 rather than the agreed $600) for individuals, while demanding that “wasteful and unnecessary items” be eliminated.

In response, top House democrat Nancy Pelosi tweeted that Democrats are ready to bring $2,000 in direct checks to the Floor this week by unanimous consent, although it was unclear just where the additional funding would come from and what would happen to the tens of billions in pork in the bill.

In any case, while Trump did not outright say that he would veto the current stimulus bill, which the House and the Senate could in turn override with supermajority votes, there is a risk of a so-called pocket veto. If this bill isn’t on the President’s desk by the end of Wednesday, he could effectively veto it by keeping it in his “pocket” for the next ten days. The President is given this exact ten day window, Sundays excluded, to either sign or veto a bill, but the current Congressional session will end on January 3. After that date, the President simply cannot return the bill to Congress.

In other words, if Trump fails to veto the bill in ten days (Sundays excluded) the bill would automatically become law.

It’s also why the initial jolt lower in futures reversed entirely overnight, as analysts said investors shouldn’t worry about Trump’s attack on the pork in the coronavirus relief package as the president can only delay passage by about a month, while his prodding might in fact boost checks to individuals.

As Vital Knowledge founder Adam Crisafulli wrote in a note, Trump’s criticism, and implicit veto threat, “won’t alter the macro narrative” and that “even if Trump actually vetoes (unlikely) and Congress fails to override it (also unlikely, given the stimulus/budget passed with veto-proof majorities), this will only delay the inevitable by 27 days (which would be unfortunate, but not material).”

“The big debate isn’t whether the $900b stimulus gets passed into law but instead if it represents a ‘down payment’ or the last major fiscal response to the pandemic,” with the outcome of Georgia Senate races in early January playing a “big role in answering that question”, Crisafulli explained.

Meanwhile, adding to the bullish case, FiscalNote’s Stefanie Miller wrote that it’s “possible that the public pressure from the president could in fact yield an additive policy to enact higher rebate checks.” Even so, she doubted any changes would be made to the “underlying package awaiting Trump’s signature – meaning it’s unlikely in our view any other of Trump’s demands are met.” Ultimately, she said Congress is highly likely to override a veto, as the policy has already been approved by both Chambers with veto-proof majorities.

Finally, Raymond James analyst Ed Mills’ base case remains that the bill passed by Congress will become law, as the package passed both the House and the Senate with veto-proof margins, and $2,000 payments have no support among Republican lawmakers. He added that Trump’s “demand is arguably a net positive for Democrats’ chances in the Georgia Senate races, as Republicans will be forced on the defensive.”

In other words, all that has happened is that Americans will almost certainly get the $600 stimulus checks, only with a several week delay.

Nikola shares plunged more than 10% pre-market after an order for 2,500 garbage trucks it previously had in place with Republic Services was canceled. The stock had previously rallied to $44 on news of the announcement back in August of this year. This morning, the stock was trading as low as 14%, a 12% drop.

“The electric vehicle maker said it has discontinued its collaboration with Republic Services Inc,” MarketWatch wrote on Wednesday morning.

A joint statement between the two companies said: “After considerable collaboration and review, both companies determined that the combination of the various new technologies and design concepts would result in longer than expected development time, and unexpected costs. As a result, the program is being terminated resulting in the cancellation of the previously announced vehicle order.”

“The goal of the collaboration was to design and build an industry-first fully integrated refuse truck based on a zero-emissions battery-electric drive platform and body while also integrating multiple new systems into a new state-of-the-art vehicle,” Nikola said in its release.

But new Nikola CEO Mark Russell called the termination of the deal “the right decision”:

“This was the right decision for both companies given the resources and investments required,” said Nikola CEO Mark Russell. “We support and respect Republic Services’ commitment to achieving environmentally responsible, sustainable solutions for their customers. Nikola remains laser-focused on delivering on our battery-electric and fuel-cell electric commercial truck programs, and the energy infrastructure to support them.”

And so, the Nikola Garbage Truck goes the way of the Nikola Badger; neither existed to begin with, and neither may ever exist. 

it’s all downhill from here https://t.co/rDnwgptiKo

— Barbarian Capital (@BarbarianCap) December 23, 2020

NIKOLA AND REPUBLIC SERVICES END COLLABORATION ON REFUSE TRUCK

R.I.P. Nikola Refuse Truck
(Never existed – Dec. 2020)

— Quoth the Raven (@QTRResearch) December 23, 2020

LOL, I guess that decided they won’t be part of $NKLA ’s garbage ->$NKLA announced that $NKLA and $RSG have discontinued their collaboration on refuse truck development.

— Option Millionaires (@OMillionaires) December 23, 2020