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Last Thursday, after a grueling three year crusade to make life for taxpayers in the second-lowest rated US state even more unbearable…

… New Jersey finally passed a tax on millionaires fulfilling a long-running dream of governor Phil Murphy and Democratic leaders.

Facing a fiscal crisis of epic proportions, Murphy finally convinced holdout lawmakers to raise the tax rate on earnings over $1 million to 10.75%, up from 8.97%. As we noted last week, it remains unclear how quickly this decision will prompt an exodus of the state’s richest residents. What was clear, however, is that it was only a matter of time before other Democrat-run, fiscally-irresponsible states would follow NJ’s lead now that the seal has been broken. After all, progressives in Albany have already been pushing governor Cuomo to consider a variety of bills, including one to raise the tax rate on those earning more than $100 million to almost 12%.

So just a few days later, the same progressives have lowered their sight on what the “fair” wealth redistribution cutoff should be, and as the WSJ reports, New York legislators said New Jersey’s agreement to increase taxes on millionaires should be matched in New York, and are pushing the state Legislature here to convene soon to consider a revenue package.

To make sure they are heard loud and clear, a coalition of advocacy groups called #FundExcludedWorkers, which includes unions representing nurses and auto workers, is planning a Friday protest along Park Avenue to call for taxing the income and wealth of billionaires.

Just like New Jersey, which was hit hard by the coronavirus pandemic, New York has seen a $14.5 billion decline in state revenues, but so far Gov. Cuomo has pushed off negotiations on adjusting the state budget in the hope that Congress will appropriate additional aid. The Democratic governor said last week that might mean a delay until after the November election.

Of course, for some progressive lawmakers such a delay is unacceptable and pointing to New Jersey, they say that the passage of the millionaire tax undercuts Cuomo’s argument, and they will increase pressure for action.

To be sure, they’ve already done the math: New York State currently taxes income over $1,077,550 at a rate of 8.82%. If New York matches New Jersey and income over $1 million is taxed at 10.75%, the state could generate an additional $5.28 billion a year, according to the Fiscal Policy Institute, a labor-backed think tank.

“While New Yorkers bore the brunt of Covid-19 in lives lost and economic disruption, our state leads the nation in income disparity, and that is reflected in our tax code,” said Jonas Shaende, the organization’s chief economist.

For now Cuomo – who understands the migratory mechanics of a tax hike all too well, and realizes that in the long run it would cripple the state’s tax revenue – is still resistant to the idea, desperately hoping for a Federal bailout instead. His budget director, Robert Mujica, said after the New Jersey announcement that most of New York’s top earners live and work in New York City, where the top combined city and state income tax rate is 12.6%. Mujica has frequently said that the highest-earning 2% of New York tax filers account for a majority of income tax receipts.

“There is much discussion about the state and nation’s economic condition and the options available to New York state. Let’s make sure the discussions are informed,” Mujica said.

Meanwhile, Republicans argue that New York should first look to reduce spending before increasing taxes, but of course that argument won’t get them anywhere at least not for a few more years, before the state implodes after taxes on the rich become unbearable and the entire state suffers a fiscal collapse. Only then will conservative policies re-emerge but until then, New York – like New Jersey – should brace itself for an even more dire budget picture as the rich flee.

“I’ve never been jealous of Jersey before,” said New York Assemblywoman Yuh-Line Niou, a Democrat from Manhattan who would be much less jealous if New York also agreed to pass a law taking from the rich. “It goes to show something, and means we can’t use the excuse that people will go to Jersey if we raise taxes.”

No, but the same millionaires and billionaire you are targeting can just easily leave the tri-state area for good – especially in this age of working for home – and head for Florida or any other state that will gladly accept New York’s wealthiest.

Authored by Bill Blain via MorningPorridge.com,

October is always a good month for a market crash, but usually on the back of insane market exuberance. This year, flatlining markets feel pretty joyless already, thus I suspect even an old-fashioned October market melt-down will prove lacklustre. 

Still… at least we’ve got the King Of Hype on later today as Elon Musk gives us “Battery Day”.

I really can’t contain my excitement. (US Readers: sarcasm alert.) 

What unsubstantiated and unmerited promises will be thrown at us in the form of irrefutable truths?  

Rocketmen…. 

The tech sector is prone to bubbles, hype and illusion for good reasons. If anything has been around for more than a few years, then it becomes mature and more difficult to construct outlandish investment scenarios and insane valuations around. If Elon Musk is a genius – it’s not because of his tech vision and engineering prowess (he hires people to do these for him), but because he is able to construct highly plausible sounding narratives around his investment scams scenarios. Dress them up in mumble-techno-babble and they sounds like genius. 

Take the time to analyse them, and walk away… except it’s not that black and white. There is a kernel of sense and possibility in Tesla and the other things he does…

Like everyone else I’m always to figure out where the next big-money stock might be hiding out. I’ve been trying to work out what the next big deal is going to be. What stock is going to go stratospheric on pulling in the punters? That got me thinking – maybe it’s the one that’s just landed on my desk. A company setting up to launch low-earth orbit satellites from the UK cheaper and faster from anyone else.. It looks a great deal – and the numbers are enticing. For a modest outlay it will be possible to own a slice of a proven rocket launch technology and system. 

Satellites are a fascinating market. The opportunities thrown up by space are legion – new markets, new revenues and new possibilities. And as soon as you think of rockets you have to think of SpaceX. 

I’ve been shot down so many times on Tesla – because I don’t understand it, apparently. If/when the Telsa bubble bursts – then SpaceX is there as Musk’s next miracle stock. Its latest $1.9 bln pre-IPO funding round values the company at $42 bln. The Manic Monks of Blessed St Elon believe it will be worth $150 bln in just a few years time – with the potential to be worth trillions. 

I like rockets so I want to believe.

The recent SpaceX funding round to literally take investors into space was done and dusted in hours. It takes me longer to write the teaser on a deal like that. Investors didn’t need to look at the deal, review financials or understand the tech – they read “Musk”, “Space”, “Disruption”, “Rockets” and heard the fun-fair music playing…. 

SpaceX is apparently going to make Tesla look small change. Who knew ferrying astronauts to space could be so valuable? Well, it’s not. That’s just what we’ve seen on the news about SpaceX’s Dragon capsule flying to the ISS. That’s a highly regulated game – which limits profits. Boeing’s rival Starliner launch vehicle is more than a year behind SpaceX because it has to pass tests. (But if there is one company I have even less time for than Tesla, its Boeing!)

SpaceX’s success has been the commercially orientated Falcon rocket.  Credit where credit is due. Its superb. The Falcon is one of a number of commercial launch vehicles that has sent the cost of space launches crashing. (Should we use crashing in a story about rockets?) 

SpaceX has launched over 100 missions and only lost 5 – which is about normal. What makes it special is the Falcon 9 is reusable – (although it reduces the payload it can carry because it needs additional fuel to land again) and it does cost about 10% of the cost of a new rocket to refurbish. One Falcon has flown 6 times. Kudos and respect – it’s a serious step forward and makes it cheaper overall. 

But SpaceX is just one of the firms that has driven the commercialisation of space launches. There are other serious players in the space rocket business including Arianespace, ISRO from India, ULA, Mitsubishi, and Rocket Lab. At the other end of the Space industry race is Virgin Orbit – $700mm of investment that still hasn’t circled the planet, while Virgin Galactic joy-rides are 12 years late. There are significant risks. 

The powers that be reckon low-orbit small/mid-sized satellite market was worth between $5-6 bln in 2019 depending whose data you use. Its growing 6-7% per annum. It’s about communication, GPS services, remote sensing, recon and science. There are good military contracts to be won. At some stage it’s going to spawn whole new sectors like micro-facturing and pharma in zero-G, and eventually launch robots to go space mining. For global aerospace industries looking to recover and re-allocate resources from the stalled and stagnant aviation sector – Satellites and Space look a very interesting option. 

In a competitive launch market SpaceX isn’t going to be worth trillions on just rockets. Let’s assume Musk gets 25% of launches (because satellite owners will spread launches among competing firms) and the others will cut costs, then he could win $2.5 bln of a $10 bln market. Maybe even $5 bln of a risk market. That is not an exciting metric for Musk.

He has therefore changed the narrative. Musk is spinning the tale the value in SpaceX lies in launching a constellation of 12,000 low orbit Starlink satellites to re-invent superfast broadband. Each Falcon can put 60 of them into LEO (Low Earth Orbit). See SpaceX wants to conquer the internet for a basic primer on the pros and cons of the story. Its already happening. 

Musk’s thesis is his Starlink system will disruptthe whole tele-coms sector, making superfast fibre-optics obsolete and undermining existing players overnight… making it available to everyone at a fraction of the current cost. Starlink will make the www.net available to everyone everywhere. Apparently. Just like Iridium et al were going to do 20-years or more ago. Yeah.. that didn’t end as expected.

Does this sound familiar? Like how Tesla went from being a good niche producer of electric alternative cars to re-writing a new narrative that framed Tesla in a whole new agenda for personal travel, self-driving cars, batteries and power – despite not making any profits and selling 0.5% of world autos. Disruptive yes. Bubblesque – definately. Overpromised and underlivered?

Space based internet is an old idea – the problem with Geostationary satellites was latency time-slips. To make it work from Low Earth Orbit, I wonder about the implications of 12,000 satellites in orbit… At $62 mm per SpaceX launch, plus the cost of the satellites at, say, $500k, then it’s going to cost in excess of $18 bln – which isn’t as outrageous as it sounds when Musk has his magic money tree of investor belief. (Some analysts think SpaceX could get to $15 mm per launch and $250k per satellite, which would total $6 bln to launch Starlink.) 

There is certainly value in broadband connectivity – but also issues. Competition will be one. The current incumbents are not going to sit and wait while Musk launches 200 Falcons into orbit to eat their lunch. Starlink will be very useful for off-grid communities and out of town. Less so in Cities. Astronomers are objecting to the number of satellites crowding out the skies – I agree with them! Putting more and more satellites into Earths already crowded low-earth space could prove increasingly dangerous in terms of collisions.

Why am I suspicious? Apparently I don’t understand. Again. The Musk fanboys assure me Starlink and Space X will be the secret sauce confirming Musk as the greatest financial/technical genius of all time.  He’s a brilliant something – but it’s a something I can’t really write in the Porridge. With any luck Starlight will be successful and will fund Musk on his trip to Mars.

If anyone wants to learn more about our Satellite project… Would you like to take on Musk for $20 mm with a rocket and platform that’s proven? 

The National Hurricane Center (NHC) is monitoring three tropical systems in the Atlantic Basin on Tuesday. 

The first system is Tropical Storm Beta, which made landfall just north of Port O’Connor, Texas, on Monday night. By Early Tuesday, Beta was moving northwest at three mph and is expected to stall over Texas. It will then shift east-northeast later in the day and most likely weaken. Beta will continue moving inland over southeastern Texas through Wednesday and then east to Louisiana and Mississippi Wednesday night through Friday.

The second system is Tropical Storm Paulette, churning southeast of Azores with maximum sustained winds around 60 mph. Paulette is expected to shift south and southwest on Wednesday night and Thursday. There are no immediate threats nor coastal watches or warnings in effect.

Forecasters are also watching Teddy, once a powerful Category 4 hurricane with 140 mph winds, was downgraded to a Category 2 storm on Monday. As of Tuesday, winds are still around 100 mph, as the storm is about 435 miles south of Halifax, Nova Scotia, moving north-northwest at 28 mph. 

Meteorologist Bob Robichaud told Halifax News that Teddy’s track is still “uncertain” but landfall will be made “between west of Halifax, to just east of Cape Breton” Wednesday. 

Readers may recall the reason behind the super active hurricane season is La Nina. This forced NHC to move into the Greek alphabet to name storms. 

Keep an eye on Beta over Texas on Tuesday, while following the developments of Teddy ahead of landfall on Wednesday. 

Nano-X shares are plunging this morning after well known short seller Muddy Waters Research has published a new report comparing it to Nikola on numerous occasions (this year’s short reference du jour, we guess) and saying it “has no product to sell other than its stock.” Shares have fallen 20% in the pre-market.

The report says:

We are short NNOX because we think it is a much bigger piece of garbage than Nikola will ever be. There are important similarities, though. Nikola rolled a truck down the hill to try to prove it’s real. NNOX almost certainly used somebody else’s chest images to try to make its ARC machine look real.

Both Nikola and NNOX try to legitimize themselves by using the halo of respectable companies. Nikola gave a bunch of stock away to GM. Nanox issued options for 1.2 million shares at $2.21 per share (worth ~$32.1 million) to the president of SK Telecom after SK Telecom happened to invest in NNOX.

Muddy Waters claims the company has faked this demo video and has revealed that a “convicted felon appears to be behind [the company’s] IPO.”

MW is short $NNOX. We conclude that $NNOX has no product to sell other than its stock. Like $NKLA, NNOX appears to have faked its demo video. A convicted felon appears to be behind the IPO. A US partner has been requesting images for 6 months to no avail https://t.co/MNndMYTcd9

— MuddyWatersResearch (@muddywatersre) September 22, 2020

“But NNOX gets much worse,” the report says. “A convicted felon, who crashed an $8 billion market cap dotcom into the ground, was seemingly instrumental in plucking NNOX out of obscurity and bringing its massively exaggerated story to the U.S. NNOX touts distribution partnerships that supposedly amount to $180.8 million in annual commitments. Almost all of the company’s partnerships give reason for skepticism.”

MW also takes exception with NNOX’s Hadassah hospital partnership: 

Another halo NNOX is using to try to legitimize itself is that of “Nobel Peace Prize-nominated” Hadassah hospital. We are convinced that this partnership has been greatly misrepresented. As background, the chairman of NNOX’s audit committee is the chairman of the board of Hadassah. He also received options exercisable at $2.21 per share. We have tried multiple routes to understand what exactly is happening with the ARC at Hadassah, yet we have been unable to get anybody to even confirm that the device is operating at the hospital. Some investors are apparently under the impression that data from studies at Hadassah forms the backbone of NNOX’s 510(k) submission. However, that misunderstands the timeline of events and the submission process.

Recall, yesterday we posted an epic shouting match between Muddy Waters’ Carson Block and CNBC’s Wilfred Frost over the perceived usefulness of sell-side research, most of which – as Carson rightfully pointed out – is garbage is used to lure companies into investment banking business.

It was after yesterday’s appearance the Block teased his Muddy Waters would have a new short out this morning.

Recall, Citron Research also blasted Nanox Imaging days ago, calling the startup “Theranos 2.0” according to Radiology Business. Citron had claimed the company was “merely a ‘stock promotion’ amassing millions without any FDA approvals or scientific evidence.” Citron had also claimed “the company made false statements to both the SEC and investors to inflate its stock value”. 

Peloton shares slid 2% premarket Tuesday after NBC News reported that Peloton competitor Echelon has teamed up with Amazon to launch an affordable smart bike, called Echelon Smart Connect Fitness Bikes EX-PRIME, or simply the Prime Bike. 

“The Prime Bike was developed in collaboration with Amazon, who wanted to create their first-ever connected fitness product, that retailed for less than $500,” an Echelon spokesperson told NBC News Shopping.

The spokesperson said Prime Bike is designed to meet “the perfect balance” between aesthetics, technology capabilities, and “reasonable pricing” and is “the only connected fitness product designed exclusively for Amazon.”

However, unlike Peloton, Prime Bike doesn’t come with a screen to view live classes; rather, the user must use an iPad or other smart devices. 

Amazon is entering the home fitness equipment market as hundreds of thousands of Americans have canceled their gym memberships, forcing many gym operators to declare bankruptcy (see: here & here). 

Prime Bike is one of the cheapest alternatives to the Peloton bike that retails for more than $2,000.