Nine Reasons Why You Should Support Joe Biden For President

Authored by Caitlin Johnstone via Medium.com,

Former Vice President Joe Biden has released a video statement telling the American people that the accusations he is now facing of touching women in inappropriate ways without their consent is the product of changing “social norms”, assuring everyone that he will indeed be adjusting to those changes.

And thank goodness. For a minute there, I was worried Biden might cave under the pressure of a looming scandal and decline to run for president on the grounds that it could cripple his campaign and leave America facing another four years of Donald Trump. Here are nine good reasons why I hope Joe Biden runs for president, and why you should support him too:

1. It’s his turn.

It’s Biden’s turn to be president. He’s spent years playing second fiddle while other leading Democrats hogged all the limelight, and that’s not fair. He’s been waiting very patiently. Come on.

2. Most Qualified Candidate Ever.

If Joe Biden secures the Democratic Party nomination for president, he would be the Most Qualified Candidate Ever to run for office. His service as a US Senator and a Vice President has given him unparalleled experience priming him for the most powerful elected office in the world. Everything Biden has done throughout his entire career proves that he’d make a great Commander-in-Chief.

3. He’s closely associated with a popular Democratic president.

You think Biden, you think Obama. You think Obama, you think greatness. You can’t spend that much time with a great Democratic president without absorbing his greatness yourself. It’s called osmosis.

4. You liked Obama, didn’t you?

Biden was part of the Obama administration. Remember the Obama administration? It was magical, right? If you want more of that, vote Biden.

5. But Trump!

Do you want Trump to win the next election? You know he’ll shatter all our norms and literally end the world if he does, right? You should be terrified of the possibility of Trump winning in 2020, and if you are, you should want him running against Joe Biden. What’s the alternative? Nominating some crazy unelectable socialist like Bernie Sanders? Might as well just hand Trump the victory now, then. Anyone who wants to beat Trump must fall in line behind the Most Qualified Candidate Ever.

6. Iraq wasn’t so bad.

Okay, maybe some of his past foreign policy positions look bad in hindsight, but come on. Pushing for the Iraq war was what everyone was doing back in those days. It was all the rage. We all made it through, right? I mean, most of us?

7. This is happening whether you like it or not.

We’re doing this. We’re going to push Joe Biden through whether you like it or not, and we can do it the easy way or the hard way. Just relax, take deep breaths, and think about a nice place far away from here. Don’t struggle. This will be over before you know it. We’ll use plenty of lube.

8. Just vote for him.

Just vote for him, you insolent little shits. Who the fuck do you think you are, anyway? You think you’re entitled to a bunch of ponies and unicorns like healthcare and drinkable water? You only think that because you’re a bunch of racist, sexist homophobes. You will vote for who we tell you to or we’ll spend the next four years calling you all Russian agents and screaming about Susan Sarandon.

9. Nothing could possibly go wrong.

Honestly, what could possibly go wrong? It’s not like the Most Qualified Candidate Ever could manage to lose an election to some oafish reality TV star. Hell, Biden could beat Trump in his sleep. He could even skip campaigning in Michigan, Wisconsin and Pennsylvania and still win by a landslide, because those states are in the bag. There’s no way he could fail, barring some unprecedented and completely unforeseeable freak occurrences from way out of left field that nobody could possibly have anticipated.

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White Plains, New York, Will Finally End Its Ban on Amusement Arcades

In a victory for the young and the young at heart, a city in Westchester County, New York, is moving to strike down its harebrained ban on arcades.

White Plains—a popular suburb outside of Manhattan—inched closer to sanctioning fun this week, with the city council signaling they will scrap a law that has barred business owners from opening “amusement arcades.” The ban’s repeal will also pave the way for laser tag and Esports establishments, both of which were barred under the prohibition as well.

The city’s ban was first implemented in the ’70s, briefly repealed, and then reinstated in 1999.

Why the discrimination against arcades, which breed family friendly fun in malls across America? White Plains Mayor Thomas Roach thinks he knows the source, and it’s as insidious as ever: Times Square.

“There was a time when Times Square was seedy, and they had a lot of arcades,” he told the New York CBS affiliate. “Things were happening there that were not favored, and I think, in general, communities didn’t think arcades were a good thing to have.”

The centrally located Manhattan plaza—laden with jumbotrons and envied by tourists everywhere—does have an arcade or two. It also has its fair share of restaurants, bars, clothing shops, convenience stores, and hotels, which were fortunate enough to avoid prohibition in White Plains.

But that’s not the entire story, as arcades have had their fair share of critics since their inception in the early 20th century. Gambling was commonplace at such establishments, and the arcade’s reputation as a smoky den of sin promulgated widely. In 1942, New York Mayor Fiorello LaGuardia confiscated the city’s pinball machines, and in a highly publicized news appearance, smashed some with a sledgehammer and then dumped them into the Long Island Sound.

The 1970s saw a resurgence—the dawn of an arcade golden age, so to speak—with businesses transitioning from pinball to computerized role-play games. Popular options included the legendary Pac-Man, as well as Asteroids and Space Invaders—pioneers in the “shoot ’em up” genre. That irked some politicians, church leaders, and concerned citizens, who worried about violence in video games and fretted over what trouble the youth might get in if left to their own devices. They soon saw to it that White Plains was washed of its debauchery.

Luckily for arcade-lovers in White Plains, though, pinball machines and Pac-Man are no longer canceled.

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Turkey Issues Counter-Ultimatum To Pence: Either Stand With Us Or With The Terrorists

In the latest in the continuing fallout between the US and Turkey over Ankara’s plans to install Russia’s S-400 missile defense systems  for which the United States this week finally halted delivery of not only the jets but also equipment related to the stealth F-35 fighter aircraft, and canceled all future shipments of F-35 related material — Turkey has issued its own counter-ultimatum: you are either with us or with the terrorists.

In response to yesterday’s threat by Vice President Mike Pence putting Turkey on notice to either scrap the S-400 deal with Russia or say goodbye to the Lockheed F-35, Turkish Vice President Fuat Oktay tweeted, “The United States must choose. Does it want to remain Turkey’s ally or risk our friendship by joining forces with terrorists to undermine its NATO ally’s defense against its enemies?

File photo via RFE/RL

Ironically it’s precisely the “undermining of NATO defense” that has Washington concerned related to the S-400, given the potential for compromising the F-35 advanced radar evading and electronics capabilities as Russia could get access to the extremely advanced Joint Strike Fighter stealth aircraft, enabling Moscow to detect and exploit its vulnerabilities.

Pence said during a speech Wednesday at the “NATO Engages” summit in Washington, DC: “We’ve also made it clear that we’ll not stand idly by while NATO allies purchase weapons from our adversaries, weapons that threaten the very cohesion of this alliance.”

“Turkey’s purchase of a $2.5 billion S-400 anti-aircraft missile system from Russia poses great danger to NATO and to the strength of this alliance,” he added, warning further that Turkey could face serious consequences.

While Turkey’s VP didn’t specify which “terrorists” the US would be taking sides with as part of his response, there’s little doubt this was a reference to Syrian Kurdish militias which has also been the source of tensions given ongoing US support to the Kurdish-led Syrian Democratic Forces (SDF) just across Turkey’s border with Syria. Over the past year Washington has repeatedly warned against Turkish forces foraying deeper into Syria to fight Syrian Kurdish militants. 

Turkey has also in the past lashed out at Washington over the fact that self-exiled Turkish cleric Fethullah Gulen has been allowed safe haven in the US. Turkey has long claimed he was a prime force behind the 2016 coup attempt targeting the Erdogan government. 

On Wednesday Turkey sought to calm US fears of compromising NATO’s systems, as Foreign Minister Mevlut Cavusoglu stated“[S-400s] will not be integrated into the NATO system,” and further suggested establishing a multi-party technical group that would ensure the air defense system “will not be a threat” to any advanced western systems, the F-35 included

Both the US and Turkish Vice Presidents publicly sparring this week will likely only harden Erdogan in his position. Turkey again reminded the world last Friday that, “We have signed a deal with Russia, and this deal is valid. Now we are discussing the delivery process,” according to words from the foreign ministry on Friday after he came out of a meeting with his Russian counterpart FM Lavrov.

He added that “We have an agreement with Russia and we are bound by it.” The first Russian S-400 delivery is expected in July.

Both last week President Erdogan and Turkish officials have remained unwavering in declaring “it’s a done deal” in the face of US threats. 

A month ago Erdogan even colorfully told a Turkish broadcaster during an interview that, “There can never be a turning back. This would not be ethical, it would be immoral. Nobody should ask us to lick up what we spat.” 

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Initial Jobless Claims Crash To Lowest In 50 Years

The last time this few Americans sought the help of government after losing a job was in November 1969…

Initial Jobless Claims tumbled 10K from the prior week to 202k.

Certainly provides some optimism for tomorrow’s payroll print being better than expected and better than last month’s dismal data.

For some context:

  • The Beatles’ “Abbey Road” Album hit #1

  • Wendy’s Hamburgers, American fast food restaurant chains founded by Dave Thomas opens in Columbus, Ohio

  • Alcatraz Island off SF, is seized by militant Native Americans

  • US performs nuclear test at Nevada Test Site

  • USSR performs nuclear test at Eastern Kazakh/Semipalitinsk USSR

So much for that Q1 weakness?

“Mission Accomplished”

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Manhattan D.A. Spent $250K in Asset Forfeiture Funds on Fine Dining and Luxurious Travel

Manhattan District Attorney Cy Vance spent nearly $250,000 over the past five years from a state asset forfeiture fund on fine dining, first-class airfare, and luxurious hotels, according to public records obtained by The City, a nonprofit news outlet in New York City.

While regular state employees, like the line prosecutors under Vance, are bound by strict travel and expense rules, Vance is under no such regulations, and his office controls more than $600 million in funds seized by New York law enforcement in civil and criminal cases.

During his frequent trips across the country, Vance lived high on the hog, The City reports:

Expense reports show that in the last fiscal year alone, Vance visited Washington nine times, Aspen and London twice, and Paris and Los Angeles once apiece.

While in Paris, he spent four nights at Hôtel d’Aubusson, paying $2,816. The five-star hotel “is housed in a true Parisian mansion dating back to 1634” and boasts “discrete luxury, Louis XV furniture, original Aubusson tapestries and a wonderful wood burning fireplace,” according to a description posted on TripAdvisor.

In London, Vance was booked at the Ned Hotel, paying $994 for a two-night stay. The five-star accommodations are located in a former bank described on the hotel’s website as an “abandoned architectural masterpiece,” with a rooftop pool that overlooks St. Paul’s Cathedral. Vance spent $128 for a meal in the hotel’s restaurant, records show.

Notably, The City reports that Vance’s spending over that period dwarfs that of district attorneys in New York City’s other boroughs. The next highest spender was Bronx District Attorney Darcel Clark, who expensed $18,407 since taking office on Jan. 1, 2016.

Vance defended the spending in statements to The City, saying they were within the rules and involved travel to important policing and counter-terrorism conferences. Vance’s office has also spent $38 million in forfeiture funds to help local prosecutors across the country test rape kits.

But the report highlights one of the chief criticisms of asset forfeiture: The loose rules and lax oversight over how those funds are used.

Civil asset forfeiture laws allow police and prosecutors to seize property—cash, cars, and even houses—suspected of being connected to criminal activity. Much of that money is often funneled back into police department and district attorney offices’ budgets.

Civil liberties groups argue that creates a perverse profit incentive. Many states have lax reporting requirements for forfeiture expenditures, and numerous watchdog and media investigations have revealed local police departments and prosecutors using forfeiture revenues as a slush fund.

Local news outlets reported earlier this year that the district attorney in Lancaster County, Pennsylvania, used $21,000 in asset forfeiture revenues intended for drug enforcement to lease a 2016 Toyota Highlander.

In Macomb County, Michigan, county officials launched an audit of the local prosecutor’s office after a successful public records lawsuit revealed more than $100,000 in questionable expenditures from the asset forfeiture fund, including office furniture, birthdays, and retirement parties.

In Illinois, former La Salle County state’s attorney Brian Towne is facing criminal charges for misconduct and misappropriating public funds after he allegedly spent asset forfeiture funds on an SUV, WiFi for his home, and local youth sports programs. Town created his own highway interdiction unit and asset forfeiture fund for his office, an unusual move that the Illinois Supreme Court later ruled was illegal.

A 2016 Department of Justice Office of Inspector General audit found that an Illinois police department spent more than $20,000 in equitable sharing funds on accessories for two lightly used motorcycles, including after-market exhaust pipes, decorative chrome, and heated handgrips.

There was also the Georgia sheriff who purchased a $90,000 Dodge Viper with forfeiture funds for the department’s D.A.R.E. program—not to be confused with the other Georgia sheriff who bought a $70,000 Dodge Charger Hellcat with forfeiture funds.

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German Manfuacturing Collapse: “Awful” Industrial Orders Plunge Most Since Financial Crisis

One day after Germany’s leading economic institutes slashed their forecasts for 2019 growth by more than half on Thursday (and warned that the economy could slow much more if Britain quits the European Union without an agreement), Germany again confirmed just how bad the manufacturing recession at the heart of the Eurozone is, when it reported that Industrial orders fell by the biggest margin sequentially in more than two years in February, slumping 4.2%, badly missing consensus expectations of a 0.3% rebound, and worse than last monght’s -2.1% drop, highlighting the extent of the slowdown amid ongoing global trade disputes.

On an annual basis, the collapse was almost unprecedented, with the 8.2% drop matching the worst since the global financial crisis.

The drop in orders in February was marked by a slump in foreign demand, data from the Economy Ministry showed. Across sectors, orders of capital goods fell by 6.0%, compared with a decrease of 0.9% and 3.5% for intermediate and consumer goods orders, respectively.

As Goldman recaps, the February weakness was “broad-based across regions and sectors. Foreign orders declined the most (by 7.9%mom, of which -2.9% from the Euro area countries) against a decrease of 1.6% for domestic orders.”

Digging between the numbers, the IIF’s Robin Brooks noted that contrary to consensus, it wasn’t collapsing Chinese trade that was the culprit for the drop, but rather the GDP contraction in Turkey that disproportionately hit German manufacturing: while German exports to Turkey are only 1.4% of total, they were down 22% in the year to Jan. 2019.

Long the Eurozone’s economic powerhouse, Germany barely avoided a technical recession at the end of last year and posted its weakest growth in five years in 2018 as its export-orientated economy is slowed by the trade and Brexit headwinds.

As Reuters notes, Germany’s slower-than-previously-expected growth means Finance Minister Olaf Scholz’s fiscal room for maneuver is getting tighter as tax revenues are likely to come in lower than expected this year. Last month, the cabinet passed a draft budget for 2020 that calls for a 1.7% spending increase and relies on ministries to cut costs to avoid incurring new debt in light of the slowdown.

The tighter public finances – after years of budget surpluses routinely exceeding expectations – are starting to raise tensions over spending priorities in Merkel’s awkward grand coalition, senior party officials say. Defense Minister Ursula von der Leyen said last month the ministry would have to fight next year to ensure that defense spending continues to expand as a share of the overall economy to move toward the NATO target of 2 percent of economic output.

Meanwhile as we noted yesterday, the German institutes’ forecasts were completed by March 29, the date Britain was originally due to leave the EU, when the institutes assumed it would not quit without an agreement on the terms. The deadline has since been extended to April 12. Their estimates feed into the government’s own growth projections, which will be updated later this month. In January, the government forecast growth of 1.0 percent for this year.

Economy Minister Peter Altmaier said the slowdown in Germany seen in the second half of 2018 would be overcome during the course of this year and replaced by an economic upswing. Still, officials are hopeful that once global trade disputes and Brexit are resolved, growth can pick up next year.

Summarizing all of the above, ING economist Carsten Brzeski said that “awful new-order data suggests that German industry is still suffering from Brexit woes and global uncertainties.”

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The End Of The Bull Market, In Three Charts

Authored by John Rubino via DollarCollapse.com,

Stocks have completely recovered from their flash bear market of late 2018.

But now they face a hard question: Can already record high prices continue to rise in the face of falling corporate profits?

Let’s start with the “falling corporate profits” part:

A business generates improving profits when the things it sells rise in price faster than the cost of production. So on the following chart you want labor costs to be flat or falling, and the other line – a measure of inflation – to be rising. But lately the opposite is true.

A big part of the past decade’s spike in corporate profits came at the expense of workers, who saw real wages stagnate while the cost of living rose. Now, with labor markets tightening and minimum wages rising, workers are getting a bigger slice of their employers’ revenues. That means shrinking corporate margins and, other things being equal, slower to negative earnings growth.

Now let’s look directly at corporate profit margins. Note that they stopped widening in 2015 as wage inflation began to bite. Then they spiked in 2018 when the Trump corporate tax cuts provided a one-time windfall. But that windfall is over and future comparisons will be with last year’s unbeatable earnings. As a result, public companies are going to report lower year-over-year profits going forward.

Why does that imply falling stock prices, especially when corporate profits stagnated between 2015 and 2018 while share prices kept rising? Because of what those rising share prices did to valuations. Stocks are now a lot more expensive both nominally and compared to earnings than they were in 2015, which means the air pockets under them are much bigger. They’re priced for perfection, and falling earnings per share is the definition of imperfect for the stock market.

Based on history, the next few years look brutal for the US stock market. Which raises yet another question: Is history still worth anything in a world of out-of-control central banks and hyper-profligate governments?

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Dimon Sees Recent Volatility as ‘Harbinger’ of Things to Come

Coming just five weeks after Warren Buffett’s annual letter to Berkshire shareholders, JP Morgan CEO Jamie Dimon has published what CNBC has described as the “second-most anticipated CEO missive of the year”. In this year’s letter to JP Morgan shareholders, Dimon followed a familiar format: First touting the banks record revenue and earnings in 2018 (noting that the bank’s profits are at an all-time high, even without the boost from the Trump tax cuts), warned that the bout of market volatility in Q4 may be a “harbinger” of things to come, inveighed against the forces threatening the “American dream”, and articulated a passionate defense of capitalism as a “force for good.”

After US stocks started the year with one of their best quarterly advances in years, shrugging off signs that global fundamentals are deteriorating amid an environment of looming political risks (the US-China trade war, Brexit, the looming US debt ceiling battle), Dimon commented that though everything is awesome right now, the volatility in Q4 might be a “harbinger of things to come” – though he of course remains “optimistic” about the long-term outlook for markets.

In the second section of this letter, I comment on important forward-looking issues. While we remain optimistic about the long-term growth of the United States and the world, the near-term economic and political backdrop is increasingly complex and fraught with risks — both known and unknown. And we face a future with less overall confidence in virtually all institutions, from corporations to governments to the media. The extremely volatile global markets in the fourth quarter of 2018 might be a harbinger of things to come — creating both risks for our company and opportunities to serve our clients.

Tapping into the political zeitgeist, where the debate about the growing popularity of so-called “Democratic socialism” has been raging since Democrats took back the House, Dimon offered a principled defense of capitalism as the most successful economic system in the history of the world, while condemning socialism as a road to authoritarianism and mass-poverty. That’s not to say that the social democracies in the Nordic countries have a model that works for them, and that capitalism as the US practices it can’t be improved – rather, socialism in its true form – that is government control over the economy – would be an unmitigated disaster, as history has repeatedly demonstrated.

There is no question that capitalism has been the most successful economic system the world has ever seen. It has helped lift billions of people out of poverty, and it has helped enhance the wealth, health and education of people around the world. Capitalism enables competition, innovation and choice. This is not to say that capitalism does not have flaws, that it isn’t leaving people behind and that it shouldn’t be improved. It’s essential to have a strong social safety net – and all countries should be striving for continuous improvement in regulations as well as social and welfare conditions.

Many countries are called social democracies, and they successfully combine market economies with strong social safety nets. This is completely different from traditional socialism. In a traditional socialist system, the government controls the means of production and decides what to produce and in what quantities, and, often, how and where the citizens work rather than leaving those decisions in the hands of the private sector. When governments control companies, economic assets (companies, lenders and so on) over time are used to further political interests – leading to inefficient companies and markets, enormous favoritism and corruption. As Margaret Thatcher said, “The problem with socialism is that eventually you run out of other people’s money.”

Socialism inevitably produces stagnation, corruption and often worse – such as authoritarian government officials who often have an increasing ability to interfere with both the economy and individual lives – which they frequently do to maintain power. This would be as much a disaster for our country as it has been in the other places it’s been tried. I am not an advocate for unregulated, unvarnished, free-for-all capitalism. (Few people I know are.) But we shouldn’t forget that true freedom and free enterprise (capitalism) are, at some point, inexorably linked.

Though it has been unduly vilified by some on the left, private enterprise remains the true engine of growth and prosperity in any successful country.

Private enterprise is the true engine of growth in any country. Approximately 150 million people work in the United States: 130 million work in private enterprise and only 20 million people in government. As I pointed out earlier in this letter, large, successful companies generally provide good wages, even at the starting level, as well as insurance for employees and their families, retirement plans, training and other benefits. Companies in a free enterprise system drive innovation through capital investments and R&D; they are huge supporters of communities; and they often are at the forefront of social policy. Are they the reason for all of society’s ills? Absolutely not

Read Dimon’s letter below:

Ceo Letter to Shareholders 2018 (1) by Zerohedge on Scribd

 

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Will Today’s Global Trade Wars Lead to World War III?: New at Reason

In the latest issue of Reason, Daniel W. Drezner argues that the breakdown of global trade relations is pushing is setting the stage for future conflict. A snippet:

You might not know about a minor trade skirmish in the Balkans that started late last year. But you should, because it signals a worrying shift in how national security considerations are altering the fabric of globalization in ways eerily similar to how they did at the dawn of the 20th century. That first shift helped start World War I, so in case you’re wondering, yes, I’m going there: The current rise in protectionism could be the precursor to World War III.

The story starts in 2008, when the small southeast European nation of Kosovo unilaterally declared independence from Serbia after nearly a century of being bound to its larger neighbor, followed by a war for secession that ended only after NATO intervened. The Serbian government refused to recognize the breakaway province and, as part of this diplomatic position, late last year successfully pressured members of Interpol to not admit its former territory as a member.

Click on the link below to read the whole article.

View this article.

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“Substantially Worse than Expected”: Tesla Plunges As Analysts Throw Up On Disastrous Deliveries

Tesla thought it was getting one over on the world last night when it waited until the close of extended hours trading before releasing its awful Q1 delivery numbers. But last night’s timing didn’t the stop reality from taking hold this morning, when Tesla stock crashed $26, down a little over 9% with further downside expected as exasperated mutual funds start dumping at the open.

Feeding the dismal mood, even formerly bullish analysts have come out swinging at Tesla this morning, throwing up all over its disastrous delivery numbers with RBC’s Joseph Spak saying that the delivery miss could wind up turning into a $1 billion revenue miss. Spak was previously looking for 52,500 Model 3 deliveries, down from his previous estimate of 57,000. He said in a note Thursday morning:

“To us, this signals that the tax subsidy cut in the US was a significant hit to these premium vehicles and/or Model 3 is having a bigger cannibalization impact,” he says. Tesla’s comment about challenges of delivering to Europe, China “speaks to a lack of planning and foresight,” Spak said.

Spak also expects a “sizeable cash burn” in Q1.  JPMorgan analyst Ryan Brinkman also blasted the company in a morning note: “Tesla’s 1Q19 vehicle production & deliveries report was substantially worse than expected.” JPM lowered their price target to $200 from $215:

Tesla‘s 1Q19 vehicle production & deliveries report was substantially worse than expected…Deliveries tracked just 63,000 units vs. JPM 70,500 and consensus as recently as March 27 of 74,930, suggesting materially less 1Q revenue, margin, and free cash flow… We believe the market postulated that if Tesla were to miss, it would be due solely to a materially greater than expected number of vehicles in transit (vehicles that could be sold in early 2Q, suggesting little need to lower full year estimates), but this appears to be only partly the case, with vehicles in transit at quarter-end totaling 10,600 vs. our estimate of 10,000, in our view implying lower underlying domestic demand…While most attention is being paid to the Model 3 ramp, deliveries of the higher price Model S & X declined substantially in 1Q, totally just 12,100 between them — less even than the Model S alone used to sell in some quarters preceding the full production ramp of the Model X, again in our view implying a deceleration in underlying demand unrelated to temporary delivery difficulties (maybe due to tax credit expiration?).”

Morgan Stanley poured some more gasoline on the fire, calling the quarter “one that Tesla might want to forget“:

“1Q19 is shaping up to be one TSLA may want to forget, but needs to explain to shareholders who own it as a LT disruptor. We felt the #1 2019 determinant for TSLA’s share price was if it could prove to the mkt. it can be self-funding on a sustainable basis.”

Bank of America says it sees “slower than anticipated progress” on the Model 3 production ramp and that it “continues to question” the company’s profitability, cash flow and valuation:

“Ultimately, given what appears to be slower than anticipated progress on the Model 3 production ramp, TSLA’s past production/ logistics challenges on the Model S/X, and now potentially new challenges with deliveries to Europe and China, we expect it will take some time before the Model 3 production/sales reaches mass scale; and thus, costs related to the ramp and lower priced variants may outweigh potential benefits of operating leverage for some time. .. .Moreover, there still remain a number of major hurdles ahead for TSLA, including: 1) ongoing Model 3 production ramp and future operational challenges associated with expanding the product lineup; 2) what could be a very material cash burn in coming quarters (from ongoing delivery/logistic issues, Shanghai factory construction, etc.) which could pressure TSLA’s liquidity even with recent capital inflows and require future capital raises; 3) faster than usual spike and burnout pattern for Model S/X; and 4) the prospect of new competition and longer term obsolescence. As such, we continue to question TSLA’s longer term profitability, cash flow, and valuation.”

The bears were rampaging, with Citi obviously maintaining its “sell/high risk” rating on Tesla shares:

“Though Tesla bulls might look past the Q1 Model 3 miss, the S/X numbers will likely spark some legitimate demand & company margin concerns, particularly given the risk for some incremental cannibalization from the recently introduced Model Y. We expect the stock to come under pressure on this and perhaps test recent lows—maintain Sell/High Risk. 

At the very least, Q1 deliveries will likely cause the bull camp to revisit assumptions about the NT demand trajectory. Tesla confirmed its 2019 delivery targets, which of course now look quite aggressive requiring ~100k deliveries on average in each remaining quarter. So demand will likely be scrutinized even more so, and the outcome in the coming months could meaningfully re-shape the entire Tesla bulls/bear debate.”

Goldman Sachs also reiterated their “sell” rating on the company Thursday morning, saying that demand was likely negatively impacted by the phasing out of the Federal EV tax credit in the U.S. Goldman’s note also said that “production levels disappointed” and that “average production was ~4,800, which was marginally higher than the 4,700 in 4Q18 and below Goldman estimates of 5,500/week for 1Q19”.

“These disappointing results will likely lead to pressure on the shares and consensus estimates for the full year, and could potentially fuel investors’ concerns about falling demand,” Goldman’s note continues. 

“Further, this likely puts downward pressure on our EBITDA and FCF estimates (as well as consensus) given the lower volume levels and worse utilization than anticipated.”

Back in April 2018 we asked the question of whether or not Elon Musk would be the next CEO faced with a margin call. In that analysis, it was calculated that Musk’s margin call could kick in around $232, or just $30 away (other analyses have arrived at differed “trigger” targets, with some as low as the mid $100’s). 

As a reminder, last night we reported that the company’s Q1 delivery and production numbers missed even the most pessimistic of estimates. Total deliveries came in at just 63,000 vehicles and Model 3 deliveries came in at a paltry 50,900. To add insult to injury, the company said it expects the poor delivery number to negatively impact its Q1 net income:

Because of the lower than expected delivery volumes and several pricing adjustments, we expect Q1 net income to be negatively impacted. 

The Q1 Model 3 number missed consensus estimates of 55,100 by nearly 10% and also fell well short of the 63,000 Model 3s that the company produced last quarter. The number also fell short of analysts’ estimates of 58,900, according to IBES data from Refinitiv. Deliveries of all models fell 31 percent from the fourth quarter to 63,000 vehicles, including 12,100 Model S sedans and Model X SUVs.

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