Month: October 2024

Authored by Jonathan Turley,

It appears that U.S. District Judge Tanya Chutkan and Special Counsel Jack Smith are not done yet in releasing material in advance of the election. In a previous column, I criticized the release of Smith’s  180-page brief before the election as procedurally irregular and politically biased, a criticism shared by  CNN’s senior legal analyst and other law professors. Nevertheless, on Thursday, Judge Chutkan agreed to a request from Smith to unseal exhibits and evidence in advance of the election.

The brief clearly contains damning allegations, including witness accounts, for Trump.

The objection to the release of the brief was not a defense of any actions taken on January 6th by the former president or others, but rather an objection to what even the court admitted was an “irregular” process.

As discussed earlier, Smith has been unrelenting in his demands for a trial before the election. He has even demanded that Donald Trump be barred from standard appellate options in order to expedite his trial.

Smith never fully explained the necessity of holding a trial before the election beyond suggesting that voters should see the trial and the results — assaulting the very premise of the Justice Department’s rule against such actions just before elections.

To avoid allegations of political manipulation of cases, the Justice Department has long followed a policy against making potentially influential filings within 60 or 90 days of an election. One section of the Justice Department manual states “Federal prosecutors… may never select the timing of any action, including investigative steps, criminal charges, or statements, for the purpose of affecting any election.”

Even if one argues that this provision is not directly controlling or purely discretionary, the spirit of the policy is to avoid precisely the appearance in this case: the effort to manipulate or influence an election through court filings.

With no trial date for 2025, there is no reason why Smith or Chutkan would adopt such an irregular process. The court could have slightly delayed these filings until after the approaching election or it could have sealed the filings.

If there is one time where a court should err on the side of avoiding an “irregular” process, it is before a national election. What may look like simply an adversarial process to some looks like oppo research to others.  Delaying the release would have avoided any appearance of such bias.

For Smith, the election has long been the focus of his filings and demands for an expedited process. Smith knows that this election is developing into the largest jury verdict in history. Many citizens, even those who do not like Trump, want to see an end to the weaponization of the legal system, including Smith’s D.C. prosecution. Trump has to lose the election for Smith to be guaranteed a trial in the case.

Chutkan has given the Trump team just seven days to oppose her order. That would still allow the material to make it into the public (and be immediately employed by the media and Harris campaign) just days before the election. The move will only increase criticism that this looks like a docket in the pocket of the DNC.

It is telling that, once again, the timing just works out to the way that is most politically impactful. Many are left with a Ned Flanders moment of “well, if that don’t put the “dink” in co-inky-dink.”

Labor strikes at Boeing’s commercial jet factories are approaching the one-month mark, with no end to the paralyzing labor action. This seriously threatens Boeing’s credit rating, which faces mounting downgrade risks from investment grade to junk status from multiple credit ratings agencies as cash reserves dwindle.

Quartz News reported overnight that Boeing filed unfair labor practice charges with the National Labor Relations Board (NLRB) against the International Association of Machinists and Aerospace Workers, claiming union bosses have been bargaining in bad faith on behalf of the 33,000 striking union members. 

Boeing wrote in a statement that IAM negotiators “did not seriously consider” the latest offer earlier this week, which included a 30% wage bump over four years, up from 25%, and other benefits.

“The union’s public narrative is misleading and making it difficult to find a solution for our employees,” Boeing said in the filing to the NLRB, adding the union had engaged in a “pattern of bad faith bargaining.” The aerospace giant retracted its “best and final” offer on Tuesday. 

Boeing Commercial Airplanes President and CEO Stephanie Pope wrote in a memo earlier this week, “Unfortunately, the union didn’t seriously consider our proposals. Instead, the union made non-negotiable demands far in excess of what can be accepted if we are to remain competitive as a business.”

IAM leaders said the talks collapsed when Boeing negotiators refused to increase wages over the contract’s lifespan or reinstate the defined benefit pension. 

As the strike eclipses one month in just a few short days, troubles keep piling up for Boeing. S&P Global Ratings placed the struggling planemaker on CreditWatch negative, citing mounting risks that its investment-grade credit rating would be slashed to junk.

“The CreditWatch listing reflects the increased likelihood of a downgrade if the strike persists toward the end of the year, further constraining the recovery in the company’s cash flow generation and the company does not raise capital sufficient to meet its upcoming needs in such a way that does not increase financial leverage,” S&P said. 

S&P estimated the labor action costs Boeing $1 billion per month. They expect the target of producing 38 Max jets per month will be pushed to mid-2025. 

There’s also concern the planemaker will need to raise money via public equity markets (read more about dilution fears) with its cash balance dwindling: 

Boeing will likely seek incremental funding. We anticipate that Boeing will end 2024 with a cash balance below its $10 billion target if the strike continues through the fourth quarter and the company typically uses cash in the first quarter due to seasonal working capital build. Boeing also has approximately $4 billion of debt maturities due in April 2025. We believe the company will need to seek external capital to meet these demands. Based on its public comments, we assume Boeing is also open to potentially issuing additional equity. However, we believe the company remains exposed to higher-than-expected cash usage and adjusted debt for the next year or two, which could further delay the expected recovery in its credit measure to levels we view as consistent with the rating.

S&P concluded:

The CreditWatch with negative implications placement reflects our view that we could lower our ratings on Boeing if the strike continues, increasing costs and delaying the company’s recovery in aircraft production and cash flow generation. We could lower ratings if the company fails to preserve its target cash balance, fund operating and working capital, and meet debt maturities without increasing leverage. We intend to resolve the CreditWatch placement by the end of the year.

Some Wall Street desks following this story are left pondering this question: Which will happen first—Boeing’s credit downgrade from investment grade to junk or a deal with the IAM?

Authored by Naveen Athrappully via The Epoch Times (emphasis ours),

Oklahoma-based BrucePac is pulling millions of pounds of meat items from across the United States due to concerns they may be adulterated with listeria monocytogenes bacteria, according to the Food Safety and Inspection Service (FSIS).

Roughly 9,986,245 pounds of ready-to-eat meat and poultry are being recalled, according to an Oct. 9 FSIS announcement.

“Consumption of food contaminated with L. monocytogenes can cause listeriosis, a serious infection that primarily affects older adults, persons with weakened immune systems, and pregnant women and their newborns. Less commonly, persons outside these risk groups are affected,” the announcement reads.

“Listeriosis can cause fever, muscle aches, headache, stiff neck, confusion, loss of balance and convulsions sometimes preceded by diarrhea or other gastrointestinal symptoms.”

BrucePac has two manufacturing plants and supplies its products nationwide.

The products were manufactured between June 19, 2024, and Oct. 8, 2024. They were shipped to distributors and other establishments, eventually being sold to restaurants and intuitions. The recalled items come with establishment numbers “51205 or P-51205” printed inside or below the USDA mark of inspection.

No confirmed reports of adverse reactions have been reported so far, the announcement said, while advising people who are concerned about getting ill to contact a health care provider.

The contamination risk was discovered after FSIS conducted routine testing of BrucePac products and found that these items tested positive for listeria monocytogenes.

“FSIS is concerned that some product[s] may be available for use in restaurants, institutions, and other establishments. These other establishments may have used affected meat and poultry in [ready-to-eat] products that may be on store shelves or in consumers’ refrigerators or freezers,” the agency said.

“Restaurants, institutions, and other establishments are urged not to serve or use these products. These products should be thrown away or returned to the place of purchase.”

Multiple firms have pulled out their products from the market due to listeria fears in recent months.

In July, Virginia-based Boar’s Head Provisions recalled all their liverwurst and other deli meat products, amounting to more than 200,000 pounds. The firm later expanded the recall to an additional 7 million pounds of products.

The same month, Al-Safa US LLC pulled out more than 2,000 pounds of imported frozen ready-to-eat chicken products over listeria contamination concerns.

Listeria Dangers

Listeria is the third leading cause of death in the United States from foodborne illnesses, according to the U.S. Centers for Disease Control and Prevention (CDC). The agency estimates that around 1,600 Americans get infected by listeria annually, with 260 people dying from the disease.

Over half of all infections occur among people aged 65 years and older. “As you get older, your immune system has a harder time recognizing and getting rid of harmful germs, including Listeria. You also have less stomach acid, which can help kill germs,” the CDC states.

“Older adults with Listeria infection almost always have to be hospitalized. Sadly, 1 in 6 older adults with this infection die.”

Among pregnant women, one in 25,000 get infected with the pathogen every year, according to the CDC. Even if the mother does not feel sick from the infection, listeria can spread to the baby and cause harm. One in four pregnant women who get infected either lose their pregnancy or their baby shortly after birth.

As for people with weakened immune systems, these individuals make up 75 percent of all infections, which “almost always leads to hospitalization,” according to the CDC. One in six individuals in this demographic dies from the illness.

Last year, the CDC reported two listeria outbreaks. So far this year, five outbreaks have been reported, with various food products being responsible for these events, including enoki mushrooms, leafy greens, and ice creams.

The agency advises people to choose safer foods to prevent listeria infection. This includes avoiding consuming foods like unpasteurized soft cheeses, unheated deli meats, cold cuts, hot dogs, fermented or dry sausages, and refrigerated smoked fish.

Sticking to safer foods “is especially important if you or someone you cook for is at increased risk for Listeria infection,” the CDC said.

McDonald’s Chief Executive Officer Chris Kempczinski spoke at the Boston College Chief Executives Club event on Thursday, sounding the alarm that low-income customers will remain under strain through the end of the year and into early 2025. 

“We’re starting to talk about 2025, and my message to our teams has been: ‘We need to be preparing for another challenging year,'” Kempczinski told the audience, adding, “We need to be making sure that we’ve got a really strong value proposition in all of our markets.”

In June, MCD rolled out the $5 meal deal in response to low/mid-tier customers struggling under the failed Bidenomics era (elevated inflation and high interest rates). This deal, which allows customers to pick the following items: a McDouble or McChicken sandwich or 4-piece Chicken McNuggets, a small fry, and a small soft drink, has been well received by customers and was recently just extended through the end of the year.

Kempczinski commented on the limited-time $5 meal deal, noting that MCD will likely revamp its value offerings. 

This comes as MCD reported in July its first quarterly same-store sales drop in nearly four years amid a slowdown in customer spending.

The latest consumer data we’ve shared with readers shows that working-poor households are cracking.

Consumers Crack: Credit Card Debt Suddenly Plunges Most Since Covid As APRs Hit Record High https://t.co/ojSaHAYLXb

— zerohedge (@zerohedge) October 7, 2024

As we’ve previously noted, values wars among fast-food chains are heating up:  

• McDonald’s Admits Consumers Are Broke With Planned Reintroduction Of $5 Meal Deal
• First McDonald’s, Now Burger King Admits Consumers Are Broke With Planned Reintroduction Of $5 Meal Deal
• KFC Unveils’ Finger-Lickin Good’ Meal Deal As Value Wars Heat Up
• McDonald’s Meal Deal Extends Into December As Core Customers Under Pressure

MCD CEO also said, “It’s easier to deliver value on chicken products than it is on beef products.” 

And we wonder why? …

One of the big themes this year has been low/mid-tier households faltering under the weight of elevated inflation and high interest rates. 

The latest consumer note from Goldman reveals a new survey of 2,000 consumers. It shows many consumers have been pushed into value-seeking mode because of the mounting macroeconomic headwinds.

All in all, remember that VP Harris pushed disastrous Bidenomics to the extreme. 

R group Restoration PAC is up on TV in battleground states and nationally with this spot targeted at Black voters —

Clip of woman in Philadelphia:

“They are killing us without killing us”

Clip of Kamala Harris:

“That is called Bidenomics” pic.twitter.com/5pndQdgAP5

— Medium Buying (@MediumBuying) October 6, 2024

You hear that consumers… Harris wouldn’t have changed a damn thing. 

If you think four more years of Harris won’t mean the same high gas prices, inflation, open borders, and crime, I’ve got oceanfront property in Oklahoma to sell you!

Kamala Harris admitted she wouldn’t change a thing from Biden’s disastrous policies. pic.twitter.com/8cIKigt0lQ

— Randy Weber (@TXRandy14) October 8, 2024

Economic conditions for the working poor will only get more challenging through the end of the year. MCD reports third-quarter earnings on Oct. 29. The lingering problem for consumers is an energy price shock at the pump could materialize if Israel begins bombing Iran’s crude oil export facilities. Consumers need to buckle up. 

Via Common Dreams

With the high-stakes U.S. presidential election less than a month away, warnings about the possible political consequences of Democratic nominee Kamala Harris’ refusal to break with President Joe Biden on supporting Israel’s assault on Gaza and beyond are taking on fresh urgency amid new survey data showing the vice president narrowly trailing GOP nominee Donald Trump in Michigan—a critical battleground state.

A Quinnipiac University poll released Wednesday found that Harris is trailing Trump by three percentage points in Michigan—a reversal of the university’s survey last month, which showed the vice president with a slight lead over her Republican opponent. The new survey showed Harris leading in Pennsylvania and Trump leading in Wisconsin.

While Trump’s polling lead in Michigan was within the margin of error, the results amplified preexisting concerns about Harris’ chances in the state, which has a large Arab and Muslim population—many of whom have lost family members in Israel’s yearlong assault on the Gaza Strip, a relentless military campaign that has intensified in recent days as the prospects of a cease-fire agreement appear nonexistent.

The Quinnipiac poll found that by a margin of 53% to 43%, Michigan respondents said they think Trump—who has expressed support for Israel’s devastating bombardment of Gaza—would do a better job “handling the conflict in the Middle East” than Harris.

James Zogby, president of the Arab American Institute, told Rolling Stone earlier this week that he has expressed to the Harris team that “if you want people to vote for you, you gotta give them a reason.”

“They don’t seem to care enough about the Arab American vote to do something to get it,” said Zogby.

Last month, Zogby’s organization released a poll of its own showing that support for Harris would climb nationally if she endorsed an arms embargo against Israel—something she has openly opposed despite pressure from advocacy groups who say it’s essential to end Israeli Prime Minister Benjamin Netanyahu’s obstruction of cease-fire talks.

Zogby noted in his interview with Rolling Stone that Michigan’s Lebanese American population is the largest in the United States—potentially compounding Harris’ political vulnerability in the state as Israel ramps up its assault on Lebanon with the support of the Biden administration.

“Many of the constituents are Lebanese who have deep attachments to Palestinians,” said Zogby, arguing that Israel’s escalation in Lebanon “will either put an exclamation point on the outrage or depression—causing them either not to vote or to flip and vote elsewhere.”

“The reaction I’m getting, when I go around the country and talk to people, is they want to punish Democrats,” Zogby added. “That’s not a smart political move, but that’s what people are feeling. And I don’t have an argument to make because [members of the Harris campaign] haven’t given us arguments to make.”

Harris has repeatedly acknowledged, including during her speech at the Democratic National Convention in August, the “immense suffering of innocent Palestinians in Gaza who have experienced so much pain and loss over the year.”

But Harris has rebuffed calls to create distance between herself and the Biden administration’s unwavering support for Israel’s assault on Gaza and Lebanon. “No,” the vice president responded when asked during a recent televised interview whether she would support withholding U.S. arms shipments to Israel, whose forces have used American weaponry to commit war crimes in Gaza and Lebanon.

Harris has also declined to meet with Americans with family members in Lebanon and Gaza, according to the co-founder of the Uncommitted National Movement.

Speaking to Mother Jones earlier this week, Dearborn Mayor Abdullah Hammoud—who is Lebanese American—said Trump “is a threat” to Arab Americans and hardly an advocate of peaceful resolution in the Middle East. But Hammoud said the Harris campaign is not helping its case with voters when it fails to support an arms embargo against Israel, a position that—according to one recent poll—is backed by a majority of the American electorate.

Donald Trump won Michigan in 2016 by approx 10,000 votes. There are over 200,000 Arab Americans in Michigan.

Harris’s decision to treat them with complete contempt is a massive, suicidal electoral error.

— Nathan J Robinson (@NathanJRobinson) October 10, 2024

“What I keep pushing back on is it’s not this community that has to move in its values and principles and any issues that it’s taken a stance on. It’s the candidates who have to move,” said Hammoud. “And don’t move because of Dearborn, by all means. I’m not telling you to move because this small city in the Midwest is telling you to move on these issues. Move because the general American populace has said these issues matter to them.”

“And this idea that people will forget?” he continued. “Remember we heard this nine months ago: ‘People will forget come November.’ People are not forgetting… Genocide is not something you can cast aside.”

On Thursday, Emerson College released survey data it collected with The Hill showing that Trump and Harris are in a dead heat in Michigan—further indicating that a small swing in favor of either candidate could tip the scales and potentially decide who takes the White House.

Moira Donegan, a columnist for The Guardian, argued Wednesday that “Harris should give a speech in Michigan where she breaks with the Biden administration on Israel.”

“This is very obviously in her self-interest to do,” Donegan wrote on social media, adding that she doubts the vice president will take her advice. If she did, wrote IfNotNow co-founder Yonah Lieberman, it “would be a seminal political moment that would win Michigan, stop a second Trump administration, and help end a genocide.”

Via Issues & Insights Editorial Board,

If conservatives want to win elections, they don’t need to rile up the base, they need to convince independents to say in public what they believe in private – that they agree with conservatives on most issues and that Democrats are the wildly out-of-touch extremists.

That, at least, is one way to read a fascinating new survey from Populace, a non-partisan think tank in Massachusetts, which figured out a way to discern what 20,000 Americans think privately and compare that to what they are willing to say publicly.

It turns out that there are often wide gaps between the two, which Populace calls the “Social Pressure Index.” People tend to avoid stating their views if they think they’re in the minority.

But here’s the really interesting finding: On a host of bellwether issues, independents are, in private, far more conservative than they will admit to pollsters.

The survey asked questions about democracy, individual rights, the economy, culture, racism, etc.

Take the question of whether the government has “too much control in America.” Fully 71% of independents believe this privately. That is almost identical to the 78% of Republicans who believe it.  In contrast, a mere 17% of Democrats think government has too much control.

When asked if “society is better off when individuals make decisions for themselves rather than having experts make decisions for everyone,” 86% of independents believe this privately, which is close to the 90% of Republicans. Among Democrats, just 63% believe it.

On the economy, independents are deeply depressed. Just 11% think it is doing well, and a mere 4% believe they are better off than they were five years ago. Those numbers are much closer to Republicans (5% and 2%, respectively). Democrats are the extreme outliers (64% think the economy is doing well and 47% think they’re better off).

Independents are also far less favorably inclined toward unions. Fewer than a third believe that “stronger labor unions are good for the economy.” That’s close to the 29% of Republicans. Again, Democrats – 70% said they believe this – are the extremists.

The chart above shows their hidden views on other issues and how they are actually much closer to conservative Republicans than leftist Democrats.

But this isn’t what independents tell pollsters. On almost all these issues, they publicly claim to be more liberal than they really are.

For example, while 86% of independents think privately that society is better off when individuals make decisions for themselves rather than experts doing it for everyone, only 69% are willing to admit that publicly.

While only 3% of independents privately believe that the government should censor offensive content, 20% say they do. Fifty-two percent think public schools focus too much on racism, but only 41% will admit to that view. Six in 10 think the U.S. is doing too much to help Ukraine, but only 44% will say that publicly.

Why do you suppose that is? The pollsters don’t speculate, but we can. We’d say it’s because the left has so thoroughly infiltrated the media, the entertainment business, education, and every other major institution that they’ve browbeaten independents into denying or hiding their actual views.

The result is that opinion polls skew left, which then only reinforces independents’ desire to stay silent. In reality, it’s leftist Democrats who should be running scared.

— Written by the I&I Editorial Board

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We’re doing this on a voluntary basis because we believe in a free press, and because we aren’t afraid to tell the truth, even if it means being targeted by the left. Revenue from ads on the site help, but your support will truly make a difference in keeping our mission going. If you like what you see, feel free to visit our Donations Page by clicking here. And be sure to tell your friends!

Authored by Simon White, Bloomberg macro strategist,

The market is not ready for a re-rise in inflation, with positioning long in stocks, bonds and rates futures.

Inflation has been relegated to secondary importance for now, but unwatched pots often boil over.

Structural price-growth remains elevated, while core consumer prices are still above 3% – harbingers that it’s not time to mute the inflation alarm.

It would be around now – before inflation has returned to a low-and-stable regime – that a shock arrives and prices re-accelerate.

Price pressures had already begun to boil in the late 1960s, and it was the “bad luck” of Nixon closing the gold window in 1971, the Arab oil embargo in 1973 and the Iranian Revolution in 1979 that turned the decade into the Great Inflation.

For September’s PPI data today (and following yesterday’s CPI), it’s clear positioning is not expecting any big upside shocks, or more concernedly, not prepared for inflation that starts to trend higher again.

The chart below shows inferred positioning for CTAs based on HFR’s indices. A multiple regression on CTA returns versus the S&P 500 and Treasuries shows that they are likely long and getting longer stocks and bonds.

The CTA fund data is not perfect, but we see corroboration elsewhere.

The DBi Managed Futures ETF shows it has been getting longer 2-year and 10-year note futures as well as long-bond futures.

It is long the S&P, MSCI Emerging Markets index and MSCI EAFE as well.

Commitment of Trader positioning shows the net long of speculators in US stocks is rising. And the US Bonds Position Proxy, where I have amalgamated hedge funds’ beta to Treasuries, COT data and the JPMorgan Treasury Client Survey, also shows a long in bonds that’s burgeoning outside of CTAs.

Furthermore, COT data shows significant longs in fed funds and SOFR futures. There is a net short bond position between leveraged funds and asset managers, but some of this could be related to the basis trade, i.e. it is not clear how much of this is outright short risk.

A revival in inflation very likely means higher rates, lower bonds, and quite possibly lower stocks, as valuations are throttled by higher discount rates.

With SOFR options implying a near-zero probability of an inflation tail, and positioning as it is, it’s clear the market is not prepared for such an outcome.

Tesla’s shares stumbled in premarket trading after the company’s long-awaited robotaxi event in Burbank, California. The event showcased the robotaxi Cybercab, the futuristic-looking Robovan concept, and the latest version of the humanoid robot, Optimus.

Just hours after the event, some top Wall Street analysts began weighing in, praising the impressive lineup of new innovative products that will revolutionize transportation and other areas of the economy but noting a lack of technical details. 

Robotaxi details pic.twitter.com/AVSoysc6pS

— Tesla (@Tesla) October 11, 2024

Robovan details pic.twitter.com/Pdito0dfRq

— Tesla (@Tesla) October 11, 2024

Optimus is your personal R2D2 / C3PO, but better

It will also transform physical labor in industrial settings pic.twitter.com/iCET3a9pd8

— Tesla (@Tesla) October 11, 2024

A team of Goldman analysts led by Mark Delaney and Will Bryant attended the robotaxi Cybercab.

The analysts said Tesla “demonstrated very strong progress with the Optimus humanoid robot, and we think the Cybercab looked attractive,” but noted, “the lack of data shared on Full Self Driving (FSD) performance, relatively limited details on the robotaxi business plan, and absence of a lower-cost consumer vehicle unveil may be disappointing for some market participants.” 

Here are more of their thoughts about Cybercab and Optimus:

Cybercab

Tesla unveiled a two-seat Cybercab vehicle without a steering wheel or pedals/controls, and with winged doors. The company also showcased a Robovan that can carry up to 20 people or could transport goods. Tesla expects to start unsupervised FSD robotaxi operations in Texas and California next year with its currently available models (e.g. 3 and Y) and be in production with the Cybercab in 2026/before 2027 (although the company noted that it tends to be optimistic with timelines).

Given that vehicles are only typically used for several hours per week, Tesla believes that autonomous vehicles can offer 5X or even 10X higher utilization. Importantly on costs, Tesla believes the average operating cost of its Cybercab over time will be ~$0.20 per mile and may be priced at ~$0.30-$0.40 per mile including taxes and other costs. Tesla expects the Cybercab to cost ~$30K or less. Tesla also commented that it plans to over-spec the computer for the Cybercab (AI 5 computer) as the company believes that distributed inference compute can be utilized when the vehicle is not in use. Additionally, the robotaxi will use inductive charging, and Tesla indicated there would be self-cleaning capabilities. Finally, Tesla said one business model could be a person owning a small fleet that they put onto the network. Tesla did not provide other details on its business plan (e.g. scope of the initial deployments, pricing to start, if Tesla will own the early fleet, remote assistance, etc).

The timelines for AV deployment (next year with 3/Y in Texas and California) and with Cybercab (in 2026/by 2027) and lack of incremental FSD performance data will likely leave the debate on how close Tesla is to unsupervised FSD (L4) unresolved.

As we have previously written in our report, “Can new AI technology help accelerate AV deployments? Updating our global ADAS and AV forecast” we believe there is a material long-term revenue opportunity from robotaxis. However, revenues from initial smaller scale deployments would likely be more limited, as we show in Exhibit 1 and Exhibit 2.

We also provide an illustrative cost model for an owned and operated fleet of robotaxis in Exhibit 3. At scale, we believe that Tesla could benefit from lower per mile costs for its vehicle depreciation (e.g. if Tesla can produce a robotaxi at $30k vs a competitor robotaxi at $50k-$75k, at 100k miles per year and a three year useful life, Tesla would have depreciation costs of $0.10/mi vs a standard robotaxi at $0.15-$0.25/mi). This is driven by the volume leverage Tesla already has making cars (with each vehicle already equipped with inference silicon), and its more narrow sensor stack (e.g. no lidar). Tesla said the cybercab will use vision and AI, implying that it may not use radar (and how it would handle operating in certain weather/lighting conditions without a secondary sensor type is something that may remain a debate).

Optimus

The progress with Optimus was impressive in our view especially given where Tesla was just a few years ago. The robots were very life like in several of the movements, and interacted via voice with attendees, danced, and gave out snacks. We had an impromptu conversation with one of the robots which asked us if we’d checked out the snack bar, and when we asked what it would suggest to eat, it said to ask its friend that was actually giving out snacks (which we found to be relatively human like). We expect Optiumus to be a growing part of the Tesla story.

The TAM for higher-end humanoid robots could be >$10 bn in 2030 per research from a report led by our colleague Jacqueline Du. Recall that on its 2Q24 earnings call, Tesla stated that it expects to have limited production of Optimus Version 1 starting early next year for internal Tesla use (and expects to have several thousand produced and deployed by the end of next year), and expects to ramp production and provide Optimus Version 2 to external customers in 2026.

The analysts are “Neutral-rated” on TSLA shares and believe “that Tesla can grow longer term including with FSD.” However, they noted that “headwinds in the auto business” will limit EPS growth in the near term. Their TSLA 12-month price target is $230, based on 65X applied to our Q5-Q8E EPS estimate, including SBC. 

Separately, other Wall Street analysts published notes to clients after the event, with many also detailing how Elon Musk and Tesla were light on details (list courtesy of Bloomberg):

Barclays analyst Dan Levy (equal weight, PT $220)

• Tesla’s Cybercab demo was similar to prior sketches, but “the event was light on the details”
• “Consumers able to buy Cybercab, but Tesla also likely planning to operate fleet,” Levy said
• The near-term stock reaction is likely to be sell the news, “as the focus now shifts back to fundamentals – which has been neutral at best”

Baird analyst Ben Kallo (outperform, $280)

• The company did not unveil a lower-cost vehicle which can be manufactured on existing factory lines.
• Investor attention will now shift to auto margins in the near term as the company reports 3Q results on Wednesday

Bloomberg Intelligence analyst Steve Man

• “Tesla will likely need to add steering wheels and pedals to scale its robotaxi production by 2026”
• However, the robotaxi announcement provides a better visibility of the company’s capabilities in affordable cars and autonomy

Citi analyst Ronald Josey

• Tesla’s event clarified the company’s vision and timeline for its robotaxi — leading us to be “incrementally positive on Uber shares as a result”
• “Importantly, details regarding distribution or a potential ride-hailing app for the Cybercab were limited, which leads us to believe it’s still possible that Tesla could partner with Uber for distribution in the future”

Jefferies analyst John Colantuoni

• Tesla’s event is a best-case outcome for Uber as the automaker did not provide verifiable evidence of progress in its self driving technology and it also did not outline the number of robotaxis planned

Morgan Stanley analyst Brian Nowak

• Tesla’s $0.20 cost per mile estimate is in line with expectations, confirming its cost advantage
• “This speaks to TSLA’s current theoretical cost advantage over Uber’s current cars and Waymo”

The market reaction to Thursday’s Tesla event this AM in premarket trading in NYC is simply underwhelming. Shares are down 6%. For the past two years, shares have traded sideways, facing resistance above $250. 

Nancy Tengler, the chief executive officer of Laffer Tengler Investments and a Tesla investor who attended the event, told Bloomberg that the only specifics Tesla gave were the $30,000 price tag for Cybercab. 

Tens of millions of Americans have been battered by a multi-year housing affordability crisis, mainly during the Biden-Harris administration’s first term. With high interest rates and record-high home prices, many prospective buyers have been sidelined and forced to remain in their parent’s basement or stuck in expensive rentals.

Despite a hotter September CPI print, this morning’s inflation report offered some good news: “The silver lining is that shelter inflation continues to slow.”

Yet rents are still at or near record highs in markets like Manhattan, giving apartment hunters minimal room for deals anytime soon.

Bloomberg cited new data from brokerage Douglas Elliman Real Estate and appraiser Miller Samuel showing that the median rent in the NYC borough slipped 3.4% in September to around $4.2k. Prices also fell in Brooklyn and Queens. 

Even though shelter costs in NYC are easing in some boroughs, prices are still near record highs – offering minimal deals for apartment hunters. 

Jonathan Miller, president of Miller Samuel, told Bloomberg that while rents typically trend lower in the autumn and winter, only “modest easing” is expected in the coming months, with no significant drops forecasted through the end of the year. 

Bloomberg noted, “That’s at least partly because the market remains fiercely competitive. The number of newly signed leases in Manhattan surged 40% from a year earlier, and bidding wars broke out in nearly a fifth of those deals.” 

Miller pointed out that the slight drop in rents last month was due to cheaper mortgage costs that turned some renters into buyers. However, with a recent hot jobs report and Thursday’s inflation print, the 30-year fixed-rate mortgage tracked by Bankrate has surged from 6.5% to nearly 7%. 

“Think of the direction of rents in terms of the direction of the economy. Wages and employment continue to defy expectations,” Miller noted, adding, “Symbolically, the Fed rate cuts are important to the purchase market. But if mortgage rates don’t come down, it will stall the decline in rents.”

What’s often left out from the conversation by leftist media outlets, and correctly pointed out by Sen. JD Vance at last week’s vice presidential debate is the topic of the illegal alien invasion stoked by Biden-Harris that is driving up housing costs in various markets: “[Y]ou have got housing that is totally unaffordable because we brought in millions of illegal immigrants to compete with Americans for scarce homes.”

The root cause of the affordability crisis is the housing shortage. Biden-Harris importing ten-plus million illegal aliens into the country certainly exacerbated the crisis.