August 23, 5:00 pm EST

It was two weeks ago when Elon Musk sent this tweet about taking Tesla private…

For a guy that has taken personal offense to the short sellers in the stock, this tweet only emboldened them — and may have been the catalyst that will ultimately prove the shorts right.

Why?  If you liked shorting a company that’s lost $6 billion over the past five years, while making the CEO/ founder a billionaire more than 18 times over, you’ll love it when you have an absolute ceiling of $420 to sell against.

And that’s precisely what the shorts have done.  They’ve leaned more heavily against the company, as Musk has created an asymmetric outcome for them. As you can see in the chart, it’s working.

As I’ve said in the past, Tesla is among the tech giants that benefited from the Obama administration’s distribution of the massive fiscal stimulus package that followed the global financial crisis.  Not only did they get regulatory favor from the government, but they received outright funding — a $465 million loan, at a time the company was broke.  And in that economic environment, the big pension funds were happy to follow government money in search of relative security (plowing money into government “sponsored” investments).

Fast forward 10 years and the company is still bleeding money, but Musk is a billionaire!  But sentiment has finally begun turning against the company, which is it’s biggest risk.  When the investors stop believing in the hype and start demanding real performance, the air can come out of the balloon very quickly.

So, to step out of the scrutiny of public markets, Musk has threatened to take the company private, with the help of Saudi funding.  But there’s a new problem.  If the Saudis are indeed willing to fund Tesla, Trump may block it.  The administration is stepping up protections against allowing U.S. intellectual property to fall into the hands of foreigners.  The government may giveth and the government may taketh away, in the case of Tesla.

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January 23, 2017, 4:30pm EST

The new President Trump has wasted no time on carrying out his plan on trade.  He met with 12 major U.S. company leaders today and told them that they would pay to build outside of the U.S., but (importantly) they would save to build here.  And he wrote an executive order to withdraw from the Trans-Pacific Partnership, and one to renegotiate NAFTA.

There are plenty of people that have focused on the risks and the dangers with the Trump trade policies. Meanwhile, those most directly affected aren’t quite as draconian on the outlook — quite the opposite.  The executives that have walked out of Trump Tower, and now the White House have largely been optimistic. The same is said for trade partners.  Whether they mean it or not, they understand the value of doing business with the U.S. consumer.

As I’ve said, there are clear opportunities for win-wins – especially in a world that must rebalance trade to avoid more cycles of the booms and busts, like the boom-bust we experienced over the past two decades.  The administration has the leverage of power (with a Republican Congress), but they also have the leverage of rewards.  Despite what the media tells us, behind closed doors the new administration seems to negotiate by carrot rather than stick.  Trump comes to meetings bearing gifts, and that creates buy-in.

When you bring American CEOs in and tell them that you’re going to give them a 20 percentage point tax cut, you’re going to slash the regulation burden (by “75%” as he said today), you’re going to give them a 30+ percentage point tax cut on repatriating offshore money,  and your going to launch a trillion dollar infrastructure spend, all in an effort to juice the economy to a 4%+ growth rate, they’re going to be very excited — even if you tell them they can no longer access the cheapest production in the world.

In the end, they’d rather have a hot economy to sell into, than a stagnant economy, even if it comes with a higher cost of production.  And we may find that, in the end, the after-tax profit margins of these big U.S. corporates may be better given all of these incentives, even if they make things here. Better revenues, and maybe better margins to go with it.

Remember, the optimism of U.S. small business owners made the biggest jump since 1980 on the prospects of growth-friendly Trump policies.   GDP equals Consumption + Investment + Government Spending + Net Exports. Ultra easy monetary policies have made borrowing cheap, saving expensive and created the economic stability necessary to get hiring over the past several years.  That has all kept consumption going.

The “build it here” policies are a recipe for capital investment to finally ramp up.  Add to that, a big government infrastructure spend, and we’re getting the pieces of the puzzle in place to see much better economic growth. A hotter U.S. economy will mean a hotter global economy. With that, I suspect net exports will ultimately pick up as well, with a healthier, more sustainable global economy.

On that note, if we look at the USD/Mexican Peso exchange rate as a gauge of trade partner health, we’ve seen the peso hit hard through the campaigning period under the protectionist fears of a Trump administration.  Interestingly, since the inauguration, the peso has been strengthening, even as President Trump signed an executive order today to renegotiate NAFTA. The message behind that usually means: the U.S. does better, Mexico does better.

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