Musk Stalls on Massive Tesla Plant, Stoking Caution in Mexico
Dec 15, 2023
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Musk stalls on massive Tesla plant in Mexico, partnership launched for actively-managed bitcoin and ethereum futures ETFs, investment opportunities in Asia discussed, and market outlook including bond market indicators and investing opportunities
Elon Musk has delayed the construction of a Tesla factory in Mexico, raising concerns about the company's expansion plans in the region.
Investors should focus on individual companies and conduct thorough fundamental analysis when making investment decisions in the current market.
Deep dives
Market Rally and Optimism for 2022
Despite expectations, the market continues to rally, with the S&P 500 on pace for its seventh straight week of gains. While the tone from the Fed indicated that rate hikes will be coming, the exact timing remains uncertain. However, investors are slowly pricing in rate hikes for the first quarter of 2022, though it's unlikely unless unemployment surpasses 4%. Although expectations for rate cuts may be overstated, the market is expected to continue its upward momentum, with a price target of 5200 to 5400 for the S&P 500 by the end of 2024.
Selective Investing in an Optimistic Market
In the current market, it is important to be selective and focus on individual companies rather than sectors or asset classes. Bottom-up analysis and a careful evaluation of fundamentals are key. Companies with low leverage, strong balance sheets, and healthy free cash flow are favorable. While small caps may present opportunities, a company's individual financial health should guide investment decisions.
Overallocation to Equities and Fixed Income Opportunities
With an equity bias, clients with a high net worth are encouraged to remain fully invested in the market. However, bonds could provide decent returns for clients with a small allocation. Municipal and high-quality corporate bonds were attractive a few weeks ago, but yields have since normalized. The ten-year Treasury yield is expected to remain in a range of 3.8% to 4.5%. Any significant drop below 3.8% would signal potential issues in the near term.
Buying Opportunity and Positive Outlook
A pullback in the market could present a buying opportunity, with clients advised to take advantage of any dip in prices. The next six to 18 months are forecasted to be positive for the market, with expected earnings growth of 11% and a price target of 5200 to 5400 for the S&P 500 by the end of 2024.
Blomberg News Mexico Business Reporter Amy Stillman discusses Elon Musk stalling the construction of a Tesla factory in northern Mexico. Ophelia Snyder, Co-Founder of 21.co, talks about a partnership with ARK Invest launching actively-managed bitcoin and ethereum futures ETFs. Jon Withaar, Head of Asian Special Situations for Pictet Asset Management, shares his thoughts on investment opportunities in Asia. And we Drive to the Close with Brooke May, Managing Partner at Evans May Wealth. Hosts: Tim Stenovec and Jess Menton. Producer: Paul Brennan.