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Commodity Carnage Crushes Trumpflation Hopes: "Everyone's Nervous The Bottom Is Falling Out"
Another night of ugliness in Asia as the 'froth' is blasted out of the exuberant hot-money-chased commodity markets. Chinese steel and iron ore futures tumbled on Wednesday to the lowest prices in months as market sentiment turned bearish on the demand outlook.
The most active rebar contract on the Shanghai Futures Exchange settled 3.5 percent down at 2,893 yuan ($420), the lowest since Feb. 2. The sharp decline in steel futures has tamed buying interest in the physical market as well. Iron ore for delivery to China's Qingdao port has swung into a bear market, with the price sinking more than 20 percent from its 2017 high in February to $74.38 a tonne, according to Metal Bulletin.
Tesla shares rose to $313.38 this morning, giving the company a market capitalization of about $51 billion, surpassing GM for a moment as the most valuable American automaker. This left some industry insiders wondering about tulip bulbs.
Tesla makes some nice cars, as you’d expect from a company that charges an arm and a leg for them. But Jackson’s statement wasn’t about its cars, their quality, or electric versus internal combustion engines. It was about Tesla’s market capitalization of $51 billion.
Then there is Tesla’s financial performance. It lost money in every one of its 10 years of existence. Here are the “profits” – um, net losses – Tesla racked up, in total $2.9 billion:
As long as shares continue to rise, the whole equation is perfectly validated: Let the doubters and short sellers stew in their own juices. Shares will rise because stock jockeys expect them to rise, and with that expectation, they buy them and drive up their price. Buy-buy-buy turns into a self-fulfilling prophecy. It won’t last forever.
But until then, market share, profits, or anything else vaguely linked to reality simply don’t matter.
DYI
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