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The longest streak in history! What's really happening with Tesla? Can the stock continue its upward trend?
Since May 25, Tesla shares have risen for 13 consecutive days, climbing 38% from $186 to $258. Its market capitalization has once again surpassed $800 billion, a gain of more than 100% this year. From a low of $101 at the beginning of the year, it has grown more than 126 percent so far.

At the beginning of the year, Tesla faced a decline in competitiveness due to a decline in demand for electric vehicles and the lack of new models being introduced. Inventory even reached the highest level since the epidemic. However, through two rounds of global price cuts, Tesla effectively solved the inventory problem and the stock price rebounded from the bottom.

On Jan. 7 of this year, Bill Miller, a well-known U.S. investor, said he had been shorting Tesla recently because of increased competition in the electric car industry. However, after Bill Miller increased his short position in Tesla, Tesla's global price reduction strategy quickly solved the inventory problem and brought the delivery cycle back to normal, and Tesla's share price rebounded.

After Tesla's 11 consecutive days of gains, a journalist retweeted Bill Miller's bearish view of Tesla in January, saying it was up more than 140% since that interview. In response, Tesla CEO Musk commented below with a laughing and crying emoji as the old horse once again mocked the short-seller.

Back in January, the market all felt that Tesla was about to fall below the $100 mark and that was the end of Tesla's high valuation story. However, it turns out that Musk has once again smacked the shorts in the face.

In the past six months, here are the things that have brought Tesla back to kingdom come.

First, Musk decided to drastically reduce the price. On the day he announced a 10% reduction in the global average selling price, Tesla's share price had fallen below the $100 mark, the lowest point of the round of Tesla's decline. The market was deeply skeptical about the effectiveness of this strategy and even worried about its impact on gross margins.

However, it turns out that Tesla has successfully withstood the test of the market, and both sales and share price have successfully bottomed out.

Especially in this year's U.S. IRA electric vehicle subsidy policy, Tesla can also enjoy a $7,500 tax credit after the price cut, which makes Tesla in the already low competitive pressure of the North American market, but also the existence of no rival.

In the Chinese market, Tesla has entered the price range of brands such as Xiaopeng and Askworld after the price cut, forcing these brands to follow the price cut as well. But the price cut did not bring them sales rise, but led to a decline in revenue and gross profit.

The rise in sales to clear inventory is just the first reason for the stock price rebound, but it can't be separated from the fact that Tesla has been on the right path to get things right.

Under the continuous iteration of AI this year, the market is increasingly convinced of the development of AI technology. Tesla's number one fan, Sister Woody, believes that the biggest opportunity for AI lies in software, and Tesla is the most important AI concept stock. Once again, Sister Woody is wildly predicting that FSD will drive Tesla's stock price to $2000 in 2027, which is equal to about $7 trillion.

After the recent Tesla surge, Musk's statements are active again. A Twitter user asked Musk if Tesla would one day surpass the combined market capitalization of Apple and Saudi Aramco. And Musk said that there is still a lot of work to do in between, but it is possible. Currently, the combined market capitalization of Apple and Saudi Aramco is nearly $6 trillion.

Of course, Musk has more than enough of these words. But it is undeniable that the current market is increasingly looking forward to Tesla's FSD story, because we all know that the software side of the profits are much higher than the profits of individual car sales.

At the beginning of the year, Tesla was criticized by the market for the lack of new model launches and the decline in competitiveness. However, since the price reduction strategy succeeded in stimulating market demand, Tesla is also actively addressing the issue of new models.

Tesla plans to put into production a major revision of the Model 3 within this year. and for now, the Model 3 will no longer use Ningde Times batteries in North America in order to comply with the U.S. government's IRA tax credit, plus the subsidies already in place in most parts of the U.S. The price is even lower.

For example, after enjoying all the subsidies in California, the price of Model 3 can be reduced to $25,000, about 180,000 RMB, which is a thousand dollars cheaper compared to buying a Camry in California, which is a very big impact on traditional fuel cars.

The revised Model 3 will be put into production in Shanghai factory and Texas factory in September this year, and it is expected that 23Q4 can start booking, and it is expected that 24Q1 can start delivery. The new model's manufacturing costs are nearly 50% lower than the current Model 3, which means there is more room for downward pricing adjustments.

According to Electrek, Tesla plans to produce 375,000 Cybertrucks per year, an amount that far exceeds Wall Street's expectations, with analysts previously expecting production of less than 100,000 in 2024 and about 240,000 by 2027.

Musk also said recently that he thinks the Cybertruck could produce between about 250,000 and 500,000 units a year. Tesla said it expects to be able to make deliveries of the CyberTruck by the end of the third quarter of this year.

On June 9, the White House said electric vehicle charging stations that offer Tesla charging interfaces are eligible to share in billions of dollars in U.S. federal subsidies as long as they also support CCS interfaces. The White House's goal is to drive the deployment of hundreds of thousands of charging stations, and sees this as an integral part of the push for electric vehicle adoption.

Ford and General Motors have each announced that they will adopt Tesla's charging standard, the North American Charging Standard NACS, which means that the U.S. government hopes to subsidize the switch to Tesla's NACS charging interface for car companies that use CCS charging interfaces, since the entire North American CCS charging piles combined do not use as many NACS piles as Tesla alone, which accounts for 60 percent of North American fast charging piles. 60%.

Tesla will be able to generate additional revenue from Ford and GM EV owners, and the charging network will be more fully utilized.

Conclusion
Over the past six months, Tesla has done four things to boost its stock price.

A big global price cut has spurred market demand, a steady increase in capacity and lower costs at the Texas plant, the upcoming launch of the new and revised Model 3, an expected increase in CyberTruck capacity, and the opening of charging pads to GM and Ford. With the combination of these factors, Tesla's stock price has more than doubled this year, leading the Nasdaq tech stocks.

It is interesting to note that North American sales remain strong under the rate hike cycle. How much will this contribute to Tesla if the end of the rate hike cycle is followed by lower-priced model launches and FSD advances?

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Don't be blinded by the AI craze! Major banks warn of topping out of speculation, traditional cyclical stocks poised to rise
Despite the market's frenzy over artificial intelligence, investors have been quietly displeased with the tech oligarchs' recent stock market moves. t Rowe Price Group, Bank of America and Citigroup, among others, believe the hype around AI has peaked. But that's not bad news for the market, they argue, because so-called cyclicals, the "old economy" companies like banks and mining, are poised for a rebound.

In recent months, artificial intelligence-related stocks such as $NVIDIA (NVDA.US)$ and $SUPER Micro (AMD.US)$ have been in demand. With record capital flows, these stocks led the Nasdaq 100 to its largest-ever performance gap over the Russell 2000 small-cap index. For example, a $1,000 investment in the Nasdaq on Jan. 1 would have returned $330 by now, while the same amount invested in the Russell 2000 would have yielded nothing.

Nevertheless, small-cap stocks are starting to recover lost ground. This week, the Russell 2000 index rose more than the Nasdaq by nearly 5%, as more and more investors are betting that hard-hit cyclical stocks will earn greater returns than "bubble" technology stocks in the future. This is because they believe that the U.S. recession and interest rate cuts are expected to be too much, and this is a powerful driver of technology stocks.

Sebastien Page, chief investment officer at asset management firm T Rowe Price, has been snapping up small-cap stocks because he believes the market is overstating the risk of recession. These assets look really cheap, and this is an opportunity to get in when others aren't ready."

Some are also skeptical that the rally around large-cap stocks can be sustained. The S&P 500 is hovering in bullish territory, but more stocks touched 52-week lows in May than touched 52-week highs. Market concentration is at an extreme, with the index's five largest constituents (especially all technology stocks) now accounting for nearly a quarter of the index's market capitalization. page noted: "This has been an incredibly concentrated market rally. A handful of stocks are up and others are essentially flat."

Some long-time technology stock longs are also reducing their positions. Edmond de Rothschild Asset Management cut its holdings in Nvidia, which it had held since at least 2020, citing "overvaluation" in the artificial intelligence technology sector.

Cyclical stocks suffered a setback
Cyclical banking and mining stocks performed strongly in 2022, thanks to rising interest rates and normalization after the new crown epidemic. But as the U.S. banking turmoil in March sparked fears of a severe recession, investors rushed to buy so-called growth stocks, which benefit more when borrowing costs fall.

But many economists now expect the recession to be mild and short-lived - Bank of America, for example, expects U.S. GDP to fall 0.8 percent from peak to trough, and its head of U.S. equity strategy, Savita Subramanian, says the resolution of the U.S. debt ceiling, along with a tight job market, provides "a less scary recession" is in place. She expects cyclical stocks to lead the market higher from now on, rebounding from the largest position reduction since 2008.

Similarly, a team of Citi strategists led by Scott Chronert is urging clients to allocate wait-and-see cash to cyclicals, predicting that "cyclicals in the S&P 500 will gain market cap share at the expense of growth."

Chronert's recommendations are based in part on valuation gaps, with an expected P/E ratio of about 30 times for the Nasdaq 100 and 20 times for the S&P 500 cyclicals. He also expects a mild downturn, with the "shock effect" not as severe as in previous periods, given that much of the market is on the defensive.

Artificial intelligence wave
Although Chronert is bullish on cyclical stocks, he admits that it is difficult to "fight" the tailwinds of artificial intelligence. As a result, he advises investors who are already invested in technology stocks to hold their positions, while warning that the current rally has gone too far for new investors to join. He added: "The momentum is still strong, but it's hard to catch up."

Meanwhile, economic data was mixed. A measure of economic surprises showed that key indicators exceeded expectations as the labor and housing markets slowed, but only gradually. But inflation did not cool as quickly as hoped, and the U.S. Treasury yield curve, a key recession indicator, continued to warn.

This leaves those hoping to prepare for a cyclical rebound in a dilemma, all the more so if they suffer a setback earlier in 2023 due to the market's sudden shift toward technology stocks. BNP Paribas Investment Management was one of the firms found to have increased its holdings in financials and value stocks earlier this year. They are hesitant to put more money into cyclical stocks despite doubts about an AI-driven rally.
Despite the market's frenzy over artificial intelligence, investors have been quietly displeased with the tech oligarchs' recent stock market moves. t Rowe Price Group, Bank of America and Citigroup, among others, believe the hype around AI has peaked. But that's not bad news for the market, they argue, because so-called cyclicals, the "old economy" companies like banks and mining, are poised for a rebound.

In recent months, artificial intelligence-related stocks such as $NVIDIA (NVDA.US)$ and $SUPER Micro (AMD.US)$ have been in demand. With record capital flows, these stocks led the Nasdaq 100 to its largest-ever performance gap over the Russell 2000 small-cap index. For example, a $1,000 investment in the Nasdaq on Jan. 1 would have returned $330 by now, while the same amount invested in the Russell 2000 would have yielded nothing.

Nevertheless, small-cap stocks are starting to recover lost ground. This week, the Russell 2000 index rose more than the Nasdaq by nearly 5%, as more and more investors are betting that hard-hit cyclical stocks will earn greater returns than "bubble" technology stocks in the future. This is because they believe that the U.S. recession and interest rate cuts are expected to be too much, and this is a powerful driver of technology stocks.

Sebastien Page, chief investment officer at asset management firm T Rowe Price, has been snapping up small-cap stocks because he believes the market is overstating the risk of recession. These assets look really cheap, and this is an opportunity to get in when others aren't ready."

Some are also skeptical that the rally around large-cap stocks can be sustained. The S&P 500 is hovering in bullish territory, but more stocks touched 52-week lows in May than touched 52-week highs. Market concentration is at an extreme, with the index's five largest constituents (especially all technology stocks) now accounting for nearly a quarter of the index's market capitalization. page noted: "This has been an incredibly concentrated market rally. A handful of stocks are up and others are essentially flat."

Some long-time technology stock longs are also reducing their positions. Edmond de Rothschild Asset Management cut its holdings in Nvidia, which it had held since at least 2020, citing "overvaluation" in the artificial intelligence technology sector.

Cyclical stocks suffered a setback
Cyclical banking and mining stocks performed strongly in 2022, thanks to rising interest rates and normalization after the new crown epidemic. But as the U.S. banking turmoil in March sparked fears of a severe recession, investors rushed to buy so-called growth stocks, which benefit more when borrowing costs fall.

But many economists now expect the recession to be mild and short-lived - Bank of America, for example, expects U.S. GDP to fall 0.8 percent from peak to trough, and its head of U.S. equity strategy, Savita Subramanian, says the resolution of the U.S. debt ceiling, along with a tight job market, provides "a less scary recession" is in place. She expects cyclical stocks to lead the market higher from now on, rebounding from the largest position reduction since 2008.

Similarly, a team of Citi strategists led by Scott Chronert is urging clients to allocate wait-and-see cash to cyclicals, predicting that "cyclicals in the S&P 500 will gain market cap share at the expense of growth."

Chronert's recommendations are based in part on valuation gaps, with an expected P/E ratio of about 30 times for the Nasdaq 100 and 20 times for the S&P 500 cyclicals. He also expects a mild downturn, with the "shock effect" not as severe as in previous periods, given that much of the market is on the defensive.

Artificial intelligence wave
Although Chronert is bullish on cyclical stocks, he admits that it is difficult to "fight" the tailwinds of artificial intelligence. As a result, he advises investors who are already invested in technology stocks to hold their positions, while warning that the current rally has gone too far for new investors to join. He added: "The momentum is still strong, but it's hard to catch up."

Meanwhile, economic data was mixed. A measure of economic surprises showed that key indicators exceeded expectations as the labor and housing markets slowed, but only gradually. But inflation did not cool as quickly as hoped, and the U.S. Treasury yield curve, a key recession indicator, continued to warn.

This leaves those hoping to prepare for a cyclical rebound in a dilemma, all the more so if they suffer a setback earlier in 2023 due to the market's sudden shift toward technology stocks. BNP Paribas Investment Management was one of the firms found to have increased its holdings in financials and value stocks earlier this year. They are hesitant to put more money into cyclical stocks despite doubts about an AI-driven rally.

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Towards a trillion dollar market cap! Nvidia kicks off AI frenzy as Wall Street calls for $500 price target
This AI wave is so hot that shares of $NVIDIA (NVDA.US)$, a global leader in AI computing power, are rocketing up again.

On May 25, Nvidia was up more than 23% pre-market at $376.32.

NVIDIA's Q1 results beat expectations by a wide margin, with the brightest data center business posting record revenue. Even more shocking was NVIDIA's revenue forecast for the next quarter, with the company confidently giving guidance of $11 billion, more than 50% higher than expected, which would also be its highest quarterly revenue ever.

The bright numbers that dazzled the market triggered a surge in Nvidia's stock price. At one point, shares rose nearly 30 percent to a new record high after the bell on Wednesday, moving toward the seventh U.S. company with a market capitalization of more than a trillion dollars.

After the financial release, the stock rose 1 $AMD
Nvidia financial cloth after the stock whole after wildly soaring more than 24%, the market value increased by nearly $190 billion, towards trillion, Nvidia after hours rose by a similar often limit out of 1 AMD, 1.5 Intel, 2.5 Micron.

Pulled by Nvidia's strong results, other AI-related companies' stocks have soared after the bell, with $US Supermicro (AMD.US)$ soaring over 8%, $TSMC (TSM.US)$ up over 6%, $MIKRON Technology (MU.US)$ and $ASM (ASML.US)$ up over 2%.

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A rarity in 18 years! Stock purchases by "insiders" of regional banks after banking crisis
Between March 10 and May 15, insiders at regional banks bought a combined 2.3 million shares of stock while selling off only 335,000 shares. These insiders believe that the sell-off in bank stocks is not a reflection of the strength of the banks' businesses and that the sell-off was overdone.

U.S. regional bank stocks in general rose sharply last week, with the SPDR S&P Regional Banks ETF (KRE) up 7.8% for the week, the biggest weekly gain in more than two years, which could be attributed to a big buying spree by the banks' "own people.

Michael Rose, an analyst at financial services firm Raymond James, reported on Monday that since the banking crisis broke out in March this year, insiders at regional banks have been buying stocks on a record scale. 2.3 million shares were bought by insiders between March 10 and May 15, while only 335,000 shares were sold.

Such net buying is rare, as insiders have only bought shares on a net basis in seven of the 18 quarters between the first quarter of 2005 and the first quarter of this year. The last net buying was in the first quarter of 2020, at the beginning of the new crown outbreak.

This bullish indicator reflects the combined view of bank insiders that, on the one hand, the general sell-off in regional bank stocks is not a reflection of the strength of the banks' own businesses and, on the other hand, the recent selling pressure is overdone. Those with direct, in-depth knowledge of the company are buying shares in the open market, expressing confidence in bank stocks, their credit performance during the crisis, and/or their improved competitive position.

The ten regional banks with the highest number of shares bought by insiders since the March 10 banking crisis are Byline Bancorp (BY), Stellar Bankcorp (STEL), Coastal Financial Corporation (CCB), Third Coast Bancshares ( TCBX), Central Valley Community Bankcorp (CVCY), Princeton Bancorp (BPRN), PCB Bancorp (PCB), Lakeland Financial Corportation (LKFN), Texas Capital Bancshares (TCBI), Farmers National Banc Corp (FMNB).

Although there are more than 140 bank failures every year, on average, there are nearly three bank failures a week. This year, although the number is small, the "quality" is extremely high - according to statistics, in 2009, 140 banks failed, with total assets of $170.9 billion, not as many as Silicon Valley Bank. In 2010, 157 banks failed with total assets of $96.5 billion, not as much as Signature Bank.

So, although only three banks failed at the beginning of 2023, the amount of assets directly exceeded the amount in the two years of the crisis. As of December 31, 2022, Silicon Valley Bank has about $209 billion in assets, its deposit size of $175.4 billion, is also the largest local deposits in Silicon Valley.

As mentioned by Wall Street News nearly a month ago, in March of this year, when the banking crisis broke out, more than 1,000 executives and directors of more than 600 publicly traded U.S. companies bought shares of their companies, a record number of people and companies involved since May of last year. Of these, more than half were people from financial companies, a percentage that is at least two years high.

Financial companies accounted for a large proportion because, after the collapse of three U.S. banks, including Silicon Valley Bank, triggered panic, corporate executives are betting that their own company's stock will rebound, reflecting the optimism of companies after the outbreak of the banking crisis.


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