The media’s macro portrait of ‘everything’s alright really’ looks like the daubings of an infant when you get closer to the canvas. Nowhere is this more apparent than than in the micromadness of the US Car sector.
One of the things long-distance relocation brings to the party is just how different things look “economically” when you get down to ground level. Because the world is not a global village and never will be, all news and business coverage is heavily localised….but at the same time, because the local entertainment programming is so abysmal, one tends to focus on the US globalised channels. And of course, the internet is everywhere (when it’s working) these days.
So you watch the local news and grasp the issues, which you can then compare to the bullshit being spewed out by the BBC, CNN, Bloomberg, Sky and CNBC. Then you can read what the best Net commentators are saying……and that, usually, is far closer to what regional business and banking is concerned about.
Last but not least, you meet locals along with expats and holidaymakers from the UK, the EU, Poland, Russia, India, Australia and so forth
In a nutshell, IABATO rules – It’s All Bollocks And That’s Official – when it comes to the big old corporate media. As many of us have been saying since 2011, stimulation has not worked; Zirp may have brought forward credit spending but it has also reined in the more comfortable silvers; recovery is not under way in Asia any more than it is in the US or Europe; all margins are under extreme pressure; fiscal policies account for a good 60% of boosted profits; sales remain laggard; all the smart senior business heads know that there is no natural growth at all outside a few hitech sectors; the bourses are overvalued; oil’s price level is silly; a lot of medium-sized investors are thinking about gold.
The local and regional business channels here in Asia are similar to those of the West around five years ago: that is, they are still looking to central banks to speed things up. But according to the US “business” media, ‘world growth is starting to look healthy’. No it isn’t: local eyes say spending confidence isn’t there, banks are nervous, China is a potential credit basket case, and the asset prices boosted by Zirp are being given unreal valuations they cannot support.
In the West, the hype focus is trying to extend outside of the digiital comms sector, and of late the big story has been electric cars. Paris is going to be 100% electric by 2025 (although there are murmurs this will slip back to 2030) but the City Elders are already very much on the case. Every US major auto group is gradually easing sales units up out of niche and into minority mainsteam. But as usual, Wall Street is well on the way to screwing everything up with hype behind one five-letter word: Tesla.
I’m sorry to come back to this again, but Tesla stock is overvalued junk, its PR is a continuous stream of scotal sac contents, and anyone with even a passing acquaintance with car market structures knows exactly where Tesla is going: to the recycling centre.
Car marketing is about five main things: customer credit, control of a reliable network, production expertise, marque reputation and range volume. On every one of those bases, Tesla can’t cut it.
The car company valued at close to GM and on a par with Ford is lying about the unit output and sales, close to being caught up technologically by the big boys, riddled with production problems and, in terms of volume clout, almost homoaeopathic.
Consider these stats: forecast to turn out 16,000 Tesla Model 3 vehicles in November and December this year, the actual number so far is 345. Its main competitor the Chevrolet Bolt is now number one in the sector, way ahead of Tesla: Chevy’s EVs (at just 1.2% of GM’s 2017 output) knock Tesla volume out of sight. Tesla’s onetime bestseller the Model S has seen an 18% year-on-year drop in sales. Even by Wall Street’s limbo-low standards, this is the amoral scam of the new century.
But as if that wasn’t enough, here’s more interesting stuff that some of the remaining 2008 disaster survivors will find nostalgic, in the History Rhymes sense of the word: the US car market today is beginning to show signs (in terms of non-performing loans) of that fine old institution the US housing sector. Nearly one in 10 car loans made to borrowers with bad credit was delinquent by 90 days or more in October, according to a new report on household debt by the Federal Reserve Bank Of New York.
And a cute little snippet from the Daily Telegraph: ‘Car dealer Pendragon is planning a £100m-plus sale of its US business as it seeks a new focus on used cars and online services and attempts to reverse course after a profit warning in October.’ They can see what’s careering down the road.
Don’t forget that US sector sales data steer well clear of value definitions of the market. Because everyone is struggling to make a decent return on consumer prices paid.
So: big company collapse coming, margins falling, credit scoring standards heading for the sewer. Well that’s alright then.
And a final PS harking back to yesterday’s Slogpost reference to a ‘honey-rush will deliver more Washington-manufactured dividends for the ‘Pooh Bull’ shareholders to pocket’. This from the Guardian:
Big Short anyone?