TSLA Takes A Page Out Of The Fed’s Inflation Playbook

Many investment professionals will tell you that the fact of the matter is that a stock split doesn’t change the value of a company. True, the fact is that a stock split doesn’t change the value of the of the company if the stock price remains the same.

But that’s not reality.

So don’t let facts distract you from reality.

If enough stock traders buy the stock because of the news, the reality is that the company’s value does rise.

In this case, that increase amounted to $22.3 billion in just the first day.

Equally as impressive as the loyalty of Mr. Musk’s investors, is the timing of his announcement.

As you can see on the chart below, the stock was sliding through important support, and close at a dangerous multi-week low right before he mad the announcement.

This reminded me of his famous tweet in Aug of 2018 stating that he was preparing to take Tesla private at a substantially higher price than its price at the time. This tweet came as the stock was rolling over in a bearish phase with the bears confidently predicting its demise.

The tweet resulted in an SEC investigation, and him being essentially “grounded” like a childhood punishment from tweeting unsupervised, but that didn’t stop the stock from rallying.

And of course, there was never any legitimate evidence of a private acquisition of the company after that tweet.

But it did anger the short sellers.

Mission accomplished and a small price to pay (for a billionaire with performance bonuses tied to the how quickly the valuation of the company rises)

That said, was the charts breakdown a coincidence?

I’ll let you decide.

And while we’re focused on inflation….

This week served up some interesting inflation news that really bothered the bond market, and perhaps it should get your attention too.

PPI, CPI and Import Prices all came in at levels that were much higher than expected.

As you can see from the chart below, month over month CPI spiked.

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Disclosure: None.

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