Tesla earnings beat estimates. Wall Street mispricing inflation trades. Rising costs been passed on to the consumers. Tesla short volume starting to pick up?

 

Tesla earnings beat ALL market estimates, as follows: 

Tesla 1Q revenue at $18.8bn: expected $17.92bn, 1Q Automotive gross margin +32.9%: expected +28.4%  and the company's adjusted net income $3.22 vs $2.26 estimated.   What does this tell you?  Well, the market is grossly underplaying inflation as a driver of passing on costs to the consumer, therefor company profits do rise in line with overheads blowing out.  You would think that Wall Street would adjust estimates for inflation?   Wouldn't you?   But with interest rates sitting way below where they should be (2% would be juicy) to combat the worst inflation in over 40 years, pundits are overall downplaying inflation as, yes you guessed it, the Federal Reserve's mantra of "temporal"  even though they are slowly cluing on that Americans could toss out President Biden on an inflation, for not reigning in spending.  Yet it would be a travesty for that Doomsday Clock ex-president, to be nomiated for a redux of madness.   Which I doubt will happen.

Anyway, the Chart above explains why Tesla rallied and sold on the news.  Starting from the bottom and moving up.

First chart show's the global price of nickel to which the Tesla's and other electrical cars, bikes, scooters and skateboards rely heavily on, as you can see, lows in 2020 were at $11800 they have since shot up to $19930 (cubic ton).

Next chart, is the Tesla Futures price, as 1Q earnings have passed, with the dramatic rally and sell off.  Now falling into a narrow trading range on the downside.

Above the Tesla chart is the NASDAQ, which has had its time in the sun, with yields now surging on a possible 50 basis point rate rise by the Fed, which would sit the cash rate at 1%, that in turn will put pressure on Silicon Valley startups and speculation in general.   The technological index should, by definition, fall back (noted with the trading lines) into a bear market dragging most companies with it, including Tesla.

Finally Tesla's short volume which has fallen to 2019 lows, which after a many burnt Hedge Funds, may return with vengeance on the pretext that you can't keep passing on rising costs to the consumer.   Are we going to see a spike again?  Maybe...