Wow! Layoffs from Tesla again and a hiring freeze. Musk's a warning for the Federal Reserve and the economy and Twitter profitability updates and more. All of this since last night. Oh my goodness, what's the day gonna hold? It's 5 a.m Anyway, hey everyone and meet Kevin here.

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So electric broke this morning that apparently a Tesla has told some employees uh that Tesla or Elon Musk maybe has told some boys uh that there were plans to implement another hiring freeze and confirmed that there could potentially also be another wave of layoffs are coming now I Thought this was really interesting when I first read it because my first thought was uh oh, here we go with the demand story again. but the phrase here at least was another round of layoffs and so that got me thinking back to the last round of layoffs that we had in June. That's when Tesla decided to pause all hiring and Tesla was cutting 10 percent of its staff which was met with a lot of mainstream media essentially clickbait uh, over the idea that Tesla was all of a sudden cutting from its manufacturing staff, Well, the reality was they were just cutting people wearing white colors. In other words, people in the G A departments, right? General Administration There isn't much of a sales department.

I Mean, with the exception obviously of the Tesla dealerships or showrooms if you will. we don't like to call them dealerships since the dealership model has been axed anyway. Uh, and so back in June Tesla was still actually actively hiring for its Manufacturing implants, but they were laying off and freezing hiring for corporate positions and they cut about 10 percent of their staff there. Now they've got about a hundred thousand employees and the bulk of those are manufacturing.

It's more 80 to 90 000 are manufacturing. Uh, and in June Elon Musk Uh started these layoffs with a quote super bad feeling about the economy as at least he told the world via an email to Reuters. So he also believed that we would be in a recession for about 18 months and that ultimately some bankruptcies needed to happen. Well, so far he hasn't been wrong in that the economy has definitely weakened in of the last six months and it was at least then realized.

hey, you know what? layoffs and a hiring freeze at Tesla in June was ultimately considered a a good thing for Tesla something that could help Tesla preserve margins in a time of more leanness. Now do keep in mind that those those layoffs in June were right after the Shanghai shutdown in May. So even though those layoffs occurred in June which is the end of Q2 still ended up having a rough Quarter Two because of the Shanghai shutdowns. Now, we don't have Shanghai shutdowns.

We basically have an all China shutdown. That's because even though technically Covet Zero has been unofficially lifted, it seems like many Chinese at least from what we're hearing, are either sick or are staying home for fear of being sick and a Subway ridership is down at essentially the same lows in most cities or many cities I should say across China just like what we saw in May So it's almost like you kind of have this de facto people shutdown in China and in May you had an actual shutdown in China Certainly in Shanghai where Tesla Shanghai is. Uh, and that led to the last round of layoffs. So part of me wonders if this goes back to the China story.

A part of me also wonders: is this just going to be a white collar again? Or are there going to be any manufacturing laughs I Personally can't imagine any manufacturing layoffs given that Tesla is at least still set to announce although they haven't yet. Officially, they're still set to announce uh, Tesla Mexico in which they would invest 800 to a billion dollars in a gigafactory in Northeast Mexico and potentially invest as much as 10 billion dollars over the next five to ten years at Tesla Mexico, which would be the largest gigafactory investment that we've seen yet, unless of course they're counting payrolls, In which case, then you could may as well just call it Fremont. But we'll see. Uh, so the other thing to consider is we're still ramping.

We're still substantially in the ramping phase for Tesla Berlin and Tesla Austin. So it seems unlikely that the manufacturing sector is one that's looking at cutting. But I will tell you this: When companies expand, it's very, very common to expand. kind of like a like an onion.

like you've got a good core and then you get kind of like these layers and layers and layers that get expanded on. But sometimes you look and you go Man, we just we just hired too much. That last layer, you know, you know 10 of The Hires were good and you go in. you kind of remove, refine and then keep going.

So that way you don't get kind of like a moldy onion. You know you want to keep the onion fresh and juicy. Uh, and you want to. You want to pair back pretty regularly as the business is expanding and that actually comes with any business no matter what size it is and it's something called Growing Pains As you hire people, you're unfortunately going to have to fire some.

So this hiring freeze was just again announced by Electric this morning. and uh, another wave of layoffs. Uh, coming in q1 I find very interesting for timing as well because Q1 doesn't necessarily imply this is like hey, China's slow in December let's just lay some people off in China In my opinion, Q1 and this sort of warning is more of a way of giving people a heads up who have white-collar jobs? Hey, you know what? Maybe we don't need 10 CPAs Working on this job, we really only need eight four. That's my expectation of uh, roughly what what to expect? Keep in mind that Elon he's uh, he's known to fire people just look at Twitter which will have some updates on Twitter on in just a moment as well.

but I want to stick for a moment to something that Elon Musk just mentioned on Twitter take a look at this. So somebody here wrote. what's comforting is that Elon won't even entertain the idea that his behavior impacts the stock price now I don't really think that's comforting I think that's uh, being a little bit blind to reality. but that's okay.

we'll talk more about that in a moment. So Elon replies here. maybe so which actually is the first sign I've actually I've seen of him. like finally relaxing this idea a little bit that he's kind of blind to his politics affecting.

uh Twitter I will say Dave Lee actually had a wonderful thread this morning talking about how uh, you know Elon Musk should really be the neutral umpire I thought he had a great analogy on Twitter encourage you to check it out but anyway, uh and I agree with that I think Elon Musk if he is trying to promote Free Speech should be a neutral umpire but then again, everybody's got their opinion on this. You know I like I'm gonna give you my opinion we could disagree if we could stop beer together. All right anyway. So uh, Elon Musk replies this maybe so in which case, buying opportunity for Tesla he's implying right again, he's all in reference to Tesla However, he does say the following: I keep saying that Fed rate is insane because data I'm seeing says we're already in deflation Now this is really interesting because Elon Musk again employs over 100 000 people with a massive massive producer price side insights right before we get producer price index numbers Elon Musk knows what's going on with costs for materials, components, shipping.

All of that kind of like, uh, what was the uh no I was gonna make a bad joke I'm going to skip it. Uh, anyway, if true, then the real return for T bills is roughly that of the S P 500. Now that's actually fascinating because the real return for or the the nominal return for treasury bills right now sits at probably about 3.8 percent if you had a ladder portfolio. Now if you started one now it's Fallen a little bit, but if you went with, you know, a uh, one, uh, five year ladder, you'd probably be sitting at 3.7 3.8 somewhere around there.

maybe knocking on the door four, but somewhere around here, let's just go with four to make math easy. if S. P T Bills right now uh, t-bill's usually the shorter term ones are sitting at four percent then, and Elon Musk expects inflation uh, of uh, or sorry, deflation of maybe negative three percent. Uh, then the real return of T bills is actually closer to seven percent.

And usually we like to say that the long run Return of the S P 500 not considering dividends, reinvested is somewhere around seven to eight percent reinvested. Uh, or annualize seven to eight percent annual long-term rate of return for the S P 500 historically over the last 40 years. Let me get that right, if you reinvest dividends at somewhere around nine point, four percent. But that's interesting because he's really suggesting that we could be seeing somewhere around three percent deflation, maybe even four percent deflation right now.

Uh, and it's something that he thinks the Federal Reserve is blind to. now. Yesterday I made a video and I talked about how the Federal Reserve and I encourage you to watch it. but I'll give you a quick preview I Talked about how the Federal Reserve is already waking up to the fact that they're making big mistakes.

They released the Chicago working paper where They talked about uh oh. we are totally failing to realize that rents are already plummeting. The Philadelphia Fed is making the Federal Reserve finally wake up and realize that they're over counting the number of jobs that have actually been created because they're paying too much attention to the establishment survey which makes politicians look good and doesn't reflect reality. So is it possible that Elon Musk is right that we are experiencing deflation already? Well to understand this: I Wanted to look a little bit at some of the things that he might be exposed to and here's what I found when you look at the Baltic Uh, Freight index for shipping shipping containers.

Uh, you're sitting at about a cost of two thousand, One hundred, twenty seven dollars. Now, this is definitely higher than where we sat before the pandemic. You sat somewhere around. Uh, thirteen hundred dollars for a container back then.

So we're definitely up from there. But if you just compare to 2021 and 2022 that we've had so far, we are way way lower. Way deflationary on shipping costs for containers, right? And we would expect that shipping costs not only for containers, would then also translate over for for other types of shipping costs. Uh, whether that's like rail or Freight we just saw FedEx posted bad numbers yesterday.

This is the Bloomberg Commodity Index. I'm not seeing rapid deflation in the Bloomberg commodity Index, so I'm less optimistic about the basket of the Commodities index. However, I will say when I look at what some metals are doing and you could look at Lumber and see some massive deflation as well. But if I look at what some metals are doing year to date aluminum, this is a big component for cars down 15 percent Copper huge component for electric motors down 14 year today, rolled steel down 14 Nickel unfortunately is up 36 percent and Lithium is up as well.

However, these are smaller components of batteries and Uh with the Uh Lithium iron phosphate batteries that Tesla is typically using. Uh, we expect that Lithium costs should have a nominal impact on on the actual production of Tesla vehicles. It should be more than offset I Believe by the cost of aluminum for example coming down or copper coming down. Last time I did a calculation and I saw lithium bumped like 20 I Expected it would increase the cost of each battery for for a Tesla vehicle to increase in costs somewhere between 40 to 80 bucks.

it's a big deal when you add it together over 400 000 Vehicles right? You know then it adds up. but if other costs are coming down, maybe that's okay. So uh, this is a very interesting Claim by Elon Musk that we could actually be seeing deflation already I I don't necessarily disagree with it I see that in earnings calls as well in fact I Talked to Lauren yesterday Lauren was actually a big part of of uh one of the the people that I bounced ideas off of in January when I sold and uh, what? what I talked to Lauren about yesterday was I said what I saw in January in earnings calls about how every single company was able to raise prices. Consumers were not batting an eye.

Everybody said they had price elasticity. Everybody said they had pricing power. Everybody said they had trouble hiring. Everybody said they were shortages.

that was January contrast to what we're seeing now discounting to get rid of inventory. uh, you know, pausing hiring, trying to be more efficient with our marketing and our spend. uh, you know, having to do promotions to clear older, dated inventory like it is a completely different world today than what we saw in January. So in that sense, it kind of reiterates what Elon Musk is saying.

In other words, what I'm seeing in earnings calls across the board reiterates what Elon Musk is saying we're seeing Metals deflation mostly reiterate what Elon Musk is saying uh, and uh, you know, obviously uh, there are plenty of other signs that, uh, tensions are such in the economy that the Federal Reserve might be getting a little bit ahead of itself. So Elon Musk could be right when he says, hey, you know what we could be in a situation, uh, where we are already facing deflation and then of course, uh, he throws in here a very smart investor I Spoke to today says he's shorting the S P 500. here's the thing though. you could have shorted pretty much anything in 2022 and nail it like fed goes into tightening.

Just go short anyway. All right, so moving on. Elon Musk Did also give us an update on uh oh, let me I guess before I move on. just give a couple quick uh Catalyst updates we have January 25th for earnings Uh, we have a release for Q4 uh, vehicle deliveries and production on January 2nd so mark your calendar January 2nd for uh, production and deliveries China numbers January 8th earnings January 25th Now uh again with Tesla Mexico proposedly getting announced it, it seems like Tesla would not be announcing another gigafactory in the event the demand were truly falling off of a cliff.

Uh, However, it's possible that in the short term, demand truly is falling off a cliff, especially as people wait for the 7 500 tax credit. Now Tesla is offering to uh 10 000 miles of free supercharging and 3 750 if you buy a Tesla in December Which probably means if you took the third, you know a lot of people are like why would you take 3 750 in December if you could get 7 500 in in January I Think people are forgetting that you don't get the 7 500 in January you get the 7 500 when you file your taxes the next year. Okay, so you gotta wait like another 14 or 15 months to see that 7 500 whereas you could get thirty seven hundred fifty dollars off now. Uh, and I think that's why there's such a difference.

If it were truly that immediate I think Tesla would be like, all right, we'll just give you the 7500 now. Uh, which in theory they could do. They could just do that if it were really that big of a demand problem. If Tesla was really about to have cars sitting on the Lots all across America rusting away, why not just offer the 7 500 Credit in full or drop prices a little bit.

Right now, there is a counter argument that we talked about yesterday that companies do not want to chase the consumer to zero because ultimately, that could erode brand value more than may have already been eroded for Tesla Uh, and could erode uh margins and the potential to maintain margins ever in the future, right? So there's that potential. But I Do think if the 7 500 issue were such a problem for Tesla that all of a sudden sales went to zero in December because nobody's buying Teslas in December because oh my gosh, I'm gonna get another 3750 in 14 months in the future then I think Tesla would have woken up to that idea already and uh, we we would have uh, quite a long time ago already seen uh, Tesla adjust. We haven't seen that yet. Uh, so we'll see now.

Uh, the next thing that we need to cover is uh Twitter Elon Musk Suggested yesterday that there could be, uh, profitability. Uh, Twitter as soon as 2023. I Found that very interesting. He was on a spaces call at like 11 o'clock yesterday.

I'm like dude I'm gonna get like five hours of sleep. how am I still listening to your spaces call Anyway, he did mention that uh, profitability is expected in 2023. Cost cutting helped Twitter eliminate a three billion dollar shortfall. Then why'd you have to raise three and a half? Bill Oh, that's right, because you're financing 2023.

dang it. Anyway, Uh, another. So I mean that's that's good news, right? Like here's the thing: if you're uh, a long-term holder of Tesla or potentially a bag holder of Tesla something that you have to consider is when the Twitter noise goes away and the demand fears are alade. which is the whole reason people got into Tesla in the first place is that their demand is going to be explosive which I believe then a lot of the impediments to the stock.

I Think go away now I need to give a shout out to Professor Jones from La Sabon just outside of Paris which Paris of course is by the way where I met my wife I studied in Paris for two weeks myself at City that University and uh I loved it like love that like best time of my life for sure. Uh, that was really awesome but anyways, an engineer engineering Professor uh from just outside of Uh Professor Jones from just outside of Uh Paris Had the following cassette wrote me a letter this morning I Write to you as I must take issue with comments made in your video titled on Selling Tesla stock In your closing comments, you stated that when people lose Faith it's a sign of Market irrationality I Still believe this, but we will continue with the professor's argument I must take exception to that because your comments specifically exclude the full offense created by Elon Musk As soon as Elon Musk announced that he had made an offer on Twitter and with the intent of restoring freedom of speech to the platform, I instantly declared that if successful in his bid, it would ultimately turn into a full-scale cluster F of a burning S Show Elon made the decision to declare war on the quote woke culture. We all know that the results have ensued from day one since his arrival at Twitter an increase on that platform in racist attacks on black people and increasing misogyny and an increase of anti-Semitism Now this by the way is not something that is that is cited in the email but I believe this is a reference to a report from The New York Times which did indicate in in in their opinion well it was actually the New York Times that did uh a piece on uh an anti-hate organization that suggested there were these increases Elon Musk did rebut this and say that this information was false that there's actually been a decrease. So it's kind of one of one of those things where it's it almost feels like I hate to say but like like the old days of like Trump versus the mainstream media.

you know the mainstream media says something and then Trump goes fake news. uh. anyway so the professor continues. The problem is that his war on the Woke is a direct attack on the people who buy Tesla vehicles.

They are the woke. uh I would say some of them maybe right I want to interject that I don't think necessarily all of them. but okay I I Sure, probably more likely than than uh than the flip side right? who maybe are less inclined to buy EVS Okay, I could I I see the point? Uh, the people from whom Elon Musk sought gratification do not believe in clean energy. They do not believe in climate change or protocols to save the environment.

These are the same people who continue to buy ice. Vehicles Elon's Shakespearean antic disposition of late has so disgusted the traditional Tesla buyer that he has forced their sentiment against him. Dude, can somebody please print that out? That is the most beautifully written Uh quote I have ever heard in my life. This engineering Professor like that should be a plaque in in in their lecture hall.

Let me I'm going to say that line again because that line was like incredible. Elon's Shakespearean antic disposition of late has so disgusted the traditional Tesla buyer that he must have forced their sentiment against him that he has forced their sentiment against it. Yeah, Okay, much in vain of Kanye West It will be impossible for a large segment of his supporters to forgive him. This is a direct downward pull on Tesla stock and I am not convinced that you have fully accepted how this really affects Tesla's valuation.

You're absolutely right to argue the strengths of Tesla's fundamentals. but do you think there are enough? Or they are enough? The fundamentals are enough to Stave off the numbers of Tesla buyers who may now turn to other EV makers with public positions that are far less distasteful than those held by Elon Musk Look like it or not. Like hats off to the professor here that that was a well-written piece. Okay, that that was excellent and he's not wrong.

In the short term, you're probably going to piss off more liberals who are more like more inclined to buy EVS than than Republicans right? That's the Conservatives. That's the way it is. Uh, personally. and this is just my personal response: I Think in the short term, yes, you're going to go through this hell.

I Think in the short term, uh, you know this is very painful and I think that you know in 10 years from now uh I Think that liberals and and conservatives alike are going to be like I don't really care what Elon Musk is doing with robots or who builds these cars. These cars are freaking amazing I Think that this recession is going to set back other EV manufacturers I Think that GM and Ford are going to cut back they can't figure out how to make a profitable electric vehicle Ford sells a mock V that is not profitable GM's super Crews only works on mapped highways Mercedes And they're a small amount of mapped highways Mercedes-Benz Is you know fancy autopilot that they put in their 150 000 cars only works on like less than a few hundred miles of Road in Germany Because those are mapped roads. It's ridiculous. There is no competition for self-driving There is very little electric vehicle competition.

Yes, yes, okay. Byd makes cheap ass vehicles in China and they can sell those like crazy. But remember, they're selling vehicles for like eight to fourteen thousand dollars. They're selling little two-door Putt-Putt vehicles with 70 mile by range and honestly, Tesla might consider getting into that kind of uh uh uh Market I Think that would be a great idea I Think it would be phenomenal if Tesla especially when FSD you know, continues to develop uh and and uh it goes mainstream I Think it'd be phenomenal If Tesla had a small two-door with 80 mile range or even 100 mile range.

you need a tiny battery, then you need a battery that's like 20 of the size of the battery we have now. and because you have a lighter battery, the car itself becomes more efficient. That's more than enough for the the vast majority of the commute. Americans face.

the average commute in America is 30 minutes. It's simple: you don't need that much battery, especially if you plug it in every day. and you could sell that sucker for twenty five thousand dollars or nineteen thousand dollars Game Changer or you sell it for 15 and then charge 10K for the FSD you know? uh. anyway.

so so to me, look unfazed by long-term fundamentals, right? Uh, I've obviously you know, uh, taken a big hit on on Tesla stock going uh Gone Going Down But you also have to remember the Warren Buffy in reality that we face when it comes to stocks. Warren Buffett sees himself as a batter on a baseball field and he's constantly being thrown. Pitches and pitches are prices that he's being thrown of different stocks. and if he owns a certain stock, they might throw Tesla 100, Tesla 140.

Tesla 200 and he might go Yeah, I I ain't selling at any of these prices. This This is stupid or like if I need to sell a little bit because that's life then you sell a little bit. but I'm hodling 90. That's like my position For example, like hey, got my tax bill I'm set for next year I got a huge acquisition.

The biggest debt that I've ever signed in my life was just signed I'll do a video on that soon. Uh, but otherwise I I'm like 90 in this thing. uh and and so so you stand on pictures ma'am Uh, same thing for buying. It's like you know, do we do we want to buy end phase at 500? No, that's okay.

We'll wait. You know, do we want to buy in phase of 300? Uh, you know, like one One percent? Do we want to buy end phase at 150? Uh yeah. Fifteen percent, You know. So uh, that uh, that mentality is is really great that that you want to ignore all of the insanity of the pitches that you always get thrown.

You have to remember, markets tend to be irrational to both sides. They go euphoric for too long. they go bearish for too long. So uh I you know I'm I'm very excited about the future.

Uh, but anyway, what are some comments here? Self-driving is nowhere close to completion. Thank you for being a member by the way of the channel Uh, reminder to check out the programs on Building Your Wealth Link down below the programs on Building Your Wealth from the YouTube channel. The only Uh Revenue sources we have. There are no external sponsors so this video is only brought to you by Me by the dip says another member over here.

Um Tesla 23 dollars? Yeah, Get ready for a big sell-off today says someone here Kevin Genuine question: How is the car repossession crisis impacting Earth Thesis on: Tesla Yeah, this is actually a very good question. So generally and this is my hypothesis. Okay I have not tested this thesis. This is my thesis.

My thesis is that car repossessions first affect the poorest individuals in: America I Believe the poorest individuals in America get screwed first. the bottom 20. They get screwed first and they get helped last. That's capitalism and it's terrible and it's wrong and there are ways to fix that I Believe through better Financial Education That's why I Ran for governor and and almost got a million votes and encouraged Financial education in every single damn.

High School In California What is the current Governor done? He sent stimulus checks to people making over five hundred thousand dollars didn't help homelessness and now all of a sudden we're in a budget deficit because he's a dumbass. Sorry. I Should I should be more professional I'm a licensed financial advisor I Must respect the industry I Shouldn't be so blunt and this video of course is not personalized Financial Advice for you but I Don't believe the bottom 20 percent of people are buying Teslas In fact, statistically the median income of a Tesla buyer is over a hundred thousand dollars. Statistically a Tesla buyer is in the upper 20, potentially the upper 40 percent.

So I Actually, don't believe most of the car repossessions are going to hurt. Tesla They are going to hurt the other auto manufacturers. Uh, because repossessions means less people can buy. they hear at the dealership model sales people leave.

uh, fewer cars sell at new car dealerships. It just it hurts the dealership model. It hurts. Legacy Autos Anyway, there you have it folks.

Thank you so much for being here! I Love you, love your support. Check out the programs I'm building we'll see in the next one. bye.