A truck fit for a Musk

Quote of the Day

Never say never.”

Market Snapshot

• U.S. indexes recouped yesterday’s losses.
• European markets gained thanks to a push from construction stocks.
• Oil continued to fall due to concerns of U.S. oversupply.
• Bitcoin climbed closer to $8,000, topping $7,900.



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A Truck Fit For a Musk

With all the snark and hyperbole we’ve come to expect, Elon Musk pulled back the curtain on Tesla’s (+0.39%) newest vehicle: an all-electric big rig truck, the Tesla Semi.

And Musk wasn’t lying when he said it would blow our minds out of our skulls. With a 500-mile range, 0-60 pickup in five seconds, automatic braking and lane changing, four independent motors, one million miles without breaking down (guaranteed), ohh we could go on...

But we won’t.

Instead, we blocked out the “ooh’s” and “ahh’s” of current SpaceX applicants and asked something that’s been bothering us.

Elon, we’re all friends here. You can talk to us. Why are you building a truck?

We ask because we did a little homework. And while it’s not as difficult as, say, packing for Mars, the truck industry is one tough hub to cap.

Electric big rigs aren’t exactly budget friendly. You could fork over a $100,000 check just for the battery. So when the thing is road ready (and with Tesla, you never know), we could be looking at an MSRP of more than $250,000. That’s 2x the industry standard: the average Class 8 truck (33,000+ lbs) commands $120,000 off the lot.

And even if the Semi becomes all the rage with American truckers, there’s a low ceiling. The global automotive market is inching its way to 100 million units a year, versus the trucking industry’s 1 million units.

So is this really worth risking $1.7 billion to develop?

Elon thinks so.

Besides gaining a foothold in an industry that’s ditching diesel, Musk has high hopes for the future of autonomous cargo-carriers. Truckers haul 70% of all goods across the U.S., and the American Trucking Association is currently short 50,000 drivers (a number that’s on pace to reach 175,000 by 2024).

So unless a chunk of America chooses a life of 5-Hour Energy and Combos, Musk’s handing the keys to the closest robot he can find.

The truck wasn't the only showstopper last night. Elon surprised everyone when he brought back the OG Roadster for "one more thing." How does 0-60 mph in less than 2 seconds, 620 miles of range, 4 seats, and the first vehicle to travel a quarter mile in 8.9 seconds sound? Well, it looks even better.

Norway Runs Out of (Fossil) Fuel

Fossil fuel execs might want to postpone their upcoming fjord getaways, as Norway’s sovereign wealth fund looks to shed investments in oil and gas stocks.

Norway’s $1 trillion fund is the world’s largest, and 6% of the benchmark index (about $35 billion) is tied up in oil and gas. Its 2.3% stake in Royal Dutch Shell only trails investments in Apple and Nestle...with BP, Chevron, and ExxonMobil not too far behind.

So why oil and gas? And why now? Central bankers aim to reduce exposure in petroleum (the oil-rich country already controls 67% of energy company, Statoil), while ramping up investments in other sectors.

And environmental advocates will chalk this up as a W in the fight against climate change. In 2016, Norway’s fund dropped 52 coal-linked companies from its portfolio. And now it’s setting a course to wash more grease off its hands.

All Norway asks is you ignore the fact that 20% of its total economic output depends on fossil fuels.

Another Brick in the Walmart

Target take note. Walmart’s (+10.90%) also forfeiting short-term profitability, but it’s doing so in style.

The company that’s been endowing Walton-family trusts since ‘62 just posted its largest U.S. sales growth in nearly a decade. It can thank e-commerce and grocery sales driven by post-hurricane demand.

• Same-store sales climbed 2.7%.
• E-commerce surged 50%.
• Quarterly revenue grew 4.2%.
• Profit halved to $1.75 billion.

What’s with the bottom line setback?

Walmart is learning what it takes to spar with Amazon, but it ain’t coming cheap. It’s pumping more money into e-commerce (a $3 billion purchase of Jet.com), and it’s boarding up big-box locations around the country (150+ over the last two years).

At least it’s paying off—shares hit an all-time high (and the Waltons made off with another $10 billion).

Third Time’s a Charm

After two failed takeovers, Emerson Electric (-0.14%) is convinced the key to Rockwell Automation’s (+2.59%) heart is a $25 billion $27 billion $29 billion offer. 60% cash, 40% stock, 100% industrial mclovin’.

Emerson, a $37 billion maker of garbage disposals and welders has been head over heels for industrial assembly line software guru, Rockwell.

As Emerson CEO David Farr sees it, the deal would forge a $200 billion well-oiled machine capable of controlling the U.S. industrial market. And while Rockwell’s board is “carefully reviewing” this third, certainly-not-desperate offer, it doesn’t hurt to recall Rockwell’s first two rejections: “They need us, we really don’t need them.”

Strong words, but not wrong. Outsiders are giving Farr the crazy Dave treatment, saying, “[He’s looking for] a hail mary at the back end of his career.” Case and point—how’s paying twice the 10-year going multiple for industrial deals for a “hail mary?”

What Else Is Happening…

• The House passed the GOP’s tax bill, clearing a major hurdle.
• Activist investor Sandell approached Barnes & Noble (+7.58%) about taking the bookseller private.
• Siemens (+0.87%) is cutting 6,900 jobs, mostly in its power generation business.
• The billionaire Koch brothers are backing Meredith Corp’s (+10.51%) bid for Time Inc. (+28.06%)

Economic Calendar

• Monday     Earnings: Tyson Foods (+)

                    Economic Events: Treasury Budget (-)

• Tuesday    Earnings: Dick’s Sporting Goods (+), Home Depot (+)

                  Economic Events: PPI (+)

• Wednesday    Earnings: Cisco (+), Target (+)

                        Economic Events: CPI (+), Retail Sales (+/-)

• Thursday   Earnings: Best Buy (+), Gap (+)

                   Economic Events: Jobless Claims, Industrial Production (+), Housing Market (+)

• Friday       Earnings: Abercrombie & Fitch, Foot Locker

                  Economic Events: No Events

Buy/Sell/Hold

BUY—Floating in Hong Kong

The New York Stock Exchange gets all the glory, but don’t look past Hong Kong’s hustle. The Asian territory has gained serious momentum with successful tech IPOs. Take China Literature, for example. The Kindle-clone popped 86% in its first day of trading last week. All the NYSE has to show for 2017 is Snap’s +44% debut...and we all know how that’s going. The 2018 Hong Kong IPO to look out for? Alibaba fintech affiliate Ant Financial, valued at $60 billion.

SELL—Market crashes

Full-time corporate pirate and part-time actual pirate Paul Singer is suggesting the market is in trouble. A lot of trouble. Singer is the managing partner of $34 billion hedge fund Elliott Management, which recently published a report saying assets are “ominously overpriced” and “financed by too much debt.” If your mind just jumped to that 401k, read up on the rest of the breakdown here.

HOLD—Amazon’s stranglehold on retail

Don’t get us wrong, Amazon is steamrolling most big-box retailers. But maybe there’s a way out of Bezos’ full nelson. A few successes? Walmart (see above), Best Buy (same-store sales growth in nine of the last 12 quarters), and Home Depot (7.9% increase in comparable sales). There’s no exact blueprint for success: for Best Buy, it’s investing in its Geek Squad, and Home Depot? It’s focusing on customer service and merchandise turnover. One thing’s for sure, though...those who don’t adapt will die. Hi Sears.

The Breakroom

Question of the Day

For each word, change one letter in it to name a drink.
Ex. Later —> Water or Lager

Pinch
Lead
Wink
Cold
Lake
(Answer located at the bottom of newsletter)

Who Am I?

Let’s see how closely you were reading.

I was a founder at Tinder—I recently got a $1 billion offer for my newest dating app, Bumble—I started the Help Us Project after the BP oil spill.

(Answer located at the bottom of newsletter)

Stat of the Day

1 in 10—Proportion of the world’s smartphones that are sold in India, with shipments surging 21% YoY. The bestsellers? Samsung and Xiaomi.

Breakroom Answers

Question of the Day: 1) Punch 2) Mead 3) Wine 4) Cola 5) Sake

Who Am I?: Whitney Wolfe