1.10 - two hot topics: NAFTA and Tesla
With NAFTA agreement taking all of the spotlight we try to reflect on its consequence.
We always said that in case Musk just keeps on doing what he was doing he was going to get into trouble. And not only that, he, as a big businessman was going to get into trouble a whole lot of people who hold the shares to his companies. And that day has come.
Over the weekend a lot of things happen which led to today’s horrible fall in Tesla shares and the fears that soon there will be no Tesla at all with investors turning away from the car-producing company that has earned a reputation of a company with extremely unstable and weird CEO. So, what happened to Musk? Well, he was accused of fraud last Friday, which caused a 12 percent fall in Tesla’s shares prices. The deal came as far as filing a law suit against Musk.
The court ruled – Musk is to pay a huge fine and leave the CEO post of Tesla for at least three years. Although he is still going to be one of the board members as well as make decision for the future of the company, there are huge changes to come. And what will they bring? Well, with Musk gone from the CEO office there might actually be a hope for the bright future of the company.
We all have seen the policies that led to the current situation with Tesla. Midnight tweet-sessions, smoking pot on national radio, trying to turn the situation for better and failing every tine – all of that turned Musk into a laughing stock of the business world. Investors and traders started to turn away from Tesla and preferred not to do business with the company – the whole ordeal. But a fresh set of eyes might be exactly something that Tesla needs right now.
New start, new decisions, new business plans – all of those measures can lead to the bright future for the company as it is very easy right now to run the shares’ prices onto the ground and just forget that a company like that ever existed. With so many automobile producers turning to electro cars rather than gas ones it is easy for consumers and traders to get over the collapse of one manufacturer – the main point here is to get your money out in the right time. But with so much potential it would simply be a shame.
Although from this point on it is possible that the growth is going to be all slow as the trust of investors is already lost on the stock. It is surely going to take time to recover from the losses and from the damage done to the public image of the company.
Negotiations on or total refusal from the NAFTA deal was one of Trump’s pre-election promises. And here we are. With months and months of negotiations, speculation and pure trading agony behind us as tonight the leaders of the three countries have signed the new deal that is going to replace NAFTA – USCMA [the United States-Mexico-Canada Agreement]. The Agreement is to be responsible for the free trade in simpler trade relations between the three countries.
But with so much talks about the agreement from all of the sides what good will it do to us? And what hazards are there in the situation?
Well, for us the most obvious hazard at this point is the possibility for Trump to back out of it. He has done that before and he might do that again with every agreement that is being signed during his administration. And what can happen then? Seeing how all the equities and indices of the participants have stabilized and started gaining once the deal was signed we would say that the first outcome is the fall of all that is stable right now. Dollar, Canadian dollar and peso trading hasn’t been easy and for the next couple of days the situation is not going to changes with investors trying to be as careful as possible.
The main point of the trade agreement is that American dairy companies are going to gain more representation at Canadian market. And that leads us to the second hazard – overwhelming of Canadian market and damage to their own milk farming. That one doesn’t really concern us, so we are simply going to move on from it, simply mentioning such a possibility.
What are the pluses of the agreement? Well, for one trade tension on the region is going to disappear. With Chinese and Japanese trading only getting worse it is the best scenario for us. More assets to focuses on and one of them is the greenback. That might just be the support that the dollar was waiting for. Again, only if Trump goes through with everything.
With this agreement more advantage goes to USD, of course. Trump wouldn’t have it any other way. so, with so many troubles that we went through these last several months could this finally be out chance for a stable USD trading for at least some time? Well, we would say that it is possible at this point. With dollar rising today, it seems that the greenback prefers its local relationship to its relationship with, for example, its Asian counterparts with almost no reactions to Asian turbulence last week.
With all the changes in USD-CAD-MXN relationship we are going to be watching with interest where the three currencies are going to go now.
- by Anna K.