Electric Vehicle Space Heats Up

Tesla's soaring stock price — up 269% this year — have pushed Elon Musk past Warren Buffet on the list of world's richest people. Musk's net worth is now $70.5 billion, up $6.1 billion on Friday alone. Not bad for a day's work.

But the electric vehicle maker may soon have stiffer competition as the space heats up. 
  • Rivian just raised another $2.5 billion to make electric pickup trucks and SUVs, and is backed by Amazon and BlackRock.
  • Luxury electric SUV maker Fisker is looking to go public in the near future. 
  • Since going public earlier this year, EV maker Nikola's share price has surged.
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The Huawei Conundrum

What to do when you're stuck between an old ally and neighbour and an emerging superpower and economic powerhouse? That's the puzzle facing the Canadian government, and one that is having real consequences in the case of dealing Huawei, the Chinese telecom giant.

Huawei's CFO Meng Wanzhou is currently detained in Canada and awaiting extradition to the United States. Many view China's imprisonment of two Canadians — Michael Kovrig and Michael Spavor — as retaliation for the arrest of Meng.

Maybe not surprisingly, Canadian public opinion towards China is at all-time lows and the Trudeau government is beginning to break with the traditional approach of deepening commercial ties with the country.

Why it matters: Huawei wants to build out Canada's 5G telco infrastructure, a bid that is becoming less politically tenable by the day. Shutting out Huawei from the process — as Canadian telcos have more or less done — will have big consequences for our relationship with China overall.

A global headache for China: France, India, and the U.K. are all considering limiting Huawei's involvement in their telecom infrastructure. The British government is likely to kill Huawei's bid to build the country's 5G network this week.
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Are We In a Bubble?

The S&P's relentless rise since its March low-point has more than erased any losses since the outbreak of COVID. But many segments of the economy are still in the tank, leading some to ask: has the stock market become unhinged from reality? And if so, when will it all come crashing down?

What are some warning signs?
  • Shorts against the S&P are well above their pre-COVID levels.
  • Volatility, as measured by VIX, is double its February low.
  • Money fund assets are at all-time highs, signalling lots of cash waiting on the sidelines.
To make matters more murky, more than 180 S&P 500 companies have pulled their earnings guidance in the lead-up to earnings season.

This has led to wild stock swings recently, both up and down, as companies like FedEx exceeded expectations and Nike missed targets — both after pulling their guidance.

And don't forget RobinHood

The slick trading app — not available in Canada — has attracted swarms of new amateur day-traders who may or may not have a clue what they're doing.

For every dollar in the average RobinHood account, an astounding 25,840 options contracts are traded... about 10x the velocity done by TD Ameritrade account holders.

You might think the wild swings of options trading is a replacement for shuttered casinos and sports betting, and you might be right about that. But we also wonder how much a flood of new amateur money into the markets is driving prices.

+++ The bubble might not just be local either... there are growing concerns about China's frothy stock market too.
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