Recession Fears Slam Oil

Stocks shook off another round of soft economic news Thursday morning as the averages posted modest rebounds.

Tech stocks led the bounce, helping the Nasdaq Composite to a gain of more than 1%. The Dow rose 122 points.

It’s been a rough week for the averages. But oil — not stocks — has been the week’s biggest loser. Crude has dropped more than 6% this week and energy stocks have also suffered.

“In the two-day stock selloff to start October, energy stocks fell 4.85%, on average, more than any other sector,” Barron’s notes. “The latest stock selloff was driven largely by fears of a recession, and energy is particularly vulnerable to global economic weakness. Already, analysts expect supply to outpace demand in 2020, and any further deterioration is likely to widen that gap.”

We were also treated to a jump in oil reserves, with 3.1 million barrels added to the U.S. stockpile last week. As of this morning, West Texas Intermediate remains stuck near its August lows.

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So much for last month’s drone attack on Saudi Arabia’s oil facilities that knocked out half of the country’s output. As I noted when oil began its retreat shortly after the attack, what appeared to be the biggest oil story in at least a decade now looks relatively benign.

Speaking of drone attacks, there’s a controversial new drone-killing company making headlines in Silicon Valley.

All it takes to kill a drone is another drone.

At least that what Anduril Industries thinks. The company, founded by former Oculus employee Palmer Luckey and partially funded by Peter Thiel, is a Silicon Valley-based defense contractor with big aspirations, reports Bloomberg.

Right now, Anduril’s newest piece of defense tech is the Interceptor drone. The Interceptor disables other drones by seeking targets out and slamming into them at 100 mph.

While most Silicon Valley startups keep their sinister motives secret, it’s Anduril’s entire mission statement. The company has attracted criticism for some of its political affiliations and its work in border protection. But someone has to supply the Pentagon with the tech it needs to combat a growing drone problem…

As we near the end of the week, Tesla is back under the microscope.

Yesterday, I made the mistake of complimenting Elon Musk and Tesla Inc. (NASDAQ:TSLA) for going several months without a committing a stock-slamming screw up.

Of course, Tesla fumbled the pass as soon as I hit send on your issue. While Elon’s minions managed to deliver a record number of cars during the third quarter, analysts aren’t certain Tesla can keep up the pace.

“The results fell short of some of Wall Street’s more rosy estimates, and the 100,000 mark CEO Elon Musk reportedly told employees was a real possibility,” Yahoo Finance reports. “Although the company has boosted overseas deliveries and incentivized sales, Tesla remains dogged by doubts about its cash flow and ability to sustain production.”

Shares gapped lower Thursday, falling as much as 6% even as the broad market recovered. A breakout back above $250 will have to wait another day.

Finally, residents of Ft. Lauderdale have another quandary on their hands.

A Florida Man was recently spotted on a camera cutting the brakes of Lime scooters.

The villain (vigilante?) Randall Thomas Williams was eventually caught by police and charged with criminal mischief for tampering with 20 electric scooters, according to Business Insider.

But is Randall the real villain here? After all, plenty of folks view electric scooters as a menace in many cities.

Even if you’re sick of tripping over piles of damaged scooters on your walk to work, it’s probably best to leave them along. While Lime claims it has not received reports of anyone injured from this brake-cutting fiasco, the company told Business Insider it would pursue legal action against anyone damaging its precious scooters.

I know there are plenty of smart folks who think electric scooters are the next big disruptor in transportation. But I’m not sure Bird, Lime, or Uber’s Jump scooters will ever become profitable enterprises. Maybe these things will go extinct before they become an even bigger problem.

Sincerely,

Greg Guenthner

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Greg Guenthner

Greg Guenthner, CMT, is the editor of Sunrise Profits and Seven Figure Signals. He has been with Agora Financial/Seven Figure Publishing since 2005. In 2019, the average position in Greg’s Sunrise Profits portfolio outperformed the S&P 500 by 1.65x.

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