Stocks Crashing | MASSIVE Stimulus on It's Way - Biden Responds.

well the Biden Administration is now

proposing or about to propose some

pretty large new electric vehicle rules

easiest thing to do here is pop on over

to the New York Times and see exactly

what this sort of prey leak is regarding

electric vehicles take a look at just

the headline here EPA sent a proposed

rules meant to drive up electric vehicle

sales tenfold in what would be the

nation's most ambitious climate

regulation The Proposal is designed to

ensure that electric cars make up the

majority of new auto sales by 2032 right

now electric vehicle sales are closer to

maybe five six percent of total sales

now keep in mind this is really

important to remember when we want to

see if this is related to this but the

inflation reduction act gave us

somewhere around let's call it

389 billion dollars for energy related

uh items however Goldman Sachs believes

that that number is actually going to be

a lot closer or to about 1.2 trillion

dollars via the treasury Department

simply interpreting rules uh more

Loosely in favor of the democratic

agenda so let's see how much of uh this

uh this New York Times piece relates

let's see Biden Administration is uh

planning some of the most stringent

rules on auto pollution in the world to

ensure that all electric cars note not

hybrids here make up as much as

two-thirds of new passenger vehicles

sold in 2032 a lot of companies by the

way talking about banning electric

vehicles or sorry Banning non-electric

Vehicles by 2035 California is one of

those New York I believe is another

anyway that would represent a Quantum

Leap for the United States where just

5.8 percent of vehicles sold last year

were all electric

and would exceed Biden's earlier

Ambitions to have all electric cars

account for half of those uh sold in the

country by 2032 that's because now he's

trying to get up to two uh

67 so I'm curious to see how they're

planning on setting this up take a look

at this there the administrator of the

EPA is expected to announce the proposal

limits on tailpipe emissions upon on

Wednesday so in in other words this

would simply be some uh administrative

rule not a rule that is passed by

Congress but rather some form of

administrative Rule and emissions and

how green Vehicles need to be which

essentially would drive people uh solely

into electric vehicles in order to make

them compliant

on green energy that's sort of step one

we got that right that's the inflation

reduction act uh then uh it well I

should say ensure that act includes

leeway for the current Administration

which in this case obviously is the

Biden Administration and Biden's EPA and

then allow that leeway to stretch the

existing budget via the IRA which is

what Goldman says which Goldman predicts

will be a 3X

and so in my opinion uh what's

fascinating about these rules is what

you really have is you have a game of

almost what looks like 4D chess in

preview but in hindsight totally makes

sense

so then step four have your uh

democratically controlled or I should

say democrat-controlled Democrat

controlled uh departments

uh

uh create strict rule sets that require

more inflation reduction reduction act

leeway right because basically if the

EPA comes out and says hey hey we we

need we need to get to 67 by 2032. you

know what that means so the example

right pass a small Bill a small bill

with a leeway then uh Implement strict

rules

now uh treasury has to go super strong

on leeway side to enable those strict

rules so in other words the money's

already there you don't even have to go

to Congress to create more money for

what they need here which are again

significant changes to millions of new

electric vehicle charging stations think

about what the Biden Administration has

already done hey Elon Musk can we

partner with you and can you build us

thousands of more electric vehicle

charging stations and we'll pay you

billions of dollars to do that of course

the answer is going to be yes an

overhaul of lecture grids and that's

fantastic potentially for Mega packs as

well for Tesla right which we just heard

about that New Shanghai expansion for

Mega packs that could create as many as

10 000 megapacks and then of course

helping with battery materials the

proposed regulation would go through

public comment it could be altered by

the government before becoming final to

make sure it meets legal challenges it

could become an issue in the 2024

campaign pain as a future Administration

could undo or weaken it notice here they

don't talk about Congress because

Congress has already been authorized or

the purse strings have already been

authorized via right here the new

regulations come on the heels of the

2022 inflation reduction act which has

helped Stoke demand for electric

vehicles by providing the tax incentives

we've seen as well as incentives for

battery manufacturing and critical

processing and Mining and there's been

nothing that's been made more of in

America right now than factories uh in

2022. that's something that's pretty

incredible to think about uh we um is

reading a report on this yesterday and

it's a worthwhile uh argument or a point

to mention that in uh in 2022 we saw

about 120 billion dollars actually it

was closer to 80 at 108. it was 108. let

me see if I can pull up my note uh 108

million or colleague Kevin 108 billion

dollars oh I got it here 108 billion

dollars of construction related spending

in manufacturing uh that contrasts the

next highest level compares to the next

highest level in 2015 where we spent

about

83 billion dollars which means we spent

somewhere around 25 billion dollars more

on manufacturing this was according to

the Wall Street Journal uh we spent more

money on manufacturing than we did on on

building schools Health Care Centers and

Office Buildings much of that growth was

focused on EV Tac batteries

semiconductors that's because that's

where the stimulus checks are going only

10 percent of the private Workforce

right now is actually in manufacturing

uh however uh the the sector still is

behind in on a level of employment by

about eight hundred thousand jobs so if

you're looking for more growth uh the

the growth is likely to be manufacturing

look uh particularly here at this chart

on screen now construction spending

related to manufacturing I mean we've

blown out of the water the the previous

uh sectors here now what's also pretty

incredible though is how much these

factories are automating these new

modern uh factories Stanley Black and

Decker gave us an example and they said

that their automated lines used to have

between 50 to 75 people per line to make

Power Tools today though factories only

require about 10 to 12 people and in the

future Stanley Black and Decker expects

that only two to three people will be

required per line on their manufacturing

plan I mean that that's a decline of 95

of the amount of Labor that's required

in manufacturing which is pretty

remarkable to think about but what it

really suggests is that you probably

don't want to be investing in labor not

that you directly would invest in labor

anyway but what you probably want to do

with this expansion of factories oops is

do whatever you can to find out how can

we make sure that you are exposed to

companies that are building these

manufacturing plants and are getting

these massive stimulus checks uh and uh

let's see we talked about this let's

look at the rest of the uh article here

from The New York Times transportation

is the largest source of greenhouse

gases uh okay why are we having some

interesting my problems again here

anyway the proposed auto emissions rule

is even more demanding than the target

layout by Mr Biden in 2021 speaking on

the south lawn that was back when he was

talking up the Ford F-150 fine whatever

climate change experts say that the

transition to zero Mission vehicles must

move faster to avoid a planetary

disaster so they could just go into why

basically proposed rule would not

mandate electric vehicles make up a

certain percentage of sales instead it

would require automakers to make sure

that a total number of vehicles that

they sell each year did not exceed a

certain total emission vehicle limit

that's interesting that's a one way to

do it it basically puts the onus on the

companies not on the consumer so it

makes it a little easier for consumers

so in other words consumers could still

buy an ice car but uh there will start

being some restrictions on I would

imagine a way a manufacturer could do

that is they could just raise prices on

the ice cars to limit some of the uh the

number of sales there while maximizing

their profit and then lowering the costs

on electric vehicles which that's

basically what this bill does is it

drives up the cost of ice vehicles and

down the cost of electric vehicles

even manufacturers that chafe against

the regulations would prefer to deal

with one set of rules rather than meet

specific rules from a bunch of different

states like Cal here's that California

line about banning in by 2035. one of

the biggest uh items needed for electric

vehicles is charging stations 2021

infrastructure law provided 7.5 billion

dollars to build a new network of about

500 000 charging stations

yeah so uh pretty pretty incredible uh

that uh that basically these massive

stimulus tracks are coming to the

electric vehicle World obviously I think

that's a boon to a company like Tesla

but it'll also be a boon to companies

like GM GM has a fantastic uh ultium

partnership with LG to make batteries

they're building a pretty large uh

plants actually multiple sister plants

in Ohio and Tennessee what's crazy is

how much money just to give you an

example of how much money is going into

some of these plans

uh if we just Google just for Giggles uh

the the cost to build a factory usually

you look at a cost to build a factory if

anywhere between five to Fifteen billion

dollars let's just say for Giggles we'll

take the average we'll take the number

of about 10 billion dollars well GM and

the LG partnership just got a Federal

Loan which is super super sweetheart

deal of 2.5 billion dollars so about 25

percent of it the rest they can get

commercially uh and then they're getting

about 666 million dollars in state

grants and bargain electricity rates to

actually operate those plans uh and so

what's remarkable is you're seeing

governments at every level and the

monopolies at every level whether it's

the electrical departments the cities

the counties the states the federal

government everybody's throwing money at

these these factories and it's not just

going to be a company like tassel that

succeeds it's probably going to be the

chips manufacturers is probably going to

be uh your your chip related companies

uh like the chip equipment manufacturers

uh the the companies that actually take

in those chips and use them like apple

for example by taking the chips and

turning them into a consumer product

uh but it shows you how much money is

just flowing in it is quite remarkable

and and how they're pulling it off now

there has been some chips weakness over

the last couple weeks in terms of a

trade that's worth paying attention to

for example if we look at Goldman Sachs

on chips this is a piece from Goldman

Sachs on chips let's make sure we go

ahead and have this screen up here that

reminds you about the expiring coupon

code in two days on CPI day prices will

be going up for those programs on

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those course member live streams so take

a look at this hedge funds net sold tech

stocks for the third consecutive week

and if you look at just semis

specifically this is a long uh they call

it an LS chart long short race ratio

chart and basically the higher the level

the more short uh or sorry rather the

more long in this example the more long

hedge funds are and the lower the level

the more short they are and what you can

see is hedge funds went into 2023

extremely bearish and uh they they came

out a little bullish there around

February but have already started

selling off again however look at how

uncrowded the semiconductor space is

right now which happens to be where the

majority of the stimulus checks are

rolling and look how uncrowded it is the

long short ratio is basically even we're

basically at a one-to-one ratio here

there in other words for every dollar

that somebody is long right now

somebody's sure on semiconductors now

look I understand there's been some news

that hasn't been the greatest uh

regarding uh semiconductors and and PC

shipments and you know what's going on

with Apple for example Apple personal

computer shipments declined by 40.5

percent in the first quarter uh this is

per Bloomberg quote marking a tough

stock the start to the year for PC

makers still grappling with a glut of

unsold inventory the uh that compares to

Dell which looks like it's down about 30

HP down about 28 overall Market down

about 30 percent Aces down about 33

Lenovo down about 33 as well you've got

uh let's see here Apple shares down

about point eight percent and pre-market

what this article was written

uh even with heavy discounting channels

and PC makers can expect elevated

inventory to persist into the middle of

the year and potentially into the third

quarter

the Silver Lining is that cooling demand

is giving manufacturers time to make

changes as factories begin to explore

production options outside of China that

is true you are starting to get uh sort

of this what I call re-globalization a

lot of people during the uh you know

post uh covet era were saying oh here we

go we're going to get deglobalization

and we're getting massive inflation

because of that I don't think so I think

we get re-globalization we actually get

even more efficient Supply chains than

we've ever had before tsmc also this

morning announced that they missed sales

estimates for the second consecutive

quarter and a sign of continued weakness

and Global Electronics demand first

quarter revenue for the world's biggest

contract manufacturer of chips was 16.7

billion that's a sharp slowdown in March

sales were down 15 last month relative

to the prior year companies listed

shares down about 1.1 percent in

pre-market Global PC shipments crashed

29 in the first quarter led by Apple's

Mac lineup Apple's Mac lineup uh the one

that is actually leading the decline now

Apple's uh iPhone iPad and wearable

segments have been doing better uh than

the the Mac line but something to pay

attention to especially if you're an

apple investor now what I think uh about

this and we could just sort of just

quickly look at the market too let's see

how they've moved tsmc pre-market right

now down about 1.54 AAPL pre-market

right now down about 1.3 so what I would

do is I would pay attention to see how

the stock these stocks move today on

these basically pre-announced sales

weaknesses because I think what these

companies are doing is they're providing

you the bad news now and then that way

when earnings come around the

expectation is already set and it's

actually a lot easier to beat on your

earnings report by pre-releasing the bad

news

and the pre-release bad news is only

moving these stocks about one to one and

a half percent it's probably because so

many people are already short these chip

and tank companies and so uh I actually

find that

uh a a big element of I I see a lot of

optimism in that I love that uh there's

there's so much of a short play in uh in

the chip sector right now because when

we combine that with what we're

expecting to see with electric vehicles

which require a lot of chips uh

superchargers chips uh pretty much

anything Tech related chips chips chips

chips chips uh in and this is where the

stimulus money is going not only via

directly this chips act but also the

inflation reduction act uh and the

manufacturing economies of scale that

we're expecting to see here in America

yeah I think in 10 years from now we'll

look back and go how could we have not

bought chips and electric vehicle stocks

it's going to be remarkable so that's my

take if you want more of my take make

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