(New York)

Elon Musk shocked the world and the market yesterday. After several weeks of turbulent rhetoric and behavior, the CEO yesterday announced that he was seeking to take Tesla private. Musk said bluntly, “Am considering taking Tesla private at $420”, continuing “Funding secured”. The stock was trading at only $356 when he announced his intentions. There are three ways doing so would benefit Musk and Tesla. Firstly, they wouldn’t need to do anymore public equity funding issues. Secondly, he would not need to face anymore pesky questions from analysts. Thirdly, doing so would stick it to the short-sellers that Musk hates.

FINSUM: If we take a step back and examine it, Tesla does seem like the sort of company which might be better off private at this point. Just as Uber has stayed private while it has burned mountains of capital, Tesla might be wise to follow that lead.

(New York)

If you are a strong advisor looking for a change, Deutsche Bank may be interested in speaking with you. At least that is what Deutsche Bank is saying. The US wealth management arm of the German bank says it wants to growth the ranks of its wealth advisors by 25% this year. According to the head of Americas wealth management there, the orders from the top are to “grow, grow, grow”, adding that “We’re getting dollar investment going into the unit for headcount . . . there’s great access to the management board.”

FINSUM: This is a big initiative considering that the only European brand to have any foothold in US wealth management is UBS. The other big names are all American.

(New York)

There are a lot of articles discussing data points which can help investors predict markets. Most have some value in them (though not all). In this vein, the Wall Street Journal has done some digging to assemble the eight best historical market signals. The first thing to know is that all eight predictors, each of which has a great track record, show that market returns over the next decade will be below average. Even the most bullish of the group says that returns will be way below what they have been over the last decade. Some of the eight predictors include the Household Equity Allocation, the Q Ratio, the Buffett Indicator, the CAPE, and the Dividend Yield. The Household Equity Allocation has historically been the most accurate, as households tend to have the highest allocation to stocks right before a crash.

FINSUM: That is quite a data set stacking up against the market. We expect a rough market and a recession within 18 months, but the gains until then could be good.

(New York)

We do not cover Bitcoin very much, but we thought it would be worthwhile to give an update today, especially as advisors may have some clients who are very interested in the area. Most are aware that the cryptocurrency has plunged from late last year, but had been enjoying a minor rally of late. That has come to end abrupt end though, capped off by another SEC rejection/delay of a Bitcoin ETF. The SEC delayed a decision on a new Bitcoin ETF until the end of September, which sent the market plunging ~8%. Bitcoin is now trading around $6,500, way down from its $20,000 peak.

FINSUM: This newest Bitcoin delay is more worrisome as it was the most promising proposal on the table. The proposal, in part from top ETF provider Van Eck, was to actually hold Bitcoin instead of Bitcoin futures, which one would think would alleviate some of the SEC’s worries. We think this will eventually make it through, and when it does, Bitcoin might become a more mainstream asset class.

(New York)

With all of the bearish stories swirling around lately (us included), it was refreshing to find an alternative view today. Bloomberg has put out an argument that there will be no bear market in store for Treasuries. The story is from the top ranked bond strategist in the world, who points out that a decline in structured credit and related products means that Treasuries are a much higher component of overall fixed income indexes these days. This concentration is likely to keep rising over the next decade, which means indexes and benchmarks will need to buy Treasuries, a critical factor which will keep demand high. Another important point is that the stock market is losing its appeal compared to short-term Treasuries, as the yield of the latter is way ahead of the former and likely to stay that way.

FINSUM: This is excellent analysis from a highly reputably source. Our only addition would be to point out that US and global demography also reinforces the key points, as the aging of the world means there will be a higher demand for income investments over the next decade.