U.S. stocks continue to rise warm again

U.S. stocks continue to rise warm again

NASDAQ 15,628(+1.12%)
10-Year U.S. Bond Rate 4.090% (-1.81%)
Dollar Index 103.474p (+0.02%) NDF KRW 1,335 (-1 won)

The U.S. stock market ended the day after the correction with a rebound. In particular, the U.S. Treasury Department's bond issuance fell after 3 p.m. on the news that the U.S. Treasury Department's bond issuance was smaller than expected, leading to a drop in bond rates and a rise in stock prices. This was interpreted as a sign that the economy is so good that the U.S. does not have to take on debt.

Microsoft, Apple, Alphabet, AMD, and Apple, Amazon, and Meta are scheduled to announce their earnings on the 30th. Except for Nvidia, all of the M7's earnings will be announced. Many other companies, including Boeing, Merck, Pfizer, and GM, are set to announce their earnings. Big tech companies' earnings expectations are also working strongly on the market. Tesla's stock price soared more than 4% for the first time in a long time the day before. Rather than having a special issue, there was a sharp rebound. Unfortunately, Apple closed slightly lower.

The bond market fell sharply on the news that the U.S. Treasury Department's borrowing volume was smaller than expected. The Treasury Department announced the issuance of government bonds at $760 billion in the first quarter of this year. This is 55 billion smaller than previous estimates, and interest rates fell in the bond market due to supply shortages. The Treasury Department decided to reduce the size of the bond issuance because the net fiscal flow was higher than expected and the quarterly cash balance was higher. The fact that the economy is so good that taxes have been lifted a lot and there are fewer reasons to cause debt can be interpreted as the U.S. economy is still in good shape.

Expectations for performance and confidence in the economy are breaking new highs every day in the U.S. market. Now that Big Tech has rebounded, let's look forward to a rebound in growth stocks in our market. Winter of EVs?

Analysts look at the full-year results for 23 years or the fourth quarter. Suppose that company A made 100 electric cars for $50,000 in 23 and had 20 left in stock at the end of the year, and the price of its core component, the battery pack, fell 30% in a year. The battery pack costs $20,000. Let's say it sells at cost because of the intense competition.

A company with $4 million in sales has a value of $1 million in inventory, of which the battery pack is $400,000. 30% of this value has disappeared, resulting in a $120,000 loss. This loss is reflected in cash flow in 24 years as the price of a car that fell when selling an inventory car in 24 years is $44,000, but it rises to 23 years of performance on the books.

Sales and losses have been reduced from the company's point of view, and what's worse is that new cars in 24 years will come out with better batteries and better specifications, so they will not be sold unless there is an additional discount. In other words, it is necessary to look at the market situation in 24 years to see whether it will end up with a book loss of $120,000 or a bigger loss. The disposal of inventory also hinders the sale of new cars. There are many difficult situations. Consumers are also hesitant to buy cars after hearing about the drop in car prices and news of various discount sales, which is a vicious cycle.

However, an electric vehicle company that has exhausted all of its inventory by the end of the year 23 and has not lost money does not have this problem. In other words, even if its 23-year performance is bad, it does not affect it until the year 24. Therefore, the important thing right now is how quickly to get rid of bad inventory, and if an electric vehicle company has little bad inventory, its performance could improve significantly in 24.

Suppose a vehicle with the same specifications is sold for $45,000 from the summer of 24. Since the cost of this car is $44,000, lowering the price by 10% will also result in a profit. With lower prices of electric vehicles, will they be less popular than ICE vehicles? I wonder how the market will react when the extreme weather recedes and a new electric vehicle priced similar to ICE vehicles is released. Everyone's most dangerous when they have a rosy outlook, but everyone's best time to invest can be when they're worried about the gray future.