Beaten-down stocks are often tempting as an investment, particularly when they’re blue chips. Quality always (eventually) shines through. Investors thinking about stepping into the Dow Jones Industrial Average’s worst-performing components from July right now, however, may want to think twice about it — and then decide not to.

These stocks are down for reasons bigger than just a little volatility, ill-timed bad luck, or knee-jerk reactions from investors. Now into the sixth month of COVID-19’s invasion of the United States and the ninth month since it was first recognized as a deadly disease, it’s starting to become clear some companies face headaches well beyond the temporary ones put in place by the coronavirus.

Image source: Getty Images.

Three losers of the DJIA

If you’re wondering, the DJIA tickers in question are Intel (NASDAQ:INTC), Boeing (NYSE:BA), and Raytheon Technologies (NYSE:RTX) — all well-founded stalwarts that will certainly be around years from now, but also all names that have been sold off for a reason. That is, their revival isn’t exactly imminent.

Intel’s setback was largely driven by another round of familiar bad news. It is experiencing more research and development delays that were partially prodded by the coronavirus outbreak this time around.

The tech company has been repeatedly plagued by problems with its 7-nanometer (nm) CPU foundry technology, while rival CPU maker Advanced Micro Devices already sells 7nm processors. It’s still not clear when Intel might come to the market with a competing chip either, as the company warned yet again on its recent second-quarter conference call that its 7nm CPU timeline had been extended. COVID-19 made it tough to get much done on this front. That news alone was enough to upend the stock, yet just a few days later, news that now-former chief engineer Murthy Renduchintala would be leaving only fanned those bearish flames.

All told, Intel shares fell 20% in July, with investors perhaps now wondering if there’s a far bigger fundamental flaw in how the company’s been planning and managing product development. That’s much tougher to fix than a mere retooling.

Boeing didn’t slide nearly as much as Intel did, but its stock’s 11% loss last month is hardly modest given the Dow’s 19% gain for July.

The company’s relatively new 737 MAX jets were once touted as game-changing. A couple of catastrophic crashes shortly after they went into service in 2019, however, forced most regulators of the world’s airspace to ground the plane until its problems were solved. Boeing’s engineers have seemingly made some measurable progress, with the FAA in 2020 nearing a renewed assessment of the aircraft’s airworthiness.

A recertification may not be enough, though. Airlines are now experiencing weakened demand for air travel thanks to COVID-19, and it’s not inconceivable many are still worried there could be something else wrong with the 737 MAX that’s yet to be realized. Between the two headwinds, more than 350 orders for the aircraft were canceled during the first half of this year. There’s no clarity as to when or even if those canceled orders will be replaced, either.

Finally, Raytheon’s 10% tumble in July isn’t harrowing, but it’s certainly not dismissible.

To its credit, the company topped its second-quarter earnings and revenue estimates when the numbers were reported on Tuesday. The problem is those numbers were well down on year-over-year basis, reminding the market that the same weakening demand for Boeing’s jets also means waning demand for related aircraft components that Raytheon produces.

Read between the lines

In some regards, being an investor in March was easy: Assume all companies are going to be hit hard. The late-February/early March sell-off was pretty indiscriminate, dragging most everything lower. In a similar sense, the rally from March’s low to current levels was also a rather sweeping one, steering most stocks and most investment categories higher. It was difficult not to do well no matter how you played the market.

As July turns into August though, clarity is starting to bloom.

Take a closer look at the reasons these three names suffered last month while most other Dow Jones stocks didn’t. Every company struggled when the coronavirus was new, including these three. Only certain companies will continue to struggle in the aftermath of the pandemic, though. Air travel looks like one of those industries set for prolonged turbulence. Even as COVID-19 seems to fade away, the public may remain worried about sitting in a confined space for so long with so many other people. Passage through an airport terminal isn’t exactly a germ-free experience, either. The aircraft headwind could last a while. This is the outbreak’s ripple effect.

As for Intel, the coronavirus didn’t cause its problems, but it certainly exposed and exacerbated them. Its research and development process will get back to normal at some point in the near future, but Intel’s “normal” isn’t necessarily great. Its new leadership structure will require time to reset, but time is the one thing Intel doesn’t really have to give.

It’s not just Raytheon, Intel, and Boeing, though. Unlike most points between March and now, investors now know why they’re bidding a stock up or sending it lower. It’s not mere panic or fear of missing out. If a stock’s down, it’s probably down for a reason. It would be wise to start taking the market’s hints instead of merely buying the dips and selling the rips. We’re just not in that kind of volatile, easily reversed environment anymore.

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PlanB, the well-known creator of the contested stock-to-flow (S2F) model, believes Bitcoin (BTC) is now well on track to reach $100,000 as the price has risen to yearly highs. The optimistic sentiment coincides with the shift in momentum from alternative cryptocurrencies, or altcoins, to BTC.

He said:

“I can’t make a chart for you now (at sea), but S2F model perfectly on track.”

At the same time, the price of Bitcoin has increased by 17% this week, as it broke through a major three-year trendline. As Cointelegraph reported, traders seemingly expect BTC to test higher resistance levels in the near term.

The price of Bitcoin surpasses $11,700 in a swift intraday rally. Source: TradingView.com

Data shows it might be the time for Bitcoin to shine

Altcoin declined particularly in the past 72 hours when the price of Bitcoin started to rally. Ethereum’s Ether (ETH) moved in tandem with BTC throughout the rally, but it slumped against BTC in the past two days.

In the short term, as Bitcoin sees a profit-taking rally from altcoins, some investors expect BTC to outperform altcoins. Kelvin Koh, the co-founder of Asia-based venture capital firm Spartan Group, said:

“If BTC breaks the resistance at $11.4K, we are going above $12K in no time. Will take the wind out of alts again short term.”

The pattern of a Bitcoin rally following a strong altcoin season is not new. In previous cycles, the top cryptocurrency typically saw a sharp uptrend after altcoins initially gained against BTC. Such a trend materializes because investors seek safer options, like BTC, when the altcoin market gets overheated.

Most recently, the fear of missing out, or FOMO, of retail investors around DeFi led small market cap tokens to surge substantially. In the early days of the DeFi market craze, for example, Compound (COMP) saw a major rally. Then, smaller tokens, including Yearn Finance (YFI), Synthetix Network (SNX), and Aave (LEND), followed.

Eventually, as small tokens saw five to ten-fold spikes in price, investors started to take profit. The abrupt pullback of DeFi tokens coincided with a BTC rally as momentum shifted back to Bitcoin.

Traders say the trend is still up

Data from Skew shows that tens of millions of dollars worth of short contracts are still getting liquidated. It indicates that a relatively large number of investors are betting against BTC in the near term.

Bitcoin liquidations on BitMEX. Source: Skew

Cryptocurrency trader Cantering Clark said that while he understands why shorts are compelling, the upward trend is too strong. He said:

“Looking at trades from the standpoint of R:R is good, but understanding context is superior. After a major contextual change like this, you can assume that your shorts have a lower probability of resolving successfully. Bets should be on strength always showing up.”

For some traders, a short against Bitcoin could be attractive because BTC has increased steeply in the past week and is testing major resistance levels. 

A 17% rally in six days — even during a bull market — is substantial, even for Bitcoin. But when the trend of BTC is overwhelmingly bullish, a short squeeze could only add more rocket fuel.

In the last 12 hours, more than $23 million worth of shorts were liquidated, for example, as the price hit as high as $11,750. Thus, during a strong upward price trend, shorts could indirectly catalyze a larger rally.

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That description, perhaps, is an apt way to think about August markets in the midst of a pandemic that continues to dog investors, wreaking havoc on global economies.

“Historically August has had pretty muted performance…given the fluid coronavirus situation, the uncertainty regarding the timing of fiscal stimulus and signs of economic data stalling out, August could be more turbulent than it has in the past,” Lindsey Bell, chief strategist at Ally Invest told MarketWatch.

In fact, August has tended to be more prone to unexpected turbulence than its traditional reputation as a period in which traders and investors laze about before autumn trading action kicks off.

Last year, for example, the month began with President Donald Trump reigniting Sino-American trade tensions via a series of tweets that indicated that the U.S. would impose levies of 10% on China imports starting on Sept. 1. In 2017, a flare-up in tensions between North Korea and the U.S. drove the Cboe Volatility Index
VIX,
-1.21%,
one measure of implied volatility in the S&P 500
SPX,
+0.76%,
to its highest level to that point of the year.

China’s yuan
CNYUSD,
0.00
CNHUSD,
0.00
devaluation and sluggish economy in 2015 helped to fuel the worst August performance in 17 years, amplified by angst of a rate-hike by the Federal Reserve to normalize monetary policy (that seems so far away now), and weakness in global energy markets.

The list of tumultuous August moments goes on, including the default of Russia in 1998, but this moment in history might seem more uniquely primed for turbulence.

There is arguably more uncertainty about the future of the economy and markets swirling around than answers. And for many a fresh round of fiscal stimulus for Americans stricken by the COVID-19 pandemic ranks tops among the list of concerns.

Checkout: Coronavirus Update: 17.6 million cases world-wide, with 4.6 million in the U.S., as of Aug. 1.

“I think in terms of market outlook we’re all laser focused on two things: 1) the outcome of Fiscal Stimulus / extended [unemployment] benefits and 2) the path of the virus,” Michael Antonelli, market strategist at Robert W. Baird & Co ., told MarketWatch.

“If I had to weight importance, #1 is like 75% and #2 is 25%,” he said. 

“August is notoriously slow but those two things are unique to 2020 and might ratchet up volatility,” Antonelli said.

A modicum of progress was enough to hep the Dow Jones Industrial Average
DJIA,
+0.43%,
the S&P 500 and the Nasdaq Composite Index
COMP,
+1.48%
finish in positive territory on Friday, along with a heaping dose of Apple’s share
AAPL,
+10.46%
rally, on Friday.

Talks between Trump administration officials and congressional Democrats over a coronavirus aid package stretched into the weekend, after Democrats rejected the administration’s offer of a short-term extension of the $600 weekly unemployment benefit.

Emerging from the weekend without some path toward some further aid from Congress for suffering Americans and corporations could inject fresh volatility into markets to start the month.

The economy shrank at a record 32.9% annualized in the second quarter, highlighting the fact that this is the deepest recession in American history.

Read: ‘A massive welfare economy’ – federal aid prevents even steeper GDP collapse

Also: MarketWatch Coronavirus Recovery Tracker

As MarketWatch’s Jeff Bartash puts it, the severity of the economic downturn will come into fuller focus next week when the employment report for July is released on Friday. The number of jobs regained last month is unlikely to match the huge increases in May and June that totaled a combined 7.5 million.

Economists polled by MarketWatch predict on average that the U.S. added about 1.5 million jobs in July.

Fretting about fresh shocks to the financial system in August and months ahead could also explain why gold prices
GOLD,
+2.33%
finished at a fresh record on Friday and are closing in on a round-number level at $2,000 an ounce. Meanwhile, the Cboe Volatility Index, which tends to rise when markets fall because it reflects buying in options contracts intended to insure against drops in stocks, has been trading well above its historical average.

The index, which is colloquially referred to by its ticker, VIX, has a long-run average at 19.38, and hit an all-time high above 80 in March, a week before stocks hit a recent nadir on March 23, amid the worst of the outbreak of the novel strain of coronavirus that causes COVID-19.

VIX, which closed at 24.46 on Friday, has been trading above its historic average for 111 trading days, with 117 trading days representing the longest trade above its mean since Jan. 11 of 2012, according to Dow Jones Market Data.

Despite the angst about the outlook for August, however, there is cause for optimism.

August performance in presidential election years has been stellar. August’s performance on average is up 0.63%, as gauged by monthly returns for the S&P 500 index since inception. However, during election years, August returns 2.87% on average, marking the best monthly performance by some margin, with July’s returns during election years second on average at 2.08%, Dow Jones Market Data show (see attached table).

So far, July has lived up to its billing and then some, with the S&P 500 up 5.51% in July, the Dow returning 2.38% and the Nasdaq Composite registering a 6.82% gain, on the back of unfettered appetite for technology and e-commerce stocks.

To be sure, this is a pandemic year too, so anything could happen.

August 1st, 2020 by Zachary Shahan 

Tesla has released its quarterly “Tesla Vehicle Safety Report.” One of the top reasons — if not the #1 reason — I bought a Tesla Model 3 last was because of its record-setting safety rating, so I’m always interested in seeing new stats on this topic.

The second quarter of 2020 saw a slightly worse result for Tesla than the first quarter in terms of accidents per million miles driven with Tesla Autopilot engaged (see graph below), but keep in mind that the first quarter had a record result. Additionally, the difference was so small that it was probably not statistically significant. On the other hand, Tesla’s Q2 figure was far better than the US average — about 10 times better with Autopilot engaged.

Here are the key statistics:

• 1 accident every 4.53 million miles when Autopilot engaged
• 1 accident every 2.27 million miles when Autopilot not engaged but active safety features active
• 1 accident every 1.56 million miles without Autopilot and without active safety features
• 1 accident every 479,000 miles — US average

Note: The following interactive graph does not display well on many mobile phones. I recommend viewing it on a real computer or at least turning your phone horizontal instead of vertical. Alternatively, you can look at this non-interactive version (but it’s not as much fun as the interactive version).

In other words, on average, nearly 10 times more miles are driven on Tesla Autopilot before an accident occurs than are driven by the average American driver before an accident occurs.

There is something to keep in mind here, though. First of all, Autopilot is more commonly used on longer freeway trips than in city driving, and accidents are much more common in urban driving than on the freeway, especially per mile. Additionally, in general, Autopilot would be engaged in safer driving situations in which an accident is less likely in the first place.

Lastly, the figure for the US average is based on annual data, and accidents are more common in winter. (Naturally, Tesla’s Q2 data doesn’t cover the winter. Although, its record-breaking result in Q1 does.)

Overall, though, 1 accident every 4.53 million miles is far better than 1 accident every 479,000 miles.

In my experience, having Autopilot on does improve safety considerably. You still have to pay attention and make sure you don’t do something stupid, but with Autopilot on, the car is using many more eyes (cameras, radar, etc.) and its rather clever brain to make sure to not hit other cars or objects on the road. Those eyes and the car’s “brain” work very well.

“While no car can prevent all accidents, we work every day to try to make them much less likely to occur,” Tesla writes. “Active safety features come standard on all Tesla vehicles made after September 2014 for an added layer of safety beyond the physical structure of each car. Because every Tesla is connected, we’re able to use the billions of miles of real-world data from our global fleet – of which more than 1 billion have been driven with Autopilot engaged – to understand the different ways accidents happen. We then develop features that can help Tesla drivers mitigate or avoid accidents. Through over-the-air software updates, we’re able to introduce safety features and enhancements long after a car has been delivered, as well as release updated versions of existing safety features that take into account the most up-to-date real-world data collected by our fleet.”

Even if you do get into an accident, Tesla’s vehicles offer the lowest probability of injury, according to NHTSA testing.

Tesla also addresses fires in its quarterly safety reports, presumably due to all kinds of misinformation and overblown cases regarding a few Tesla vehicles that caught fire over the years. However, Tesla just shares annual data for this, so the latest update is regarding 2019. Here it is:

“From 2012 – 2019, there has been approximately one Tesla vehicle fire for every 175 million miles traveled. By comparison, data from the National Fire Protection Association (NFPA) and U.S. Department of Transportation shows that in the United States there is a vehicle fire for every 19 million miles traveled.

“In order to provide an apt comparison to NFPA data, Tesla’s data set includes instances of vehicle fires caused by structure fires, arson, and other things unrelated to the vehicle, which account for some of the Tesla vehicle fires over this time period.”

One of the biggest benefits of a Tesla is indeed the high level safety it provides to its passengers and driver.

Want to buy a Tesla Model 3, Y, S, or X? Feel free to use my referral code to get some free Supercharging miles with your purchase: https://ts.la/zachary63404. 

You can also get a $250 discount on Tesla solar with that code.

  
 
Have a tip for CleanTechnica? Send us an email: [email protected]
 
 


 

Latest Cleantech Talk Episodes

Latest CleanTechnica.TV Episode

Tags: Tesla, Tesla accidents, Tesla Active Safety, Tesla autopilot, Tesla Autopilot Accidents, Tesla Model 3, Tesla Model 3 Standard Range Plus Long-Term Review, Tesla safety, Tesla safety reports

About the Author

Zachary Shahan is tryin’ to help society help itself one word at a time. He spends most of his time here on CleanTechnica as its director, chief editor, and CEO. Zach is recognized globally as an electric vehicle, solar energy, and energy storage expert. He has presented about cleantech at conferences in India, the UAE, Ukraine, Poland, Germany, the Netherlands, the USA, Canada, and Curaçao.

Zach has long-term investments in Tesla [TSLA] — after years of covering solar and EVs, he simply has a lot of faith in this company and feels like it is a good cleantech company to invest in. But he does not offer (explicitly or implicitly) investment advice of any sort on Tesla or any other company.

August 1st, 2020 by Zachary Shahan 

Tesla has released its quarterly “Tesla Vehicle Safety Report.” One of the top reasons — if not the #1 reason — I bought a Tesla Model 3 last was because of its record-setting safety rating, so I’m always interested in seeing new stats on this topic.

The second quarter of 2020 saw a slightly worse result for Tesla than the first quarter in terms of accidents per million miles driven with Tesla Autopilot engaged (see graph below), but keep in mind that the first quarter had a record result. Additionally, the difference was so small that it was probably not statistically significant. On the other hand, Tesla’s Q2 figure was far better than the US average — about 10 times better with Autopilot engaged.

Here are the key statistics:

• 1 accident every 4.53 million miles when Autopilot engaged
• 1 accident every 2.27 million miles when Autopilot not engaged but active safety features active
• 1 accident every 1.56 million miles without Autopilot and without active safety features
• 1 accident every 479,000 miles — US average

Note: The following interactive graph does not display well on many mobile phones. I recommend viewing it on a real computer or at least turning your phone horizontal instead of vertical. Alternatively, you can look at this non-interactive version (but it’s not as much fun as the interactive version).

In other words, on average, nearly 10 times more miles are driven on Tesla Autopilot before an accident occurs than are driven by the average American driver before an accident occurs.

There is something to keep in mind here, though. First of all, Autopilot is more commonly used on longer freeway trips than in city driving, and accidents are much more common in urban driving than on the freeway, especially per mile. Additionally, in general, Autopilot would be engaged in safer driving situations in which an accident is less likely in the first place.

Lastly, the figure for the US average is based on annual data, and accidents are more common in winter. (Naturally, Tesla’s Q2 data doesn’t cover the winter. Although, its record-breaking result in Q1 does.)

Overall, though, 1 accident every 4.53 million miles is far better than 1 accident every 479,000 miles.

In my experience, having Autopilot on does improve safety considerably. You still have to pay attention and make sure you don’t do something stupid, but with Autopilot on, the car is using many more eyes (cameras, radar, etc.) and its rather clever brain to make sure to not hit other cars or objects on the road. Those eyes and the car’s “brain” work very well.

“While no car can prevent all accidents, we work every day to try to make them much less likely to occur,” Tesla writes. “Active safety features come standard on all Tesla vehicles made after September 2014 for an added layer of safety beyond the physical structure of each car. Because every Tesla is connected, we’re able to use the billions of miles of real-world data from our global fleet – of which more than 1 billion have been driven with Autopilot engaged – to understand the different ways accidents happen. We then develop features that can help Tesla drivers mitigate or avoid accidents. Through over-the-air software updates, we’re able to introduce safety features and enhancements long after a car has been delivered, as well as release updated versions of existing safety features that take into account the most up-to-date real-world data collected by our fleet.”

Even if you do get into an accident, Tesla’s vehicles offer the lowest probability of injury, according to NHTSA testing.

Tesla also addresses fires in its quarterly safety reports, presumably due to all kinds of misinformation and overblown cases regarding a few Tesla vehicles that caught fire over the years. However, Tesla just shares annual data for this, so the latest update is regarding 2019. Here it is:

“From 2012 – 2019, there has been approximately one Tesla vehicle fire for every 175 million miles traveled. By comparison, data from the National Fire Protection Association (NFPA) and U.S. Department of Transportation shows that in the United States there is a vehicle fire for every 19 million miles traveled.

“In order to provide an apt comparison to NFPA data, Tesla’s data set includes instances of vehicle fires caused by structure fires, arson, and other things unrelated to the vehicle, which account for some of the Tesla vehicle fires over this time period.”

One of the biggest benefits of a Tesla is indeed the high level safety it provides to its passengers and driver.

Want to buy a Tesla Model 3, Y, S, or X? Feel free to use my referral code to get some free Supercharging miles with your purchase: https://ts.la/zachary63404. 

You can also get a $250 discount on Tesla solar with that code.

  
 
Have a tip for CleanTechnica? Send us an email: [email protected]
 
 


 

Latest Cleantech Talk Episodes

Latest CleanTechnica.TV Episode

Tags: Tesla, Tesla accidents, Tesla Active Safety, Tesla autopilot, Tesla Autopilot Accidents, Tesla Model 3, Tesla Model 3 Standard Range Plus Long-Term Review, Tesla safety, Tesla safety reports

About the Author

Zachary Shahan is tryin’ to help society help itself one word at a time. He spends most of his time here on CleanTechnica as its director, chief editor, and CEO. Zach is recognized globally as an electric vehicle, solar energy, and energy storage expert. He has presented about cleantech at conferences in India, the UAE, Ukraine, Poland, Germany, the Netherlands, the USA, Canada, and Curaçao.

Zach has long-term investments in Tesla [TSLA] — after years of covering solar and EVs, he simply has a lot of faith in this company and feels like it is a good cleantech company to invest in. But he does not offer (explicitly or implicitly) investment advice of any sort on Tesla or any other company.

Japan’s “dormant” crypto accounts are starting to see activity as Bitcoin breached a critical price resistance level this week. According to the Japanese crypto exchange Coincheck, their trading volume this week has risen by two to three times in comparison to the previous one. 

Speaking to a selected number of the Japanese outlets, Yusuke Otsuka, the co-founder of Coincheck explained that existing users who hadn’t traded for a while became active again this week: “Some of our users already have accounts so the initial velocity is high.”

If users already have accounts, they don’t have to take time to go through Know Your Customer check to open new accounts and can resume buying cryptocurrencies immediately. In contrast, those new to the trading platform had to wait for their account to become approved, so there was a time lag before they could start trading. “This time is different”, Otsuka emphasized. 

According to Coincheck, the volume of the direct sale this week was twice as big as seen during the previous one, while the demand for the exchange service increased threefold. Otsuka also believes this is correlated with the Japanese Coivd-19 stimulus payments. In April, the Japanese government began distributing 100,000 yen payments — about $930 —  to every household. 

Moreover, Oki Matsumoto, CEO of Monex Group, a parent company of Coincheck points out the possibility that those who missed buying gold are now interested in Bitcoin. The gold price has surged recently, breaking previous highs while Bitcoin just started breaking the resistance at the beginning of this week.

Libra on the agenda

Matsumoto also commented on the recent development of central bank digital currencies:

“I think David Marcus made a mistake. He should have said it was Facebook Token. Because they said it was ‘the future currency,’ the U.S. government criticized it heavily”.

Matsumoto added that “the role of Libra might be just to open Pandora’s Box and that was it”. Meanwhile, the United States is behind the competition precisely because “they crushed Libra by themselves and could no longer say they would start developing CBDC”, Matsumoto analyzed. 

Some industry insiders are worried about American reluctance to move forward with CBDC. Takaya Nakamura, an executive from Japanese crypto exchange Fisco recently claimed that Japan’s role should be to urge the United States to take CBDCs more seriously.