Well as far as I am concerned Tesla makes very nice cars but is a crappy company that I would steer well clear of from an investment perspective. Given that it a junk bond rating of B3/Caa1 which tells you that there is a very good chance that this company will actually go bankrupt over the next 5 years. If that happens the shares will be worth a big fat zero.  There is a very good reason behind this rating it has $10 billion of debt on its books Link1. It also makes a huge loss every quarter, equivalent to $16 per share and yet people are prepared to pay $375+ a share for the privilege. You know what - that is nuts at the price of $379 a share yesterday the company has a market capitilization of $64 billion making it bigger than Ford or General Motors.

So what happened yesterday was the stock was trading at a around $340 a share when Musk tweeted that he was thinking of taking the company private by offering those that  want to cash out $420 a share that would value the company at a even crazier $70 billion valuation. The share promptly shot up to around $370 a share was suspended for trading for an hour then resumed trading closing around the $379 a 10% gain on the day.  If he pulls this off then it really would be an amazing achievement because he needs to sell even more debt in a leveraged buyout to buy out those that wish to sell at the $420 price and also to buy out some existing debt holders at a preium to the current price of their debt.. So basically he need some people to be dumb enough to buy newly issued debt to fund. I would think a lot would want to cash out at $420 a share, of course  he owns around 19.9% of the stock so will not be buying himslef out but that still means he may need to raise $40 billion or perhaps even $50 billion. I suppose anything iis possible but ultimately you are going to need to persuade a lkot of sophisticated investors to tske a big risk to buy that debt and with a junk bond rating that is going to be very difficult.. Nonetheless in a singly tweet Musk added around $6 billion to his company's valuation yesterday so we can call it the $6 billion tweet. In my view this company has a great brand name, a visionary leader and good support but it is worth more like $15 billion maximum end of (and probaly substantially less than that).

I see that Donald Trump is today proposing to raise the tariff on $200 billion of Chinese imports from 10% to 25%. The unilateral raising of tariffs against China is contrary to the World Trade Organization rules that require non discrimination when implementing tariffs, that is tariff imposed should be the same against all WTO members. The only exceptions to "Most Favoured Nation" status are for customs unions or Free Trade Areas that cover "substantially all trade" or for arrangements that pre-dated a country's entry into the WTO. As such, by singling out China for punitive tariffs Donald Trump is attacking the rules based system of the WTO and its multilateral system for dealing with international trade. The other problems with Trump's policy is that all it does is invite retaliation from the Chinese who will undoubtedly hit US goods with their own tariffs.

The Trump policy is also contrary to basic economics because countries gain from lowering or eliminating tariffs not increasing them. Tariffs on imports raise the cost of living for consumers leaving them with less money to buy other goods, for firms they raise the cost of imported inputs and so reduce their profitability and ability to invest costing jobs. Also since many US firms have investments in China through joint ventures with Chinese companies, Trump is actually hitting US overseas investments by limiting their ability to export to the U.S. The other thing Trump will learn is that the US is a debtor nation and much of that debt is held by the Chinese government in the form of its holding of US Treasuries as part of the Chinese foreign exchange reserves. Failure of the Chinese to turn up at US Treasury bonds, or selling of US debt that the Chinese own would put upward pressure on the US bond yields. Generally it does not pay to upset your creditors. So my message to Trump is simple, stop this stupid policy it will end up damaging the USA far more than it will any other country including China. A nice BBC video on the risk of a trade war below: