GM and BRRR.

The US Dollar is in focus today, as its price index faces resistance as it runs into yearly highs. The fall of the dollar provides support to risk assets and tech, which have admirably fought off dollar strength in recent months.

The correlation between the dollar and risk assets is usually negative, so it’s surprising and encouraging to tech hold up as well as it has.

It’s this resilience of tech in the face of the strong dollar keeping me cautiously bullish and optimistic for markets through the end of the year.

There are three events we’re watching for this week:

1. Inflation Reports: We’ll learn of August consumer and producer price inflation numbers on Thursday.
2. Apple iPhone Event: The tech giant is expected to announce a step up in specs for the new iPhone 15, along with a significant price hike.
3. Buffalo Bills vs New York Jets: We’re tracking US sports betting as a potential recession-resistant sector. Let’s see the ratings for the first Monday Night game of the year before jumping in.

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Market News

Morgan Stanley to Tesla: We Like Your Robot

Tesla's stock has surged by nearly 6% in the pre-market session following Morgan Stanley analyst Adam Jonas's optimistic outlook on the company. Jonas has upgraded Tesla to "overweight," increased the price target to $400, and highlighted Tesla as a top pick. The primary driver behind this bullish stance is Tesla's Dojo supercomputer.

Dojo could potentially add a whopping $500 billion to Tesla's market value, drawing parallels to how AWS revolutionized Amazon. The supercomputer is expected to expedite the adoption of Robotaxis and enhance Tesla's network services, positioning the company to tap into a potential $10 trillion market.

• Tesla's Target Price Doubled: Morgan Stanley more than doubled its price target on Tesla stock from $250 to $400 per share after naming it a top pick. This represents nearly 50% upside from current levels.

• Dojo's Cost Savings: Tesla claims Dojo can provide 6x cost savings versus GPUs. Morgan Stanley calculates this could drive $6.5 billion in compute cost savings for Tesla by 2024 to reach its goal of 100 exaFLOPs.

• China Sales Jump: Tesla's China sales jumped 30.9% month-over-month in August to 64,694 vehicles. This growth is attributed to aggressive price cuts, with China also helped by lower mortgage rates.

  Read more

Macro News

New iPhone Brings Meaning to "Arm and a Leg"

Apple's stock price will likely drop following its major iPhone event on Tuesday, as it historically has after such announcements, but the focus on premium-priced Pro models represents a sound long-term strategy.

By expectedly raising prices $100-$200 on the iPhone 15 Pro and Pro Max models, featuring improved processors and camera technology, Apple aims to increase overall iPhone revenue by pushing more customers to upgrade to these more expensive, higher-margin versions.

Despite probable initial negative reactions to the price hikes, this sets Apple up for revenue growth and margin improvement over the coming year.

• Pro models dominate sales: Pro iPhone models now account for nearly 50% of estimated iPhone sales so far in 2023, indicating customers are already opting for pricier versions.

• Substantial revenue upside: Raising Pro prices by $100-$200 could drive an additional $10B-$15B in annual iPhone revenue through increased average selling prices.

• Prestige and innovation justify premium: Major upgrades like enhanced battery life, cameras, titanium cases will help justify Pro prices and attract prestige-seeking buyers.

  Read more

Today’s Reader Poll

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AI Art of The Day

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The BRRR is meant for informational purposes only. It is not investment advice. Please consult with your investment, tax, or legal advisor before making any investment decisions.