Elon Musk does not fear a recession
Elon Musk makes the news.
He’s everywhere.
CEO of the premium electric car manufacturer Tesla (TSLA) – Get Tesla Inc Report somewhat reminiscent of former Republican President Donald Trump when the latter was in office.
Like Trump, Twitter is Musk’s most important communication channel. Like the real estate developer, it seems that the technology magnate loves to be in the spotlight. When another financial newsman manages to steal the show, Musk always finds a way to bring all eyes back on him.
Since April, he has found a strategy to monopolize media attention. His $ 44 billion bid to buy Twitter has become a telenovela with unexpected twists and turns. Every day seems to have its share of surprises. More than a month after the announcement of the offer, very few can say that Musk will complete the transaction which in the process will put him in debt.
When it̵[ads1]7;s not Twitter, Musk has found another way to be the center of attention: he gives his opinion and comments on political as well as economic topics and hot topics.
The world’s richest man, who sees himself as a global CEO, has just given his diagnosis about the state of the economy while consumers are struggling with sky-high grocery revenues and investors are wondering if we are in a recession.
“We are in a recession”
“I think we’re probably in a recession and that the recession will get worse,” the billionaire said on May 16 during a virtual appearance at the recent All-In conference in Miami. “But you know, these things go away, and then there are boom times again.”
The Tesla boss added that the recession “probably” will last 12 to 18 months.
“It’s usually how long it takes for a correction to occur.”
Economists are currently divided on the state of the economy, although financial markets have recently shown that fears of recession are very high among investors.
Gross domestic product (GDP) fell by 1.4% year-on-year in the first quarter. But the decline was mainly due to a decline in inventory growth and a growing trade deficit. Consumer spending and business investment – the pillars of the economy – recorded solid gains. Unemployment was 3.6 per cent in March.
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“The economy is still showing some resilience, but the first quarter GDP report signals the start of more moderate growth this year and next, mainly in response to higher interest rates,” said Sal Guatieri, senior economist at BMO Capital Markets.
Musk recommends that companies look at their costs as well as cash flows.
“Recessions are not necessarily a bad thing. I’ve been through some of them now. And what usually happens is that if you have a boom that lasts too long, you get a misallocation of capital. It’s starting to rain money on fools. “Basically, it’s like every damn thing gets money, and I’m sure you’ve seen a few of them,” Musk said.
“So someone just gets out of control. And you only have a misallocation of human capital where people do things that are stupid and not useful to their fellow human beings,” he continued. “See your cash flow and get positive cash flow as soon as you can.”
“The real president is the one who controls the teleprompter”
Mogulen added that one of the things about recessions is that they sort out good companies from bad ones.
“Bullshit companies go bankrupt, and those who use useful products are prosperous.”
Also during the same interview, Musk vehemently criticized Democratic President Joe Biden when asked if he observed a difference in immigration between the current administration and his predecessor Donald Trump. The series founder begins by laughing before answering that Biden can only do one thing: read the teleprompter.
“It’s hard to say what Biden is doing to be completely honest,” Musk said. “The real president is the one who controls the teleprompter. The road to power is the road to the teleprompter. I feel that if someone accidentally leans on the teleprompter, it will be like “Anchorman”. ”
Tesla’s CEO refers to the 2004 film about a news anchor who wants to read everything written on the teleprompter even if it ruins his career.
Relations between Musk and the White House have been strained from the start. The world’s richest man did not digest that Biden organized events on electric vehicles without inviting him or mentioning the name of Tesla when it was his company that forced the car industry against electrification.
“This administration, only, it does not seem to get much done,” Musk continued. “The Trump administration, Trump is leaving, there were a lot of people in the administration who were effective in getting things done.”
“It seems that this administration does not have the drive to just finish. That is my impression. That is my impression. We must definitely fix the immigration policy, as if we had covid which was a problem.”
