The rotation out of tech and into big cap Dow /Industrial value stocks continued as the Nasdaq 100 (QQQ) closed - 1.8 % for the week and those boring Dow stocks (DIA) closed positive +.4%. Sector rotation out of tech and semiconductors continued while the flight to safer plays such as utilities (XLU) and the undervalued Industrials sector (XLI) remained strong. Last week we highlighted that value stocks have underperformed tech for the last 15 years and might have bottomed.

This week, world visionary and serial entrepreneur Elon Musk clarified his life mission statement stating that he is betting his considerable fortune on getting out of town and colonizing Mars.

He believes that an extinction event of humans is coming to a theater near you and sometime soon. The only solution is multi planetary colonization to this existential threat. He is a climate change hawk and this has him a diametric position to President Trump since he withdrew from the Paris Climate accord. In similar fashion, Musk withdrew from the Trump Advisor Councils. Adding to the mix of potential existential threats both he and Stephen Hawking’s believe that Artificial intelligence will run amok and destroy humans.

Bring things down to a more tangible level, the real existential questions investors are asking is what does this mean to equities? Will they continue to rally even if there is no one around? Will the computers just take over?

What about Tesla (TSLA) lofty stock price? Is traditional valuation measure even pertinent if you believe in Musk’s mission and his bet to save humanity? What’s the PE ratio on the future of humanity?

We put our AI and Neural Net on the task and should have an answer shortly as we are using the Amazon cloud to distribute the processing power needed to solve the problem. Hopefully that occurs before extinction.

In case you are curious, one of the inputs into the model is Bitcoin prices and other alt currencies which are on currently on parabolic moves. These are big concept, unproven ideas that are now worth tens of billions in market cap with nothing tangible to attach to its worth.

What is most interesting is that Tesla is the only tech stock to hit new highs since the meltdown initiated by Goldman’s memo went out and did a hit job on tech last Friday. Leading tech stocks such as AAPL, FB, GOOG, NFLX, AMZN all remain under pressure to varying degrees. AAPL and NFLX look particularly heavy, and in warning phases.

A more immediate existential question currently facing investors is how the unwinding of the Feds experiment with zero rates will play out. The economic data this week was weak but the Feds interpretation was that it needs to raise rates and reduce its 4.5 trillion-dollar balance sheet to temper potential inflation. From this vantage point the current tightening seems more like an effort to have some ammo left if the current economic trends continue to slide. Bonds ignored the hike and have been strong for weeks, hence we have a flattening the yield curve, yet another cautionary flag.

Risk off indicators are still flashing caution such as High yield debt versus T Bonds. Our stocks versus utilities indicator continues to show caution. The adage of two steps and a stumble might have morphed into three steps and tumble. The questions remain, can the migration to value keep this long old bull in tack.

Video length: 00:07:34