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Personal Consumption Expenditure Inches Higher

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These days, we plenty of reality TV coming from Capitol Hill, but Wall Street has, at times, given our nation’s capital a run for its money in that regard. And in the business world, no one is more watchable in this sort of serial “reality” venue than Tesla (TSLA - Free Report) founder and CEO, Elon Musk.

This morning, Musk trumps headlines coming out of DC this morning by defying the Securities and Exchange (SEC) commission: moments before Musk and the SEC were about to sign an agreement to settle the commission’s charge of fraud relating to a “reckless” tweet Musk made several weeks ago, Musk suddenly grew defiant at the last moment and refused to sign, calling it an “unjustified action” on behalf of the SEC.

The agreement, as it stood, would have claimed “no guilt” for Musk in exchange for him spending 2 years barred from being CEO of his company, with Tesla’s board required to appoint 2 new independent directors to take the helm in the interim. The tweet in question — where Musk openly mused about taking his company private when its stock price reached $420 per share (both a nose-thumbing at short-sellers of Tesla stock AND a veiled reference to smoking marijuana, which Musk has subsequently been witnessed doing on camera) — caused the SEC to take action, as the commission saw this act as blatant market manipulation.

Tesla shares are now down more than 12 1/2% as of this hour in the pre-market. The stock had already sold off more than 9% year over year, and at sub-$270 per share currently it has shed more than $100 per share since the company’s all-time high in June 2017.

The company will now have to continue carrying the SEC charges forward, providing yet further distraction for the electric vehicle (EV) maker. Tesla had already been under significant pressure to produce Model 3 EVs without recalls or other quality control issues, to say nothing of Musk’s — shall we say “unraveling” — personality. The company currently carries a Zacks Rank #3 (Hold) rating with a Style Score (Value - Growth - Momentum) of F. These ratings are subject to change.

Elsewhere, new Personal Income numbers are in ahead of today’s opening bell, and the +0.3% growth for the month of August is 10 basis points below expectations, with Personal Spending unchanged at +0.3% as well. “Real” personal spending came to +0.2%.

The Personal Consumption Expenditures (PCE) price index for August reached +0.1%, with PCE core unchanged. Not much to see here — inflation is creeping slowly and manageably into our continually growing economy.

The Fed’s interest rate hike to a range of 2.00-2.25% looks to be followed up with another quarter-point hike in its December session. This, of course, is contingent on new economic data, as well as Q3 earnings results, which will start hitting the tape in rapid succession next month. Today marks the final trading day of calendar Q3 2018.

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