We look on with somewhat bewilderment at the rise in the valuation of Tesla relative to the valuations of traditional auto manufacturers. For a company that produced 76,000 vehicles last year, it has a market cap of $330 bln. If those at the Federal Reserve are scratching their heads at the lack of pricing power, they should look no further than the drivers behind this relative valuation. Mark Fields, ex CEO of Ford, is probably wondering as well having been pushed out in favor of a more radical Tesla-like strategy. We take no issue with Tesla as a company, vehicle or technological pioneer but rather the leeway and latitude that is given the company in the capital markets, as evidenced by a $1.8Bln bond issue for a company that doesn’t promise to be cash positive any time soon. The problem with the Musking of the global economy is that traditional companies are making real competitive decisions based on unrealistic or skewed metrics. How does Ford compete with a company with thirty times its market cap, losing money on every car produced. As we have continually highlighted, the mis-allocation of capital, driven by zero and negative real rates of interest, has real world ramifications for real world pricing power.