By Jeff Brown, Editor, The Bleeding Edge 
I don’t care much for politics at all. I’d much prefer to focus 100% of my time on the markets and growth investment opportunities. It’s a lot more fun to research and write about the companies and technologies changing the world for the better and creating wealth-generating opportunities for my subscribers. My wish and hope are to have the best possible market and economic conditions for investment opportunities for my subscribers. And because economic, fiscal, monetary, regulatory, and geopolitical policy directly impacts the investment climate, my team and I have to stay on top of what’s happening in politics and whichever group is in power. Yes, there is always a bull market somewhere, and I can guarantee we’ll be on top of it. And yes, some trends are unstoppable – like artificial intelligence – regardless of economic conditions. But as self-directed investors, the best environment is one in which the broad markets are healthy, inflation is low, interest rates are low, and institutional capital is investing in growth. We’ll have a lot of volatility, but as I look ahead, I’m bullish about what’s coming… And while it has only been a few days, the markets seem to agree with major indices popping off to record highs on Wednesday. Just look at the S&P 500… 
S&P 500 Index And the Nasdaq… 
NASDAQ Composite Index Within the next 18 months, I expect the Fed Funds rate will drop by at least 150 basis points. This will be a catalyst for institutional capital rotating into high-growth, small-capitalization stocks, which will ignite a broad market rally, benefiting all investors. There will also be a lot of opportunities to trade off volatility. We have entered an intense period of disruption. Companies that are rapidly adopting bleeding-edge technologies are seeing their valuations run higher, and those that are pretending and/or being disrupted are seeing their shares plummet. We’re going to win in both directions. More updates to follow soon… And in the meantime… We have so much to look forward to, Jeff Tesla Smartphones and Green Hydrogen Fuel Jeff, So refreshing to have your investigative reporting back, I know many missed your transparency and accuracy with in-depth, easy-to-read, and understandable reporting (none of the clandestine word salad so prevalent today). Great insights on Tesla’s announcements I’m ready to sign for Optimus in 2026.
I do have two questions for you… Have you prepared a review of the Tesla Pi Phone and Elon’s impact on current cell phone carriers? Back to hydrogen as a fuel source I know you basically reported it is a great idea but the production of green hydrogen is not financially possible to meet demands! Have you investigated the following company to see if they have a possible solution? – Anthony P. Hi Anthony, Thank you. And I’m right there with you, I can’t wait to sign up for an Optimus. My best guess is that we’ll be able to do so in less than 18 months. Just like Teslas, Optimus will be software upgradeable, so it’s going to be incredible to see the progress made each month with the software once Optimus is made available to consumers around the world. As for the Tesla Pi Phone, I need to warn you that it’s not real. Tesla does not have a phone. Some companies are pretending to be Tesla and selling a “Tesla” phone. It also appears that there are some scams around this product idea, so please avoid them entirely. Musk has indeed hinted about a smartphone in the past, but I’m not aware of any legitimate new product initiatives for a phone. The only real technology related to cell phones that Musk has built is through SpaceX and its Starlink system. SpaceX has been launching direct-to-cell Starlink satellites to support its upcoming launch with T-Mobile in the coming weeks. I recently wrote about this in last week’s Bleeding Edge AMA, I recommend giving it a read if you haven’t done so already. Aside from that, I don’t see much benefit of Tesla getting into smartphones. The integration with today’s smartphones and Tesla vehicles is already seamless. Tesla already has breakthrough technology and is building product lines right now that present a far greater opportunity – and much less competition – than the smartphone market. As for hydrogen as a fuel source, this is a question I get a lot. It’s such an exciting topic. The thought of powering our cars, trucks, trains, and even planes with the most abundant element in the universe with a byproduct of just water when used… it sounds like the solution to greatly reducing global carbon emissions. And it’s true, hydrogen seems perfect on the surface. It stores three times as much energy per unit of mass compared to gasoline. When it is combined with air, the energy released can power a vehicle, and it combines with oxygen to produce water. We can’t do much better than that, right? Yet that’s not the whole story. We have to understand how hydrogen is made to see the whole picture. Hydrogen is produced from water. About 70 million tons of hydrogen are produced by industry each year. It’s primarily used for ammonia fertilizer. And 96% of hydrogen production is made by a process known as steam-methane reformation. And here’s the problem… this process to produce that hydrogen uses energy created by natural gas, coal, and oil. In all, the industry produces 830 million metric tons of carbon dioxide every year to produce this “clean” hydrogen fuel. Not so clean after all. So, I would argue, what’s the point? If we have to burn massive amounts of carbon-based fuel just to put hydrogen in our cars, we aren’t helping the environment at all. We are only displacing where the carbon emissions take place, not whether or not they happen in the first place. It is really no different than fueling our electric vehicles with electricity produced from coal, natural gas, or oil. It is nonsensical to think that we are helping the environment by doing so. As for the remaining 4% of hydrogen production, it is produced using electrolysis which uses electricity to split the hydrogen out of the water. Again, at the surface, this sounds better than steam-methane reformation. But we must ask… where does the electricity come from? And again, the answer is almost entirely from fossil fuel power plants or nuclear fission power plants (radioactive waste). So where does this leave us? We can use carbon capture technology to capture the carbon dioxide that is emitted when we produce hydrogen. That works, but it is not perfect. At least 10% – and often more than 20% – of the emissions are not captured in this process. It’s better than 100%, sure, but it’s still not clean energy production. We can make up for the difference by using carbon offsets, for example, by planting more trees halfway around the world. But the fact remains that we’d still be burning fossil fuels in the production of hydrogen. It’s worth noting that hydrogen sourced using carbon capture technology is about twice as expensive than that produced using steam-methane reformation. And if we can make the leap to producing hydrogen with 100% renewable energy – and that is a major leap because of how much power is required – the costs are four times higher than steam-methane reformation. Why is this important? Well… hydrogen is fuel, and consumers and businesses have to pay for it. We can think of a gallon of gas as having about the same amount of energy as a kilogram of hydrogen. But a hydrogen fuel cell system is twice as efficient as a gasoline system. We can expect close to 70 miles per kilogram of hydrogen fuel for a small hydrogen fuel cell car. To put things in perspective, it takes about 50–55 kilowatt hours of electricity to produce a single kilogram of hydrogen fuel. That’s the equivalent of about two days of electricity consumption for an average home in America. Two days of an entire household’s energy consumption just to produce one kilogram that provides enough fuel to travel 70 miles. Also worth noting is hydrogen’s disadvantages. Hydrogen is problematic in its volume. It takes up a lot of space, so we can only carry about 5 to 6 kilograms of hydrogen in our tank. Hydrogen molecules are also so tiny that they easily leak out of most containers. This is a safety problem as hydrogen is colorless, odorless, highly flammable, and very easy to ignite. The average price of hydrogen fuel in California, which has the highest number of hydrogen cars, is about $16 per kilogram. That works out to the equivalent of about $5–6 a gallon of gasoline. And we have to remember that almost all of the hydrogen was produced by burning fossil fuels. Without billions of dollars in subsidies, hydrogen just doesn’t make economic sense. And because the energy in the production of hydrogen comes mainly from fossil fuels, it doesn’t even make environmental sense. For hydrogen fuel cells to be both environmentally sustainable and economical, the world must address how it produces baseload power. This is the kind of power required to manufacture the 70 million tons of hydrogen produced every year. The most promising technology to achieve this is a kind of nuclear fusion (not fission) technology that does not produce any radioactive waste. Carbon-free emissions with no radioactive waste is a sustainable energy production strategy and one that we would all benefit from. Something very tangible that the industry can work towards. Unfortunately, I’m not sure from your question which company you were specifically referring to, but I’m not yet aware of any company that can produce clean hydrogen, at a commercial scale, that is economical and competitive with the cost of today’s electricity or gasoline fuels on a per-mile basis. I hope the context on hydrogen was helpful. Tesla’s Relationship With Uber Hello Jeff, You mentioned in a previous Bleeding Edge article (I think) that Tesla already has a relationship in place with Uber. It seems like it would make more sense for Uber/Lyft to make bulk purchase orders of the Cybercab as soon as it can. I am wondering how that will work in the future if Tesla has its own option to allow Tesla owners to opt-in their vehicles to work for them. I've been waiting until Tesla is closer to having its network set up so that I can purchase one myself. I'm also curious about the mechanics of charging and cleaning all of the privately owned Teslas while they are working in the Tesla network. Thanks for all the research that you do. – Synthya G. Hi Synthya, I’m so glad you asked this question as I haven’t had the chance to explore this topic yet. Tesla does not yet have a deal in place with Uber, although to your point, it would certainly make sense. Uber executives in the past have said that autonomy is eventually the future of ride-hailing and getting rid of the human drivers will improve safety and reduce operating costs (i.e. driver fees are the largest operating expense for Uber in its ride-hailing service). But right now, Telsa is positioning itself as a competitor to Uber/Lyft. In 2025 we’ll see the first state-level launches of a Tesla ride-hailing service. We’ve already seen a preview of what Tesla’s own ride-hailing app will look like. 
Source: Tesla Given that the Cybercab won’t get into volume production until the second half of 2026, the initial autonomous vehicles in Tesla’s ride-hailing services scheduled to launch in Texas and California in 2025 will be from Tesla’s customers. Those who own or lease their Teslas will be able to opt their Teslas into the ride-hailing network whenever their EVs are not being used. Once the Cybercab goes into production we’re going to see a radical shift in the economics of public transportation. In fact, small business owners in transportation will have an incredible opportunity enabled by the Cybercab and Tesla’s autonomous driving technology. For example, you could purchase (or lease) 10 Cybercabs from Tesla for about $250,000. The down payment with an auto loan will be a fraction of that. The business owner can put those Cybercabs to work, day and night. The owner would simply have to manage the fleet by making sure they are charged and clean. So, once you have your own Tesla (or Teslas), you can send it out to work and generate enough income to pay for your lease payment or loan payment. When the car gets low on energy, it will return to your home or office where you’ll charge it up and clean the interior if needed. Not only will this disrupt the entire ride-hailing industry, it will disrupt public transportation. It will likely be cheaper to ride in a Cybercab than it will be to ride a bus. And the Cybercab will be a private point-to-point experience, which will be strongly preferable to riding a bus. Uber actually “sold” its autonomous tech division – Autonomous Technologies Group (ATG) – to Aurora back in 2020. It wasn’t really a sale though. Uber paid Aurora $400 million to take ATG off its hands. In exchange, Uber received 26% of Aurora which today is worth around $2.2 billion. At the time, this was a very smart move by Uber. It was cleaning up its balance sheet and focused on getting to free cash flow generation. Uber shed all its cash-burning businesses and has since become wildly profitable and successful, something that I predicted back when everyone hated Uber (from an investment perspective). Ironically, Uber’s CEO recently said that he didn’t think full autonomy would become a reality “anytime soon.” That sounds exactly like the kind of thing that an incumbent would say as he is trying to protect his business. He also said that he would “bet on Waymo” for the next five years. That, as I’ve explored in both The Bleeding Edge – Waymo’s Race to Catch Up and Tesla’s Biggest Competitor, would be a mistake… It’s true that Waymo is the largest autonomous ride-hailing service in the U.S. right now. It provides around 100,000 paid weekly trips in its geofenced locations. Waymo also likes to boast of its 25 million autonomous miles driven to date, with its fleet of fewer than 1,000 Waymo vehicles. And yet… Tesla vehicles have already driven more than 2 billion miles in full self-driving mode. And that’s on top of 9 billion miles driven on Autopilot. 2 billion miles compared to 25 million. Waymo’s vehicles have driven a mere 1.25% of the miles that Teslas have in autonomous mode. […] And here’s the kicker… When Tesla turns on its ride-hailing service in a state, it won’t be in some small, geofenced area. It will be for the entire state. No special mapping is required. The service will be turned on like a light switch – something that is impossible for Waymo to do. I’m afraid that he clearly doesn’t understand the technology. Either that or he is just trying to be dismissive of Tesla to message to Wall Street. In the end, companies like Lyft and Uber will need to partner with and/or license Tesla’s technology for ride-hailing services. Any ride-hailing company without autonomy will be at a severe cost disadvantage. This is a Netflix vs. Blockbuster moment. The transition will happen quickly. What’s the Deal With Biotech Right Now? I've been interested in Jeff's coverage of advances in medical technology and the leading stocks responsible for this progress. With all the breakthroughs Jeff has reported on involving CRISPR technology, could you ask him to comment on why many CRISPR stocks are down 90% from 2021 and still languishing as the markets hit new all-time highs? – John M. Hi John, I recently wrote about this topic in The Bleeding Edge – Another Win for CRISPR. This is definitely worth a read and will provide more context. For additional perspective, I also recommend reading something that I wrote in December in Outer Limits – End of an Era in Biotech Stocks? The problem with today’s market is that they aren’t exhibiting normal market behavior. These new highs are being driven by a very limited number of large-cap growth stocks, most of which are linked in some way to artificial intelligence. We do not have broad, healthy market conditions, and many areas of the economy are unhealthy. Small-cap growth stocks have still not recovered. And that won’t change until economic and fiscal policy changes in a way that will reduce the persistent inflation still holding back the U.S. economy and the U.S. consumer. Interest rates need to come down for us is see a rotation of capital into small-cap stocks and the biotech sector. Any sectors that require heavy research and development and aren’t generating product revenues (like biotech) always suffer in a high-interest-rate environment. This is why biotech companies are trading for absurdly cheap valuations – oftentimes negative enterprise values. These valuations in no way represent the value of these companies. Said another way, a board would never sell the company where it is trading. We can think of this as a market distortion caused by the absence of institutional buyers in biotech stocks. This will not last. It never does. And from what we know of the economic and fiscal policies of the President-elect, I predict we’re in for the next raging bull market in biotech starting next year. The data provides us with a great example. From 2017 through 2020, the equally weighted XBI biotech index was up 135%. In the last four years, it dropped as low as 57% and is still down 32.6% despite the market rally this year. Biotech has incredible tailwinds right now. Venture capital investment has already started to pick up this year compared to 2023, and artificial intelligence is becoming a foundational technology for biotech. All we need is strong economic and fiscal policy which will result in lower interest rates, and the bull market will rage. I can’t wait… as it will create incredible investment opportunities and wealth for my subscribers. Thanks to everyone who wrote in this week. We’ll have another round of questions in next Friday’s AMA, so if you have something you’d like addressed, you can reach us right here. Have a great weekend. Regards, Jeff | 
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