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IOL News
12 hours ago
- Business
- IOL News
Does Musk-Trump spat blow a hole in Tesla bull case?
An ugly, name-calling, chest-thumping public brawl on Twitter between the richest guy in the world and the most powerful guy in the world – it's what the platform was made for, says the writer. Image: Allison Robbert / AFP I spoke almost a year ago to Mark Spiegel of Stanphyl Capital in New York. He said it was just a matter of time before Musk and Trump fell out – the only question was who would shaft who first, but his view was that sooner or later everyone 'gets Musked'. An ugly, name-calling, chest-thumping public brawl on Twitter between the richest guy in the world and the most powerful guy in the world – it's what the platform was made for. It's also whacked Tesla stock as bulls need to reassess their upside case for the carmaker. Both probably realise that this is doing each of them a lot of harm – Musk could lose billions of dollars in government contracts and tax credits, while Trump could see his 'big beautiful bill' fail to pass. They are going to cool off a bit and talk things over. But in the words of Anchorman, boy, that escalated quickly! Selling in Tesla was HEAVY, with $153bn wiped out in one day. There is a whole cluster of related items here - we saw the likes of Palantir also hit hard, down almost 8%. Tesla, though, is coming back in pre-market trade. BTD is ever present. To summarise where we are - Musk has been criticising the tax and spending bill all week, which prompted Trump to talk about his disappointment with his 'former' ally. Musk then went full tweetstorm and launched a series of attacks on X, suggesting that Trump appears in unreleased files related to Jeffrey Epstein. Trump shot back, saying Musk "went CRAZY" and was asked to leave the administration, while he also threatened to cut government contracts with Musk's companies. Tesla's stock price dropped 14%. Clearly this introduces new risks for TSLA – the argument that Musk's closeness to Trump was bullish for the stock because Trump always promotes his favourites is kinda becoming unstuck. For instance, the assumption was it would mean an easier path for the rollout of robotaxis or some other favourable policy decision - that is now very much in doubt. Enmity with Trump changes the regulatory environment. Video Player is loading. Play Video Play Unmute Current Time 0:00 / Duration -:- Loaded : 0% Stream Type LIVE Seek to live, currently behind live LIVE Remaining Time - 0:00 This is a modal window. Beginning of dialog window. Escape will cancel and close the window. Text Color White Black Red Green Blue Yellow Magenta Cyan Transparency Opaque Semi-Transparent Background Color Black White Red Green Blue Yellow Magenta Cyan Transparency Opaque Semi-Transparent Transparent Window Color Black White Red Green Blue Yellow Magenta Cyan Transparency Transparent Semi-Transparent Opaque Font Size 50% 75% 100% 125% 150% 175% 200% 300% 400% Text Edge Style None Raised Depressed Uniform Dropshadow Font Family Proportional Sans-Serif Monospace Sans-Serif Proportional Serif Monospace Serif Casual Script Small Caps Reset restore all settings to the default values Done Close Modal Dialog End of dialog window. Advertisement Next Stay Close ✕ But, I guess, TACO...? I subsidies were always on the chopping block, but I guess Musk thought his 'influence' at court would help..I guess he found out he'd been labouring under a misapprehension. Anyway, look at it like this – the tax bill will cut Tesla's EV subsidy, probably negatively impact profits by $1.2bn a there is a $2bn hit coming from California explains why Musk is such a critic. The tax bill has much broader ramifications than EV credits and Tesla shares, though, so the question is whether this intervention is going to derail the legislation. If it does, then it's probably GOOD for Tesla. But then Trump has many other levers of vindictiveness to pull – he's already mentioned pulling government contracts for things like SpaceX or Starlink. And then you have to chuck in elements like MS's Adam Jonas says could turn TSLA into a defence stock... I guess TSLA won't be getting any Pentagon contracts soon ...but either way, the bulls will keep grasping and throwing new reasons to buy. Does it blow a hole in the bull case? I never bought into the Tesla bull case in the first case - to me it just reaffirms what I already knew. Let's not forget trade! Before this Trump-Musk spat S&P 500 e-mini futures touched 6,016, the highest since late February, as reports that Trump had held a phone call with China's Xi Jinping. Trump said he has had a "very good" phone call amid their ongoing trade war, during which they agreed to more tariff talks. Meanwhile, markets are braced for today's nonfarm payrolls report from the US. It's expected at 130,000 in May, down from the 177,000 increase recorded in April, with the unemployment rate sticking at 4.2%. Wall Street fell yesterday as Tesla dragged the broader tech sector down, with the Nasdaq Composite down 0.83% and the Nasdaq 100 off 0.8%. The S&P 500 fell half a percent, while the Dow was 0.25% lower. European stock markets were mixed in muted early trade on Friday, with investors looking over their shoulders at trade wars and the economic data in the US, which is going to be important for sentiment. Ultimately, really bad economic data may be coming, but it could spur the Fed into action. Yesterday we had US jobless claims up, labour costs up, productivity data is cracking. Broadcom was down 4% after it forecast modest revenue for the current quarter, hinting AI spending isn't as strong as expected. Sales will be around $15.8 billion, with more AI chip deployment next year. Stock fell 4% in extended trading.
The Star
3 days ago
- Business
- The Star
US stocks end down as Tesla slumps on Trump-Musk feud
NEW YORK: Wall Street's stock indices ended lower on Thursday in choppy trade as a slump in Tesla shares offset news of progress in tariff talks between US President Donald Trump and Chinese leader Xi Jinping. Shares of electric car-maker Tesla dropped more than 14% in heavy trading as the public feud between CEO Elon Musk and Trump intensified. The stock has fallen four out of the last five sessions. The company lost about US$150 billion in value after Trump and Musk began their verbal war. Musk has stepped up criticism of the president's massive tax legislation in recent days, while Trump alleged Musk was upset because the bill takes away tax benefits for electric vehicle purchases. "The fallout for Tesla stock is self-evident," said Mark Spiegel, portfolio manager at Stanphyl Capital. "I see no meaningful fallout from this for the rest of the market, other than its slight effect on the indexes and index funds. The overall stock market has plenty of problems, but Tesla isn't one of them." Investors focused earlier on news that Trump and the Chinese leader had invited each other to their respective countries for visits as shown in US and Chinese summaries of their phone call on Thursday. A recent dispute over critical minerals had threatened to tear up a fragile trade truce between the two biggest economies. "Recent market moves are further indication that with economic policy shifts, and higher geopolitical and headline sensitivity, equity markets will be characterized by greater volatility and velocity than in the previous cycle," said Katherine Bordlemay, co-head of Americas client portfolio management for fundamental equities at GSAM. The Dow Jones Industrial Average fell 108.00 points, or 0.25%, to end at 42,319.74. The S&P 500 lost 31.51 points, or 0.53%, at 5,939.30 and the Nasdaq Composite dropped 162.04 points, or 0.83%, to 19,298.45. Weaker-than-expected US private payrolls and services sector data on Wednesday raised concerns about an economic slowdown caused by trade uncertainties, with investors focusing squarely on Friday's nonfarm payrolls report. Initial jobless claims data on Thursday showed Americans filing new applications for unemployment benefits last week rose for a second straight week. Kansas City Federal Reserve Bank president Jeff Schmid on Thursday expressed concern that tariffs could rekindle inflation, saying upward price pressure could be apparent in coming months but not fully known for much longer. The comments show Schmid is likely inclined to hold the Fed policy rate steady at its June 17-18 meeting as is widely expected, but also beyond that. Despite calls from Trump to slash rates, Fed chair Jerome Powell has opted to stand pat so far, awaiting further data to guide the policy decision as tariff volatility prevails. US equities rallied sharply in May, with the S&P 500 index and the tech-heavy Nasdaq scoring their biggest monthly percentage gains since November 2023, thanks to a softening of Trump's harsh trade stance and upbeat earnings reports. Brown-Forman fell almost 18% after the Jack Daniel's maker forecast a decline in annual revenue and profit. Procter & Gamble said it will cut 7,000 jobs, or about 6% of its workforce, over the next two years in a restructuring. Shares of the consumer goods bellwether fell 1.9%. Volume on US exchanges was relatively light, with 17.3 billion shares traded, compared to an average of 17.9 billion shares over the previous 20 sessions. Declining issues outnumbered advancers by a 1.11-to-1 ratio on the NYSE. There were 253 new highs and 49 new lows on the NYSE. On the Nasdaq, declining issues outnumbered advancers by a 1.48-to-1 ratio. The S&P 500 posted 16 new 52-week highs and three new lows while the Nasdaq Composite recorded 63 new highs and 42 new lows. — Reuters
New Straits Times
3 days ago
- Business
- New Straits Times
Wall Street stocks end down as Tesla slumps 14pct on Trump-Musk feud
NEW YORK: Wall Street's stock indexes ended lower on Thursday in choppy trade as a slump in Tesla shares offset news of progress in tariff talks between US President Donald Trump and Chinese leader Xi Jinping. Shares of electric car-maker Tesla dropped more than 14 per cent in heavy trading as the public feud between CEO Elon Musk and Trump intensified. The stock has fallen four out of the last five sessions. The company lost about US$150 billion in value after Trump and Musk began their verbal war. Musk has stepped up criticism of the president's massive tax legislation in recent days, while Trump alleged Musk was upset because the bill takes away tax benefits for electric vehicle purchases. "The fallout for Tesla stock is self-evident," said Mark Spiegel, portfolio manager at Stanphyl Capital. "I see no meaningful fallout from this for the rest of the market, other than its slight effect on the indexes and index funds. The overall stock market has plenty of problems, but Tesla isn't one of them." Investors focused earlier on news that Trump and the Chinese leader had invited each other to their respective countries for visits as shown in US and Chinese summaries of their phone call on Thursday. A recent dispute over critical minerals had threatened to tear up a fragile trade truce between the two biggest economies. "Recent market moves are further indication that with economic policy shifts, and higher geopolitical and headline sensitivity, equity markets will be characterised by greater volatility and velocity than in the previous cycle," said Katherine Bordlemay, co-head of Americas client portfolio management for fundamental equities at GSAM. The Dow Jones Industrial Average fell 108.00 points, or 0.25 per cent, to end at 42,319.74. The S&P 500 lost 31.51 points, or 0.53 per cent, at 5,939.30 and the Nasdaq Composite dropped 162.04 points, or 0.83 per cent, to 19,298.45. Weaker-than-expected US private payrolls and services sector data on Wednesday raised concerns about an economic slowdown caused by trade uncertainties, with investors focusing squarely on Friday's nonfarm payrolls report. Initial jobless claims data on Thursday showed Americans filing new applications for unemployment benefits last week rose for a second straight week. Kansas City Federal Reserve Bank President Jeff Schmid on Thursday expressed concern that tariffs could rekindle inflation, saying upward price pressure could be apparent in coming months but not fully known for much longer. The comments show Schmid is likely inclined to hold the Fed policy rate steady at its June 17–18 meeting as is widely expected, but also beyond that. Despite calls from Trump to slash rates, Fed Chair Jerome Powell has opted to stand pat so far, awaiting further data to guide the policy decision as tariff volatility prevails. US equities rallied sharply in May, with the S&P 500 index and the tech-heavy Nasdaq scoring their biggest monthly percentage gains since November 2023, thanks to a softening of Trump's harsh trade stance and upbeat earnings reports. Brown-Forman fell almost 18 per cent after the Jack Daniel's maker forecast a decline in annual revenue and profit. Procter & Gamble said it will cut 7,000 jobs, or about six per cent of its workforce, over the next two years in a restructuring. Shares of the consumer goods bellwether fell 1.90 per cent. Volume on US exchanges was relatively light, with 17.30 billion shares traded, compared to an average of 17.90 billion shares over the previous 20 sessions. Declining issues outnumbered advancers by a 1.11-to-1 ratio on the NYSE. There were 253 new highs and 49 new lows on the NYSE. On the Nasdaq, declining issues outnumbered advancers by a 1.48-to-1 ratio. The S&P 500 posted 16 new 52-week highs and three new lows while the Nasdaq Composite recorded 63 new highs and 42 new lows.
