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It’s Never a Good Time To Overreact

Sometimes things get even crazier than normal.

“May you live in interesting times” is an English expression that only claims to be a Chinese curse. It’s well-turned, and it feels wise.
Everybody everywhere feels like their age and place is more fraught and/or more blessed with objects of anxiety and/or objects of interest than any other.
After Thursday’s wild price action and Saturday’s disturbing political violence it has a particular empty-but-apt poignance.
“This too shall pass” is how my grandmother would put it, with a deep breath and a deeper sigh. I’ve got enough time in now to know she’s basically correct.
By Friday the previous day’s six-standard-deviation event – the Russell 2000 $IWM outperformed the SPDR S&P ETF Trust $SPY by 4.5 percent – was already history.
Over the weekend it was trivialized even more.

The yield on the 10-year US Treasury note and the US dollar will reflect broad reaction to the weekend’s political events.

It’s impossible to say right now how the attempted assassination of Donald J. Trump by suspect Thomas Matthew Crooks on Saturday in Butler, Pennsylvania, will impact the 2024 US presidential election.
Plenty of people are making all kinds of predictions.
At times like these I back up to the great William Goldman, author of “The Princess Bride” and the screenplays for “All the President’s Men” and “Butch Cassidy & the Sundance Kid.”
In his autobiography, “Adventures in the Screen Trade,” describing his industry and its understanding of what makes a hit but also dropping a universal truth, Goldman wrote, “Nobody knows anything.”
But investors, traders, and speculators are reacting to the tragic events outside Pittsburgh, because the big wheel keeps on turning.
Goldman Sachs $GS will report second-quarter financial and operating results at 7:30 a.m. ET, and management will host a conference call at 9:30 a.m.
At 12:30 p.m. today, Federal Reserve Chair Jerome Powell will appear at the Economic Club of Washington D.C. for a conversation with David Rubenstein.
Tomorrow at 8:30 a.m., the US Census Bureau will release retail sales data for June, the economic data highlight of the week.
And Bank of America $BAC and Morgan Stanley $MS will report earnings on Tuesday.

The iShares Russell 2000 ETF $IWM outperformed the SDPR S&P 500 ETF Trust $SPY by 4.5 percent on July 11, 2024, the second-biggest outperformance on record.

The attempted assassination of a US presidential candidate is going to create some noise. But the bottom line is the bottom line.
Prediction markets suggest Trump has galvanized a coalition that will carry him back into the White House, that Saturday only strengthens his position.
Financial markets reflect a similar sense, that Trump’s return means lower taxes, looser regulation, and a new era of global trade defined by protectionist tariffs.
Indeed, Bitcoin $BTC is back above $60,000, its weekend surge supported by expectations of favorable treatment by a new Trump administration.
Be prepared for a short-term volatility spike when markets open.
Also be prepared to stick to your long-term investment plan.

DEEP DIVE

There Are Rules in the EU, Even for X

“Free speech” has its limits.

Elon Musk took to his very own social media platform on Friday to lay down the gauntlet against the European Commission.
The European Commission is attempting to rein in that very same social media platform.
The European Union’s executive authority has accused X of deceiving users and breaching online content rules and is threatening to fine Elon’s platform as much as 6 percent of its global revenue.
The European Commission opened an investigation last year to determine whether X violated terms of the Digital Services Act.
That law was enacted in 2022 to monitor tech companies’ use of targeted advertising, part of a broader EU crackdown on platforms including X as well as TikTok, Ali Express, and Meta.

The European Commission has accused X, the social media platform owned by Elon Musk, of deceiving users and breaching online content rules.

“The DSA has transparency at its very core,” says EU antitrust chief Margrethe Vestager, “and we are determined to ensure that all platforms, including X, comply with EU legislation.”
The commission says X has violated rules related to “dark patterns,” deceptive tactics designed to push people towards certain products and services, advertising transparency, and data access for research.
The commission has also taken aim at the notorious blue checkmark for verified accounts because it doesn’t align with industry practices and enables “motivated malicious actors” to abuse verification and deceive users.
Elon, who never goes quietly, said the EU sought an “illegal secret deal” to quietly censor speech.”
According to Pirate Wires, the European Commission wanted X to hire a team of people in the EU that would unilaterally oversee the removal of “misinformation” on the platform.
On Friday, Musk said the commission "offered X an illegal secret deal: if we quietly censored speech without telling anyone” it would not fine the platform for its verification system.
"The other platforms accepted that deal. X did not," Elon posted.

FROM THE RESEARCH DESK

From “Hold” to “Sell”

Is that even the hardest cut?

Is that even the hardest cut?Tesla $TSLA has staged an impressive rally off its mid-April low, rising nearly 75 percent and seeming to renew the sense of Elon Musk’s genius after a series of EV production misses.
The stock has been bouncy lately, though, selling off hard on Thursday on reports Tesla would delay its highly anticipated robotaxi rollout event from August until October but rebounding on Friday on renewal of faith in Elon’s narrative.
And even after popping 2.99 percent to end the week it’s still down more than 40 percent from its November 4, 2021, all-time high of $414.50.
And it looks like UBS Group analyst Joseph Spak may have reached some sort of Rubicon.
Spak downgraded TSLA to “sell” from “hold” but raised his 12-month price target from $147 to $197.

UBS Group analyst Joseph Spak downgraded Tesla $TSLA from “hold” to “sell” but raised his 12-month price target from $147 to $197.

The analyst says Tesla is unlikely to achieve its stated goal of delivering 5 million electric vehicles by 2030 and is skeptical of artificial intelligence-driven growth prospects.
Spak sees the stock trading more than 20 percent lower from here by next July.
“While Tesla is investing heavily in AI and the tech is making progress,” Spak argues, “investment is costly, pace of improvement may slow and the payoff is long dated.”
Spak notes that a global slowdown in EV demand and increased competition from European and Chinese automakers will also weigh on the company and the stock.
Wall Street is relatively ambivalent on TSLA, with 22 analysts rating it a “buy,” 17 rating it a “hold,” and 11 rating it a “sell,” including Spak.
The consensus 12-month price target implies approximately 20 percent downside from current levels.

It’s Never a Good Time To Overreact

Sometimes things get even crazier than normal.

There Are Rules in the EU, Even for X

“Free speech” has its limits.

From “Hold” to “Sell”

Is that even the hardest cut?

past issues

read more from our daily investor newsletter

Bottom Lines Are Just Fine

It’s Easy Being Green

Incoming Data (Growth Version)

What We’re Seeing Is Good

It’s Just a Correction

Concerned About Jobs

It’s Never a Good Time To Overreact

Sometimes things get even crazier than normal.

There Are Rules in the EU, Even for X

“Free speech” has its limits.

Stay ahead of the markets with our daily investing newsletter

From “Hold” to “Sell”

Is that even the hardest cut?

past issues

read more from our daily investor newsletter

Bottom Lines Are Just Fine

It’s Easy Being Green

Incoming Data (Growth Version)

What We’re Seeing Is Good

It’s Just a Correction

Concerned About Jobs