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Pathetic!

The feud between Donald Trump and Elon Musk, just hours after the latter left his role in the US administration, will probably make the headlines for the childish behavior of two grown-ups who happen to be respectively the most powerful and the richest men in the world. However, it also says a lot about investors.

One did not need a PhD in psychology to predict that the bromance between Donald Trump and Elon Musk would not last very long. Whatever is excessive needs to reverse, and two peacocks never live long in the same barnyard without clashing. The dispute started from a disagreement on the budget law and led to a war of words mixing personal attacks on the Epstein files and threats of government contract cancellations. This is probably not far from what could be expected in nursery school, but this is not what surprised us the most.

At the close of June 5, the Tesla stock was losing more than 14%, and had even been down 17% at some point in the session. We do not hold that security in any of our portfolios, but we can’t help wondering how this feud, however pathetic it may be, led our fellow investors who held it to think it was time to sell. We are conscious that some people believe that Tesla owns SpaceX, and we are used to seeing market reactions influenced by this confusion, but this can’t explain the huge variation of the stock. Should we conclude that investors used to consider that 14 to 17% of Tesla’s future profits would be directly related to the benefits Elon Musk would be able to derive from his position at the White House and his influence on the President?

It is obviously not the first time that the multiple conflicts of interests within the Trump administration are under the spotlights. However, there are not many other examples of market reactions confirming that a large proportion of investors were consciously and openly trying to take advantage of those conflicts. We definitely moved to a new era!

HG – June 6, 2025

 

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