Lonnie and Donnie’s Billion-Dollar breakup: Tesla tanks, markets yawn

• Lonnie and Donnie are getting divorced – Can’t’ wait for the SNL skit.
• SLA loses $150 billion of value, Lonnie down $20 billion.
• Trump talks to XiXi – He says we have a deal – the mkt? Not impressed yet.
• NFP is out at 8:30. What will it say about the labor market?
• Bonds have quietly rallied, Oil stable and Gold about to break out.
• Try the Summer Zucchini/Feta Salad.

“Try to see it my way, do I have to keep on talking till I can’t go on? While you see it your way, run the risk of knowing that our love may soon be gone. We can work it out; we can work it out….” The Beatles – December 1965.

It was the war of words….and it got nasty….

And so, the drama between Lonnie and Donnie takes center stage, what started as a ‘pillow fight’ has ended in what some would describe as a full-blown corporate cage match, with Tesla's stock plummeting 14%—wiping out $150 billion in market value for investors and $20 billion for Lonnie as their public feud over the spending or lack of cuts in the "big, beautiful bill" and the removal of EV credits (and the threats of severed gov’t contracts for SpaceX and xAI) causes the split in their relationship.

Lonnie screaming about how the bill would inflate the deficit to dangerous levels, calling it a ‘crime against taxpayers’, while Donnie accuses him of suffering from TDS (Trump Derangement Syndrome). Both taking to social media to hurl memes and cryptic emojis at each other, turning their spat into a viral soap opera for the world to see. Lonnie going so far to ask, ‘if it is time to create a new political party in America that represents the 80% in the middle?’ while also saying that Trump needs to be impeached - and suddenly the Democrats are in love with Lonnie all over again – Tesla’s for everyone! Now, while this makes for great social media – will it drive the broader market lower? Nah…. not at all…this is nothing but a side show….

By the end of the day though, stocks did trade lower – the Dow down 108 pts, the S&P down 32, the Nasdaq down 162, the Russell down 1, the Transports lost 54, the Equal Weight S&P down 18 while the Mag 7 gave back 574 pts or 2.2% - you can blame that on TSLA – down $48 or 14+%.

What really did cause investors to take breath yesterday? It was some mixed ‘hard’ economic data…. Unit Labor Costs rose by 6.6% vs. the estimate of 5.7%, Initial Jobless Claims at 247k were 12k more than expected while Cont. Claims were in line. It was the ‘phone call’ between Donnie and XiXi, it was the ongoing drama in DC over what the Senate is going to do with the bill and what happens next.

Now the eco data is giving some investors a reason to pause, and while the phone call was described as ‘very positive’ – investors are not jumping in just yet – why? Because we have seen this movie before and because the market feels tired. In the end – I told you what the market and investors need to see in order to really move forward – they need to see a real deal, not an MOU, not a handshake, not a nod, but a deal. (and just to be clear – those deals don’t just happen in days or weeks).

On the other hand – the move up off of the April lows have been dramatic and swift – and so, it just feels tired – nothing more, nothing less – this as several big-name CEOs remind us to be careful. Last week it was Jamie Dimon (JPM) and yesterday it was Blackrock CEO Larry Fink – who told us that ‘he’ expects the economy to feel the impact of the tariffs later this year – saying that ‘he’ expects inflation to rear its ugly head. And that suggests that the FED stands still – no rate cuts for you.

Bonds have quietly been rallying – the TLT up 4.5% in a week while the TLH is up 3.6% and this has caused yields to come down…the 10-yr yield is now 4.38% - down from 4.6% on May 22^nd. That’s a 4.7% decline. The 2 yr is yielding 3.91% down from 4.05% in mid-May – that’s a 3.4% decline while the 30 yr is yielding 4.87% down from 5.14% on May 22^nd. That’s a 5.2% decline.

Oil pierced trendline resistance last week at $62.47 and has managed to remain above it. This morning – oil is down 15 cts at $63.23. Remember – OPEC + is expected to raise production in July, August and September – so I think the upside is capped right in here at the $64 level. Oil remains in the $60/$64 range.

Gold remarkably has done very little during this time…stuck in the tight $3325/$3425 trading range. This morning – gold is up $5 at $3,380/oz. If you draw the triangle from the highs of April and the lows of May – you see it comes together right here. $3,380 Is the support while $3425 is resistance. At some point – it has to break out – the question is will it break out to the upside, or will it break down? The answer to that question depends on what we hear about trade and what we hear about coming eco data…I’m betting the move is to the upside!

Speaking of economic data – today we get the all important NFP report. We are expecting 126k new jobs to be created. Unemployment at 4.2%, and Avg Hourly earnings of 0.3% m/m and 3.7% y/y. This would consider a healthy report – in fact 100k new jobs would still consider healthy and is enough to maintain a 4.2% unemployment rate. So, the surprise will be if it is below that level - that would further suggest weaking of more ‘hard’ data. If it is substantially above that level – say 150k+ – then that would suggest our economy remains robust. I do not expect a surprise – but we will all find out at 8:30 am.

Now US futures are a bit higher. Dow futures are up 150, S&P’s up 27, Nasdaq up 108 and the Russell is up 12 pts. The media suggesting that is because Lonnie has given Donnie an olive branch – suggesting on X that he is open to a ‘cooling off’ period in his war of words.

I say – that might be true for TSLA which is quoted up $13 or 4.6% in the pre-mkt…but it is really a stretch to think that it is true for the broader mkt. Let’s be honest here boyz…..investors do NOT care about the BS between these two billionaires… The exchanges are heated but largely within the realm of political and personal posturing. They include sharp critiques, but there’s no overtly offensive language – just a lot of stamping their feet. However, the public nature of their fight, amplified by their massive platforms, can feel divisive or polarizing to some audiences – but in the end will not price stocks.

European markets are all trading around the unchanged line as they await our NFP report and any further news about Lonnie and Donnie’s love feud – if only for the entertainment value.

On a side note – we should be watching the developing story about the Chinese woman who brought that dangerous biological pathogen into the US – in what is known as ‘Agro-terrorism’ - the intentional use of biological pathogens to disrupt a country’s agricultural systems, food supply, or economy. Just another reason to hold XiXi’s feet to the fire.

The S&P closed at 5939 down 108 pts… Recall that I told you on Monday that we were just 30 pts away from 6000…..the question is will be kiss and penetrate it or will it be a false alarm? My sense is it will be a false alarm – and it was. We didn’t even kiss 6000 before we backed off. Now, while futures are up this morning – it is Friday in the summer and like I said – expect volumes and the action to be subdued unless something significant happens. I continue to expect the mkt to churn here – so, sit back – no need to rush to do anything, unless of course you are a day trader. As a long-term investor – you are invested…. Let your portfolio work for you. If you want to put money to work – bid for stuff, there is no reason to be aggressive.

Summer zucchini/feta salad

This is a great side dish for any summer BBQ – easy to make and even easier to eat.

For this you need: Ditalini pasta, Olive oil, s&p, feta cheese, shallots, garlic, capers, roasted pistachios, Cecci beans, chopped parsley, and lemon juice.

Bring a pot of salt water to a rolling boil.

Begin by cutting up the zucchini into bite size pieces. Now fry them up in a frying pan (hi heat – be careful not to burn) with chopped garlic and sliced shallots and a splash of olive oil. After 5 mins – add in the capers and cecci beans. Turn the heat down to simmer. Stir to mix and warm. Season with s&p.

While this is happening – add ½ lb. of the pasta to the water and cook until aldente – 7 mins or so. Strain.

Now in a big bowl – add the pasta and the zucchini mix. Now add crumbled feta cheese, roasted pistachio and plenty of chopped parsley. Finish it off with fresh lemon juice and a splash of olive oil. Mix well.

You can eat this warm, chilled or at room temp.