Overnight US markets were weaker with the S&P 500 down 0.5% and the Nasdaq down 0.7%. You have most likely heard of the TACO trade. TACO standing for “Trump always chickens out”. I was surprised he was unaware of it when asked by a journalist last week. He remarked it was the “nastiest question”.
I don’t fear the TACO trade, I fear the ISY trade. The “I’ll show you” trade. I’ve just made that up, but if we’re watching the Art of the Deal unfold, the threats need to look real. This week Trump slapped tariffs on steal and overnight had an uneventful call with President Xi.
- S&P 500 = -0.5%
- Nasdaq = -0.7%
- Aussie dollar up 0.3% to 65.07 US cents
- Iron down 0.5% to $95.00 US a tonne
Tesla turmoil
Trump’s relationships always seem to breakdown. Whether they be his personal, business or political they rarely seem to end well.
Who could have possibly predicted Donald and Elon would fall out? Elon has come out criticising Trumps big beautiful bill. In retaliation Trump made threats of removing all of the government subsidies to Elon’s businesses and suggested Elon had “Trump derangement syndrome” Apparently that’s what you get when you leave Trump’s gravitational pull.
The end result of this lovers tiff? Tesla Inc (NASDAQ: TSLA) fell 15% overnight, erasing the gains achieved in May when Elon left the White House.
Impact on passive investors
Tesla is the eighth largest position in the iShares S&P 500 ETF (ASX: IVV) – our passive ETF of choice for Rask Invest – with a weighting of 1.8%. In the Nasdaq Tesla is also the eighth largest holding but at 3% of the index.
Whilst the spat between these former lovers may be amusing, it has greater implications for investors, especially those invested in an ETF such as Betashares Nasdaq 100 ETF (ASX: NDQ).
To put the position size into local terms, ANZ Group Holdings Ltd (ASX: ANZ) is 3.5% of the ASX 300 and Macquarie Group Ltd (ASX: MQG) is 2.7%. Imagine if either of those had a 15% drop in a day.
First Home Super Saver Scheme
Just quickly, if you missed Owen and Gemma going live yesterday breaking down the First Home Super Saver Scheme you can catch it over here on Youtube.
As always, if you’d like to get in touch with me you can use the chat in the bottom right, jump across to the Rask Community or jump across to the Rask Invest site too. Catch you next week.
