 Hello and welcome to the market maker end of week podcast and we have a special guest Well, I'm gonna call it because Guess who's back? Oh, yeah, look at it Where have you been? Been around and about Yeah, but it's I went over to Zurich actually Which was super nice. I know I'd never been to Zurich before Um, so just popped over there just saw a few clients like UBS and Uh to chat with st. Gallon University and yeah Very nice little trip. Thanks very much How's how's rainy london? Uh, well, I think we should move on It's not been pleasant Not not a great deal that's been uh been going on the odd patch of sun, but look we're Keen to get you back on because I've actually indeed had a little bit of an extended Vacation from easter and so I'm quite keen to to hear from you in the same position as I'm sure some of the listeners of What's been going on? So I thought we could divide the episode today into two sections One little bit of a global macro update just generally up on the train on the way in on the commute this morning Also headlines talking about the fed and kind of higher rates for longer and again pushing back on this idea of yes rate cuts are coming but not quite yet And so just quite keen to see Where that sits at the moment in terms of how markets have been Reacting whether stocks are still holding firm or not And then the kind of a side shoot from that other headlines around similar connected subjects gold Copper both on a bit of a tear at the moment so interested as well to get your your insights on that And then the second subject to discuss is a little bit more focused on a single stock and of course you've got to talk about tesla And that's because tesla's quarterly deliveries declined for the first time in nearly four years At this year. I know I know you're loving this. You're going to smile on your face while I read the Piers but I'm going to add some more little some more flavor to this an unmitigated disaster Tesla boss was quite putting gasoline on the fire through his behavior. Why not my words those But dan ivis well followed u.s equity Analyst in the states. So yeah, we'll get around to that a bit later because you know, I I like a good conversation about tesla So yeah, let's kick it off then. Let's what's going on at the fed and just generally the vibe In global markets at the moment. Yeah the vibe I I'd say The vibe we kind of kind of flip flop a little bit through the last I would say Month or so flip flopping between right hang on a minute The u.s economy staying stronger than we thought Hang on a minute. Does that mean that inflation Isn't going to Move down to the 2% target. It's currently at 3. Is it going to get stuck at 3 because the economy is stronger And actually we'll look at some of these commodity markets in a second right commodity prices are on the rise That's inflationary And so it's kind of that move to well, maybe the fed aren't going to be able to cut rates as much right But the mood has been well, hang on this economy is super strong So I guess the conundrum has been in investors minds Is the economy strong enough? to essentially trump the Reduction in interest rate cuts expectations. So from a stock market point of view Normally if you just look at the interest rate side And if you say right, we've gone from expecting six rate cuts to now only three If you just looked at that alone, that's really negative And you'd expect stock markets to get slammed. They have not they've stayed high and because at the moment investors are going Well, okay fine. No rate cuts, but the economy's on a tear so you kind of And and I'd say if you look at well something like just like the s and p 500 That kind of us bellwether Kind of stock market then if you look at a sort of chart of the last 12 months Then, you know, we're at the top and it's a stellar rally and it's all time ever highs And if you think about it, we're trading almost touched the 4 000 level back at the start of november And here we are five months later and we're at five above 5200. So it's been a phenomenal move And we're still at the top if you zoom in to the last like one month then There's question marks as to whether this rally has got any momentum left And and it's still at the top, but it hasn't broken new highs now For a good three weeks, right? So some are saying or maybe now we're at this equilibrium from a stock market point of view Where okay rate cut expectations have been lowered The economy stayed strong and they're kind of equalling each other out And maybe we're around the top for now and we want to see what happens next So what does happen next? Is it that? inflation Even maybe goes back up Now if that were to happen that might push the fed rate cutting cycle out even further And I think that could be a negative catalyst that might lead these stocks back lower Because you know, ultimately can this economy stay this strong if these inflationary headwinds remain And I saw Jerome Powell the Fed chair spoke a fireside chat. I think it was yesterday and he said that recent By the way, what is a fireside chat? I'm going to ask you that. I thought I'd say it because you know, that's what it's called And I like saying it Was there literally a fire? I don't know. That's kind of it's just I guess an informal do they mean basically just an informal chat kind of Yeah, I think that's what it's supposed to be So the history of this is that fireside chats were a series of evening radio addresses given by Franklin Roosevelt between 1933 and 1944 Right. Wow There you go. But yeah, we move on So so pal said at one of these fireside chats That recent inflation figures though higher than expected did not materially change the overall picture He reiterated his expectation that I will likely be appropriate to begin lowering rates at some point this year. So In terms of then this equilibrium It doesn't sit there as we know for long before the scale tips one side or the other Yeah, there is the key. So there's two forms of looking at this right There's our assumption which is looking at incoming data looking at jobs data still to come which is after when we're recording this inflation figures in particular And then the second point is what the movement of that language One way or the other. So at the moment it's status quo Right to change probably in the coming weeks Well, yeah, it's that's right and I'd say probably his his comments yesterday If anything were more were on the hawkish side where he I think he's basically trying to Because look he cemented this new idea that their last meeting the new idea being three cuts All in the second half of this year Right. He cemented that he landed that nicely that that change in expectation Look at the stock market. It's still on its heights I think what he did on next to the the log fire last night. He he Massaged that expectation further out and I think he's trying to move to say We're not going to be cutting in July We're going to start cutting later that might still mean three cuts this year But actually, you know what it might mean two And I think ultimately it still comes back to inflation, right? And so it's data dependent and does in the big worry is inflation starts ticking back up Now when you look at the evidence this week Then well actually on Friday last week and then again yesterday. We had two data points that were Very worrying on the one hand if you're concentrating on inflation and you don't want it to go back up But actually very positive on the other hand if you're thinking about economic growth momentum So these two data points to the one on friday was core pce Which is an inflation? A set of inflation numbers that the fed pay very close attention to there was one component of that That set of readings called the pce spending So by how much our consumer spending going up if you want to simplify it and it came in at plus 0.8 percent Which was way higher than expected. So that's showing that the consumers still Super solid and and spending more And then the data so that's inflationary right then the data yesterday The ism manufacturing figures So this is quite an important one a lot of investors pay close attention to this It's called the ism manufacturing other countries have a similar reading they call it something else So they call it their manufacturing pmi But essentially it's it's looking at The manufacturing sector and the thing about that is it can be seen as a lead indicator to things like consumption because ultimately How much a consumer spending or would you spend money on products and services? Well, let's just look at the products side. Well, the products obviously need manufacturing before you can buy them So if you're looking at the manufacturing sector, it's almost like a lead indicator towards How the industry is feeling? consumer demand is going to be for these products and the ism manufacturing figures jumped sharply Showing activity in the manufacturing sectors picking back up That's positive from a let's say GDP growth point of view it's inflationary though and What was super noticeable about this figure it came out the reading was 50.3 Now with this ism figure and indeed the pmi figures It's basically zero to a hundred okay in 50s the midpoint if the readings above 50 It's showing that the manufacturing sector is is in expansionary Conditions they're manufacturing more if it's below 50 is contractionary. So 50 super important Now this reading on ism manufacturing has been below 50 For 16 months in a row Okay until Now and it's gone back above. So it's actually a really kind of landmark moment and here's a stat for you which I Just read this morning and I didn't realize The ism manufacturing so that the data goes back to 1951 ism manufacturing readings okay month on month and the longest Time that the survey had been below 50 without a recession In that entire period of 75 years basically was 14 months Okay, until now now we've had 16 months with no recession Now my point I guess is what I'm saying You know, we were waiting for the recession that never came and I think with the rear view mirror now I think it's become more and more clear that actually Covid and the supply side Disruptions caused havoc And really made it incredibly difficult To predict, you know, what's this economy doing this economic cycle was the most unusual We've seen in our lifetimes and actually It was the unusual inputs like chronic supply chain constraints That have kind of messed up all the normal trends and patterns And so whilst we're looking at the data going hang on ism manufacturing has been below 50 for months and months and months Recession the yield curves inverted right. We should be having a recession Inflations too high and interest rates have gone up sharply. Well, we should be having a recession and we haven't and I think it's now become becoming more clear that it was the Reakish nature of the cycle because of all the covid inputs that has meant it's been The usual patterns have been irrelevant So this data this week ISM manufacturing back above 50 way above expectations Has fed into this now Concern that maybe inflation might start going back up and powell said We're not yet done So by the log fire yesterday when he was talking about The fed's job in bringing down inflation He said we're not yet done and he said we do not expect that it will be appropriate to lower our policy rate Until we have greater confidence that inflation is moving sustainably down towards 2% So that comment in line with the strong data Is just got people thinking hang on maybe three cuts isn't going to happen this year either So how is that is feeding into other asset classes you kind of we've talked about stocks a little bit But the other one that's kind of been flagged is gold persistent rally Yeah, so is there any read across from what you've been talking about there? Well, I think there is golds. We talked about gold a few weeks ago. I mean gold this year has made new all-time heights and 2020 high And notably broke through the $2,000 Ceiling for the first time in its history And this was actually end of last year, right and it's really shot up since so this the first three months of this year It's been a steep uptrend for gold and we talked a few weeks back about how that might be Foreign governments, you know switching out of their kind of dollar US dollar reserves selling their US dollar reserves and buying gold instead And we talked about those kind of factors that might be leading to that But I think what might now be the the kind of next catalyst for what's been now A continuation of this move to the upside may well be these inflation fears coming back in because gold is an inflation hedge and so You might be seeing some buy side Volume coming in now because of inflation expectations So just explain to me very Shorthand inflation hedge. What do you mean by that and how it's gold? Well, okay. Yeah, good question. So let's say you got dollars, right? You just got hard cash Well inflation is bad news for your cash Because we you know, what can you buy with your $100 bill? Right? Well It depends how quickly prices are going up and the faster prices go up Well, the less you can buy with that $100 your your $100 becomes less valuable So this is what we talk about. This is the this is inflation in Eroding the value of money over time, right? So if you think inflation is going to rise don't hold cash instead The the old school kind of hedge has been don't hold it in cash by gold And it's really been if you look back over decades decades decades decades then Gold has had a very strong positive correlation with inflation. It's thought to be one of the The the one of the assets that's most correlated to inflation So the point is take your $100 bill buy some gold if inflation rises Well, history tells us that the gold price rises in line with that So then when you're ready to buy your products fine, you then sell your gold And it's you get more than $100 back Because it's gone up in line with inflation. Okay, so it's been the best inflation hedge Out over the super long term So this this is a completely behavioral phenomenon then I I think it might be yeah, I mean Because when you listen to that expert explanation, you think okay fine Kind of makes sense. But why what why is gold? correlated to in what's the technical fundamental reason and I think the Kind of isn't one. So yeah, I would say it probably is a behavioral Like default hang on inflation is going up by gold and behavioral meaning that then why Things like bitcoin were mentioned before and somewhat disproven But it could shift to other products. Is that possible? I mean, do you not get this in silver? For example, are other precious metals? Well, I guess the the other thing about gold because think about it if inflation's going up You could argue well, then that's bad news for Economic growth because interest rates are going to have to go up and etc. Right. So other commodities like silver Silver is a precious metal. Yes, like gold But silver has a lot more industrial Use cases right and industrial usage. So gold's price is more sensitive to the economic cycle Sorry, silver's price is more sensitive to the economic cycle Gold is a safe haven in one aspect, right? So if inflation's going up Well, fine. You're getting you're kind of safe haven Covered as well as this inflation hedge. So yeah, I I wouldn't say Gold is going to be changed to A precious metal like silver as your inflation hedge, but bitcoin, I mean, who knows? Yeah, obviously people talking about it as the the gold of the future And maybe it will be but but that's in the future. Okay And then the other metal non-precious industrial Yeah, I just wanted to get your thoughts on was another one that's moving up At the moment is copper. So what's going on in the copper market? Well, I think like when you think about more broadly, right? Inflation is it going to go back up then? Actually, you got a lot of commodity prices that are rising So gold we've just said new highs oils like a six-month high And you know oil is one of the most important commodities from an inflation point of view Because it's so widely used So when the things like oil goes up and then that's pretty important from the inflation picture overall So oils at a six-month high Coco we talked about cocoa. I think a few weeks back. That's still I mean quadrupled in six months But Copper is another key one and again we call this it's like a bellwether sort of commodity In that it's used cases is so embedded and widespread across the economic system globally Of course copper is used in most electronic all electronic products because of its conductivity Okay, so this is what's used on pcb printed circuit boards in your electronics. Okay, so The demand for copper is very Linked to the economic cycle. So when the economies are booming We're buying more stuff more electronics, right? You need more copper to manufacture that stuff copper demand goes up copper prices go up and then Opposite when we're getting a crash Of course, we we consumers buy less and then write demand for copper drops prices drop. Okay, so it's a very industrial metal very in like prices very in line with the economic cycle Um And an important thing because yeah, it's in everything, right? So if the copper price is going to rise and this will feed through into an inflationary situation So copper's up at the moment. It's actually testing. It's high from 2023. So it's up near a kind of 12 month It was made a new Yeah, just over twice like it's like a 14 month high But it's right on the january 2023 top. So if it goes any higher We're talking about the highest since The summer of 2022. Okay. So why is it on the up and you could argue? Well, all right from a demand point of view You know, isn't it the case that the u.s economy is strong it is but then you can counter that by saying the chinese economy is weak So when we think a bit more globally The argument isn't quite as strong as to say Growth momentum is amazing because it's not so what's going on here? And actually when you look at the pricing whilst I've said it's at a 12 month or 14 month high What's more interesting is looking at the difference between the spot price So that's if you're buying physical gold today versus The futures price so you can use derivatives To basically lock in a purchase price for gold that you're going to make in the future So if you look at june, so that's three months out from now. Okay, if you know You're going to need copper in june Because you're an electronics manufacturing company So i'm going to need copper all the time every month for my manufacturing process, right? So let's say in june, you know, you're going to need to buy x tons of copper Well, you can lock in a price for that today You're not going to buy it until june, but you can lock in that june price today using these futures contracts Now the difference between Today's buying physical gold today versus locking in that june price the difference is 105 dollars per tonne So it's 105 dollars per tonne more expensive to buy gold in june than it is to buy gold today now that Is the widest that spread has ever been So that means that we have a short term Um expectation that copper prices are going to ramp higher In the next few months and the reason behind that is basically it's all about china and most kind of electronics get manufactured in china and so You know china is a very important market for copper now in to make copper usable In the manufacturing process you need to get it through a copper smelter And there's raw materials that are needed by these smelters and china has more copper smelters than anyone else on the planet And basically the they've got too many is really the bottom line in a shrinking economy And so they've got too many and what's happened is the demand for raw materials Has gone there's been a there's become an imbalance and it's meant the raw material costs prices have spiked And it's meant that actually It's copper smelters in china are now making a loss The cost of their input has gone up so much that it is no longer covering The revenue of their output And so actually You've got this phenomenal sudden shift and it's it has been sudden We're talking about over the last sort of four weeks all of a sudden These smelters are now loss making businesses. And so we're expecting these chinese smelters to now collectively reduce output So we're expecting a supply Cut So less supply of copper Means that the prices are going to rise now when you got the u.s. Consumers staying strong Well, then that imbalance that supply demand imbalance has suddenly just shot out And you've got demand really strong in the u.s. The biggest global market and you've probably got a sudden supply drop So this is why copper prices are rallying so so the people who would have the Intel to capture that type of move would be the commodity traders Yep, and so don't think of commodity trader being You know a guy sat on a screen In a financial institution. We're talking commodity traders in a sense of People who trade these products physical Using derivatives in addition Yep, so you got it. Yeah, you're you're talking about The glencors who everyone I imagine has heard of but there's other ones like vitzol traffic you're You know these types of commodity trading houses They're absolutely primed to take advantage of this and actually I was reading about vitzol They've just been like I think they've had five Years in a row of best-ever profits really since you could say this commodity price move really since the ukrain prices You know broadly commodities have gone up and vitzol have been just been smashing it to the point where Um, they're kind of net profits Um, well actually I got figures for 2022. I know it's a bit old, but it's quite staggering in 2022 They made 15.1 billion. This is by the way the biggest independent energy trader. This is just on energy. This is vitzol 15.1 billion in 2022. They paid on average So they got three thousand three hundred and eleven employees Do you know what the average salary? plus bonus was in 2022 seven hundred eighty five thousand dollars per person on average three thousand two hundred and eleven employees Um, anyway traffic you're also smashing it and yeah commodity The commodity trading house has never had it so good And yeah with this copper stuff cocoa kicking off Gold highs oil on a nice uptrend. It's it's like perfect perfect storm for these guys to really cash in So we talked there about supply and demand and in particular um Tweaking that dial let's say on either side can dramatically move the price So that might lead us on then to talking about the ev market Yes, and trying to I guess the catalyst for the discussion is tesla But the bigger picture here and there are some I guess unique factors It would seem that tesla can pin some underperformance on But is there a bigger broader ev Thing going on here. Well, yeah, let's talk. Let's start broad um So I've got some stats On the manufacturing side obviously There's been a boom in global car manufacturers panicking and pivoting to ev Um, obviously tech will come on to tesla in a minute tesla were, you know, right at the forefront of that You know, you know, well one of the trendsetters 15 years ago, right more and so Um, they were well ahead of the game But it's only been in recent times that the big boys, you know, your volks wagons and your toyotas and your All the rest of them are now panicked. Hang on. We've missed the hat Before we miss the boat, let's throw all our money Into now manufacturing evs. Okay, and then you've got the chinese coming as well So the byd's of this world we were talking about byd. That's the chinese ev electric vehicle manufacturer Hipping tesla to become the biggest ev manufacturer in the world. So you've got the chinese coming in as well And actually this has led to 10.5 million electric vehicles being produced In 2023. Okay. Now we're expecting in 2024 We're expecting that 10 and a half million to move up to through 13.5 million And then in 2025 on current trends, we're expecting 18 million electric vehicles to be manufactured So we have got that that is a 70 increase in global ev output in two years Okay, that's what we're expecting. Obviously it could change But currently expecting 70 growth now That's the that's supply Right, so now well, what about demand then? Is demand going to grow to meet that increased supply and currently that is looking way off and actually last year was a massive I think yeah a bit of a pivot a bit of a pivotal year because for You know for years we've been thinking right everyone's going to pivot to evs Demand's going to ramp and carry on ramping And this is the this is the You know just going to continue to be an unstoppable trend except last year all of a sudden it was like oh hang on Ev demand. Well, perhaps it isn't going up quite as fast as we thought and there were 9.5 million ev sales globally last year So straight away you've got a supply over supply 10.5 million manufactured 9.5 million purchased That's why you've seen people like tesla cut prices Because they've got an over supply, you know in the warehouse and they need to shift stock Okay, we're going to have to cut prices now the big problem Yes, last year was an imbalance 1 million over supply. The big problem is down the track Because whilst demand sorry whilst supply is accelerating supply growth We're expecting demand to stall. So actually this year in 2024 current expectations are that 9.8 million vehicles will get purchased So bearing in mind, we're expecting 13.5 to be manufactured So that is a what is that a 3.7 million vehicle over supply in 2024 We had a 1 million over supply in 2023 3.7 2024 we don't have demand expectation figures for 25 yet But given that the supply is expected to accelerate even further you're you're expecting this supply demand gap to widen and this is a disaster From a ev manufacturer's point of view. So just give me then a a couple bullet points. Why is the demand so lackluster? um, I think it's probably a few things so infrastructure Not being rolled out fast enough. Okay, so like ev charging points. Let's just keep it simple Just hasn't been rolled out successfully enough certainly not globally um China's probably the leader in all of this and find their ev sales are looking Now their ev adoptions better than anyone else But infrastructure is one cost is another so these ev cars are just they're just more expensive Now the governments have trying to be they've tried to subsidize these But look straight out. It's it is still more expensive, right? And when you've got a cost of living crisis because of inflation Then you know, it's it's impossible to go. Oh, yeah I'm gonna now step up and buy a much more expensive vehicle than I've used to be buying And then finally I'd say it's that And maybe it's all tied into what I've been talking about with that inflation and I guess people's you might say the Viromental momentum That switch to green energy Has that's just come off the boil. It's no longer the Um, the the kind of driving force it once was and I think there's been other things people have been worried about like The inflation and the cost of living crisis. And so I think that environmental Momentum has dampened and I think that's also played a role here. Oh, yeah, it's funny how so The the circle that it follows because you're exactly right. I think consumers feeling that that tightening of the purse strings but then you look up and you see these big multinational companies like Shell or BP Pivoting completely on their green strategy, right? um, so then one thing leads to another and it's like All fossil fuels again. Here we go Trump Trump back But maybe we could talk a little bit then About let's go into tesla. Yeah, and then we could talk about how tesla is performing in the broader mix of that mag seven right So, yeah tesla. I mean if you just look at the Well, their share price is down 30% this year I mean, we're just start a quarter two here. We've only had three months It's down 30 but it's worse than that when you when you look back If you go back to uh, you know, I had the chart. Let me just get it back So currently it's trading at let's just round it. It's at 170 dollars per share. Okay The start of 2024 is at 250 But it's all time high was actually back in november 21 like that peak of the sort of post-covid bubble for tech stocks if you like and that it hit 400 dollars So it's all time high was 400 dollars. It's now trading at 170 So that's like uh, almost a 60 drop, right? So look the share price has been hammered And the news this week That's kind of put it back on the front pages is that the They reported a nine percent year-on-year decline in first quarter vehicle deliveries Massively missing the expectations figure Okay, so it's kind of it's further fuel on that fire of you know, the ev revolution is stalling So nine percent drop That's despite the fact that musk Quite sharply cut prices. Remember back end of 2023 cut prices. So these cars are cheaper And yet Deliveries are down by nine percent now. Why is this happening? Well, we've talked about maybe the demand side As has just not increased like we thought there's then the competition. So the byd's of this world the chinese electric vehicle competition You could also say that I don't know bad corporate governance at tesla You know, there was that saga a few months back musk wanted a 55 billion dollar pay packet The Delaware court Slapped it down and said no. So that's all like wrapped up in that kind of governance scenario. There's political risks. So talking about Deliveries and production. So actually in germany, I don't know if you saw this story a few weeks back musk wanted to double so in in europe tesla only have one manufacturing plant in germany And musk had plans to double the output currently that factory can produce 500 000 cars a year He wanted to double it to a million and basically the local community where this factory is it's like an hour outside of berlin Voted against it. And so he's they've said no So he's like, oh, okay So he knows he was wanting to increase production, but there's maybe some political risks In the mix to that So they're they're kind of all the negatives and it's all looking a bit Well worrying, right but I mean, there's always an opposite side to the argument, of course, and so now remember these figures is nine percent down on deliveries So that's not that's not talking about sales. I'm talking about deliveries. So was there Did anything happen that might have disrupted The ability for tesla to deliver and one point is well, yeah in quarter one. There was a lot of disruption in the red sea due to the hootie kind of campaign on cargo ships Now tesla did have to shut down one of their production facilities for two weeks because they didn't have enough components because of that So you could argue. Well, that's that's one and is that a long term? Problem for tesla. I mean, I don't know that's hard to say. That's a geopolitical call, right? So that's one thing you could think I don't know the optimists are saying the us has been a particularly slow market to adopt eb and yes the infrastructure part Plays a role there but right now the us on average us households have two cars And pick up and so the optimists out there would say, well, you know It won't take much for you know, whilst we're not expecting the household to entirely move to ev Straight away. There might be a first step where one of their cars becomes an ev and the other one remains a petrol or diesel, right? And so they're saying that If that were to happen And that's a big if but if it were to happen then the demand story could flip Pretty dramatically and very positively So the optimists out there are thinking that that's going to happen. You could argue long term, you know, the move to green is Unstoppable we might be in a bit of a dip on that trend, but ultimately that's the long-term direction and so yes demands weak here, but You know, that's that's that's going to change and finally Prices So as these manufacturers produce more um The prices to the end user should go down economies of scale and all the rest of it and we're expecting Tesla to deliver their new cheaper vehicle in 2025, which will only cost $25,000 test um musk is telling us so it could be finally That issue that consumers have but hang on. Oh, it's just too expensive. Well, maybe that will change and and they'll the cost will come in line with kind of fossil fuel driven vehicles so That's the optimists view Tesla's in a rut Because of its own internal stuff, but because of also the broader situation, but ultimately It's still a good bet. I think the the optimism pessimism thing is interesting I think it's just over what time frame Right, you're giving this thing because yeah, I kind of subscribe to the idea of This is a blip when I'm thinking long term That depends what you're in the game for you. Well, are you buying tesla? Is that what I'm here averaging in So, uh, well, no, I'm not saying any more on that. Oh Wow, I never thought I would see the day It's just got you know what it just just got so negative that that's when I start to get I start to sniff around I could like a dirty vulture I would caution you there is a saying about picking bottoms If you try to pick bottoms You get smelly fingers So does the famous saying go One interesting final part with with tesla was I did see that and I guess it kind of fits into your counteracting the supply chain Disruption because not only covet. You've now got the geopolitical situation in the red sea And I saw that in the news today tesla are going to be sending a team to locations in india For a proposed multi-billion dollar plant according to sources Yeah, so that I guess could be interesting as well to watch I guess geographically then if you're thinking about us Central europe western europe and then you've got asia wrapped up in india Yeah, kind of dominating these global locations slowly yeah india's been the word i'm like thinking about yeah from a manufacturing point of view a manufacturing hub. Yes, I think from a demand point of view india's been shockingly behind on Indian people buying e v's I think they're one of the worst like Something like less than two percent of car sales are e v's in india So far behind Yeah, so and there's a lot of inf like talking about infrastructure problems. I mean the infrastructure challenges in india Just monumentally large. So there'll be a That's that that they'll continue to lag. I guess is what i'm saying from an internal demand point of view But from a yeah global manufacturing hub perspective. Yeah makes sense okay, so tesla In the mix of the mag seven then what does that look like in the car? Well, there was an interest I was reading in the ft. There was an interesting kind of spin on this thing Now going back to where we started this Hot we're talking about the s&p's stayed up there It's kind of it's up at its highs and actually it's quite Impressive that that's happened given that two of the mag seven So the magnificent seven are those stocks that have been responsible for most of this rally like the 2023 rally Um, and two of the seven have had really bad 2024s. We've spoken about one of them tesla's down 30% Um apple's the other one that's down 8% this year. So if you've got two of the big seven Down sharply Then actually it makes it all the more remarkable that the s&p's staying at its highs actually um But they were just looking at tesla and thinking about You know, how does how does tesla compare to the other six? Should tesla have been in the mag seven in the first place? And the argument now that it's dropped 30% Um, the argument it's easy now to come out with the argument that maybe it shouldn't have been but the main point is thinking about their business and The point was that tesla operates in a business Where it's still in its infancy And the economics of it all are much less settled. We're not sure about demand yet You know, we're not sure about supply. We're not sure about prices and and all the rest of it It's still in its infancy point being Way harder to predict and forecast um So should tesla be alongside the other six the point being the other six are in dominant You know positions in very mature industries So think about alphabet. So that's google meta microsoft apple So alphabet and meta, you know digital ads, you know, they absolutely dominate the planet Okay, and that is a very mature industry. They got big moat Um, then obviously microsoft enterprise software and apple smartphones. Okay, they dominate these mature markets If you think about amazon and and invidia, you might say it's a little bit less secure, but they still enjoy deep competitive moats um, so amazon's retail platform and aws and data and logistics and then obviously, um invidia is In the class of their own ai chips scenario So I guess the argument was that tesla's position Is not a dominant position in a infantile market It may be used to dominate if you go back 10 years, but we're talking about b y d overtook them was the biggest manufacturer of ev so tesla does not have a dominant position in an infantile market Which is exactly the opposite case for all the other six So should it be should it have been in the seven in the first place? What do you think? Well, let's put it to the community. I'll add a poll To this release on spotify for listening there. So if you just go on the show, you'll see a poll Should tesla have been in the mag seven first place and you to vote yes or no And we'll we'll update then on the next episode Let's see All right, thank you pierce feel feel much more comfortable now Complete visibility on the world of finance. Thank you. Okay. We can go into the weekend Relaxed All right, thanks everyone and uh, enjoy your weekend catch you later