Labour Landslide, Trump Trade & Tesla's Surge

A very good morning, and in the UK we have a new government for the first time in 14 years. So in this podcast, we'll break down the results. There's 99.2%— just did the latest poll— of votes are now in for the UK general election. More so, neither Piers or I are politicians or sit within the political sphere, so we're going to just give an update on that side but talk a little bit about how the markets have reacted. And we'll carry that theme over as well to a big conversation point this week, which is centered around US President Joe Biden's cognitive well-being, let's say, and his ability to— whether or not he will continue on, or will he be replaced? And if so, as a Democratic leader, who would be the potential replacement? And also, how have markets been reacting and this idea of a Trump trade almost already being initiated somewhat after the debate debacle that we saw. And then finally, Tesla, it's back, baby. Tesla up, as much as it pains me, at 17%, I think, in 2 days, which is a phenomenal move for a company of that size. So let's kick things off then, and let me give you a run-through of the highlights of what's happened here in UK elections. So as I said, nearly all of the votes are in. Labour have won 411 seats. Actually, that's slightly more than the exit poll. I think that was only slightly— I think that was 410. From a trading perspective, if you've never watched this sort of thing before, actually often you don't need to wait through the night because that exit poll is highly accurate historically. It's a little bit different from when we had the Brexit EU referendum exit poll, because that was literally every, every vote counted. So you really had to watch every single constituency. Where in the UK, if you're American, we have a first-past-the-post system, which just means that there is a popular vote, which you can also touch upon a little bit. But also those then who, if you came second but you lost by one vote, Well, then you have zero representation in our UK Parliament system. You lose the seat. So essentially, Labour, long story short, they've got a majority and it's known, it's kind of classified as a landslide and the Conservatives got hammered. So they've won 119 seats down from 249 in 2019. And as I said, it's the first transition that we've had from Conservative power in 14 years. In fact, it's the first time Labour opposition has defeated the incumbent Conservative Party. It's only the first— it's only the fourth time that's actually happened, I think, um, in terms of recent UK history. So other highlights, several Tory cabinet ministers— you've probably heard of some of these— Grant Shapps, Penny Mordaunt. Liz Truss also is gone, as is Jacob Rees-Mogg, lost his seat to Labour. I think he's Somerset. However, Reform UK leader Nigel Farage won the Commons seat the first time in, I think this is his 8th attempt.

Yeah.

Becoming an MP. So he's in. The Lib Dems, slightly fewer votes than Reform, but have benefited the most from the Tory collapse. Uh, they've surged to record 70 MPs. And interestingly, although it probably won't be a major talking point, it will be locally. Sinn Féin has won the most Northern Ireland seats at Westminster for the first time. And actually, that marks a hat-trick now for the party because they already are the largest in local government, Stormont, as well. So that's quite significant for Ireland and the potential unification conversation, I'm sure, in good time. However, Let's talk markets. So that's kind of what's happened. Um, I was talking to our interns about this yesterday, and it was kind of building out scenarios as a trader of what might happen. So the kind of scenarios were by balance of probability, and it was that there was going to be a landslide, and a landslide was kind of sitting at that 150 to 200 kind of area, which was kind of the sweet spot for markets to react potentially more in a calm and orderly and slightly positive manner. And they have actually done that. There was a risk of a supermajority, which would've been an even bigger victory that we've seen. But there were some fears that if Labour had even more governing kind of power to set policy, well, they could go a little bit more radical with their, their policy implementation, and that could be negative. In terms of the traditional approach of borrowing, spending, these sorts of things. There was then a narrow victory, which they were— analysts were saying would be around the 50%. And obviously it's come in more like 170%. And if it was 50%, it would be a catastrophic failure on behalf of Kier Starmer, basically. Because there'd probably be immediate questions about his leadership having blown what should have been a much more straightforward affair. And then there was a hung parliament, which was like the, lowest probability, uh, where maybe there might have been at the last moment, because Labour were losing pretty consistent popularity in some of the polls going into this. But that's quite normal, um, going into D-Day, if you like. So yeah, that was the scenarios. We've kind of landed in the middle, but perhaps we can break down a little bit of what's moving this morning and also what are some of the big banks kind of looking at and what are their interpretations?

Yeah, I mean, I think the— I think firstly I would use the word— generally I'd use the word muted to describe how markets have reacted. Let's, let's just get that there first up. There's not huge— I mean, like, relative to elections of years gone by, you know, this is fairly tame stuff in terms of market reaction. That's just because what's happened is largely what most people are expecting. What has happened? You could say that the pound has gone up. Look, this is based off this idea that if Labour win and have a majority, but as you rightly pointed out there, without that majority being super, which can lead them more down the left-wing side. So it's a majority, and really it's stability, right? This is what people are kind of basically saying. We've been through this turmoil of a Tory roller coaster over the last few years with Boris getting kicked out post-COVID, with the Truss disaster, with Sunak just not delivering the goods. And so this is seen to be right. Let's kind of put behind us this Tory roller coaster scenario, and, and Starmer is going to be more stable. So that, that's the kind of main theme here. The pound slightly higher, and, you know, I'd say the pound against the dollar, you know, if you look at the chart, it's actually had a decent move over the last week or so where it's gone from about 1.2620 up to 1.2750. But look, some of that is US dollar weakness as we've had a bit of dovishness out of Powell at the end of last week. For example. But yeah, sterling slightly on the up. When you're looking at stocks, then, well, again, mild positives. I'm not, not going to say straight out that it's all to do with the election necessarily. We've had some decent gains over in Wall Street, which is certainly feeding through to positive moves here in the UK. But what you can point to is that the FTSE 250, which is the— well, so hang on, you've got the FTSE 100, of course, that's the 100 biggest companies in the UK. By market cap. That's largely speaking, I would say, more global-facing. These are global institutions that generate a lot of their revenue outside of the UK. So we often look to the, then the next 250 biggest. This is the FTSE 250 as then that more, you know, better barometer for UK domestic kind of economic scenarios. And so the FTSE 250 is outperforming the FTSE 100. So that's probably your best proxy for market reaction here to this election result. And so domestically, markets have thought this is a positive thing. Again, not huge moves, but still, it's the stability idea that's kind of driving things.

Yeah. And that obviously a Labour pledge was to increase the number of homes being built. And actually, when you dive into that, the home builders segment, if you like, of looking at equities. Persimmon, Crest Nicholson, Vistry, Taylor Wimpey, they're all seeing outperformance in the initial trade. So yeah, like you said, there's kind of two points I point out. One you covered, which was, I think a big thing that the Conservatives were trying to do was like change is risk.

Right.

And so the pushback from Starmer was relentless messaging about fiscal discipline because there's this perception that Tories are good at fiscal discipline, Labour are bad, and they're kind of, they were tapping that, that kind of angle from a Tory perspective. But what this has left with then is, is a lot renewed confidence because Labour's messaging was quite strong on that. And particularly because of who will now become the Chancellor is a lady called Rachel Reeves. And she's kind of been saying, I'm not going to do anything radical. On spending or borrowing. And it's kind of like, yeah, but this is what a lot of politicians, I mean, the people think Kwasi Kwarteng and Liz Truss duo, and you think, mm, I can't quite believe what you're saying. However, her kind of pedigree, I had a look. And so out of Oxford Uni, she was an economist at the Bank of England for 6 years. And then she went on and became an economist at RBS for a further 3 years. So she's been 10 years as an economist.

Yeah.

And so the city kind of look at this sort of thing as a bit of a track record of someone's, I guess, knowledge of the area and therefore ability to talk over certain subjects. So there's definitely that. The other thing is, I think there's a lot of political turmoil just happening across the Channel at the moment and other places. And actually, I saw one fund manager talking about, is this actually the UK is a store of political safety in some respects. Because if you look over in France at the moment, it's not going to be anywhere near as conclusive as a power center, say, that Labour will have over on our shores.

It's an interesting point that, I mean, I think you're right where every, most other democracies are leaning more extreme, right? They're going away from the center ground. And I think that's probably the most remarkable takeaway from this election when you're comparing it globally, where in the UK we've actually gone more center in terms of the election result. So yeah, I mean, the UK, a store of political stability. I mean, that's a stretch, but—

I guess you got to think about the kind of behavioral— the reference point here is that in the last election, of course, Uh, you know, the market got absolutely slammed because of this kind of, that, that selling from leveraged pension fund strategies and Liz Truss's like planned unfunded tax cuts essentially. So I guess when you're coming from that as well, from a market's perspective, because I know that people on the street aren't thinking of that stuff, but in the markets you're like, this is a way better scenario than that was. So a couple of the banks have said a few things. Um, so straight out the gate this morning, Goldman Sachs, they're expecting UK economy to grow slightly faster in light of Labour's landslide victory. Jefferies, the bank, said that despite concerns raised by a strong showing for right-wing Reform UK party, Labour Party's UK election will help make the UK appear relatively stable. They believe that Labour will lift spending by £14 billion a year more than it's currently assumed. And that will have a consequent— that's over the course of parliamentary term. And that's going to have a marginal impact on growth rates for next year and '26.

Well, we'll talk about fiscal spending in a minute because actually part of the Trump trade, certainly fiscal spending and part of the, I would say, US stock market outperformance in recent years is because maybe driven by fiscal spending. Now, that might have then implications further down the line when your deficits get too wide. But yeah, I mean, I'd say the most surprising thing, well, I don't know. Here's a couple of stats for you. Did you know that this UK election, it's the first time ever, if we talk about the popular vote, so forget about the constituencies and the number of MPs winning seats now and just straight up what percentage of the population voted for Labour, what, you know, Conservative, whatever, then actually, firstly, it's the first time ever in UK history that 4 parties have got more than 10% of the vote. So that's the first time that's ever happened, which is interesting. And this is because of reform, right? And Farage. And I guess the second point then is, I think I'm right in saying that this Labour majority is off the lowest ever popular vote. So actually Labour have got 411 seats at the current count. There's 5 more seats still to be declared. 411 of the 650 seats, right? But they actually only got 33% of the vote. And when you look at Reform, quite staggering really. Reform have 4 seats, but they got 14% of the popular vote. So when you think about it from a kind of proportional point of view, when you look at the popular vote, Labour got 2.6 times more of the vote than Reform did, 2.6 times. And yet they've got more than 100 times the number of seats in Parliament.

So that, that's just the system, the UK kind of political So actually on the ground in Britain, there is a lot of division irrespective of Parliament having a bit more of a power center with Labour. Interestingly though, not that I think that Reform now are going to run and become this new powerhouse. What actually has happened is if you look at the Tory seats that were held, in actuality, it's a lot of the center, more lefty leaning Tories that have gone. Those who are more right, so Braverman, Priti Patel, those ones who are more right on the right fringe of the party, they've all held their seats. So what's probably going to happen here is the remaining Tory party will become more right-leaning.

Yeah.

And thus will eat into the reform performance that they've had.

And it's inevitable. That's what happens, right? If you, you know, when a party storms in and takes the center ground and gets a big majority, as Labour have just done, then what happens is the losing party then veers to the, to the right or the left, depending on who's come in and taken that center ground. And then you have years where this party then veers out. It's like Corbyn. It's like the Corbyn Labour move to the left, right? We're going to have, maybe not quite as extreme, but you're going to have a Tory move to the right. And normally in the UK, it's the center ground that takes the win. Right. And so, you know, here we are. What I would say, final point maybe, is that because there's so much people, you know, 14% voting for reform, I actually think that's a positive when you think about it from a market's point of view, because it may well just clip Labour's ability to go left and kind of keep them honest in the center ground space. Which then feeds into all of that narrative, political stability, um, and then so positivity from, from that point of view.

Okay, well, look, let's move on and let's talk about President Joe Biden, and let's break this into two parts perhaps. So the reason why we're talking about this is because he absolutely bombed in the first televised debate, and so there's been significant questions about his ability to continue on, and thus If he did step aside, what's the process? Who would replace him? Um, one, some of the stats I've seen that Trump holds at the moment a 48 to 42% advantage among voters according to a poll by The Journal. That was yesterday. Uh, 8 out of 10 Americans say the president is too old, 8 out of 10, to run for a second term. Uh, Joe's birthday actually is in a few weeks' time, so if he does secure another term He'll be 86 at the end of it. So that sounds old, but Trump's not exactly a spring chicken. He's actually not that much, um, younger. And so Joe Biden, so far, we're having this conversation. The context is he did really bad. He's saying he's gonna stay put for now, but obviously we need to prepare for what are the eventualities if there's change. Biden said he's had a cold. He was weary of travel. He hasn't been getting enough sleep. Um, and the timing of this is quite key because there's a big Democratic convention happening on August 19th. And so if there is gonna be a window where Biden will step aside, it's probably gonna happen between now and the 19th of August.

Right.

However, given the televised debate happened, what, 2 or so weeks ago? I know that markets have already been jumping the gun and thinking, right, Trump, it looks like, is even more likely to win than what he was prior to that debate. So how has that been reflected in markets from what you've seen?

Yeah, well, just on that Trump trade, um, basically the Trump trade, as people are calling it, is what you would describe as a US rates curve steepener. Oh, it's the Trump trade. So what the hell does that mean? It basically means if Trump gets in, what are his policies likely to be? And therefore, right, what does that mean for things like growth, inflation, interest rates? And basically, we know if you look back at Trump's term first time around, we know that he loves a bit, he loves tariffs. That kind of protectionist type scenario. Well, that's inflationary, right? Because if you bump up tariffs on Chinese goods coming in even more, well, then that just means goods in the shop on the high street or even online in the US are more expensive. And so this is an inflationary scenario. Okay. Also, looser from a fiscal point of view. So you may well, maybe, I mean, I don't know about this one. Some analysts are saying you're going to have more fiscal spending. I'm actually not quite sure about— I'm not sure I agree with that. But anyway, let's just go with this narrative. More tariffs, more spending is inflationary. Trump is very famously dovish, highly critical of the Fed when they were hiking rates when he started his first term. Back in 2017, he got into office and the Fed were hiking rates through 2017, and he was very, very I mean, in true Trump fashion, was highly critical, not afraid to get onto Twitter and just absolutely destroy the Fed chair, being incredibly insulting. He's quite dovish. The idea is that we'll have an inflationary scenario with a Powell, you're out, replaced with a more dovish Fed chair who will cut rates. So what does that mean for then this US rates curve? So this is looking at US bonds and thinking about yields on bonds of different durations. And those on the shorter duration end of the curve, well, if the Fed are going to cut rates, that means the short end comes down, yields drop, prices go up. Okay, but then if we've got inflationary environment, that means that the longer end of the curve yields go up. And prices come down. So the trade would be a kind of relative value. And this is a very popular hedge fund, you know, the Citadels of this world. Um, you know, they have a fixed income and macro division, which is one of their most profitable divisions. And this is perfect for them where they're going to do a relative value trade. Well, they'll buy the short end, they'll buy, let's say, US 12-month T-bills or US you know, 2-year government bonds, and they'll short 10-year or 30-year, and they're looking for the curve to steepen as we get an inflationary environment with rate cuts. So that's the Trump trade. And actually, it's already kind of happened to a degree, right? So after that debate, the fateful debate, you've seen the difference between the long end and the short end. It's actually shifted, you know, a meaningful amount when you look at the short amount of time that it's happened. And so, yeah, we look at the 10-year versus the 3-month T-bill, and you've seen the difference diverge quite sharply.

Yeah. Okay, so let, let, let's talk about then what could further fuel that move or not. Yeah, in terms of if there was a shift and a change and Biden steps aside. Now, the reason why this has been a talking point is that post the debate, what's happened is, is that Kamala Harris, who's the vice president, has now started to outpoll Biden when seen as against Trump. And it's the first time that that switch has happened. So technically, the poll's suggesting she would have a better chance of going against Trump than Biden would. At this point. However, Trump's still looking pretty strong, and we'll, we'll, we'll talk about Kamala Harris, and then I'll get your opinion about how you feel about her as a potential, yeah, candidate, and then to go against Trump. So who is she? Because I'm mindful of there's people in the UK might not have heard of her before. So the vice president of the United States, elected with Joe Biden 2020. She's the first female, Black, and South Asian vice president in US history. In terms of why would she be a replacement? Well, as I've just said, the polls are kind of leaning to being more in favor of her now than Biden. Um, one of the things here is that being a vice president gives her distinct strategic advantages, including namely access to Biden's fundraising network. Hmm. Now how this works is that you have what we call in America a ticket, and on the ticket is Biden's name and Harris's name. So all the donors that they've been building up this war chest of funds, which I believe is in the region of $200 million, which can't be raised overnight by a new candidate very quickly. And the way it would work is that if they decided to go with not the VP in future, that money goes back to the kind of Democratic Party en masse, but then the money can't necessarily channel there's this term like hard money and soft money within the party. You can't just plug the $200 million straight into someone else because the donors have given it on the condition of it's running under those candidates' names. And they would, it would continue under, under Harris. So from that, I was like, oh, okay. So let's have a look at Harris and what are the pros and cons so we can get to know her a bit, a bit better. And so the pros being, yeah, strategic position. So if you think about it, would face fewer hurdles securing the nomination. It's more straightforward by taking the vice president. You're, you've basically pledged to say you're ready to go at a moment's notice. The fundraising we've just discussed. Some key ones then, visibility and experience. So she's already somewhat in the public eye. She has some experience dealing with international domestic affairs. Um, one thing is that when you are at the highest power of influence in the political system, you come under intense scrutiny. So the fact that she's already been around for a while, she's already had a lot of scrutiny put upon her. And so one would imagine she's a little bit more thick-skinned. To the system and the media pressure rather than someone who's only been in a lower-level political seat before. Other things: support from key demographics, which is particularly important with the way that US politics pans out. So strong performance in polls among young people and Black voters, and they are crucial for the Democratic Party's performance on a nationwide level. Um, and then symbolic value, um, women, minority voters, uh, these are quite essential demographics for, for tackling Trump. Now the cons, uh, she's not very popular.

How long's your list? Yes.

So unpopular. And I was kind of like, okay, so why does she face such criticism? Why, why don't people like her? And I, and I was having a look and there's a couple of different things basically. So one, She's not a very sophisticated talker. I think she's been said to be quite generic, not much personality. She doesn't have much mental agility to sort of joust, if you like, in a verbal debate scenario. It's very scripted. She has made communication missteps. I've got one here. Moments like her recalling her mother saying, you think you just fell out of a coconut tree? Have been seen as a bit bizarre when she kind of has these really weird quotes she comes out with. It's just a bit, bit off-piste of someone who you'd probably associate presidential qualities of being assured and authoritative. The other things are she's had a really high staff turnover. So any political senior person has a team around them of advisors, of admin staff, and so on. And they've described her as a, quote, tough boss. And that's fueled lots of narratives about ineffective leadership, quite a chaotic work environment that she instills. And that's kind of been amplified, obviously, in the media. She's obviously tried to run for the Democratic presidency before and failed. So, there are, you know, she is marked somewhat by internal conflicts in the party. If you can't win the president race, well, then you would say you've got an inability to be coherent with your messaging, your communication, and these are problems. And then again, kind of going into the communication side, a lot of people think she lacks authenticity, essentially. So she's not particularly relatable. And that comes as well from the fact that she shifts her political position a little bit. You know, one thing about Farage is like, or Trump, you know what you're signing up for and they're consistent no matter how much you disagree or agree. I think she tends to move about a bit and some people think then, well, you're just trying to do that in order to further fuel your career development rather than actually being a candidate as representation of a group of people. So yeah, they're all the The negatives, gaffes, high staff turnover, unpopular. So yeah, thoughts on that?

This is a disaster for the Democratic Party. Trump is loving what's going on here because right now Biden's just, I mean, you say Harris has now got a— is polling as having a stronger ability to compete with Trump than Biden has. That's because Biden's abilities just collapsed. And so Harris's ability, which is incredibly low to beat Trump, is now just slightly less low than Biden's that has just plummeted off a cliff, right? I mean, I think you know, you, you say visibility, but she's been invisible for a big portion of this Biden presidency. Biden himself basically sort of almost disowned himself from his vice president a few months into his presidency. We don't know really why specifically, but she certainly became less visible as part of his team and, and the kind of day-to-day running of the White House and stuff. So look, This is the situation for the Democrats. If they hang on to Biden and he clings on and he refuses to go, he's going to get smashed and Trump will win easily. If they pivot and go, "Oh God, all right, fine, we're going to have to go with Harris," Harris will get smashed, Trump will win easily. This is my opinion. To be fair, I've had this opinion about Biden for at least, I don't know, you could go back 9 months, and this has been my view. But there's another guy called Gavin Newsom. I mean, I think from the Democrats' point of view, I think they've lost. Okay, it's, it's a bit like the Tories. It's, it's just, just a phenomenally bad, um, set of candidates and a phenomenally bad campaign. Okay, but I think there's a guy called Gavin Newsom who's this sort of, um, California governor. You know, I, I think he's— he would be the right candidate for them to pivot to now. But even that's too late, right? It's just, it's just too, it's just too late. And so ultimately, we can debate all we want about the merits of these Democratic candidates that might replace Biden, or does Biden stay? I mean, it's all too late. So let's get ready Donald Trump, um, version 2, uh, is coming.

So how does the Trump trade materialize from here? Is it already factored into price at this moment in time? Because you're sounding fairly conclusive about this. So, so if that— is it not going to move now until November, or—

well, it's already started to, it's already started to move, but what you got to understand is Whilst Trump, yes, historically has been dovish, anti-regulation, all the rest of it, it's a very different scenario now than it was when he came in last time. Um, and like, when he came— by the way, just to remind people, when he did hit the desk, uh, back in 2017, um, the market kind of went on a tear, went on this massive rally. Um, but that was because the market was coming from a lower base. The S&P was actually at 18 times earnings and had been sideways for like 18 months. And then Trump came in and bang, it just went flying. Um, but that's because he delivered tax cuts. He delivered his 2017 Tax Cuts and Jobs Act, Okay, so I'll talk about fiscal spending, right? Fiscal spending has been phenomenally positive for things like the S&P 500. But whilst it is true that Trump's probably going to come in at the beginning of a rate-cutting cycle, which is a positive, right? But the problem is on the fiscal side. I think even Trump recognizes that they've spent too much. And so I'm not sure how much fiscal spending is going to go on in this Trump, um, presidency, obviously if he wins. Um, but also then you get into office and it's just difficult to get stuff done. He might want rates to come down faster. Yes, he might be able to position in a new Fed chair that's going to be more dovish, but look, this takes a hell of a lot of time, and ultimately If inflation does go back up, well, then it doesn't matter how dovish your Fed— if inflation is above target, your Fed chair can't cut rates. So it doesn't matter really how dovish they are. It's not just that one individual, remember, it's the whole committee that votes to kind of change rates. So it's not easy when you're in office to actually deliver stuff. When you look back, actually, the best performing sector equity sector off the Trump win last time with financials. And that was because of the deregulation. And the thought is that actually it'll probably be the same again because Basel III, which is that global banking standard, this new regulatory regime, it still hasn't been signed off in the US. And the thought is that if Trump gets in, Trump's just going to bin it, in which case there'll be no Basel III in the US, which will be a positive for financials. So I think if you're going to be a betting person, then probably financials may well be the better, the safer place to play your Trump trade.

Oh, I thought you'd say Trump card then.

Um, but yeah, we'll see. I mean, on the fiscal spending side, I don't know if there's much room. That's the problem.

Okay, so the final segment, let's talk a little bit about Tesla briefly. So up 17% in 2 days. Up 73% since bottoming out, um, for the year in April. I mean, that was only April.

Yeah, so yeah, mid-April. Yeah, it's been an extraordinary rebound. I mean, um, I, I'd say the first part of that rebound— so the low was in mid-April, and, um, actually, let me— so just get the right chart up. The low was in, uh, yeah, mid-April, and it was about $145 per share, or roughly there or thereabouts. Okay, mid-April, we're now 145, we're now 250. Um, the first part of that rally, I guess, was a bit about maybe a slightly— we're getting a bit more dovish on the Fed, and, and we've had some inflation figures that have come down. Because one thing that's hampered Tesla, of course, and one, one reason why you saw a sharp drop-off, you know, year to date from January 1st to April 15th of 2024, Tesla got hammered. Um, and it went from $250 down to $145, but absolutely hammered. And one of the reasons was that the number of deliveries of Tesla vehicles in Q1 was, was really low. We got this cost of living crisis. Electric vehicles are expensive, you know, not only to buy, to maintain, and to insure. They're really— they're more expensive. And so you had all these kind of macro headwinds, right? The rebound then has been firstly a reduction of those macro headwinds. Inflation's come down a bit. The Fed might cut in September now. Um, so that's number one. But the more powerful move has been for two reasons, and that's this week on Tuesday, Tesla. So Tuesday, look, we'll start July here, right? So Q2 is done and dusted, and Tesla was straight out of the gate announcing their vehicle deliveries in Q2. And their vehicle deliveries in Q2 were better than expected. They delivered 443,956 vehicles, to be precise, which— it depends if you're glass half full or glass half empty here. That was a decline on the same quarter in 2023, right? So it's actually 4.7% down year on year. But the more important thing is it was better than the Wall Street expectations, only marginally, mind. It's like 1% better. Right? But the point is that they had a shocker in Q1 where they only delivered 386,000. So the point is, people are like, relief, you know, that, that, that, that the worst is behind us for Tesla. They're on the way back up is the kind of theme here. Um, Tesla's share price jumped 8.5% on Tuesday off the back of that deliveries number. Okay, we won't get their full Q2 earnings for another few weeks, but that's a clear signal that the earnings are going to be better than maybe analysts were worried about. Okay, so that's, that's number one. Number two then came on Thursday. This is all about China. So, and look, all of this stuff, I would say, just before I dive into the China bit more specifically, because the headlines been dominated by politics in the US Now, certainly here in the UK, in France, right, it's all kicking off. So all of this Tesla news, I mean, it's just been off— it's off the front page. No one's really seen it unless you've— I don't know, you're a Tesla investor or you go looking for it, right? So it's kind of all gone a bit under the radar to a degree. But what's happened with China is that on Thursday, China announced that Tesla has been included on the Chinese local government's list of electric vehicles that can be bought by public party and government groups. That's the first time they've been put on that list, and they are the— and there's only 10 companies on it, and they're the only single company that's not Chinese. So that's a pretty powerful, um, endorsement from the Chinese government. Now remember, there's another element to all of this, which is then kind of That Elon Musk saga about his share options deal. Okay, if you go back a few months, the Delaware courts said that his options deal, which is worth $56 billion, which was a deal that was voted for by shareholders, like, I think it's like, uh, back in 20— I get— I'll get the dates wrong here— 2016, I think it was. And in 2016, Musk said, look, I don't want much of a salary, but if I deliver on the share price for this business, then right, as I get above each hurdle, I'll get more share options. And he absolutely smashed it. Shareholders loved it. The courts have gone, hang on a minute, $56 million, sorry, billion. This is crazy. They voted it down. Musk has now said, right, we're off to Texas. We're going to go and register the business in Texas. He's had a second shareholder vote when they voted it through, right? So the point here is what I'm trying to say is Musk is fully back on board with Tesla, right? So what does he do straight away? Trip to China. So he went to China, he met with the premier, you know, the prime minister of China. I mean, this guy's a big hitter, right? And it's because of his status. That he gets those meetings. And in those meetings, he's obviously talking a good game. And here we are with Tesla on the top 10 list and the only non-Chinese company. Now, what's— why is this all important? Well, um, China is— that makes up 60% of global EV sales. They are the absolute giant when it comes to vehicle demand. And 20% of Tesla's sales are in China. And actually, more than that, 50% of their production is in China. So China's super, super important for Tesla, both from a production side and a sales side. So this is, uh, you know, pretty much an ace card that, uh, that Musk has kind of pulled out of the bag here. So that's definitely— so I'd say there's those 3 positives, actually, not 2. You've got the deliveries in Q2 indicating we're on the rebound. You've got this phenomenal news from China. And then just more generally, Musk is interested again because he's got his share options in the bag.

I might add another 3.

Go on.

To your, to your bull case. Yeah.

Wow.

Hang on, Anthony Cheung. Oh, you know, someone might have been sniffing around when they were trading at 145.

Good.

So now I need to talk it up. So to add to the phenomenal Tesla story that you've been telling us here, so a couple of other things. I think what's quite interesting is, obviously he's unconventional, but a super smart guy. And I think the political, the way he navigates the political landscape is really interesting. And the China thing, key for the economical reasons that you said. Also though, obviously he's been leaning progressively more right over the course of recent years, knowing full well that probably, um, him, him and Trump, if you remember, had a fallout, got booted off Twitter. Trump went off, did his own thing, and now there's a bit of a bromance reforming just in time for when Trump's going to come in back into power. And now, yeah, Elon aligning himself as a smart businessman does for the benefit of his own business interests. So I think that's another thing I think you can't ignore because that he, he definitely has lent into that, I would say. Um, and whether he believes in it or not, I'm not there to judge, but from a, from an economics perspective, it would make sense. The other thing I saw was quite interesting was Uh, RBC Capital Markets put out a note and they were talking about a division called Powerwall.

Yeah.

Within Tesla. And this is their batteries for individual homes, uh, commercial businesses. And they were actually talking about that being a real value center within the business with tremendous upside potential, given that it's already more profitable than the cars, than themselves.

Right.

So that's interesting. And then there's the technical setup of the chart. I mean, if you look at Tesla shares, yeah, I mean, they're right on a very key descending trend line from the kind of summer '21 high, kind of tapped it in '22 and '23, and we're pretty much at it right now. And if that— if we get our heads above that $250 level, well, then it could open up the door for some decent further upside. Um, we were highs in June of last year, so the, the high of really this time last year, it was the 17th of July we were at the high, and here we are 12 months later. Um, they were trading at that point at 3, about 300.

Anthony Cheung bullish on Tesla. I'd never thought I'd see the day. And you know what, you added 3 positives to mine I'm going to add 3 more. I'm going to see your 3 and I'm going to add another 3. Okay. Well, you, okay, you've covered one of them. Sorry, energy storage. But in amongst that, so actually here's a stat. They deployed 9,400 megawatt-hours in the second quarter, which was more than double quarter 1. So the growth rate there in that part of the business is very interesting. Also, there's a big solar panel part to that. Part of the business, which is thought to be pretty interesting. The other one then is robotics, the Tesla robot. I mean, one thing Elon Musk keeps talking about is he believes every household will have a Tesla robot. So it's not— his point is, don't value us as a car company. Yes, we sell cars, but actually the, the, the power unit business, the robotics side, and then, um, finally the robo-taxis. And this is coming 8th of— 8th of August, put it in your diary. Musk has an event where he's going to be talking about the Tesla robo-taxi, and his vision is that if you own a Tesla, fine, you can drive it whenever you want, but when you're not driving it, the— it can autonomously just wander off and basically be an Uber. So the Tesla Robotaxi is a bit of an Uber killer, you could say. And because they're ahead of the game on the autonomous vehicle side, um, you know, Musk will be talking this up on August 8th, you can be sure. Um, but yeah, Tesla on a tear.

All right, well, look, we've hit our stop, so So we'll wrap it up there. Thank you very much for, for your insights as ever. I wish everyone a great weekend and yeah, we'll catch you for the next episode.

Thanks, have a great weekend.