The market reacts to Elon vs Trump
What the meltdown means for you
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Now, normally I don’t like to dive into political news and drama because it doesn’t have any direct connection to what you might find useful, which is, how to protect your savings and invest better. But what’s been going on these past few days has a direct impact on the stock market and I think you need to know exactly what’s going on, and all the risks involved.
Over the last few days, Elon Musk and President Trump went from being the closest of associates to going head-to-head on social media. This had consequences — Tesla stock plummeted by 17% in a single day, and Trump’s “Big Beautiful Bill” is now under the spotlight. It’s also surfacing the question: Can we afford to print money endlessly without any consequences?
So today let’s:
Piece together what exactly is going on by diving into a storm of tweets
Understand why Elon wants the President impeached
Figure out what all of this means for you and the markets
Because despite all the turmoil in the market, if you know where to look, this could lead to some pretty good buying opportunities.
Elon Musk’s role in the government
It all begins with the role Elon Musk has been playing in the government since 2024. It’s not often that we see a tech bureaucrat openly take sides and place all their bets on one political candidate, but Elon flipped that expectation by going all-in on Trump. He was a massive proponent of getting Trump re-elected in 2024, spending more than $250 million to make this happen.
Throughout most of Trump’s campaigns, Elon was right next to his side. His control over X also gave him significant influence on the public conversation, which probably swung the election in favor of Trump. This is where things get interesting. It’s hard to get an unelected person to actively contribute to the government — but through some special, limited orders, Trump was able to put Elon Musk in charge of the “Department of Government Efficiency” aka DOGE with the goal of lowering the Federal deficit, cutting wasteful spending, and making the best use of our tax dollars.
Elon got to work immediately, putting his own companies on hold — his team fired or bought out about 250,000 government workers to eliminate wasteful roles. They initially went in with the expectation of being able to save $1 Trillion. But pretty soon, it became evident that cost-cutting measures were falling short (Why’s that? Maybe because he was used to the entrepreneurial, aggressive way of operating while things in government move much slower).
On top of this, he began to face personal damage. His companies started to receive significant backlash, and he was quoted as saying:
“Being attacked relentlessly is not super fun…Seeing cars burning is not fun. In the grand scheme of things, I think we’ve been effective. Not as effective as I’d like. I think we could be more effective…But we’ve made progress.”
His measures fell short due to legal hurdles and resistance within courts. He eventually stepped back to focus more on Tesla — until he saw Trump’s Big, Beautiful Bill.
The Big, Beautiful bill
If you’re unaware, this bill is really important to Trump because it follows through on many of the promises he ran on. For example, this bill extends The Tax Cuts and Jobs Act from 2017, boosts spending on Military and Border Security, reinstates bonus depreciation, and eliminates tax on tips and overtime. I wrote a complete post about how the bill impacts your finances:
But to do all that, the money has to come from somewhere… and to compensate for the lack of additional revenue, the bill would raise the debt ceiling. Which leads to the problem that the bill is expensive.
The Congressional Budget Office estimates that it would add around $2.4 to 3 Trillion to the National Deficit over the next decade – other analysts say it could be as high as $4 Trillion. This works according to Trump’s agenda because he thinks the additional tax breaks could help to boost the economy and make up for the rise in debt.
But for the long term health of America, this is a questionable move. We’re printing and spending money we don’t have. As for Elon, this completely undoes all of his work with DOGE.
Imagine spending months publicly cutting Government Spending, receiving backlash from all quarters and seeing your stock crash — only to see all your efforts erased 20 TIMES OVER in a few weeks with a single bill. Elon even called it “The Big Ugly Bill” saying the new tax plan nullifies the $180 Billion in spending cuts made by DOGE. This is where things began escalating in public.
The argument
Elon blasted the legislation as a disgusting abomination that would bankrupt the country by inflating the deficit. Then he called it a Debt Slavery Bill that would shackle future generations with massive debt.
On June 4th, Elon Musk tweeted this:
On June 5th, Trump responded publicly in a press interview saying that he was very disappointed and that he’s “helped Elon a lot.” Trump also claimed that Musk knew the inner workings of this bill better than almost anybody sitting here.” Elon responded almost instantly with: “False, this bill was never shown to me even once and was passed in the dead of night so fast that almost no one in Congress could even read it!”
Now, on the surface this is objectively true. The tax credit would have an upfront impact on Tesla. But the twist is that it’s a bill that doesn’t apply to just Tesla, but to all car manufacturers. Removing the bill could actually benefit Tesla in the long run because selling EVs is extremely unprofitable and the bill would hurt Tesla’s competitors even more, giving Tesla an edge. Once the EV tax credit expires, automakers would be forced to take massive losses, while Tesla stays profitable and gains market share. In other words, while other manufacturers are losing $6,000 per car on average, Tesla is making $6,000 per car and can run the others out of business.
Elon said as much in 2021, recommending that Congress get rid of EV credits altogether.
So when Trump said Elon was “wearing thin and just went crazy,” Elon snapped back calling it a lie. But Trump doubled down saying this:
This was effectively a public threat to Elon that he could face severe financial losses if he continues. Elon responded by saying that without him, “Trump would have lost the election, the Dems would control the House, and the Republicans would be 51-49 in the Senate… Such ingratitude.” I can’t think of a single time in history where calling someone ungrateful has created gratitude. This is pretty much where things devolved. It led to Tesla’s largest single-day loss on record.
The feud turns ugly
Elon turned up the heat by digging up something that always comes back to bite you in the ass: old tweets. Back in 2013, Trump was publicly against raising the debt ceiling. He called himself embarrassed as a Republican, claiming that no member of Congress should be re-elected if the country’s budget isn’t balanced. Elon brought it back up asking where was the man who uttered these words:
The situation escalated so quickly that Elon started live-tweeting responses to Trump’s live press release, and then began calling out other members of Congress previously in favor of cutting costs, who were now backtracking and promoting a bill that would raise the Federal deficit once again. And then — you can’t even make this stuff up — Elon tweets that Trump is in the Epstein files, claiming that’s the reason you haven’t seen them yet, going as far as posting a video of a time where the two of them were together.
He also re-tweeted a post agreeing that Trump should be impeached:
And then he went on to say that a recession will take place later in the year due to the ongoing tariffs:
The craziest one is this tweet that Elon posted in response to Trump’s veiled threat, saying that he would begin to decommission the SpaceX Dragon spacecraft immediately. But here’s something even more insane: A Twitter user with just 184 followers replied to the tweet saying that this is a shame, that the two most powerful people in the world are better than this, and need to take a step back to sort this out. Elon took the advice and agreed to stop decommissioning Dragon!
You might have noticed that a lot of the images above don’t have source links. That’s because Elon deleted most of these tweets later — including the Epstein one — after a few hours of posting them. Maybe he realized that this isn’t really the best look for him or his company. Others have been incredibly critical of Elon Musk too lately given his erratic appearance at a recent meeting with a black eye. Some sources believe this is connected to his vocal outbursts.
Regardless of reasons, the toll on the market has been severe. Tesla lost $150 Billion in market cap, $285 million was wiped out from the crypto market in 60 minutes, and Trump says that if the bill doesn’t pass, there will be a 68% tax increase.
How does this impact you?
Here’s my honest perspective as someone who doesn’t take sides. I’ve got nothing to gain or lose by saying this: I find it in really bad taste that all of this is playing out so publicly at a time where we would be better off unified.
I think that these matters should be handled behind closed doors, privately. Even better if the country didn’t have so much political back and forth, but that’s a tad idealistic. The counter argument is that transparency is better than secrecy, and allowing everything to be aired in the open publicly lets us see exactly what’s happening and make decisions ourselves – in real-time. In terms of how this impacts you, here’s the truth:
Short term, I’d expect to see a lot more volatility in the market. Investors hate this type of uncertainty. If we see more market turmoil, it’s to be expected. It would be strange for the market to not react to this drama at all – but in the long-term, this doesn’t change any of the core fundamentals and I don’t think this is going to have any meaningful consequences.
Not passing the new tax plan would potentially place a drag on the economy. But let’s be real: A new tax plan will most likely pass, and there will be spending increases because Congress always wants to spend more. It’s wildly unpopular to cut costs or raise taxes, so the only logical solution right now is to spend more money.
Is this a problem for the National Debt? Absolutely. I wrote an entire post about it last week:
But is it a problem right now, this very second? Probably not. I wish it were different but it seems like most politicians just care about their next term, and if that means spending more to push various packages through, it’ll keep happening until eventually, it’s too late.
How late is too late? Well, we could easily continue spending money we don’t have for decades to come. The only “cost” will be the devaluation of the US dollar and the weakening position of the United States as a dominant superpower. Like the frog in the parable of the water that boils slowly, we won’t feel the heat till it’s too late.
But it’s nothing that our grandkids can’t fix. Hopefully.
The problem that Elon is highlighting is a very real one. But who’s going to bell the cat? I don’t have faith in the government to actually do anything about it. What I do believe in is the resilience of the market over the long-term, and I think this is a good buying opportunity. I’m not changing anything about how I invest, and this back-and-forth doesn’t change any of my long-term plans.
It’s nice to dream about the government operating efficiently. But I don’t have high hopes that it can actually be accomplished, and it’s a losing battle. Sure, you could pinch a few pennies, but at the rate the government is spending, even trying to cut spending is a waste of resources that might be better spent elsewhere. I do think that the current rate of spending is too much and can’t be sustained. But I’m also trying to be realistic about the change we can expect.
If you think I missed anything, let me know in the comments. This isn’t the kind of content I usually post, so if you enjoyed this commentary and deep-dive into the news, let me know and I might do more of these. Until next week!
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Crazy how fast things can spiral when billionaires and politicians clash. Gotta stay sharp out here with all this chaos going down.
I find it hard to decide just which one is the drug addled addict and which is just bat shit crazy