Issue #17 - Tesla's Troubles & Trade Triumphs: A Week of Market Drama

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What’s in this issue

The holiday-shortened week ended on a high note with record market levels, fueled by optimism in trade deals and a surprisingly robust June jobs report.

As investors excite in the recent turnaround, several key moves warrant your attention beyond the headlines.

This week, we explore the far-reaching implications of President Trump’s impending tariff changes, poised to introduce volatility as the 90-day tariff pause concludes.

Meanwhile, the corporate world shuffles, with groundbreaking decisions like Cloudflare's move to curb AI data scraping, Figma's strategic IPO filing, and Meta's ambitious dive into superintelligent AI.

Despite Tesla's production rebound, the automaker's delivery declines spotlight growing industry competition, raising questions about strategic direction ahead of its earnings call.

We look into the intricate global economic tapestry, with developments from U.S.-China trade frameworks to fluctuations in international inflation rates, and what they signal for future financial bets.

Join us for a deeper look at how these dynamic elements shape the economic landscape and prepare for a pivotal week of potential market shifts and strategic plays.

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Weekly Movement

Markets ended the holiday-shortened week at record highs, with both the S&P 500 and Nasdaq Composite achieving fresh closing records ahead of the July 4 Independence Day weekend.

The rally was fueled by optimism over new trade deals, including President Trump’s agreement with Vietnam, and a surprisingly strong June jobs report, which exceeded expectations and helped push major indices to new peaks.

This positive momentum marked a sharp turnaround from earlier market turbulence in the year, as investors embraced the upbeat economic data and legislative progress, notably the passage of Trump’s “One Big Beautiful Bill Act,” which was signed into law on Friday.

What is Moving the Markets

End of the 90-day U.S. Tariff Pause

The major focus is on the expiration of the U.S. tariff pause, with uncertainty about whether President Trump will extend the deadline or introduce new trade deals. Markets are watching for potential trade turmoil or further agreements, which could trigger volatility.

Cloudflare will block AI Bots from Scraping

Cloudflare has announced it will block AI companies from scraping website content by default unless site owners explicitly grant permission, marking a significant shift in internet infrastructure policy.

This move, which reportedly impacts up to 16% of global internet traffic, makes Cloudflare the first major company to implement such a measure, giving website operators direct control over whether AI crawlers can access their data.

The policy aims to address growing concerns about unauthorised data harvesting by AI firms and strengthens the ability of site owners to protect their content from being used without consent.

Figma Just Filed An IPO

Figma, the collaborative design software company, has publicly filed for an IPO on the New York Stock Exchange under the ticker “FIG,” revealing its financials for the first time. The company reported strong growth, with revenue rising to $228 million in the first quarter of 2025 and a net income of $44.9 million for that period.

Figma’s annual revenue for 2024 reached $750 million, reflecting a 48% year-over-year increase, and the company boasts high margins and widespread enterprise adoption, with 95% of Fortune 500 companies as customers.

The IPO follows the collapse of Adobe’s attempted $20 billion acquisition due to regulatory pushback, which resulted in Figma receiving a $1 billion termination fee—funds that have helped fuel its rapid expansion and investment in AI-powered design tools.

The offering’s terms and share count have not yet been set, and the IPO is expected to be one of the largest of the year

Meta’s Superintelligence Lab

Meta has launched a new division called Meta Superintelligence Labs (MSL) to accelerate its push into advanced artificial intelligence, aiming to develop “superintelligence”—AI systems that can surpass human cognitive capabilities.

The lab will be led by Alexandr Wang, former CEO of Scale AI, and Nat Friedman, ex-GitHub CEO, and includes several high-profile recruits from top AI firms, many of whom received substantial compensation offers.

This move is part of a broader reorganisation of Meta’s AI efforts after challenges with staff departures and mixed reception for its latest open-source model, Llama 4.

CEO Mark Zuckerberg hopes MSL will fast-track the development of artificial general intelligence, enhance Meta’s AI products like Meta AI and smart eyewear, and help the company compete with rivals such as OpenAI and Google.

Tesla Deliveries Decline Again

Tesla delivered 384,122 vehicles in the second quarter of 2025, a 14% decline year-over-year compared to 443,956 deliveries in Q2 2024, marking its second consecutive quarterly drop as it faces heightened competition from lower-cost rivals.

Production for the quarter reached 410,244 vehicles, up from 362,615 in Q1 2025 but nearly flat versus Q2 last year; however, deliveries lagged behind production by about 25,000 units, indicating growing inventory.

The Model 3 and Model Y continued to dominate, with 373,728 units delivered, while deliveries of other models (including Cybertruck, Model S, and Model X) fell sharply to 10,394 down 52% from a year ago.

Despite the production rebound, Tesla’s sales performance remains below prior years, and investors are watching closely for updates on new models and strategic direction at the upcoming earnings call.

Top Economic News

Markets Resilient Amid Middle East Conflict and Tariff Changes

Despite geopolitical tensions in the Middle East and rising tariffs, global stock markets, including the FTSE 100 and US markets, have surged.

Brent Crude oil prices initially spiked above $80/barrel following US airstrikes on Iran but fell back after a ceasefire was announced.

The US Federal Reserve held interest rates steady between 4.25% and 4.5%, expecting two rate cuts later this year amid signs of a slowing US economy. Inflation in the US rose modestly to 2.4% year-on-year in May.

The UK stock market hit record highs even as the economy shrank slightly in April, with inflation steady at 3.4% and unemployment rising to 4.6%.

US-China Trade Deal and Tariff Adjustments

The US and China agreed on a trade framework aimed at boosting supplies of rare earth minerals and magnets critical to the automotive industry.

The US raised total tariffs on Chinese goods to 55%, while China imposed a 10% tariff on US imports.

China’s industrial production growth slowed, but retail sales improved, though the property sector remains weak and deflation concerns persist.

The European Central Bank cut interest rates again to 2% to stimulate its economy amid cooling inflation.

UK Economic Challenges and Policy Tensions

The UK economy shows mixed signals with retail sales declining for the ninth month and manufacturing output subdued, despite marginal growth in the composite PMI.

Inflation pressures continue, with food inflation accelerating to 4.7%.

Chancellor Rachel Reeves faces internal opposition to proposed welfare cuts amid rising fiscal pressures, and the government launched a 10-year industrial strategy with modest green levy reductions.

The Bank of England remains cautious on interest rates amid stagnant household incomes projected until 2030.

Track Inflation Across Europe & US

In June 2025, Eurozone inflation rose slightly to 2.0% year-on-year, up from May’s eight-month low of 1.9%, aligning with the European Central Bank’s (ECB) target and market expectations.

Key details for June:

• Services inflation increased to 3.3%, up from 3.2% in May, making it the largest contributor to overall inflation.

• Food, alcohol & tobacco inflation was 3.1%, slightly down from 3.2% in May.

• Energy prices continued to decline but at a slower rate (-2.7% vs. -3.6% in May).

• Core inflation (excluding energy, food, alcohol, and tobacco) remained steady at 2.3%.

• Inflation rates varied across Eurozone countries, with Estonia (5.2%) and Slovakia (4.6%) at the high end, and Cyprus (0.5%) and France (0.8%) at the low end.

• In Germany, inflation was stable at 2.0% in June, with core inflation at 2.7%.

• Consumer prices were unchanged compared to May, indicating a pause in monthly inflation growth.

The modest rise in June inflation has increased speculation that the ECB may consider lowering interest rates later in the year, as the central bank’s Chief Economist suggested the main phase of tightening to control inflation may be complete.

Overall, June inflation data indicate a stabilisation of prices near the ECB’s 2% target after a period of decline, with services and food sectors driving the slight increase.

Hot Take 🔥

The market seems a little untrue right now. I still feel like we need to approach with caution. It feels like all the issues that caused it to go down haven’t fully been resolved yet.

I still feel we are on the brink of an all-out war between Russia and Ukraine, China potentially taking Taiwan, Israel and Iran, and some other minor feuds because of alliances could cause a huge ripple effect.

Looking Forward: What We Anticipate Next Week

Market Focus:

Markets are bracing for a pivotal week as the 90-day pause on U.S. reciprocal tariffs expires Wednesday.

President Trump has signaled no extension, with letters going out to trading partners specifying new, potentially steep tariffs—some as high as 70%. This could test investor sentiment and put pressure on the S&P 500’s record levels.

The economic calendar is light, but the Fed’s May meeting minutes and several key earnings reports will be closely watched.

Monday

• Germany Industrial Production (May)

• Forecast: -0.6% MoM (Prev: -1.4% MoM)

• Why it matters: A key gauge of eurozone growth momentum.

Tuesday

• Australia NAB Business Confidence

• Forecast: -5 (Prev: 2)

• Why it matters: Early signal for economic trends.

• Australia RBA Interest Rate Decision: Forecast: 3.6% (Prev: 3.85%)

• Why it matters: Impacts borrowing costs and consumer spending.

Earnings Spotlight: 

Penguin Solutions (PENG)

Wednesday

• U.S. Reciprocal Tariff Pause Expires

• President Trump will begin notifying countries of new tariff rates, with some as high as 70%.

• Why it matters: Higher tariffs could unsettle markets and global trade.

• U.S. FOMC Minutes (May)

• Why it matters: Offers insight into Fed policy thinking.

Thursday

• U.S. Initial Jobless Claims

• Forecast: 245k (Prev: 233k)

• Why it matters: Labor market health indicator.

Earnings Spotlight:

• Delta Air Lines (DAL) (Q2 results before market open)

• Analysts expect a 16–18% YoY EPS decline, but positive earnings surprise potential remains.

• Dividend yield now 1.47%, with a five-year growth streak.

• Conagra Brands (CAG)

• Levi Strauss (LEVI)

• Aehr Test Systems

Friday

• UK GDP Estimate (May)

• Prev: -0.3% MoM

• Why it matters: Weak data could fuel recession fears and BoE rate cut expectations.

• Canada Unemployment Rate

• Forecast: 7% (unchanged)

• Why it matters: Key for BOC rate policy.

Earnings Season Note:

The main Q2 U.S. earnings season kicks off July 14, but this week’s highlights include Delta Air Lines and Levi Strauss.

Join our investment group to stay tuned for daily updates as the tariff deadline approaches and markets react to fresh economic and earnings data.

ICYMI

Major Headlines & Developments

Texas Floods: The death toll from severe flooding in Texas has reached at least 43, with dozens still missing. More than 850 people have been rescued after torrential rains around the Guadalupe River.

Gaza Conflict: Over 300 Palestinians have been killed in the past 48 hours due to Israeli attacks, including an airstrike on a school sheltering displaced civilians. Israel is also moving toward the formal annexation of the occupied West Bank, and Prime Minister Netanyahu is set to visit Washington, D.C. next week.

US Politics: President Trump’s sweeping tax cuts for the wealthy and deep cuts to social programs are moving toward a final vote. The Congressional Budget Office warns this will add $3.3 trillion to the national debt over the next decade, and millions could lose health insurance if the bill passes.

Immigration Ruling: A federal judge in Washington, D.C., has struck down Trump administration efforts to ban asylum protections for migrants crossing the southern border, reaffirming legal protections for asylum seekers.

UK News: The government has unveiled a £39bn plan to deliver 300,000 new social and affordable homes, with at least 60% for social rent. Transport for London has launched procurement for a £700m infrastructure improvement framework.

International: Leaders of the BRICS group are meeting in Rio de Janeiro, calling for reform of Western-led institutions and promoting multilateralism. The Dalai Lama turned 90 and vowed to continue advocating for Tibetan autonomy.

Upcoming Events

Other Interesting Stories

Elon Musk launches ‘America Party’ - in the US, following his opposition to Trump’s new tax and spending bill.

Ukraine: President Zelenskiy described his latest call with Trump as the “most productive yet,” while Ukraine’s top general warned of a possible new Russian offensive in the northeast.

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