Sunday night update: The big economic news of last week was the surprisingly weak July jobs report, which showed just 73K jobs created (vs 104K expected), and included a shocking 258K downward revisions in May/June jobs, which caused 10yr Treasury yields to plunge to 4.22% on Friday (from 4.40% on Thurs) following a month of 10yrTY gains. The data sent traders piling into fresh bets on the Fed cutting interest rates, with futures pricing in 92% odds of a rate cut in September and 2.5 rate cuts by year-end. 

In theory, lower long term rates are good for stocks, but with odds of recession moving higher, Trump’s new tariff wall makes things worse, with an average tariff of 18.4% now vs 2.4% at the end of 2024 when the Trump II Presidency began.

U.S. equity futures are higher (SPX +0.3%, NDX +0.3%) in Asia on higher odds of a Fed rate cut in September and strong corporate earnings which should continue into this week. We expect $Tesla(TSLA.US) to continue to trend lower until safety drivers are removed from robotaxis in Austin and now the San Francisco/Bay area. At 178x 2025 EPS, investors are attaching 2x the normal P/E to TSLA’s P/E, and a 5x forward PEG, vs other Mag 7 names trading at an avg 2.3x forward PEG. We remain cautious about TSLA given its stretched valuation, and our view that investors are too optimistic about how quickly TSLA FSD can expand TSLA robotaxi to other states without a safety driver.