Gold is expected to fall! How come Tesla's terrible Q1 results led to an 8% surge?
Today's Views and Strategies
Regarding gold, I've been reminding everyone since April 16th that the recent deviation in gold prices is too high, advising caution when adding positions. I've posted two or three articles about this.
Yesterday, gold prices corrected by 1.23%, continuing to drop after hours, falling 2.28% by the time of writing.
Multiple factors are at play: first, Trump softened his stance, indicating a reduction in tariffs on China; second, gold has risen too much recently, and any selling pressure triggers profit-taking.
In my view, gold still holds investment value. Regardless of Trump's unpredictable policies, we only need to know that the U.S.'s ultimate goal is debt reduction. With fewer U.S. bonds, where will safe-haven funds go? As long as B-standard isn't established, they’ll flow into gold. So, in the medium term, just watch the deviation rate—buy low, sell high, and maximize returns.
In U.S. stocks, the market surged across the board yesterday. Tesla released its earnings after hours, which fell far short of expectations: revenue was $19.34 billion, down 9% YoY, significantly below the expected $21.43 billion; adjusted EPS was $0.27, down 40% YoY, far from the expected $0.44. However, Musk stated he would focus more on Tesla's core business, and Robotaxi is about to begin trial operations. Tesla's stock rose after hours instead of falling.
Same old story—this script played out identically in the 2024 annual report: Tesla missed expectations, the stock plummeted, Musk came out with promises, and the stock rebounded for two days.
And then what happened? The market realized it was just empty promises, and the stock dropped 16% over nine trading days.
This earnings report is even worse than the last one, so be cautious about adding long positions—don’t get carried away. Tesla's forward P/E is about 5 times that of BYD, still very expensive. Those who bought in before earnings should take profits; those considering new positions should proceed with caution.
For the broader market, after-hours trading saw continued inflows. Recent trends show strong resistance at the 20-day moving average, so expect significant resistance tonight—watch for short opportunities.
Market: Celebrating the Rally
Last night, U.S. stocks finally opened low and closed high, with the three major indices all gaining over 2.5%.
U.S. Treasury Secretary Besant signaled "tariff negotiation easing" at the JPMorgan summit, hinting at a possible delay in the 145% tariff hike on China, calming market panic. The volatility index dropped 9.61%. Additionally, Trump stated after hours that he "won’t fire Powell," reflecting some conflict easing. QQQ rose another 2% after hours.
Chinese Stocks
Boosted by the softer stance on China tariffs, the Golden Dragon Index surged 3.69%.
Among the constituents, JD.com and New Oriental were the only two stocks that fell, with JD.com dropping more significantly, closing down 1.15%.
Currently, JD.com is near support levels, and its short-term decline exceeds the Golden Dragon Index benchmark. Combined with the recent successful PR around "JD Delivery," there might be some rebound potential. However, given its underperformance relative to the Golden Dragon Index, bottom-fishing should be done with controlled positions.
The Magnificent Seven
Driven by the broader market, the Magnificent Seven all rallied (or did the Seven rally and lift the market?).
Among them, Tesla released earnings after hours, with financial data missing across the board. The stock dipped slightly, but during the earnings call, Musk said he’d reduce government work hours to focus on Tesla’s core business and announced Robotaxi trial runs in Texas in June. Tesla rose 5.39% after hours.
U.S. Stock Sectors
A broad rally, with brokerage and investment banking stocks leading at +3.58%. The only declining sector was aerospace, down slightly by 0.39%.
Commodities and Forex
Gold corrected yesterday, falling 1.23%.
WTI crude oil: +1.36%
Gold: -1.23%
Silver: -0.43%
Copper: +2.70%
USD Index: +0.64%
U.S. Bonds: Continued Recovery
US2Y: Yield +1.34%
US5Y: Yield +0.34%
US10Y: Yield -0.36%
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