Tesla Stock Drops on Musk's Battle With Trump Over New Political 'America Party,' Loss of EV Tax Credits

Stocks

Political

Summary:

Musk continued his complaints that Trump's bill would do nothing to rein in the deficit and offers little in terms of benefits to the American people.

Tesla (TSLA) stock is sliding on Monday after CEO Elon Musk's latest foray into politics once again challenges President Trump. Separately, Wall Street is growing concerned over the loss of EV tax credits and regulatory credits stemming from Trump's "One Big Beautiful Bill."

Over the weekend, Musk polled users on X about whether he should start an independent party called the America Party to challenge the government's status quo. Musk continued his complaints that Trump's bill would do nothing to rein in the deficit and offers little in terms of benefits to the American people.

"By a factor of 2 to 1, you want a new political party and you shall have it!" Musk said. "Today, the America Party is formed to give you back your freedom."

Tesla stock closed down roughly 6.8% in Monday trading.

Trump and Musk supporters hoped a recent detente would settle the matter, but it erupted again with Musk's latest foray.

"I am saddened to watch Elon Musk go completely 'off the rails,' essentially becoming a TRAIN WRECK over the past five weeks," Trump responded in a Truth Social post. "He even wants to start a Third Political Party, despite the fact that they have never succeeded in the United States - The System seems not designed for them."

Musk's past strong critiques of the bill led to a massive falling out with Trump, with Tesla and Musk's other businesses like SpaceX caught in the crosshairs.

The battle between the two was too much for even Tesla bulls and investors to bear, who saw the stock pummelled a few weeks back before recovering.

"Very simply Musk diving deeper into politics and now trying to take on the Beltway establishment is exactly the opposite direction that Tesla investors/shareholders want him to take," Wedbush analyst Dan Ives wrote. "After leaving the Trump Administration and DOGE there was initial relief from Tesla shareholders and big supporters ... That relief lasted a very short time and now has taken a turn for the worst with this latest announcement."

As if the political battles weren't enough, Trump also responded to a feature of the bill Musk privately groused over.

"It is a Great Bill but, unfortunately for Elon, it eliminates the ridiculous Electric Vehicle (EV) Mandate, which would have forced everyone to buy an Electric Car in a short period of time," Trump said on Truth Social. "I have been strongly opposed to that from the very beginning."

Source: Yahoo Finance

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Commodity

Energy

Wall Street analysts predict oil futures will fall below $60 per barrel by the end of the year as the Organization of the Petroleum Exporting Countries and its allies (OPEC+) boost output.

OPEC+ has been unwinding output cuts this year as it seeks to recover global market share. Over the weekend, the group announced it would boost production by 548,000 barrels per day in August. This marks OPEC+'s fourth consecutive monthly increase and was larger than analysts anticipated.

"Saturday's announcement to accelerate supply hikes suggests that the strategic shift to normalizing spare capacity and market share, supporting internal cohesion, and disciplining US shale supply is continuing," Goldman Sachs analyst Daan Struyven and his team wrote in a research note on Sunday.

Struyven and his team noted resilient demand, particularly from the world's largest oil importer, China. The analysts anticipate OPEC+ will increase production yet again in September.

"We keep our price forecast with Brent averaging $59 in 2025Q4 and $56 in 2026," Struyven wrote.

On Sunday, BNP Paribas analysts lowered their year-end Brent forecast by $5 to $55 per barrel, but they said that they foresee a recovery in the oil market in 2026.

"The main driver for that is that we expect supply growth — from both OPEC and non-OPEC — to moderate," the analysts said in a note.

Crude prices have fallen following a brief spike to near $80 on the heels of the Israel-Iran war last month.

During the conflict, Wall Street analysts had outlined worst-case scenarios, predicting prices could surge into the triple-digit range of $120-$130. However, their base cases ultimately anticipated lower prices by year-end.

A ceasefire between Israel and Iran announced late last month by President Trump erased oil's war risk premium. WTI is down nearly 3% year to date. Brent is down 5% during the same period.

On Monday, West Texas Intermediate crude (CL=F) edged higher to close at 67.93 per barrel, and Brent crude (BZ=F), the international benchmark, settled at $69.58 per barrel.

"All in all, the supply picture definitely looks to be elevating; however, the stronger demand is remaining above expectations as well, hence the choppy trade," Dennis Kissler, senior vice president at BOK Financial, wrote in a note on Monday.

Source: Yahoo Finance

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Manuel

Cryptocurrency

Bitcoin futures showed renewed strength as their aggregated open interest (OI) surged by +7% over the past 30 days, marking the first sustained uptick since the May through June 12% drawdown. This revival signals a potential shift in sentiment, with traders increasingly positioning for the upside as their appetite for volume and leverage rises. Bitcoin Futures Pivot to Long Positions: Is $112K the Next Stop?_1

Bitcoin Futures Pivot to Long Positions: Is $112K the Next Stop?_1

Rising OI with price typically suggests bullish momentum as fresh capital enters the market to support an uptrend. Still, Bitcoin researcher Axel Adler Jr. cautioned that a confirmed breakout may require OI growth to exceed +10%, ideally paired with expanding trading volumes to validate the move.

Additionally, Adler Jr. noted that the Bitcoin Futures Market Power v2.0 indicator, which combines OI, funding rates, and taker-side aggression, currently sits at 22,000. While far from euphoric levels seen in past rallies with scores above 80,000, the metric reflects growing long-side pressure and a strengthening bullish consensus without signs of overheating. The indicator reflects a positive score for the first time since May, while a similar score in the 20,000 range signaled the price bottom in April. Bitcoin Futures Pivot to Long Positions: Is $112K the Next Stop?_2

Bitcoin Futures Pivot to Long Positions: Is $112K the Next Stop?_2

Bitcoin net futures positioning also flipped positive, with net long exposure rising to $27.4 million. This net bullish stance has held above zero for over 24 hours, suggesting that even as BTC consolidates near $108,000, traders are gradually stacking long positions in anticipation of a bullish breakout.

Bitcoin may see “equal lows” dip below $107,000

After closing its strongest weekly candle, Bitcoin faced a minor pullback to $108,000 from $109,500, forming a double top on lower timeframes. Despite the dip, BTC maintains intraday support at the 200-day exponential moving average (EMA) on the one-hour chart.

However, a sweep of equal lows near $107,300 remains probable before any upside continuation. Equal lows refer to price points where BTC has formed identical support levels multiple times, typically signaling resting liquidity that traders could target for a deeper move. In this case, BTC’s prior low at $107,300 aligns with an earlier liquidity block, reinforcing the likelihood of a stop-loss hunt.

A move below $107,000 could fill the nearby fair value gap between $107,000 and $106,300. A swift bullish reaction would be pivotal below $107,000, marked by strong buy absorption, which should send BTC back above $108,000. Failure to do so could open the door to deeper losses at $105,000.

Conversely, a strong defense of $108,000 followed by a clean break above $109,500 would invalidate the equal highs retest narrative and set the stage for a rally above $112,000 this week.

Source: Cointelegraph

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Commodity

While gold hasn’t been making strong gains since its April highs, sovereign demand is providing plenty of support at these price levels, and while EFT flows show investors see further gains for silver, platinum may have topped out in the near term, according to precious metals analysts at Heraeus.

In their latest precious metals update, the analysts noted that central banks continue to provide a solid floor for gold demand.

“In May 2025, central banks added a net 20 tonnes of gold to their reserves, with Kazakhstan, Turkey and Poland leading the purchases,” they wrote. “Despite a slight moderation in pace, sentiment remains strongly bullish – 95% of surveyed central banks expect global gold holdings to rise, and 43% plan to increase their own reserves, a record high. This reflects a structural shift in reserve management, with growing diversification away from the US dollar and heightened demand for gold as a hedge against geopolitical and inflationary risks.”

Central banks have added over 1,000 tonnes of bullion to their reserves in each of the last three years, which is far above the long-term average. “This is likely to have been a driver of the gold price, even as correlations with other assets have broken down,” the analysts said. “For example, gold and the US Treasury 10-year bond yield were strongly negatively correlated until central banks began to ramp up purchases. Over the last 18 months, yields have largely traded between 3.5% and 5.0%, while the gold price has risen from $2,000/oz to ~$3,400/oz.”

Central banks go for gold, investors still see value in silver, platinum may consolidate after rapid price rise – Heraeus_1

“Ongoing central bank gold buying is expected to continue to underpin gold price performance through the remainder of 2025, providing emerging market banks continue to favour gold over other assets,” they said.

After dipping briefly below support at $3,300 earlier this morning, spot gold is staging a modest recovery on Monday, last trading at $3,320.89 per ounce for a loss of 0.47% on the session.

Central banks go for gold, investors still see value in silver, platinum may consolidate after rapid price rise – Heraeus_2

Turning to silver, Heraeus analysts said the numbers show that investors continue to see value in silver.

“Net ETF inflows of 990 tonnes have been made since the beginning of June to date (4 July),” they said. “Most of the inflows came from the price rallying in the first half of the month (+509 tonnes), followed by more opportunistic buying and selling as the silver price stabilised above $36/oz in the second half of the month and beginning of July. Since 14 June, net inflows have amounted to an additional 426 tonnes. In total, this accelerated investor interest over the last month or so has accounted for more than 50% of year-to-date net inflows into silver ETFs. This has helped to propel holdings to the highest level since August 2022, at more than 24,000 tonnes of metal.”

Central banks go for gold, investors still see value in silver, platinum may consolidate after rapid price rise – Heraeus_3

The analysts noted that as of Friday’s close, silver ETF holdings are valued at $28.5 billion. “Silver remains historically undervalued versus gold (Au:Ag = 90.3),” they said. “Should the silver price continue to appreciate, ETF inflows may continue, as investors, betting that the ratio will revert towards the 10-year average of 80.2, rejoin the trade.”

Spot silver set a new high weekly close of $36.91 per ounce last week before falling along with gold earlier on Monday, but after multiple tests of the session low around $36.170 held, prices have moved back into the middle of their daily range. At the time of writing, spot silver last traded at $36.665 per ounce and is down 0.73% on the daily chart.

Central banks go for gold, investors still see value in silver, platinum may consolidate after rapid price rise – Heraeus_4

And on the platinum front, Heraeus wrote that producers are looking to reduce their costs to increase profitability.

“Last week, Impala Platinum announced the official consolidation of the Impala and the Royal Bafokeng Platinum (RBP) operations in South Africa, following Impala’s acquisition of RBP in 2023,” they said. “The aim of the consolidation is to realise the synergies of the two contiguous operations, and lower unit costs across both. In CYH2’24, RBP shafts together were profitable, having successfully reduced costs by 2% year-on-year thanks to cost controls and labour restructuring efforts. Likewise, lower average labour costs at Impala helped to control costs, though mining inflation brought total costs up year-on-year.”

“Given the contiguous nature of the Impala Lease Area and the Bafokeng lease, there is scope for costs to be reduced beyond overheads,” the analysts said. “It is feasible that accessing the underground ore from a more optimal shaft and optimal ore blending at the concentrating stage could have a positive impact on costs. The recent rise in the South African basket price will also be helping the country’s PGM producers’ bottom lines in the short term and ease pressure on the highest-cost operations.”

They pointed out that platinum rose for a fifth straight week and saw the highest weekly close of the current rally at $1,394 per ounce. “Price action was choppy, swinging up to $50/oz intraday during the week,” the analysts noted. “The daily RSI is showing increasing divergence from the price, and after such a rapid rise a more prolonged period of consolidation is possible.”

After hitting a session low of $1,341.94 just before 3 am EDT, spot platinum is also recovering along with the broader precious metals complex, though it has significantly more ground to make up.

Central banks go for gold, investors still see value in silver, platinum may consolidate after rapid price rise – Heraeus_5

Spot platinum last traded at $1,363.53 per ounce for a loss of 2.20% on the session.

Source: kitco

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Economic

President Trump is threatening 25% tariffs on Japan and South Korea after months of trade talks have yet to seal a deal. The S&P 500 turned lower in Monday afternoon trading, but investors know there's a good chance this won't be the final word.

Trump's "reciprocal" tariff pause announced on April 9 comes to an end on Wednesday. Trump and Treasury Secretary Scott Bessent have warned that countries which don't agree to a deal by then should expect their tariff rate to jump back to the April 2 level. Yet the U.S. has only struck deals with the U.K. and Vietnam over the past three months, though talks with China have an established framework and are progressing along a different timeline, with an Aug. 12 deadline.

Trump Tariffs On Japan, South Korea

In letters to South Korea and Japan, Trump informed the key trading partners that the U.S. would impose "a Tariff of only 25%" on South Korean and Japanese imports to the U.S. The figure excludes categories that are subject to sectoral tariffs, including autos and steel.

Trump further threatened to escalate tariffs to match any retaliatory tariff imposed by either country.

Auto imports have been a sticking point in talks with both countries, while rice has loomed large in talks with Japan. According to S&P Mobility, Japan exports 1.3 million vehicles a year to the U.S., while South Koreas sends 1.4 million vehicles. The U.S, exports 17,000 vehicles to Japan and 46,000 to South Korea.

Trump Tariff Optimism Tested

Investors betting on the TACO trade — Trump Always Chickens Out — rode the S&P 500 to a 26% gain through last week from the 52-week low on April 8. Markets won't start taking Trump's tariff threats at face value without a compelling reason. It's not clear whether the threats against South Korea and Japan provide that reason.

Plus, Trump has already signaled that any big tariff announcements this week aim to prod trading partners to strike a deal. Though the 90-day pause ends Wednesday, new tariff levels announced this week won't take effect until 1Aug.

Trump gave Mexico and Canada, America's two biggest trading partners, a pass from so-called reciprocal tariffs, so they won't come in the line of fire this week, nor will China. While Trump threatened the European Union with a 50% tariff in May, markets don't take that seriously. At the moment, reports suggest that the EU is still hopeful that a deal can be struck.

Markets can tolerate the economic headwind from some level of tariffs. Yet, as the cycle of Trump tariff escalation and Chinese retaliation showed this spring, when tariffs get high enough to cancel out economic activity and trading partners strike back with retaliatory tariffs, the cost of tariffs spikes.

While the risk of tit-for-tat tariffs with the EU remains, Trump probably also learned the lesson of dividing and conquering, rather than taking on all trading partners at one time as he did in April.

How High Will Tariffs Go?

While markets have taken a sanguine view ahead of this week's tariffs news, there's good reason to think that the average U.S. tariff rate is still heading higher in some places. Last week's deal with Vietnam probably shouldn't be seen in a vacuum. Would Vietnam have agreed to swallow 20% tariffs — down from the 46% rate announced on April 2 but double the 10% that actually took effect — unless officials had reason to believe that other Southeast Asian countries would face a similar rate.

The agreement with Vietnam also puts in place a 40% tariff for Chinese goods shipped via Vietnam to the U.S. to dodge the higher tariffs for direct imports of Chinese goods to the U.S.

"The draft Vietnam deal confirms that countries with sustained high trade surpluses with the U.S., and those acting as transshipment hubs for Chinese goods, may face higher baseline tariffs and additional duties on rerouted products," wrote Ulrike Hoffmann-Burchardi, chief investment officer of UBS Global Wealth Management in the Americas, in a July 3 note.

Still, UBS viewed the U.S.-Vietnam deal as "a positive step toward more durable bilateral deals for the U.S. and toward greater clarity for investors."

"While tariffs will likely slow U.S. growth and add some inflation pressure into 2026, we do not expect them to derail the economy or cause a recession," Hoffmann-Burchardi said.

S&P 500

The S&P 500 fell 0.8% in Monday afternoon stock market action. The S&P 500 had climbed 1.7% in the holiday-shortened week, pushing further into new-high ground.

Be sure to read IBD's The Big Picture column after each trading day to get the latest on the prevailing stock market trend and what it means for your trading decisions.

Source: investors

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Economic

China–U.S. Trade War

President Donald Trump said on Monday the U.S. would impose a 25% tariff on imports from Japan and South Korea beginning Aug. 1 as he unveiled the first two of an expected 12 letters to trading partners outlining the new levies they face.

"If for any reason you decide to raise your Tariffs, then, whatever the number you choose to raise them by, will be added onto the 25% that we charge," Trump said in letters to the leaders of the two Asian countries, which he posted on his Truth Social platform.

Later, Trump also announced the U.S. will impose 25% tariffs on Malaysia and Kazakhstan, 30% on South Africa and 40% on Laos and Myanmar.

The rate for South Korea is the same as Trump initially announced on April 2, while the rate for Japan is 1 point higher than first announced. A week later, he capped all of the so-called reciprocal tariffs at 10% until July 9 to allow for negotiations. Only two agreements have so far been reached, with Britain and Vietnam.

There was no immediate response from the Japanese or South Korean embassies on the announcement.

About 12 countries will receive letters from Trump, White House spokeswoman Karoline Leavitt said at a briefing without identifying them. She said Trump would sign an executive order on Monday formally delaying the July 9 deadline to August 1.

"There will be additional letters in the coming days," Leavitt said, adding that "we are close" on some deals.

The European Union will not be receiving a letter setting out higher tariffs, EU sources familiar with the matter told Reuters on Monday.

U.S. stocks fell in response, the latest market ruction since Trump unleashed a global trade war on his return to office in January. His moves have repeatedly whipsawed financial markets and sent policymakers scrambling to protect their economies.

U.S. stocks were driven to near bear-market territory by his cascade of tariff announcements through the early spring but quickly rebounded to record highs in the weeks after he put the stiffest levies on hold on April 9.

The S&P 500 on Monday was down nearly 1%, its biggest drop in three weeks. U.S.-listed shares of Japanese automotive companies fell, with Toyota Motor down 4.1% at mid-afternoon trading and Honda Motor off by 3.8%. The dollar surged against both the Japanese yen and the South Korean won.

U.S. Treasury Secretary Scott Bessent said earlier on Monday he expected several trade announcements to be made in the next 48 hours, adding that his inbox was full of last-ditch offers from countries to clinch a tariff deal by the deadline.

Bessent did not say which countries could get deals and what they might contain. Trump has kept much of the world guessing on the outcome of months of talks with countries hoping to avoid the hefty tariff hikes he has threatened.

Countries have scrambled to hammer out deals before the Wednesday deadline. South Korea and Indonesia dispatched representatives to Washington, while Thailand submitted a new trade proposal offering zero tariffs on many U.S. goods.

"We've had a lot of people change their tune in terms of negotiations. So my mailbox was full last night with a lot of new offers, a lot of new proposals," Bessent said in an interview with CNBC. "So it's going to be a busy couple of days."

BRICS THREAT

For its part, the European Union still aims to reach a trade deal by July 9 after European Commission President Ursula von der Leyen and Trump had a "good exchange," a Commission spokesperson said.

It was not clear, however, whether there had been a meaningful breakthrough in talks to stave off tariff hikes on the United States' largest trading partner.

Adding to the pressure, Trump threatened to impose a 17% tariff on EU food and agriculture exports, it emerged last week.

Trump had said on Sunday the U.S. was close to finalizing several trade pacts and would notify other countries by July 9 of higher tariff rates. He said they would not take effect until Aug. 1, a three-week reprieve.

He also put members of the developing nations' BRICS group in his sights as its leaders met in Brazil, threatening an additional 10% tariff on any BRICS countries aligning themselves with "anti-American" policies.

The new 10% tariff will be imposed on individual countries if they take anti-American policy actions, a source familiar with the matter said.

The BRICS group comprises Brazil, Russia, India and China and South Africa along with recent joiners Egypt, Ethiopia, Indonesia, Iran and the United Arab Emirates.

Trump's comments hit the South African rand.

EU SEEKS EFFECTIVE APPROACH TO TRUMP

The EU has been torn over whether to push for a quick and light trade deal or back its own economic clout in trying to negotiate a better outcome. It had already dropped hopes for a comprehensive trade agreement before the July deadline.

"We want to reach a deal with the U.S. We want to avoid tariffs," the spokesperson said at a daily briefing.

Without a preliminary agreement, broad U.S. tariffs on most imports would rise from their current 10% to the rates set out by Trump on April 2. In the EU's case, that would be 20%.

Von der Leyen also held talks with the leaders of Germany, France and Italy at the weekend, Germany said. Chancellor Friedrich Merz has repeatedly stressed the need for a quick deal to protect industries vulnerable to tariffs ranging from cars to pharmaceuticals.

The German spokesperson said the parties should allow themselves "another 24 or 48 hours to come to a decision."

Germany's Mercedes-Benz (MBGn.DE), said on Monday its second-quarter unit sales of cars and vans had fallen 9%, blaming tariffs.

Russia said BRICS was "a group of countries that share common approaches and a common world view on how to cooperate, based on their own interests."

"And this cooperation within BRICS has never been and will never be directed against any third countries," said Kremlin spokesman Dmitry Peskov.

Source: Reuters

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Forex

Two European Central Bank (ECB) officials last week expressed concern that the rise of the euro could further weaken the still-recovering eurozone economy, while US tariffs of 10% on European exports now seem inevitable.

Since the beginning of the year, the eurodollar has risen 14% and reached its highest level since September 2021.

Investors seem keen to reduce their exposure to the dollar in the face of Donald Trump's unpredictable economic policy. At the same time, Germany's fiscal stimulus and rising military budgets in Europe have boosted the euro's appeal.

"We can manage up to 1.20"

Nevertheless, the currency's rapid rise is beginning to make the ECB uncomfortable. While a strong euro is a sign of market confidence and reduces imported inflation, there is also a downside. A more expensive currency weighs on exports by making them less competitive.

The rise of the euro could therefore end up weighing on growth. This is particularly true given that the eurozone relies heavily on exports. "If you combine a 10% tax (customs duties) with a more than 10% appreciation of the exchange rate, that is enough to impact export momentum," warned Martins Kazaks, governor of the Latvian central bank, on the sidelines of the ECB's annual monetary policy forum in Sintra, Portugal.

European leaders are now preparing for a 10% tax on exports to the US to become a reality. Long opposed to any form of customs duties, Europe now seems ready to accept a compromise: a 10% tax, with certain exemptions for key sectors.

These risks to growth are therefore causing the ECB to worry about the rise of the euro. "We can manage a rise in the euro to $1.20. Beyond that, it will become much more complicated," ECB Vice President Luis de Guindos said last week on Bloomberg TV.

This appreciation of the euro could push the ECB to lower interest rates further. After eight consecutive cuts that brought the deposit rate to 2%, the neutral level, the ECB is expected to pause in July.

However, further adjustments are possible between now and the end of the year. With inflation back on target, the ECB could ease monetary policy slightly. Most strategists still anticipate one or two rate cuts in 2025.

The consensus is always wrong

This movement in the eurodollar certainly took investors by surprise. In the wake of Donald Trump's election last November, the rise of the dollar was fairly widely expected and many imagined a return of the eurodollar to parity. At the beginning of the year, the 1.02 level was reached, before the momentum reversed completely.

The rationale behind this reasoning is that tariffs are inflationary in nature. Higher inflation means higher interest rates and therefore a stronger dollar.

At the end of last year, the central scenario for tariffs was a universal rate of 10%, which was to be largely offset by currency adjustment (the rise of the dollar).

But today, Europe has to contend with a eurodollar that has gained 14% since the beginning of the year and, most likely, 10% tariffs. This is a much less favorable scenario for growth.