🐂 The Real Reasons to be Bullish on Tesla

Plus, a look at Nancy Pelosi's latest trade

Happy Saturday, and welcome back to our super skimmable Street Tweets newsletter.

The AI craze has taken flashy tech companies like Apple and Google to new heights as they implement the cutting-edge technology into all viable aspects of their services.

However, companies like Apple and Google may not be the real winners of the AI boom. Rather, the winners may be companies that are more… well, boring.

Generative AI demands consistent upgrades and is immensely power-hungry, entailing exponentially greater energy infrastructure and data center needs.

Goldman Sachs believes data-center power needs will surge 160% by 2030, noting that a ChatGPT query uses 10X the electricity of a Google search.

To profit off the behind-the-scenes players of the AI boom, you could consider Digital Realty Trust (DLR). Jeffries recently highlighted the pick, as it is the only data-center real-estate investment trust on the NYSE.

Plus, today’s partner shares investing opportunities previously reserved for institutions and accredited investors. Click here to learn more.

MARKET REVIEW

TL;DR: This week in U.S. markets, the S&P 500 and Nasdaq Composite reached new record highs as the third quarter began.

Fed Chair Powell indicated cautious optimism about disinflation, warning against premature or delayed rate cuts. The labor market showed cracks, with June's Non-Farm Payrolls exceeding expectations but the unemployment rate rising to 4.1%. Company news highlighted strong performances from tech giants like Amazon, Microsoft, Apple, and Meta, while Tesla reported strong delivery numbers, and Chinese EV makers faced new E.U. tariffs.

In other sectors, Boeing announced a significant acquisition, Southwest Airlines adopted a defensive strategy against activist investors, and Paramount pursued a merger deal with Skydance Media.

MARKET PREVIEW

TL;DR: The second week in July unofficially kicks off the second quarter earnings season, with major U.S. banks such as JPMorgan Chase, Wells Fargo, Citigroup, and BNY Mellon reporting and setting the tone for the quarter.

We will also see earnings from notable companies like PepsiCo, Conagra Brands, Progressive Corporation, and Delta Air Lines on Thursday.

The economic calendar is packed, starting with consumer inflation expectations on Monday, followed by the NFIB Small Business Optimism Index, testimony from Treasury Secretary Janet Yellen on Tuesday, and a key speech from Fed Chair Jerome Powell on Wednesday. Thursday and Friday will bring crucial inflation data with the release of the Consumer Price Index (CPI) and Producer Price Index (PPI), which will heavily influence the Federal Reserve's upcoming interest rate decisions.

Yikes.

As you probably already know or could guess from the name, the ISM services index measures the economic activity in the services sector.

The restaurants and retailers that make up this sector have powered US growth over the past several years, but fatigue is setting in.

A double whammy of persistent inflation and high interest rates have cut into Americans’ savings, and discretionary spending has taken a nose dive.

A recent survey by KPMG found that 41% of consumers plan to spend less at restaurants this summer compared to last, and just 21% say they’ll spend more.

The stock market has reflected this consumer trend:

  • Darden Restaurants, which operates Olive Garden and other brands, has seen its stock decline roughly 10% over the last six months.

  • Even McDonald’s has taken a hit, with a 14% decline in the last six months, as nearly 80% of Americans now consider fast food a luxury good.

Will Service Sector Stocks Make a Comeback in 2025?

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In case you missed it, Nancy is making moves again.

When former House Speaker Nancy Pelosi makes trades, they get attention, and for good reason — her stock portfolio from 2019 through Q4 2021 grew 95% and gained $62 million in value.

Last year, her one-year stock returns reached 45.59%, and her options returns were 66.7%. For comparison, Warren Buffet's annual returns average roughly 22%.

How Pelosi can be both a masterclass politician and investor simultaneously isn’t for us to discuss… cough, cough… insider trading?

However, rather than “Be like Buffett,” maybe we can learn to “Know like Nancy.” This week, a periodic transaction report showed she purchased $5 million worth of call options in Broadcom, with an $800 strike price, and $1.2 million in shares of Nvidia.

Are You Bullish or Bearish on Broadcom and Nvidia?

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TOGETHER WITH HERON

You aren't alone if traditional investment options don’t give you high enough returns. All too often, investment firms keep you from high-yield opportunities. That's why savvy investors should consider diving into private credit with Heron Finance.

Heron Finance shares opportunities previously reserved for institutions. Their platform gives advantages previously reserved to the ultra-wealthy to any accredited investor. Specifically, Heron Finance offers:

Yields reaching 11-16% target APY* (net of fees), with interest distributed monthly

Monthly payments mean you get money in your hands in less than 30 days

Passive investing that takes the stress out of managing your portfolio

On top of these benefits, Heron Finance offers stability by carefully filtering deals and monitoring investments. Their commitment to transparency and risk management prioritizes low-volatility and consistent returns. Whether you're looking for short-term opportunities or long-term stability, Heron Finance has the solutions you need.

Risk disclosures: http://heronfinance.com/

* APY is not hypothetical but based on underlying APRs borrowers pay in existing loans. Create an account to view more details about those loans.

A bad time to be a Tesla short-seller.

Shares of Tesla have risen 26% this week after the EV manufacturer’s deliveries beat expectations by a wide margin.

While surging EV deliveries are certainly a good sign, EV sales might not be the best reason to be bullish on Tesla in the long run — as Musk alluded to in the above tweet.

Musk recently claimed that Tesla’s Optimus robots could lift the company’s market cap to $25 trillion. Regarding autonomous driving, Tesla cleared another hurdle last month to launch its self-driving system on China’s public roads through a partnership with Baidu.

In spite of all this, nothing indicates that Bill Gates has abandoned his half-billion dollar short position against Tesla.

Will Bill Gates' Short Position Against Tesla Pay Off?

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“You’ll own nothing and be happy.”

That quote originates from a World Economic Forum video entitled “8 Predictions for the World in 2030.” While the WEF has taken the official video down and distanced itself from the phrase due to bad publicity, the organization may, unfortunately, be partially correct.

According to Redfin, investment firms purchased 26% of America’s most affordable homes in Q4 2023, the highest share on record. And according to MetLife Investment Management, institutional investors may control 40% of US single-family homes by 2030.

Looking past whether this is “good” for the country, it could be a good time to invest in Vanguard‘s real estate ETF (VNQ) or BlackRock’s real estate securities fund (BIREX).

TOGETHER WITH HERON

You aren't alone if traditional investment options don’t give you high enough returns. All too often, investment firms keep you from high-yield opportunities. That's why savvy investors should consider diving into private credit with Heron Finance.

Heron Finance shares opportunities previously reserved for institutions. Their platform gives advantages previously reserved to the ultra-wealthy to any accredited investor. Specifically, Heron Finance offers:

Yields reaching 11-16% target APY* (net of fees), with interest distributed monthly

Monthly payments mean you get money in your hands in less than 30 days

Passive investing that takes the stress out of managing your portfolio

On top of these benefits, Heron Finance offers stability by carefully filtering deals and monitoring investments. Their commitment to transparency and risk management prioritizes low-volatility and consistent returns. Whether you're looking for short-term opportunities or long-term stability, Heron Finance has the solutions you need.

Risk disclosures: http://heronfinance.com/

* APY is not hypothetical but based on underlying APRs borrowers pay in existing loans. Create an account to view more details about those loans.

A unique economic indicator…

Year to date, RCI Hospitality Holdings (RICK), primarily known for operating strip clubs, has seen its shares tumble 38%.

While a significant drop in RCI Hospitality preceding the last two recessions may be just a coincidence, looking to strippers as oracles of the American economy is nothing new.

As defined by Berkely’s Business Journal, the “Stripper Index” gauges the American economy by analyzing strippers’ tip revenue: if strippers see a significant decline in cash over an extended period of time, the economy is experiencing strain.

Does the Decline in RCI Hospitality Allude to a Coming Recession?

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TRIVIA

Last week, we asked: In 2008, which investment bank filed for bankruptcy, marking a significant event in the global financial crisis?

The correct answer was Lehman Brothers.

This week’s question…

Which economist is credited with developing the theory of Comparative Advantage, which forms the basis for international trade theory?

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