I was Wrong... Kevin Warsh is a "Hawk" (Tesla Stock is Falling)
Overall Thesis
Kevin Warsh's hawkish Fed comments triggered a market selloff, particularly in AI and Tesla, as rate hike probabilities doubled, though the creator sees this as a potential buying opportunity.
Narratives
The speaker views today's Tesla decline as a hawkish-Fed-driven overreaction rather than a fundamental problem, maintaining a long-term bullish thesis built on robotics, AI, Optimus, robotaxi, and the newly announced semi-truck fleet deal. He reiterates a prior long-term price target of $1,000 and says any dip is a buying opportunity.
Key Arguments
- Tesla is trading like an AI/hardware stock today rather than reflecting its own fundamentals
- New Einride semi-truck fleet order (500 trucks) could add meaningful EPS and reduce reliance on capital raises
- Tesla's AI/robotics projects (Optimus, robotaxi, FSD) are underappreciated by Wall Street
- Tesla historically does nothing for long stretches then makes parabolic moves
Predictions (1)
The speaker sees short-term risk of a September correction due to Fed hawkishness, the Iran war, and midterm-related AI fears, but expects a strong seasonal rally from October through the following August. He is not panicking and views near-term weakness as a buying opportunity.
Key Arguments
- Rate hike odds for September 16th nearly doubled after Kevin Warsh's comments
- Midterm outcomes could affect AI/data-center-driven earnings growth, pressuring the index
- Historical seasonality suggests a strong rally from October through the following August
The speaker discusses oil's elevated price (around $83/barrel) due to the Iran conflict and its inflationary impact on the Fed's decision-making, but explicitly states he does not know what oil will do next.
Key Arguments
- Oil prices remain elevated due to the Iran conflict, up significantly from pre-conflict levels in the 60s
- Oil is an input cost that affects inflation broadly, complicating the Fed's job
The speaker notes that Treasury yields rose sharply after Kevin Warsh's hawkish-leaning comments, with the 10-year yield up over five basis points to 4.724% and the 2-year yield jumping to 4.32%, implying bond prices are under pressure.
Key Arguments
- Rate hike probability for the September 16th meeting rose from 34.1% to 60% overnight
- Rising yields reflect increased market expectation of tighter monetary policy
Hedges & Caveats
- INVEST AT YOUR OWN RISK AND NEVER LISTEN TO ANYTHING SAID IN THESE VIDEOS AS FINANCIAL ADVICE. BECAUSE ITS NOT.
- Creator acknowledges uncertainty around geopolitical tensions and oil price impacts on inflation
- Creator notes this could be a 'clearing event' and potential opportunity, suggesting mixed conviction
- Uncertainty around Fed policy direction given new Fed chair dynamics