“Good ideas are always crazy until they’re not.”
It hurts to admit, but Elon Musk played a blinder during the US election. Just how much more could he deliver to the US economy as part of the Trump administration? Disrupting entrenched US bureaucracies and the military-industrial complex could be transformational. I have a great business idea for him!
You have to giggle at me admitting it, but… Elon Musk is the greatest trader in global history… ever.
The secret of a great trader is recognising an opportunity and going to it. Musk spotted he was on to something after he endorsed President-Elect Donald Trump following the assassination attempt on July 13th – MAGA supporters started talking up and buying Tesla. Since he first danced onto Trump’s rally stage as his razzamatazz paladin/joker in early October, Musk has spent some $150mm on backing Trump via PACs and his lottery. 6 weeks later the value of his 22% stake in Tesla has risen by an incredible $91 billion dollars, a 607x bagger of a deal!
If anyone knows a trade that, ahem, trumps that.. please let me know.
I need to be dispassionate about Musk. That is difficult. I’ve been ranting about him for years – ever since the incident when he called the British cave diver trying to rescue trapped Thai Children a paedophile. Musk displayed incredible venality, furious his plans to use a submarine (in a cave?) were dismissed as nonsensical. What can’t be denied is Musk’s utter brilliance at making sh*t happen: Tesla, SpaceX, The Boring Company, Nueralink… and soon… the US Government.
I have an even better idea for him. Read on below….
There is little doubt Musk’s unwavering support and blanket-bombing the electorate with tweets (some of doubtful veracity), including over 200 X-comments on election day, was one of the factors that swung votes in Trump’s favour. (Knowing what we do of the 45th and 47th President, I am mightily surprised Trump hasn’t demanded a significant slice of Musk’s action. (Of course he hasn’t… who could possibly believe the elected president of the USA would be so base…)
The FT carries a great article this morning outlining how Musk is packing his loyal lieutenants into the administration: Who’s who in the Musk “A-Team” vying to shape Trump 2.0. If Trump gives Musk the freedom to act as Secretary of the Department for Government Efficiency (DOGE) it could be a pivotal moment for the US economy. It is a model all Western governments should be watching – if Team Musk can slash bureaucracy and deliver results it resets the art of the possible, and might alleviate bond market concerns.
More to the point, if Musk can put leading technocrats into the key positions in The Department of Defence – which I’ve written about in Big Tech, DefTech and Why Musk is all-in on Trump – it could be transformational. I quoted from a book, UnitX, on why the US DOD is missing out: “The second decade of the 21st Century was one of colossal missed opportunities for the US military. The Pentagon missed the advent of modern software development, the move to cloud computing, the commercial space revolution, the centrality of data, and the rise of machine learning. It’s a story of the US getting ambushed by the future.”
It hurts to admit it – Musk may be a bad person, but he’s frighteningly effective. (Which is why I fear Trump will ultimately sideline him – for getting more headlines than him.)
As for Tesla – nothing has changed. It is still producing very good cars. It’s autonomous driving system isn’t as good as Waymo’s – thus it’s pretty much nailed on the Robotaxi concept will we delivered late. There are multiple reasons for the massive post-election rally in Telsa; expectations Musk will have unparalleled access to the President, he’ll retain the $7k per vehicle govt subsidy even as Trump unwinds other green support, possible early regulatory approval for Robotaxi, a carve-outs from Trump’s tariff policies, and any special help he gets to support Tesla’s position in the China market (33% of Telsa sales).
Despite that, I’m thinking of putting my Tesla short back on…. (If I could otherwise go long Musk, I would.)
As I’ve repeatedly written, Tesla a great car maker. It would more than justify 12-16x PE, more than double the valuation of any other auto-manufacturer. But, it is not worth the x96 multiple PE it’s on this morning. It’s become a meme-stock – entirely driven by what Musk’s iconic status, with fans following what says about deregulating autonomous driving, massive protectionist battery tariffs on anything not a Tesla Powerwall, and lots and lots of smoke, mirrors and noise.
With a few weeks of the January 2025 inauguration we will be back to normal US politics. The first flush of Trump’s success, and the euphoria that went with the election result, will have faded. Reality will be biting. Bitcoin will be exposed as not-a-gold substitute, and I suspect the outlook for Tesla won’t be as rosy.
A new, new thing…
I have a transformational idea for Musk: Buy BOEING and merge it into SpaceX.
I have oft described Boeing as the worst firm in the world. Its’ failure is entirely due to cost accountants running what was once a great engineering firm. For $115 bln Musk could buy the company outright, and stamp his own brand of “make sh*t happen” upon it.
Three things need to happen – all of which Musk could deliver:
- Get rid of the current management and mindset.
- Retool, retrain and re-empower the workforce to build better.
- Show Boeing has a vision for the future – planning new aircraft that will meet the need for 40,000 new, green, efficient planes in the next 20 years
What’s the upside for Musk? He would be given space. The new SBX would dominate the growing Space market. US defence would be reinvigorated with SBX rocket-ships patrolling the high orbitals, while Starlink dominates the internet, cloud and AI. In 10 years-time we’ll see the next generation of SBX aircraft travel faster, further and cheaper than the older designs Airbus will be struggling to replace.
If Musk takes the opportunity, I can see SBX as the world’s leading firm in just a few years.
Who was long the Election Result?
Curiously, I have not met anyone since November 5th who did not think Trump was going to be the surefire winner. It’s funny, and a great pity because before the election, nobody I was speaking to knew what the result would be. My bad luck, eh? If only I’d met them a few days earlier… Harry Hindsight is the world’ best trader. And not everyone tells the truth.
We do know Global Hedge Funds lost billions on their Tesla shorts – according to Bberg and others at least $5.2 bln. I admit was hosed out the game completely on a leveraged short on Tesla, plus thumped on Bitcoin and Truth Social. Yes, I was apparently the one person on the planet who thought Harris would win… (and I also hedged all these outright coin-tosses on Harris… albeit not so comprehensively as I might have done…) Suffice to say.. not my best night out in the casino that is global markets.
Making mistakes is painful. But we have the capacity to learn from them.
The fact the market has rallied so strongly to Trump’s win is entirely a cover play. Folk who hadn’t put the Trump trades on because they just couldn’t call the election found themselves playing catchup. That’s the reality. Had the market really been so strongly behind Trump, I expect it would have been a sell the fact moment. Always remember, markets tend to over-react to the upside and downside.
Some lessons from the US Election:
It’s now a week since the USA voted. I thought Harris would win. I was wrong. I’ve tried to understand why. (The next few paragraphs are an edit of something I posted last week on the website last week.)
I did a wash-up with one of the smartest advertising minds on the planet, head of digital marketing at a major consumer firm. He’s made it clear to me my call on Harris to win was based on confirmation bias – a common trait across the lefty commentariat. I can read whatever I want in the NYT, the WSJ, Bberg, Washington Post, the Atlantic – safe in the knowledge only people like me are reading it. The electorate were not.
He made the point Harris’ celebrity endorsements were newsworthy, but irrelevant in terms of opinion forming. The electorate didn’t care and were not listening. What the voters were listening to were podcasts like Joe Rogan. Young men and young women were listening and paid attention. In the space of a week Rogan got 9 cumulative hours with a trifecta of Trump, Harris and Musk answering every question!
- Harris accumulated some 20 million views related to her comments on TV media appearances.
- Team Trump scored over a billion views vis streaming sites though podcasts and such.
It’s no wonder Trump won the attention of his voters. Trump’s team absolutely understand that media is consumed in an utterly different way today than just a few years ago. The Democrats are living in a past that no longer exists thinking TV appearances and endorsements matter.
All that matters is that the electorate is engaged with the product – the candidate. Trump’s team understood perfectly that to win they had to be in conversation with their demographic targets, who felt they got to know them on the long, lengthy, engaging podcasts. Folk listening came away knowing exactly what the candidates stood for… They engaged the electorate in conversation.
In contrast most Democrat voters still know nothing about Harris. She never revealed herself the way Trump and team did. Add in the new concept of Blitzkrieg politics: where everything, no matter how sensible the opposition say is attacked. Attack, attack, attack – that is the future. It means rational political debate is over, but polarisation is defacto the only form of politics now.
The UK’s Tory party have successfully crushed confidence in Labour and Starmer’s huge majority in just a few months through Blitzkrieg Politics. I suspect that is Kemi Badenough’s superpower – disruptive Blitzkrieg political disruption – and Starmer et al will remain utterly flummoxed by it.
Politics and the Game of Elections has utterly changed.
Out of time, and back to the day job…
This article was originally published in Bill Blain’s Morning Porridge and is republished here with permission.
