The week’s headline was undeniably the dramatic clash between Trump and Musk—an event that could morph into a full-blown political crisis. Tesla shares plunged 14.26% on Thursday, an epic drop reflecting how dangerous it can be when political-business alliances turn too intimate. This is a quick review from Ivan Kompan, Edinburgh Business School analyst.
But this isn’t just a personal feud—it’s a standoff between traditional political power (Trump, elected and still clinging to a cowboy-autocrat style) and the might of trillion-dollar tech capital. Musk’s declaration that a new party is needed and that he’ll be “in charge” for the next 40 years signals serious political ambitions. Now it’s up to Congress to choose sides—both Trump and Musk wield immense influence, and America, like any country, isn’t immune to money-driven politics.
Markets hate uncertainty, and this internal war, on top of Trump’s global confrontations, is likely to weigh on investor sentiment. Equity valuations remain stretched, growth prospects are shaky, and the national debt issue is reaching crisis levels. The Buffett Indicator—market cap to GDP—is at 1.99, nearly at its all-time high (2.09 in December), while the Fed’s inflation-adjusted version shows similar extremes, rivaling only 1999 and 2014.
Macroeconomic news isn’t encouraging either. On Tuesday, the OECD revised down global and U.S. growth forecasts for 2025–26 due to rising trade barriers, tighter financial conditions, and weakening business confidence. U.S. GDP is now expected to grow just 1.6% in 2025 and 1.5% in 2026—well below last year’s 2.8%. Inflation will also likely stay elevated, delaying any Fed rate cuts.
Labor market data showed mixed signals: April job openings slightly beat expectations, but ADP hiring fell to a two-year low for the second straight month. On Friday, the main jobs report showed resilience—job creation beat estimates, unemployment held steady at 4.2%, and wages ticked up slightly, all pointing to little pressure on the Fed to cut rates soon.
The services PMI also softened, hinting at slower economic activity. Trump quickly returned to attacking Powell, urging the Fed chair to cut rates, calling him “Always Late Powell.” When things go wrong, someone must take the blame.
Even with all this turmoil, stocks are holding up—FOMO seems to outweigh fear. In fact, May was the best May for the S&P 500 in 35 years, gaining 6.15%, fully erasing losses from the “Liberation Day” sell-off.
Finally, in foreign affairs, Xi Jinping and Trump had a friendly phone call. While no real breakthroughs were announced, it’s safe to assume that if there had been, Trump would’ve taken full credit across every network and social media platform.
So what’s next? Hard to say. Risks are high, solutions elusive, and optimism scarce. It’s expensive, uncertain, and politically volatile—but theory means little when FOMO takes the wheel.
*And finally, we would like to remind you that the information you have just listened to is not an investment advisory. Remember – investments in the stock market are always tied up with financial risks. So be careful and cautious.
