“I don’t foresee that relationship enduring beyond 6 months,” stated Peter Brown, Managing Director of Baggot Investment Partners based in Dublin.
This market analyst is not alone in his sentiments.
Prior to Donald Trump’s inauguration last Monday, financial markets were bracing for transformations across multiple sectors, including stocks, forex, and cryptocurrencies.
They were also prepared for the influence of Musk.
Notably, he was positioned prominently at the inauguration event at the State Capitol alongside other prominent tech figures.
However, is this newfound friendship a beneficial partnership for the US economy, or is it a looming catastrophe?
“The markets are estimating a timeline of roughly 6 months for these two personalities to clash and ultimately part ways,” remarked Mr. Brown. “There seems to be a consensus that both individuals can’t coexist long-term.”
President Trump and Elon Musk aspire to make the federal government more streamlined and efficient by thoroughly reviewing its budget and operations.
Musk has indicated that he aims to eliminate at least $2 trillion in federal spending, partly through reducing the workforce of ineffective federal employees.
“The concern regarding Musk is quite straightforward,” Mr. Brown elaborated. “He has established the Department of Government Efficiency; if he is unable to implement sweeping layoffs like he does at X or in his other ventures, his frustration will escalate quickly.
“He cannot achieve this without legislative changes in Congress, which isn’t likely to occur. I don’t envision that relationship lasting longer than 6 months.”
This perspective is shared by other market analysts as well.
After an initial period of harmony, various market experts project that the association between President Trump and Elon Musk will deteriorate by 2025.
The global technology market analysis firm Canalys predicts that Trump and Musk will fall out over China if the President follows through on his promise to impose 60% tariffs on all Chinese goods.
He refrained from doing this during his initial days in office, which helped stabilize the markets.
Musk heavily relies on China as a significant market for Tesla, as well as a source of batteries and essential minerals for electric vehicle production. A negative impact on China could jeopardize Tesla’s ability to produce self-driving cars.
Tesla’s stock has surged by 98% over the past year, with most of that growth occurring following the presidential election.
The company stands among the most valuable globally, boasting a market capitalization of $1.24 trillion. Musk envisions Tesla achieving a valuation of $4 trillion in the future. For this ambition to materialize, maintaining a strong relationship with China is crucial.
Musk also foresees a future powered by AI and robotics, proposing advancements in self-driving cars and humanoid robots to transform industries.
These technological innovations could face fewer regulatory challenges if Trump implements pro-tech policies while adhering to Musk’s guidance.
During his inaugural address, President Trump vowed to plant an American flag on Mars, eliciting cheers from a joyous Elon Musk.
Musk’s aspirations for Mars colonization through his aerospace company SpaceX are expected to gain momentum with a Trump administration that favors deregulation.
This support could expedite missions associated with NASA’s Artemis program, which has SpaceX’s backing.
Musk is also an advocate for cryptocurrencies, even naming the Department of Government Efficiency he heads after the meme-based dogecoin.
The Trumps launched their own meme coins the weekend before inauguration day.
The then-President-elect took to the social media platform Truth to declare, “My NEW Official Trump Meme is HERE! It’s time to celebrate everything we stand for: WINNING!”
The incoming First Lady, Melania Trump, followed this initiative. Both coins have experienced a rise, albeit with volatile trading. Bitcoin has shown similar trends, rallying nearly 4% this week and trading above $105,000 on Friday after reaching a new all-time high of $109,588 on inauguration day.
Cryptocurrency investors are hopeful that Trump will honor his commitments regarding crypto policies once in office.
Lenny McLoughlin from Irish Life Investment Managers emphasized that the first hundred days of any administration are crucial for establishing the direction that lies ahead.
President Trump certainly demonstrated this on his very first day.
The ILIM Investment Strategist anticipates positive economic growth in the US, predicting “close to double digits, perhaps 10 – 12%, regarding equity performance.”
“Volatility in markets is to be expected,” Mr. McLoughlin remarked. “Our baseline expectation is that growth will remain positive.”
He mentioned Trump’s track record of erratic policy announcements. “That’s one aspect we can anticipate, and with it, we should expect more volatility in 2025 than in 2024.
“In light of this, having a diversified portfolio is essential.”
Only time will reveal what the next four years of Trump’s presidency will entail for the markets, but in the short term, at least one investor stands to gain significantly from the new administration: Elon Musk.
The CEO of X and Tesla could potentially find himself out of favor with President Trump.
If circumstances do not progress as favorably as they seem, will this affect Musk’s financial portfolio? It seems unlikely.
Ultimately, the valuations of Musk’s companies should withstand any future market volatility or shifts in political landscapes.
But have markets already accounted for a potential split in this partnership?
