This months economic news has been quite interesting and full of intertwining corporate struggles with geopolitical drama. Al Root’s article in Barron’s on February 28, 2025, titled “Tesla Stock Falls Again. When Will It Stop?” Highlights the ongoing story of Tesla’s plummeting stock. Additionally, Martin Baccardax’s article on yahoo finance titled, “Stock Market Today:Stocks end higher despite angry Trump-Zelensky exchange” discusses the unsuccessful economic negotiations between President Donald Trump and Ukrainian President Volodymyr Zelensky. These events offer a view into how politics, corporate performance, and international deals combine to drive markets.
Tesla’s stock dropped 8.4% on Tuesday, pushing its market cap below $1 trillion, after European sales dropped by 45% in January—selling just 9,900 cars compared to a 37% rise in overall European electric vehicle sales. This decline aligns with Elon Musk’s newly established political involvement with his advisory role in Trump’s administration. Root suggests that Musk’s political activities are pushing away European buyers. Consumer behavior often reflects sentiment, and if Tesla’s brand is now attached to U.S. political policies, like Trump’s tariff threats or his Ukraine stance, it could stifle demand in major markets. For Tesla investors, this is a dangerous time as they all wonder when this will end which depends on Musk’s ability to separate Tesla’s performance from his political popularity, which could be impossible.
Additionally, news released regarding the U.S.-Ukraine economic deal, meant to secure American stakes in Ukraine’s natural resources, remains up in the air after a heated White House meeting on Friday. Trump and Zelensky’s meeting left a proposed “Reconstruction Investment Fund” unsigned. This fund sought to obtain 50% of Ukraine’s future resource revenues (lithium, titanium, oil, and gas) into a joint U.S. and Ukraine partnership, promising economic stability for Ukraine and profits for American firms. Trump claims it to be a “win-win” and support comes from Treasury Secretary Scott Bessent’s reinforcement that it was in both Ukrainian and U.S. business interests. However, the failure of finding an agreement highlights the sensitivity of economic diplomacy when tensions rise between world leaders.
Additionally, news released regarding the U.S.-Ukraine economic deal, meant to secure American stakes in Ukraine’s natural resources, remains up in the air after a heated White House meeting on Friday. Trump and Zelensky’s meeting left a proposed “Reconstruction Investment Fund” unsigned. This fund sought to obtain 50% of Ukraine’s future resource revenues (lithium, titanium, oil, and gas) into a joint U.S. and Ukraine partnership, promising economic stability for Ukraine and profits for American firms. Trump claims it to be a “win-win” and support comes from Treasury Secretary Scott Bessent’s reinforcement that it was in both Ukrainian and U.S. business interests. However, the failure of finding an agreement highlights the sensitivity of economic diplomacy when tensions rise between world leaders.
For Ukraine, forfeiting half its resource revenues could fund reconstruction through U.S. contributions but sacrifices long-term wealth. This is a deal Zelensky is refusing to make without military security guarantees Trump won’t provide as he believes Zelensky will continue the war rather than cease fire immediately. For the United States, the deal granted access to minerals crucial for the production of technology. Though Ukraines mineral supply is greatly outmatched to China’s, the source would still prove beneficial to the United States as we try to remain competitive in the AI and technological race with China. The market reacted nervously, with the market seeing a drop before recovering, signaling uncertainty over peace prospects and resource access. This recovery could be due to the position Ukraine is in as Trump says they stand no chance without the aide of the United States, which would ultimately end with the United States getting the deal Trump wants. However, as we saw with the meeting today, if communication and cooperation cannot be established, further instability is to come.
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Very interesting to see how fragile a stock is when the owner is causing problems and creating a lot of enemies. What used to be a hot stock is one lots are just trying to get out of now because it doesn't look like there will be a rise in the near future.
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