The addiction to Wall Street hype hits the wall. The fallout from the public, split between Trump and Elon’s musk, torched everything tied to their names, from codes to ETFs.
According to Bloomberg data, the clash between the sitting US president and the world’s wealthiest man wiped out billions of dollars in deals within 24 hours. The stocks linked to the brand collapsed while retail investors were scrambling. There are no speeches. There are no warnings. Just a loss.
The drama exploded after a tax bill from the White House threatened to cut Tesla’s electric vehicle subsidies. Elon fought back. Trump has already drilled a deep hole in his second term and did not retreat. The market responded immediately.
Dogecoin fell 10%. Destiny Tech100 Inc., a fund pitched as retail access to SpaceX, fell 13%. Leveraged bets on Elon’s Empire are 25% nosey. Even the Trump Media & Technology Group became a hit. By the end of the day, anything that circled either person was bleeding red.
Trump’s tax bill causes huge losses
The sale was driven by panic rather than fundamentals. Peter Atwater, who runs Financial Insyghts, said, “You’re an incredible beneficiary, so you can get BL hit the next moment.” Atwater warned that busy Elon’s deal was like a domino.
The feud has shaken up risky assets, but traditional indexes have not flinched. The S&P 500 rose 1.5% in a week. The extended fan index, which excludes Tesla, broke the record. Treasury yields for 10 years of bonds have skyrocketed over 10 basis points after new employment numbers were killed in fears of a short-term recession.
Meanwhile, the dollar fell to its lowest point in nearly two years. But retailers – those who ride dreams instead of revenue – were smoked.
Tesla’s stock acts like a scoreboard for Elon’s ambitions. Trump’s growing crypto empire, his media play, and his Magazine brand products have had an economic impact that grows far beyond politics. Each post, each insult, each headline – a chance to suck capital from retailers chasing kraut instead of value.
The Ark Innovation ETF and the Baron Partners Fund were both caught up in the massacre before a mild rebound on Friday. The problem is that the entire system is built for these hype deals. Ever since Elon and Trump helped the campaign trajectory, backed by Elon’s $250 million contribution, the market has transformed into a huge meme casino. From joke to leveraged ETFs, all new products have few guardrails and promise insane upside down.
Speculative profits disappear in one day
Some of those bets have been working for a while. Destiny Tech100 Inc. has surged 500% in a month since the November 5th election. Dogecoin ran from 15 cents to 43 cents. Even ARK popped 26% within two weeks. These moves were not supported by revenue calls. They were driven by emotions.
Jay Hatfield, CEO of Infrastructure Capital Management, said, “I put him in another category of character cult Zeus beyond what has happened so far.” Hatfield was talking about Elon, but the same applies to Trump.
The speculative waves have been built since the pandemic, but were supercharged when Trump returned to his oval office. Ironically, Elon’s economic plan, named after a crypto token born as a dog joke, helped solidify his meme-style investment.
Meanwhile, Trump’s media companies are pushing towards launching the Truth Social Bitcoin ETF, one of several MAGA-themed crypto products that feed this frenzy.
It’s not just that gamblers are being sucked in. Bloomberg Intelligence’s Athanasios Psarofagis said 16% of ETFs launched this year are single shares of products using options or leverage. It’s a record. Most of them are made for retailers who are swinging big and looking to buy all the dips.
“Retailers – the brother trade component of retail — doesn’t care much about the basics,” said Dave Mazza, CEO of Roundhill Investments, who launched the Tesla ETF in February. Mazza said it’s all about the story, not the numbers.
