Finimize - 🚗 Tesla went big on AI

What’s going on here?

Tesla’s sales fell by less than expected last quarter, but it might’ve been a big bet on energy that really brought investors around.

What does this mean?

Tesla has the biggest market share of any EV maker in the world. But true to Musk’s personal brand of tinkering with a little bit of everything, the company also has a side hustle of delivering clean energy. That business is booming these days, with data centers whirring away to keep up with AI systems. Good job, too: demand for EVs – Tesla’s main moneymaker – has been waning in the US, as drivers find their high prices too much to swallow. Last quarter could have been worse, though. Sure, Tesla sold nearly 5% fewer cars than the same time last year, but that was better than expected – and enough to help reduce the count of unsold cars. Investors took it, sending the share price up 10% after the news.

Why should I care?

Zooming in: It’s Optimus time.

Tesla’s shareholders approved Elon Musk’s historic $56 billion pay package in June. Musk was threatening to develop human-like robots outside of Tesla otherwise, so the approval will keep traders’ beady eyes locked onto the carmaker. Tesla plans to spend $10 billion on AI research this year, so expect some fireworks – including an autonomous robotaxi due to be showcased August 8th, and the Optimus robot entering limited production next year.

The bigger picture: Enter, robots.

Countries in North America, Europe, and East Asia are seeing their populations age and their birth rates decrease. So unless they can stabilize shrinking workforces, their economies will be at risk – especially as the few in-demand workers will likely ditch dangerous, dirty, and dull jobs. Musk’s robots may be welcomed one day, then, as they could prop up the mining, nuclear reactor maintenance, and chemical manufacturing industries.

What’s going on here?

Japan’s trade unions secured the highest wage increase since 1990, but not everyone’s wallet is on the table.

What does this mean?

Japanese labor unions have been pushing for a major wage rise. And on Wednesday, the country’s trade union federation negotiated a 5.1% increase for the seven million workers it looks after – a substantial 10% of the total Japanese workforce. But that mainly covers bigger companies, and in Japan, small businesses make up 70% of the workforce. What’s more, the small fry that are included will be rolling out smaller pay rises. At least a chunk of those paychecks should trickle into the economy: prices have risen faster than wages lately, but this announcement means that relationship’s going to flip for the first time in four years.

Why should I care?

For markets: America's hogging the limelight.

The Bank of Japan has put its might behind the country’s currency, partly by raising interest rates to just above zero. But despite its best efforts, the yen is still on the slide. And traders doubt that another increase would make a difference. High interest rates in the US are encouraging investors to stash cash in the strong dollar, see, and that’s taking even more attention away from the yen.

The bigger picture: I’m lovin’ it.

Forget about Ps, Es, and EBITDAs: right now, the evaluation trick you’ll want to know about is the “Big Mac Index”. This method – as simple as checking the price of America’s favorite burger – can be used to check if a currency is over or undervalued. A Big Mac in Japan costs less than half the price of one in America, indicating that folk can get more bang for their buck in the country. And if you’re wondering which country has the most expensive burger, it’s Switzerland – so maybe reconsider that Swiss food tour.