Stocks Are Going Crazy, Here’s Why

Today on the Joseph Carlson show, stocks are going crazy. Some of the biggest companies in the world like Amazon are up 5 or 6%. The overall indices are up around 3% on the day. And this comes at a time of renewed optimism of de escalation on tariffs. There is news that the White House is considering slashing Chinese tariffs to a huge degree. We'll be going over the latest in this news, Trump's attempts

to de escalate the situation. Scott Bessent, the one that's leading this charge of trying to calm the markets and potentially making deals with lots of trading partners. We'll be looking over all the latest as well as how this effects our portfolios. Now we also have news just yesterday that Tesla reported earnings they missed on everything and the stock is up around 7% on the day.

Like you would expect, we'll be going over why this is a common occurrence, why Tesla misses on everything and the stock goes up. And we also have Moody's and Equifax, two companies in My Portfolio that both reported earnings will be reviewing both of them as well as going over all my portfolios and the holdings in them.

We're going to take a look at what my performance looks like, how it stacks up against the market and which companies I'm looking at buying. So we have a lot to get to in the episode. Let's go ahead and jump in Now. We kick things off by first looking at what's causing this market to surge today. Some of the biggest companies like Amazon, which were the most impacted by the Chinese tariffs, are the ones that are up the most today.

And that is because the news that the White House is strongly considering slashing the tariffs. This is a de escalation of the trade war. This is what investors have been looking forward to. The Trump administration is considering slashing its steep tariffs on Chinese imports, in some cases by more than half, in a bid to de escalate tensions with Beijing. Now, so far, President Trump hasn't made a final

determination. They say that the discussions remain fluid and several options are on the table. One administration official said Trump would act unilaterally and would need to see some action on Beijing to lower the tariffs. So although nothing is definitive right now, it does look like there's a strong chance of the escalation. In fact, 1 senior White House official said the Chinese tariffs were likely to come down between roughly 50 and 65%.

The administration is also considering a tarred approach similar to the one proposed by the White House Committee on China late last year. 35% levies on items the US deems not a threat to national security, but at least 100% for items deemed as strategic to Americans interests. The strategy is adapting here from a broad based aggressive roll out of tariffs on China, tariffing every single item that we can, to now much more nuanced strategic specific approach.

And overall, the market likes this more strategic approach. Investors are getting further and further on board of this

plan. Now during this entire tariff rollout, the one person that investors can really think, if you're an investor and you're excited about your portfolio going up today, the person that you owe the most gratitude towards is Scott Besson. He is the one that's in the White House that is the most for free trade collaboration and making smart and strategic deals with our partners. He's also the one that shares the best message, the most

unified message. For example, he recently said that America first does not mean America alone. This is a much needed message, one that's being repeated over and over again, showing that even if you believe America's a great country, if you're like me, if you have a flag in your background, if you're very American first, it doesn't mean that you want to do it alone. America's made better by our strategic partnerships, by our strong ally ships across the

world. He says, quote, America first does not mean America alone. To the contrary, it's a call for deeper collaboration and mutual respect among our trade partners. This is the message that America needs going forward. And Scott Besson continued on, saying, quote, far from stepping back, America First seeks to expand US leadership in international institutions like the IMF and World Bank. Scott Besson in a private meeting, said that he expects de escalation with China.

The de escalation will come in the very near future, Besson said during an event hosted by JP Morgan. He characterized the current situation as essentially a trade embargo, according to people who attended. So we can clearly see what's going on here.

The evolution of the strategy over time, it's starting off Broad bold, going in with huge sweeping tariffs, imposing them on virtually every country in the world and then reducing them more strategically, more focused to align with specific products and countries that better align with EU s s strategic goals. And the market like seeing this transition as this continues on, going from this broad based tariff to this more strategic approach, the market will be bullish as a response.

And the next bullish phase of this, the next thing that investors can look for in terms of big days like today is a ladder, a ladder of new trade deals announced with different strategic partners over the upcoming months. The White House is also reportedly very close with many key deals, some like Japan and India.

When these get announced, there's only one way the market can go. And throughout all of this, with the trade policy becoming more clear, with investors becoming more optimistic, you can start to see what the best decisions have been. And that has been to stay the course and buy the dip. Now, let's go ahead and move on to some headlines. The first big piece of news is

that Tesla is in the green by 6%, which may leave you with the impression that Tesla had a fantastic earnings. But I'm here to report, regrettably, that Tesla's earnings were not great. In fact, they weren't only not great, they weren't even good. Tesla's an interesting case because once again, they missed on everything. Top and bottom line, miss revenue and earnings per share. The net income was down 71% year over year. The revenue declined 9% year over year.

The operating margins are lower than Texas Roadhouse, a sit down restaurant, yet somehow the stock is in the green. It's in the green by 7% at this point. Tesla missing on earnings and the stock going up after is not a surprise. It's more of a seasonal tradition. It's like daylight savings time or being surprised when Mariah Carey comes around in November. It's something that we all know is going to happen, but we all act shocked when it happens again.

And here we have it happening again. Tesla missed big and the stock is in the green. And it's clear why this continues to happen. Tesla's unique example of a company where investors are not focused on any of the numbers or the past historical results. They are squarely focused on the commentary from management. And Elon Musk delivered where he needed to, which was the 1st 5 minutes of the earnings call. He casually stated that Tesla would become bigger than the next 5 biggest companies

combined. Now, keep in mind, this is a company that's struggling through seasonal sales to sell its vehicles, a company that generated less than free cash flow than Netflix, and the CEO of the company saying that it's going to become the biggest company times 5. Even though these future promises and visions by Elon Musk seem a little out there, investors give him more credit because of what he's accomplished.

Tesla, after all, is a huge outlier, a huge success that shouldn't have been in the first case. So investors look at these big, bold promises from Elon Musk with greater optimism. And although they missed on everything this quarter, not everything was bad. Tesla investors have reason to be incrementally bullish based

on this quarter. If we look at the earnings call summary, transcript of what happened, what really went on this quarter, nothing summarizes it better than the transcript summary generated by Qualtrim. This is something that we've dramatically improved and updated. It breaks it down by topic and it explains every single thing that Tesla did or any company that just reported earnings.

For example, if we look at what Elon Musk actually talked about on this quarterly call and what investors are bidding the company U-71 of the first things he mentioned on the call was Dodge. Investors have been concerned that Elon Musk is damaging the brand of Tesla by being involved with DOGE. Elon Musk addressed his work with the Department of Government deficiency focused on reducing waste fraud in the US government spending.

Due to completion of the foundational DOGE work, Musk will soon be reducing his time spent on government activities and reallocating more time to Tesla. So he basically said, hey, look, we've done most of the set up, I'm not really needed there anymore, and now it's just doing unnecessary damage to the Tesla brand. So I'm going to step away from Doge, let them do their thing. I'll still have some connections there, but I want to kind of detach so I'm not damaging the brand of Tesla.

He stated that the protest against his government work are by groups previously benefiting from inefficient spending. So a lot of the people fighting back against DOGE were people that were upset that their jobs are being cut. But this is huge news for Tesla investors. They want to know that their CEO is more focused on Tesla than it is on the US government, especially when that's damaging the brand. So this is one of the reasons the stock is moving up. We also have Tesla's current

state and the outlook. This is Elon Musk's commentary on what he expects for the future. And this is where we get into those big grandiose plans. Elon stressed Tesla's not crisis mode unlike the past, but expects some challenges and unexpected bumps during the year. So this is going to be a rocky year. He's setting those expectations, but he still paints this very optimistic long term future.

He says he remains highly optimistic, believes Tesla can become the world's most valuable company, especially with successful execution and autonomy and robotics. He emphasized that the company's long term vision large scale production of autonomous vehicles and humanoid robots. We know that Tesla has been closer and closer to their robo taxi plans. They plan on doing this in 2025. He says the robotaxi in autonomy is a core focus.

Launching fully autonomous paid ride services in Austin in June using Model wise. So we plan on this going live in June and investors again, we're looking for that to check off and they got it. Scaling is planning in other cities quickly with the intent to generalize solutions that work across entire jurisdictions relying on AI rather than city specific mapping. So we know that Elon Musk has said that Waymo is kind of doing it city by city. They have to map the entire city.

The way that Tesla's doing this is building AI that works in any city. And then their only real restraint is jurisdiction. Just the red tape. So he doesn't consider Waymo much of A competitor. He predicted millions of autonomous Teslas will be operating in the second-half of 2026 with scaling depending on regulatory approval. There you have this more bullish sentiment. Millions of autonomous Teslas next year. That is an incredible statement. They still have to deliver on this.

But again, this is the reason the stock is up 6%, up 7%. Investors really love seeing this. Elon is checking off all the boxes that Tesla investors wanted to hear. Drivers in China have already extensively tested full self driving features. Tesla's generalized AI based solution adapts rapidly to different locations. So it's going to work in China very easily, it's going to work in the US, it'll adapt to any

different location. Now we also talked about the Optimist, the humanoid robot that Tesla's creating. They say that by the end of this year they expect to have thousands of these Optimist robots working in Tesla factory floors. The long term scale up anticipated to reach 1,000,000 units per year by 2029 to 2030. So in just five years, they want to be assembling and manufacturing 1,000,000 units per year. So this is something they're working on aggressively right

now. Tesla investors are baking this into the models because again, as we look at all these topics that were covered, we have to know that Tesla right now is overvalued based on its current fundamentals. But all of this is stuff that's happening over the next five years. If all of this comes to fruition, if all of these plans really do happen, if they scale up, if they're able to execute, then Tesla will justify its

current valuation. Now, one thing I like to see was that Elon Musk was asked specifically about Waymo as a competitor. He said that Tesla's approach with AI and cameras is lower cost, more scalable, and not reliant on expensive sensors and maps, unlike Waymo. Now, that's the first thing that I would push back on if I was an analyst there asking him. It's true that Tesla doesn't have LIDAR, but it's also true that these expensive sensors and maps are becoming cheaper by the day.

The cost of Lidar has gone down dramatically. And when you extrapolate the cost of a Lidar sensor on a vehicle over the course of its lifetime, the amount of miles driven, it's insignificant. The lighter sensors add on a little initial cost, but they're amortized over years of use for these vehicles. And on top of that, the lighter sensors do add in another form factor, another visual for these

vehicles. Elon Musk repeatedly said that full self driving needs to be significantly better than humans, but he also says the reason that they don't need LIDAR is because humans don't have radar. Human drivers would be significantly safer and better drivers if they had radar. If the cost is not prohibitive then it makes sense to add Lidar. But Tesla so far continues to refuse to do so, and they see a path of making this successful without LIDAR.

They also say that Tesla's existing fleet can be transformed into robotaxis via software updates, offering a significant scale advantage and the future. Musk believes most people will no longer buy cars, instead using autonomous vehicle fleets. When we look at Tesla more broadly and breakdown what investors are digging into and their expectations for the future, it all comes down to narrative. It makes sense that this company can feasibly always miss on earnings.

And so long as investors buy into this extremely extraordinary future, the vision that Elon Musk is painting, they will still want to hold their shares. Why wouldn't you if you believe it's going to be the most valuable company times 5? So when we look at Tesla, it still remains a battle of narratives. From my investing standpoint, it doesn't resemble the type of companies that I personally pick, but I can still see why some investors are betting on this one.

Next we get into a company that's a recent addition to My Portfolio, one that I've invested a little over $20,000 into, which is Equifax. Equifax also reported earnings yesterday, and the stock surged up 14% on the day and it's up again another 2% today. So when you look at the stock price, we can just see the magnitude of the surge. It went from $215 now to 2:48. So big move by Equifax, erasing all the losses it had over the past month.

And it leaves investors asking why did the stock go up so much? And there's a few reasons why. First of all, most analysts had negative sentiment on this company and I did as well. If you recall my review going into this week, Equifax was actually a company that I highlighted as believing that it would be a tough quarter. I thought there's a high likelihood it would go down further and that's based off of looking at the company and the many headwinds it's facing.

It has so many current challenges the companies facing and they did much better than expected across the board. They simply exceeded investors expectations. First of all with their earnings per share in revenue, earnings per share was a big beat, $1.53 versus $1.44. So you have a pretty significant beat on earnings. They also beat on revenue. Every part of the company did a little bit better than expected. So it wasn't just one part

outperforming across the board. The different segments like the verification business, the mortgage business, all of that performed relatively well. Equifax also announced a $3 billion buyback program, so they say they're returning aggressively capital back to the investor. Of course, investors like hearing that. It's better that a company that's highly profitable returns some money back to the shareholder. On top of doing this aggressive buyback program, they're also

raising the dividend by 28%. That's hard to complain about. When a company raises its buyback program and then increases its dividend by 28%, They're returning capital back to the shareholder every way possible. Investors like hearing that. Now there are some other things that they mention on the earnings call that I think are worth diving into. And again we'll go into the Qualtrum transcript summary here, which is the industry best

summary of these companies. We have here the Q1 financial performance. Equifax reported a strong Q1 revenue of 1.44 billion, which exceeded their midpoint of their guidance. Their debt leverage ended March at 2.5 turns, aligning with their long term targets. So they're saying their debt's not a problem at all. And then the Adjusted EBITDA margins were 29.3%, slightly higher than last year and expectations with Workforce Solutions with margins above 50%.

So that great product they have in the Workforce Solutions called the Work number has extremely high margins. This is what investors are paying attention to. Now. All of this sounds great, but one of my concerns with Equifax was the DOGE effort. The DOGE effort was to cut government spending and Equifax has a lot of business with the government. So it kind of made sense that Equifax would be under target. After all, Equifax makes a lot of money from the government.

The government is being reduced by the DOGE effort, but Equifax pivoted in a brilliant way. The EWS is expanding its presence in the federal and state government markets with emphasis on program integrity and reducing 160 billion of improper payments. So out of all the things that DOGE and the government's trying to cut and become more efficient, probably the last thing that they would want to cut is identity verification, knowing who you're dealing with.

The entire product that Equifax sells to the government is one that reduces improper payments, IE fraud and waste. Knowing who you're doing business with means that you have lower amounts of waste in a very beneficial way. For Equifax. The government becoming more efficient actually enhances their products value because they sell a product that makes the government have less waste. Their marketing team is aware of this and they're putting greater emphasis into selling this product.

Now in terms of what this company would do in a recession or with ongoing tariffs in a slower economy, this is what they highlighted. Equifax believes that 67% of its revenue comes from recession resilient counter cyclical businesses, up from 54% in 2022. So I like that they really broke down specifically how much of their business is not cyclical and the majority of it's not historical recession analysis.

2008 to 2009 in COVID suggests non mortgage businesses could see low single digit growth even during downturns. The subscription based revenue growth and increased use of alternative data add resiliency. Now the mortgage business is more sensitive to economic cycles like we're seeing right now. The mortgage business is really slow, but they note that it offers significant upside during refinancing cycles and post rate cuts, which will eventually

happen. The company expects to maintain strong free cash flow, strong margin expansion, and return of capital even during economic uncertainty. Overall, a very strong report and I'm happy to be wrong in this case. I always love seeing my companies do well. I'm now back in the green on this one by a decent margin, up $2500 where I was in the red just two days ago. And I still believe that Equifax Today is meaningfully undervalued. Now we also have Moody's at reported earnings yesterday.

I'm not going to spend a lot of time on this one.

It was business as usual, just another quarter of this company doing the same thing it always has. One notable thing is the Moodys Investor Services. This is the credit rating portion of the business had a record high quarter. So debt issuance for big companies is still happening and we're seeing the debt renewal wall. As this happens, this very high margin portion of the business will continue to collect more.

So this is the global tollbooth, a company that every business virtually in the world has to go through to issue debt. And as they issue more debt, as we have this renewal, they're going to make more money. I think that Moody's continues to be one of the most predictable businesses in the market. I don't plan on selling this one anytime soon. Now finally, we got to take a look at one of my portfolios. This is the story fun.

I've been tracking this one publicly since the minute I created it. It's a portfolio that's highly concentrated into a couple companies that I believe will be huge winners. Now this portfolio is around 4 years old and we're nearing the five year mark, which was my goal to outperform the S&P 500 / a five year period. A lot of people say it's easy to beat the S&P 500 in one years or just two years. It's a little bit of a luck of the draw. But over a five year period it

becomes bigger. It's a bigger challenge to outperform the S&P 500. Now I found that to be just the opposite. I think outperforming the S&P 500 over the one year is very difficult. In fact, it's a bit of a coin flip to know how your holdings are going to perform over one year period. But as you go further amounts of time, it becomes a little bit easier because the companies that you pick, their performance

starts to weigh in more. What I've seen with My Portfolio is that when I first created it, it was doing really well Year 1, matching the S&P 500. Then we got into 2022. My Portfolio in blue hair started to underperform the S&P 500 to a huge degree. I held companies like Amazon and Netflix, all these companies that really tanked. I also held some companies that just didn't work out, ones like Alibaba. I simply lost money on them.

But during this time period, I started to double down on my highest convictions, purchasing more Netflix at the bottom, purchasing more Amazon towards the bottom, at the very lows that these companies were trading at. We went through a long time period here. That was somewhat discouraging. I gave routine updates showing that My Portfolio was underperforming the S&P 500 all through 2022 into 2023. But then we started to gain

momentum. Netflix started to pick up and this one has really carried the portfolio over the past couple of years. Amazon also started to move up as well. In 2023, you can start to see My Portfolio catch back up to the S&P 500 led by Netflix, Amazon and Google. It met the S&P 500 in 2024 and ever since then it's started to surpass it.

Since 2024, it's continued to surge higher and higher, primarily led by Netflix. When we get into 2025 right here, you can see that we had an advantage going into 2025 already outperforming the S&P 500. But moving into it, it also outperformed even in 2025 with Netflix once again leading the way. Right now, this portfolio is up 86% and the S&P 500 is up 31%

since inception. This portfolio remains a highly concentrated a group of bets in companies that I believe have both great stories, great narratives behind them and great fundamentals overall, making them highly predictable. The reason that I named this portfolio the story fund is an homage to Peter Lynch. A company story is the combination of the fundamentals with the narrative and I believe these companies still remain the best stories in the market.

That'll be it for this episode. Hope you enjoyed and see you in

the next one.