Tesla’s EVs stall in China
1Digest
The podcast begins by discussing the current state of tech stocks, highlighting the excitement surrounding artificial intelligence (AI) and its impact on companies like Nvidia and Microsoft. However, traditional tech businesses are struggling to maintain their growth rates, leading to predictions of a shift in investor focus towards sectors like financial services. The podcast then delves into the concept of "reject stocks," companies that have been removed from stock indices like the S&P 500 due to declining valuations. Asset manager Rob Arnott has created an ETF specifically for these stocks, betting on their long-term reversion to the mean. The podcast discusses Arnott's strategy and the broader trend of investors seeking lower-cost investment options, particularly in ETFs. The podcast also covers Google's ongoing antitrust trial, where the US Department of Justice is accusing the tech giant of monopolizing the digital advertising market. Google's ownership of various aspects of the ad ecosystem, from ad space to bidding exchanges, is seen as creating conflicts of interest. The case could potentially lead to a breakup of the $2 trillion company. Finally, the podcast examines Tesla's declining sales in China, a key market for the electric vehicle manufacturer. The podcast explores the reasons behind this slowdown, including the rise of domestic Chinese EV brands and the growing popularity of hybrid vehicles. Tesla's reliance on regulatory approval for its autonomous driving technology is also highlighted as a factor hindering its growth in China.
Outlines
Tech Stock Trends and the Rise of AI
The podcast discusses the current state of tech stocks, highlighting the excitement surrounding artificial intelligence (AI) and its impact on companies like Nvidia and Microsoft. However, traditional tech businesses are struggling to maintain their growth rates, leading to predictions of a shift in investor focus towards sectors like financial services.
Reject Stocks and the Rise of ETFs
The podcast delves into the concept of "reject stocks," companies that have been removed from stock indices like the S&P 500 due to declining valuations. Asset manager Rob Arnott has created an ETF specifically for these stocks, betting on their long-term reversion to the mean. The podcast discusses Arnott's strategy and the broader trend of investors seeking lower-cost investment options, particularly in ETFs.
Google's Antitrust Trial and Digital Advertising
The podcast covers Google's ongoing antitrust trial, where the US Department of Justice is accusing the tech giant of monopolizing the digital advertising market. Google's ownership of various aspects of the ad ecosystem, from ad space to bidding exchanges, is seen as creating conflicts of interest. The case could potentially lead to a breakup of the $2 trillion company.
Tesla's Stalling Sales in China
The podcast examines Tesla's declining sales in China, a key market for the electric vehicle manufacturer. The podcast explores the reasons behind this slowdown, including the rise of domestic Chinese EV brands and the growing popularity of hybrid vehicles. Tesla's reliance on regulatory approval for its autonomous driving technology is also highlighted as a factor hindering its growth in China.
Keywords
Reject Stocks
Companies that have been removed from stock indices like the S&P 500 due to declining valuations. These stocks are often considered undervalued and have the potential to rebound in the long term.
Smart Beta Fund
A type of investment fund that combines elements of passive and active investing. These funds use rules-based strategies to select investments, aiming to outperform traditional index funds.
Exchange Traded Fund (ETF)
A type of investment fund that trades on stock exchanges like individual stocks. ETFs offer investors a diversified portfolio of assets, such as stocks, bonds, or commodities, at a relatively low cost.
Digital Advertising
The use of online platforms and technologies to promote products or services. This includes various formats, such as search engine marketing, social media advertising, and display advertising.
Antitrust Law
A body of law that aims to prevent monopolies and promote competition in the marketplace. Antitrust laws prohibit practices that restrict trade, such as price fixing, market allocation, and predatory pricing.
Autonomous Driving
A technology that enables vehicles to drive themselves without human intervention. This involves using sensors, cameras, and artificial intelligence to perceive the environment and make driving decisions.
Hybrid Vehicle
A vehicle that combines a gasoline or diesel engine with an electric motor. Hybrid vehicles offer fuel efficiency and reduced emissions compared to traditional gasoline-powered vehicles.
Q&A
What are "reject stocks" and why are they attracting attention from investors?
Reject stocks are companies that have been removed from major stock indices due to declining valuations. Investors are interested in these stocks because they believe they are undervalued and have the potential to rebound in the long term.
How is Google's antitrust trial impacting the company's digital advertising business?
The US Department of Justice is accusing Google of monopolizing the digital advertising market, which could lead to a breakup of the company and a reduction in its power. The trial is raising concerns about Google's dominance in the ad ecosystem and its potential conflicts of interest.
What challenges is Tesla facing in China, and how is the company trying to address them?
Tesla's sales in China have been slowing due to the rise of domestic EV brands and the growing popularity of hybrid vehicles. Tesla is trying to address these challenges by focusing on its autonomous driving technology and seeking regulatory approval for its implementation.
What is the significance of the growing popularity of ETFs in the investment market?
The increasing popularity of ETFs reflects a shift towards lower-cost investment options, particularly among investors seeking diversification and long-term growth. This trend is impacting the traditional asset management industry, as managers are seeking new ways to generate revenue and compete in the ETF market.
Show Notes
Enthusiasm about artificial intelligence masks a recession in the technology sector, and a new exchange traded fund looks specifically for ‘reject’ stocks. Plus, Google heads back to court over fresh antitrust allegations, and Chinese car buyers ditch Tesla for local alternatives.
Mentioned in this podcast:
AI exuberance masks broad weakness in tech sector, say investors
Star manager Rob Arnott launches ETF to buy up index ‘rejects’
Google’s $20bn ad tech business to play for at next antitrust showdown
Elon Musk’s China dream stalls as hybrids rush past Tesla
The FT News Briefing is produced by Niamh Rowe, Fiona Symon, Sonja Hutson, Kasia Broussalian and Marc Filippino. Additional help from Josh Gabert-Doyon, Breen Turner, Sam Giovinco, Peter Barber, Michael Lello, David da Silva and Gavin Kallmann. Our engineer is Monica Lopez. Topher Forhecz is the FT’s executive producer. The FT’s global head of audio is Cheryl Brumley. The show’s theme song is by Metaphor Music.
Read a transcript of this episode on FT.com
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