🎯 Stocks set to lose to bonds

Welcome back to Trendline!

Today we have some interesting charts on US stock market returns expectations, and Tesla’s woes. Let’s dive in 👇️ 

1) 10-year return forecast for US equities is less than US treasuries: Forecasts should be taken with a pinch of salt. However, this one is interesting - Vanguard forecasts US stocks to return only 3.9% annually over the next decade, much less than 4.9% for US treasuries.

Take it for what it’s worth but return expectations from US stocks is low. More asset classes mentioned in graphic below.

2) Tesla is losing ground in China: Tesla sales have declined 4% YoY in China in 2024. Its losing market share to Chinese domestic car companies like BYD (in fact China is the #1 car exporter globally). With Tesla also losing ground in Europe to BYD, the future’s looking bleak for the company. Tesla stock is facing one of its worst drawdown yet - with the stock down 54% from its peak.

3) Foreign Investors are big buyers of US equity: As the US stock market comes under pressure, it is worth looking at who holds stocks of US companies. In the 1950s, almost all of corporate equity was held by American households. Now, institutions call the shots, but foreign investors (institution, retail) are also a significant player - accounting for 17.4% of US corporate equity.

4) 3.35 Billion people use Meta’s products globally: One of the biggest reason for Meta’s success has been its ability to continuously grow its user base globally. Through Facebook, Instagram and then Whatsapp, Meta has been able to get ~66% of all eligible people in the world on to its products (Adults over 13 years+, excl. China)

As developing countries get richer and people transact more online, Meta will have more opportunities to continue to monetize its vast user base.

5) Polymarket predicts 38% chance of US recession in 2025: Prediction markets were right about US elections. Polymarket is now showing 38% chance for a US recession in 2025. Do you agree? Answer in the poll below.

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