Follow the “Feds”

Hey Snackers, Whether or not the US government keeps running, one thing is sure: America has a very, very negative view of the sector. A new Gallup poll asking people to rate various industries found that the federal government is now ranked even lower than the previous villain of the list: Big Pharma. On the positive side, Americans continue to think highly of sectors that put food on the table, as well as the computer industry. If the government does go dark, let's hope some of that good will heads toward Cava, which may be an unlikely victim of a government shutdown. Yesterday's early morning market rally ran out of steam throughout the session as that very shutdown threat weighed on US stocks. The S&P 500 ended the day up 0.3% and the Nasdaq 100 enjoyed a 0.4% gain, while the Russell 2000 just barely eked out a gain. GO WITH THE FLOW "Follow the feds" replaces "follow the Fed" as financial market maxim Lately, investors in the US stock market have enjoyed a variation on the classic "follow the Fed" theme, where investors just buy whatever the Federal Reserve is buying.  But this time, there's a twist: don't follow the Fed — follow the feds. That is, buy stocks of companies where the government has accumulated an equity position or is rumored to be doing so. Intel has been a massive beneficiary of the US government taking an equity stake, which was later followed by an Nvidia partnership and investment.  Rare earths miner MP Materials has gained even more significantly thanks to an investment from the Pentagon.  Reports that the government will pursue a similar strategy with Lithium Americas prompted that stock to nearly double in a day last week. Retail investors are clearly paying attention to this mantra. On Friday morning, Intel had more positive mentions on Reddit's r/WallStreetBets forum over the previous 12 hours than any other stock had in overall mentions, per data from SwaggyStocks. And Lithium Americas was just outside the top five in total mentions during that time. It's the most stark example of a theme that's been key for markets in 2025: the power of the Trump administration as a market catalyst. Policy decisions made in the executive branch, ranging from tariff carve-outs and export restrictions and reversals to personal and ideological relationships with the president, have made a clear mark on market giants like Apple, Nvidia, Palantir, and Tesla. THE TAKEAWAY Before getting too giddy over the prospect of "following the feds," we'd be remiss not to point to China as an example of how, number one, the long-term performance of companies with a heavy government footprint leaves much to be desired, and number two, what are seemingly national champions or well-supported industries can see their stocks crushed by the state's changing whims. Read more IT'S ELECTRIC Electric vehicle sales to hit record this quarter as tax credits near end EV sales are expected to reach 410,000 units in the US this quarter — up more than 20% from Q3 2024, according to new estimates from Cox Automotive. That means EVs will make up a record share of the new car market, at 10% of sales. The reason is plain: would-be EV buyers are pulling forward purchases in order to take advantage of the federal $7,500 tax credit, which ends today.  What does this mean for the biggest EV maker in the US, Tesla? Cox is bearish: the company estimated that Tesla will see its third-quarter US sales decline about 6% year over year. The situation would be similar to the one in Europe, where EV sales rose 30% last month while Tesla's sales declined 37%. Analyst Troy Teslike is bullish: he expects the company's sales to rise about 15% to a record this quarter.  Tesla's stock is ripping: it's on track for its best month since the presidential election. Meanwhile, EV rivals Lucid and Rivian don't seem to be too scared of the impending tax credit expiration. Earlier this month, Rivian broke ground on a new $5 billion EV plant that could produce 200,000 cars a year, while Lucid has revved up following its reverse stock split, delivering the first vehicle for a 20,000-strong robotaxi fleet and getting a price target hike to boot.  THE TAKEAWAY "The federal tax credit was a key catalyst for EV adoption, and its expiration marks a pivotal moment," Stephanie Valdez Streaty, Cox's director of industry insights, said. "This shift will test whether the electric vehicle market is mature enough to thrive on its own fundamentals or still needs support to expand further." Read more Presented by Cboe More profit or more taxes? Many single stock and ETF options traders don't know that index options may qualify for 60/40 tax treatment, where 60% of gains are taxed at the lower long-term capital gains rate and the remaining 40% are taxed at the short-term rate, regardless of the holding period. See an example of how much more profit an index options trader could potentially keep.  THE BEST THING WE READ TODAY How well can top AI models do your job? One of the biggest fears fueling the public's apprehension toward AI is that the technology will take their jobs. To help understand how real these fears are, OpenAI created a new benchmark to test how well AI models can perform "economically valuable" jobs. The results: good news for pharmacists and terrible news for software developers. See the rest MOVES Yesterday's Big Daily Movers Cannabis stocks soared after President Trump reposted a video touting CBD products as the "most important senior health initiative of the century" Disk drive makers ripped higher after Morgan Stanley analysts upped their price targets Trendy nuclear stock Oklo rose following Barclays initiating coverage of the stock with an "overweight" rating Get more details on the biggest movers of the day right when the market closes: subscribe to The Wrap here. What else we're Snackin' Electronic Arts is set to go private in $55 billion deal — the latest in a long line of disappearing stocks  A rare form of diabetes with unusual symptoms gets its own name: Type 5 How the oil from your french fry order is turned into jet fuel OpenAI is getting into everything: it plans to launch a TikTok-like app for its AI videos, and its ChatGPT is powering shopping Snack Fact of the Day Starbucks is shutting down about 1% of its stores in North America.  Tuesday September consumer confidence August job openings Earnings expected from Nike and Lamb Weston Holdings Was this email forwarded to you? Don't miss out on future stories — subscribe to Snacks and get your daily dose of financial news straight to your inbox.  Craving more insights in your inbox? Subscribe to Chartr and The Wrap for quality reads. 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