Macro

BYD overtook Tesla as the world’s biggest seller of electric cars in Q4 2023, delivering a record 525,409 battery-electric vehicles against Tesla’s 484,507. Tesla kept the full-year BEV crown (1.8 million vs 1.57 million), but its lead halved in a year as BYD’s cheaper models scaled at home and abroad. The first quarterly crown change marked the arrival of Chinese makers as the volume leaders of the global EV transition.

Hertz said it will sell 20,000 EVs — about a third of its electric fleet, predominantly Teslas — and buy gas cars with part of the proceeds, citing weaker-than-expected rental demand and high repair costs. It took roughly $245 million of incremental depreciation on the move, a sharp reversal of its 2021 pledge to buy 100,000 Teslas. The discounted fleet sales added pressure to already-falling used-EV prices and resale values.

The Biden administration raised tariffs on $18 billion in Chinese imports, targeting electric vehicles, solar panels, batteries, and semiconductors to shield U.S. industries from subsidized Chinese competition. The move may protect domestic clean energy investments but risks retaliation from China and potential inflationary pressures despite administration assurances.

As of mid-2026, the Federal Reserve under Chair Kevin Warsh has held its target rate at 3.50%-3.75% after no cuts this year, reversing earlier expectations. The FOMC cited solid economic growth despite Middle East conflict-driven uncertainty. With the last cut in late 2025, the Fed's dot plot and CME's FedWatch tool now indicate a possible rate hike later in 2026, driven by rising energy prices and geopolitical tensions. Experts like Gary Pzegeo of CIBC Private Wealth expect one or two increases to cool demand. Consumers are advised to pay down variable-rate debt, lock in fixed borrowing rates, and boost savings in anticipation of higher borrowing costs.

The July Consumer Price Index showed core inflation moderating to an annual rate of 2.5%, down from June's 2.65% and approaching the Federal Reserve's 2% target. Despite this easing, mortgage rates have risen to near 6.75% from 6.16% at the start of 2026, partly due to inflation concerns from Mideast conflict-driven oil prices. The Fed remains in a wait-and-see mode but is expected to raise short-term rates, as traders anticipate a hike by year-end to curb persistent consumer costs. The impact on mortgage rates remains uncertain, with Fannie Mae forecasting rates in the low- to mid-6% range through 2027.

The International Longshoremen's Association (ILA) launched a strike at 14 major U.S. East and Gulf Coast ports after contract talks with the United States Maritime Alliance (USMX) collapsed over wages and automation. The work stoppage, affecting $3 trillion in annual trade, threatens supply chains, holiday retail, and industries like pharmaceuticals and autos, with potential economic losses exceeding $3.7 billion per week. Market implications include rising logistics costs, delays, and inflationary pressures, particularly if the strike persists beyond a few days.