Life is a highway, and a bunch of US automakers just hit a big ol’ pothole.

Second quarter vehicle sales have arrived, and now that we’ve got the whole picture, we can see who’s racing for the checkered flag and who’s getting lapped.

Winners: hybrids and EVs

The Trump administration cut EV tax credits last year, raising prices for would-be buyers and hurting sales enough that companies like Ford, General Motors, and Honda have drastically reduced their EV production. But this year, upheaval in the Middle East convinced US buyers that being beholden to prices at the pump isn’t so great. That’s been a boon for hybrid and electric vehicles, and the companies that make them.

For example, Toyota’s sales of hybrids, EVs, and plug-in models soared 19.5% last quarter, and accounted for just under 57% of all Toyota cars sold in Q2. Hyundai just capped its best second quarter ever, thanks mainly to the 71% increase in hybrid sales over the last three months, while Honda touted its best quarter since 2021, fueled by “a record performance by electrified models.”

Don’t forget the EV powerhouses: Despite the lack of tax credits, for some Americans the same forces that have them test-driving hybrids also have them side-eyeing EVs. That’s great news for Tesla, which saw its deliveries surge 34% quarter over quarter and 24.9% year over year. But the announcement was pretty expected among investors, and the stock sank 7.49% in a sell-the-news decline.

Meanwhile, smaller EV player Rivian surged 8.44% thanks to better-than-expected vehicle deliveries. But Lucid Group dropped 8.45% after delivering a one-two punch of missing vehicle delivery estimates and announcing a bunch of management turnover.

Losers: US automakers

The decision by Ford and GM to cut EV and hybrid vehicle production made sense at the time, but it’s got to sting right about now. GM eked out a 0.64% gain after it revealed its second-quarter sales sank 4% year over year, while Ford shares tumbled 2.13% on a painful 10.3% decline in sales. Both companies highlighted problems in the EV market, especially Ford, which reported a 40.7% drop in EV sales.

The automotive industry is shifting as we speak, and some companies are prepared for it while others are being left behind. Peace in the Middle East and lower oil prices might swing the pendulum back in US automakers’ favor, but for now, they are stalling out.—MR

🟢 What’s up

• AeroVironment jumped 10.7% after it clinched a $500 million contract with the US Army.
• Universal Health Services added 5.16% and HCA Healthcare rallied 4.39% thanks to a revised payment rate from the US Centers for Medicare & Medicaid Services.
• Palantir rose 2.84% after D.A. Davidson upgraded the stock and said it’s time to buy the dip.
• Strategy gained 7.9% and Coinbase climbed 3.92% as bitcoin rallied above $61,000.
• Blue Owl Capital rose 4.63% after the besieged private credit firm restricted redemptions from two of its biggest funds.
• Robinhood surged 3.76%, fueled by bitcoin’s rise, new tokenization plans, and new perpetual futures contracts (more on that later).

What’s down

• Bending Spoons dropped 11.28% as investors took profits following its 40% jump on its first day trading yesterday.
• Investors continued to take profits from memory stocks after their blockbuster H1: Sandisk lost 14.13%, Western Digital sank 9.92%, and Seagate Technology dropped 10.38%.
• Nvidia fell 1.39% and Micron dropped 5.49% amid a broader rotation out of tech stocks.

Nobody has a crystal ball. But if you’re wondering what’s going to happen with markets in the second half of the year—it’s worth asking Joe Quinlan.

Quinlan is managing director and head of market strategy at Bank of America private bank. His team focuses on market analysis and asset allocation across Bank of America’s wealth management business, and helps construct their portfolio.

We spoke with Joe about the biggest risks investors face in the months ahead, and how to prepare now.

Our conversation has been edited for length and clarity.

Many investors have been surprised by the market’s resilience over the past year, given the Iran war and political chaos. What could go wrong now?

One possibility is that inflation comes in higher than expected. That’s not our base case—especially since oil prices have fallen sharply—but it’s a risk. Another risk is that the Federal Reserve may have to move more aggressively than markets currently expect. Our economists are kind of an outlier, looking for the Fed to raise rates three times—that’s a contrarian call right now, and if that happens, we’re going to be set up for some more volatility.

So the biggest risks are elevated inflation leading to more aggressive monetary tightening, and geopolitical tensions—particularly involving the US and Iran—creating another oil shock. Oil prices have already fallen about 40%, but what happens if they rise 40% again? Again, that’s not our base case, but it’s something we’re watching.

Click here to keep reading about how to prepare your portfolio for AI upheaval.

Like bitcoin and prediction markets, perps are another fad that began on the fringes of degeneracy and are now hurtling toward mainstream finance.

Perpetual futures, aka “perps,” may have a strange name, but their actual use is even wilder: These are specialized derivatives that enable traders to speculate on the price movement of an asset without actually owning it—hence the “future” part of the name. But unlike regular futures contracts, they never expire—there’s the “perpetual” part. For example, if you purchase a December oil future contract, it settles in December. With perps, the position never expires.

These instruments are essentially a retail trader’s dream and any sane investor’s worst nightmare: The retail crowd can speculate as far into the future as they want, amplify their returns (and losses) with leverage, and do this around the clock, 24/7.

If you can’t beat ’em…

The hub where these debaucherous little demons really took off is called Hyperliquid, an offshore crypto-based decentralized exchange. There, investors buy and sell perps directly on blockchain infrastructure instead of centralized exchanges. But now, perps are evolving from a weird thing your Dogecoin-loving cousin told you about, into a legitimate financial instrument.

In May, the CFTC reversed its earlier skepticism towards perps, and recently approved bitcoin perps for Kalshi and Coinbase. Coinbase in particular is jumping on the perp train, having recently rolled out US crypto perpetual futures, thematic index perps, stock perpetual futures, and even pre-IPO perpetual contracts that give exposure to companies like SpaceX.

TradFi is hopping on the nonstop trading bandwagon, too. The reason is simple: Why would traders settle for a 4pm deadline when they can trade 24/7 elsewhere? Nasdaq has partnered with Kraken to tokenize stocks to trade around the clock, while the New York Stock Exchange, CME Group, and Cboe Global Markets are also tinkering with some form of around the clock trading.

But it’s not all smooth sailing into a perpetual-futures future: While the CFTC is fine with Kalshi rolling out perps to its users, CME Group is suing the regulator to stop it. CME is the largest futures exchange in the country, so it’s trying to defend its turf from new competition, not necessarily protect investors.

TLDR: It goes without saying that nobody needs to be using these things, and in fact, you probably shouldn’t be. But as perps creep into financial markets and investing lingo, you might not be able to avoid them forever.—LB

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Monday: We’re smack in the gap between earnings seasons next week, so there’s no announcements of note. The only economic report to keep an eye on is US Services PMI.

Tuesday: The dry spell for earnings announcements continues, and there’s no economic reports of note. Maybe take the day off and go touch some grass?

Wednesday: The first trickle of the new earnings season begins with Levi Strauss & Co., and we’ll get the May Consumer Credit report. But for our money, the big announcement will be the minutes from the first Federal Open Market Committee meeting since Kevin Warsh took office.

Thursday: Earnings announcements continue in dribs and drabs, with PepsiCo and the WD-40 Company dropping their latest numbers. We’ve got the usual weekly initial jobless claims report, as well as a look at Existing Home Sales for June.

Friday: The only thing worth watching at the end of a quiet week will be Delta Air Lines’ quarterly report. Enjoy the peace while you can, because a new earnings season kicks off the following week.