BYD Leaves Tesla in the Dust; Germany Goes All-In on Defense

TL;DR

1. BYD outpaces Tesla in EV sales and charging — at a fraction of the cost

2. Aman Resorts raises $2 billion to fuel global expansion 

3. Fed holds rates, signals two cuts despite higher inflation forecast

4. Germany goes all-in on defense and infrastructure spending

5. Professional tennis players are suing the ATP over antitrust violations

BYD’s Five-Minute EV Charge Just Made Tesla Look Slow … and Expensive

BYD shares hit an all-time high after the company unveiled new technology that fully charges its latest EVs in just five minutes. The charging system will debut in the company’s new sedan and SUV, both set to launch next month. 

• BYD’s new technology: 249 miles in five minutes 

• Tesla’s supercharger: 200 miles in 15 minutes  

This isn't the first time BYD technology has leapfrogged Tesla’s. Earlier this year, BYD rolled out its self-driving technology for free across much of its fleet — including its $9,700 model. Tesla’s Full Self-Driving software package alone costs $8,000. 

Last year, BYD surpassed Tesla to become the largest producer of EVs globally, despite not selling cars in the US. Its momentum is only accelerating: Total passenger cars delivered in both January and February rose 90%. 

The stock market is taking notice. Year to date, BYD stock is up 49% and trades at 31 times earnings, while Tesla is down 38% and trades at 161 times earnings.

• Said differently, the market values each car Tesla sold in 2024 at $425,000, and each car BYD sold for only $39,000.

The question: Is BYD dramatically undervalued, or is Tesla dramatically overvalued? The answer is yes.

This story is a metaphor for a broader shift. BYD represents a movement toward international markets — especially China and parts of Europe — where multiple expansion is underway. Investors are starting to pay more for each dollar of earnings as confidence, momentum, and capital flows into these regions.

It’s hard for stocks to go up when multiples are contracting, and it’s hard for stocks not to overperform when they're expanding.

Aman Resorts Is Raising $2B to Cater to the World’s Richest Travelers

Aman, the ultra-luxury hotel group, is seeking $2 billion to expand across the Middle East and Africa, build Aman Residences, and launch a new hotel line aimed at younger elites.

The announcement underscores a clear trend: Demand from the fastest-growing cohort in America, the super f*cking rich, is only getting stronger.

• In 2024, billionaire wealth surged by $2 trillion, growing three times faster than the prior year.

Time is the ultimate luxury, and the ultra-rich — who can control everything but time — are willing to pay a premium for high-end experiences.

• A night at the Aman hotel in NYC costs roughly $2,500, for the cheapest room. 

• That’s more than the average American household spent on housing per month last year ($2,009).

I don’t travel to cities; I travel to hotels. I didn’t take my son to a PSG game in Paris; I went to the new Cheval Blanc. I didn’t fly to São Paulo for a conference; I went to check out the new Rosewood. 

These hotel groups have an incredible business model: They don’t own their properties; they just manage them. In other words, they outsource the capital risk.

They find a local billionaire who wants the prestige of owning an Aman in the Alps, and that billionaire funds the construction. The hotel brand then enters into a management agreement, handling everything — service, training, standards, interior design, and reservations — while taking a high-margin fee of 8–12% of revenue. 

That cut might not sound huge, but it’s almost pure profit because operating costs are covered by hotel revenue. 

The lesson here: You don’t want to be in the business of owning the capital; you want to be in the business of managing it and taking revenue off the top.

The Fed Holds Rates Steady; Powell Shrugs Off Gloom

The Federal Reserve held interest rates steady, but raised its inflation forecast for the year to 2.7% and lowered GDP growth projections from 2.0% to 1.7%. Still, the announcement wasn’t as hawkish as many investors feared. The median forecast continues to call for two rate cuts this year.

In his post-meeting press conference, Chair Jerome Powell noted that the “economy is strong overall” and downplayed tariff-driven inflation as potentially “transitory.” That’s Fedspeak for “temporary, we think.”

• Asked about recession risk, he pointed out that at any given time, there is a 25% probability of a recession in the next 12 months. Old joke that’s always relevant: Economists have successfully predicted 9 out of the last 5 recessions.

Powell also waved off gloomy consumer sentiment: “There have been plenty of times where people are saying very downbeat things about the economy and then going out and buying a new car.”

Hawkish monetary policy refers to a stance where controlling inflation takes priority over boosting economic growth. Hawkish policymakers are more inclined to raise interest rates to keep inflation in check, even if it slows the economy.

Dovish monetary policy is more focused on supporting the labor market and overall economic expansion through lower interest rates.

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Germany Moves to Amend Constitution to Boost Military Spending

German lawmakers approved a major boost in defense and infrastructure spending. The plan removes borrowing limits for defense spending and creates a $547 billion infrastructure fund. 

• The DAX surged to a record high on the news and is now up 15% year to date, while the S&P 500 is down 4%. 

EU nations have increased their defense spending by nearly 30% since 2021, yet their combined military budgets still amount to less than half of what the U.S. spends each year.

• Germany is the third-largest economy in the world, but has the 28th-largest active military, smaller than South Sudan’s. 

German defense stocks went ballistic on the news: Rheinmetall, Renk Group, and Hensoldt have all more than doubled in 2024. 

• Rheinmetall, the country’s top defense contractor, now sits on an order backlog equivalent to three years of revenue.

This is a substantial shift for Germany, a country known for its fiscal conservatism and aversion to military spending since WWII. Annual borrowing was capped at 0.35% of GDP, a limit that is written into the country’s constitution. 

• Germany’s debt-to-GDP ratio is 60%, the lowest in the G7 (compared with 100% in the U.K. and 120% in the U.S.).

It might sound prudent, but Germany’s austerity has come at the expense of growth: Since 2017, the German economy has grown by 1.6%, far below the EU average of 9.5%. 

Still, defense spending isn’t a silver bullet. The “fiscal multiplier,” which measures ​​how much GDP changes in response to each additional unit of government spending, is typically low for defense. A €1 increase in defense spending leads to an increase in GDP of only €0.40 to €0.70.

• Fewer than 600,000 people are employed in Europe’s defense sector. For context, the European auto industry alone supports over 3 million jobs.

But a rotation from U.S. equities into European markets is already underway. In March, U.S. equity allocations dropped a record 40 percentage points, while eurozone stock allocations jumped 27 points — the most dramatic shift from U.S. to European equities since 1999.

The bottom line: For years, Germany — and much of Europe — looked stagnant. Now, with Berlin abandoning austerity, European equities have something they haven’t had in a long time: a growth story.

If you want European stock exposure, I’d recommend buying a broad European stock market ETF. A few low-cost options to consider: the Vanguard FTSE Europe ETF (ticker: VGK) or the iShares Core MSCI Europe ETF (ticker: IEUR); both have low fees and wide exposure across developed European markets. Low cost, diversified ETFs are the smartest and safest move.

Some less obvious winners from Europe’s rearmament? Rolls-Royce, up 35% year to date. While best known for luxury cars, the company is also the world’s 23rd-largest defense contractor, producing military jet engines.

Ramping up defense and infrastructure spending also points to higher energy demand.

That’s good news for Norway, the largest supplier of natural gas to the EU. Specifically, Equinor, the firm that controls most natural gas production in the country, and the Norwegian government, which holds a 67% stake in the company. 

Another bullish sign for Europe? Norway's sovereign wealth fund, the largest in the world, is on a buying spree of premium London real estate.

The Tennis Racket: PTPA Hits ATP With Antitrust Lawsuit

The Professional Tennis Players Association (PTPA) — co-founded by Serbian pro tennis player Novak Djokovic and Canadian tennis player Vasek Pospisil, and backed by billionaire investor Bill Ackman — has filed a new antitrust lawsuit against the Association of Tennis Professionals (ATP), Women’s Tennis Association (WTA), and other international tennis agencies. The group accuses the governing bodies of colluding to limit prize money and sponsorship opportunities for players. 

• In 2012, Larry Ellison — founder of Oracle and owner of the Indian Wells Tennis Tournament — proposed a $1.6 million increase in prize money, but the ATP blocked it due to fears that other tournaments would be pressured to match the bump, raising costs for event organizers across the tour.

Unlike athletes in team sports, tennis players compete as individuals, with no union, no collective bargaining, and minimal leverage. That structure helps explain why they earn just 18% of the sport’s total revenue, compared with 50% in the NBA or 61% in the Premier League. Lower-ranked players, who make up the bulk of the tour, often can’t afford to compete full time.

Fans are also impacted. With limited competition among tournament organizers, prices for major sporting events have skyrocketed 179% since 1997, nearly double overall inflation.

This lawsuit is about as clear-cut as it gets: the ATP and WTA are running a monopoly, and the complaint lays it out in brutal detail. The tours fix prize money, restrict sponsorships, and overfill the schedule to keep players locked in. 

• Pro tennis players compete in an 11-month season (January to November), often participating in 20–25 tournaments worldwide. 

• Compare that to football, where teams play a 17-game regular season over 18 weeks (September to early January), followed by playoffs for qualifying teams.

That said, sports leagues have historically been given a free pass on antitrust laws. Courts in the U.S. and Europe consistently side with sports leagues, arguing that unlike regular businesses, sports need monopolization so the teams and the players can compete fairly under the same conditions. I predict that the PTPA doesn’t come out on top here.

Scott shares his strategies for beating laziness, managing energy, and staying productive — drawing from both personal experience and applying academic insight. Plus, why declining birth rates could spell trouble for companies like Disney. Listen here.

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