5 ETF Areas That Thrived Amid the Trump-Musk Feud Yesterday

On June 5, 2025, a public feud between President Trump and Elon Musk triggered market volatility, with Tesla shares slumping 14.3% amid Trump's threat to revoke subsidies. Inverse Tesla ETFs, such as TSLZ and TSLQ, surged 30% and 29.5% respectively, while inverse cryptocurrency ETFs also saw gains as SMCI and COIN declined. Despite the overall market uncertainty, leveraged ETFs in silver (driven by AI demand) and South Korea (boosted by semiconductor exports, up 50.9% year-over-year) performed strongly.

Analysis

Wall Street experienced heightened volatility on June 5, 2025, primarily driven by a public dispute between President Trump and Tesla CEO Elon Musk, which saw Tesla (TSLA) shares plummet 14.3%. This decline directly benefited inverse leveraged Tesla ETFs, with the T-REX 2X Inverse Tesla Daily Target ETF (TSLZ) surging 30% and the Tradr 2X Short TSLA Daily ETF (TSLQ) increasing by 29.5%. The conflict, characterized by President Trump's expressed “disappointment” over Musk's opposition to an economic bill and Musk's retaliatory comments on X, escalated with Trump suggesting he might revoke federal subsidies and government contracts essential to Musk's companies, including Tesla and SpaceX. Musk, in turn, declared he would consider decommissioning SpaceX's Dragon spacecraft and endorsed Trump’s impeachment. This political turmoil introduced fresh uncertainty into markets already contending with global trade concerns and mixed economic data, reigniting concerns about market fragility despite earlier signs of cautious optimism. However, several ETF sectors demonstrated strength amidst the drama: inverse cryptocurrency ETFs, specifically the Defiance Daily Target 2X Short SMCI ETF (SMCZ) and GraniteShares 1x Short COIN Daily ETF (CONI), gained 12.4% as underlying assets SMCI and COIN shares fell 7.6% and 4.6% respectively. Leveraged silver, represented by ProShares Ultra Silver (AGQ), rose 6.9%, buoyed by strong industrial demand, notably from the artificial intelligence sector's need for silver in high-performance GPUs. South Korean equities, reflected in the Direxion Daily MSCI South Korea Bull 3x Shares (KORU) 6.3% gain, benefited from a significant 50.9% year-over-year surge in semiconductor exports, indicating robust global demand. Similarly, leveraged semiconductor ETFs like the GraniteShares 2x Long MU Daily ETF (MULL) advanced 6.7%, supported by positive sentiment around companies like Micron (MU), which received an upgraded price target from Mizuho due to expected growth in high-bandwidth memory sales for AI applications.

Key Decisions for Investors

• Investors should closely monitor the evolving political dispute between President Trump and Elon Musk, particularly its potential impact on federal subsidies and contracts for Tesla and SpaceX, and reassess their exposure to TSLA given the demonstrated share price sensitivity.
• The significant gains in inverse leveraged ETFs like TSLZ, TSLQ, SMCZ, and CONI underscore opportunities for sophisticated investors in tactical, short-term trades based on event-driven volatility, though these instruments carry substantial risk.
• Consider maintaining or seeking exposure to sectors with strong underlying fundamental drivers, such as semiconductors, evidenced by South Korea's 50.9% YoY export growth and Micron's AI-related demand, and industrial commodities like silver, which are benefiting from the AI boom and industrial applications.
• The market reaction emphasizes the need to incorporate political risk assessment into investment strategy, as pronouncements from key political figures can rapidly affect specific companies and broader market sentiment.