On Tuesday, Tesla announced a lower-cost version of its Model Y electric vehicle. So why now? What finally convinced the company to bring its long-rumored, and possibly once-canceled, mass market vehicle to fruition? We can think of 1,000,000,007,500 reasons. That’s the size of Elon Musk’s new pay-for-performance pay package (plus an insignificant-by-comparison number long prized by EV buyers).

No Tax Credit? No Problem

At the end of September, the cost of a Tesla effectively rose $7,500 after the expiration of the federal government’s EV tax credit. The expiration, presumably, was a blow for Tesla (though it did create a short-term surge in demand). The new lower-cost Model Y, dubbed the Model Y Standard, essentially fills the void left by the tax credit, with a starting price of $39,990.

That’s almost $7,000 cheaper than the previous base Model Y offered by the company (Tesla also announced a $36,990 Model 3 sedan on Tuesday, marking a modest discount from previous iterations). But it’s also above the $30,000 price tag that Musk called a “key threshold” when discussing a low-cost Tesla last year, and well above a planned $25,000 EV that Musk reportedly canceled last year, per sources who spoke with Reuters. Still, it could be enough to keep Tesla sales juiced for the foreseeable future, which is also good news for Musk:

• In one of several milestones necessary to secure his recently negotiated $1 trillion pay package, Tesla must deliver 20 million cars within a decade.
• Hitting that mark will require significant sales growth. The company delivered 497,099 vehicles in its recent record quarter, following sales of just 336,681 and 384,122 cars in the first and second quarters of the year, respectively, both of which marked double-digit declines from the same period in 2024. Sales have tumbled 6% year-over-year through September.

Sky High Expectations: Still, the new lower-cost models are a healthy tick above the cheapest EVs in the US. The baseline Kia Leaf, for instance, runs just $26,000, while a Chevrolet Equinox EV comes in at just under $35,000. And in China, where EV makers are locked in a bitter price war, BYD is selling cars for as little as $10,000. Tesla shares fell 4.4% on Tuesday, after popping 5.5% on Monday following a teaser video for the announcement event. There may be a lesson in there: Buy the hype, sell the news.

US consumers were asked to look into their crystal balls in September. They didn’t like what they saw.

Americans reported growing pessimism about the trajectory of inflation as well as the labor market, according to the Federal Reserve Bank of New York’s latest monthly Survey of Consumer Expectations, released on Tuesday.

An Uptick in Worry

The official unemployment rate in the US last month is, for now, a mystery that not even the Scooby Doo gang could solve: Only lawmakers can end the government shutdown that put the Bureau of Labor Statistics’ latest report on hold, and Shaggy doesn’t have a seat in Congress. But private sector data from the ADP’s latest National Employment Report showed that hiring deteriorated in September, lending support to the uneasiness registered by consumers in the latest NY Fed Survey.

The survey showed a mean expectation of 41.1% that the unemployment rate will be higher in 12 months. That’s up 2 percentage points from August. The median expectation of inflation for the next 12 months rose to 3.4% from 3.2% in August, and the five-year inflation expectation rose to 3% from 2.9%. That’s higher than economists’ and government estimates, which nevertheless see inflation reaching about 3%, well above the Federal Reserve’s 2% target. The 2.7% year-over-year inflation in groceries in August, the fastest annualized rate since August 2023, is likely to have had a particularly significant impact on consumers. The Bureau of Labor Statistics’ report on September inflation, due on October 15, would offer an update on how tariffs are impacting prices, but only if the government shutdown ends before then. In the meantime, more consumers signaled belt-tightening is in order:

• The perceived probability of losing one’s job in the next year rose 0.4 percentage point to 14.9%, according to the NY Fed survey. Unsurprisingly, consumers said they were aiming to be more frugal: Median spending growth estimates dropped 0.3 percentage point to 4.7%, below the 4.9% trailing 12-month average.
• “Labor market expectations continued to deteriorate with consumers reporting lower expected earnings growth, greater likelihoods of losing jobs, and a higher likelihood of a rise in overall unemployment,” the report says.

Willing to Gamble: Whatever they say, consumers’ actual spending has remained rock solid, even if sentiment has yet to return to pre-pandemic levels. The NY Fed Survey also showed improving views of household finances. Analysts at KPMG expect spending to keep rising through the holiday season, writing in a report two weeks ago: “The consumer is spending like a poker player with a small chip stack. They know they can’t play every hand but are willing to go ‘all in’ on a promising hand with a high emotional payoff.”

The blue bloods in the S&P 500 and Dow Jones Industrial Average will soon welcome their nouveau riche crypto-stock cousins into the family.

They’ll arrive via the new S&P Digital Markets 50 Index, which S&P Global announced Tuesday. In a fitting twist, fintech Dinari is collaborating with S&P to release an investable token that tracks the benchmark.

A Hybrid Approach

Rather than just 50 companies, the S&P Digital Markets 50 will include 15 cryptocurrencies alongside 35 companies from the broader crypto sector. While S&P has launched indices with multiple asset classes before, mixing stocks and cryptocurrencies is a new frontier. Equities listed on the index will be required to have a minimum market cap of $100 million, and cryptocurrencies will be required to have a minimum cap of $300 million. Single assets will be restricted to 5% of the index.

Crypto markets remain somewhat volatile, so indexing adds the appeal of smoothing out exposure. Institutional investors have grown increasingly interested in the crypto sector, especially as federal regulators have adopted a friendlier approach under the Trump administration. An EY survey of institutional investors earlier this year found that 85% reported increasing their allocations to digital assets in 2024, and a similar proportion plan to invest more. And 60% said they preferred to gain exposure through registered vehicles, such as diversified index funds and ETFs. The S&P index makes crypto practically mainstream:

• “Cryptocurrencies and the broader digital asset industry have moved from the margins into a more established role in global markets,” Cameron Drinkwater, chief product officer at S&P Dow Jones Indices, said in a statement. “S&P DJI’s expanded index suite offers market participants consistent, rules-based tools to evaluate and gain exposure to this segment.”
• The companies and cryptocurrencies on the S&P Digital Markets 50 have yet to be named, and the index is still weeks from launch, but it’s not hard to see the appeal of the hybrid format. Bitcoin, which is up roughly 30% this year, hit a new all-time high of $126,080 on Monday, and crypto industry stocks like Coinbase (up 51% YTD), Circle (up 115%) and Strategy (up 13%) have been a hit among investors this year.

Check Your Wallet: If you have personal crypto holdings, a security check may be in order. Researchers at Elliptic said Tuesday that North Korean hackers have stolen more than $2 billion in crypto assets this year and warned that they are increasingly targeting crypto-wealthy individuals because they typically have less sophisticated safeguards than businesses.