Elon Musk’s D.O.G.E could crash the US stock market

Elon Musk's D.O.G.E Initiative Raises Concerns on Wall Street

Elon Musk's latest venture, the Department of Government Efficiency (D.O.G.E), launched under President-elect Donald Trump, aims to reduce federal spending by targeting unauthorized or misused expenditures. The initiative, co-piloted by Vivek Ramaswamy, seeks to slash $500 billion in government costs.

Potential Fallout for Industry

The potential impact of D.O.G.E has sent shockwaves through Wall Street. Federal contractors, pharmaceutical giants, and defense companies brace for significant losses.

Analysts at TD Cowen have identified Lockheed Martin, Boeing, and Pfizer as among the most vulnerable. These companies rely heavily on government contracts, which could face cuts under D.O.G.E's cost-cutting measures. Leidos Holdings, which handles contracts for Homeland Security and Transportation, is also at risk.

Skepticism over Savings

However, analysts cast doubts on the potential savings that D.O.G.E can deliver. TD Cowen estimates annual savings of $50 billion to $100 billion, a figure that pales in comparison to the federal deficit. Moreover, Congress must approve any major cuts, potentially limiting D.O.G.E's effectiveness.

Uncertain Future

Despite the potential risks, investors have shown optimism for D.O.G.E's impact on Dogecoin, the cryptocurrency championed by Musk.

Crypto markets have reacted positively to the initiative, with Dogecoin's value surging over 150%. However, analysts caution that the crypto market's reaction is more speculative than based on concrete savings.

The full impact of D.O.G.E remains uncertain, with analysts predicting potential savings but skepticism over the scale of cuts and the ability of Congress to approve them. The potential for a significant blow to federal contractors, pharmaceutical companies, and defense companies is a major concern for Wall Street.