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Elon Musk will resign as CEO of Twitter… once a successor has been found. I don’t think anyone ever thought that he’d lead the company forever, but two months is a short tenure. Musk tweeted that he would step aside as soon as he finds someone “foolish enough to take the job!” but stick around to “run the software and servers teams”. I bet they are delighted. The problem is that Musk has created such chaos at Twitter in the last few weeks, who would want the job?! As Musk said, there is no successor. He needs someone politically aligned who can also get the advertisers back – in short a square peg and round hole situation. The poll was always distraction – he was always planning to step down and it seems has been actively seeking a replacement for a while. 

TSLA: Meanwhile no relief for Tesla stock. Shares declined a further 8% yesterday to hit a fresh two-year low. Lots of outlets noting that Tesla is now worth less than Exxon again...even a massive Tesla bear like me is wondering when it starts to show some value...not yet I would suggest. Not a pretty chart. There had been hope that Musk stepping down as CEO of Twitter would help but it looks like until Musk is done burning TSLA stock (is he?) there is further for this to go. Evercore cuts PT from $300 to $200, noting the failure to hold the $150 battleground…funny seeing all these analysts chasing the stock lower with their PT cuts.  

tsla 211222.png 

FedEx numbers...not great from the bellwether perspective for the global economy. Revenues declined 3% in the three months to the end of November, but profits beat expectations and a further $1bn in identified cost savings sent the stock higher after hours.  

Nike...price cuts. Inventories at $9.3 billion, up 43 percent compared to the prior year period, though aggressive discounting helped lower the pile from $9.7bn three months ago. Gross margin decreased 300 basis points to 42.9%, primarily due to higher markdowns to liquidate inventory, particularly in North America. Shares rallied 13% pre-market though as it beat on the top and bottom lines. Nike reported second quarter revenue rose 17% year-over-year to $13.32 billion. Big read across today for the likes of Puma, Adidas and JD Sports, which all jumped around 7-8% in early trade. 

Wage price spiral? Minutes from the Fed’s November meeting stated that “A few participants commented that the ongoing tightness in the labor market could lead to an emergence of a wage–price spiral, even though one had not yet developed.” Latest data from the New York Fed suggests it might be. It shows, unsurprisingly, that employee demands for more money has hit a record high. Of course it has, but it makes it harder to ignore the risks of a wage price spiral – something the Fed is desperate to avoid. Let’s keep it brief – but the same people who told you inflation would be transitory are telling you there are no signs of a wage price spiral and it’s not something to worry about. To be clear, a ‘spiral’ might be misleading – more like higher for longer and still not keeping pace with inflation meaning lower real incomes for the consumer. The average reservation wage, which is the lowest someone would be willing to accept for a new job, increased from $72,873 in July to $73,667 in November, the highest reading of the series. There is an interesting demographic element to this with the increase most pronounced for respondents below the age of 45. These are also the same people who don’t want to return to the office. It all sounds simple, but from a monetary policy perspective there is a big question here for the central banks – do higher wages actually present an inflation ‘problem’, or is it because the workers are shifting more easily and are becoming more productive?  

Stocks moved higher in Europe on Wednesday morning after Wall Street snapped its losing streak to post modest gains in the previous session. The FTSE 100 is looking again at 7,400 while the DAX is trying to recapture 14,000. For the FTSE after the 7,400 round number the near-term resistance is at 7,420. Light day for data with US consumer confidence later. 10yr Treasury yields just below 3.7%, coming back a bit from the BoJ-inspired move up.  

 JPY: The yen has given back some of yesterday’s massive rally, with USDJPY back to 131.80 from a four-month low of 130.560. Likely to settle in the 120s if the market bets on the BoJ taking some more baby steps in 2023? The Bank of Japan’s decision to broaden the trading range for the 10yr government bond saw the cross move sharply lower through the 200-day line and a rejection of the earlier bullish MACD crossover. GS is out saying the next step for the BoJ is to end its negative rate policy but is unlikely to widen the band any further. Overnight the 2yr Japanese bond yield turned positive for the first time since 2015. 

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