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Elon Musk takes stake in Twitter. That’s it. That is the story. And of course, Matt Levine got in there first. But let’s try do this anyway.

So many things going on here…

  1. First, I’m a markets guy, so let’s do the markets bit. Shares in Twitter ended 27% on Monday after news broke that Musk had taken a 9.2% stake in the company. The market cap of Twitter rose by about $8bn – the Elon effect.
  2. The jump in the stock values Twitter better. It has an intangible real estate value as the ‘world’s town hall’ that is way beyond simple ad metrics – as Musk alluded to in his post-purchase tweets about free speech on the platform.
  3. Note, he bought the stake on March 14th so these tweets came after his so-called ‘passive’ investment.
  4. On that note, no way is this passive. He filed a 13G form, not a 13D form, which you can only do if your investment is passive. But this is Musk, and he loves Twitter and thinks people should be able to express themselves. And it’s Musk.
  5. Musk could be breaking securities law already by filing in this way…he’s already been tweeting about it in what could only be described as an activist manner, polling people’s opinions on rules and algos. Either Musk took a passive stake in a company he believes undermines democracy (seems unlikely) or, more plausibly, Musk broke securities law by filing 13G (passive) where he plans to do something about what he regards as a major problem.
  6. I mean, this kind of looks ‘active’
  7. Tweeting post transaction is becoming a habit – remember his famous poll which was after he’d filed his 10b51 selling plan with the SEC.
  8. Musk doesn’t seem to be that bothered about what the SEC thinks, accusing the regulator of misconduct in its investigation of trading by Musk and his brother, Kimbal.
  9. The SEC also seems to let Musk do what no other CEO would be allowed to do.
  10. Musk owns more Twitter stock that any other single investor, including Vanguard (8.79%) and founder Jack Dorsey (2.25%).
  11. What happens next to Twitter? Does Musk agitate for a subscription track and a free speech track or just the latter?
  12. If it’s all about free speech, does Donald Trump make a comeback?
  13. Why didn’t Donald Trump think of it?
  14. Musk has lately been offloading TSLA stock, and is buying TWTR stock. So, in effect, he’s been short Tesla and long Twitter this whole time.
  15. And in other news Twitter says it is making excellent progress, but an edit button is super hard. Should be ready in 3 months maybe, 6 months definitely.

Tesla shares rose over 5%. Piper Sandler reiterated his $TSLA rating of Overweight (Buy) following the first quarter delivery numbers.

Starbucks does the unthinkable: cancels buyback to invest in growing the business. Shock, horror. Didn’t they get the memo? Shares fell 5%. Which kind of begs a question: is your fiduciary duty as the board mean you ought to do buybacks at the expense of capex? If that is so, then what is the point of capital markets?

Lots of chatter about Europe finally banning Russian gas…seems the appetite is not there yet in Berlin. Germany’s finance minister said it is ‘not possible’ for now to cut Russian gas supply, ‘we need some time’. Time for more massacres? Halting Russian gas would hurt EU more than Russia, he says. Russian oil and coal is on the table, but not gas; yet.

Oil prices rose Monday, perhaps on sanctions chatter but also Aramco raised its official selling price for the key Arab Light to the Far East to a premium of $9.35 over Dubai.

Stocks rallied on Monday with the Nasdaq climbing 1.9%. The Golden Dragon index of US listed Chinese companies rallied more than 7% on Monday after the China Securities Regulatory Commission said it would change the law to enable Chinese companies to share documents with overseas authorities. European indices are flat this morning.

Market pricing now sees the Fed nudging rates above 3%, with some 100 bps of rate cuts priced in starting in 2024. At 2.5% priced in by the end of 2022, the market is now well above the FOMC dot plot. JPM says recent comments by Fed officials suggest a faster response may be preferred. As such, the bank says it is replacing its expectations for 25bp hikes in May and June with 50bp moves, reverting to 25bp hikes in July and thereafter

On crypto, the Royal Mint is making an NFT and Rishi Sunak, for it is he, wants to position the UK as a global crypto tech hub. Which is hard since derivative trading of cryptos is banned. But anyway.

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