Coffee With Greta: Elon Musk Gets Cold Feet
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DJIA Futures: +341 (+1.1%)
SPX Futures: +57 (+1.5%)
NASDAQ Futures: +246 (+2.1%)
Good morning friends!
Futures are higher as traders look to shake off a dramatic week of selling.
Let’s get right to it!
Musk Puts Twitter Deal On Hold
Twitter (TWTR) shares are plunging 12.4% ahead of the open after Elon Musk announced his buyout deal is on hold.
In a tweet, Musk said the deal is “temporarily on hold pending details” on fake accounts.
Twitter deal temporarily on hold pending details supporting calculation that spam/fake accounts do indeed represent less than 5% of usershttps://t.co/Y2t0QMuuyn
— Elon Musk (@elonmusk) May 13, 2022
In a follow-up tweet, he said he is “still committed” to the acquisition.
Still committed to acquisition
— Elon Musk (@elonmusk) May 13, 2022
Musk included a link to a Reuters report on Twitter’s estimation that less than 5% of accounts on the platform are spam or fake accounts.
He wants this confirmed before he moves ahead with purchasing the platform.
If he were to ditch the deal, he would owe Twitter a $1 billion breakup fee.
Fed Can’t Guarantee Soft Landing
Fed Chair Jerome Powell knows getting inflation under control may cause some pain for the economy.
In an interview with Marketplace Thursday, Powell said he can’t guarantee the Fed can accomplish a soft landing.
“So a soft landing is, is really just getting back to 2% inflation while keeping the labor market strong. And it’s quite challenging to accomplish that right now, for a couple of reasons,” he said.
His comments came after fresh stagflation fears swept across Wall Street Thursday.
But Powell steered clear of saying a recession is imminent.
He said avoiding a recession “will be challenging, it won’t be easy. No one here thinks that it will be easy. Nonetheless, we think there are pathways … for us to get there.”
The Fed Chair reiterated the Fed’s target to get inflation back down to 2%.
The CPI jumped 8.3% annually in April while the PPI rose 11%.
Cryptocurrencies Bounce
The crypto market is clawing back gains after a week of intense selling similar to the moves on Wall Street.
Bitcoin is up nearly 9% in the past 24 hours and nearing $31,000.
Ethereum is up nearly 9% as well, topping $2,100.
The global crypto market cap has risen 8.2% to $1.38 trillion.
Crypto was hit hard this week as traders sold-off risk assets.
The collapse of Terra’s UST stablecoin also wreaked havoc across the market.
The world’s largest stablecoin, Tether, briefly dropped below $1 on Thursday but has since reclaimed that peg.
Oil Rises, Gas Hits 4th Straight Record
Oil prices are rising despite fears of weaker demand.
West Texas Intermediate crude futures are up more than 2% to over $108 bbl while Brent crude futures are up 2% to over $109 bbl.
But oil is still on track for its first weekly loss in three weeks amid heightened concerns about slowing economic growth.
In the meantime, U.S. gas prices hit a new record-high today.
Data from AAA shows the national average for a gallon of regular is now $4.432 while diesel jumped to $5.56/gal.
This is the 4th day in a row those prices have jumped to a fresh record.
Affirm Rallies On Fiscal Q3 Results
Affirm Holdings (AFRM) shares are rallying 36.1% in premarket trade after beating fiscal Q3 expectations.
The buy-now, pay-later company reported a loss of $0.19 per share on $354.8 million in revenue.
That was better than analysts’ expectations for a loss of $0.46 per share on $344 million in revenue.
Affirm said it processed $3.9 billion in gross merchandise volume (GMV) last quarter, up 73% year-over-year and better than estimates for $3.85 billion.
The CEO said 81% of those transactions were from repeat customers.
Affirm forecast fiscal Q4 GMV between $3.95 billion and $4.05 billion with revenue ranging from $345 million to $355 million.
That was in line with analysts’ estimates.
Crypto Exchange CEO Buys Stake in Robinhood
Robinhood (HOOD) shares are jumping 20.3% ahead of the open after the CEO of a major crypto exchange bought a large stake in the company.
A new SEC filing shows FTX CEO Sam Bankman-Fried bought a 7.6% stake in Robinhood.
The rally comes after HOOD tumbled to an all-time low at $7.71 Thursday.
Bankman-Fried purchased $648 million worth of the stock through his firm Emergent Fidelity Technologies.
The SEC filing says he bought the shares believing they “represent an attractive investment”.
Consumer Sentiment Expected to Fall
The University of Michigan releases the preliminary reading of its May consumer sentiment index at 10:00 a.m. ET.
Sentiment is expected to fall more than 1 point to 64.
So far, consumers have weathered inflation well with spending remaining high.
But many economists see Americans reaching a breaking point soon as the threat of a recession rises.
In Case You Missed It
- The Senate confirmed Fed Chair Jerome Powell for a second 4-year term Thursday. His nomination was approved on an 80 to 19 vote. 13 Republicans and 6 progressive Democrats voted ‘no’. Powell’s term will expire in February 2026.
- U.S. airline bookings tumbled 17% in April as flight prices surged 8% from March. Consumers spent $7.8 billion on domestic flights last month, down 13% from March. But demand is still higher than pre-pandemic levels. Bookings rose 5% compared to April 2019 while prices jumped 27%.
