bond that binds
Technology stocks have long been regarded as the most profitable but riskiest investments on the market. Bonds have the opposite reputation. This year, they both ended up in the same place — at a loss.
The tech-heavy Nasdaq index fell nearly 3% yesterday and is now down nearly 30% for the year. Meanwhile, bonds, frightened by inflation and the Fed’s promise to keep raising interest rates to counter rising prices, are facing their most devastating period since at least 1926.
Bonds and tech stocks rarely crash together. In 2000, bond prices rose nearly 12% when the dot-com bankruptcy hit technology hard. 2008 was no different. Tech stocks are down 42% of him and bond prices are up 5% of him.
Alignment may become more natural. Tech companies are more vulnerable to higher interest rates than before.
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One reason is debt. For example, his 2000 debt to Apple was only $300 million. about $95 billion.
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Another is its size. Microsoft’s sales are seven times what he was 20 years ago. And as tech companies grow, they become more tied to the general ups and downs of the economy.
But don’t expect the relationship to last forever. Venture capital and private equity funds remain well-funded and ready to invest in promising companies. In addition, rising interest rates encourage investors to seek higher returns, favoring technology stocks. But for now, rising interest rates and the threat of a recession are hitting all investments, including technology. Wedbush Securities technical analyst Dan Ives said:
Nasdaq futures this morning show a mild rebound as the market opens. But macro data points to more problems ahead. Inflation is rampant — this morning Eurozone inflation hits record high — Put pressure on central banks to raise interest rates further to stifle consumer demand, risking a further slowdown in the global economy. Such a situation could take a hit to corporate profits and create new headaches for investors with a mix of stocks and bonds in their portfolios.
this is what is happening
Ian heads to South Carolina. Hurricane-intensified storms brought power outages to about 2 million customers in Florida this morning. His more than 2.5 million people near the ocean in multiple states also received hurricane warnings early today.
Senate passes emergency funding bill. The law approved yesterday will allow the federal government to continue functioning beyond today’s deadline and send more aid to Ukraine. President Biden plans to sign the bill into law by midnight.
The EU supports electricity reduction plans. The Energy Minister today Measures to reduce consumption Prevent gas price hikes. The measures include a windfall tax on fossil fuel companies and targets to reduce peak electricity use.
For what plagues multinationals, look to Nike. The company’s shares fell more than 10% in pre-market trading after the company traded Disclosed issue It reflects a range of economic problems, including rising inventories related to supply chain disruptions, the need to hold on to more sales to liquidate them, and weaker international sales due to the strong dollar.
What happened to Elon Musk’s Twitter deal
Big hit contract. In April, Elon Musk made a one-sided bid worth more than $40 billion for the social network, saying he wanted to make Twitter a private company so people could speak more freely on the service.
Mehta preparing for layoffs. Tech giant Mark Zuckerberg told employees this week that the company would freeze all hiring. rice field.
Why Elon’s Texts (and Tweets) Matter
Yesterday, numerous text messages were made public between Elon Musk, Twitter’s board of directors, Musk’s bankers at Morgan Stanley, and supporters of Silicon Valley heavyweights. The text, which was revealed in the court filing, was support rally For Musk’s bid.they also exposed How desperate Wall Street was Winning Mask’s business and shedding new light on some of the fundamental issues surrounding this case.
Musk thought bots were a big problem. In a text to Twitter chairman Bret Taylor the day he told the company of his plans to take Twitter private, Musk wrote that it would be difficult to fix Twitter as a public company. Restructuring should be done as a private company. ” Twitter quoted this text In lawsuit seeking to force Musk to buy companyand that goes to the heart of the main legal argument in this case: Spam count concernsMusk made his offer without any provision regarding the accuracy of the spam number.
Either way, spam data may not be useful in Musk’s case. When Musk first tried to pull the deal, on July 8th, the percentage of active Twitter users who were actually spam was “significantly more than 5%(Musk said Twitter’s estimate that 5% of active users are spam is misleading.) 5.3Could such a slight difference derail the deal?
Musk’s intentions to acquire Twitter may also be important. Much of the text between Musk and his Twitter board leading up to the deal (as well as texts with his various supporters) is Musk’s claim to rid the platform of spam and use it to promote free speech. Concentrate on your goals. Pronouncing such a noble purpose is his view that bots and spam are part of a larger “significant adverse effect” that is eroding the value of the company he once hoped to acquire. “The courts are discussing whether there were enough changes to call into question the economics of the deal,” said Ann Lipton, a professor of corporate governance at Tulane Law School. says. “It is unclear how buyers will apply.” Economy is not very important to him.
Speaking of those text messages… Here are a number of samples released yesterday.
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“Make me a match manager! CEO of Twitter is my dream job. Investor Jason Karakanis Wrote to Musk.
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of Venture capitalist Steve Jurvetson Musk recommended hiring former Uber executive Emil Michael as Twitter’s CEO and his son as an engineer.
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When Musk tried to make an emergency contact Oracle’s Larry EllisonEllison, a former Tesla board member, brushed him off. Let’s talk tomorrow. “
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“Oprah may be interested in joining Twitter’s board of directors if my bid succeeds,” Musk wrote. Journalist Gayle King, a prominent friend of Oprah Winfrey. (King called Musk’s offer a “gangsta move.”)
Large banks face new climate resilience challenges
Extreme weather in Florida this week has heightened debate in Washington and beyond about the financial risks climate change poses to banks.
Yesterday, the Fed announced that: 6 of the largest US banks — Bank of America, Citigroup, Goldman Sachs, JP Morgan Chase, Morgan Stanley, Wells Fargo — are planning next year’s I am planning to participate in a pilot program.
The Federal Reserve said the program was “experimental in nature” and would not yield capital results.
Environmentalists applauded the move. Sierra Club’s Adele Shraiman told DealBook the program was “long overdue.” She argued that there is a “very broad consensus” among financial authorities around the world that climate risks are real, but not banks and regulators. address these risks quickly enoughThe Florida storms are a “primary example” of physical risks, she said, but the less visible risks are the failure to transition to green energy, continued investment in fossil fuel companies, and those types of companies may fail.
Similarly, yesterday’s report from sustainability advocacy group Ceres said: the bank was progressing But key aspects of the business, like the $600 trillion derivatives market, remain “climate risk black boxes.”
Some industry representatives countered that the climate requirements may be overkill. Following the Fed’s announcement, Banking Policy InstituteIt is an advocacy group representing the major banks in the United States.
Conflicting stances are creating friction for banks. Whether climate change poses significant economic risks has long been a political question. As such, American banking officials took longer to find answers than European banking officials. At the same time, Republican politicians are stepping up their fight against environmental, social, and governance investments, creating headaches for banks. Be wary of international climate change efforts.
In memory of Sandy Gottesman
Warren Buffett’s longtime friend and billionaire investor David Gottesman died Wednesday at the age of 96. Known to close friends as Sandy.
Gottesman became one of Buffett’s closest associates early on. After the two met in 1963 and bonded over an investment discussion. First Manhattan, an investment firm currently managing about $20 billion. But Gottesman’s most profitable decision was to bet on Buffett. Gottesman invested in Berkshire Hathaway and acquired the stock that made him a millionaire.
Ten years ago, Mr. Gottesman wrote, “Never in the history of Wall Street has a stock held for 44 years yielded such a high return.”
Buffett considered him a close friend and advisor. He credited Gottesman with saving his department-store investment from bankruptcy and invited him to Berkshire’s board of directors. (Gottesman reportedly inadvertently urged Buffett to invest in Apple when he lost his iPhone in a taxi).
“If Sandy didn’t do something for me financially, we would have been best friends,” Buffett told The Times yesterday.
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