Breaking News
Investing Pro 0
NEW! Get Actionable Insights with InvestingPro+ Try 7 Days Free

Stocks Firm Post Fed Minutes, Elon Musk Needs To Find More Cash

By (Neil Wilson)Market OverviewMay 26, 2022 11:52
Stocks Firm Post Fed Minutes, Elon Musk Needs To Find More Cash
By (Neil Wilson)   |  May 26, 2022 11:52
Saved. See Saved Items.
This article has already been saved in your Saved Items

European stocks traded firmer after a solid session on Wall Street as risk seemed to react relatively favourably to minutes from the last Federal Reserve meeting. The S&P 500 rallied almost 1% and e-minis have broken the trend line resistance to the upside. The euro is running into resistance at 1.07. Treasury yields remain soft with 10s at 2.73% as recovery continues. Russia’s central bank cut its key interest rate from 14% to 11%. Oil continues to hand around $110. US futures trade mildly higher.

Fed minutes revealed that "most" participants think 50bps hikes will be appropriate "at the next couple of meetings", while some participants "noted that a restrictive stance of policy may well become appropriate". But the meeting was three weeks ago and already the market has dialled back expectations for hikes just a tad reflecting worries about slowdown/recession. VIX continues to ebb around the 30 handle and there is a bit of relief in the tape. But QT is only about to begin on Jun 1. What the Fed can be reasonably happy about is the degree of tightening already in the market (Nasdaq -30%, S&P 500 PE down to about 16x from 22x, mortgage rates a lot higher, etc) in a fairly orderly fashion. That gives it some scope to follow the Bostic idea of pausing in September.

Elon Musk needs more cash to finance his Twitter (NYSE:TWTR) purchase. In a filing, Musk revealed he’d let the $6.25 billion margin loan component of the financing lapse. This means he needs to find $33.5 billion to finance the deal. This removes leverage from the deal and probably eases some of the concern around using Tesla (NASDAQ:TSLA) stock as collateral as the decline in the stock price in recent days/weeks had raised the prospect of a margin call that would have driven the stock way lower. But where does he find the money except from further stock sales? Why would investors want to pay $54.20 when they can buy today at $39...shares in Twitter were up almost 6% after-hours to $37. I mean there is probably a greater chance that the deal goes ahead (not exactly ‘on hold’ could not be due to pretty basic securities laws). Why would an equity partner want to be involved at $54.20 when Musk has been talking the company down so much? The saga continues...

NVIDIA (NASDAQ:NVDA) shares fell almost 7% after-hours on light guidance despite beating on the top and bottom line. A challenging macro environment was again cited as the reason for the caution, referring to Ukraine and China’s lockdowns.

Oil inventories are declining fast and approaching worryingly low levels just as the US prepares for the driving season. EIA reported a draw of more than 1 million barrels. Petroleum product inventories are at “precarious levels” for middle distillates and gasoline “as the market heads into the peak of the U.S. driving season”, BofA said Monday. “As a result, refined petroleum cracks have recently spiked to record levels, contributing to boost volatility across the oil complex … Most worryingly, strategic oil barrels held by OECD governments are already low and set to decline steeply going forward, leaving consumers exposed to any future negative supply shock.” Meanwhile, focus remains on whether the EU can agree an embargo of Russian oil.

Presented with no comment: developers of the Terra LUNA/USD blockchain are set to launch LUNA 2.0 on Friday. I guess we get to find out just how stupid and reckless people are with their own money.

Stocks Firm Post Fed Minutes, Elon Musk Needs To Find More Cash

Related Articles

Stocks Firm Post Fed Minutes, Elon Musk Needs To Find More Cash

Add a Comment

Comment Guidelines

We encourage you to use comments to engage with users, share your perspective and ask questions of authors and each other. However, in order to maintain the high level of discourse we’ve all come to value and expect, please keep the following criteria in mind: 

  • Enrich the conversation
  • Stay focused and on track. Only post material that’s relevant to the topic being discussed.
  • Be respectful. Even negative opinions can be framed positively and diplomatically.
  •  Use standard writing style. Include punctuation and upper and lower cases.
  • NOTE: Spam and/or promotional messages and links within a comment will be removed
  • Avoid profanity, slander or personal attacks directed at an author or another user.
  • Don’t Monopolize the Conversation. We appreciate passion and conviction, but we also believe strongly in giving everyone a chance to air their thoughts. Therefore, in addition to civil interaction, we expect commenters to offer their opinions succinctly and thoughtfully, but not so repeatedly that others are annoyed or offended. If we receive complaints about individuals who take over a thread or forum, we reserve the right to ban them from the site, without recourse.
  • Only English comments will be allowed.

Perpetrators of spam or abuse will be deleted from the site and prohibited from future registration at’s discretion.

Write your thoughts here
Are you sure you want to delete this chart?
Post also to:
Replace the attached chart with a new chart ?
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Thanks for your comment. Please note that all comments are pending until approved by our moderators. It may therefore take some time before it appears on our website.
Comments (1)
som sithy
som sithy May 26, 2022 13:31
Saved. See Saved Items.
This comment has already been saved in your Saved Items
Are you sure you want to delete this chart?
Replace the attached chart with a new chart ?
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Add Chart to Comment
Confirm Block

Are you sure you want to block %USER_NAME%?

By doing so, you and %USER_NAME% will not be able to see any of each other's's posts.

%USER_NAME% was successfully added to your Block List

Since you’ve just unblocked this person, you must wait 48 hours before renewing the block.

Report this comment

I feel that this comment is:

Comment flagged

Thank You!

Your report has been sent to our moderators for review
Our Apps
© 2007-2022 Fusion Media Limited. All Rights Reserved.
Risk Disclosure: Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.
  • Sign up for FREE and get:
  • Real-Time Alerts
  • Advanced Portfolio Features
  • Personalized Charts
  • Fully-Synced App
Continue with Google
Sign up with Email