Most Asian stocks dropped along with US equity futures Monday and the dollar jumped as the risk of more Covid curbs in China exacerbated overarching worries about the global economic outlook. An Asian equity gauge shed about 1% amid declines in Hong Kong and China. Japan was a bright spot, buoyed by the prospect of administrative stability after the ruling coalition expanded its majority in an upper house election. A dollar gauge was back around the highest level since 2020. The yen was the weakest Group-of-10 performer, possibly because investors viewed the poll result as an endorsement of Japan’s super-easy monetary policy. Shanghai reported its first case of the highly infectious BA.5 omicron sub-variant Sunday and warned of “very high” risks, stoking fears of more lockdowns given China remains wedded to stamping out the pathogen. Casino shares sapped Hong Kong after Macau announced the closure of almost all businesses for a week from Monday due to a virus outbreak. Commodity-linked currencies were under pressure and oil suffered losses. Treasuries were steady, leaving the US 10-year yield at 3.08%. Inversions along the yield curve are potential signs of economic retrenchment ahead. Price pressures, a wave of monetary tightening and a slowing global economy continue to shadow markets. A US inflation reading later this week is expected to get closer to 9%, a fresh four-decade high, buttressing the Federal Reserve’s case for a jumbo July interest-rate hike. Company earnings, meanwhile, will shed light on recession fears that contributed to an $18 trillion first-half wipeout in global equities.
the pound fell as the race to replace Boris Johnson as UK premier heats up. Over in Europe, the main conduit for Russian gas down for 10-day maintenance on Monday. Germany and its allies are bracing for President Vladimir Putin to use the opportunity to cut off flows for good in retaliation for the West’s support of Ukraine following Russia’s invasion. Bitcoin caught a downdraft from the cautious start to the week in wider markets, falling as much as 2.5% but holding above $20,000.
Nikkei +1.02% Hang Seng -2.85% CSI -2% Shanghai -1.52% Shenzen -1.88%
Eur$ 1.0149 CNH 6.7067 CNY 6.7089 JPY 137.05 GBP 1.1984 CHF 0.9783 RUB 61.13 TRY 17.2698 WTI$ 104 -0.75% Gold 1,742.35 +0.00% BTC 20,615 -1.70% ETH 1,152.31 -2.10%
S&P -0.69% Nasdaq -0.97% EuroStoxx -1.49% FTSE -0.95% Dax -1.33% SMI -0.78%
Macro :
- China’s Bumper Data Week Will Set Tone for Economic Stimulus
- Everything Bear Market is Fueling ETF Takeover of Wall Street
- Putin Is Set to Halt Gas and Germany Fears It’s Not Coming Back
- France Mulls Extending Energy Aid on Targeted Basis, Borne Says
- French Minister Says Russian Gas Cutoff Most Likely Scenario
- Greek Tourism Boom Means Growth May Top 3.2%, Stournaras Says
Keep an eye on :
- AKRBP NO : Aker BP Makes Gas Discovery Near Skarv Field in Norwegian Sea
- ALV GY : Allianz Outlook to Positive by Moody’s
- AGL IM : Switzerland’s Dufry to Buy Autogrill: M&A Snapshot
- CPINV BB : Care Property Buys Care Residence in Dorst for About EU22m
- DANSKE DC : Danske Bank Revises 2022 Net Profit Out-Look Downwards
- DANSKE DC : Danske Bank Cuts Outlook as Higher Rates Hit Market-Making Unit
- DUFN SW : Dufry to Buy Benettons’ Autogrill, Forming $6 Billion Group
- EDF FP : UK Nuclear Watchdog Boosts Monitoring Of French Utility EDF Amid
- ZIL2 GY : ElringKlinger Prelim 2Q Ebit Loss EU97.0M
- FCT IM : Fincantieri Gets Ultra-Luxury Cruise Ship Order Worth ~EU1.2b
- FORTUM FH : Finland Sees No Possibility for More Uniper Financing Via Fortum
- KINVB SS : Kinnevik: Earnings Day Ahead
- MC FP : Rare Scotch Whisky Cask Sells for Record £16 Million, FT Says
- MGNX US : MacroGenics Announces Closure of CP-MGA271-06 Study Evaluating Enoblituzumab plus Checkpoint Inhibition in Head and Neck Cancer
- KN FP : Natixis to Hire London Bankers in Plan to Build UK Client Base
- NDX1 GY : Nordex Seeks EU212 Million in Share Sale to Shore Up Finances
- STM FP : STMicro, GlobalFoundries Sign Deal for French Chipmaking Plant
- TSLA US : Tesla Shares Edge Higher After Musk Walks Away From Twitter Deal
- TWTR US : Twitter Assembles Legal Team to Sue Musk Over Dropped Takeover
- UNO1 GY : Germans Face ‘Enormous Wave’ of Energy Price Hikes, Uniper Says
- UN01 GY : Finland Sees No Possibility for More Uniper Financing Via Fortum
- VAR NO : Var Energi Still Sees FY Production 230,000 to 245,000 BOE/D
- VOW GY : Volkswagen Software Problems Delay New Models: Automobilwoche
- WIHL SS : Wihlborgs 2Q Rental Income Meets Estimates
>>> Up
* Bank of America Raised to Buy at SocGen; PT $37.50
* Credito Emiliano Raised to Market Perform at KBW; PT 6.90 euros
* EDF Raised to Overweight at JPMorgan; PT 12 euros
* Hargreaves Lansdown Raised to Buy at Investec; PT 970 pence
* Mattel Raised to Buy at Goldman; PT $31
>> Down
* ABB Cut to Neutral at Citi
* BPER Banca Cut to Market Perform at KBW; PT 2.06 euros
* Credit Agricole Cut to Underperform at KBW; PT 10.50 euros
* Fabege Cut to Sell at ABG; PT 100 kronor
* Fortum Cut to Reduce at AlphaValue/Baader
* ManpowerGroup Cut to Neutral at JPMorgan; PT $78
* Siemens Gamesa Cut to Hold at Mirabaud Securities
>>> Initiation
* Anglesey Mining Rated New Buy at Stifel Canada; PT 5.50 pence
* Avanza Rated New Underweight at Morgan Stanley
* Delivery Hero Resumed Equal-Weight at Morgan Stanley
* Endesa Reinstated Hold at Mirabaud Securities; PT 22 euros
* flatexDEGIRO Rated New Underweight at Morgan Stanley
* Greggs Rated New Hold at Deutsche Bank; PT 1,950 pence
* Ninety One Rated New Hold at Peel Hunt; PT 214 pence
* Nordnet Rated New Overweight at Morgan Stanley
* Restaurant Group Rated New Hold at Deutsche Bank; PT 47 pence
>>> Call
* ABB Downgraded at Citi; Siemens, Rexel Among Top Sector Picks
* Investment Platforms Facing Tough Outlook, Morgan Stanley Says
* Italian Banks’ Asset-Quality Risks Are Under Control, KBW Says
* Morgan Stanley’s Wilson Says Stock Rally to Wane as Dollar Soars
Tiger Global to slow startup investments for two quarters, eyes new fund later this year
Chinese Bank Run Turns Violent After Angry Crowd Storms Bank of China Branch Over Frozen Deposits
While the world of high, and not so high finance, is obsessing over the volatility of cryptos and recent painful losses for overlevered players who - much to the amazement of plain vanilla equity investors - were not bailed out by a magnanimous Fed (which however only rescues stock markets, not cryptos), things in China with its $54 trillion financial system, or more than double the size of assets across US commercial banks, are once again getting heated.
As Reuters reports, a large crowd of angry Chinese bank depositors faced off with police Sunday in the city of Zhengzhou, and many were injured as they were taken away, amid the freezing of their deposits by some rural-based banks.
The banks froze millions of dollars worth of deposits in April, telling customers they were upgrading their internal systems. The banks have not issued any communication on the matter since, depositors said.
According to Chinese media the frozen deposits across the various local banks could be worth up to $1.5 billion and authorities are investigating the three banks.
On Sunday, about 1,000 people gathered outside the Zhengzhou branch of China's central bank on Sunday to demand action; they held up banners and chanted slogans on the wide steps of the entrance to a branch of China’s central bank in the city of Zhengzhou in Henan province, about 620 kilometers (380 miles) southwest of Beijing.
People hold banners and chant slogans during a protest at the entrance to a branch of China’s central bank in Zhengzhou in central China’s Henan Province. A large crowd of angry Chinese bank depositors faced off with police Sunday, some reportedly injured as they were roughly taken away
The protesters are among thousands of customers who opened accounts at six rural banks in Henan and neighboring Anhui province that offered higher interest rates. They later found they could not withdraw their funds after media reports that the head of the banks’ parent company was on the run and wanted for financial crimes.
Videos and photographs on social media showed depositors waving banners and throwing plastic bottles at approaching security guards who then roughly dragged some of the protesters away.
Besides uniformed police, there were the teams of men in plain T-shirts. A banking regulator and a local government official arrived, but their attempts to talk to the crowd were shouted down.
“We came today and wanted to get our savings back, because I have elderly people and children at home, and the inability to withdraw savings has seriously affected my life,” said a woman from Shandong province, who only gave her last name, Zhang, out of fear of retribution. Zhang and another protester, a man from Beijing surnamed Yang, told the AP the protesters had heard from the officials before and don’t believe what they say.
The police then announced to the protesters from a vehicle with a megaphone that they were an illegal assembly and would be detained and fined if they didn’t leave. Around 10 a.m., the men in T-shirts rushed the crowd and dispersed them. Zhang said she saw women dragged down the stairs of the bank entrance. Zhang herself was hit, and said she asked the officer, “Why did you hit me?” According to her, he responded: “What’s wrong with beating you?”
Yang said he was hit by two security officers including one who had fallen off the stairs and mistakenly thought in the chaos that Yang had hit or pushed him.
“Although repeated protests and demonstrations don’t necessarily have a big impact, I think it is still helpful if more people get to know about us, and understand or sympathize with us,” Yang said. “Each time you do it, you might make a difference. Although you will get hit, they can’t really do anything to you, right?”
"I feel so aggrieved I can't even explain it to you," Zhang, 40, told Reuters. Zhang said he had been hoping to retrieve about 170,000 yuan ($25,000) deposited with one of the banks, the Zhecheng Huanghuai Community Bank.
Zhang said he had suffered injuries to his foot and thumb, and was taken away by four unidentified security personnel at around midday. Security personnel outnumbered protesters by around three to one, he said.
"They did not say they would beat us if we refused to leave. They just used the loudspeaker to say that we were breaking the law by petitioning. That's ridiculous. It's the banks that are breaking the law."
The banks, which include the Yuzhou Xinminsheng Village Bank and the Shangcai Huimin Country Bank, are under investigation by the authorities for illegal fundraising, the state-run Global Times reported.
The protesters were eventually bused to various sites where Zhang said they were forced to sign a letter guaranteeing they would not gather anymore. Late Sunday, Henan banking regulators posted a short notice on their website saying that authorities are speeding up the verification of customer funds in four of the banks and the formulation of a plan to resolve the situation to protect the rights and interests of the public.
More than 1,000 depositors from across the country had planned to gather in Zhengzhou last month to try to withdraw their money but they were unable to when their COVID-19 health codes, which determine if one can travel, switched to a "no travel" status.
42-Foot Tsunami Would Hit Seattle In Minutes After Quake, Study Finds
The Washington State Department of Natural Resources (DNR) released a terrifying new simulation of a monster earthquake rocking the Seattle Fault that would produce a tsunami as high as four stories in the central business district of Seattle.
"Tsunami waves could be as high as 42 feet at the Seattle Great Wheel and will reach inland as far as Lumen Field and T-Mobile Park," Washington State DNR tweeted.
Washington Geological Survey division of DNR wrote in a press release that a 7.5-magnitude earthquake on the Seattle Fault would generate tsunami waves over 40 feet tall and hit the downtown district in less than three minutes.
Geologists said the last known quake on the Seattle Fault occurred more than one thousand years ago, and geologic evidence shows at least five quakes of an estimated magnitude 6.5 occurred on the fault in the last 3,500 years.
"Most often, when we think of tsunamis, we think of our outer coast and communities along the Pacific Ocean. But there's a long history of earthquakes on faults in Puget Sound."While the history of earthquakes and tsunamis along the Seattle Fault is less frequent than the Cascadia subduction zone, the impacts could be massive. That's why it's critical these communities have the information they need to prepare and respond," Commissioner of Public Lands Hilary Franz said in the release.
The study was "conducted to help local and state emergency managers and planners develop and refine response and preparedness plans for a tsunami in the middle of Washington's largest population center and economic hub," the release said.
An earthquake swarm off the Pacific Northwest coastline in late December incited fears that the next big tsunami could be nearing.
Traveling Internationally? Don’t Overpay to Use Your Phone
Set up an app to call home for free and buy local data for cheap to get ahead of fees
Some vacations are intended to be unplugged bliss. This column is for the other kind, where you want to use your phone like you do at home—to rent bikes, book tickets, make reservations and, let’s be honest, post on Instagram.
Plus, air travel is messy this summer. International travel has returned, and so have airport crowds and flight cancellations. Paying close attention to potential delays and changing health requirements is a new reality for those headed abroad.
Using your phone overseas requires preparation, unless you want to be hit with some steep fees. Sticking with your carrier is more convenient but can be expensive. You can get ahead of those charges by setting up an internet calling app to phone home for free, or buying local data for cheap on the ground.
Here is what to know about using your phone while traveling abroad:
For Single-Day Use: The Flat Fee
Your flight lands, you turn off airplane mode then—bam!—you get a text from your carrier: You’ve just been charged $10 for the day.
It’s common for carriers to charge an international roaming fee for each phone in a plan. You get 24 hours of access to your normal data allotment, calls and texts abroad. Granted, this is an improvement over comically high pay-as-you-go overseas rates. But that daily $10 adds up quickly, especially when traveling for a week or more with multiple family members.
The tricky part is that the daily charge is automatically triggered, and carriers have different rules for what usage activates it.
Before you take off, disable data roaming in the settings on any iPhone or Android device that you don’t want to be charged. Doing so will likely prevent unintended cellular data use. Since you may still be able to receive text messages and phone calls, which some carriers charge for, it’s even safer to turn on airplane mode and limit yourself to Wi-Fi.
Here’s an overview of major carriers’ policies:
• Verizon : The carrier’s TravelPass charges $10 a day per phone to access your current plan in eligible countries. The charge kicks in if you make or receive a call, send a text or use any data, including your phone’s invisible background app syncing. (An incoming text won’t incur any fees, but getting a phone call will.) Verizon grants just 0.5 gigabyte of fast data before reducing your speeds. You can buy additional high-speed data, or opt for a high-priced, pay-as-you-go plan instead. Even if you’re being careful, this pay-as-you-go data tally will also include your phone’s behind-the-scenes activity. And Verizon doesn’t have a maximum amount you can be charged.
For longer trips, Verizon sells a $100 International Monthly Plan, charged on top of your domestic monthly service. It includes 250 minutes of calling and 5GB for 30 days. Each additional gigabyte of data costs $20.
• AT&T : If you use data, respond to a text message or answer a call, AT&T’s $10 International Day Pass, which gives you access to your current plan abroad, will be triggered in eligible countries. Receiving a text or call won’t activate the pass. For each additional line on your plan, the daily charge is $5.
AT&T no longer offers a pay-as-you-go or monthly international option, but there is a maximum charge of $100 per line per billing cycle. If your trip happens to fall between two billing cycles, you could pay up to $200.
• T-Mobile : You need to sign up for T-Mobile’s international plans: $5 for 512MB over one day; $35 for 5GB over 10 days; and $50 for 15GB over 30 days. You can activate the plan immediately or set a start date. Magenta plan subscribers get international data and texting in 11 European countries, and for Magenta Max customers, your phone works in over 200 countries, without extra fees.
For Calling Home: Skype and Google Voice
There are steps you can take to avoid making pricey phone calls. Free communication apps such as WhatsApp and FaceTime audio are good for keeping in touch with loved ones from abroad.
For calling landlines—such as customer service numbers—over data or Wi-Fi, you will need to use an internet-based phone service. You can use these apps to make or receive calls and texts. Note that internet phone service usually can’t be used for emergency calls (you need a proper mobile network connection) and some banks, such as Wells Fargo, don’t support these apps for receiving two-factor authentication texts.
If you anticipate having to call a landline back home or being on hold with customer service for a North American-based company (such as an airline), Google Voice is the best option. With the mobile app, it’s free to call the U.S. and Canada over Wi-Fi or wireless data. You can also receive texts and calls to your U.S.-based number assigned by Google Voice. Rates vary for making calls to other countries.
After downloading, enable this setting to avoid using your cell network for calls: Open the app then tap the menu icon (top left). Go to Settings then choose “Make and receive calls,” then “Prefer Wi-Fi and mobile data.” (Make sure you have data roaming turned off on your phone to avoid fees.)
For making or receiving calls from elsewhere, use Skype, a Microsoft -owned app. You can get up to 10 local Skype Numbers in 25 countries for $6.50 a month or $52 annually. That’s usually cheaper than getting a local SIM card. (A few countries, such as Brazil, France and South Korea, require proof of residence to set up a Skype Number.)
For More Data and Value: A Local Prepaid SIM
In many countries, you can walk into a carrier’s store and buy a cheap SIM card that gives you a local number and data for a certain number of days. Airports often have cellular kiosks, letting you set up service after passing through customs.
You first need to make sure your phone is unlocked, which means it doesn’t just work on your primary carrier’s network. Call your carrier to ask about your device’s locked/unlocked status, or insert a SIM from another carrier, if you have one. If your device says, “SIM not supported,” it’s locked. You need to ask your carrier to unlock the device or sign up for an international plan with your wireless provider.
If you bought your phone through your wireless company, it may be locked to that company temporarily. For example, devices purchased from Verizon are locked for 60 days after purchase.
Swapping SIM cards could deactivate iMessage for iPhone users. When you put in your new temporary SIM, your iPhone will register that new number, allowing you to message people through Apple’s service. You may be asked if you want to deregister your home number from iMessage—decline that request.
In Settings, tap Messages, then turn iMessage on if it wasn’t already. Go to Send & Receive then select your home number or Apple ID under “Start new conversations from,” and “Receive iMessages to and reply from.” Do the same for FaceTime.
You may see a warning: “This number is registered to your Apple ID, but is not associated with this phone. You can keep using the number for iMessage and FaceTime until it expires.” Don’t worry, that message will go away once you replace your original SIM.
Buying a local SIM often costs less than sticking with your regular U.S. wireless plan. When one of my editors went to Australia for 10 days this summer, she paid about $20 for 60GB of 4G data through a local carrier.
For Frequent and Long-Haul Travelers: Switch Carriers or Plans
If you regularly travel or plan on being abroad for an extended period and want to continue using your home number, consider switching to a travel-friendly plan or carrier. AT&T’s unlimited premium plan includes coverage in 19 Latin American countries, and T-Mobile’s Magenta Max plan includes data in over 200 countries. Both of those plans start at $85 a month for one line. Subscribers to Verizon’s Do More ($80 monthly) and Get More ($90 monthly) plans accrue one Travel Pass day each month of the calendar year. (They expire a year after you earn them.)
Google Fi is a carrier that includes international coverage in over 200 countries in both its pay-as-you-go ($20 a month plus $10 a gigabyte) and unlimited data plans ($65 a month). Like most carriers, it gets cheaper as you add more lines.
The carrier is best on Android phones. iPhones don’t get Wi-Fi-calling with Google Fi—though you could use another app, such as Google Voice or FaceTime, for that—or 5G. That new higher-speed network can more quickly drain your battery anyway.
There is also no annual contract. That said, if you only intend on signing up for a month or two, you would likely get more data for less by buying a local prepaid SIM.
Twitter Didn’t Seek a Sale. Now Elon Musk Doesn’t Want to Buy. Cue Strange Legal Drama.
In trying to terminate his $44 billion takeover deal, Tesla boss sets stage for what could become one of the oddest courtroom battles in corporate-takeover history
Elon Musk’s showdown with Twitter Inc. TWTR -5.10% has set the stage for what could become one of the most unusual courtroom battles in corporate-takeover history—a spurned acquisition target that never sought to be bought potentially trying to force the buyer who soured on the deal to see it through.
In just over three months, Mr. Musk aggressively pursued a takeover that Twitter first resisted, then he prevailed and reneged—all the while using the very platform to ridicule Twitter and its leaders and drop hints about his shifting intentions.
With Mr. Musk’s attempt to terminate his $44 billion takeover, Twitter says it plans legal action. In a statement Friday, it indicated it will file a lawsuit in the Delaware Court of Chancery arguing Mr. Musk must close the agreed-upon deal.
Friday evening, he filed papers saying he wanted out, taking aim at Twitter on several fronts and saying the company violated the merger agreement. He accused Twitter of withholding data from him to verify facts about the business and that its statements on the amount of spam on the platform represent material misstatements to regulators. He also argued the company was making critical changes to the ordinary running of the business without his consent, such as imposing a hiring freeze and layoffs.
Corporate-law experts say Twitter appears to be on sounder legal footing than Mr. Musk. The filing didn’t provide evidence to back up his assertion that the estimate was inaccurate or an alternate calculation. “This isn’t even in the ballpark,” said Zohar Goshen, professor of transactional law at Columbia Law School, adding that the impact on a company’s value needs to be so dramatic that its value would be halved, for example.
Layoffs and hiring freezes at tech companies in recent weeks also have become commonplace. Facebook parent Meta Platforms Inc. has cut back on hiring and Mr. Musk’s Tesla Inc. TSLA 2.54% is trimming staff.
The question remains whether it is really possible to force the eccentric billionaire—known for eschewing norms even when it gets him in legal trouble—to buy a company he doesn’t want to own.
“What are they going to do if there is a judgment and he says, ‘Well, I’m still not going to buy it’?” said Mr. Goshen. “They don’t really have tools to force him to go through with it. You don’t put people in jail because they don’t buy something.”
There have been a few examples of buyers being forced to follow through with purchases under the “specific-performance” clause Mr. Musk agreed to, but most were small deals. Never has the concept of a court forcing a buyer to complete a deal been tested on such a large scale.
Most legal clashes over soured deals end in settlements involving a price cut or one-time payment. Mr. Musk agreed to pay a $1 billion reverse termination fee to Twitter if the deal falls apart, triggered under certain scenarios including if his debt financing falls through or regulators try to block the deal. Neither has occurred.
The clash pits multiple white-shoe law firms against each other. Twitter has recently retained Wachtell, Lipton, Rosen & Katz, people familiar with the matter said, while Mr. Musk is using Skadden, Arps, Slate, Meagher & Flom LLP. Twitter has already been working with Simpson Thacher & Bartlett LLP and Wilson Sonsini, while Mr. Musk’s team also includes lawyers at Quinn Emanuel Urquhart & Sullivan.
The agreement caps at $1 billion the amount Twitter could sue for damages, meaning its only options are to sue for specific performance to force him to follow through, or a maximum of $1 billion. A representative for Mr. Musk declined to comment.
The standoff leaves Twitter in a precarious position, given that its prospects as a stand-alone company are daunting in part because of a digital-advertising market in upheaval. Twitter shares closed at $36.81 Friday, 32% below the $54.20-a-share price Mr. Musk agreed to pay.
Facing broadsides from Mr. Musk and a softening ad market, Twitter CEO Parag Agrawal has been trying to prepare it for a difficult period ahead, whether under Mr. Musk’s ownership or not. In May, he announced a hiring freeze and belt tightening, saying he was taking action during the takeover because economic conditions had worsened and Twitter couldn’t assume the deal with Mr. Musk would close. This past week, he cut recruiting staff.
Investors appear unnerved by the latest twist, sending Twitter’s stock 4.81% lower in Friday after-hours trading following Mr. Musk’s disclosure.
Musk’s romp
Mr. Musk’s Twitter romp began with the unannounced purchase of $22.8 million of Twitter shares on Jan. 31. He kept buying in February and March, building a roughly 9% stake for $2.6 billion and becoming the largest individual investor.
He took public jabs at Twitter, polling his followers on the site over whether it adheres to free-speech principles and publicly toying with the idea of started a rival. By the time his stake became public on April 4, Mr. Musk had been secretly talking to Twitter for nine days.
He initially reached out to Jack Dorsey, the company’s co-founder and a friend of Mr. Musk’s, then spoke to director Egon Durban, co-CEO of private-equity firm Silver Lake, another acquaintance, according to a public filing on the deal.
The discussions began congenially, with Mr. Musk saying he might want to join the board. Then on Apr. 9, hours before taking the board seat Twitter had agreed to give him, he withdrew. Four days later, he made an unsolicited takeover offer at $54.20 a share and made the offer public the subsequent day.
Twitter initially seemed to turn up its nose but eventually relented—in part because directors concluded that no one else was likely to have the interest or ability to buy the company at the price Mr. Musk was offering. The billionaire agreed to waive detailed due diligence of Twitter’s business.
Even as the transaction was coming together, Mr. Musk was voicing concerns about a darkening economic and business outlook. In late March, Tesla had to temporarily shut its auto plant in Shanghai, the company’s largest, as China implemented pandemic restrictions, sending the stock steadily lower. And, on an April 20 earnings call, Mr. Musk talked about mounting inflationary pressures.
On May 13, Mr. Musk shocked many people involved in the deal with a predawn tweet saying the deal was “temporarily on hold.” He later added he remained committed to seeing it through. He cited questions about Twitter’s estimate that fewer than 5% of its monetizable daily average users are spam or fake accounts.
Fake accounts are certainly a concern for social-media companies. But Mr. Musk had long been aware of fake accounts on Twitter—he tweeted about it at least as far back as 2018—and Twitter’s estimate hadn’t changed in years. Mr. Musk said repeatedly that part of his goal as owner would be, as he put it in an April 21 tweet, to “defeat the spam bots or die trying!”
The May 13 bombshell kicked off weeks of public and private back and forth between Mr. Musk, Mr. Agrawal and lawyers and advisers for both sides, according to Friday’s filing. After Mr. Agrawal on May 16 tweeted an explanation of the company’s spam accounting, Mr. Musk responded with a poop emoji, then followed up with a question: “So how do advertisers know what they’re getting for their money? This is fundamental to the financial health of Twitter.”
Asked on Twitter on May 26 about the prospects of a recession, Mr. Musk said he expected one that could last 12 to 18 months. On May 24, Tesla shares hit their lowest point since June 2021, down nearly 50% from their all-time high in November. The fall had knocked more than $100 billion off Mr. Musk’s net worth, weakening a key asset he was using to help fund the Twitter deal.
As he was lining up financing, Mr. Musk sold $8.5 billion of Tesla stock over three days. Afterward, he said he planned to sell no further shares. He remains the auto maker’s largest investor, with a stake of around 16%, and planned to borrow against his stake. His original financing plan for Twitter included $12.5 billion from margin loans backed by Tesla stock he owns. But Tesla’s share price kept falling, effectively increasing the number of shares Mr. Musk would have to pledge as collateral.
About a month after the deal—with Tesla shares now down 37% from when Mr. Musk agreed to buy Twitter—Mr. Musk filed a revised funding plan that eliminated the margin loans. Instead, he pledged more equity financing. The funding details left questions about how Mr. Musk would come up with roughly $14 billion of his financing package that he still needed to secure himself or through outside investors.
Twitter’s troubles
On April 21, Twitter rival Snap Inc. had spooked investors with disappointing earnings and a stark warning of trouble in the digital ad market. Twitter, soon after, withdrew all previously provided goals and outlooks with its first quarter earnings, and didn’t provide any forward-looking guidance.
On May 12, Twitter’s Mr. Agrawal told staff the company was imposing a hiring freeze and cutting back on spending.
While some Twitter employees expressed optimism that Mr. Musk might reinvigorate the company, many were bewildered about their futures and upset at Mr. Musk’s incessant public hectoring, The Wall Street Journal has reported.
In the month after the deal was inked, executives held more than a dozen companywide or division-wide meetings to address employee questions. One senior Twitter executive, in a May internal note, called it a “chaos tax.”
When Mr. Musk on Friday said he was aiming to abandon the deal, a Twitter executive urged employees to refrain from commenting on the matter, citing planned legal action, according to a message viewed by the Journal. That message was shared with outsiders within an hour.
Mr. Musk on Saturday addressed attendees at the annual Allen & Co. gathering of media and tech leaders in Sun Valley, Idaho, mostly steering clear of Twitter. He focused his remarks on explaining how he forms his opinions and what goes into the conclusions he reaches.
At one point, he did ask his audience how many thought the number of fake accounts on Twitter was less than 5%, said an attendee, and people seemed hesitant to raise a hand.