Markets.com Logo
euEnglish
LoginSign Up

Stocks up after Fed minutes, Elon Musk needs more cash

May 26, 2022
3 min read
Table of Contents

    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 1st. 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 purchase. In a filing, Musk revealed he’d let the $6.25bn margin loan component of the financing to lapse. This means he needs to find $33.5bn to finance the deal. This removes leverage from the deal and probably eases some of the concern around using Tesla 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’ …it 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 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 1m 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.


    Risk Warning and Disclaimer: This article represents only the author’s views and is for reference only. It does not constitute investment advice or financial guidance, nor does it represent the stance of the Markets.com platform. Trading Contracts for Difference (CFDs) involves high leverage and significant risks. Before making any trading decisions, we recommend consulting a professional financial advisor to assess your financial situation and risk tolerance. Any trading decisions based on this article are at your own risk.

    Written by
    SHARE

    Markets

    • Palladium - Cash

      chartpng

      --

      -1.00%
    • EUR/USD

      chartpng

      --

      0.08%
    • Cotton

      chartpng

      --

      -0.28%
    • AUD/USD

      chartpng

      --

      -0.43%
    • Santander

      chartpng

      --

      -1.35%
    • Apple.svg

      Apple

      chartpng

      --

      0.51%
    • easyJet

      chartpng

      --

      -1.62%
    • VIXX

      chartpng

      --

      2.23%
    • Silver

      chartpng

      --

      0.23%
    Table of Contents

      Related Articles

      Solana Price Gains 4%: What is the price target for Solana?

      Solana Price Gains 4%: Solana, a prominent blockchain platform known for its high-speed transactions and low fees, recently saw a notable increase in its price by approximately 4%.

      Ghko B|about 23 hours ago

      Bitcoin Price Outlook: What will be the value of Bitcoin in 2025?

      Bitcoin Price Outlook: Bitcoin has long been a subject of intense discussion and speculation, captivating attention across the world.

      Frances Wang|about 23 hours ago

      Morning Note: Markets Break Records - What’s Fueling the Surge?

      Global stocks climbed to record highs for the second consecutive session on Thursday, while the U.S. dollar strengthened following a stronger-than-expected jobs report.

      Tommy Yap|about 23 hours ago
      Markets.com Logo
      google playapp storeweb tradertradingView

      Contact Us

      support@markets.com+12845680155

      Markets

      • Forex
      • Shares
      • Commodities
      • Indices
      • Crypto
      • ETFs
      • Bonds

      Trading

      • Trading Tools
      • Platform
      • Web Platform
      • App
      • TradingView
      • MT4
      • MT5
      • CFD Trading
      • CFD Asset List
      • Trading Info
      • Trading Conditions
      • Trading Hours
      • Trading Calculators
      • Economic Calendar

      Learn

      • News
      • Trading Basics
      • Glossary
      • Webinars
      • Traders' Clinic
      • Education Centre

      About

      • Why markets.com
      • Global Offering
      • Our Group
      • Careers
      • FAQs
      • Legal Pack
      • Safety Online
      • Complaints
      • Contact Support
      • Help Centre
      • Sitemap
      • Cookie Disclosure
      • Regulation
      • Awards and Media

      Promo

      • Gold Festival
      • Crypto Trading
      • marketsClub
      • Welcome Bonus
      • Loyal Bonus
      • Referral Bonus

      Partnership

      • Affiliation
      • IB

      Follow us on

      • Facebook
      • Instagram
      • Twitter
      • Youtube
      • Linkedin
      • Threads
      • Tiktok

      Listed on

      • 2023 Best Trading Platform Middle East - International Business Magazine
      • 2023 Best Trading Conditions Broker - Forexing.com
      • 2023 Most Trusted Forex Broker - Forexing.com
      • 2023 Most Transparent Broker - AllForexBonus.com
      • 2024 Best Broker for Beginners, United Kingdom - Global Brands Magazine
      • 2024 Best MT4 & MT5 Trading Platform Europe - Brands Review Magazine
      • 2024 Top Research and Education Resources Asia - Global Business and Finance Magazine
      • 2024 Leading CFD Broker Africa - Brands Review Magazine
      • 2024 Best Broker For Beginners LATAM - Global Business and Finance Magazine
      • 2024 Best Mobile Trading App MENA - Brands Review Magazine
      • 2024 Best Outstanding Value Brokerage MENA - Global Business and Finance Magazine
      • 2024 Best Broker for Customer Service MENA - Global Business and Finance Magazine
      LegalLegal PackCookie DisclosureSafety Online

      Payment
      Methods

      mastercardvisanetellerskrillwire transferzotapay
      The markets.com/za/ site is operated by Markets South Africa (Pty) Ltd which is a regulated by the FSCA under license no. 46860 and licensed to operate as an Over The Counter Derivatives Provider (ODP) in terms of the Financial Markets Act no.19 of 2012. Markets South Africa (Pty) Ltd is located at BOUNDARY PLACE 18 RIVONIA ROAD, ILLOVO SANDTON, JOHANNESBURG, GAUTENG, 2196, South Africa. 

      High Risk Investment Warning: Trading Foreign Exchange (Forex) and Contracts For Difference (CFDs) is highly speculative, carries a high level of risk and is not appropriate for every investor. You may sustain a loss of some or all of your invested capital, therefore, you should not speculate with capital that you cannot afford to lose. You should be aware of all the risks associated with trading on margin. Please read the full  Risk Disclosure Statement which gives you a more detailed explanation of the risks involved.

      For privacy and data protection related complaints please contact us at privacy@markets.com. Please read our PRIVACY POLICY STATEMENT for more information on handling of personal data.

      Markets.com operates through the following subsidiaries:

      Safecap Investments Limited, which is regulated by the Cyprus Securities and Exchange Commission (“CySEC”) under license no. 092/08. Safecap is incorporated in the Republic of Cyprus under company number ΗΕ186196.

      Finalto International Limited is registered  in the Saint Vincent and The Grenadines (“SVG”) under the revised Laws of Saint Vincent and The Grenadines 2009, with registration number  27030 BC 2023.

      Close
      Close

      set cookie

      set cookie

      We use cookies to do things like offer live chat support and show you content we think you’ll be interested in. If you’re happy with the use of cookies by markets.com, click accept.