Elon Musk said he’ll give up on running Twitter as soon as he finds “someone foolish enough to take the job.”
He finally acknowledged a poll on his social media site over his leadership that, surprisingly, appeared to give him an answer he didn’t want to hear.
He’ll certainly need to find a new CEO with a lot of confidence. If his foray into Twitter has shown anything, it’s that the job of running the company can reduce someone of Musk’s impressive track record from Marvel Superhero to mere mortal in just two months.
For investors, the bigger question is what it all means for
On Tuesday evening, Musk tweeted that the carmaker’s share slide comes down to higher interest rates, but that doesn’t explain why the stock has tanked so much more than the rest of the market.
Yet Tesla is still priced considerably higher than other carmakers. Even after a rough year, it trades at 24 times forward earnings.
trade at about 6 times forward earnings, and newly listed
at 17 times. That suggests that investors haven’t completely given up on the man–there’s still a Musk premium in Tesla shares.
Throughout his career, his great talent was convincing people that they’re not just buying a share of future revenues in his companies, but rather a stake in big ideas that can change the world.
Twitter has taken a lot of the shine off, and Musk may not be able to recover it. As F. Scott Fitzgerald said, there are no second acts in American lives.
Now it’s up to Musk to prove that that’s just another mold he can break.
*** Join MarketWatch reporter Emily Bary, MoffettNathanson analyst Lisa Ellis, and Mizuho analyst Dan Dolev today at noon for a discussion on how to make strategic fintech wagers. Shares of
did better than most payments stocks this year despite punchy inflation and higher rates. But with 2023 recessionary fears intensifying, will those fintech names prove havens, or is it time to bargain hunt? Sign up here.
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Zelensky Visits Washington as Lawmakers Boost Military Spending
Ukrainian President Volodymyr Zelensky’s trip to Washington on Wednesday is his first spell abroad since the Russian invasion of his country. The visit comes on the heels of lawmakers finalizing a $1.65 trillion spending bill for fiscal 2023 with boosted military funding and additional aid for Ukraine and North Atlantic Treaty Organization allies.
- A meeting with President Joe Biden is on the schedule as well as an address to a joint session of Congress. Biden is expected to confirm the provision of a Patriot antimissile battery to Ukraine, an advanced air-defense system made by Raytheon Technologies and Lockheed Martin.
- Biden isn’t expected to pressure Zelensky to negotiate with Russia, according to the Wall Street Journal, despite a top U.S. general last month saying the winter could provide an opportunity for peace talks. That means no short-term relief for energy inflation worries stoked by the conflict.
- The bill presented by lawmakers includes $858 billion in military spending, up about 10% from the prior year and $45 billion more than Biden had requested. Senate Republicans presented the increase as a win in negotiations, as it breaks the prior parity between increases in defense and nondefense spending.
What’s Next: The bill looks set to pass with support from Senate Republicans despite the opposition of some of their House colleagues who hoped to push negotiations into next year. Military spending is on the rise in the U.S. and its NATO allies, but aid to Ukraine could become controversial under a Republican-controlled House next year.
Wells Fargo Settles with Regulator Over Loan, Account Issues
reached a $3.7 billion settlement with the Consumer Financial Protection Bureau over allegations of loan and deposit account mismanagement affecting 16 million accounts. The CFPB said the bank illegally assessed fees and interest charges on auto and mortgage loans and some had cars wrongly repossessed.
- The settlement comes six years after Wells Fargo’s fake account scandal came to light and other problems in its lending and deposit businesses since then. “Wells Fargo’s rinse-repeat cycle of violating the law has harmed millions of American families,” said CFPB Director Rohit Chopra.
- The CFPB ordered Wells Fargo to pay a record $1.7 billion civil penalty and $2 billion in restitution, including $205 million for illegal surprise overdraft fees, the CFPB said. Much of the latter has been paid, a bank spokesperson said.
- Wells Fargo CEO Charlie Scharf said: “This far-reaching agreement is an important milestone in our work to transform the operating practices at Wells Fargo and to put these issues behind us,” adding that the bank’s priority is to operate in “a more controlled, disciplined way.”
- Since 2018, Wells Fargo has been operating under a $2 trillion asset cap imposed by the Federal Reserve in response to its fake accounts scandal. That cap has been an overhang on the stock. Wall Street wants to see enough improvements in Wells Fargo operations for it to be lifted.
What’s Next: Wells Fargo set aside $2 billion for regulatory and legal issues in the third quarter, and said Tuesday it expects fourth-quarter operating losses to hit $3.5 billion because of the settlement.
FedEx Reports Softer Shipping Demand as Economy Slows
shares rose 3.6% late Tuesday despite the transportation and delivery giant offering lower-than-expected full-year earnings guidance. Domestic and international express daily package volumes dropped about 12% from last year, while ground deliveries fell about 9%—a sign the economy is slowing down.
- FedEx posted adjusted fiscal second-quarter earnings of $3.18 a share from $22.8 billion in sales, beating Wall Street’s quarterly projections for profit but falling short of sales forecasts. FedEx expects to earn $13 to $14 a share for the year, while analysts forecast $14.
- FedEx said it is facing challenges from a weakening global economy and is cutting costs to try to offset any sales weakness. Management plans to reduce expenses by about $3.7 billion this fiscal year, almost 5% of total costs incurred running the business in fiscal year 2022.
- Investors were shocked in September when FedEx announced quarterly results early, saying it earned about $3.40 a share versus expectations for $5.10 a share. Management blamed a weakening economy, and its shares plunged 21% the trading day following the warning.
In other earnings,
stock rose nearly 12% in after-hours after the athletic apparel maker reported stronger than expected revenue and profit and showed signs it was getting its inventory glut under control. Executives said they remained positive about consumer demand.
What’s Next: Nike expects full-year fiscal 2023 revenue will be dimmed somewhat by foreign exchange effects, but despite that its outlook is higher than before. It expects full-year revenue growth in the mid-single digit percentages, compared with earlier guidance for sales growth in the low- to mid-single digit range.
3M to Quit Forever Chemicals Business by 2025
Industrial materials giant
the maker of Post-it Notes and Scotch tape, will stop making and using chemicals that take a long time to break down, also known as forever chemicals, by 2025, exiting a business that’s given it headaches for years. 3M expects to take charges totaling $1.3 billion to $2.3 billion to shut down the business.
- PFAS, short for perfluoroalkyl and polyfluoroalkyl substances, take a long time to break down in the environment. The Environmental Protection Agency has proposed designating PFAS and related compounds as hazardous, and requiring companies to remove them from the environment.
- 3M Chief Executive Mike Roman told The Wall Street Journal that the decision was influenced by increasing regulation of PFAS chemicals, and customers looking for alternatives to the chemical used in nonstick cookware, food packaging, and other products.
- The compounds have been found in drinking water, including municipal systems and private wells, and exposure has been linked to health problems including kidney and testicular cancers, thyroid disease, and high cholesterol, the EPA said. Thousands of lawsuits have been filed against chemical companies alleging harm from PFAS.
- 3M’s net sales of PFAS chemicals represent about 4% of its total annual sales, according to RBC Capital Markets. “This is a step in the right direction for 3M,” RBC analysts wrote Tuesday.
What’s Next: 3M expects to record a $700 million to $1 billion charge in the fourth quarter of 2022. The company said about 70% to 80% of the charges are noncash. 3M could spend up to a half a billion dollars exiting the business.
Luxury Liquor Sales Surged in the Third Quarter
Sales of premium alcohol, or spirits sold at $50 or more for a 750ml bottle, have continued to surge the trend towards quality started during the pandemic. Sales of luxury spirits rose 15% in the third quarter from one year ago, according to the Distilled Spirits Council’s latest Luxury Brand Index.
Sales of American whiskey, including such brands as
Jack Daniel’s and
Westland, were strongest, rising 33% from last year. Tequila consumption rose 29%, followed by Japanese whisky, up 20%.
- The Distilled Spirits Council launched the Luxury Brand Index in October 2021, but it has historic data to 2017. Compared with five years ago, luxury spirits volume sold in the U.S. has nearly tripled. Over this time frame, tequila beat whiskey, growing 44% annually to 43% for whiskey.
- Investors shifted to wine this year as an alternative investible asset. The Liv-ex Fine Wine 1000, the broadest index of the fine wine market, is up 16.1% year over year, while the benchmark Liv-ex 100 rose 3.8%.
- There are signs of a slowdown in fine wine markets after supply chain turmoil. The Liv-ex 100 recorded its first decline in 18 months in July, and again in October and November, and trade volume increased 2.4% in 2022 compared with 10.4% last year.
What’s Next: Liv-ex, a global marketplace for the fine wine trade, even uncovered some ominous signs among merchants, who said in the survey they had “neutral” or “quite pessimistic” view about next year. Two respondents predicted the Liv-ex 100 Index would fall more than 25% in 2023.
—Liz Moyer and Penta
—Newsletter edited by Liz Moyer, Rupert Steiner.