Reads
- Will Taxing the Windfall Profits
- A Nation in the Crosshairs
- What Is ‘Friendshoring’?
- What If Deglobalization Is Good for Emerging Markets?
- ‘Do You Really Want to Rebuild at 80?’ Rethinking Where to Retire.
- Qatar Bans Alcohol Sales at World Cup Stadiums in Abrupt U-Turn
- ECB May Have to Restrict Growth to Control Inflation, Lagarde Says
- Inflation and Unemployment
- BofA Sees Bear Rally Fizzling Out Even as Equity Inflows Surge
- Musk’s ‘Hardcore’ Ultimatum Sparks Exodus, Leaving Twitter at Risk
- Tech Companies Were Thriving
- New Chief Calls FTX’s Corporate Control a ‘Complete Failure’
- Is This the End Game for Crypto?
- An iPhone Factory Needs Workers
- GM Has a New Business: Fixing Tesla EVs
- Masayoshi Son Now Owes SoftBank $4.7 Billion on Side Deals
- Elizabeth Holmes’s Fraud Sentence
Options
Futures
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The problems of a post-Elon Musk Twitter (TWTR) could be reaching an existential level as speculation that the company will not continue in its current form grew Friday following another employee exodus.
Hundreds of workers, including many key software developers and engineers, decided to quit on Thursday rather than sign up for Musk's "extremely hardcore" culture at the company, according to published reports citing sources and employee Slack messages.
The new Twitter chief set a 5 p.m. ET deadline Thursday for employees to click a link and commit to Twitter 2.0 and "working long hours at high intensity." Instead, many employees decided to take the three months' severance alternative.
In response to the exodus, Twitter is closing offices, as it did after the initial big wave of layoffs, as it determines who is still with the company.
"Effective immediately, we are temporarily closing our office buildings and all badge access will be suspended. Offices will reopen on Monday, November 21st," the company said in a memo obtained by Bloomberg. "Thank you for your flexibility. Please continue to comply with company policy by refraining from discussing confidential company information on social media, with the press or elsewhere."
Tweeting goodbyes: On Twitter Friday morning, the hashtags #RIPTwitter, #ApparentlyTwitter and #TwitterMigration were trending.
Accounts posted information on what other social media networks they could be found on, such as Mastodon, asked whether work accounts on Meta's (META) Instagram should be created, and tweeted gallows humor farewells such as the "It has been a privilege" meme of the band playing in the movie Titanic.
Twitter employees also said their goodbyes and sent messages of support on the platform. Still, there is little sign of a meaningful decline in Twitter posts.
The inflection point?: The latest exodus comes after Musk initially fired half of the Twitter staff as he looked to make the company leaner and slash costs. A departure of top executives followed, then Musk reportedly fired a number of employees who had been critical of him in the company Slack. Yesterday's decisions were enough for Musk to make moves to retain some staff.
As the "hardcore" deadline approached, Musk's team held an in-person and videoconference meeting with key undecided employees, but as the deadline passed some began hanging up while the Tesla (TSLA) founder was still speaking, The New York Times reported.
He also appeared to soften his stance on remote work, saying in an e-mail he would no longer make the final decision personally on who could work remotely. But that may have backfired as he put manager jobs on the line for an employee's remote performance, adding another level of job insecurity.
"Any manager who falsely claims that someone reporting to them is doing excellent work or that a given role is essential, whether remote or not, will be exited from the company," he said. (8 comments)
John J. Ray III, the new boss of bankrupt cryptocurrency exchange FTX, criticized the "unprecedented" management of ex-CEO and founder Sam Bankman-Fried that ultimately led to the once-mighty firm's demise, according to a court filing.
"Never in my career have I seen such a complete failure of corporate controls and such a complete absence of trustworthy financial information as occurred here," said Ray, who has more than 40 years of legal and restructuring experience, including overseeing Enron's high-profile bankruptcy in 2001.
"From compromised systems integrity and faulty regulatory oversight abroad to the concentration of control in the hands of a very small group of inexperienced, unsophisticated and potentially compromised individuals, this situation is unprecedented," he added.
Ray mapped out a number of poor management practices that took place within Bankman-Fried's crypto empire, including FTX's failure to "keep appropriate books and records, or security controls, with respect to its digital assets." It also used unsecured group email accounts to access private keys, Ray noted, and used software to hide the misuse of customer funds.
U.S. Senators Elizabeth Warren (D-MA) and Dick Durbin (D-IL) have demanded the now-bankrupt cryptocurrency exchange FTX provide information to shed light on its practices and finances from 2019 to present.
"New revelations continue to shed light on what now appears to be an appalling case of greed and deception," the lawmakers wrote in a letter. "The public is owed a complete and transparent accounting of the business practices and financial activities leading up to and following FTX's collapse and the loss of billions of dollars of customer funds." (4 comments)
OPEC is "back in the driver's seat" as the world's top swing oil producer while U.S. shale growth has slowed, Hess (HES) CEO John Hess said. Hess told an investor conference in Miami that he sees U.S. oil production reaching ~13M bbl/day in the next few years before leveling off, as shale output is ticking lower due to inventory depletion, inflation and investor pressure to focus on returns over growth.
"Shale was thought of as a swing producer … the Saudis and the OPEC have waited this out. Now, really OPEC is back in the driver's seat where they are the swing producer," Hess said, even as OPEC lacks spare capacity to easily increase its production. The CEO expects U.S. oil output will rise by ~500K bbl/day this year and next, but many companies "have already hit the wall" with only about a decade of life remaining. (12 comments)
James Bullard, president of the St. Louis Fed, said that even with his "generous" assumptions that tend to favor a more dovish policy, "the policy rate is not yet in a zone that may be considered sufficiently restrictive."
"To attain a sufficiently restrictive level, the policy rate will need to be increased further," he said at an event hosted by Greater Louisville Inc. The central bank has increased its key interest rate by 375 basis points this year and has been shrinking its balance sheet in its fight to lower inflation. He said in remarks after the speech that he sees 5%-5.25% as a minimum level for rates.
Meanwhile, the yield curve inversion between the 2-year (US2Y) and 10-year (US10Y) Treasury notes deepened to its widest level in four decades. The spread between the 2-year and 10-year extended to a mark of -66 basis points, marking the deepest inversion since 1982. An inverted yield curve is usually a sign of recession. (3 comments)
Today's Markets
In Asia, Japan -0.11%. Hong Kong -0.29%. China -0.37%. India -0.12%.
In Europe, at midday, London +0.64%. Paris +0.79%. Frankfurt +0.75%.
Futures at 6:30, Dow +0.18%. S&P +0.31%. Nasdaq +0.39%. Crude +0.13% to $81.75. Gold +0.23% to $1766.95. Bitcoin +1.58% to $16,780.3.
Ten-year Treasury Yield +3 bps to 3.80%
Today's Economic Calendar
10:00 Existing Home Sales
10:00 E-Commerce Retail Sales
10:00 Leading Indicators
10:00 Quarterly Services Report
1:00 PM Baker-Hughes Rig Count
Companies reporting earnings today »
What else is happening...
Mortgage rates tumble to 6.61%, biggest drop since 1981.
Meta Platforms (META) has fired dozens for hijacking user accounts.
Amazon (AMZN) CEO says role eliminations will extend into 2023.
Binance CEO says he 'may have been the last thing that poked' FTX (FTT-USD) into collapse.
Goldman Sachs boosts terminal Fed rate forecast, still sees no recession.
Alibaba (BABA) jumps despite Q3 sales miss.
Ross Stores (ROST) stock rips higher on big earnings beat, bullish guide.
Upgrades
- Summit Insights upgraded Applied Materials (AMAT) to Buy from Hold post the October quarter results. The firm now believes the 2023 wafer dab spending cuts are priced in into the stock. The firm notes Applied Materials' customers' capex adjustments are manageable for the company and will primarily be completed by mid-2023. The firm expects Applied Materials to benefit from the upturn in the WFE spending, primarily due to the increased capital intensity for more advanced process nodes in both DRAM and foundry.
- Guggenheim upgraded Pinnacle West (PNW) to Neutral from Sell with a price target of $70, up from $54. The firm notes regulatory construct in Arizona has improved following the election loss of Commissioner Sandra Kennedy and the victories of two Republican commissioners. The regulatory construct in Arizona, not the company itself or its management, had been the reason for the firm's previous negative view and Sell rating, the firm explained, adding that the firm now sees improved potential for the utility to come out of an Arizona rate case with a more appropriate ROE .
- Gordon Haskett upgraded Ross Stores (ROST) to Buy from Hold with a $130 price target. The firm had turned incrementally more positive on the off-price retail space last week when the firm had upgraded TJX (TJX) to Buy, but the results from Ross and across the space with over 10 companies under coverage reporting Q3 results this week lead him to see more "evidence" that middle-income shoppers would begin to trade down into the off-price space. Commentary from Walmart (WMT), Target (TGT), and Kohl's (KSS) would suggest that trade down is occurring and he thinks it "makes sense to add" more off-price retail exposure, Grom tells investors.
Downgrades
- Piper Sandler downgraded Chart Industries (GTLS) to Neutral from Overweight with a price target of $133, down from $228. The firm cites the company's additional leverage from Howden for the downgrade. The firm notes Howden's product lines do fit into Chart's strategy, but the balance sheet along with the structure of the convertible preferred overshadow the industrial logic. With a more levered balance sheet for an industrial headed into a probable recession, the firm understands the market selling off the shares, especially when free cash flow is the debt repayment plan and there hasn't been much FCF as of late.
- Wedbush downgraded RH (RH) to Neutral from Outperform with a price target of $270, down from $274. The firm notes RH has been steadfast in protecting its brand without discounting, but this has contributed to mounting market share losses. The firm sees mounting evidence of a course-correction to its strategy of climbing the luxury mountain. A key tenet of this strategy has been to cede low-value share as it elevates its brand, raises prices and improves quality to levels appealing to a narrower set of high-net-worth customers, says the analyst. The firm , however, surprisingly found that RH reduced prices by 2%-9% since March on half of the products in a price study. This potential course-correction in the company's strategy and deteriorating macro outlook drive the downgrade the Neutral.
Others
- Cantor Fitzgerald initiated coverage of Precigen (PGEN) with an Overweight rating and $7 price target. The firm believes that the peak sales potential of Precigen's innovative product pipeline is under-appreciated, and notes that with near-term clinical milestones that could bring increased investor attention/appreciation to these assets, upward earnings estimate revisions, driven by pipeline advancements, could potentially move the stock higher.
- Raymond James initiated coverage of Fulgent Genetics (FLGT) with an Outperform rating and $45 price target. The firm notes the company capitalized on COVID-19 testing capabilitie and has now deployed part of its substantial cash hoard to emerge from the pandemic with the full breadth of oncology testing capabilities. The firm says Fulgent now aims to be a one-stop shop for oncology diagnostics and that its positive dynamics are not properly reflected in the shares.
- Credit Suisse initiated coverage of Pfizer (PFE) with an Outperform rating and $55 price target. The firm notes Pfizer has been "impacted adversely" following its COVID vaccine success, but his Outperform thesis is not predicated on a single asset, but a combination of pipeline advances that support growth.
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