Morning Reads


  • Taiwan Semiconductor (TSM) aiming to raise prices further. FT
  • Lordstown (RIDE) executive says the company's ability to stay in business depends on ability to raise capital. WSJ
  • Traders removed $7 bln in investments from Tether (BITO, BTC, HOOD, COIN, MSTR). FT
  • SpaceX might be selling shares to fund Twitter (TWTR) bid. NY Post
  • Nestle (NSRGY) is moving baby formula supplies from US and
  • Europe due to supply shortages. Reuters
  • China Southern Airlines (ZNH) removes Boeing (BA) 737 Max from its fleet plans. Bloomberg





Another day, another tweet

Twitter (NYSE:TWTR) shares are on the move again this morning as Elon Musk confirmed that his $44B deal for the platform cannot move forward until he has more clarity on how many accounts are fake. The stock fell 3% to $36 in premarket trading on the news - down a total of 25% over the past week - with the completion of the transaction looking increasingly uncertain. In fact, the stock has lost all its gains since closing at $39.31 on April 1, which was the last session before the billionaire disclosed his minority stake in Twitter.

Latest tweet: "20% fake/spam accounts, while 4 times what Twitter claims, could be *much* higher," wrote Musk. "My offer was based on Twitter’s SEC filings being accurate. Yesterday, Twitter's CEO publicly refused to show proof of <5%. This deal cannot move forward until he does."

The reference was to a thread from Twitter chief Parag Agrawal, who also took to the "digital town square" on Monday, saying "the most advanced spam campaigns are sophisticated and hard to catch." Estimates are based on "multiple human reviews (in replicate) of thousands of accounts" that could not be "performed externally, given the critical need to use both public and private information (which we can't share)." Musk tweeted a poop emoji in response, adding, "so how do advertisers know what they're getting for their money? This is fundamental to the financial health of Twitter."

Fine print: Musk cannot legally walk away from the $44B acquisition unless he proves breach of contract, which in this case would be centered around misleading information (like disclosures about fake accounts or bots). If Musk simply abandons the deal, Twitter could sue him for billions in damages along with collecting the $1B breakup fee stipulated in the agreement. Instead, it looks like he is trying to renegotiate his takeover of Twitter, even commenting on Monday that a lower price wouldn't be "out of the question" after putting the deal "temporarily on hold." (27 comments)

Retail health

It might be the middle of May, but the retail stretch of the Q1 earnings season is on the calendar. Investors will be keeping a close watch this week on comments about runaway inflation and spending power, as well as higher shipping fees and other supply chain costs. Retail sales data for April will also be released at 8:30 a.m. ET, providing some clues to how well the average consumer is holding up after the Fed decided to embark on a monetary policy tightening cycle.

On deck: Home Depot (HD) and Walmart (WMT) unveil their first quarter results this morning, while Target (TGT), Lowe's (LOW) and TJX Companies (TJX) will report tomorrow. The figures will come during a choppy trading environment for stocks, with many concerned that the economy could soon fall into a downturn.

"We see clear late-cycle indicators, and while the risk of economic growth contraction or recession has risen steadily through the first four-and-a-half months of this year, we are now beginning to cross over a probability level that makes recession a base case for the end of this year and beginning of next," said Darrell Cronk of Wells Fargo Investment Institute.

Coming up: A lot will be on investors' minds over the next few sessions as Fedspeak coincides with retail earnings. Fed Chair Jerome Powell is scheduled to take the stage at The Wall Street Journal’s Future of Everything Festival at 2 p.m. ET, while a number of speaking engagements from other central bank officials will take place through Friday. (8 comments)

Protectionist measures

Chicago wheat futures jumped by their 6% limit on Monday after India banned exports of the grain citing concerns over "food security." The move has the potential to drive food prices even higher and add to the current inflationary environment, while further weighing on the tight global supply chain. Since its invasion on Feb. 24, Russia has sealed off Ukraine's Black Sea ports to conquer its coast, hurting the county's economy which is known as the "breadbasket of Europe" (together with Russia it accounts for a third of global wheat exports).

Backdrop: India had been helping to fill the wheat supply gap following a plentiful harvest in 2021 until it experienced a blazing heat wave in March and April. The searing temperatures prompted concerns about wheat supply and spiked domestic prices by 20%-40%. India even said the country's wheat production dropped by 3M tons from 106M tons last year, but would allow exports covered by already issued letters of credit and grant support to countries seeking to meet food security needs.

"India is not a big wheat exporter, but the fact that a big country scrambles to secure food supply left the market anxious," according to analysts at Danske Bank. There are also fears of a domino effect if other nations follow suit with their own export bans. Indonesia, which accounts for over half of global palm oil production, recently halted trade of the widely-used ingredient and feedstock.

First decline in four years: "Global wheat production [in 2022-23] is forecast at 775M tons, down 4M from the previous year," according to Grain: World Markets and Trade report released last week by the USDA. "The largest cut to production is in Ukraine, which is projected to have a crop one-third smaller than the prior year with reduced harvested area and lower yields due to the ongoing war with Russia." (14 comments)


It's 13F season, where hedge funds with at least $100M in assets under management reveal their holdings. The flurry of filings gives investors a chance to see what they bought and sold during the quarter, including long positions, and call and put options, though shorts aren't disclosed on the statements. Besides detailing where the "smart money" is being put to work, some may seek out vulnerabilities they can profit from... remember last year's GameStop saga? It all started when a Reddit user flagged Melvin Capital's heavy puts on GME, which eventually spiraled into the notorious short-squeeze enabled by WallStreetBets.

Where are the big guys putting their money? With the form required to be filed within 45 days of the end of a calendar quarter, hedge funds usually wait until the last minute to publish their holdings so as not to let the public know what they are doing. Check out some of the top headlines on Seeking Alpha:

Berkshire Hathaway takes 2.5% stake in Citi in Q1, exits Wells Fargo

Gates Foundation exits Alphabet, pares Microsoft, Walmart, Berkshire holdings

Druckenmiller buys a quarter billion worth of oil and gas stocks during Q1

Dalio's Bridgewater invests in Berkshire Hathaway, exits Tesla in Q1

Dan Loeb's Third Point adds stakes in CSX, Alcoa; exits Alphabet, Upstart

Tepper's Appaloosa bumps up Uber stake in Q1, exits Alliance Data

ValueAct adds stake in TopBuild, cuts stake in Trinity Industries

Paul Singer's Elliott Management exits Santander Consumer, Dell in Q1

Soros Fund Management buys Zynga, exits Activision in Q1

Carl Icahn trims Delek stake, exits Occidental, adds International Flavors & Fragrances

While the transactions can be helpful, it's important to remember that 13Fs don't tell the whole story about what funds are doing. As noted above, bearish bets like short-selling are not included on the statement, so visible long core holdings could actually be hedges against those positions. In some instances, the reports can also reflect investment decisions made months ago, since they are only filed up to 45 days after the quarter is complete.

Go deeper: The recent stock market selloff has battered many of the hedge funds listed above, especially those that have bet heavily on high-flying tech shares. Tiger Global, known for making aggressive big bets in the sector, even lost a reported $17B since the beginning of the year, marking one of the biggest dollar declines for any hedge fund in history. The results have been "very disappointing" as "markets have not been co-operative given the macroeconomic backdrop," according to Tiger Global, which slashed its holdings in companies like Netflix (NFLX), Zoom (ZM), DoorDash (DASH), Roblox (RBLX) and Robinhood (HOOD). (1 comment)

Today's Markets

In Asia, Japan +0.4%. Hong Kong +3.3%. China +0.7%. India +2.5%.
In Europe, at midday, London +0.9%. Paris +1.4%. Frankfurt +1.5%.
Futures at 6:20, Dow +1.6%. S&P +1.9%. Nasdaq +2.3%. Crude +0.5% to $114.79. Gold +0.7% to $1826.10. Bitcoin +2.4% to $30,503.
Ten-year Treasury Yield +4 bps to 2.92%

Today's Economic Calendar

8:30 Retail Sales
9:15 Industrial Production
9:15 Fed's Harker: “Healthcare as an Economic Driver”
10:00 Business Inventories
10:00 NAHB Housing Market Index
2:00 PM Jerome Powell Speech
2:30 PM Fed's Mester: “Inflation and Monetary Policy: Parallels to and Differences from the 1970s”
6:45 PM Fed's Evans: Monetary Policy

Known to most as Uranium Pinto Beans, Jason has more than 15 years under his belt of trading stocks, options and currencies. His expertise primarily lies in chart analysis, and he has a strong eye for undervalued stock. Because he’s got the ability to identify great risk/reward trades he usually enjoys taking the path less traveled and reaping the benefits from the adventure.

He is a co-founder of Option Millionaires, and he is best known for his weekly webinars with Scott, as well as his high level training webinars and charts found in the forums.

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