tyb and good morning
Tesla Announces $2 Billion Stock, Bond Offering; Stock Jumps Because "Musk Is Buying"
Tesla's need for cash has finally slipped beyond the point where CEO Elon Musk can continue to pretend to ignore it, and instead has been given a violent thrust into urgent, as the company filed this morning to offer about 2.7 million shares (~$650 million in stock) and $1.35 billion in convertible notes one week after Musk said there was merit to the cash-crunched company raising more capital. Shares popped on the news in the pre-market session on news Musk would participate in the offering.
The entire financing seeks to raise about $2B. The converts will add another maturity to the company's nearly $11 billion in debt it already carries and, by our back of the envelope calculations, the equity issuance will dilute current shareholders by approximately 1.25%. The senior convertible notes will be due in 2024.
To put a lipstick on the dilution pig, CEO Elon Musk has indicated his "interest" in purchasing up to about 42,000 shares, or a paltry $10 million of the offering. This equates to about 0.045% of Musk's reported $22 billion net worth. According to FinTwit regular @bgrahamdisciple, Elon Musk is the only executive officer or director who has purchased shares in the last 12 months. Other executive officers and directors have executed 41 sales in the past 12 months.
Goldman Sachs, Citigroup, BofA, Deutsche Bank, Morgan Stanley, Credit Suisse, Soc Gen and Wells Fargo will be handling the offering. As Mark Spiegel points out, the lead underwriter on the stock has a "sell" rating on the name and a $200 price target.
The response on Twitter from those who follow the story closely was mostly bemused:
$TSLA $2B is not enough. And Musk’s virtue signaling purchase is laughable relative to recent continued insider selling by Straubel, Gracias, Buss, etc.
— Diogenes (@WallStCynic) May 2, 2019
$TSLA will burn around $1.5B just in operations this year, before repaying any debt or spending anywhere NEAR its projected capex. This is a band-aid on the path to oblivion.
— Mark B. Spiegel (@markbspiegel) May 2, 2019
Size of this offering is just enough to plug the working capital deficit. $TSLA pic.twitter.com/UoSzmd62b8
— Charley Grant (@CGrantWSJ) May 2, 2019
Hey morons, err' $TSLA longs': this isn't a bought deal. No one has ponied up the $2B+ yet. Who's in and and what price? 🤣 Gali - you good for $1K?
Stock should be tanking on this IMO. who gives a fuck if the toothless @SEC_Enforcement allows this fraud to sucker more fools?
— CVC Research (@CVCResearch) May 2, 2019
https://www.zerohedge.com/news/2019-05-02/tesla-announces-2-billion-stock-bond-offering-stock-jumps-because-musk-buying
Yet another announcement with nothing moar than wishful thinking and "hope" to entice buying. They burn $10m in cash everyday.
See cap #3 for executive share sales.
https://www.secform4.com/insider-trading/1318605.htm
Stocks flat to slightly down, As Rate Cut Bets Slide On Hawkish Fed
*edit () in bold are additions
With key Asian markets (China and Japan) closed for the second day in a row, Europe’s share markets struggled early on even as US equity futures levitated form session lows.
The Fed crushed hopes that it is preparing its first interest rate cut in years, as Powell said inflationary pressures were "transitory", sending 2019 rate cut odds sliding.
(thats not what CME rate watch-futures- say's but no matter)
But the biggest driver of risk on Thursday was the reaction to the Fed, where for all the intense political pressure to ease policy and the mixed growth/inflation data, the central bank held the line on Wednesday and refused to signal anything other than it was still on pause as Reuters put it.
Although the Fed made the predicted 5 basis point cut to the interest it pays on banks’ excess reserves – a technical move to ease money market tightness as it runs down its balance sheet - chair Powell was unwavering on the rate outlook and said the recent relapse in inflation rates was likely temporary.
(dropping the discount rate will only give the system a temporary reprise and it will also accelerate the yield curve implosion)
Watch the ten year as the lower the mkts go the higher the yields are on those- starting to see a bit of a climb already today-remember the bond market is MUCH bigger and small % moves mean billions of $'s cap 4
CNBC reported the U.S. and China could announce a long-awaited trade deal by May 10, as Chinese Vice Premier Liu He heads to Washington.
Market Snapshot
S&P 500 futures up 0.2% to 2,927.25
STOXX Europe 600 down 0.3% to 389.82
MXAP down 0.02% to 162.64
MXAPJ up 0.1% to 540.16
Nikkei down 0.2% to 22,258.73
Topix down 0.2% to 1,617.93
Hang Seng Index up 0.8% to 29,944.18
Shanghai Composite up 0.5% to 3,078.34
Sensex up 0.2% to 39,093.26
Australia S&P/ASX 200 down 0.6% to
6,338.41
Kospi up 0.4% to 2,212.75
German 10Y yield rose 1.9 bps to 0.032%
Euro up 0.2% to $1.1215
Brent Futures down 0.8% to $71.59/bbl
Italian 10Y yield fell 2.9 bps to 2.184%
Spanish 10Y yield rose 0.8 bps to 1.009%
Brent Futures down 0.8% to $71.59/bbl
Gold spot down 0.5% to $1,270.65
U.S. Dollar Index down 0.1% to 97.55
US Event Calendar-Data
7:30am: Challenger Job Cuts YoY, prior
0.4%
8:30am: Initial Jobless Claims, est. 215,000,
prior 230,000; Continuing Claims, est.
1.66m, prior 1.66m
8:30am: Nonfarm Productivity, est. 2.2%,
prior 1.9%; Unit Labor Costs, est. 1.5%,
prior 2.0%
9:45am: Bloomberg Consumer Comfort,
prior 60.8
10am: Factory Orders, est. 1.5%, prior
-0.5%; Factory Orders Ex Trans, prior 0.3%
10am: Durable Goods Orders, prior 2.7%;
Durables Ex Transportation, prior 0.4%
10am: Cap Goods Orders Nondef Ex Air,
prior 1.3%;
Cap Goods Ship Nondef Ex Air,
prior -0.2%
This afternoon in the US we’ve got another busy slate of data releases with claims, preliminary Q1 nonfarm productivity and unit labour costs, and final March durable, capital and factory orders data all due. We’ve also got comments due from the ECB’s Hansson this morning and then Praet this evening, while from today US waivers on purchases of Iranian oil officially expire. The earnings highlights today include Shell, Volkswagen, DowDupont, BNP and Lloyds.
https://www.zerohedge.com/news/2019-05-02/stocks-drift-lower-rate-cut-bets-slide-hawkish-fed
https://www.bloomberg.com/markets/stocks/futures
https://www.dailyfx.com/crude-oil
https://www.marketwatch.com/investing/bond/tmubmusd10y?countrycode=bx
POTUS spoils Xi's Belt and Road Forum, without even attending
TOKYO – U.S.-China trade negotiations have entered the homestretch as top negotiators concluded a short round of talks in Beijing this week and will reconvene in Washington from May 8.
Whether the world's two largest economies can agree on a deal "historic" enough for U.S. President Donald Trump to declare a success is unclear.
What is clear, however, is that the trade talks weigh heavily on Chinese President Xi Jinping's mind. This unexpectedly became clear at the second Belt and Road Forum for International Cooperation in Beijing on April 25-27.
China staked its prestige on the success of the second Belt and Road summit, and used its diplomatic muscle to bring together top-level leaders from 37 countries around the world, drawing more leaders than the first summit did two years ago.
But missing from the guest list was the most important one. The Trump administration refused to send a delegation to the Beijing gathering, and well-known American business figures stayed away. Even the media center seemed short on American reporters.
It was a significant difference from the first summit and reflects just how contentious the Belt and Road Initiative – a massive infrastructure plan that seeks to connect China and Europe by highways, rail lines and ports – has become in the eyes of the U.S.
Xi's opening speech was symbolic. After lauding the initiative's achievements, the tone of the speech changed about midway through.
The Chinese president vowed to "expand market access for foreign investment in more areas," "enhance protection of the lawful rights and interests of foreign intellectual property owners," "stop forced technology transfer" and "improve protection of trade secrets."
Xi was clearly not talking to those in attendance, including Russian President Vladimir Putin, but to another set of ears, 11,000 km away in Washington.
He also said that China "will increase the import of goods and services on an even larger scale," "will not resort to the beggar-thy-neighbor practice of yuan devaluation" and "will overhaul and abolish unjustified regulations, subsidies and practices that impede fair competition and distort the market."
These are all central topics in the U.S.-China trade talks. They were not related to China's external aid policy, which would have been a more natural focus of attention at the summit.
For the Chinese head of state to go into such details at a major international speech was unprecedented. Such policy setting is usually the job of Premier Li Keqiang. But Li does not sit in the command seat for trade talks with the U.S.
"It looked as if the Belt and Road summit was hijacked by measures to deal with Trump," one Chinese source involved in the conference said, heaving a sigh.
China is highly conscious about criticism toward its Belt and Road Initiative from the U.S. and others. Particularly damaging has been an allegation that Beijing is pursuing "debt-trap diplomacy" by saddling foreign countries with heavy debt and wrestling away crucial infrastructure if they do not repay.
China has so far squarely rejected the allegation. Until shortly before the second Belt and Road summit, China had denied the debt trap theory each time as a "false rumor."
Surprisingly enough, China has changed its confrontational tone on the issue.
China's external propaganda for this year's summit was also fairly restrained, compared with the over-the-top public relations campaign for the first summit two years ago.
A central architect of these significant changes is Vice Premier Liu He, one of Xi's closest aides.
Liu, who presides over trade negotiations with the U.S., kept a low profile at the summit, but his fingerprints could be seen covering its talking points.
Addressing the debt-trap criticism, China spoke of issues such as "consideration to the fiscal sustainability of partner countries" and "high-quality infrastructure development."
Furthermore, the closing remarks of Xi's speech at the summit were also noteworthy. As is the case with most Chinese leaders' speeches, the key message was inserted at the end.
"We hope that other countries will also create an enabling environment of investment, treat Chinese enterprises, students and scholars as equals, and provide a fair and friendly environment for them…," Xi said.
https://asia.nikkei.com/Editor-s-Picks/China-up-close/Trump-spoils-Xi-s-Belt-and-Road-Forum-without-even-attending
https://www.secform4.com/insider-trading/1024305.htm
can you pop a few pepe heads on something for an oldfag?. Will drop if acknowledge
appreciate it memefag. Stuff getting stale and need sumthang new. and don't think anyone is a benchwarmer, we all do equal stuff and no one is above/below anyone else imo.
whatever you can do with this is much appreciated
hour's of laughter on that one reading those convo's.