Genius who defies sceptic: Elon Musk’s lightning strike on Twitter must be regarded as the most glorious in financial history, says ALEX BRUMMER
Never underestimate Elon Musk. His lightning strike on Twitter, which saw him put together a financial package and overturn board collywobbles in just 12 days, must be regarded as the most glorious in financial history.
It also has unleashed a fusillade of criticisms and health warnings.
Musk’s libertarian instincts have wrought political blowback. Brussels has issued dire warnings about hefty fines and worse should Musk infringe the EU’s new digital rules.
Elon Musk’s libertarian instincts have wrought political blowback. Brussels has issued dire warnings about hefty fines and worse should he infringe the EU’s new digital rules
Voices on the BBC seem apoplectic that former president Donald Trump may be allowed to propagate his opinions again.
And there are suggestions at Westminster that the Online Safety Bill may need to be toughened. All of this before the current Twitter owners, a Who’s Who of international fund management, have signed up for the £35billion deal.
Twitter has already been a powerful force for change in Hong Kong and China where President Xi Jinping has clamped down on the output of Alibaba and newspaper offshoot the South China Morning Post.
Beijing may find it difficult to directly silence a more aggressive Twitter. But it could choose to take revenge on Tesla in Shanghai where it assembles some 50 per cent of its global output, enjoys tax breaks and has a well-developed supply chain.
Musk’s ownership gives the People’s Republic a tool which it has lacked in the past.
Some Wall Street voices argue that the last thing Tesla needs is for Musk to be further distracted.
His time is precious as a result of a big push for a low orbit Starlink satellite network at Space X. Musk also is involved in Neuralink, a start-up researching chips in the brain.
Tesla is seen as having insufficient managerial bandwidth to cope with Twitter and the electrified car maker’s shares fell sharply.
Maybe. But Musk’s slim executive team at Tesla could be the reason why his electric revolution has left the 17 strong top team at General Motors and 11 at Volkswagen in the dust.
The retreat for the shares has more to do with the Morgan Stanley-arranged leveraged buyout of Twitter secured against Tesla shares.
No one with an ISA or pension fund wants to see Tesla undermined. This is especially the case in that Musk’s Twitter investment is viewed by sceptics as a vanity project.
Genius moves in mysterious ways and there are enough serious people, including Silicon Valley financier Michael Moritz as well as top City bankers, willing to give Musk the benefit of the doubt. A capacity to refurbish Twitter without damaging other interests should not be underestimated.
The notion that inflation will calm down anytime soon is laid to waste by Primark owner Associated British Foods (ABF) which fears a return to the 1970s.
Everything in its clothing supply chain has soared in price, from raw cotton to runaway freight costs.
Prices at Primark will rise but the no-frills retailer will take some of the pain on the chin with margins dropping from 11.7 per cent to 10 per cent.
Group revenues were buoyant in the half-year to March 2022 at £7.88bn with most Primark stores able to keep open.
Enthusiasm for expansion through new shops remains undimmed with a focus now on the US. A more tactile website, designed to make it easier for customers to navigate stores, may eventually transition to click and collect.
Elsewhere in the group, higher input prices are hitting baker Kingsmill hard. ABF’s other main operations, sugar and ingredients, are coming back strongly. Inflation has allowed ABF to regain some lost pricing power.
The disappointment of squeezed margins sent ABF shares down 5 per cent. There is optimism at the top that fashion offering value for money could be a winner among customers in harder times.
Last year HSBC and other banks were able to write back sums put aside for Covid. In contrast, in the first quarter of this year HSBC upped its credit losses by $600million as energy prices and Ukraine took their toll.
Given the deteriorating financial conditions a share buyback has been hooked.
Covid isn’t helping in Hong Kong and China at present. However, HSBC will eventually benefit from the improved margins which come with higher interest rates.
It would be nice to think that HSBC and Santander UK (which reported buoyant results) might offer comfort to retail customers by curtailing branch closures.
Then pigs might fly.