It will surprise absolutely no one that Twitter does not agree with Elon Musk’s announcement that he is terminating his acquisition of the social media company.
In a letter dated July 10 and included in a regulatory filing on July 11, Twitter’s lawyers said Musk is still obligated to continue with the deal.
“Mr. Musk’s and the other Musk Parties’ purported termination is invalid and wrongful, and it constitutes a repudiation of their obligations under the Agreement. Contrary to the assertions in your letter, Twitter has breached none of its obligations under the Agreement, and Twitter has not suffered and is not likely to suffer a Company Material Adverse Effect,” Twitter’s lawyers wrote.
Shares of the company fell by more than 11 percent on Monday, but they still remain well above where most analysts think they would trade if the deal really did die. Analysts at MKM Partners compared the company with peer valuations and found that the stock “would likely find support around $24 to $26 per share, if investors start to assign a greater probability that this merger will not happen.” The stock closed at $32.86, which would seem to indicate at least some hope remains that Musk and Twitter will work things out.
Shares of Tesla were down on Monday. That was unexpected. The acquisition of Twitter has generally been thought of as a distraction for Musk from his car company and shares of Tesla. Analysts have estimated the deal hurt Tesla’s value by 5 percent to 15 percent. So the death of the deal would have been expected to give Tesla a lift. It may be that investors think fighting about whether the Twitter deal really is “terminated” will be an even bigger distraction than actually buying the company.
It’s almost hard to believe that it was just April when Twitter seemed to be desperately trying to avoid being acquired by Musk.
New York Fed’s Consumer Misery Survey
The Federal Reserve Bank of New York today released the June 2022 Survey of Consumer Expectations. It showed an increase in short-term inflation expectations but a decline in medium-term and longer-term inflation expectations. The median one-year-ahead inflation expectations increased to 6.8 percent, from 6.6 percent in May, marking a new all-time high. In contrast, median three-year ahead inflation expectations decreased to 3.6 percent from 3.9 percent. The five-year ahead inflation expectations ticked down from 2.9 percent to 2.8 percent.
One way of interpreting the decline is as a vote of confidence that the Fed will get inflation under control eventually. Less optimistically, the long-term estimate may have come down because people just cannot imagine prices will keep going up as fast as they have been. So, what gets added now has to be subtracted later. Unfortunately, that’s not what history suggests happens with inflation.
The New York Fed’s survey also picked up a pretty sizable increase in people saying they are worse off financially now than they were a year ago. The shares of people saying they are somewhat worse off rose from 32.8 in May to 36.1 in June. The share of those saying they are much worse off jumped from 13 percent to 15.2 percent. This is the first time in a decade or so history of the surveys that a majority of Americans have said they are worse off.
No wonder Joe Biden is the least popular president in 75 years.
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