Elon Musk has sent a third letter to Twitter attempting to terminate his $44 billion acquisition of the company. Musk’s legal team cited Twitter’s multimillion dollar severance payment to former security chief and whistleblower Peiter Zatko as a violation of the merger agreement and a reason to end the deal. The letter, dated September 9th, was sent to Twitter’s chief legal officer Vijaya Gadde, and was included in a filing Twitter made with the SEC on Friday (which you can read at the bottom of this article).
Last month, Zatko made headlines by accusing Twitter of misleading investors about the number of bots on the service, failing to delete users’ data, and having poor security practices, among other things. Musk jumped on the accusations, citing them in his second termination letter and subpoenaing Zatko to testify in the lawsuit. Zatko was set to be deposed on Friday.
Elon Musk sent his first letter of termination in July, saying that Twitter mislead him about the number of bots on its platform, and that the company wouldn’t give him access to the information he need to make his own determinations. This is despite the fact that he was given access to the “firehose” API that contains every tweet.
On Thursday, the Wall Street Journal reported that Twitter had agreed to pay Zatko roughly $7 million before he left the company, in relation to lost compensation after he and the company negotiated about pay for months. Musk’s lawyers are citing it as yet another reason why his deal to purchase the social media company shouldn’t go through. The purchase agreement bars Twitter from providing any out-of-the-ordinary severance or termination payments. According to the Journal, the settlement isn’t particularly strange, given that Zatko was an executive leaving the company, but it seems like Musk doesn’t agree. (The letter also mentions Musk didn’t learn about the separation agreement until Twitter filed it with the court.)
Whether Musk is actually allowed to terminate the deal is a matter for a court in Delaware after Twitter sued Musk in July for trying to abandon the deal. Chancellor Kathaleen McCormick has already ruled that Musk will be allowed to use Zatko’s allegations to support his case, and that there will be a “limited” discovery on documents related to the whistleblower’s report. In August, Musk filed the second notice of termination, citing the original reports.
The trial is set to begin on October 17th. Twitter didn’t immediately reply to a request for comment.
Retail sales fall for 1st time this year as consumers start to tap out – CBC News
Facing sky-high inflation, consumers put away their wallets more often in July, new data revealed Friday, as retail sales fell for the first time since 2021.
Canadian retailers rang up $61.3 billion in sales in July, Statistics Canada reported Friday. That’s a decline of 2.5 per cent from the previous month’s level as lower sales at gas stations and clothing stores led the way down.
Sales at gas stations fell by 14 per cent. A big part of that was lower prices for the fuel itself, but even in volume terms sales were down by seven per cent. Fewer people were filling up during the month, which was in keeping with the vehicle segment overall as auto sales edged down 0.5 per cent. Both new and used car dealers reported declines.
Consumables like food and drink also weren’t flying off the shelves, as supermarkets and grocery stores saw sales slip by 0.9 per cent, while liquor stores saw a decline of 1.2 per cent.
The soft retail sales numbers suggest consumers are starting to put away their wallets in the face of sky-high prices and a gloomy outlook for the economy.
“This retail sales report was unambiguously weak, suggesting that consumers tightened their purse strings in July,” TD Bank economist Ksenia Bushmeneva said of the numbers. “Consumer demand appears to have broadly cooled across most categories of spending.”
“All in all, given the triple headwinds emanating from higher consumer prices, rapidly rising interest rates and a drop in wealth, consumers are becoming more frugal,” she said.
Dow drops but narrowly avoids confirming bear market status – Reuters.com
Sept 23 (Reuters) – The blue-chip Dow Jones Industrial Average (.DJI)tumbled to its lowest level since November 2020 on Friday, but narrowly missed ending more than 20% below its Jan. 4 closing record high.
A Dow close below 29,439.72 would have confirmed a bear market that began from that record, according to a widely used definition. read more The Dow fell 486.27 points, or 1.62%, to end at 29,590.41.
The renewed selling pressure in markets came in a week that saw the U.S. Federal Reserve raise interest rates by three-quarters of a percentage point for a third straight time and a vow to keep it going until inflation is under control.
It has been a tumultuous year for Wall Street, plagued by worries about Russia’s invasion of Ukraine, an energy crisis in Europe and the end of easy money policy globally.
The S&P 500 has lost 23% this year and the Nasdaq has shed 31%.
The last time the three indexes pulled back so sharply was in 2020 during the heights of the pandemic selloff.
Heightened fears of a U.S. economic downturn next year and its impact on corporate profits has prompted brokerages to downgrade their year-end targets for the S&P 500. read more
(This story refiles to fix typo in headline)
Our Standards: The Thomson Reuters Trust Principles.
TSX slumps as oil falls below $80 and economic gloom settles in – CBC News
Canada’s benchmark stock index dropped heavily on Friday as prospects of a global recession cause investors to sell first and ask questions later.
The S&P/TSX Composite Index was off by more than 520 points or 2.75 per cent to close at 18,480, dragged down by a plunge in the price of oil. That’s the lowest level for the benchmark Canadian stock index since July.
The benchmark price of crude oil in North America lost almost $5 to close at $79.13 a barrel, its lowest price since January. The catalyst for oil’s decline seems to have been central banks signaling this week that they are so committed to reining in inflation that they are willing to create a recession to achieve it.
The U.S. Federal Reserve hiked its benchmark interest rate on Wednesday, and nine other countries around the world followed suit the next day. That will help bring down inflation, but it will likely come at great cost to the economy.
“Clearly what they are saying is they are so determined to bring inflation down that they are going to bring down the economy in the process,” said John Zecher, the founder of Toronto-based money manager J Zechner & Associates. “That’s the way the market is reading it … They aren’t going to stop until the economy turns down.”
Oil price down to lowest since January
A recession would lead to much less demand for energy, which is why oil sold off. About a fifth of the companies on the TSX are in the energy sector, and they were among the biggest losers Friday. Shares in Suncor, Cenovus, MEG Energy and Crescent Point all lost more than eight per cent on the day.
More and more economic indicators are starting to suggest Canada’s economy either already has derailed or is about to. Employment numbers last week showed the economy has lost jobs for three months in a row, and retail sales data on Friday showed that Canadians are putting away their wallets once more.
Stock markets are responding to that gloom, and some analysts think there is a lot more pain to come.
“The lows that we saw recently in the summer months are going to be challenged in the next couple of days to weeks,” said Larry Berman, chief investment officer with Toronto-based money manager QWealth, in an interview. “The market [isn’t] priced for what the central banks are going to do.”
The Canadian dollar dipped as low as 73.61 cents US, its lowest level in more than two years.
Shares in New York also sold off, with the Dow Jones Industrial Average closing down almost 500 points to 29,590 — its lowest level of the year.
“Over the next couple of weeks, long-term investors may hesitate buying into weakness,” said Edward Moya, an analyst with foreign exchange firm Oanda. “How far we go below the summer lows is anyone’s guess.”
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