Canadian banks announced they were raising their prime lending rates after the Bank of Canada surprised markets by hiking it benchmark interest rate on June 7.
Tesla Stock Is Plummeting and Reddit Investors Are Blaming Musk’s Twitter Chaos
Tesla’s stock is in the toilet and the meme stock investors of Reddit aren’t happy. The electric car company’s stock has struggled this year, but investors are selling what they have amid Musk’s so far tumultuous Twitter takeover which has brought the stock down to a 17-month low. Over on the Wallstreetbets subreddit, some people have been left holding the bag and are doing one of the only things they can: posting about it.
Wallstreetbets is a chaotic subreddit where retail investors gather to pump meme stocks and post memes. The subreddit has helped move markets. It was involved in the pumping of Gamestop, AMC, and Bed Bath & Beyond and the rise and fall of the Robin Hood app. Through all of this, Elon Musk and Tesla have been favored memes on the site. Despite his many ventures, Tesla is the only publicly-traded stock in Musk’s portfolio, and has long served as a general proxy for people’s enthusiasm for him even as analysts warned it was overvalued.
Tesla’s decline is down entirely to Musk. He over-paid for Twitter to the tune of $44 billion dollars to take it private and took on a huge loan that will cost him $1 billion a year in interest. As Musk himself has said, the value of Tesla is closely tied to his personal value. If one goes bankrupt, so will the other. As Musk meanders through the halls of Twitter—firing people then offering them their job back, losing large amounts of advertisers and revenue, and generally turning himself into the main character for two weeks running—Tesla stocks continue to plunge.
A top comment on one popular thread asking why Tesla’s stock has fallen reads, “because you can’t short twitter, that’s why!” Another user replied, “Literally though. A massive part of TSLA valuation is the brand. Always has been. And a large % of the brand is musk.”
As Tesla’s stock has fallen, Wallstreetbets has rolled out the anti-Musk memes. “What’s with all the hate Elon Musk is getting?” Reddit user Greebo427 asked. “Everyone here used to love this guy, now he’s a pariah even though I can’t remember him having done or said anything differently from 1 year ago? We surrounded by Musk-hating bots trying to sway the masses?”
Another user’s reply summed up all the problems that investors on the subreddit have with the billionaire.
“Objectively speaking, the dude has done some not so good stuff,” BeardlessPete replied. “He wasn’t completely honest with respect to self-driving technology at Tesla. He’s implementing a subscription model at Twitter that will directly impact the visibility of communication on the website, which runs counter to his narrative of having a free and open Twitter. He fired 1/2 of the company very abruptly and without warning. Yes, some got severance packages but many companies do this. That’s like stopping at a red light and telling people you stopped at a red light lol… Bro. He blocked marketing executives on Twitter–the very people who are responsible for agreeing to finance marketing campaigns on Twitter…And in general, he over promises and under delivers. The biggest example is his underground Tesla tunnels which, despite being a 100% closed system that he himself could have overseen, still has traffic problems lol.”
That doesn’t mean people on Wallstreetbets aren’t making money off of Tesla even as it tumbles. People who placed puts—stock options that bet a stock’s price will fall—are winning big. And they’re posting to let everyone know about it.
Indigo shakeup: Heather Reisman retiring, 4 other board members stepping down
The company says director Chika Stacy Oriuwa indicated she resigned “because of her loss of confidence in board leadership and because of mistreatment.”
In addition to Oriuwa, Indigo says Frank Clegg, Howard Grosfield and Anne Marie O’Donovan have also stepped down as directors. No explanation for their departures was given.
Indigo CEO Heather Reisman talks about creating a happier planet in her new book ‘Imagine It!’
Indigo wished the departing directors well and thanked them for their contributions.
The retailer says Reisman will retire as executive chair and from the board effective Aug. 22.
Reisman stepped down as chief executive of Indigo last year as part a transition that saw Peter Ruis, who had been the retailer’s president, promoted to chief executive.
Canadian banks raise prime rate to 6.95% after Bank of Canada hike
Big banks follow suit after surprise quarter-point hike
Royal Bank of Canada, TD Canada Trust, Canadian Imperial Bank of Commerce (CIBC), Bank of Montreal, National Bank of Canada and Bank of Nova Scotia all said they were increasing the prime rate by 25 basis points to 6.95 per cent from 6.70 per cent, effective June 8, 2023.
Desjardins Group and Equitable Bank also announced it would raise its Canadian prime rate by the same amount.
The Bank of Canada surprised markets and observers when it raised its benchmark policy rate by a quarter percentage point to 4.75 per cent earlier in the day.
The central bank has raised its rate nine times, and 4.5 percentage points, since March 2022, and the commercial banks’ prime rate has moved in lockstep from 2.7 per cent to 6.95 per cent.
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Stock Market News Today, 7/06/23 – Stocks End Mixed as Nasdaq Leads Indices Lower – TipRanks
Last Updated 4:00 PM EST
Stock indices finished today’s trading session mixed. The Nasdaq 100 (NDX) and the S&P 500 (SPX) fell 1.75% and 0.38%, respectively. Meanwhile, Dow Jones Industrial Average (DJIA) gained 0.28%.
Furthermore, the U.S. 10-Year Treasury yield increased to 3.79%, an increase of more than 12 basis points. Similarly, the Two-Year Treasury yield also increased, as it hovers around 4.56%.
The Atlanta Federal Reserve updated its latest GDPNow reading, which allows it to estimate GDP growth in real-time. The “nowcast” becomes more accurate as more economic data is released throughout the quarter. Currently, it estimates that the economy will expand by about 2.2% in the second quarter.
This is higher than its previous estimate of 2%, which can be attributed to recent releases from the U.S. Census Bureau, the Institute for Supply Management, and the U.S. Bureau of Labor Statistics.
Last updated: 1:50PM EST
Stocks are mixed so far in today’s trading session. As of 1:50 p.m. EST, the Nasdaq 100 (NDX) and the S&P 500 (SPX) are down 1.5% and 0.4%, respectively. Meanwhile, Dow Jones Industrial Average (DJIA) is up 0.2%.
Surprising market observers, the Bank of Canada hiked its primary policy rate by 25 basis points, raising it to 4.75% on Wednesday. The bank cited persistent underlying inflation as the main driver for this decision, marking a departure from two consecutive meetings where the rate was held steady.
The bank also continues with its policy of quantitative tightening, indicating a response to worldwide economic growth that’s weakening due to increased interest rates. “Major central banks are signaling that interest rates may have to rise further to restore price stability,” the bank stated.
This unexpected move initially boosted the Canadian dollar but has since lost some ground as it hovers around C$1.338 per US$1. The rate increase follows a rise in CPI inflation to 4.4% in April, its first surge in 10 months, and a stronger-than-anticipated GDP of 3.1% in Q1.
The Bank of Canada’s Governing Council asserts that the rate hike is in response to previous policy not being restrictive enough to balance supply and demand and bring inflation sustainably back to the 2% target.
As a major trading partner, what happens in Canada usually has ripple effects in the U.S. Thus, this could be a sign that the Federal Reserve might have to continue hiking as well going forward.
Last updated: 10:55AM EST
Stocks have turned red so far in today’s trading session after a positive start. As of 10:55 a.m. EST, the Nasdaq 100 (NDX) and the S&P 500 (SPX) are down 0.9% and 0.2%, respectively. Meanwhile, Dow Jones Industrial Average (DJIA) is near the flatline.
Last updated: 9:50AM EST
Stocks ticked higher at open on Wednesday morning even as the trade deficit data showed that the United States’ trade deficit jumped 23% in April to $74.6 billion – a six-month high indicating a surge in imports. Imports were up 1.5% in April to $323.6 billion while exports fell by 3.6% to $249 billion.
The Nasdaq 100 (NDX), S&P 500 (SPX), and Dow Jones Industrial Average (DJIA) were all up by 0.6%, 0.32%, and 0.11%, respectively, at 9:50 a.m., EST, June 7.
First published: 4:38AM EST
U.S. Futures are in the red this morning after the SPX marked its highest close in trading since August 2022 yesterday. We are almost halfway through the trading week, and markets remain elevated in the absence of any negative news. Futures on the Nasdaq 100 (NDX), S&P 500 (SPX), and Dow Jones Industrial Average (DJIA) are down 0.26%, 0.15%, and 0.18%, respectively, at 4:00 a.m., EST, June 7.
On the economic front, traders await reports on the U.S. trade deficit and consumer credit due today, as well as the weekly initial jobless claims data scheduled for June 8. Meanwhile, the Chinese economy is showing signs of slowing, with May exports falling 7.5% year-over-year against the expected 0.4% decline. Also, imports fell 4.5% year-over-year, much lower than the expected 8% decline.
On the earnings front, fewer companies remain to report their quarterly results. Shares of Casey’s General Stores (NYSE:CASY) dropped 4.5% in extended trading yesterday, after missing both sales and earnings expectations. On the other hand, Dave & Buster’s (NASDAQ:PLAY) stock was up over 4% in yesterday’s extended trade following its report of mixed results, with earnings surpassing but sales missing estimates.
Furthermore, meme stock GameStop (NYSE:GME), travel service provider Trip.com Group (NASDAQ:TCOM), e-commerce platform Rent the Runway (NASDAQ:RENT), and discount chain Ollie’s Bargain Outlet (NASDAQ:OLLI) will report their results today.
Elsewhere, European indices are trading in the red today, following weaker-than-expected data from German industrial production for April. After a disastrous March, April seems to continue bleeding from poor performance. Industrial production in April grew by a marginal 0.3% month-over-month, against an expected rise of 0.7%. Economists worry that if data remains weak in May and June, the economy’s recession will spill well into the second quarter.
Asia-Pacific Markets Trade Mixed on Wednesday
Asia-Pacific indices ended the trading session mixed today, following economic data sets from different nations. Mainland Chinese and Hong Kong indices closed mixed on signs that the economy is going into a continued slowdown. At the same time, Australian indices continue their downward spiral after reporting poor GDP growth and following the Reserve Bank of Australia’s unexpected rate hike to a record high yesterday.
Hong Kong’s Hang Seng index and China’s Shanghai Composite ended the day up 0.80% and 0.08%, respectively, while the Shenzhen Component index closed down by 0.60%.
At the same time, Japan’s Nikkei and Topix indices ended down by 1.82% and 1.34%, respectively.
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