Wednesday, Apr 6th 2022

Three Things (4/6)

Commentary

"As a matter of self-preservation, a man needs good friends or ardent enemies, for the former instruct him and the latter take him to task." —Diogenes

The below content and projections are the opinion of the authors. Any conclusions or takeaways are their own. This should not be considered as investment advice. Investing involves the risk of loss and returns are not guaranteed.

1) Elon Musk joins Twitter’s board of directors, shares rise another 2%

  • Musk will join the company’s board as a Class II director.
  • As part of his joining the board, Musk agreed he will not acquire a stake in the company that exceeds 14.9% of its shares outstanding.
  • Following this news, Twitter shares gained another 2% on Tuesday; the stock rose over 25% on Monday.

Titan’s Takeaway: Tesla makes electric cars, Twitter operates a social platform. On the surface, Musk brings little other than an enthusiasm for the product and a lot of money to Twitter’s board. But Musk does have deep experience and demonstrated success in one area Twitter could really use some expertise — how to make a company’s stock price go up.

2) Meta to enable third-party video integrations with Facebook Reels as company amps up competition with TikTok

  • The “Sharing to Reels” integration will enable apps to offer users the ability to send video directly to Facebook for editing and sharing on Reels.
  • Video editing apps like Smule and Vita have already integrated this feature into their product.
  • Earlier this year, Meta disclosed that Reels is its fastest growing format and opened up Facebook Reels to users globally.

Titan’s Takeaway: Meta Platforms has never been shy about copying competitor products and TikTok is its latest inspiration. New integrations to accelerate the creation and consumption of Reels across Meta’s platforms ensures the TikTok-ification of social content will continue.

3) Top Fed official says slowing inflation is of “paramount importance,” pressuring stocks as investors brace for more aggressive steps

  • Lael Brainard, a member of the Fed’s Board of Governors, spoke Tuesday morning and is considered the second-most influential Fed official behind Chair Jay Powell.
  • Brainard indicated the Fed would be aggressive in the coming months in paring down the size of its balance sheet.
  • Brainard’s comments sent stocks lower in morning trading, with the Nasdaq and Russell 2000 ultimately dropping more than 2% on Tuesday.

Titan’s Takeaway: War in Ukraine made commodity prices and geopolitical conflict the biggest factor moving markets in March. But the reaction to Brainard’s comments on Tuesday serve as a reminder that longer-term market trends – higher rates and less love for growth stocks – remain in place, and those moves are driven by Fed policy.

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