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Musk’s potential Tesla stake sale follows share surge

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November 9, 2021

By Lewis Krauskopf and Noel Randewich

NEW YORK (Reuters) – Should Elon Musk decide to unload some of his stake in Tesla Inc, he will be capitalizing on a massive rally that has made the electric-vehicle maker one of the world’s most valuable companies.

The Tesla chief asked his Twitter followers on Saturday if he should sell 10% of his Tesla stake. Nearly 58% said they would support such a sale, leading the stock to fall 4.9% when trading resumed on Monday.

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Musk polled his Twitter followers after a jump in Tesla shares in recent weeks extended a strong, if volatile, run for the stock since it was added to the S&P 500 index late last year.

Trading in Tesla has averaged $19 billion a day in the past three months, more than any other U.S. company, according to Refinitiv data.

Here is a closer look at Tesla’s shares:

After falling in the first half of 2021, Tesla shares have soared in recent weeks. Since Oct. 20, the stock has gained some 34%, with the S&P 500 up 3.6% over that time, a move that has pushed the electric-car maker’s market value over $1 trillion.

With those recent gains, Tesla shares have now surged 67% since the stock joined the S&P 500 in late December, versus a 27% gain for the benchmark index over that time.

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(For graphic on Tesla shares since joining S&P 500 – https://graphics.reuters.com/USA-STOCKS/TESLA/byvrjkrzwve/chart.png)

Tesla accounts for about 2.5% of the S&P 500’s $4 trillion market capitalization. That compares to 1.8% when Tesla joined the index in December 2020.

(For graphic on Tesla in the S&P 500 – https://fingfx.thomsonreuters.com/gfx/mkt/egpbkamzzvq/Pasted%20image%201636404344233.png)

Tesla’s valuation has crept lower in recent months, as analysts increase their earnings forecasts. Analysts on average see Tesla’s 2022 earnings per share at $7.92, up from an average estimate of $5.50 per share in February.

However, Tesla’s PE valuation remains sky-high, with the stock now trading at 150-times future earnings, compared to 21 times for the S&P 500.

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(For graphic on Tesla’s forward P/E – https://fingfx.thomsonreuters.com/gfx/mkt/dwvkreegrpm/Pasted%20image%201636404441389.png)

Short bets against Tesla have declined this year as the stock’s rally forced some investors to cover their positions.

The number of Tesla shares shorted stood at 29.5 million, down from 60.6 million at the start of January, analytics firm S3 Partners said on Monday. The short position in Tesla as a percentage of the company’s float is down to 3.6% from about 8% at the start of the year.

Still, Tesla’s short interest, a measure of the stock’s price and number of shares shorted, amounted to nearly $36.1 billion, larger than any other stock, according to S3.

(For graphic on Bets against Tesla shares fall – https://graphics.reuters.com/USA-STOCKS/TESLA/zjvqkwwkjvx/chart.png)

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Tesla and other car companies’ shares have notched big swings this year as the auto sector goes through upheavals related to the global supply crisis and other effects of the coronavirus pandemic. Tesla’s stock has gained or lost 2% in a session 99 times so far in 2021, compared to 79 times for Ford Motor and just five times for the S&P 500.

(For graphic on A volatile year for U.S. car makers – https://graphics.reuters.com/USA-STOCKS/TESLA/gdpzydwxjvw/chart.png)

(Reporting by Noel Randewich and Lewis Krauskopf; Additional reporting by Saqib Iqbal Ahmed; Editing by Ira Iosebashvili and Muralikumar Anantharaman)

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Asia braces for China data, oil nears 2021 highs

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January 17, 2022

By Wayne Cole

SYDNEY (Reuters) – Asian share markets got off to a cautious start on Monday as the U.S. earnings season loomed large and a slew of Chinese economic data were expected to show the deadening effect of coronavirus restrictions on activity.

A holiday in the United States made for thin trading, but that did not stop Brent crude from extending its bull run toward last year’s peak of $86.70 a barrel.

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MSCI’s broadest index of Asia-Pacific shares outside Japan was little changed, while Japan’s Nikkei bounced 0.8% after losing 1.2% last week

S&P 500 futures were flat, while Nasdaq futures slipped 0.1%.

The main feature of the market recently has been a rotation into value stocks and away from growth, particularly technology. The S&P 500 information technology sector, which accounts for nearly 29% of the index, has shed 5.5% this year.

With valuations still high, earnings will have to be strong to stop further losses. Overall S&P 500 earnings are expected to climb 23.1% this season, according to Refinitiv IBES, while the tech sector is seen up by 15.6%.

Companies reporting this week include Goldman Sachs, BofA, Morgan Stanley and Netflix.

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The market will be spared speeches from Federal Reserve officials this week ahead of their Jan. 25-26 policy meeting, but there has been more than enough hawkish comments to see the market almost fully price in a first rate hike for March.

There was also talk the Fed will start trimming its balance sheet earlier than previously thought, draining some of the excess liquidity from world markets.

Yields on cash 10-year Treasuries climbed to their highest in a year at 1.8%, while futures implied yield of 1.83% early on Monday.

“The implications of quantitative tightening continue to occupy markets as an earlier Fed balance sheet runoff looms,” noted analysts at Barclays.

“Meanwhile, new COVID lockdowns in China could re-aggravate global supply bottlenecks, while in both Europe and the U.S. the near-term growth outlook is now weaker and the 2022 inflation profiles higher.”

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Data out of China due on Monday are expected to show retail sales and industrial output slowed further in December. The economy is forecast to have grown 1.1% in the fourth quarter, though the annual pace is seen slowing to 3.6% from 4.9%.

BEWARE THE BOJ

A Bank of Japan (BOJ) policy meeting this week will bear watching given talk it will revise up its outlook for growth and inflation, while sources told Reuters policy makers were debating how soon they could start telegraphing an eventual interest rate hike.

While a move is unlikely this year, financial markets may be under-estimating its readiness to gradually phase out its once-radical stimulus programme.

This was one reason the yen has rallied, with the dollar slipping 1.2% last week to last stand at 114.29 but still well above major chart support at 112.52. [FRX/]

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The euro also gained 0.5% last week as the dollar eased broadly and was last changing hands at $1.1408. The dollar index was a shade firmer at 95.231, after touching a 10-week trough at 94.626 on Friday.

“We continue to think that the greenback will strengthen again before long, as we expect strong cyclical price pressures in the U.S. to mean the Fed tightens by more and for longer than investors currently discount,” argued Joseph Marlow, an economist at Capital Economics.

They see Fed rates topping 2.5% while the market has priced in a peak around 1.75-2.0%..

The risk of higher rates kept non-yielding gold restrained at $1,817 an ounce, while industrial and energy resources have benefited from resilient demand and limited supplies.[GOL/]

Oil prices have climbed for four weeks straight and such is demand that physical barrels of oil are changing hands at near record high premiums. [O/R]

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Early Monday, Brent had added another 51 cents to $86.57 a barrel and was approaching the 2021 top of $86.70 and the 2018 peak at $86.74. A break there, would take it to heights last visited in 2014.

U.S. crude also firmed 75 cents to $84.57 per barrel.

(Editing by Himani Sarkar)

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Japan machinery orders rise more than expected, govt welcomes pick-up signs

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January 17, 2022

By Daniel Leussink

TOKYO (Reuters) -Japan’s core machinery orders rose for a second straight month in November, government data showed on Monday, a sign that corporate appetite for capital spending remained resilient despite pressure from soaring raw material prices.

The gain in core orders, a key indicator of capital expenditure, could be a relief to policymakers hoping for corporate investment to trigger a private demand-led recovery in the world’s third-largest economy.

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Core orders, a highly volatile data series regarded as an indicator of capital spending in the coming six to nine months, grew 3.4% in November from October, rising for the second straight month, the Cabinet Office data showed.

It beat economists’ median estimate of a 1.4% rise and followed a 3.8% jump in the previous month.

However, Japanese firms could be cautious about boosting spending due to higher raw material, fuel and transportation costs that are sending wholesale inflation soaring and squeezing corporate margins.

“Firms may postpone capital spending from this quarter into the next fiscal year from April as uncertainty in the global economy has risen,” said Takeshi Minami, chief economist at Norinchukin Research Institute.

“Due to a decline in coronavirus cases and an easing of the (global) chip shortage, orders from manufacturers recovered up to November, but the outlook is unclear.”

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A government official confirmed firms’ appetite for capital spending faced risks from rising raw material prices, though he added companies were still likely to spend on investments to strengthen their businesses for the future.

Compared with a year earlier, core orders, which exclude volatile numbers from shipping and electric power utilities, jumped 11.6% in November, the Cabinet office data found.

By sector, orders from manufacturers rose 12.9% month-on-month, offsetting a 0.8% drop in those from non-manufacturers, the data showed.

The government raised its assessment on machinery orders for the first time in six months, saying they showed signs of picking up. Previously, it said a pick-up in orders was showing signs of stalling.

After contracting in the third quarter of last year, Japan’s economy is expected to return to growth in the October-December quarter.

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The economy is forecast to show growth of an annualised 6.5% in that quarter, thanks largely to a projected pick-up in private consumption, which makes up more than half the economy, after an easing of coronavirus curbs.

(Reporting by Daniel Leussink; Editing by Kenneth Maxwell)

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Credit Suisse Chairman Horta-Osorio resigns after board probe into breach of COVID-19 rules

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January 17, 2022

SINGAPORE (Reuters) -Credit Suisse Chairman Antonio Horta-Osorio, who was being investigated by the bank’s board for breaching COVID-19 quarantine rules, has quit with immediate effect and board member Axel Lehmann has taken over the role.

Horta-Osorio’s resignation comes less than a year after he was brought in to clean up a corporate culture marred by Switzerland’s second-largest bank’s involvement with collapsed investment firm Archegos and insolvent supply chain finance firm Greensill Capital.

“I regret that a number of my personal actions have led to difficulties for the bank and compromised my ability to represent the bank internally and externally,” Horta-Osorio said in a statement issued by the bank in the early hours of Monday.

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“I therefore believe that my resignation is in the interest of the bank and its stakeholders at this crucial time.”

In late December, Reuters reported in an exclusive story that a preliminary investigation by Credit Suisse found that Horta-Osorio breached COVID-19 rules a second time.

He attended the Wimbledon tennis finals in July during a visit to Britain when the country’s COVID-19 rules required him to be in quarantine, Reuters cited sources as saying. [L1N2TF08K]

Credit Suisse said Lehmann, the board and the executive board would continue to implement Credit Suisse’s strategy.

(Reporting by Anshuman Daga in Singapore, Shivani Tanna and Maria Ponnezhath in Bengaluru; Editing by Himani Sarkar)

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