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Weekly Market Digest: Musk Considers Taking Tesla Private

By Kurt Osterberg · On August 11, 2018

Tesla CEO Elon Musk made headlines on Tuesday for tweeting that he was considering taking Tesla private. A sell-off on Friday wiped out gains for the week and left US stocks modestly lower for the week. In part due to a strengthening dollar, international stocks fared worse and are now down 4.2% for the year, widening the gap with US stocks to over 11%. The Turkish lira hit an all-time low as leadership resists traditional monetary policy such as raising rates and looks to avoid assistance from the IMF. President Trump added to the decline by doubling steel and aluminum tariffs with Turkey at least partly in response to the detention of an American pastor. European stocks were lower on fears of contagion.

Weekly Returns

S&P 500: 2,833 (-0.3%)
FTSE All-World ex-US (VEU): (-2.1%)
US 10 Year Treasury Yield: 2.87% (-0.08%)
Gold: $1,212 (-0.1%)
EUR/USD: $1.141 (-1.4%)

Major Events

Tuesday – Facebook was said to be in talks with major banks to share financial data to boost engagement.

Tuesday – Tesla CEO Elon Musk tweeted that the company is considering going private.

Wednesday – China released a list of US goods it would hit with tariffs if US plans to tax Chinese imports go into effect on 8/23.

Thursday – The Russian ruble dropped 5% after the US imposed sanctions related to an alleged nerve-agent attack on a former Russian spy in the UK.

Thursday – Yelp shares rose over 25% on higher than expected revenues.

Thursday – Rite Aid and Albertsons terminated their merger plans.

Friday – The Turkish lira sank 14% after a defiant speech from President Erdogan in which he resisted traditional monetary responses.

Friday – CPI, a measure of inflation, rose 2.9% in June from a year ago while inflation adjusted wages were down 0.2%.

Our Take

On Tuesday, Telsa CEO Elon Musk tweeted that he was considering taking the company private at a price of $420 and added “funding secured”. The stock initially rose about 11% and has since surrendered a little over half of those gains as no details have emerged on where the funding would actually come from. It entered the weekend at a 15% discount to the $420 level, suggesting significant doubt from the investment community.