Market Watch 21.11.2021

Elon Musk Sells $8.85bn of Tesla Shares. On Saturday the 6th of November Elon Musk asked twitter users in a poll if they support the selling of 10% of his personal Tesla stock, because “Much is made lately of unrealized gains being a means of tax avoidance.”

The twitter poll closed with 57.9% voting yes, however, the ball has already been in motion since September for the sale of over $1.1bn in stock in a blind trading plan. This is frequently used by executives to prevent insider trading suspicions and is called a 10b5-1 plan.

Furthermore, at the Code Conference in September, Elon said “a huge block” of his options would likely be sold in the final quarter, prior to the twitter poll outcome. The reason is to cover the taxes on options worth tens of billions of dollars that need to be exercised by August 2022.

Elon Musk has kept his word and so far, has sold a total of $8.85bn of Tesla shares over the course of the last two weeks, causing the share price to fall by just under 10% from its alltime highs. Tesla competitor, Rivian, saw its stock rise 15% and is now valued at $114bn. Since its IPO last Wednesday, it is now the fourth largest car company in the world.

Biden’s Bills Make a Breakthrough. Last Tuesday Joe Biden signed his long awaited $1.2tn bipartisan infrastructure bill into law, something Biden said would change Americans’ lives “for the better”, just as his approval rating hits an all-time low. $550bn will be spent over the course of five years on roads, bridges, tunnels, airports, broadband and other infrastructure.


“For too long, we’ve talked about having the best economy in the world. We’ve talked about asserting American leadership in the world with the best and safest roads, railways, ports, and airports,” Biden said, “But today, we are finally getting it done. And my message to the American people is, America is moving again.”


There was more positive news for Biden on Friday, because the $1.75tn bill to bolster the social safety net and fight climate change finally passed the House of Representatives in a 220-213 vote following more delays. Republican House Minority Leader Kevin McCarthy, spoke for a record long 8.5 hours. The democrats decided to push the bill through despite the Congressional Budget Office’s findings. The CBO said federal budget deficits would increase by $367bn over 10 years, however, additional revenues could arise from better IRS tax collections. The social spending and climate bill now heads to the senate to be voted on.


Brexit Talks Reach Critical Point. Last Friday, U.K. Brexit Minister David Frost and European Commission Vice-President Maros Sefcovic met in Brussels for talks directed at food inspections, customs and improving medicine flows between mainland Britain and Northern Ireland. On Thursday night, Irish Prime Minister Micheál Martin, said there was “serious intent” within the EU to solve the disagreements over Northern Ireland.

Reaching the crucial deal on medicines might have calmed fears of the U.K. withdrawing from negotiations which could lead to a trade war. Instead, David Frost said, "Significant gaps remain across most issues," and "We have not yet made substantive progress on the fundamental customs and SPS issues relating to goods moving from Great Britain to Northern Ireland." The reason being Britain wants a solution that is "a significant change from the current situation".

"If no such solution can be found, we remain prepared to use the safeguard provisions under Article 16, which are a legitimate recourse under the Protocol in order for the government to meet its responsibilities to the people of Northern Ireland,” said Frost.

If article 16 of the Northern Ireland protocol is triggered, it results in both sides suspending parts of the agreements if diversion of trade or serious societal or economic difficulties arise. Britain believes the conditions have already been reached because of a decrease in the amount of goods crossing the Irish sea. GBP rose by 0.3% against the Euro and fell by around 0.2% against the dollar on Friday.


Economic Calendar 22nd November -26th November


MONDAY

  • Data: PBoC Loan Prime Rate, UK Composite PMI, EU Consumer Confidence, Australian Retail Sales, UK Composite PMI, US Existing Home Sales

  • Events: BCB Focus Market Readout


TUESDAY

  • Data: EU Market PMI Composite, UK Manufacturing and Service PMI, German GDP

  • Events: BoE Haskel Speech, RBA Assist Gov Bullock Speaks


WEDNESDAY

  • Data: RBNZ Interest Rate Decision, US Durable Goods Orders, US GDP, US Initial Jobless Claims, Crude Oil Inventories, New Zealand Rate Statement

  • Events: RBNZ Rate Statement and Press Conference, New Zealand Monetary Policy Statement, FOMC Meeting Minutes


THURSDAY

  • Data: Japan CPI, German GDP

  • Events: ECB Monetary Policy Meeting Accounts, BoE Gov Bailey Speaks, ECB President Lagarde


FRIDAY

  • Data: Australian Retail Sales

  • Events: U.S Early close 13:00 (Thanksgiving Day), ECB President Lagarde


Main Events


  • FOMC Meeting Minutes

On Wednesday, the Federal Open Market Committee will release the minutes surrounding their latest monetary policy meeting. This will give a more detailed outline of the central bank’s policy decision of tapering the bond-buying programme that was announced at the November meeting amid concerns around inflationary pressure and a recovery of the labour market.


However, as the inflation surged to 6.2%, the highest level since 1990, investors will closely monitor any hints for the rate hike timeline in 2022 and 2023. Also, in the spotlight for the week will be President Joe Biden’s Federal Reserve chairman announcement, while the market expectations suggested Lael Brainard to be the favourite.


  • Bailey and Lagarde Speeches

On Thursday, two of the most influential central bank’s governors will be issuing further clarifications on the next monetary policy steps. The Euro block is currently under pressure as it became the new epicentre of coronavirus’ cases and some countries including EU’s largest economy, Germany, adopting movement restrictions. On the economic data front, investors will monitor the Markit PMI and the Eurozone flash consumer confidence.


In the United Kingdom, the flash PMI is expected to shade some light on the economic health of the country, taking in consideration the end of the furlough scheme that affected approximately one million people.




Thank you to Cameron Barker, George Fol and Mihai Golumbeanu for your in-depth analysis!

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