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Elon Musk’s Twitter Poll Shows Users Want Him to Step Down as CEO

After billionaire asks on social-media platform whether he should stay or go, 57.5% of respondents say he should go

By ALEXA CORSE
Tue, Dec 20, 2022 9:00amGrey Clock 3 min

Elon Musk should step down as chief of Twitter Inc., according to a poll the billionaire orchestrated and pledged to follow, casting new uncertainty on the social-media platform after more than seven weeks of turmoil since he took it over.

More than 17 million Twitter users had voted by the time the poll on the platform closed after 6 a.m. ET, with 57.5% saying he should leave as head of the company. Mr. Musk, who in October closed a $44 billion deal for Twitter, had said when he launched the Twitter poll on Sunday that he would abide by the results.

It isn’t clear who would take over leading Twitter if Mr. Musk steps aside as CEO, or what his role would be, given that he still owns the company. Most of the company’s prior leadership was either fired or left after he took over.

“No one wants the job who can actually keep Twitter alive. There is no successor,” Mr. Musk tweeted Sunday.

Twitter didn’t respond to a question on the poll’s outcome.

The billionaire’s leadership at Twitter has been tumultuous and weighed on sentiment toward his other businesses, particularly car maker Tesla. Shares in the auto maker have fallen more than 56% this year, frustrating some retail investors who partly blame Mr. Musk’s focus on Twitter for the decline. Mr. Musk’s Twitter involvement also has dented Tesla’s brand image.

Tesla shares initially advanced Monday following the suggestion that Mr. Musk would stop running Twitter, though later fell along with the broader market.

There have been questions since Mr. Musk first showed interest in buying Twitter how he would juggle running the company while also pursuing all his other endeavours.

Bill Nelson, the National Aeronautics and Space Administration’s administrator, this month said he had asked SpaceX President Gwynne Shotwell if Twitter would divert from the rocket company’s mission. “She assured me that it would not be a distraction,” Mr. Nelson said.

Mr. Musk said last month that he had too much work on his plate.

“I expect to reduce my time at Twitter and find somebody else to run Twitter over time,” he testified at a trial about his Tesla pay package last month. He also said he has been spending most of his time of late focusing on Twitter. At the time, he wrote on Twitter, “I will continue to run Twitter until it is in a strong place, which will take some time.”

The outcome of the poll adds another disruption at the top of Twitter, which has suffered waves of leadership upheaval. Co-founder and former CEO Jack Dorsey handed over running the company little over a year ago after a bruising battle with an activist investor. His successor, Parag Agrawal, lasted less than a year and was fired by Mr. Musk immediately after he took over the company in October. Mr. Musk also ousted several other top Twitter executives, and more have resigned since.

Mr. Musk has been the driving force at Twitter for nearly two dramatic months, with many advertisers having paused spending, resignations, and content-moderation actions that have been abrupt and controversial among many users. This past week has been another one full of twists. Twitter suspended the accounts of several journalists, prompting criticism from some lawmakers and officials before Mr. Musk said Saturday that Twitter would begin reinstating the accounts.

Earlier Sunday, Twitter made another sudden change to its content-moderation rules, saying it would no longer allow “free promotion of certain social media platforms.” That also fuelled criticism and questions, including from Mr. Dorsey, who previously endorsed Mr. Musk’s takeover. “Doesn’t make sense,” Mr. Dorsey tweeted Sunday.

Late Sunday, the tweets from @TwitterSupport and a note on the company’s website announcing the policy against promoting other social-media platforms appeared to have been deleted. Twitter’s head of trust and safety, Ella Irwin, said Monday that the company removed the new policy “in response to user feedback.” Ms. Irwin said that links to other social-media sites will be allowed until Twitter determines whether or not to implement a new policy prohibiting them.

Mr. Musk, who has said he intends to make the platform a bastion of free speech, appeared to acknowledge some concerns about the recent, abrupt content policy changes. “Going forward, there will be a vote for major policy changes. My apologies. Won’t happen again,” he tweeted shortly before posting the poll about his leadership Sunday.

Mr. Musk has warned about Twitter’s financial condition, saying last month that the company had suffered “a massive drop in revenue” and was losing over $4 million a day. He later raised the possibility of bankruptcy.

Mr. Musk’s team this past week reached out for potential fresh investment for Twitter at the same price as the original $44 billion deal, a Twitter investor said.

Some Tesla shareholders have complained that Mr. Musk’s recent focus on Twitter is hurting the auto maker. This month he sold more than $3.5 billion of Tesla stock in his second round of sales since buying Twitter. It wasn’t clear what prompted Mr. Musk to sell additional Tesla stock.

Democrat Sen. Elizabeth Warren of Massachusetts on Sunday sent a letter to Tesla’s board chair, Robyn Denholm, raising questions about Mr. Musk’s involvement with Twitter, suggesting it could be to the detriment of the auto maker’s shareholders and create conflicts of interest. The senator has sparred before with Mr. Musk.

Tesla didn’t respond to a request for comment about the share sale or the senator’s letter.

—Peter Stiff contributed to this article.

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Where Are Stocks, Bonds and Crypto Headed Next? Five Investors Look Into Crystal Ball

Equities are often seen as expensive after promising start to 2023

By CAITLIN MCCABE
Mon, Jan 30, 2023 7 min

A new trading year kicked off just weeks ago. Already it bears little resemblance to the carnage of 2022.

After languishing throughout last year, growth stocks have zoomed higher. Tesla Inc. and Nvidia Corp., for example, have jumped more than 30%. The outlook for bonds is brightening after a historic rout. Even bitcoin has rallied, despite ongoing effects from the collapse of the crypto exchange FTX.

The rebound has been driven by renewed optimism about the global economic outlook. Investors have embraced signs that inflation has peaked in the U.S. and abroad. Many are hoping that next week the Federal Reserve will slow its pace of interest-rate increases yet again. China’s lifting of Covid-19 restrictions pleasantly surprised many traders who have welcomed the move as a sign that more growth is ahead.

Still, risks loom large. Many investors aren’t convinced that the rebound is sustainable. Some are worried about stretched stock valuations, or whether corporate earnings will face more pain down the road. Others are fretting that markets aren’t fully pricing in the possibility of a recession, or what might happen if the Fed continues to fight inflation longer than currently anticipated.

We asked five investors to share how they are positioning for that uncertainty and where they think markets could be headed next. Here is what they said:

‘Animal spirits’ could return

Cliff Asness, founder of AQR Capital Management, acknowledges that he wasn’t expecting the run in speculative stocks and digital currencies that has swept markets to kick off 2023.

Bitcoin prices have jumped around 40%. Some of the stocks that are the most heavily bet against on Wall Street are sitting on double-digit gains. Carvana Co. has soared nearly 64%, while MicroStrategy Inc. has surged more than 80%. Cathie Wood‘s ARK Innovation ETF has gained about 29%.

If the past few years have taught Mr. Asness anything, it is to be prepared for such run-ups to last much longer than expected. His lesson from the euphoria regarding risky trades in 2020 and 2021? Don’t count out the chance that the frenzy will return again, he said.

“It could be that there are still these crazy animal spirits out there,” Mr. Asness said.

Still, he said that hasn’t changed his conviction that cheaper stocks in the market, known as value stocks, are bound to keep soaring past their peers. There might be short spurts of outperformance for more-expensive slices of the market, as seen in January. But over the long term, he is sticking to his bet that value stocks will beat growth stocks. He is expecting a volatile, but profitable, stretch for the trade.

“I love the value trade,” Mr. Asness said. “We sing about it to our clients.”

—Gunjan Banerji

Keeping dollar’s moves in focus

For Richard Benson, co-chief investment officer of Millennium Global Investments Ltd., no single trade was more important last year than the blistering rise of the U.S. dollar.

Once a relatively placid area of markets following the 2008 financial crisis, currencies have found renewed focus from Wall Street and Main Street. Last year the dollar’s unrelenting rise dented multinational companies’ profits, exacerbated inflation for countries that import American goods and repeatedly surprised some traders who believed the greenback couldn’t keep rallying so fast.

The factors that spurred the dollar’s rise are now contributing to its fall. Ebbing inflation and expectations of slower interest-rate increases from the Fed have sent the dollar down 1.7% this year, as measured by the WSJ Dollar Index.

Mr. Benson is betting more pain for the dollar is ahead and sees the greenback weakening between 3% and 5% over the next three to six months.

“When the biggest central bank in the world is on the move, look at everything through their lens and don’t get distracted,” said Mr. Benson of the London-based currency fund manager, regarding the Fed.

This year Mr. Benson expects the dollar’s fall to ripple similarly far and wide across global economies and markets.

“I don’t see many people complaining about a weaker dollar” over the next few months, he said. “If the dollar is falling, that economic setup should also mean that tech stocks should do quite well.”

Mr. Benson said he expects the dollar’s fall to brighten the outlook for some emerging- market assets, and he is betting on China’s offshore yuan as the country’s economy reopens. He sees the euro strengthening versus the dollar if the eurozone’s economy continues to fare better than expected.

—Caitlin McCabe

Stocks still appear overvalued

Even after the S&P 500 fell 15% from its record high reached in January 2022, U.S. stocks still look expensive, said Rupal Bhansali, chief investment officer of Ariel Investments, who oversees $6.7 billion in assets.

Of course, the market doesn’t appear as frothy as it did for much of 2020 and 2021, but she said she expects a steeper correction in prices ahead.

The broad stock-market gauge recently traded at 17.9 times its projected earnings over the next 12 months, according to FactSet. That is below the high of around 24 hit in late 2020, but above the historical average over the past 20 years of 15.7, FactSet data show.

“The old habit was buy the dip,” Ms. Bhansali said. “The new habit should be sell the rip.”

One reason Ms. Bhansali said the selloff might not be over yet? The market is still underestimating the Fed.

Investors repeatedly mispriced how fast the Fed would move in 2022, wrongly expecting the central bank to ease up on its rate increases. They were caught off guard by Fed Chair Jerome Powell‘s aggressive messages on interest rates. It stoked steep selloffs in the stock market, leading to the most turbulent year since the 2008 financial crisis. Now investors are making the same mistake again, Ms. Bhansali said.

Current stock valuations don’t reflect the big shift coming in central-bank policy, which she thinks will have to be more aggressive than many expect. Though broader measures of inflation have been falling, some slices, such as services inflation, have proved stickier. Ms. Bhansali is positioning for such areas as healthcare, which she thinks would be more insulated from a recession than the rest of the market, to outperform.

“The Fed is determined to win the war since they lost the battle,” Ms. Bhansali said.

—Gunjan Banerji

A better year for bonds seen

Gone are the days when tumbling bond yields left investors with few alternatives to stocks. Finally, bonds are back, according to Niall O’Sullivan of Neuberger Berman, an investment manager overseeing about $427 billion in client assets at the end of 2022.

After a turbulent year for the fixed-income market in 2022, bonds have kicked off the new year on a more promising note. The Bloomberg U.S. Aggregate Bond Index—composed largely of U.S. Treasurys, highly rated corporate bonds and mortgage-backed securities—climbed 3% so far this year on a total return basis through Thursday’s close. That is the index’s best start to a year since it began in 1989, according to Dow Jones Market Data.

Mr. O’Sullivan, the chief investment officer of multi asset strategies for Europe, the Middle East and Africa at Neuberger Berman, said the single biggest conversation he is currently having with clients is how to increase fixed-income exposure.

“Strategically, the facts have changed. When you look at fixed income as an asset class…they’re now all providing yield, and possibly even more importantly, actual cash coupons of a meaningful size,” he said. “That is a very different world to the one we’ve been in for quite a long time.”

Mr. O’Sullivan said it is important to reconsider how much of an advantage stocks now hold over bonds, given what he believes are looming risks for the stock market. He predicts that inflation will be harder to wrangle than investors currently anticipate and that the Fed will hold its peak interest rate steady for longer than is currently expected. Even more worrying, he said, it will be harder for companies to continue passing on price increases to consumers, which means earnings could see bigger hits in the future.

“That is why we are wary on the equity side,” he said.

Among the products that Mr. O’Sullivan said he favours in the fixed-income space are higher-quality and shorter-term bonds. Still, he added, it is important for investors to find portfolio diversity outside bonds this year. For that, he said he views commodities as attractive, specifically metals such as copper, which could continue to benefit from China’s reopening.

—Caitlin McCabe

 

Find the fear, and find the value

Ramona Persaud, a portfolio manager at Fidelity Investments, said she can still identify bargains in a pricey market by looking in less-sanguine places. Find the fear, and find the value, she said.

“When fear really rises, you can buy some very well-run businesses,” she said.

Take Taiwan’s semiconductor companies. Concern over global trade and tensions with China have weighed on the shares of chip makers based on the island. But those fears have led many investors to overlook the competitive advantages those companies hold over rivals, she said.

“That is a good setup,” said Ms. Persaud, who considers herself a conservative value investor and manages more than $20 billion across several U.S. and Canadian funds.

The S&P 500 is trading above fair value, she said, which means “there just isn’t widespread opportunity,” and investors might be underestimating some of the risks that lie in waiting.

“That tells me the market is optimistic,” said Ms. Persaud. “That would be OK if the risks were not exogenous.”

Those challenges, whether rising interest rates and Fed policy or Russia’s war in Ukraine and concern over energy-security concerns in Europe, are complicated, and in many cases, interrelated.

It isn’t all bad news, she said. China ended its zero-Covid restrictions. A milder winter in Europe has blunted the effects of the war in Ukraine on energy prices and helped the continent sidestep recession, and inflation is slowing.

“These are reasons the market is so happy,” she said.

—Justin Baer

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