The Week's Top Stories is a guided tour through the biggest market stories of the week, from winning stocks to brutal dips to the facts and forecasts generating buzz on Wall Street.
TWITTER GETS MUSKED
Everyone's favorite social media platform has linked up with everyone's favorite tech billionaire, and the results are as chaotic as one would expect. On Monday, Tesla CEO Elon Musk revealed an 11 percent stake in Twitter. After that, things started moving pretty fast. Twitter's stock rallied. The hot takes poured in. Some cheered. Some shuddered. Then, upping the ante, Twitter put Musk on its board of directors, starting the cycle all over again. Now Musk is holding an AMA with concerned Twitter employees. What happens next is anyone's guess. An edit button? Lifting speech restrictions? All of this came just one week after Musk said he was considering launching his own social media platform.
- Amidst all this, Musk happened to mention that production on Tesla's humanoid robot, Optimus, could begin as early as next year.
- Twitter founder and former CEO Jack Dorsey, meanwhile, admitted he's "partially to blame" for the current state of the internet, and that he "regrets it." Too little, too late, Jack.
STARBUCKS SINKS
Starbucks' stock took a venti-sized hit this week after CEO Howard Schultz announced that the company was suspending stock buybacks. Shultz's pledge to put "more profit into our people" comes as dozens of Starbucks locations across the country seek to unionize. The decision was one of the first from Schultz since he returned, and while investors initially recoiled at the move, some say it could actually be a good thing. In the meantime, Schultz is leading a PR blitz against the unionization efforts.
- Two Santa Cruz Starbucks are suing the company for allegedly unfair labor practices, including "overwhelming district manager presence" while trying to unionize.
- Despite the resistance, more stores keep voting to unionize. The latest to unionize was all three shops in Ithaca, New York, bringing the national total to 16 stores.
BUFFET BOOST FOR HP
Berkshire Hathaway CEO Warren Buffet has revealed an 11 percent stake in the Hewlett-Packard Company, sending the computer-and-printer maker's stock soaring 14 percent. The 91-year-old investor has been on a shopping spree lately, making a series of investments in Occidental Petroleum and striking a deal to acquire Alleghany Insurance. Buffet has also warmed up to tech stocks in recent years, with investments in IBM and Apple. Why now? HP recently lifted its profit outlook and reported strong computer sales.
- HP's stock, along with Dell's, was sinking as recently as last week with Wall Street analysts marking the end of the pandemic-era boom in personal computer sales.
- Meanwhile, at the Bitcoin Conference currently underway in Miami, Peter Thiel called Buffet a "sociopathic grandpa from Omaha" and the "Enemy No. 1" to crypto.
FED DOES THE 'TIGHTEN' UP'
The Federal Reserve isn't playing games anymore. After a quarter-percent rate hike last month, there's been a steady trickle of "Fedspeak" from officials suggesting they might clamp down even harder at the next several meetings. The minutes from the March FOMC meeting showed that the majority of Fed officials envision shrinking the central bank's nearly $8.9 trillion balance sheet by $95 billion a month. That's nearly double the monthly amount that the Fed sold during the last tightening cycle between 2017 and 2018, which had all kinds of unfortunate ripple effects. The news gave investors the willies and led to a sell-off in U.S. Treasury bonds that continued through the end of the trading week.
- St. Louis Fed President James Bullard said Thursday that the central bank is "behind the curve" on raising rates but is steadily making progress.
- Russia's central bank, meanwhile, is moving in the opposite direction, lowering rates as the war in Ukraine pummels its economy.
HEARD ON WALL STREET
The various headwinds facing the world economy are churning up some bearish sentiments from Wall Street head-honchos. Morgan Stanley said the recent rebound in stocks is over and urged investors to stay "defensive." One former Fed official said the U.S. economy is headed for a recession this summer, and JPMorgan CEO Jaime Dimon told shareholders they should expect "very volatile markets” over the next year. Business Insider put it best: A "vibe shift" is underway for markets, and even the biggest players are telling everyone to hold tight.
