Musk's plans for Twitter

Delivered on By Justin Pyvis

Good morning! According to the AFR, “traders are pricing in a more than 100 per cent chance that the official cash rate will be increased to at least 0.25 per cent at next week’s meeting… [and are now] pricing in an incredible 290 basis points of rate increases by this time next year”.

Three of the big four banks – Westpac only jumped on the bandwagon yesterday, while CBA remains the lone June holdout – now expect a pre-election cash rate increase next week. ANZ expects 15 basis points in May, and “the starting point means some 50bp moves [at future meetings] are a real possibility”.

It offered up the following chart showing just one effect of the Reserve Bank of Australia’s (RBA) incredible monetary stimulus, with the central bank now so far behind the curve that taming inflation without causing a recession is going to be a monumental challenge:

At a minimum the RBA should have communicated the possibility of monetary tightening last year.
At a minimum the RBA should have communicated the possibility of monetary tightening last year. Source

Reading the tea leaves

Daily % change

AUD/USD

71.0

-0.2%

AUD/CNY

4.70

+0.7%

AU Bond

3.15

+1.7%

US Bond

2.86

+1.6%

ASX200

7,357

+1.3%

S&P500

4,288

+2.5%

Brent (bbl)

107.5

+2.1%

Gold (oz)

1,896

+0.4%

Iron ore (t)

142.7

+1.0%

Bitcoin

40,054

+2.1%

Ethereum

2,953

+2.3%

Note: Brent oil, gold bullion and iron ore prices are the second futures contract. Bond yields are 10-year Treasuries.

TheΒ US S&P500Β shot up 2.47% despite official GDP figures showing an economic contraction of -1.4% (annualised) in the March quarter, well below analyst expectations of a 1% gain, as better than expected quarterly reports boosted sentiment. One such report came from Facebook owner Meta (+17.6%), which surged higher after reporting a return to user growth after its first-ever decline in the December quarter.

Locally, theΒ ASX200 added 1.32% in a broad-based rise with 10 of 11 sectors gaining, led by materials (+3.5%) after iron ore major Fortescue Metals Group (+8.1%) reported a 10% increase in production in the March quarter from a year ago. It also upgraded full-year guidance to 185-188 million tonnes, up from the previous 180-185 million tonnes.

Elsewhere in the region, the Japanese yen fell to a fresh multi-decade low against the US dollar after the Bank of Japan “maintained its massive stimulus programme and a pledge to keep interest rates ultra-low”.


Food for thought

Yep, he tweeted this.
Yep, he tweeted this. Source

The tears on the cheeks of some staff have barely had time to dry but that hasn’t stopped Elon Musk from voicing some of the changes he’d like to see at his new social media company, Twitter, including:

  • for it to be “politically neutral, which effectively means upsetting the far right and the far left equally”;
  • for private messages to “have end to end encryption like Signal, so no one can spy on or hack your messages”;
  • making the algorithms open source to increase trust”;
  • to “defeat the spam bots or die trying”; and
  • to “authenticate all real humans”.

Those goals are all easier tweeted than done. For instance, “political neutrality” might upset European regulators and encrypting private messages could negatively affect revenue, which is almost entirely advertising-based.

On the latter point, in a couple of since-deleted tweets Musk did suggest that he had plans to shake-up not just how Twitter works but also how it makes money, pivoting it away from advertising towards subscriptions. According to Musk:

“Everyone who signs up for Twitter Blue (ie pays $3/month) should get an authentication checkmark”, and there should be “no ads” because “The power of corporations to dictate policy is greatly enhanced if Twitter depends on advertising money to survive.”

That would be a major shakeup for Twitter and would set it apart from the social media ‘model’, which has involved the monetisation of ‘free’ products almost exclusively through data collection and advertising.

Interestingly, the only tweets that remain from the above exchange are of Musk replying to people pondering what to charge and whether to accept crypto, with Musk responding: “Maybe even an option to pay in Doge[coin]?”

Time will tell whether Musk will be able to radically transform Twitter, because that’s probably what’s going to be required to turn around a company that has struggled to ship anything or attract new users for the past several years.

Of course that all assumes the deal closes, which is no guarantee when an eccentric character like Musk is involved!


Chewing the fat


Bits and bytes

πŸ’Έ This was supposed to peak at $13.6 billion: “Spending on the National Disability Insurance Scheme is expected to blow out to $64 billion a year in 2030, even higher than previously estimated.”

🚒 Another defence procurement blunder? Retired Vice Admiral David Shackleton said Australia’s $45 billion “Hunter frigate program in its current form should be stopped and redirected… [as they’re] unsuited for its needs.”

πŸ€’ Ruh-roh: “The Chinese megacity of Guangzhou cancelled hundreds of flights on Thursday (Apr 28) and launched mass testing of 5.6 million people after one suspected COVID-19 case.”

πŸ“ˆ Sweden’s central bank hiked its cash rate to 0.25% from zero, a move which “pivots the central bank drastically from its last meeting, when officials signalled no hikes until 2024”.

πŸ”₯ A massive landfill fire in New Delhi – the pile of trash is taller than a 17-story building – has blanketed the city in thick smoke.

🦠 US President Joe Biden’s chief medical adviser, Anthony Fauci, declared that the US was past the “full-blown explosive pandemic phase”.

πŸ›’ The CEO of Coles warned that: “The inflationary pressures on suppliers are increasing and not decreasing.”

🏑 Data from Domain showed Perth house prices reached their highest ever median price, surpassing the record set over seven years ago, while Brisbane has the fastest growing capital city prices in Australia.

πŸ™Š The anti-Musk? The US government will create a “Disinformation Governance Board” that “will focus on countering misinformation and disinformation”.

πŸ“£ Elon Musk’s purchase of Twitter “put Mastodon into the public spotlight as an alternative [open source and federated] social network, rapidly exploding our growth with over 30,000 new users in just a single day”.

✈️ Peak exodus: “In February and March, Hong Kong saw a net outflow of 65,295 and 66,334 residents respectively.”

πŸ’± The southern Ukrainian region of Kherson, “the first big urban center to be seized after Russia sent tens of thousands of troops into Ukraine”, will adopt the Russian rouble from 1 May.