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Musk Hits Crypto, AT&T/Discovery and China's Rebound - What's Moving Markets

EconomyMay 17, 2021 06:29AM ET
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© Reuters.

By Geoffrey Smith 

Investing.com -- Elon Musk rattles cryptocurrencies – and stock futures - with a fresh blast against Bitcoin. AT&T (NYSE:T) and Discovery (NASDAQ:DISCA) are on the verge of merging their media assets. China’s economic rebound loses steam as the year-earlier weirdness passes out of its calculations, and England takes its biggest step back to economic normality – just as a new strain of Covid-19 arrives on its shores. Here’s what you need to know in financial markets on Monday, May 17th.

1. Musk stirs trouble in Cryptoland

Crypto assets sold off sharply across the board after Elon Musk hinted on Twitter that Tesla (NASDAQ:TSLA) may sell some or all of its Bitcoin holdings. A subsequent tweet from Musk saying Bitcoin hasn’t sold its Bitcoin and doesn’t intend to did little to restore the spirits of most digital currencies.

Musk reiterated his newly-developed distaste for Bitcoin’s environmental impact, notably the key role of coal played in the mining process. He also twisted the knife by tweeting that DogeCoin was in a better position to become a mainstream means of payment, saying it would “win hands down” if it adopts the kind of approach to faster processing that Bitcoin’s closed community refused some three years ago.

By 6:30 AM ET (1030 GMT), Bitcoin was down 7.3% at $45,389, having earlier touched a three-month low. However, all other major crypto assets were also down, including Dogecoin, which fell 4.3% to just over 50c.

2. Dreaming of a new streaming giant

AT&T is on the verge of a deal to combine its WarnerMedia unit with Discovery, creating a new streaming giant with a market value of some $150 billion, according to various reports.

WarnerMedia, which houses HBO, CNN and the Warner Brothers movie studio, accounts for nearly half of AT&T’s $230 billion. Discovery’s market cap of $18 billion is largely accounted for by its successful ventures into streaming unscripted cooking and home refurbishment shows. Had it come a couple of months earlier, the deal would have generated a handsome payoff for Bill Hwang’s Archegos Capital, which had placed a big and highly leveraged bet on Discovery.

There were few details about how the deal would be structured, but the deal has the potential to unlock substantial value for AT&T shareholders, who have seen their returns crimped by the huge load generated by the merger of AT&T with TimeWarner in 2016.  

On the subject of unlocking value, another stock likely to be in focus later is JD.com (NASDAQ:JD), whose logistics arm said it would aim to raise some $3.4 billion through an IPO in Hong Kong of a 10% stake.

3. Stocks set to open lower, unsettled by Crypto sell-off

U.S. stock markets are set to open the week in cautious mode, against a backdrop of the selloff in crypto that may bode ill for other high-beta assets such as technology stocks.

By 6:30 AM ET, Dow Jones futures were down 100 points, or 0.3%, while S&P 500 futures were down 0.3% and Nasdaq 100 futures were down in parallel.

Crypto aside, the emergence of a new and more highly transmissible strain of the Covid-19 virus in India has cast fresh doubt on the world economy’s path to reopening. Taiwan closed its borders to foreign arrivals overnight, while Singapore has closed its schools for most students. In the U.K., London mayor Sadiq Khan was quoted as saying that there were over 400 confirmed cases of the new strain in London alone.

4. China’s rebound normalizes, housing boom continues

China’s rebound from Covid-19 is flattening out, data released during the Asian session showed. The year-on-year rate of industrial output growth slowed to 20% from 24.5% in April, in line with expectations, while retail sales growth slowed more sharply, to 17.7% from 34.2%.

The numbers are a foretaste of what western data will look like as the extreme year-earlier bases pass out of headline calculations, although sustained high processing of crude oil by the country’s refineries suggest the short-term dynamic is not losing any meaningful amount of momentum.

China’s housing market also continues to froth, with urban house prices rising by the most in eight months in April.

5. England reopens, just in time for a new Covid-19 strain

The U.K. took its biggest single step yet back to economic normality, with a significant relaxation of restrictions on business and social life in England. The indoor hospitality sector is once again open, albeit subject to capacity limits, while meetings of multiple households are now also possible.

The ban on non-essential international travel has also been lifted, although the small number of countries on the U.K.’s ‘green list’ of destinations suggests the tourism season is set for a weak start. Ryanair  (NASDAQ:RYAAY) earlier was unable to give formal guidance for its new fiscal year, after reporting its biggest ever annual loss through March.

The reopening comes at a time when there are signs of the new Indian strain of the Covid-19 virus spreading in the community in the U.K.

Musk Hits Crypto, AT&T/Discovery and China's Rebound - What's Moving Markets
 

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Comments (18)
James Wills
James Wills May 17, 2021 9:51AM ET
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Not sure why anyone gives a flying duck about what he tweets. He's a self-glorying narcissist. The more his glib cryptic tweets shift elements of the market, the more he'll do it. Deprive it of oxygen as is deserved.
James Wills
James Wills May 17, 2021 9:50AM ET
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Not sure why anyone gives a flying duck about what he tweets. He's a self-glorying narcissist. The more his glib cryptic tweets shift elements of the market, the more he'll do it. Deprive it of oxygen as is deserved.
Joe Jitnarin
Joe Jitnarin May 17, 2021 9:50AM ET
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You aren’t sure why people listen to what that big of an influencer in the market has to say? I hope you don’t have any investments otherwise you will probably lose everything sooner or later.
Charles Barnes
Charles Barnes May 17, 2021 9:14AM ET
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Musk is no genius. Just a con man.
Joe Jitnarin
Joe Jitnarin May 17, 2021 9:14AM ET
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No genius? What have you achieved compared to him?
Hichem Trabelsi
Hichem May 17, 2021 9:07AM ET
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I'm surprised how so called "investors" could get manipulated so easily by someone like Musk who proved to change direction constantly .. He is just playing with people's mind to make money for his own account and his partners/lobby , and who pays the price are the stupids who are following the crowds ..
Suk fun Man
Suk fun Man May 17, 2021 9:05AM ET
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Numbers from China? ha ha
Dorian Roberts
Dorian Roberts May 17, 2021 9:01AM ET
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Elon has been a big factor in Crypto currency, that was no surprise. But it is because of him a few new investors have good bias towards investing. But the merger for ATT and Discover was a good update. Hopefully the economies around the world pick up and India recovers soon.
Kahraman Keskinbora
Kahraman Keskinbora May 17, 2021 8:29AM ET
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at this point, how is this not market manipulation?
Tomas Barkaty
TomasB May 17, 2021 8:29AM ET
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Fy Musk! You will fall soon or later
Dorian Roberts
Dorian Roberts May 17, 2021 8:29AM ET
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Well Crypto technically doesn’t count as of yet, mainly because the federal government is not involved yet, and remember technicalities do exist.
Luiza Zientek
Luiza Zientek May 17, 2021 8:01AM ET
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Haha  even Elon doesn't have the power to destroy bitcoin
Luiza Zientek
Luiza Zientek May 17, 2021 8:01AM ET
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Haha  even Elon doesn't have the power to destroy bitcoin
Nicholas Case
Nicholas Case May 17, 2021 8:01AM ET
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He actually doesnt
Benoit Avril
Benoit Avril May 17, 2021 8:00AM ET
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Maybe he just want to avoid being prosecuted for market manipulation. Anyway, not a smart move.
Dániel Hári
Dániel Hári May 17, 2021 7:46AM ET
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in the first paragraphs: "A subsequent tweet from Musk saying Bitcoin hasn’t sold its Bitcoin..." what? :D the first Bitcoin should be Tesla I guess.
Anthony Cloud
Anthony Cloud May 17, 2021 7:45AM ET
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Why anyone cares what Musk says is beyond me
Jason Soltero
Jason Soltero May 17, 2021 7:03AM ET
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panic
TheEnd IsNigh
TheEnd IsNigh May 17, 2021 7:03AM ET
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at the disco
Man Eksen
Man Eksen May 17, 2021 6:56AM ET
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Don't Panic!!
Mart Bab
Rubberduck1973 May 17, 2021 6:50AM ET
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Don’t believe Musk will bash Bitcoin when he is still holding Bitcoin. He talked it up and sold. Then shorted and now is talking it down. Witch goes to show you what crypto is. 90% FOMO and 10% experiment
Erik Esparza
Erik Esparza May 17, 2021 6:50AM ET
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Exactly...
Vishal Dhanavani
Vishal Dhanavani May 17, 2021 6:50AM ET
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Wouldn't he be trouble for market manipulation if he did that? Or since crypto market isn't regulated yet, he can get away with it? Besides, Musk himself just tweeted today that he (Tesla) hasn't sold any Bitcoin from the initial purchase of $1.5Bn worth of Bitcoins back in January21.
Mart Bab
Rubberduck1973 May 17, 2021 6:47AM ET
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England reopens, just in time for a new Covid-19 strain lol
Berat Arda Dedekoca
Berat Arda Dedekoca May 17, 2021 6:44AM ET
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But remember, people other than Muskies brought the price upto 30Ks .. now again these people will make it atleast 60K with or without Muskies
Berat Arda Dedekoca
Berat Arda Dedekoca May 17, 2021 6:41AM ET
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and now millions of people really hate him .. and believe me billions do not care about his non-sense Mars attack rich man game .. !!!!
IceIce Baby
IceIceBaby May 17, 2021 6:41AM ET
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Instead of saving life on Earth humanity will make Mars a litterbox too. LOL
Berat Arda Dedekoca
Berat Arda Dedekoca May 17, 2021 6:41AM ET
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IceIce Baby exactly 👍
 
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