April 28, 2022
TradeUP Thursday
Latest news and bulletin updates
Market Trends
Dow Jones  up
S&P 500  up
(Opening price as of 04/28/2022 compared to last close)
Weekly Highlights
#1 Elon Musk acquires Twitter 
#2 US GDP contracted 1.4% 
#3 China’s Covid outbreaks show some signs of  stabilizing
#4 Meta soars with user growth 
Share Your Thoughts:
China’s central bank to step in to slow offshore Chinese currency falling further, but can it work?
Offshore Yuan against USD has tumbled from 6.38 to 6.67 in a quick fashion, surprising investors worldwide. Hardly anyone remembers offshore Yuan was trading against USD around 7-7.2 before the pandemic, in a much weaker position. The Chinese currency was gaining momentum in the last two years as a stronghold and proved China’s pivotal role in the global supply chain disruption.
China’s central bank announced to cut reserve-requirement ratio of financial institutions’ foreign currency deposits by 1 ppt to 8% on Mon. This is the first such cut since the previous 2 hikes last year, raising deposit rate from 5% to 9%. The cut will allow banks to release more of their foreign currency holdings, so its ultimate effect on currency is unknown.
What’s your thought on Chinese currency against USD in 3 months?
A. <6.5 (Strong Yuan) B. 6.5-6.75 (Stable Yuan) C. >6.75 (Weak Yuan)
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Inside Scoop
#1. Twitter accepts Elon Musk’s $44bn acquisition offer

up TWTR 48.66(+0.05%) up TSLA 832.15(-5.60%)

• By accepting the buyout offer from billionaire Elon Musk, Twitter will become a private company by the end of this year. Musk will borrow $12.5bn and pledge $62.5bn TSLA shares to complete his acquisition deal. His wealth is tied to TSLA stock and financing could become challenging if TSLA fluctuates or tumbles below $700. 

• White House declined to comment but said President has long been concerned about the power of social media platforms. Democratic senators call for tougher tech regulation while many Republicans express delight after the deal. Trump said he will not return to Twitter.

#2. US GDP unexpectedly contracted in Q1

Q1 22 GDP -1.4% Est. 1% Q4 21 GDP 6.9%

• The drop marked the weakest quarter since spring 2020, when the Covid-19 pandemic and related shutdowns drove the U.S. economy into recession.

• One main factor that weighed on GDP came from trade, which subtracted 3.2% from overall GDP. US goods trade deficit raced to a record high in Mar at more than $125bn. Less tariff?

#3. China’s Covid outbreaks show some signs of stabilizing

• Cases in Shanghai fell for a fourth consecutive day to 13,562, while the number of new cases in Beijing remained below 50.

• Shanghai will ease lockdowns in areas with no community spread. Elsewhere, Changchun will gradually start to lift all Covid control measures starting Thu.

#4. Meta soars after reporting its main platform added more users than projected

up FB 202.92(+15.98%)

• Meta reported 1.96bn active daily users for its flagship platform, a return to growth after the first-ever decline in last quarter. However, Meta’s Average Revenue per user declined in every region worldwide. 

• Meta’s main business of digital advertising has been hurt by Apple’s privacy policy and TikTok’s intensive competition.

• Google and Snap also reported headwinds in digital advertising business, due to high inflation and Russian-Ukrainian War. Meta’s digital advertising business accounts for over 96% of its total revenue, making the company vulnerable to business cycle. 

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