Domain Daily: On Second Thought...

The Dose

  • Elon Reneges

  • Juul's Fight for Survival

  • Citi Upbeat on Stocks


Elon Backs Out of Twitter Deal

On Friday, Elon Musk officially told Twitter he no longer plans to go through with the $44 billion deal. Twitter's share price plunged Monday on the first day of trading after the news broke.

The Point: The drama isn't over yet. Expect a long, protracted legal fight between the world's richest man and the social media platform. For Musk, the best-case scenario is that he can walk away by paying a $1 billion termination fee. At worst, a court can force him to go through with the deal at the agreed-upon price. But, of course, the two sides could also find some middle ground where the sale still goes through at, ostensibly, a reduced price. As we've speculated in prior notes, renegotiating the deal might have been Musk's goal since he began raising questions about the number of fake accounts on Twitter. In the meantime, the company's fate (and stock price) will hang in the balance.

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FDA Revisits Juul Ban

The U.S. Food and Drug Administration put the brakes on its Juul e-cigarettes ban.

The Point: As you'd expect, following the FDA's initial announcement, Juul filed a lawsuit to halt the order. That was at the end of June, and since then, the company has been able to continue selling its products. Now the two sides have agreed to put their legal fight on hold while the FDA conducts an additional review. "The agency has determined that there are scientific issues unique to the Juul application that warrant additional review," the FDA tweeted. "This administrative stay temporarily suspends the marketing denial order during the additional review but does not rescind it." Juul's very existence is at stake here. Based on the FDA's decision to revisit Juul's application, the e-cigarette maker looks to have a fighting chance of remaining in business. That's excellent news for Altria, the tobacco giant, which purchased a $12.8 billion stake in Juul in 2018.  

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Citi Analysts Expect Second Half Stock Market Rally

The bank's strategists predict stronger than expected corporate earnings to push the S&P 500 to a year-end close of 4,200.  

The Point: That'd represent about an 8% gain from the index's current level. With sticky inflation and rising interest rates, many market observers fear that corporate profits will get pinched. However, Citi's strategists believe that fear might be misplaced. "We see room for U.S. equities to work higher into year-end '22, triggered by more resilient earnings than commonly expected, and potential valuation relief as Fed hawkishness is more fully priced in," wrote Citi strategist Scott Chronert in a note to clients.

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