Elon Musk continues to goad Apple (AAPL) by publishing the results of a poll in which he asked his 120M Twitter followers if the world’s most-valuable company “should publish all censorship actions it has taken that affect its customers.” The vote was resoundingly in the affirmative, with nearly 85% of the 2.2M respondents replying “Yes” to the query. Never one to miss a chance to savor a win, Musk followed up by tweeting, “The people have spoken…”
Bigger picture: The poll was the latest in a series of pokes and prods that Musk began making towards Apple over the weekend. He called out Silicon Valley’s biggest name, which controls app distribution to every iPhone, for what he claimed was the deep cutting of its advertising on Twitter. Musk also accused Apple of threatening to pull Twitter from the App Store, as well as for CEO Tim Cook to clarify his company’s moves and justify the 30% cut taken on all digital app sales.
“Apple has mostly stopped advertising on Twitter. Do they hate free speech in America?” Musk wrote in a tweet, suggesting he was “going to war.” “I certainly hope it does not come to that, but, yes, if there is no other choice, I will make an alternative phone.” Separately, Morgan Stanley analyst Adam Jones weighed in on the matter, and said Musk’s activity since he acquired Twitter for $44B has led to a growth in negative sentiment about his main business venture, Tesla (TSLA).
Thought bubble: Musk’s recent mudslinging is reminiscent of a fight once waged by Epic Games over Apple’s steep App Store fees, or what some have described as an illegal monopoly over app distribution. This time around, Musk is coming to battle in need of Twitter advertising dollars – and the ability to make more on subscription fees – at the same time that Apple seeks to preserve its recurring income from the App Store amid slowing demand for its devices. Musk is already trying to trigger a national conversation over Apple’s relationship with free speech and content moderation, but could also appeal to lawmakers that are concerned about antitrust action and the concentrated power of Big Tech. (446 comments)
The mood on Wall Street remains cautious ahead of a slew of economic data due out later in the week. Today will see the latest reading on Q3 GDP and the ADP’s report on private-sector payrolls, after the Consumer Confidence Index slipped further in November amid rising food and gas prices. The Personal Consumption Expenditures Price Index, the Fed’s favorite inflation gauge, will also be released tomorrow, while the highly-anticipated employment report will be published on Friday.
Don’t forget! Federal Reserve Chair Jerome Powell is slated to make remarks today. The big event, at the Brookings Institution, will touch on the economic outlook, inflation and the labor market. It will also be Powell’s last chance to convey the thinking of the central bank before entering a blackout period ahead of the FOMC’s meeting on Dec. 13-14.
Besides some hawkish comments, several other recent catalysts have the ability to weigh on the major averages. There’s an OPEC+ meeting coming this weekend, protests are escalating in China over COVID-19 lockdowns and there remains continued instability in the cryptocurrency market.
Commentary: “[The S&P 500 was] marginally lower on Tuesday in thin trading conditions as the market awaits significant events over the coming weeks,” analyst Andrew Hecht told Seeking Alpha. “In a year where the leading stock market indices have declined, end-of-the-year tax loss selling could put additional pressure on equities in an environment where low liquidity could exacerbate to impact… Expect volatility, and you will not be disappointed.” (9 comments)
Heading off a nationwide strike by railroad workers, House lawmakers today will take up legislation today to avert a work stoppage and prevent damage to the economy. Senate Majority Leader Chuck Schumer said at the press conference that he and Senate Minority Leader Mitch McConnell would also agree to push for the bill’s quick passage. The Railway Labor Act empowers Congress to require rail companies and unions to accept labor agreements rejected by their members, though lawmakers can order both sides to push back a strike deadline or refer the negotiations to arbitration.
Quote: “I don’t like going against the ability of unions to strike, but weighing the equities, we must avoid a strike,” House Speaker Nancy Pelosi said after meeting with President Biden and leaders from both parties at the White House. “Jobs will be lost. Even union jobs will be lost. Product will not be going to market.”
One of the top industries on watch has been the chemicals sector, which is one of the biggest users of freight rail. According to the American Chemistry Council, the group ships more than 33,000 carloads a week valued at $2.8B and any work stoppage could lead to a recession. To prepare for a shutdown, railroads even stop accepting security-sensitive shipments, such as chemicals to treat drinking water.
Flashback: The last time Congress acted to settle a nationwide railroad dispute was in 1992. Following a strike by the International Association of Machinists, Congress moved to end the industrial action two days later by approving legislation, which was immediately signed by President George H.W. Bush. (56 comments)
At a two-day summit in the Romanian capital of Bucharest, the North Atlantic Treaty Organization doubled down on a vow to make Ukraine a member of the military alliance. It was 14 years ago (in the same city) that foreign ministers first pledged that Kyiv would eventually become a constituent, and they still “firmly stand behind our commitment.” In recent weeks, Russian missile and drone attacks have targeted civilian infrastructure across the country, with strikes that have heavily damaged Ukraine’s power, water and energy infrastructure.
Quote: “NATO’s door is open,” Secretary-General Jens Stoltenberg said before chairing the meeting. “President Putin cannot deny sovereign nations to make their own sovereign decisions that are not a threat to Russia. I think what he’s afraid of is democracy and freedom, and that’s the main challenge for him.”
It’s not yet clear what Ukraine’s borders would look like if it would join the alliance, but the country must now solely focus on defeating Russia. Troops and pro-Moscow separatists are holding parts of the south and east, while the Crimean Peninsula remains annexed and President Volodymyr Zelenskyy says the nation will keep fighting until it recovers all occupied land. NATO promised more arms for Ukraine at the meeting, as well as equipment to help restore power supplies, though the alliance is still debating whether to provide more advanced defense systems like the Patriot.
Go deeper: A military buildup is likely to be another boon for stocks like Lockheed Martin (NYSE:LMT), Northrop Grumman (NYSE:NOC) and Raytheon Technologies (NYSE:RTX), which have had a phenomenal year on the back of the increases in defense spending. All current 30 NATO nations have agreed to spend at least 2% of their GDPs on defense by 2025, and while only a third of those members have met the threshold, the latest developments should accelerate a drive for achieving their targets. Finland and Sweden are also poised to become NATO members soon amid concerns that Russia might target them next. (19 comments)