This is an audio transcript of the FT News Briefing podcast episode: Who will back Elon Musk?
Marc Filippino
Good morning from the Financial Times. Today is Wednesday, April 20th, and this is your FT News Briefing.
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Elon Musk still wants to buy Twitter, but it’s not clear who will back his $43bn bid. Netflix had a miserable first quarter. The next one could be even worse. The International Monetary Fund slashed its forecast for global growth. Plus, we’ll find out how Israel is managing its biggest influx of immigrants in 30 years. I’m Marc Filippino, and here’s the news you need to start your day.
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Elon Musk has been causing quite the stir with his attempt to buy the social media site Twitter. Problem is, the CEO of Tesla and SpaceX can’t pay for it all, and the firms that have the financial firepower to help him don’t seem that interested. The FT’s Antoine Gara explains why private equity giants like Blackstone are hesitant.
Antoine Gara
Well, I think overall, Twitter is a fairly challenging company to underwrite. For years, we’ve been talking about how hard it has been for Twitter to make the kind of profits that we’ve seen out of Facebook and even LinkedIn after Microsoft’s bought it. So it’s a fairly tough company to underwrite just because it’s just not reached the level of profitability that some of the ubiquitous social media peers that are out there.
Marc Filippino
So Antoine, does this mean a deal is dead if, you know, Musk can’t get PE backers?
Antoine Gara
Well with Elon, it seems like anything’s possible. He still has, you know, a stake in Tesla worth hundreds of billions of dollars. He has credit with a number of banks. The one thing is that for financing markets to step up for Elon to make a bid with traditional debt capital, it does seem like he’ll have to work with another private equity firm because it’s really those, the private equity firm, that’s going to give the lenders more confidence to lend against a company like Twitter that doesn’t have a boatload of cash flow.
Marc Filippino
Antoine Gara is the FT’s private and institutional capital correspondent.
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Netflix shares flopped more than 20 per cent in after-hours trading yesterday. The company had announced first quarter earnings, and it was pretty bad. The streaming pioneer lost 200,000 subscribers last quarter, and it expects to lose another 2mn subscribers this quarter. Netflix blamed saturated markets and competition from other streaming services. Its shares are down more than 40 per cent since the beginning of the year.
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The International Monetary Fund expects the global economy to slow drastically this year. Yesterday, the IMF forecast global GDP to grow 3.6 per cent, down nearly a full percentage point from the fund’s outlook in January. Here’s the FT’s Colby Smith.
Colby Smith
So it really shows the kind of substantive impact from the war in Ukraine, which has led to, you know, much higher global energy and food prices. It’s really kind of dampened expectations for growth across Europe in particular. So with these headwinds in mind, the IMF slashed their forecast for global growth but simultaneously raised their expectations for consumer prices this year in recognition that countries more broadly are going to be facing potentially slower growth prospects. At the same time as consumers are battling higher prices.
Marc Filippino
So the IMF also released its global financial stability report. What exactly is that, and what did it say?
Colby Smith
So again, it’s an overview of where the kind of biggest risks to the global financial system stand at the moment. And they detailed quite specifically a lot of the financial risks stemming from the current war in Ukraine and the massive sanctions package the US and its allies rolled out. But they also talk about a lot of the, you know, vulnerabilities created as a result of the Fed and the ECB and other advanced economies starting to do more to tackle high inflation. So one of the main takeaways from our conversation with the head of the fund’s monetary and capital markets department was the fact that this combination of high inflation and potentially sharp and potentially much higher borrowing costs across Europe and the US threatened to push indebted emerging markets and developing economies further into financial distress. And one of the main takeaways of the report was that almost a quarter of emerging market countries that issue hard currency debt have bonds that are now trading in distressed territory. So there’s quite a lot of vulnerability here if higher borrowing costs rise even further from this point.
Marc Filippino
Colby Smith is the FT’s US economics editor. Thanks, Colby.
Colby Smith
Thank you.
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Marc Filippino
Of the millions of people who have fled Russia’s war in Ukraine. About 40,000 are now in Israel. That includes Ukrainians as well as Russians and other people from the area. That number is expected to more than double this year. It’s the biggest influx to Israel since the Soviet Union collapsed. Journalist Neri Zilber has been reporting on this for the FT, and he says about a third of these latest migrants are Jewish.
Neri Zilber
So initially, there were limits on non-Jewish Ukrainian refugees being allowed into the country, and this was the policy by the interior minister, Ayelet Shaked, a rightwing ultranationalist politician. And there was a huge public outcry. There were scenes from the, from the airport here in Tel Aviv of refugees sleeping on the floor or sleeping on bag trolleys not being allowed in initially. Due to the public outcry and the media attention that actually changed. And so now for non-Jewish refugees coming in who have family or friends in the country, it’s unlimited. There is still a quota of around, I think, 5,000 for just refugees who have nobody here. But overall, the intake has actually increased since the initial limitations.
Marc Filippino
Neri, you spoke to one refugee from Ukraine. She’s a 23-year-old woman named Sofia. What was her story?
Neri Zilber
So initially she fled Kyiv at the start of the war, and she fled into Poland four or five day, very arduous journey. And she found herself in Warsaw with no real documentation except for a Ukrainian driving licence. And she was in Warsaw all alone, and she didn’t quite know what to do. And the only thing that occurred to her after a day or two in Warsaw trying in vain to get some kind of documentation from the Ukrainian embassy, there was to go and stand outside the Israeli embassy in Warsaw and just wait at closing time until someone, anyone came out of the embassy. And the first person she saw happen to be an Israeli diplomat. She grabbed him and basically told him, look, I’m Jewish, please help me. And this diplomat put her in touch with a Israeli-Jewish NGO who specialises in immigration to Israel. And a few days later, she was at a hotel in Tel Aviv, receiving or in the process of receiving official status. And that’s where I found her in this hotel, and that’s where I interviewed her.
Marc Filippino
So can Israel actually absorb this wave of refugees?
Neri Zilber
So it’s not felt just yet. At some point, more housing needs to be made available, and more government support needs to be forthcoming. But overall, it seems to be manageable in terms of the scale. So here it’s important to differentiate between the official immigrants, those with Jewish backgrounds and those that aren’t considered Jewish. So those with Jewish backgrounds get all kinds of government support, from a identity card and official status and bank account and even stipends. On the other hand, those who who don’t have official status, who aren’t considered official immigrants to Israel, essentially just straight refugees will have a more difficult time of it. And a lot of NGOs here who who are helping the non-Jewish refugees primarily from Ukraine, emphasise that point that, OK, you’ve allowed them into the country, you’ve provided safe haven. At some point, they’ll need to be able to work. They’ll need to have access to healthcare, which some of them are being allowed to really, you know, it’s looking at the medium and long term. You know, how are you allowing these people to live respectable lives so long as this war continues.
Marc Filippino
Neri Zilber writes for the FT.
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And before we go, we want to know what you think about the FT’s podcast. So we have a survey that takes like five minutes. You’ll be entered to win some cash, and you’d be doing us a huge favour. We really want to know what you think about us. Just head to FT.com/podcastsurvey. That’s FT.com/podcastsurvey. And as always, we’ll have a link in the show notes. One last thing, yesterday I slipped up and said the war in Russia when I really meant to say the war in Ukraine. Shout out to Jan on Twitter for flagging that for me.
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You can read more on all of these stories at FT.com. This has been your daily FT News Briefing. Make sure you check back tomorrow for the latest business news.
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