Elon Musk blames Tesla's $600 billion plunge in market value this year on the Fed - as rising interest rates erode the appeal of stocks
"We don't control the Federal Reserve," the CEO of Tesla, SpaceX and Twitter added."That is the real problem here."
US inflation has surged to 40-year highs this year, spurring the Fed to hike interest rates from near zero in March to over 4% today in a bid to cool the economy and curb the pace of price increases. Higher rates encourage saving over spending and make borrowing more expensive — meaning they typically weigh on asset prices.that higher rates bolster the yields from low-risk assets such as government debt, boosting their appeal relative to riskier assets such as stocks.
"As the 'risk-free' real rate of return from Treasury Bills approaches the much riskier rate of return from stocks, the value of stocks drop," Musk said."For example, if T-bills and stocks both had a 10% rate of return, everyone would just buy the former." Shares of fast-growing companies such as Tesla have been hit especially hard this year, as they're primarily valued based on their future cash flows. Investors find those prospective cash flows less attractive when prices are soaring, they can earn solid and safer returns elsewhere, and aHowever, Tesla stock has more than halved in price this year for other reasons.
Argentina Últimas Noticias, Argentina Titulares
Similar News:También puedes leer noticias similares a ésta que hemos recopilado de otras fuentes de noticias.
Major Tesla Shareholder Thinks Elon Musk Should Be Replaced As CEOLeo Koguan is Tesla’s third largest shareholder and he believes Elon Musk has “abandoned” Tesla after he bought Twitter earlier this year.
Leer más »
Elon Musk could lose control of Tesla, Alex Stamos saysElon Musk could lose control of Tesla if the automaker's stock keeps tumbling, ex-Facebook security chief says
Leer más »
5 criticisms of Elon Musk from past week amid Twitter, Tesla dramaElon Musk is fueling the Twitter fire and using Tesla as his personal ATM, experts say. Here are 5 criticisms of the CEO from the past week alone
Leer más »
Third-largest Tesla stock owner says Elon Musk should step down as CEOElectric car manufacturer Tesla's third-largest individual shareholder KoGuan Leo is demanding that CEO Elon Musk be replaced by the board of directors.
Leer más »
3rd Largest Tesla Shareholder Suggests Elon Musk Should Step Aside As CEOThe third largest individual Tesla shareholders wants Elon Musk to step aside as CEO and be replaced by a professional leader.
Leer más »
How Elon Musk Keeps The Lid On Tesla Leaks | CarscoopsThe company's CEO is notorious for watermarking information so as to keep would-be leakers in check
Leer más »