Slate Money: The Momentous Tweet Edition (August 11, 2018)
Host: Felix Salmon
Guests: Anna Shymansky, Matthew Rose (Wall Street Journal)
Overview
This “Momentous Tweet” edition of Slate Money dives into three major stories dominating finance and business headlines in August 2018:
- Elon Musk’s game-changing tweet about taking Tesla private
- The diplomatic spat between Saudi Arabia and Canada, triggered by a tweet from Canadian Foreign Minister Christia Freeland
- Indra Nooyi’s departure from PepsiCo and the challenges facing women executives in the Fortune 500
The episode offers sharp analysis and insightful banter, highlighting how a single tweet can disrupt markets, trigger international crises, or foreground societal change.
Key Discussion Points & Insights
I. Elon Musk’s Tesla Take-Private Tweet
[00:52–14:09]
- Context: Elon Musk tweeted mid-trading day, saying he was “considering taking Tesla private at $420. Funding secured.”
- Immediate Market Response:
- Tesla's stock price spiked.
- Confusion amongst investors and reporters, as no details about funding sources emerged.
- “The best part was the stock went insane. People were confused…every reporter in America [was] struggling to find out where that funding might have been secured from.”
— Matthew Rose [02:04] - Speculation About Funding:
- Initial media reports linked potential funding to recent Saudi investment in Tesla, but the Saudis denied involvement.
- SEC Questions:
- Concerns raised about securities law violations if the “funding secured” claim was untrue.
- “When you’re a CEO…these are material market information moving events. This is not just a tweet.” — Matthew Rose [04:19]
- Motivations for the Tweet:
- Musk’s ongoing war with short sellers; prior threats to shorts.
- Manipulation accusations, potential impact on convertible bonds.
- Feasibility of Take-Private Deal:
- Tesla’s junk-rated debt and lack of strong cash flow make a traditional leveraged buyout highly unlikely.
- “They would be the worst LBO candidate possible.” — Anna Shymansky [06:45]
- Public vs. Private Company Arguments:
- Musk claims public markets impede long-term vision, but Tesla’s practices (no guidance, frequent misses) undercut that rationale; public markets have been generous.
- Corporate Governance Concerns:
- Tesla’s board seen as weak, likely to follow Musk’s lead.
- Discussion of “stub equity” as a potential, untested mechanism for current shareholders to remain investors post-privatization.
- Summary:
- The panel is deeply skeptical of Musk's proposal, especially given unclear funding, regulatory implications, and practical hurdles.
- Notable Quote:
- “It’s Elon Musk, let’s just sort of put on the table, is a sui generis CEO and Tesla is a sui generis company.” — Matthew Rose [04:10]
II. Saudi Arabia–Canada Diplomatic Spat
[14:09–22:23]
- Trigger:
- Canadian Foreign Minister Christia Freeland tweeted criticism of Saudi Arabia for detaining women’s rights activists.
- “Canada stands together with the Bedawi family…we continue to strongly call for the release of both Raif and Samar Badawi.” — Felix Salmon reading Freeland’s tweet [14:57]
- Saudi Response:
- Severed trade, called back students, stopped flights, expelled Canadian ambassador — all over a single tweet.
- Analysis of Saudi Motives:
- Saudi Crown Prince seeks to show reforms are gifts, not responses to external pressure or domestic activism.
- “It’s very important to him that he not be seen as doing that.” — Anna Shymansky [16:41]
- Modernization arguments: easing women’s restrictions may have economic motivation (increased workforce) as much as symbolism.
- Risks for Saudi Investors:
- The Prince’s unpredictable behavior (wealth expropriations, imprisonments) is deterring foreign investment.
- Why Target Canada:
- Canada is a “safe” target with minimal trade repercussions, sending a warning to others about interfering.
- “This is the international relations equivalent of the prison bus: when you just pick a guy to beat up to show you’re in charge…” — Matthew Rose [18:48]
- International Reactions:
- U.S. and U.K. responses are muted due to close Saudi ties.
- Broader point: expectation that Saudis would play bigger regional role has led to unpredictable, often troubling results.
- Freeland’s Tweet as Social Policy Statement:
- Canada’s strong stance on feminist foreign policy gets positive attention, costs little, boosts international reputation.
- Notable Quote:
- “No normal country can afford to isolate Canada…It just makes no economic sense. And what MBS is doing is saying, like, I am so rich and powerful, I can do things that make no economic sense.” — Felix Salmon [19:54]
III. Indra Nooyi’s Departure from PepsiCo & Women in the C-Suite
[22:23–31:10]
- Indra Nooyi’s Tenure:
- Pioneered PepsiCo’s move toward healthier offerings; made bets on nutrition and emerging markets.
- “She took a lot of risks…she spent a lot of money on research and shifting towards more nutritious options.” — Anna Shymansky [23:01]
- Market Challenges:
- Despite efforts, “fun for you” core brands still dominate sales. Healthier offshoots yield growth but are too small to move the needle.
- Emerging Market Focus:
- Nooyi’s background and vision key to Pepsi’s expansion in India and elsewhere; successor inherits global growth strategy.
- Structural Shifts:
- Big packaged brands globally face pressure from local upstarts in every market—a threat to the era of global CPG.
- “You end up…having your ankles bitten in every single country in the world by similar startups that you…can’t compete with.” — Matthew Rose [27:26]
- Women Leaders in Fortune 500:
- Nooyi’s exit highlights stagnation (or regression) in female Fortune 500 CEOs.
- Discussion of “pipeline” problem and cultural barriers impeding women’s rise to top corporate positions.
- “That’s not because women are doing something wrong. It’s because we don’t have a lot of structures in place to make that possible.” — Anna Shymansky [29:25]
Notable Quotes & Memorable Moments
- “The best part was the stock went insane.” — Matthew Rose [02:04]
- “It’s kind of hard to prove a negative at this point.” — Matthew Rose, on verifying Musk’s funding [03:58]
- “This is not just a tweet. This is, this is a significant piece of disclosure.” — Matthew Rose [04:19]
- “He clearly wants this transaction mainly because he wants to see all of the shorts in extreme pain.” — Felix Salmon [05:05]
- “They would be the worst LBO candidate possible.” — Anna Shymansky [06:45]
- “Tesla has weak corporate governance, and…the board will do whatever Elon asks them to do.” — Felix Salmon [09:13]
- “From nothing, one guy built a car company…now valued at more than Fiat and GM…An extraordinary achievement.” — Matthew Rose [12:51]
- “This is the international relations equivalent of the prison bus: when you just pick a guy to beat up to show you’re in charge…” — Matthew Rose [18:48]
- “No normal country can afford to isolate Canada…It just makes no economic sense.” — Felix Salmon [19:54]
Timestamps for Important Segments
- 00:52–14:09 — The Elon Musk/Tesla "funding secured" tweet and fallout
- 14:09–22:23 — Saudi-Canada diplomatic standoff after Christia Freeland’s tweet
- 22:23–31:10 — Indra Nooyi’s PepsiCo legacy and the challenge for female CEOs
- 31:10–35:49 — Numbers round: Birth rates in China, changing alcohol preferences in the US, and GDP breakdown
Numbers Round
[31:10–35:49]
- Felix: 3 — The number of piglets on China’s new year-of-the-pig stamp, possibly hinting at a change to the two-child policy.
- Matthew: 49.7 — % of Americans choosing beer as their drink of choice, marking the first time since tracking that beer dropped below 50%, reflecting shifting tastes.
- Anna: 1% — Drop in inventory’s share of US GDP, which could signal a snapback and bump in following quarters.
Tone & Flow
The episode is lively, sharp, and frequently humorous. The hosts move seamlessly between financial minutiae and big-picture cultural analysis, always staying candid and informed. Matthew Rose’s dry wit and Anna Shymansky’s incisive clarity complement Felix Salmon’s zippy hosting, making for an episode that’s both insightful and accessible—even for listeners unfamiliar with the headlines discussed.