—— Elon Musk Steps Down as Twitter CEO; Fantasia’s Debt Plan Opposed by Major Shareholder; U.S. Mortgage Rates Could Hit 8% on Default; Retail Leasing Slows Amid Record-Low Availability; Ex-Trader Runs $2M Ponzi Scheme; SoftBank Reports $2B Quarterly Loss; George Soros Dumps Tesla Stock
1. Elon Musk Steps Down as Twitter CEO
On Thursday, Elon Musk tweeted that he would step down from his role as CEO of Twitter, and that the new CEO he appointed is expected to take over in six weeks.
Reportedly, NBCUniversal executive Linda Yaccarino will replace Musk.
Yaccarino joined NBCUniversal in 2011 and helped launch the ad-supported Peacock streaming service. She also oversaw coverage of the Super Bowl and the Olympics. Before NBC, she worked at Turner Broadcasting for nearly 20 years.
In December, Musk held a Twitter poll asking users whether he should resign as CEO—57.5% voted “yes.” Users criticized Musk for erratic leadership and for neglecting Tesla and his other ventures.
Yaccarino previously led advertising and partnership operations at NBCUniversal.
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2. Fantasia’s Debt Plan Opposed by Major Shareholder
In January, Chinese real estate developer Fantasia, which defaulted in 2021, proposed a restructuring plan to convert $1.3 billion of offshore debt into equity and delay part of its loans.
However, sources said the proposal faces opposition from the company’s second-largest shareholder, TCL Industries, due to dilution concerns.
Fantasia needs at least 50% shareholder approval for the debt-to-equity swap. With TCL holding 17.5%, a “no” vote could derail the deal.
Fantasia told Bloomberg that if TCL votes against the plan, the restructuring could fail and shareholders might recover nothing.
Fantasia has already secured creditor support and completed over half the plan, but TCL’s opposition could nullify it.
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3. U.S. Mortgage Rates Could Hit 8% if Government Defaults
Zillow’s latest report warns that if the U.S. fails to raise its debt ceiling and defaults, mortgage rates could spike to 8.4%, pushing housing costs up by 22%.
For a $500,000 mortgage at 8.4%, the monthly payment would rise to $3,800—well above the $3,095 cost at a 6.3% rate.
Zillow senior economist Jeff Tucker said a U.S. default would plunge the market into a “deep freeze,” making homeownership even more out of reach for first-time buyers.
A default would cause mortgage rates to soar and devastate the housing market.
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4. Retail Leasing Slows Amid Record-Low Availability
The latest report from data firm CoStar shows that while retail space remains limited across the U.S., leasing activity slowed during the first quarter.
In Q1, retailers leased a total of 13.2 million square feet of space, a 57% decline compared to the same period last year.
However, due to the prioritization of newly developed retail properties and strong consumer demand, many storefronts were able to stay afloat, pushing the national retail vacancy rate down from 5.1% to 4.7% — the lowest since 2007.
Brandon Svec, CoStar’s Director of U.S. Retail Analytics, noted that even the closure of major chains like Bed Bath & Beyond may not meaningfully increase the amount of space available.
Brokerage firms and landlords reported that many retail spaces have already been pre-leased, and CoStar projects that 75% of available retail space will be leased by next year.
The report also showed that retail property sales in Q1 dropped 48% to $15.5 billion, largely due to high borrowing costs dampening investor appetite.
Although leasing activity has slowed, the vacancy rate for retail space has hit a historic low.
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5. Ex-Trader Runs $2 Million Ponzi Scheme
Phillip Galles, a 57-year-old former Chicago commodities trader, has been arrested for wire fraud after allegedly defrauding over $2 million since 2019.
According to New Jersey U.S. Attorney Philip Sellinger, Galles posed as a hedge fund manager, claiming to own 122 luxury cars and promising over 200% returns.
Prosecutors found Galles made no actual investments and used a Ponzi scheme to pay older investors with new funds.
One victim in Texas wired Galles $100,000, which he used to pay off $19,300 in credit card debt, buy $14,800 in jewelry, and transfer $10,000 to prior investors.
When another investor requested a $190,000 withdrawal, Galles falsely claimed the bank system was down.
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6. SoftBank Reports $2 Billion Quarterly Loss
For the quarter ending in March, SoftBank Group’s Vision Fund reported a loss of ¥295.7 billion ($2 billion), with the full fiscal year’s loss reaching ¥4.3 trillion — the worst performance since the fund’s inception in 2017.
While global equities experienced a rare rally in Q1, SoftBank failed to capitalize on it, as many of its previous investments in unlisted startups continued to underperform.
As of Thursday, SoftBank founder Masayoshi Son’s net worth stood at $8.9 billion.
Before the Friday market opened, SoftBank’s shares fell by as much as 5.5%.
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7. George Soros Dumps Tesla Stock
George Soros’s investment firm, Soros Fund Management, sold 10.8 million shares of electric vehicle company Rivian during the first quarter, a position worth approximately $55.4 million.
The firm now holds only 3.6 million shares in Rivian, representing about 1.1% of its investment portfolio. In total, Soros Fund’s portfolio value declined by $687 million in Q1.
Additionally, Soros Fund sold all $16 million worth of its Tesla holdings, and also trimmed positions in Amazon, Salesforce, and Intuit.
Rivian’s stock price dropped 90% from its November 2021 peak by the end of 2022.
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This content is sourced from Financial Times, Bloomberg, and The Real Deal, among other financial news outlets.