Elon Musk has banned the Twitter account that tracked the movements of his private jet. Before owning Twitter, Musk offered the college student running the account $5k to shut it down. The student counteroffered $50k before Musk said he didn’t feel right paying to shut it down. Instead, Musk saved the $5k AND shut down the account by buying Twitter for $44 billion. 3D chess, right?

The lowdown

• 🏦 Fed raises benchmark interest rate by 50 basis points.

• ✈️ Twitter bans the ElonJet account which tracks the location of Elon Musk’s private jet.

• 📉 SPAC investors continue to cash out in droves, pointing to the industry’s end.

Flex your finance muscle 💸💪

UK tech startups are calling on the government to rethink cuts to research and development tax credits ($) which, if enacted, may slow innovation. But what are they?

R&D Tax Credits

More than 40 countries use tax support to encourage innovation. This support typically takes the form of a tax credit. In general, a company is encouraged to conduct experimental activities by the promise of tax relief or the ability to cash out its tax losses. 

For example, a pre-revenue biotech startup that spends $1 million on clinical trials may receive $450,000 cash-back at the end of an income period as part of certain R&D tax credit regimes. The startup can then conduct further experimental work and extend its runway.

The issue that the UK and other countries, including Australia and New Zealand, have had to deal with is the administration and effectiveness of such programs. There have been instances of fraud and there are questions about whether the R&D would have been conducted without the incentive anyway.

There is also a question about whether subsidies such as this are a form of beggar-thy-neighbor – a term used to describe economic policies used by a country to improve its own economic position at the expense of other countries. Firms may go jurisdiction shopping just as they do when choosing a place to base their headquarters based on corporate tax rates.

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Property companies attacked by short sellers

With property prices under pressure as interest rates rise, short sellers have somewhat predictably turned their attention to property companies.

Investment firm Muddy Waters yesterday announced that they are shorting the bonds of European real estate investment company Vivion Investments. Muddy Waters' main contention is that Vivion’s real estate portfolios are overvalued and occupancy rates are overstated. Vivion is yet to respond. Muddy Waters is shorting Vivion’s bonds as the company does not have publicly traded shares. The value of this debt fell 18% to 70 cents on the euro ($) after the report was released.

Also under attack is Adler Real Estate. Shares in the company have fallen around 90% since Fraser Perring of Viceroy Research published a scathing report. Adler is currently looking for a new auditor after KPMG quit, which is never a good sign.

The content we're consuming today

• The Memo by Howard Marks: Sea Change.

• The Australian Financial Review: ’Tis the season for broken arms at EY($).

Off-balance sheet items

• Take a look at this interactive Tesla valuation model and accompanying video explainer. The model suggests that if Tesla hits its target of 20 million cars p.a. by 2030 and maintains current margins, it is worth $215 billion more than its current market cap of $491 billion. Models like this are not usually free!

The bottom line