Good morning New York,
Hyperloop de-hyped: Izzy brings you the plans for Elon Musk’s much hyped hyperloop concept, which is supposed to radically reduce the travel time between Los Angeles and San Francisco, and create a fifth mode of transport after planes, trains, cars and boats. (Financial Times take)
More to encourage the Fed to taper: Mohamed El-Erian took a look through a research note from the San Francisco Fed which, whether it intended to or not, may encourage those within the FOMC who feel that prolonged reliance on QE has already hit the point of diminishing returns.
The CFTC has subpoenaed companies including Goldman Sachs, JPMorgan Chase and Glencore as it ramps up its probe into the metals warehousing industry. (Financial Times) “The source… said the CFTC’s enforcement division has asked the firm that has received the subpoena to send, by August 23, every document, communication, voice recording, correspondence and external and internal emails related to the LME since January 2010.” (Retuers)
Japan’s core machinery orders rose 4.9% in June from a year earlier, exceeding economist estimates for a 2.6% gain. (Bloomberg) “Japanese Prime Minister Shinzo Abe may look at cutting corporate taxes to ensure he can push through a planned sales tax increase as he seeks to show he has a strategy to both foster an economic recovery and contain the country’s enormous public debt.” (Reuters) The yen fell 1 per cent against the dollar.
The BoJ minutes were cautiously optimistic, referring to the recovery beginning as with last week’s meeting statement, but also warning of uncertainty’s for the country’s economy, “including the prospects for the European debt problem, developments in the emerging and commodity-exporting economies, and the pace of recovery in the U.S. economy”. (Statement)
German regulator to order Deutsche Bank to tighten controls after Libor review: Bafin “is expected to submit a finished report to the bank later this week, addressing failings and ordering improvements as it starts to conclude its investigation into alleged rigging of interest rates, according to a person close to the investigation.” (Wall Street Journal)
“German investor confidence increased more than economists expected in August… The ZEW Center for European Economic Research in Mannheim said its index of investor and analyst expectations, which aims to predict economic developments six months in advance, rose to 42 from 36.3 in July. Economists predicted 39.9, according to the median of 42 estimates in a Bloomberg News survey.” (Bloomberg)
UK government faces pressure to drop Help to Buy extension: “Experts say the government should consider abandoning the second stage of the Help to Buy scheme, set to launch next year, which critics fear will further boost demand for housing without increasing supply.” Loans to first-time buyers were up sharply in July from a year earlier, but house prices have already topped their previous 2008 peak, according to the LSL/Acadametrics Index, while CML’s data shows first-time buyers are already having to borrow more because of the recent growth in house prices.
Former Goldman managers start Asia hedge fund: “Three former managing directors of Goldman Sachs’ Japan business plan to start an Asia multi-strategy hedge fund early next year, according to two people with knowledge of the matter. Koji Gotoda and Takayuki Kasama have incorporated Golvis Investment Pte in Singapore, said the people [...]” (Bloomberg)
Blackstone raises bet on US rental property: The private equity group is buying into a portfolio of 80 buildings in a deal with GE Capital. “The deal valuing the portfolio at about $2.7bn will give Blackstone a majority stake in apartment complexes with roughly 30,000 units in the southern United States, according to people familiar with the matter. It was not immediately clear how much equity the firm will put forward.” (Financial Times)
Ibrahim Boubacar Keita won Mali’s presidential run-off after his opponent conceded defeat in a poll meant to restore stability to the country following a coup and war against Islamist rebels. (Financial Times)
Markets: A more chipper mood is reducing demand for sovereign bonds, nudging US and German yields higher, and bolstering industrial commodities, with copper up 0.3 per cent to $3.31 a pound and Brent crude adding 56 cents to $109.53 a barrel. Gold is adding to the previous session’s strong gains for precious metals, climbing $1 to $1,336 an ounce. The FTSE All-World index is up 0.3 per cent to 248.7, less than 2 points below its best levels since June 2008, as the FTSE Eurofirst 300 advances 0.5 per cent, with resource groups showing strength writes the FT’s Global Markets pacu fish Jamie Chisholm.