Five Things You Need to Know to Start Your Day
Elon Musk has had enough of speculators, Erdogan has no easy choices, and that Ohio special election looks ominous for the GOP. Here are some of the things people in markets are talking about today.
$82 billion tweet
Tesla Inc.’s Elon Musk dropped a bombshell on Twitter yesterday when he said that he was thinking of taking the company private at $420 a share. Musk elaborated on his motivation in follow-up tweets and an email to employees, saying he wanted to escape the pressure from stock investors for short-term gains. But he failed to provide details on the “secured” funding for what could be the largest-ever leveraged buyout. Tesla stock rose 11 percent to $379.57 by yesterday’s close, leaving a considerable discount to the proposed $420 mark as markets maintain a level of skepticism on whether Musk can pull this off.
Market reality v Erdogan
The Turkish lira is holding close to 5.300 to the dollar this morning as traders await President Recep Tayyip Erdogan’s next move. The problem he faces is that any solution that will appease markets involves backing down on current policy, something the president is not famous for. The central bank is coming under more pressure to raise rates, with Investec Asset Management calling for a 500 basis point hike to 23 percent. While there is a chance to de-escalate the diplomatic crisis with the U.S. as a Turkish delegation heads to Washington, markets are demanding more action to stabilize the lira.
The special election in Ohio has seen the incumbent Republican candidate reduced to a wafer-thin majority by his Democrat opponent in what has traditionally been a safe GOP seat. The November vote is also becoming a greater concern for GOP strategists. Some 68 Republican-held House districts, with voting patterns traditionally more favorable to the Democrats compared with Ohio, are up for grabs. Democrats need a 23-seat net gain to take control of the House. Another worry is the threat from election hacking, with cybersecurity experts warning that the administration isn’t adequately defending the vote from outside meddling.
Overnight, the MSCI Asia Pacific Index advanced 0.3 percent while Japan’s Topix Index closed 0.1 percent lower ahead of high-level economic talks between U.S. and Japanese officials. In Europe, the Stoxx 600 Index was 0.1 percent lower at 5:50 a.m Eastern Time in a relatively quiet trading session. S&P 500 futures pointed to a small gain at the open, the 10-year Treasury yield was at 2.969 percent and gold was slightly higher.
The U.S. said in a statement that it will begin imposing 25 percent tariffs on an additional $16 billion of Chinese goods from Aug. 23. The list of goods hit includes motorcycles to steam turbines and railway cars. There was little sign of the trade war taking a toll yet on the country’s trade, with data released overnight showing exports rose faster than expected in July, leaving a surplus for the month at $28 billion. The country’s official factory gauge has been cooling against the backdrop of a weakening yuan, adding to the view that the Chinese economy may be set for a slowdown.
What we've been reading
This is what's caught our eye over the last 24 hours.
- Gates says he lied, stole and cheated, but trust him anyway.
- EU banker exodus hits London property market.
- Is Xi’s bold China power grab about to backfire?
- Liquidity crunch is the new bubble gripping credit investors.
- The top six contenders to fix the world’s oldest phone company.
- Bitcoin speculators, not drug dealers, dominate crypto use now.
- Using big data to micro-mange cities.
©2018 Bloomberg L.P.