Before the Open (Jun 28-Jul 2)

Good morning. Happy Friday. Happy Nonfarm Payrolls Day.

The Asian/Pacific markets were mixed. Japan, Australia and the Philippines did well; China, Hong Kong and Thailand were weak. Europe, Africa and the Middle East currently lean up, but most markets are quiet. Poland, Germany, the UAE, Finland, Sweden and the Czech Republic are doing the best. Futures in the States point towards a positive open for the cash market.

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COURSE: Learn How to Trade
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The dollar is up. Oil is down; copper is up. Gold and silver are up. Bonds are up. Bitcoin is down.

Stories/News from Seeking Alpha…

Wages on watch

Non-farm payrolls have come in below forecasts over the past two months as worker shortages appeared to restrict the pace of the pandemic recovery. Republicans have pointed to programs like enhanced unemployment benefits as responsible for the labor scarcity, while Democrats have flagged items like childcare responsibilities, lingering COVID-19 worries and the need to raise wages (maybe a bit of both?) Stock futures are holding steady before the latest NFP data, but could make some moves after the release at 8:30 a.m. ET.

Consensus forecasts: Change in non-farm payrolls: 700,000 (vs. 559,000 in May); Unemployment rate: 5.7% (vs. 5.8% last month); Average hourly earnings: 0.4% M/M (vs. 0.5% in May), or 3.7% Y/Y (vs. 2.0%).

“The wage growth is really what I’m going to be focusing in on. Because as we know, the Fed and inflation is really driving markets right now,” said Ryan Nauman, market strategist at Informa Financial Intelligence. “The wage growth is going to be a big contributor to how transitory or how temporary, is inflation.”

Central banking: The last time the FOMC gathered in June, Fed Chair Jerome Powell suggested the retirement of the term “tapering,” but said the get-together should be considered the “talking about talking about” meeting. The slow path toward cutting back on bond-buying could change if there is a surprisingly strong jobs report, which will be the first of two before expected comments on the matter at Jackson Hole in August. Wage accelerations could meanwhile persuade some FOMC members that inflation risks call for more action than the two interest rate hikes projected for 2023.

Robinhood makes it official

Hot investing app Robinhood Markets (HOOD) filed Thursday for an eagerly anticipated IPO at what many on Wall Street expect will be about a $40B valuation. The filing included few other details about the initial public offering, such as how many shares Robinhood will offer or at what price range, but 35% of them are expected to be allocated to retail investors. The company is set to be the buzziest name to tap the U.S. IPO market this summer and follows a record number of listings in the first half that’s on pace to break annual records.

Backdrop: Since 2015, Robinhood has offered a popular, mobile-friendly investing app for Millennials, Gen-Zers and others new to stocks, ETFs and crypto. The company offers such non-traditional features as zero-commission stock purchases and the ability to buy fractional shares, making it possible for small investors to buy into popular but expensive tech stocks. “By untethering investing from the desktop computer, we’ve seen new categories of people, including gig economy workers, first responders, construction workers and many more, discovering Robinhood and becoming investors,” co-founders Baiju Bhatt and Vladimir Tenev wrote in an accompanying S-1 filing.

By the numbers: Robinhood had 18M funded accounts as of March 31, as well as 17.7M monthly active users and $81B in assets under custody (more than 50% of its clients are first-time investors). Revenues grew 245% in 2020 to hit $959M, allowing Robinhood to earn $7M of net income vs. a $107M 2019 net loss. As for Q1 2021, HOOD said revenues grew 309% year over year, although the bottom line showed a $1.4B net loss due in part to a $1.5B fair-value adjustment to convertible notes and warrant liability.

Not without critics: Robinhood has faced heat over receiving what is called “payment for order flow,” where brokerages route customers’ stock orders to specific market makers in exchange for commissions, even though the market maker might not give the customer the best available execution price. Robinhood also angered customers and regulators when its system went down during some big market days in March 2020, preventing clients from trading when stocks were volatile, as well as restricting trading during the meme frenzy back in January. On Wednesday, FINRA announced that Robinhood would pay a record $70M in fines and restitution over the outages, as well as improperly approving some customers for options trading.

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Shares of Virgin Galactic (NYSE:SPCE) are up 30% premarket to $56 after the company said it was looking to launch founder Sir Richard Branson into space on July 11. That’s big news as it would come ahead of plans for Jeff Bezos and his company Blue Origin (BORGN) to launch on July 20. The two have been vying for dominance in space, as well as SpaceX’s (SPACE) Elon Musk, it what has been coined the “billionaire space race.”

Bigger picture: Virgin Galactic’s July 11 flight will be its fourth test flight, and it plans two additional ones before beginning commercial service in 2022. It was only a week ago that the FAA gave its approval and handed the company a commercial license for its spaceflights. So far, the space tourism pioneer has about 600 customer reservations on its books, most of which were sold at a price of $200K to $250K per ticket several years ago. Another 400 have expressed an interest in booking tickets to the edge of space when sales fully reopen.

Galactic and Blue Origin will get people to suborbital space in different ways. The former uses a carrier aircraft to fly its space plane high above Earth, while the latter uses a rocket-launched capsule (it’s also looking to diversify its business by sending payloads into orbit via New Glenn).

Quote: “In general, every mission that goes up, every rocket that’s launched, every bit of progress we make does drive down costs, makes space more affordable [and] accessible to everybody,” added Shift4 Payments’ Jared Isaacman, who is partnering with SpaceX (SPACE) to lead the first all-civilian mission into orbit later this year.

UAE reservations

Tensions erupted at an OPEC+ meeting on Thursday after the United Arab Emirates held up a deal at the last minute. It argued that the baseline for its own cuts needed to be adjusted, effectively boosting the country’s production quota amid heavy investments in oil capacity. The standoff could mean that OPEC+ won’t raise production at all, though ministers are aiming to resume their meeting this afternoon.

Before the skirmish took place, the group seemed to agree on an output boost of 400K barrels a day each month from August to December. It would have also extended the time frame of the broader OPEC+ deal, setting the final expiry of the cutbacks in December 2022 instead of April. “It’s hard to see either side backing down,” said Richard Bronze, head of geopolitics at consultant Energy Aspects. “Talks may even extend through the weekend, as any compromise will likely involve complicated OPEC math.”

What it means: Arguments are nothing new at OPEC+, but there is a lot more on the table at the current moment. Without a deal, the alliance would fall back on existing terms that call for production to remain unchanged until April 2022. That would risk another inflationary spike as crude heads above $75. The development could also tarnish the cartel’s reputation as a strong revival in fuel consumption is seen across the globe.

Outlook: It’s not the first time drama has hit the cartel. Late last year, Abu Dhabi debated leaving OPEC+ as it pressed to raise production, though a deal ultimately came to fruition. There was also the destructive Saudi-Russia price war of 2020, and if the U.S. reaches a nuclear deal with Iran, the latter would surely seek additional output after the sanctions are lifted.

Global minimum tax

Following the latest round of talks hosted by the OECD, the U.S. won backing for a global minimum tax from a group of 130 nations that represent 90% of global GDP. It’s part of a wider corporate tax overhaul for multinationals and the Biden administration’s plan for raising revenue for “generational investments.” Heavy federal spending will push the budget deficit to $3T for the 2021 fiscal year, according to the Congressional Budget Office, which would be the second-largest since 1945 in nominal terms and as a share of the economy. The forecast doesn’t even include the impact of two “trillion-dollar” infrastructure proposals, though the budget office does forecast the economy to grow 6.7% this year after adjusting for inflation.

“It’s a historic day for economic diplomacy,” Treasury Secretary Janet Yellen declared, adding that the “race to the bottom is one step closer to coming to an end.” While the deal aims to prevent companies from relocating their headquarters to low-tax countries, others feel the plan could be hard to enforce internationally due to accounting rules, subsidies and exemptions for R&D and capital investment. The international drive is closely tied to the White House’s domestic agenda, which calls for raising the U.S. corporate tax rate to 28% from 21%, as well as the minimum tax on American-based companies’ foreign profits to 21% from 10.5%.

Some obstacles: Several European countries continue to object to the minimum tax rate, saying it would remove a tool for encouraging foreign investment. Among them are Ireland, which is the European headquarters for U.S. Big Tech companies like Google (GOOG, GOOGL) and Facebook (NASDAQ:FB), as well as Hungary and Estonia. Resistance from any EU nation could prevent the 27-member bloc from going ahead with the plan or at least force the bloc to resort to novel legal maneuvers that have yet to be tested.

Go deeper: The new tax approach could also run into opposition in the U.S., where Yellen needs to sell the deal to Congress. The changes could require the U.S. Senate to alter existing tax treaties, which would take a two-thirds vote and at least some GOP support. Republicans have already expressed opposition to any rise in taxes, while some lawmakers have condemned the idea of ceding taxing authority to other governments. Business groups have additionally complained that higher taxes could threaten the economic recovery as American companies navigate their way out of the coronavirus pandemic.

Today’s Economic Calendar
Auto Sales
8:30 Non-farm payrolls
8:30 Goods and Services Trade
10:00 Factory Orders
1:00 PM Baker-Hughes Rig Count

Companies reporting earnings today »

What else is happening…

Krispy Kreme (NASDAQ:DNUT) jumps in trading debut following downsized IPO.

Apple (NASDAQ:AAPL) opens its App Store to marijuana delivery companies.

Best-selling automaker… Toyota (NYSE:TM) tops GM sales in the U.S.

Wild market return for Hertz (OTCPK:HTZZ) after bankruptcy.

Electric vehicle stocks fall as investors eye competitive backdrop.

J&J (NYSE:JNJ) COVID vaccine effective against Delta variant.

Larry Summers: Economy on ‘problematic course.’

NBCU (NASDAQ:CMCSA) to stream rest of Stanley Cup on Peacock.

IPO and SPAC markets on pace for best year in decades.

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Good morning. Happy Thursday.

The Asian/Pacific markets leaned to the downside but were mostly quiet. The Philippines did well while Hong Kong, South Korea and Australia closed down. Europe, Africa and the Middle East are currently doing very well. The UK, Denmark, France, Poland, Turkey, Russia, Finland, Norway, Hungary, Spain, Portugal and Austria are posting solid gains. Only the Czech Republic is down much. Futures in the States point towards a positive open for the cash market.

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COURSE: Learn How to Trade
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The dollar is down. Oil is up; copper is down. Gold and silver are up. Bonds are down. Bitcoin is down.

Stories/News from Seeking Alpha…

Instagram makeover

Instagram has a TikTok problem. The Facebook-owned (NASDAQ:FB) app is testing drastic changes to its platform like showing users full-screen videos in their feeds, as well as content from accounts they don’t already follow. In August 2020, Instagram even tried launching Reels, which was a short-form video feature that enabled users to create content with overlaid audio and effects.

“Let’s be honest, there’s some really serious competition right now. TikTok (BDNCE) is huge, YouTube (GOOG, GOOGL) is even bigger, and there’s lots of other upstarts as well,” said Adam Mosseri, Head of Instagram. “We’re no longer a photo-sharing app or a square photo-sharing app. You’ll see us do a number of things, or experiment with a number of things in this space over the coming months.”

Flashback: In early 2010, social media was all about Facebook and Twitter (NYSE:TWTR), before Instagram came on the scene with its dazzling photo filters. Within two years, Facebook had scooped up the company for $1B, and by 2018, it had more than 1B users. Later that year, Instagram’s founders left Facebook – due to a disagreement about the future of the app – and Facebook hasn’t reported Instagram figures for the last three years as things apparently went downhill.

Go deeper: There’s a big generational change happening on social media given the focus on individual expression. Compared to Instagram’s picture-perfect and airbrushed environment, TikTok offers a space to show flaws, vulnerabilities and imperfections – and even have fun doing it. According to recent data from Cowen, TikTok’s daily engagement per user has climbed from 37 minutes to 41 minutes this year, compared to Instagram’s 33 minutes of usage per day on average.

Second half kickoff

Cyclical shares are leading the market higher again as Wall Street begins the second half of 2021. The Dow closed up 0.6% yesterday, with futures tied to the index tacking on another 0.2% overnight, while the Nasdaq finished in the red on Wednesday and contracts linked to the index are inching lower before the open. Meanwhile, the S&P 500 marked its 34th record of 2021, closing the day above 4,300.

Strong first halves for the stock market are generally a good omen for the rest of the year. According to Refinitiv data that goes back to 1950, whenever there has been a double-digit gain in the first half, the Dow and S&P 500 have never ended the year with an annual loss. The Russell 2000 also climbed more than 17% in the first half of 2021 due to a strong rotation into value stocks.

Oil in focus: OPEC+ will convene via videoconference at 9 a.m. ET to discuss the next phase of their production policy. The group is optimistic about market conditions, with WTI crude up by 50% to $74/bbl since the beginning of the year. At its last monthly meeting, OPEC+ announced a supply increase of 2.1M barrels per day between May and July, and analysts expect that it could bring another 500K barrels per day online starting in August.

On the calendar: Krispy Kreme (DNUT) begins trading this morning after a bumper week for IPOs. Those included DiDi Global (DIDI), LegalZoom (LZ), Taboola (TBLA) and SentinelOne (S). The latest data on weekly jobless claims will also be published at 8:30 a.m. ET, with economists expecting initial claims for unemployment totaling 390K, down from 411K the week before.

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CCP marks centenary

China today celebrated the ruling Communist Party’s centenary with a big show in Tiananmen Square. Saber-rattling by President Xi Jinping also made some news after he warned that bully nations will “get their heads bashed in,” hailed a “new world” and committed to the “reunification” of Taiwan and grip over Hong Kong. While there are plenty of geopolitical headlines that can be written about the event, let’s take a deeper dive into the Chinese economy and its history.

Backdrop: While the People’s Republic of China was founded in 1949, the Chinese Communist Party was formed nearly three decades earlier in 1921. At the time, there was a lot of global upheaval and Chinese young people were heavily influenced by Marxist thinking and workers’ rights. In the early years, Chairman Mao launched various socio-political and economic campaigns, such as the Great Leap Forward in 1958 and the Cultural Revolution in 1966, which devastated China’s economy and resulted in millions of deaths.

As a result, Mao’s successor, Deng Xiaoping, implemented a series of market reforms after taking power in 1978. Those included the sweeping Open Door Policy, which was the first time the country opened to foreign investment. As private companies developed in the 1980s and 1990s, they sought the technological knowledge of many foreign companies to stave off the rising competition in the liberalized economy. These developments surrounded China’s Four Modernization Plan, whose pillars were made up of agriculture, industry, defense, and science and technology.

Outlook: Xi Jinping assumed office in 2012 and is arguably the most influential Chinese leader since Mao. Xi has even written himself into the CCP’s constitution and eliminated limits on his time in office. On the economic front, GDP has grown steadily on his watch and he was the architect of the Belt and Road Initiative, which has been criticized by the U.S. over its leverage in creating political goodwill, massive debt and a way to spread Beijing’s influence. Last month, the G7 unveiled concrete steps to counter China’s rising power, drawing up a global green infrastructure plan called “Build Back Better for the World.”

Travel boom!

As concerns dwindle over gathering in crowds or attending public events, 86% of Americans plan to celebrate Independence Day this year, up from 76% in 2020. Those who do have plans for the holiday are forecast to spend about $80 on food items – in line with historical trends – for a total of $7.5B. More than half of consumers are also planning a cookout or BBQ, the National Retail Foundation reports, and 29% of those celebrating expect to purchase additional patriotic items.

Road trip: 10M more Americans are set to take road trips this July 4, a 34% increase compared to last year, according to AAA. Daily car rental rates for Independence Day are also 86% higher compared to the same period in 2020, topping out at $166. That strong demand comes despite gas prices that are hovering around $3.09 a gallon nationally, the highest price over the holiday in seven years.

“The problem isn’t gasoline supply,” according to GasBuddy. “The problem is there aren’t enough truck drivers to keep up with deliveries, made worse by the pandemic as some truckers left for jobs elsewhere or were let go.”

Air travel: While cancelations and delays are piling up as carriers scramble to cope with the travel surge, 3.5M people are still expected to take to the skies. Southwest Airlines (NYSE:LUV) is even offering flight attendants double pay, as well as higher compensation to ground and cargo employees. Overall, 47.7M Americans are expected to travel across all modes of transportation, just below record high figures from 2019, when 49M people across the U.S. traveled over the holiday.

Today’s Economic Calendar
7:30 Challenger Job-Cut Report
8:30 Initial Jobless Claims
9:45 PMI Manufacturing Index
10:00 ISM Manufacturing Index
10:00 Construction Spending
10:30 EIA Natural Gas Inventory
2:00 PM Fed’s Bostic Speech
4:30 PM Fed Balance Sheet

Companies reporting earnings today »

What else is happening…

S&P hits Wall Street’s 2021 target in six months; What’s next?

Q2’s top winners and losers in energy, natural resources.

Didi (NYSE:DIDI) pops 30% on first day, then gives it back.

J&J (NYSE:JNJ) vaccine may protect against Delta variant – Surgeon General.

Jeff who? Richard Branson comments on space travel plans.

Amazon (NASDAQ:AMZN) plans to deploy full Rivian EV delivery fleet by 2030.

Chip shortage prompts Ford (NYSE:F) to slash more vehicle production.

Intellia (NTLA) gene editing pioneer outlines future of CRISPR.

Con Edison (NYSE:ED) urges NYC residents to conserve power amid outages.

Robinhood (RBNHD) to pay $70M to settle FINRA regulatory probe.

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Good morning. Happy Wednesday.

The Asian/Pacific markets leaned to the upside. China, South Korea, Taiwan, Indonesia and Singapore did well; Hong Kong, Malaysia and the Philippines were weak. Europe, Africa and the Middle East currently lean up. The UK, Denmark, France, Germany, South Africa, Finland, Italy and Sweden are doing well; Poland, Turkey, Russia and Greece are weak. Futures in the States point towards a flat open for the cash market.

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BLOG: The Anatomy of Leaders and Laggards During the Year
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The dollar is up. Oil and copper are up. Gold is down; silver is up. Bonds are up. Bitcoin is down.

Stories/News from Seeking Alpha…

Eviction friction

A national moratorium on the eviction of tenants had previously been set to expire today, though a 5-4 decision at the nation’s highest court will see the order extended for another month. Chief Justice John Roberts and Justice Brett Kavanaugh joined with the court’s three liberal justices to leave the moratorium in place, with Kavanaugh issuing a one-paragraph concurrence detailing his views. “Because the CDC plans to end the moratorium in only a few weeks, on July 31, and because those few weeks will allow for an additional and more orderly distribution of the congressionally appropriated rental assistance funds, I vote at this time to deny the application” that had been filed by real estate firms and trade associations.

Backdrop: The CDC eviction moratorium was put in place under the Trump administration, aiming to shield tenants who missed monthly rent payments from being forced out of their homes during the coronavirus pandemic (they still owe back rent). It was originally set to expire on Dec. 31, 2020, but Congress stretched the order until late January, and it was then extended several more times under the Biden administration. While the CDC last week announced a final, one-month extension through July, U.S. District Judge Dabney Friedrich ruled the moratorium was legally unsupportable, though she stayed her ruling (pending appeal) citing public-health concerns.

While the moratorium has protected millions of tenants, it has also resulted in financial hardships for landlords. Property owners, which say they are losing $13B a month in unpaid rent, are still liable for taxes, insurance and maintenance costs tied to their real estate. They also said the ban on evictions is less justifiable now due to the easing of COVID-19 restrictions and a high number of vaccinated Americans.

Reactions: “Allowing evictions to proceed when there are tens of billions in resources to prevent them would be wasteful and cruel,” said Diane Yentel, CEO of the National Low Income Housing Coalition. Landlords feel differently. “With the pandemic waning and the economy improving, it is time to restore the housing sector to its healthy, former function,” replied Charlie Oppler, President of the National Association of Realtors.

Statistics: By the end of March, 6.4M American households were behind on their rent, according to data from the Department of Housing and Urban Development. On June 7, a Household Pulse Survey from the U.S. Census Bureau also showed that roughly 3.2M people in the U.S. feared an eviction in the next two months.

Related REITs: Equity Residential (NYSE:EQR), AvalonBay (NYSE:AVB), American Homes 4 Rent (NYSE:AMH), UDR (NYSE:UDR), Apartment Investment and Management (NYSE:AIV), Essex Property Trust (NYSE:ESS), Camden Property Trust (NYSE:CPT), Mid-America Apartment (NYSE:MAA), Invitation Homes (NYSE:INVH), Bluerock Residential Growth (NYSE:BRG), NexPoint Residential Trust (NYSE:NXRT), Preferred Apartment Communities (NYSE:APTS), Sun Communities (NYSE:SUI), Clipper Realty (NYSE:CLPR), Centerspace (NYSE:CSR), Equity LifeStyle Properties (NYSE:ELS).

Speaking of housing

The U.S. property market continues to remain red hot, with demand for homes outpacing supply. Mortgage rates are still at all-time lows and many consumers have pent-up cash from the pandemic, but builders face shortages of both labor and materials. On Tuesday, the Case-Shiller Home Price Index for April rose at its fastest pace ever, coming in at a blazing 14.6% Y/Y.

Current sentiment: In a recent survey, Coldwell Banker found that one in five homeowners plan to sell their current home over the next twelve months and that six out of ten homeowners who hope to sell, aim to relocate to a different city or state. When asked in a recent interview about what is going to happen to market prices, President and CEO of Coldwell Banker, M. Ryan Gorman, stated: “Well its anyone’s guess where we go from here, but I’ll tell you the fundamentals remain incredibly strong,”

“The fundamentals though, underwriting guidelines, cash offers, low speculation, low building are a lot of reasons to believe there is going to continue to be a lot of buyers, unfortunately not enough sellers, and continue to have some inventory constraints.

Some statistics: A recent summary of May 2021 existing home sales statistics put together by the National Association of Realtors found that the median price of existing-home sales has reached an all-time high, just over $350K. In addition, data provided by the National Association of Realtors points to the fact that houses are continuing to be driven by first-time home buyers, and cash sales have increased since last year.

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End of the first half

The market has recorded a strong run in 2021, with the S&P 500 on track to register its fifth straight month of gains. The Nasdaq is also headed for its seventh positive month in the last eight, and while the Dow is red for June, it previously notched a four-month winning streak. Investors may be taking some profits before the last trading day of H2 – stock futures fell 0.2% overnight – though many are expecting the recent outsized performance to continue into the second half of the year.

Analyst commentary: “Strong growth, strong earnings, low interest rates, a bond market that’s been lulled to sleep. The bond yields aren’t really reacting to inflation news,” declared Ethan Harris, head of global economic research at Bank of America. “Powell has done a good job of calming the waves in the bond market, so this is Goldilocks for equities.”

There are still risks ahead for the latter half of 2021. Choppy trading could ensue if the Fed starts talking about tapering its bond buying program or inflation readings prove to be too hot for the economy. Supply chain shortages and bottlenecks also need to be worked out, while extended unemployment benefits run out for many Americans in September. Don’t forget the COVID situation and the potential for more harmful variants.

On the economic calendar today: The National Employment Report is forecast to show private payrolls rising by 600K in June, after surging by 978K in May. While the figures will be watched by the market, there is more anticipation for Friday’s jobs report, which will give a better picture on the state of the economy. That data has the potential to affect the Fed’s monetary policy stance, which currently sees two rate hikes starting in 2023.

‘Uber of China’

Chinese ride-hailing company Didi Global (DIDI) has reportedly priced its IPO at $14/share – at the top end of its expected range – valuing the firm at more than $67B. The IPO would raise more than $4B for the company, making it one of the biggest listings of 2021. It may also decide to increase the size of the offering before ADSs (American Depositary Shares) begin trading today on the New York Stock Exchange.

By the numbers: DIDI is offering 288M ADSs that will trade under the ticker symbol “DIDI.” The firm has granted underwriters the option to buy as many as 43.2M additional ADSs for overallotments, while each ADS will represent 0.25 Class A ordinary shares. Didi reported $21.6B in revenue last year, while the company turned a profit in its last quarter on $6.4B in revenue.

Seeking Alpha contributor EM Investor is skeptical about such a high valuation, writing that Didi’s growth potential “is without a doubt attractive, but the key question is at what cost investors should buy into this growth story.” There are also some worries about investing in a Chinese company. The Communist party continues to wield a heavy grip on the economy and there are many concerns about transparency. Examples: Remember Luckin Coffee (sales scandal in 2019)? Phoenix Tree Holdings (delisted for shady disclosures in 2020)? RLX Technology (hit by a vaping crackdown plunge in 2021)? Some IPOs have not even made it to market like Ant Group, which was set to go public last year before Beijing stepped in, while other listings have faced heavy scrutiny like Chinese giant Tencent (OTCPK:TCEHY).

But… Didi has taken out the competition. Known as the “Uber of China,” it literally bought Uber China from Uber (UBER) in 2016. Uber remains a major pre-IPO shareholder, owning about 12% of the ride-hailing giant, while Didi also has the strong backing of other Asian tech giants. The SoftBank Vision Fund (OTCPK:SFTBY) owns some 20% of the pre-IPO stock and Tencent holds about a 6% stake. Other investors include Alibaba (BABA) and Apple (AAPL), which both have executives on Didi’s board.

ICE vs. EV

As governments across the globe advance greener transport legislation to meet climate targets, a question that continues to surface is how much cleaner are electric vehicles (EVs) than traditional automobiles with an internal combustion engine (NYSE:ICE). Estimates exploring the carbon gap have to cover thousands of parameters, such as the extraction and processing of minerals for EV batteries and the production of power cells. Other considerations are based on “after-sale” elements like the type of power used to charge an EV or the fuel dynamics and upkeep of a gasoline car.

Bigger picture: It’s a little complex to delve into all the variables, so it may be easier to divide them between the “building” of the vehicles and their “maintenance.” Compared to gasoline cars, EVs are not as green when it comes to manufacturing due to the mining of rare earth metals that are needed for their batteries. But once they hit the road, the only thing that contributes to their carbon footprint is the sourcing of their energy, giving them an advantage over gas-powered cars.

Meet the GREET model: The framework created by the Argonne National Laboratory in Chicago, called the “Greenhouse Gases, Regulated Emissions and Energy Use in Technologies,” is being used to help shape policy at the EPA and the California Air Resources Board. Reuters recently took a test drive of the model, stacking up a Tesla (NASDAQ:TSLA) Model 3 versus a Toyota (NYSE:TM) Corolla, with the assumption that both vehicles would travel 173,151 miles during their lifetimes. The scenario also took place in the U.S., where 23% of electricity comes from coal-fired plants.

Results? Even before hitting the road, the analysis showed that the production of a mid-sized EV generated 8.1M grams of CO2 during the extraction and manufacturing process, more than the 5.5M grams for a comparable gasoline vehicle. One would also have to drive another 13,500 miles in a Model 3 – the average mileage motorists drive each year – before breaking even with the Corolla in terms of emissions. Tesla then pulls ahead… At Year 5, the Model 3 has emitted a total of 17M grams of carbon emissions (vs. 30M for the Corolla) and at Year 10, it has released 25M grams (compared to the 52M produced by the Toyota vehicle).

Not every country is the same: If the Model 3 was being driven in Norway, which gets most of its electricity from renewable hydropower, the breakeven point would come after 8,400 miles. Compare that to the 78,700 miles needed to reach carbon parity in nations like China and Poland, which generate the majority of their power from coal.

Today’s Economic Calendar

7:00 MBA Mortgage Applications
8:00 Fed’s Bostic Speech
8:15 ADP Jobs Report
9:45 Chicago PMI
10:00 Pending Home Sales
10:00 State Street Investor Confidence Index
10:30 EIA Petroleum Inventories
11:00 Survey of Business Uncertainty
1:00 PM Fed’s Barkin Speech
3:00 PM Farm Prices

Companies reporting earnings today »

What else is happening…

SpaceX (SPACE) prepared to spend $30B on Starlink (STRLK) – Musk.

All-time high: Moderna (NASDAQ:MRNA) jab effective against Delta variant.

U.S. senator encourages people to buy Bitcoin for retirement.

New online store… Shopify (NYSE:SHOP) cuts app store fees for developers.

Facebook’s (NASDAQ:FB) Zuckerberg unveils newsletter-product ‘Bulletin.’

Pain and no gain! Beachbody (BODY) gives back post-SPAC gains.

Southern California spot gas prices soar in confronting heatwave.

Shell (NYSE:RDS.A), Renault (OTCPK:RNLSY) weigh investment in EV charging.

Turnaround setback… Intel (NASDAQ:INTC) delays new data center processor.

Mizuho cites names pushing AI toward a $1T chip market.

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Good morning. Happy Tuesday.

The Asian/Pacific markets closed mostly down. Thailand did well, but Japan, China, Hong Kong and Singapore posted moderate losses. Europe, Africa and the Middle East are currently split. The UK, Denmark, France, Germany, South Africa, Finland, India and Sweden are doing well; Poland, Turkey, Russia, Greece and Hungary are weak. Futures in the States point towards a flat open for the cash market.

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VIDEO: How to Play Bottoming Formations
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The dollar is up. Oil is up; copper is down. Gold and silver are down. Bonds are down. Bitcoin is up.

Stories/News from Seeking Alpha…

Antitrust dismissed (for now)

Thinking of putting in a bid for Facebook (FB)? You better have deep pockets. Like, $1T deep. The social networking giant climbed above a $1T valuation on Monday, as a federal judge took the company’s side in an antitrust suit. The dismissal marks a big blow to the state and federal movement against Big Tech, which has cited alleged abuses in the corporate giants’ massive market power.

Backdrop: The Federal Trade Commission sued the company last December, along with attorneys general from 48 states, saying Facebook had employed a systematic strategy to eliminate threats to its monopoly. Those included the 2012 and 2014 acquisitions of Instagram and WhatsApp, which – mind you – the FTC previously cleared. The agency and states were seeking a forced divestiture of the social services, as well as other remedies.

Judge James Boasberg dismissed the FTC’s case as too vague, but gave the agency a chance to amend its complaint with more clarity (it has until July 29). As for the states, the judge said the attacks on Facebook’s acquisitions are “barred by the doctrine of laches, which precludes relief for those who sleep on their rights.” He also ruled that the states’ challenge to Facebook’s policy of preventing interoperability with competing apps “failed to state a claim under current antitrust law, as there is nothing unlawful about having such a policy.”

Outlook: The antitrust efforts are not stopping here. The White House is said to be developing an executive order that will ask government agencies to consider antitrust concerns in decision making, following news earlier this month of a five-bill package of bipartisan legislation seeking to rein in Big Tech. Last week, new Federal Trade Commission Chairperson and Big Tech critic Lina Khan also reportedly named three top staffers, which are likely to get more aggressive on antitrust policy.

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Reconsidering reflation

Big Tech and growth stocks led the market higher on Monday as the reflation trade took a backseat. Traders are now wondering if that will be the case going forward after the Fed caught some off-guard two weeks ago when it projected earlier rate hikes than it had previously forecast. Overnight, stock futures inched between gains and losses, though the major averages are still holding near record highs.

Hedge funds that bet big on the reflation trade, like Caxton Associates, did experience some losses following the Fed’s announcement on June 16 (its $2B Macro fund is down 8% since the meeting). Investors are also reassessing how to think of inflation and the growth outlook if the FOMC is open to pivoting on its monetary policy. The central bank previously signaled it would look past rapidly rising consumer prices, before opening the door to two interest rate hikes in 2023.

Sticking to their guns: “Nothing in our view has changed. We are all in on the reflation trade,” said Bob Michele, chief investment officer at JPMorgan Asset Management. “We think there is a lot of growth and inflationary pressures that are building in the economy… [and] we are only halfway through the reopening domestically.”

New chapter: “The breakout to new highs in Growth was the catalyst to push the S&P 500 to new highs,” noted JC O’Hara, chief market technician at MKM Partners. “We see the situation where Growth may continue to outperform Value in the weeks ahead.”

Consumer confidence: Fresh figures from The Conference Board will be published this morning and could signal how much optimism Americans have about economic conditions. That could help gauge their readiness to spend on goods and services, as well as the stock market’s direction. Economists have forecast the Consumer Confidence Index will tick higher in June after holding relatively steady since February.

Record heat

There are some crazy temperatures being felt across the U.S. Pacific Northwest, triggering some power outages and more wildfires. The extreme weather is also threatening more vulnerable populations like the elderly and homeless, as well as those without air conditioning. Only about 44% households in Seattle have AC, according to the U.S. Census Bureau, as the climate there is usually temperate (highs in June average 71 degrees).

New records: The extreme temperatures began at the weekend, with mercury in the Emerald City hitting an all-time high of 108 degrees Fahrenheit on Monday. According to the National Weather Service, it was also the first time Seattle topped 100 degrees for multiple days in a row. Meanwhile, temperatures in Portland, Oregon, soared to 116 F, while the heat wave is now moving into Idaho, where temperatures above 100 are forecast in Boise for the next week.

The severe weather comes about a week after record temperatures hit parts of the Great Plains to coastal California, which exacerbated an existing drought situation. The scorching conditions were caused by an extended “heat dome” that traps hot ocean air over a certain area and blocks the jet stream. Meteorologists warn that extreme weather is becoming more common, while scientists are still researching the differences, connections and to what levels these patterns are linked to human-generated behavior and longer-term climate patterns.

Prime chilling: The record-breaking heat wave has prompted Amazon (NASDAQ:AMZN) to turn part of its Seattle headquarters into a “public cooling center.” The facility is located at the Amazon Meeting Center, which is part of the company’s South Lake Union campus and has room for up to 1,000 individuals. Earlier this year, the same site was converted into a pop-up clinic to administer COVID-19 jabs, assisting with the broader U.S. vaccine rollout.

New space race

The battle for space is heating up among the world’s most popular billionaires, with Sir Richard Branson’s Virgin Galactic (NYSE:SPCE) receiving FAA clearance last week to fly paying customers into the thermosphere. The stock has been on a tear since the approval on Friday, with many traders and the WallStreetBets crew banding together for the rocket ride. In fact, shares are up a total of 36% to $54 over the last three sessions and are 250% higher than their May low.

Cue the Star Wars soundtrack: Rumor has it that Branson could make it to space before rival Jeff Bezos blasts off in his Blue Origin (BORGN) rocket on July 20. UBS even sees an incremental positive for Galactic if the company flies Branson on its next test flight, saying it could be a catalyst for a faster opening of the company’s sales campaigns. “I think part of how they’re shaping the competition is by putting themselves on the line as part of the face of the competition,” said Victoria Samson of the Secure World Foundation.

The two companies will get people to suborbital space in different ways. Galactic uses a carrier aircraft to fly its space plane high above Earth, while Blue Origin uses a rocket-launched capsule (it’s also looking to diversify its business by sending payloads into orbit via New Glenn). “In general, every mission that goes up, every rocket that’s launched, every bit of progress we make does drive down costs, makes space more affordable [and] accessible to everybody,” added Shift4 Payments’ Jared Isaacman, who is partnering with SpaceX (SPACE) to lead the first all-civilian mission into orbit later this year.

Go deeper: Taking ownership of the heavens is not only limited to space travel and tourism, but also the infrastructure that could change how we operate on Earth. Today, Elon Musk will take the virtual podium at the Mobile World Congress in Barcelona to discuss progress on Starlink’s (STRLK) global connectivity plan. The SpaceX subsidiary is hoping to avoid the fate of similar satellite ventures that preceded it (i.e. bankruptcy) after launching its “Better Than Nothing Beta program” in the U.S. last October. While data speeds have been advertised at 150 megabits per second, some users have complained of connectivity and reliability issues that have long plagued satellite internet.

Today’s Economic Calendar
8:55 Redbook Chain Store Sales
9:00 Fed’s Barkin Speech
9:00 S&P CoreLogic Case-Shiller Home Price Index
9:00 FHFA House Price Index
10:00 Consumer Confidence

Companies reporting earnings today »

What else is happening…

United (NASDAQ:UAL) announces largest order in the airline’s history.

Nations impose new restrictions to curb Delta variant.

Wells Fargo (NYSE:WFC) plans big buybacks, to double dividend.

Cathie Wood’s ARK Invest to help launch a Bitcoin ETF.

Meme favorite AMC (NYSE:AMC) finds itself back in the headlines.

Etsy (NASDAQ:ETSY) jumps on deal to acquire Brazil’s Elo7.

Solar stocks rally to two-month high as restriction fears ease.

Juul (JUUL) agrees to pay $40M in North Carolina vaping settlement.

FAA tells Boeing (BA) its 777X is not ready for certification.

EV upstart Electric Last Mile Solutions (NASDAQ:ELMS) pops on Nasdaq debut.

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Good morning. Happy Monday. Hope you had a good weekend.

The Asian/Pacific markets were mixed, with Malaysia and Indonesia (both down) being the only big movers. Europe, Africa and the Middle East are currently mostly down, but losses aren’t extreme. Denmark and Finland are up, but the Uk, Turkey, Germany, Greece, South Africa, Poland, Norway, Hungary, Spain and Austria are down. Futures in the States point towards a positive open for the cash market.

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VIDEO: How to Play Bottoming Formations
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The dollar is up. Oil is up; copper is down. Gold is down; silver is up. Bonds are up. Bitcoin is up.

Stories/News from Seeking Alpha…

Gene editing history

Gene editing stocks are starting the week with a big advance following a major breakthrough for the industry. Early trial data from Intellia Therapeutics (NASDAQ:NTLA), whose shares are up 33% premarket to $117, released interim data from a phase 1 trial of a CRISPR candidate showing the ability to genetically edit cells inside a liver. The data was presented today at the 2021 Peripheral Nerve Society Annual Meeting and in the New England Journal of Medicine.

What happened? CRISPR technology, which stands for Clustered Regularly Interspaced Short Palindromic Repeats, was previously restricted to editing cells outside the body or in the eye. It also faced challenges like sticking molecular scissors into the body or slicing DNA in a select number of tissues. This time around, researchers injected a CRISPR drug into the blood of people born with transthyretin amyloidosis, a destructive disease that causes fatal nerve and heart disease. The results showed that the editing technology was able to nearly shut off production of the toxic protein generated by their livers by knocking the gene’s activity.

While it’s too early to tell whether the CRISPR treatment will ease symptoms of the disease, or if other problems will surface over time, there’s still a lot to be excited about. “The allure and the promise of CRISPR is this notion that you can change any gene, anyhow, anywhere in the genome, so long as you can get it there. And that last proviso is the key one,” declared Intellia CEO John Leonard. “This is the first time CRISPR has ever been infused into a patient and the first time we’ve been able to target a gene successfully.”

On the move premarket: Beam Therapeutics (NASDAQ:BEAM) +12%; Editas Medicine (NASDAQ:EDIT) +11%; CRISPR Therapeutics (NASDAQ:CRSP) +8%; ARK Genomic Revolution ETF (BATS:ARKG) +2.5%; Regeneron (NASDAQ:REGN) +1.7%.

Regulatory crackdown continues

Over the weekend, the Financial Conduct Authority, the U.K.’s financial regulator, barred Binance Markets from Britain. It’s one of the most noteworthy moves by a Western regulator to date and follows a recent crackdown on crypto mining in China and elsewhere. Binance Markets is an affiliate of the world’s largest cryptocurrency exchange Binance, but is no longer “permitted to undertake any regulated activity in the U.K.”

The concerns: In January, the FCA has required all crypto-related services to register and show that they meet anti-money laundering standards. Since then, just five companies have registered and the majority of them are still not yet compliant. A statement from the FCA also included a warning about crypto volatility. “Be wary of adverts online and on social media promising high returns on investments in cryptoasset or cryptoasset-related products.”

Binance Markets must also remove its advertising and make clear on its website and social media that it’s no longer permitted to operate in the U.K. Bitcoin (BTC-USD) has turned higher since the news, rising 5.5% over the past 24 hours to $34,480. While the bans could make it harder for the currency to achieve widespread adoption, they could also increase crypto demand for the exact same reason. DeFi revolution?

Save the date: In an interesting conversation taking place over Twitter, Elon Musk and Jack Dorsey agreed to discuss Bitcoin with each other at a cryptocurrency event on July 21. The gathering, called The B Word, offers a “live experience and a library of content to the investor community, enabling a more informed discussion about the role Bitcoin can serve for institutions across the globe.” Dorsey has also said it will “help protect and spread what makes #bitcoin open development so perfect.”

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Little changed

The major averages are hovering close to record highs after the S&P 500 notched its largest weekly advance since February. Traders appear to be growing more confident that U.S. inflation trends are not a sustained economic threat or may be disregarding the concerns altogether. At the time of writing, Dow futures are down 0.1%, while contracts linked to the S&P 500 and Nasdaq were 0.1% and 0.2% higher, respectively.

Bigger picture: Some market participants expect a quiet week ahead of the latest jobs snapshot on Friday. The report, expected to show the economy adding 683,000 jobs in June, is the next piece of data that could shed light on wage inflation and the worker shortage as pandemic-era unemployment benefits taper off in some states. Trading volumes could also be lower in the coming sessions, with many traders taking an early vacation ahead of the July 4 holiday weekend.

On the infrastructure front, President Biden walked back (clarified) a declaration made last week that he would refuse to sign the latest $579B bipartisan bill if it didn’t come with a reconciliation package. As opposed to the first measure that’s focused on physical infrastructure, the second bill would include funding for issues like childcare, healthcare and climate change, or what administration officials have called “human infrastructure.” The latter would be passed through a Senate process called reconciliation, which doesn’t require Republican votes.

Analyst commentary: “The bipartisan infrastructure agreement hammered out in Washington, D.C., last week appears to stand some chance of becoming a reality,” wrote John Stoltzfus, chief investment strategist at Oppenheimer Asset Management. “This program could serve the country near and longer term in generating job creation, boost economic growth, underpin corporate revenue and earnings growth and increase the ability of the US to compete with other nations in the still relatively new but hypercompetitive 21st Century.”

Opioid pullback

Johnson & Johnson (JNJ) has agreed to stop selling opioid medications across the country as part of a nearly $230M settlement with New York over the company’s alleged role in contributing to the nation’s opioid crisis. Payments to the state would be made over nine years. In addition, J&J would have to pay an additional $30M in the first year if Gov. Andrew Cuomo signs into law a bill that was approved by the New York legislature creating an opioid settlement fund.

Quote: “The opioid epidemic has wreaked havoc on countless communities across New York state and the rest of the nation, leaving millions still addicted to dangerous and deadly opioids,” said New York Attorney General Letitia James. “Johnson & Johnson helped fuel this fire, but today they’re committing to leaving the opioid business – not only in New York, but across the entire country.”

Under terms of the deal, J&J is prohibited from promoting opioids through sales representatives and disciplining those reps for not meeting sales quotas. The company is also prohibited from lobbying lawmakers on opioids at the federal, state or local levels. J&J opioid products are manufactured by the company’s Janssen division and include Duragesic (fentanyl patch) and Nucynta (tapentadol), though J&J says both are no longer sold in the U.S.

Fine print: The agreement removes Johnson & Johnson from a trial involving opioid manufacturing and distribution set to begin tomorrow in Long Island, N.Y. While that lawsuit involves Teva Pharmaceutical (TEVA), McKesson (MCK), and Walgreens (WBA), J&J still faces similar cases in other states. The latest settlement “is not an admission of liability or wrongdoing by the company,” according to J&J, but is rather consistent with a prior agreement from October 2020 that includes an all-in settlement of $5B to resolve opioid claims from “states, cities, counties and tribal governments.”

Paving the EV future

The European Commission is discussing a zero-emissions target for cars sold beyond 2035, according to a new report from Politico. “That would not only mean the end of the internal combustion engine, but also the end of plug-in hybrids,” explained Hildegard Müller, head of Germany’s VDA car lobby. It would also force the EV revolution upon European automakers, though some are already planning moves of their own.

Start your electric motors! Germany’s Volkswagen (OTCPK:VWAGY) just announced it will stop selling combustion engine cars in Europe by 2035 and aims for the region’s electric cars to account for 70% of total sales by 2030. Ceasing sales of ICE vehicles in the United States and China will occur “somewhat later,” according to VW board member Klaus Zellmer, and by 2050 – at the latest – the entire fleet should be carbon neutral. “South America and Africa will take a good deal longer due to the fact that the political and infrastructure framework conditions are still missing.”

Volkswagen isn’t the only carmaker getting serious about emissions targets. Ford (NYSE:F) has already said it will only sell EVs in Europe by 2030, Volvo (OTCPK:GELYF) is retiring the ICE automobile and hybrids by the same year and Honda (NYSE:HMC) announced plans to phase out gas-powered cars by 2040. Meanwhile, Stellantis (NYSE:STLA) is no longer planning to invest in the development of new internal combustion engines, while General Motors (NYSE:GM) will stop building polluting vehicles by 2035. Some seem not as prepared, like VW’s German rivals – Daimler (OTCPK:DDAIF) and BMW (OTCPK:BAMXF).

Go deeper: Countries and cities are also revving up their green goals when it comes to EVs. The U.K. plans to end the sale of ICE vehicles by 2030 and plug-in hybrids by 2035, France has set a 2040 phase-out date, while Norway is the most ambitious nation with a 2025 deadline. Over in the U.S., California has banned the sale of gas-powered vehicles by 2035 and a dozen other states are looking at similar legislation.

Today’s Economic Calendar
9:00 Fed’s Williams Speech
10:30 Dallas Fed Manufacturing Survey
11:00 Fed’s Harker Speech Outlook
1:10 PM Fed’s Quarles Speech

Companies reporting earnings today »

What else is happening…

Experts are already taking J&J (NYSE:JNJ) COVID booster shots.

Pfizer (NYSE:PFE), Moderna (NASDAQ:MRNA) vaccines now include heart condition warning.

Order books are closing on Didi Global’s (DIDI) mega IPO.

Alpha Tactics: Bitcoin (BTC-USD) death cross? Not a time to worry.

Nvidia (NASDAQ:NVDA) gets chipmaker support for planned $40B ARM purchase.

Commercial real estate in Sunbelt fared best post-pandemic.

Zillow (NASDAQ:Z) CEO says stock price appreciation doesn’t reflect reality.

U.S. May spending/income decline amid rising inflation.

Tesla (NASDAQ:TSLA) recalls 285K cars in China for online software fix.

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