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The investors: Should they have done more homework? Ahead of the IPO, several reports suggested China was ramping up pressure on its Internet companies, including DiDi, and was pushing more antitrust scrutiny of its homegrown tech firms. Back in April, Beijing also imposed sweeping restrictions on the fast-growing financial divisions of companies like DiDi, as well as stricter compliance on listing abroad, curbs on information monopolies and the gathering of personal data. (67 comments) 
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Tech
The Pentagon on Tuesday canceled its $10B Joint Enterprise Defense Infrastructure cloud contract, also known as JEDI, which had become a bone of contention between Amazon (AMZN) and Microsoft (MSFT). The deal aimed to provide the Defense Department with a centralized "secure cloud environment to rapidly access computing and storage capacity to address warfighting challenges at the speed of relevance." It would also upgrade its technology for managing data located across thousands of networks and data centers.
Backdrop: Amazon Web Services was considered the frontrunner for the contract before the DoD handed it to Microsoft in 2019. AWS didn't back down. The company alleged in a lawsuit that the award was tainted by then-President Trump's animus against Jeff Bezos and related litigation threatened to delay the deal for years. There was also a slew of objections from Congress, prompting the Pentagon to acknowledge that advances in cloud computing and the timeframe of the contract could render the scheme obsolete.
"The evolving landscape is what has driven our thinking," said John Sherman, the Pentagon's acting chief information officer. "JEDI was the right approach at the time," but with changing circumstances "we're in a different place."
Outlook: The Pentagon is now planning a multi-vendor approach, where more cloud providers including Google (GOOG, GOOGL), Oracle (NYSE:ORCL) and IBM (NYSE:IBM) will be allowed to bid for the new contract. The new deal, known as the Joint Warfighter Cloud Capability, is also scheduled to run no more than five years. Bidders are expected to be identified by about October, with the new contract expected to be awarded in spring 2022. (42 comments)
Backdrop: Amazon Web Services was considered the frontrunner for the contract before the DoD handed it to Microsoft in 2019. AWS didn't back down. The company alleged in a lawsuit that the award was tainted by then-President Trump's animus against Jeff Bezos and related litigation threatened to delay the deal for years. There was also a slew of objections from Congress, prompting the Pentagon to acknowledge that advances in cloud computing and the timeframe of the contract could render the scheme obsolete.
"The evolving landscape is what has driven our thinking," said John Sherman, the Pentagon's acting chief information officer. "JEDI was the right approach at the time," but with changing circumstances "we're in a different place."
Outlook: The Pentagon is now planning a multi-vendor approach, where more cloud providers including Google (GOOG, GOOGL), Oracle (NYSE:ORCL) and IBM (NYSE:IBM) will be allowed to bid for the new contract. The new deal, known as the Joint Warfighter Cloud Capability, is also scheduled to run no more than five years. Bidders are expected to be identified by about October, with the new contract expected to be awarded in spring 2022. (42 comments)
Bonds
A prolonged drop in U.S. Treasury yields is catching bond and fixed income traders by surprise, as well as other investors in the broader financial markets. The 10-year U.S. Treasury yield dropped below 1.3% on Wednesday - before attempting a rebound at the end of the week - despite lingering concerns about rising inflation and a gradual removal of Fed stimulus. Treasury yields play an important role in the economy, affecting borrowing costs on everything from mortgages to corporate bonds.
What's happening? While the move has mystified many traders, some are ascribing the reverse to changing narratives and new developments.
"The market is sort of taking a deep breath," said Subadra Rajappa, head of U.S. rates strategy at Société Générale. "Are those optimistic forecasts [for economic growth and inflation] actually achievable?"
"All that seems to be implying that perhaps not only was the inflation transitory, but maybe some of the growth has been transitory," added Kathy Jones, Schwab's chief fixed income strategist.
"The muscle memory of markets is that governments will lock down again [due to the Delta variant] if they see cases rise, which means slower growth and that we are caught in a loop," explained Charles Diebel, head of fixed income at Mediolanum International Funds.
"Tuesday's [weaker] ISM reading just added more motivation to extend the move in Treasury yields lower," declared Ian Lyngen, interest rate strategist at BMO Capital Markets.
"A reduction in the Treasury General Account, which the U.S. government uses to run most of its day-to-day business, is being wound down, shrinking the supply of bonds," proclaimed John Luke Tyner, fixed-income analyst at Aptus Capital Advisors.
"A big portion of what we are seeing is a capitulation of the higher rates thesis," J.P. Morgan wrote in a research note. "Some short covering has occurred, but the breadth of bearish duration positions remains on par with 2017-2018."
Go deeper: Most analysts had expected 10-year Treasury yields to hit around 2% by this point in the COVID economic recovery, or at least by the end of 2021. In the first quarter alone, the yield soared from 0.9% to nearly 1.75% as the reflation trade took hold of the markets, but it looks like the move lower is now staying firmly in the opposite direction. Longer-term yields are also a closely watched economic barometer, with the rates tending to fall on a weakening growth outlook. (202 comments)
What's happening? While the move has mystified many traders, some are ascribing the reverse to changing narratives and new developments.
"The market is sort of taking a deep breath," said Subadra Rajappa, head of U.S. rates strategy at Société Générale. "Are those optimistic forecasts [for economic growth and inflation] actually achievable?"
"All that seems to be implying that perhaps not only was the inflation transitory, but maybe some of the growth has been transitory," added Kathy Jones, Schwab's chief fixed income strategist.
"The muscle memory of markets is that governments will lock down again [due to the Delta variant] if they see cases rise, which means slower growth and that we are caught in a loop," explained Charles Diebel, head of fixed income at Mediolanum International Funds.
"Tuesday's [weaker] ISM reading just added more motivation to extend the move in Treasury yields lower," declared Ian Lyngen, interest rate strategist at BMO Capital Markets.
"A reduction in the Treasury General Account, which the U.S. government uses to run most of its day-to-day business, is being wound down, shrinking the supply of bonds," proclaimed John Luke Tyner, fixed-income analyst at Aptus Capital Advisors.
"A big portion of what we are seeing is a capitulation of the higher rates thesis," J.P. Morgan wrote in a research note. "Some short covering has occurred, but the breadth of bearish duration positions remains on par with 2017-2018."
Go deeper: Most analysts had expected 10-year Treasury yields to hit around 2% by this point in the COVID economic recovery, or at least by the end of 2021. In the first quarter alone, the yield soared from 0.9% to nearly 1.75% as the reflation trade took hold of the markets, but it looks like the move lower is now staying firmly in the opposite direction. Longer-term yields are also a closely watched economic barometer, with the rates tending to fall on a weakening growth outlook. (202 comments)
Space
The next leg of the billionaire space race commences this weekend, with Sir Richard Branson journeying to the edge of space in Virgin Galactic's (NYSE:SPCE) VSS Unity spaceplane. The flight on Sunday will come just nine days before Jeff Bezos is scheduled to blast into the thermosphere and the rivalry is quickly turning into a cold war. Branson has denied the scheduling was a contest to see who would go up first, while Blue Origin (BORGN) has said the two companies aren't even after the same prize. "We wish him a great and safe flight, but they're not flying above the Karman line and it's a very different experience," CEO Bob Smith told the NYT.
Note: The Karman line is the unofficial altitude at which space begins, and starts at 100 kilometers, or 62 miles, above Earth's mean sea level. The measure is named after Theodore von Kármán (1881–1963), a Hungarian American engineer and physicist who was active in aeronautics and astronautics. While the exact marking is subject to debate, he was the first person to determine the altitude at which the atmosphere becomes too thin to support aeronautical flight.
What will the flight look like? The VSS Unity will be carried aboard a so-called mothership aircraft, known as WhiteKnightTwo, which will release the plane at an altitude of 49,000 feet (Blue Origin uses a rocket-launched capsule). At that point, VSS Unity reaches supersonic speed within 8 seconds and climbs vertically until 55 miles above Earth. The plane will then hover at the top of its flight path, giving passengers a few minutes of weightlessness, before re-entering Earth's atmosphere and landing on a runway at Spaceport America, New Mexico. The entire show is expected to take about 90 minutes from takeoff to landing.
Sunday's flight will not only be a make-or-break moment for Virgin Galactic, but for the company's shares as well. If all goes well, expect a rocket ride on Monday morning, though there is plenty that can go wrong. The engine could fail, the cabin could lose pressure or Earth's atmosphere could hamper the space vehicle. Back in 2014, the same spaceplane model suffered a crash that killed a test pilot, when a descent mechanism was triggered at the same time the rocket climbing. There's also the threat that the flight gets called off or weather-related issues postpone the takeoff.
The stock: Options bets on the outcome of the flight could be risky as shares continue their wild ride. SPCE soared 17% to the $52-level on Thursday after a volatile last few weeks. Wall Street is mixed on the stock, with four out of 10 analysts rating Galactic at Buy, five Neutral and one Bearish on the company. "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.
Outlook: Galactic's journey will be the fourth test flight for the company and the first with a crew of four on board. It 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, but another 400 have expressed an interest in booking when sales fully reopen in 2021. While space tourism is expensive for now, it is seen as a means of getting more people interested in the industry for the long term, as well as investing in satellite infrastructure that could change the way we operate on Earth. (18 comments)
Note: The Karman line is the unofficial altitude at which space begins, and starts at 100 kilometers, or 62 miles, above Earth's mean sea level. The measure is named after Theodore von Kármán (1881–1963), a Hungarian American engineer and physicist who was active in aeronautics and astronautics. While the exact marking is subject to debate, he was the first person to determine the altitude at which the atmosphere becomes too thin to support aeronautical flight.
What will the flight look like? The VSS Unity will be carried aboard a so-called mothership aircraft, known as WhiteKnightTwo, which will release the plane at an altitude of 49,000 feet (Blue Origin uses a rocket-launched capsule). At that point, VSS Unity reaches supersonic speed within 8 seconds and climbs vertically until 55 miles above Earth. The plane will then hover at the top of its flight path, giving passengers a few minutes of weightlessness, before re-entering Earth's atmosphere and landing on a runway at Spaceport America, New Mexico. The entire show is expected to take about 90 minutes from takeoff to landing.
Sunday's flight will not only be a make-or-break moment for Virgin Galactic, but for the company's shares as well. If all goes well, expect a rocket ride on Monday morning, though there is plenty that can go wrong. The engine could fail, the cabin could lose pressure or Earth's atmosphere could hamper the space vehicle. Back in 2014, the same spaceplane model suffered a crash that killed a test pilot, when a descent mechanism was triggered at the same time the rocket climbing. There's also the threat that the flight gets called off or weather-related issues postpone the takeoff.
The stock: Options bets on the outcome of the flight could be risky as shares continue their wild ride. SPCE soared 17% to the $52-level on Thursday after a volatile last few weeks. Wall Street is mixed on the stock, with four out of 10 analysts rating Galactic at Buy, five Neutral and one Bearish on the company. "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.
Outlook: Galactic's journey will be the fourth test flight for the company and the first with a crew of four on board. It 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, but another 400 have expressed an interest in booking when sales fully reopen in 2021. While space tourism is expensive for now, it is seen as a means of getting more people interested in the industry for the long term, as well as investing in satellite infrastructure that could change the way we operate on Earth. (18 comments)
U.S. Indices
Dow +0.2% to 34,870. S&P 500 +0.4% to 4,370. Nasdaq +0.4%, to 14,702. Russell 2000 -1.3% to 2,275. CBOE Volatility Index +7.4% to 16.18.
S&P 500 Sectors
Consumer Staples +0.4%, Utilities +0.9%, Financials -0.6%, Telecom -0.4%, Healthcare +0.4%, Industrials +0.2%, Information Technology +0.9%, Materials +0.2%, Energy -3.4%, Consumer Discretionary +1.5%.
World Indices
London 0.% to 7,122. France -0.4% to 6,529. Germany +0.2% to 15,688. Japan -2.9% to 27,940. China +0.2% to 3,524. Hong Kong -3.7% to 27,274. India -0.2%to 52,386.
Commodities and Bonds
Crude Oil WTI -0.7% to $74.63/bbl. Gold +1.4% to $1,808.6/oz. Natural Gas -0.6% to 3.678. Ten-Year Treasury Yield +0.5% to 133.39.
Forex and Cryptos
EUR/USD +0.11%. USD/JPY -0.79%. GBP/USD +0.58%. Bitcoin -2.8%. Litecoin -4.6%. Ethereum -3.9%. Ripple -6.8%.
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