Chinese watchdogs are considering unprecedented penalties for tech giant Didi. Stark figures highlight the effectiveness of Covid vaccines. A Saudi Prince vows to unearth every last drop of oil. Here’s what you need to know.
Chinese regulators are considering perhaps unprecedented penalties for Didi. Regulators see the ride-hailing giant’s U.S. IPO decision as a challenge to Beijing’s authority. Chinese officials from various government agencies have started an investigation on-site at the company’s offices, with regulators weighing a range of potential punishments, including a fine, suspension of certain operations or the introduction of a state-owned investor. Didi is quickly becoming one of the worst IPOs of the year. Shares dropped 11% to $10.20 at the close in New York. The IPO offer price was $14. Here’s how an obscure cyber agency became the nemesis of China’s tech giants.
Asian stocks look set for a cautious start after U.S. shares edged up and Treasuries climbed as traders digested mixed economic data and the latest spate of earnings. Equity futures dipped in Australia and Hong Kong. Japan is closed for a holiday. The S&P 500’s biggest three-day advance since April took the gauge closer to a new peak, with technology firms like Microsoft leading the advance, while cyclical stocks lagged. Longer-term Treasuries snapped a two-day decline and strong demand for an auction of 10-year inflation-protected securities produced a record-low yield. The dollar was little changed
A tale of two countries highlights the vast discrepancy in suffering between nations with high and low vaccination rates. After a recent streak of 50,000 cases a day, Indonesia is seeing hospitals run low on oxygen and drugs and more than 1,000 virus fatalities every day. In the U.K., however, 50,000 cases a day has an entirely different impact: restrictions have been lifted, masks are out and around 50 people are dying each day. The difference? Vaccinations. Meanwhile, travel bubbles across Asia have been destroyed by delta; “ridiculous” vaccine myths are slowing shots in the U.S.; and younger people are being infected in increasing numbers in Singapore. Finally, here’s why the vaccinated are still at risk from Covid-19.
Saudi Prince Abdulaziz bin Salman sees it as his destiny: to ensure that the last barrel of oil on the face of the Earth comes from a Saudi well. As he proclaimed in June during a private event organized by Bank of America: “We are still going to be the last man standing, and every molecule of hydrocarbon will come out.” All of this has huge implications for the world’s energy markets at a time when, in erecting a fortress to safeguard oil, Abdulaziz and Saudi Arabia seem to be on the wrong side of history.
When a nearly empty National Stadium in Tokyo lights up on Friday evening in Japan to mark the beginning of the delayed Summer Olympics, Covid-19’s scar on the event will be glaring. Covid is only the latest, albeit biggest, challenge for an Olympics that’s been mired in drama for nearly a decade, from a scrapped stadium design to a bribery probe. The latest in a series of PR disasters came when Olympics bosses were forced to fire the director of the opening after a decades-old video emerged of him joking about the Holocaust. Can anything else go wrong for the strangest Olympics the world has ever seen?
What We’ve Been Reading
This is what’s caught our eye over the past 24 hours:
And finally, here’s what Tracy’s interested in today
At first glance, the prospect of billions of dollars of infrastructure spending from the Biden administration at a time when concerns about inflation are rising would appear ill-timed. But there's a new narrative beginning to show up from Washington: infrastructure spending and other forms of investment could actually reduce inflation. To wit, President Joe Biden made comments in a Town Hall on Thursday saying exactly that. "If we pass the other two things I'm trying to get done, we will in fact reduce inflation,” he said.
To understand the argument, consider the sources of recent inflation spikes: things like a semiconductor shortage, overcrowded ports thanks to a U.S. import boom, canals that are prone to getting clogged up and so on. Or check out the below excerpt from a recent Odd Lots episode, in which Anton Posner and Margo Brock — CEO and President of logistics company Mercury Resources — discuss how a crumbling bridge over the Mississippi was adding to transportation gridlock:
Anton: So, you know, it certainly leads into the infrastructure discussion, right? So we're seeing, you know, the I40 bridge right in Memphis falling apart. And it stopped up the barge traffic on the Mississippi River for days because of chunks of a bridge falling. Not only that, but trucks couldn’t transit over it. So we're seeing everything collide.
Margo: Anton, no chunks fell off the bridge,
Anton: You're right. It wasn't chunks. It was a crack in the steel.
Margo: They said it was a crack. It was a crack you could see daylight through. It was kind of massive. Nothing fell into the river.
Anton: Either way I don’t want to be on a tugboat under it, put it that way,
The suggestion is that we’re paying more for goods and services right now thanks to crumbling infrastructure and a lack of investment in key industries like semiconductors. Crowded ports and falling bridges means goods can’t travel by barge up the Mississippi, adding to price pressures as manufacturers compete for other types of transport. A lack of U.S. semiconductor plants means car production gets cut and prices for existing cars go up enough to form a significant chunk of the recent headline increase in CPI. Biden’s not alone in thinking this of course, and plenty of mainstream economists have made the same point. But it’s interesting to see the argument gaining traction in DC.
You can follow Tracy Alloway on Twitter at @tracyalloway.
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