Wednesday Morning Reads
- Automatic Visa to Let In Top Talent
- Macau Casinos See $18 Billion Wipeout
- China Evergrande’s Liquidity Crisis Deepens
- Prices Climbed More Slowly in August
- Should Biden Reappoint Jerome Powell?
- U.S. Poverty Fell Last Year
- Food Hasn’t Been This Expensive in Over 50 Years
- A Crack Opens in the App Store Economy
- Smart Robots
- $60 Billion Stock Buyback Program
- Chevron to Triple Low-Carbon Investment
- Peter Thiel Gamed Silicon Valley
- Steve Cohen Throws Himself Into Crypto
The first all-civilian mission to orbit Earth is set to take off tonight, within a five-hour launch window that opens at 8:02 p.m. ET. SpaceX (SPACE) will power the expedition, known as Inspiration4, using one of its Dragon capsules atop a reusable Falcon 9 rocket. It'll also be proof of concept for the broader private spaceflight industry, which hopes to send many more people to space in the coming years and push even deeper into the solar system.
Bigger picture: Inspiration4 will be commanded by Shift4 Payments (NYSE:FOUR) CEO and accomplished pilot Jared Isaacman. While the civilian mission is part of a charity initiative to raise money for St. Jude Children’s Research Hospital, it's being seen as a coming-of-age moment for an adolescent commercial spaceflight market. The crew of four will spend three days in orbit and perform a number of medical experiments like gathering data about their "movement, sleep, heart rate and rhythm, and blood oxygen saturation levels." That information will be crucial for coming missions as more astronauts blast into the heavens (only 600 people have been to space in history).
The latest endeavor supported by SpaceX will go well beyond the International Space Station at a height of 360 miles above Earth. That compares to the recent flights of Virgin Galactic's (NYSE:SPCE) Richard Branson (50 miles up) and Blue Origin's (BORGN) Jeff Bezos (65 miles up), who squabbled over the definition of space during their suborbital flights in July. "We'd like to see aircraft like - airline, like - operations from a human spaceflight perspective, and so this chance to have our first commercial all-civilian flight is awesome," said Benji Reed, SpaceX director of human spaceflight.
Snapshot: Interest in space has been growing at an exponential rate, especially in the public markets. Many space companies have already closed SPAC deals to go public this year, including Redwire (NYSE:RDW), AST SpaceMobile (NASDAQ:ASTS), Astra (NASDAQ:ASTR), Spire Global (NYSE:SPIR), Momentus (NASDAQ:MNTS) and Rocket Lab (NASDAQ:RKLB). Last month, satellite launch company Virgin Orbit announced another merger with SPAC NextGen Acquisition Corp. II (NASDAQ:NGCA), while Cathy Wood launched the ARK Space Exploration ETF (BATS:ARKX) earlier this year.
Funding the industry: From 2000 to 2018, space startups drew $22.6B in investment, but that number has jumped rapidly over the last few years, according to a report from BryceTech. Space startups saw $6.5B of inflows in 2019, while 2020 brought in about $7.6B in investment (around 6% came from going public via SPACs). In fact, 342 investors invested in over 120 upstarts last year, with nine companies bringing in 80% of the total funding.
Outlook: Congress has restricted the FAA from regulating the safety of commercial space flights since 2004 to help the sector develop without heavy compliance costs. The policy has been extended several times over the years and now runs until 2023. Crews today fly under a regime known as "informed consent," meaning potential astronauts take on similar risks to skydivers and bungee jumpers. Companies are fighting for share in a space market that will triple in size to more than $1T in annual sales by 2040, according to Morgan Stanley, whose forecast assumes rapid developments in space tourism, moon landings and satellite broadband Internet. (5 comments)
Valuation expert and NYU professor Aswath Damodaran "cannot find" the good points that derive from the recent focus on "environmental, social and governance" for corporations and fund managers. In a series of tweets, the closely followed "Dean of Valuation" argued that the difficulty of determining whether a company or fund was "good" in terms of ESG made the measure difficult to apply and is why services disagree on ESG rankings and scores.
The thread: "It will not get easier over time, because we have different value systems. Your measure of 'goodness' will not match mine and the evidence on ESG's effect on value is muddled. A stronger case can be made that companies should not be bad, (because they will face higher funding costs and failure risk) than that they should spend money to be good. If good firms have lower funding costs, arguing that investing in good companies will earn higher returns is internally contradictory, and incoherent, since the link between ESG & returns is more a reflection of pricing than it is of how ESG affects value," continued Damodaran, who is also a Seeking Alpha contributor.
"In the old model, companies focused on business, investment funds on returns, and shareholders chose how much, and who to give to, in society. In the ESG model, companies and fund managers make those choices instead... not clear how or why society benefits. Why is ESG being sold so aggressively? Because accountants, measurement services, fund managers & consultants are on the ESG gravy train, with stockholders & taxpayers paying. Corporate CEOs are buying into ESG, because it makes them accountable to no one. Bring your moral code into your own business & investment decisions, but investing other people's money to advance what you view as 'good' is hubris. Accept that being good is more likely to cost & inconvenience, than to help, you, and be okay with that."
Go deeper: In 2020, BlackRock (BLK) - one of the industry's most prominent supporters of sustainable investing - pledged to put environmental stewardship at the heart of how it invests its nearly $9T in assets. While the company did make big progress on its goals last year, there has still been quite a bit of criticism. Some say the asset manager is still way behind its peers in Europe, which are being much harder on companies around climate change issues and stewardship, while the company has also been accused of "greenwashing" in the past. BlackRock has also pledged to integrate ESG into all of its actively managed portfolios, though more than half of its assets are managed passively. (11 comments)
At the Morgan Stanley Global Healthcare Conference on Tuesday, Pfizer (PFE) said expects to apply for U.S. authorization of its COVID-19 vaccine for children aged between six months and five years old in November. The timeline assumes "all of the data is positive," noted Pfizer CFO Frank D'Amelio. The drugmaker, which developed its vaccine in partnership with BioNTech (BNTX), already said it planned to apply for approval from the FDA for children aged between five and 11 years old in early October.
Bigger picture: Rising COVID-19 infections and hospitalization levels in the U.S. have prompted calls for vaccines to be made available for children, especially as schools and childcare facilities reopen in the fall. Others are hesitant or more skeptical, especially for a population that is not as affected by severe cases of the virus.
According to the most recent data in the U.S., hospitalization rates among children aged four or younger were just 2.2 per 100,000, compared with 15.8 per 100,000 among over-65s. But in the week ending August 14, the hospitalization rate among children aged four and under was nearly 10x the level of the week ending June 26, per the CDC.
Less potent: In the clinical trials conducted by Pfizer/BioNTech, children aged between six months and five years old were given a 3 microgram vaccine. That compares to the 10 microgram dose for those aged five to 11, and 30 micrograms for adults 12 and older. (8 comments)
Looking to fuel growth this holiday season, Apple (AAPL) hosted its "California streaming" fall hardware event on Tuesday, introducing its new iPhone 13 lineup, the Watch Series 7 and two iPad refreshes. Shares of Apple, as well as supplier stocks, dipped about 1% during the show, while AT&T (T) was quick out of the gate to offer promotions like free new iPhone Pros for some users. As the dust settled, Wedbush's Dan Ives called the 1TB iPhone 13 a "potential game changer," while Satori Fund's Dan Niles said he was shorting Apple in the wake of its product announcements.
iPhone 13: The lineup will consist of four models, two base and two Pro, with the same sizes as last year's iPhone 12 family. Entry-level models include the 5.4-inch iPhone 13 Mini and 6.1-inch iPhone 13 priced at $699 and $799, respectively, with 128GB, 256GB and 512GB storage configurations. As expected, the primary iPhone 13 upgrades are a bigger battery, camera improvements and the faster A15 Bionic processor, which Apple said offers "the fastest CPU in any smartphone, up to 50% faster than the leading competitor." At the top of the price range, the iPhone 13 Pro will get 1 terabyte of storage for $1,499, while the 1TB Pro Max will have a price tag of $1,599.
iPad: The new base model (starting at $329) will include the A13 Bionic processor, offering "three times faster performance than the average Chromebook and six times faster than the bestselling Android tablet." The base model also inherits ultrawide camera and Center Stage tracking, while featuring a powerful neural engine that will better support functions like Live Text. Apple separately updated its iPad Mini ($499) for the first time since early 2019, gaining 5G support, new color options, rounded corners, better CPU, and a screen size of 8.3 inches (from 7.9 inches). iPad sales have experienced a resurgence during the pandemic due to remote learning, streaming TV/movies and videogames.
Watch Series 7: The device, which was reportedly delayed by production issues, was announced at the event on schedule, but availability will be "later this fall" for $399. The main upgrade was the display size, with the smaller Watch model moving from 40-millimeters to 41-millimeters and the larger from 44-millimeters to 45-millimeters. The wearables also offer 18 hours of battery life, the same as the Watch Series 6 from last year. (97 comments)
In Asia, Japan -0.5%. Hong Kong -1.8%. China -0.2%. India +0.8%.
In Europe, at midday, London +0.1%. Paris -0.4%. Frankfurt -0.1%.
Futures at 6:20, Dow +0.2%. S&P +0.2%. Nasdaq +0.3%. Crude +1.5% at $71.53. Gold -0.2% at $1803.10. Bitcoin +3.6% at $47483.
Ten-year Treasury Yield unchanged at 1.28%
Today's Economic Calendar
What else is happening...
Transitory relief? Core CPI rises 0.1% in August, smallest increase since February.
Macau casino stocks slump amid heightened government supervision.
Palladium slides below $2,000/oz. to lowest close in 14 months.
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