TheChek News Flow

* Cover Story When GameStop, BlackBerry (BB), and Blockbuster started rising last January, it seemed like only a matter of time before they would crash. Yet, half a year later and the so-called core ‘meme stocks’ “are still trading at levels considered outrageous by people who have studied them for years. New names like Clover Health Investments (CLOV) and Newegg Commerce (NEGG) have recently popped up on message boards, and their stocks have popped, too.” Retail traders, derided as ‘the dumb money’ have “forced the naysayers to capitulate.”

* Tech Trader: Keeping track of your network is a major challenge of modern computing. That’s because the latest information-technology systems “are a messy brew of public clouds, private clouds, old-school data centers, third-party apps, edge computing, and mobile workers. Keeping tabs on what’s working—and what isn’t—is a gigantic challenge. The good news for investors is that the result is an enormous emerging market.” Until recently, users would resort to ‘Infrastructure management tools.’ But the market now uses the term “observability” to describe these tools. Companies like Datadog (ticker: DDOG), Dynatrace (DT), Elastic (ESTC), and Splunk (SPLK) provide observability tools to help IT departments monitor their networks’ health.

* Trader : Because of a quirk, the two publicly traded classes of Alphabet stock are trading at different levels. The nonvoting shares class, whose ticker is GOOG, trades at a premium of 3% to the voting stock, whose ticker is GOOGL. It’s best for investors to choose the class A voting stock.

* Interview: Dallas Fed President, former Harvard Professor and 23-year veteran of Goldman Sachs, Robert Kaplan was the first to speak up publicly, from a small cadre of Federal Reserve officials, about the need to start tightening monetary policy. “Kaplan isn’t a voting member of the Federal Open Market Committee (the central bank’s policy-setting arm) this year, but he will be in 2023. Kaplan is wary of rising inflation, which he views as more persistent than do some of his colleagues, and he is warning of excessive risk-taking and the unintended consequences of policy that is too loose for too long.”

* Profile: Be “greedy when others are fearful and fearful when others are greedy.” That’s ‘standard’ investment advice, but China’s leader Xi Jinping “seems determined to disprove the axiom.” Xi has set his sights on leading technology companies, launching a new and tougher regulatory framework “in what appears to be, at a minimum, an effort to control data on Chinese citizens at home and perhaps also abroad.” These moves, also serve as “rough reminders to China’s increasingly high-profile technocrats that Xi is more powerful than anyone.”

* Features: 1) Luminar Technologies (LAZR) stock may have dropped in 2021, losing about 40% - compared to the S&P gaining 16%, but “director Matthew Simoncini recently bought a large block of shares of the developer of technology to enable self-driving cars.” Luminar went public after it merged with a special-purpose acquisition company in December. The company makes LIDAR sensors, which use lasers “to measure the surroundings of autonomous vehicles.” 2) Virgin Galactic (SPCE) founder Richard Branson is heading to space on July 11 when he will take off from Virgin’s spaceport in New Mexico at about 9.00 am EST. And his flight to space “could be a monumental moment for the fledgling space tourism industry.” Branson, company mission specialists, and pilots, will be the first to take a “passenger trip to space, beating Jeff Bezos’s Blue Origin passenger flight by more than a week.” 3) The recent cyberattack perpetrated during the July 4 weekend on security software provider Kaseya, affecting anywhere between 800 and 1,500 businesses, “exposed what some analysts say will be a growing and evolving threat, boosting their expectations for spending on cybersecurity to the benefit of stocks in the sector.” Cybercrime appears to favor “targeting service providers and supply chains, since hackers know they can affect a large group of people with a single attack.”

* European Trader: EBay has sold all of its classified-advertising business to Norway’s Adevinta last June “in a cash and stock deal that will let the online auctioning group boost its stock buyback program to $5 billion from $2 billion.” Credit Suisse, in a note initiating coverage, says that “Adevinta is an outperform as the world’s largest pure-play classifieds group, and its 210 kroner ($24.03) target is the second highest of sell-side firms, according to data from S&P Capital IQ.”

* Emerging Markets: Barron’s suggests that tech stocks “are not the only Chinese assets that have crashed lately.” Paul Lukaszewski, head of Asia Pacific corporate debt at Aberdeen Standard Investments says that Investors should consider that “spreads on B-rated corporate bonds, which run inversely to price, have jumped by seven percentage points over the past month or so.” “Outside of Asia, credit markets are priced for perfection,” Lukaszewski says. “In China, it’s priced for a meltdown.”

* Commodities: Steel prices have been on a positive trajectory (rising from some $500 to $1,600 per short ton) during the recovery thanks to tight supply, and this has also fueled the price of steel stocks. United States Steel and Cleveland-Cliffs have gained between twice and three times the S&P 500 index’s 15% gain this year, respectively, while Nucor is up nearly 80%. Credit Suisse analyst Curt Woodworth says that “steel stocks aren’t cooling down soon.” Woodworth believes that “the rebirth of the U.S. steel sector is a real event.”

* Streetwise: In late June, Facebook achieved a market value of $1 trillion, becoming just one of five U.S.-listed companies have reached the this mark, “or 0.08% of the total number of stocks currently traded on the New York Stock Exchange and Nasdaq. That’s roughly the odds of a high school basketball player making the National Basketball Association. It’s an elite club.” But, Facebook’s market cap fell slightly in the past week to $980 billion. And “we might be waiting a while for the next entrant. That’s partly because the federal government wants to rein in big business, but also because the current trillion-dollar members have a natural incentive to keep the club small.”

White House looks to regulatory agencies like the FTC to adopt tougher policies to rein in the power of large tech platforms

WASHINGTON—President Biden’s sweeping new competition order targets big tech companies in ways that could fundamentally alter how they do business.

But it will fall to government agencies to carry out the order, and they could take years to put its ideas into action. The Federal Trade Commission that already has Big Tech companies in its sights is likely to become a particular battleground.

A core thrust of the order is to encourage regulatory agencies such as the FTC to adopt new rules and policies to rein in the growing size and power of large tech platforms such as Amazon.com Inc., Alphabet Inc.’s Google and Facebook Inc. That could prove to be a tall order for the FTC, the principal federal regulator of internet commerce. Some observers say the agency—which had its sails trimmed by Congress in the deregulatory era of the 1970s and 1980s—has struggled to keep up with unfair practices online, particularly in the areas of user privacy, big data and tech mergers.

As the White House detailed its executive order, one Democratic FTC commissioner, Rebecca Kelly Slaughter, said in a tweet, “So excited about @POTUS’s EO on competition; it is an ambitious agenda that will help our markets work better and create a more equitable economy for all people - esp workers, marginalized communities, entrepreneurs, small biz.”

Gary Shapiro, chief executive of the Consumer Technology Association that counts Apple Inc., Facebook and Google among its members, defended the tech industry as competitive and vibrant and took issue with the White House’s action.

“Elements of this executive order threaten our global leadership and hard-won success,” he said, taking aim, in particular, at scrutiny of past mergers and acquisitions. “Prohibiting these acquisitions will dry up venture capital, harm entrepreneurs and small businesses and make our economy less competitive.”

America’s biggest tech companies, Microsoft Corp. Google, Amazon, Facebook and Apple, declined to comment or didn’t immediately respond to a request for comment. They have, in the past, defended their business practices and said they don’t harm consumers.

One of the most far-reaching parts of the order encourages the FTC to establish new rules on online surveillance and the accumulation of users’ data. That could have significant effects on all the big platform companies. A White House fact sheet says that “many of the large platforms’ business models have depended on the accumulation of [extraordinary] amounts of sensitive personal information and related data.”

The executive action also pushes the FTC to establish rules barring “unfair methods of competition on internet marketplaces.” The directive doesn’t call out individual companies, but Amazon, Apple and Google have been in the crosshairs of lawmakers or regulators for the power they wield over parts of their business.

The White House said that companies that run retail marketplaces “can see how small businesses’ products sell and then use the data to launch their own competing products,” and can also “display their own copycat products more prominently than the small businesses’ products.”

The Biden administration also is taking aim at deal making by platforms it views as dominant and trying to fend off future competition. Over the past decade, the White House said, “the largest tech platforms have acquired hundreds of companies—including alleged ‘killer acquisitions’ meant to shut down a potential competitive threat.”

Proposed deals will now undergo tighter scrutiny, particularly in cases such as those involving a nascent competitor. The policy also aims to focus more scrutiny on mergers involving the accumulation of data, competition through free products and effects on user privacy.

FTC Chair Lina Khan and the head of the Justice Department’s antitrust division, Richard A. Powers, in a joint statement said, “We plan soon to jointly launch a review of our merger guidelines with the goal of updating them to reflect a rigorous analytical approach consistent with applicable law.”

TechNet, a network of tech executives and investors, said in a statement that the order’s provisions could discourage innovation and harm consumers.

“They put at risk free services that consumers use to message and call loved ones, get directions, connect with healthcare professionals, consume online content—including news and educational content—and much more,” said TechNet Senior Vice President Carl Holshouser.

The White House also encourages the FTC to adopt rules against anticompetitive restrictions on using independent repair shops or making do-it-yourself repairs of devices. That could have a particular impact on device manufacturers such as Apple that limit who can fix devices such as iPhones without voiding warranties.

Other parts of the order focus on how users are treated by telecommunications companies that provide internet service. The order notes that more than 200 million U.S. residents live in areas with only one or two reliable high-speed internet providers, leading to much higher prices than in markets with more options.

Developing rules to implement the executive order is likely to be a “a long, contentious process that would ultimately end in litigation,” said Robert Kaminski of policy research firm Capital Alpha Partners.

- The increase in the inflation target is minimal; people needn't fear higher inflation

- A target of two per cent has an important function: it creates space so that our monetary policy can have its stabilizing effect.

- Our inflation target is symmetric: inflation may sometimes be slightly above it or below

- "The Governing Council supported this unanimously...Unanimous means unanimous."

- Inflation in Germany is now relatively high on account of the pandemic. We will see this as of July – precisely one year after the reduction in value added tax – when prices will be particularly high compared to last year, but only because prices were reduced at that time. The recovery in oil prices has a similar effect. The Deutsche Bundesbank forecasts that inflation will reach just over four per cent in Germany towards the end of this year, but will already fall again significantly next year. Given such short-term fluctuations, the ECB’s monetary policy is oriented towards medium-term price developments – across the entire euro area. Our medium-term inflation projection is subdued: only 1.4 per cent in 2023. Though that is surrounded by uncertainty, I am sure that we will not experience excessively high inflation.

- Whether inflation rises sustainably ultimately hinges on whether wages also rise and amplify inflation through second-round effects. So far we have seen little evidence of that

- We are yet to decide on the concrete effects that the new strategy will have on our current monetary policy stance. It is clear that we must achieve our medium-term inflation target in a sustainable manner. Bond purchases are part of our standard toolkit.-

White House looks to regulatory agencies like the FTC to adopt tougher policies to rein in the power of large tech platforms

WASHINGTON—President Biden’s sweeping new competition order targets big tech companies in ways that could fundamentally alter how they do business.

But it will fall to government agencies to carry out the order, and they could take years to put its ideas into action. The Federal Trade Commission that already has Big Tech companies in its sights is likely to become a particular battleground.

A core thrust of the order is to encourage regulatory agencies such as the FTC to adopt new rules and policies to rein in the growing size and power of large tech platforms such as Amazon.com Inc., Alphabet Inc.’s Google and Facebook Inc. That could prove to be a tall order for the FTC, the principal federal regulator of internet commerce. Some observers say the agency—which had its sails trimmed by Congress in the deregulatory era of the 1970s and 1980s—has struggled to keep up with unfair practices online, particularly in the areas of user privacy, big data and tech mergers.

As the White House detailed its executive order, one Democratic FTC commissioner, Rebecca Kelly Slaughter, said in a tweet, “So excited about @POTUS’s EO on competition; it is an ambitious agenda that will help our markets work better and create a more equitable economy for all people - esp workers, marginalized communities, entrepreneurs, small biz.”

Gary Shapiro, chief executive of the Consumer Technology Association that counts Apple Inc., Facebook and Google among its members, defended the tech industry as competitive and vibrant and took issue with the White House’s action.

“Elements of this executive order threaten our global leadership and hard-won success,” he said, taking aim, in particular, at scrutiny of past mergers and acquisitions. “Prohibiting these acquisitions will dry up venture capital, harm entrepreneurs and small businesses and make our economy less competitive.”

America’s biggest tech companies, Microsoft Corp. Google, Amazon, Facebook and Apple, declined to comment or didn’t immediately respond to a request for comment. They have, in the past, defended their business practices and said they don’t harm consumers.

One of the most far-reaching parts of the order encourages the FTC to establish new rules on online surveillance and the accumulation of users’ data. That could have significant effects on all the big platform companies. A White House fact sheet says that “many of the large platforms’ business models have depended on the accumulation of [extraordinary] amounts of sensitive personal information and related data.”

The executive action also pushes the FTC to establish rules barring “unfair methods of competition on internet marketplaces.” The directive doesn’t call out individual companies, but Amazon, Apple and Google have been in the crosshairs of lawmakers or regulators for the power they wield over parts of their business.

The White House said that companies that run retail marketplaces “can see how small businesses’ products sell and then use the data to launch their own competing products,” and can also “display their own copycat products more prominently than the small businesses’ products.”

The Biden administration also is taking aim at deal making by platforms it views as dominant and trying to fend off future competition. Over the past decade, the White House said, “the largest tech platforms have acquired hundreds of companies—including alleged ‘killer acquisitions’ meant to shut down a potential competitive threat.”

Proposed deals will now undergo tighter scrutiny, particularly in cases such as those involving a nascent competitor. The policy also aims to focus more scrutiny on mergers involving the accumulation of data, competition through free products and effects on user privacy.

FTC Chair Lina Khan and the head of the Justice Department’s antitrust division, Richard A. Powers, in a joint statement said, “We plan soon to jointly launch a review of our merger guidelines with the goal of updating them to reflect a rigorous analytical approach consistent with applicable law.”

TechNet, a network of tech executives and investors, said in a statement that the order’s provisions could discourage innovation and harm consumers.

“They put at risk free services that consumers use to message and call loved ones, get directions, connect with healthcare professionals, consume online content—including news and educational content—and much more,” said TechNet Senior Vice President Carl Holshouser.

The White House also encourages the FTC to adopt rules against anticompetitive restrictions on using independent repair shops or making do-it-yourself repairs of devices. That could have a particular impact on device manufacturers such as Apple that limit who can fix devices such as iPhones without voiding warranties.

Other parts of the order focus on how users are treated by telecommunications companies that provide internet service. The order notes that more than 200 million U.S. residents live in areas with only one or two reliable high-speed internet providers, leading to much higher prices than in markets with more options.

Developing rules to implement the executive order is likely to be a “a long, contentious process that would ultimately end in litigation,” said Robert Kaminski of policy research firm Capital Alpha Partners.

Guggenheim Partners and Nuveen among managers who held out against consensus

Bond fund managers who bucked a market consensus earlier this year that long-term interest rates and inflation were headed sharply higher have been rewarded with outsize performance during the market switchback of the past few weeks.

Star managers including Scott Minerd at Guggenheim Partners and Stephen Liberatore of Nuveen are riding high in industry league tables, after US Treasury yields plunged as low as 1.25 per cent this week, compared with a peak above 1.7 per cent at the end of March.

Markets have come round to the view that the global economic rebound will soon decelerate, and the US Federal Reserve is unlikely to lose control of inflation.

“Ultimately the market ran too far in front of the recovery,” said Liberatore, lead portfolio manager for Nuveen’s fixed income strategies, whose core impact bond managed accounts have outperformed all their peers since the end of March.

“We are more likely to go below 1 per cent [on the 10-year] than we are to be substantially above 1.5 or 1.75 per cent,” he said.

Two Guggenheim funds managed by Minerd and his team are also among the five best performing intermediate bond funds since the end of the first quarter, according to Morningstar, with total returns above 4 per cent.

At the start of March, when the 10-year note was still four weeks shy of its peak and his funds were receiving a drubbing, Minerd, global chief investment officer at Guggenheim, made the case for contrarians.

“The foregone conclusion today is that long-term rates are on an uninterrupted trajectory higher,” he said then. “History tells us something different.”

Minerd argued vast stimulus from governments and central banks would ultimately result in accumulated savings, which would eventually find a home in financial markets and drive Treasury yields lower.

His funds are now positive for the year and ahead of the Bloomberg Barclays US Aggregate index, the main fixed income benchmark for investors. The Aggregate has recovered 2.6 per cent from the start of April for a total return of minus 0.8 per cent in 2021 so far.

A steady decline in yields since the start of the second quarter accelerated sharply this month, which market participants attributed to a liquidation of short positions by hedge funds and other momentum-orientated traders whose bets had turned against them.

PGIM’s total return bond fund, managed by Robert Tipp, has rebounded 4.15 per cent after a tough first quarter and is now ahead of the benchmark, as he remained steadfast in his view that long-dated Treasuries were headed lower.

“The market was banking on a dovish contingency at the Fed,” Tipp said, who would allow the economy to run hot, pushing up inflation and reducing the value of long-dated bonds. That narrative stalled last month, he said, when Fed officials opened the door to raising rates in 2023, earlier than previously expected.

Mark Lindbloom, who manages the Western Asset core plus bond fund echoed that view. “We do not believe the Fed today, or in the future will sacrifice its credibility” from taming inflation in the 1980s, he said.

Companies with 1m users will need to pass review to ensure sensitive data cannot be obtained by foreign regulators

Big Chinese companies that have the data of more than 1m users will need to pass a security review before issuing shares on overseas stock exchanges, the country’s internet regulator said on Saturday.

The announcement from the Cyberspace Administration of China came less than a week after the State Council, China’s cabinet, and the Chinese Communist party’s Central Committee said a new regulatory regime was needed to police overseas listings, which had previously escaped strict government oversight.

President Xi Jinping’s administration is most concerned about listings in the US, where more than 30 Chinese firms raised a record $12.4bn in the first half of this year, according to data from Dealogic.

The CAC’s edict confirmed its status as a powerful entity under the emerging regulatory regime for Chinese overseas listing. The regulator will inform IPO applicants if they have passed its data security review within 60 business days, but the process may take twice as long if there are disagreements.

On July 2, China’s internet regulator told Didi Chuxing, China’s largest ride-hailing group, to stop signing up new users on data security grounds, just days after it had completed a $4.4bn IPO on the New York Stock Exchange.

The CAC had wanted Didi to at least delay its US IPO, but had no legal powers to force it to so. The regulator was concerned the group’s data, including the locations of sensitive government buildings and installations, could be obtained by foreign regulators.

US has passed legislation compelling foreign companies to comply with domestic audits within three years or face forced delisting, but Beijing has ordered Chinese groups to not do so. US politicians have pointed to the Didi saga as justification for tighter oversight of Chinese companies listed in New York.

Didi’s shares fell more than 20 per cent on Tuesday, their first day of trading after the CAC’s intervention.

The CAC also banned downloads of the car hailing group’s main app last Sunday. The previous night, it extended the ban to 25 more Didi-related apps.

In another sign of the increased clampdown China’s technology giants, the country’s market regulator also vetoed a Tencent-proposed merger on Saturday that would have created a dominant video game streaming operator.

The State Administration of Market Regulation said the merger of two US-listed Tencent units, DouYu and Huya, would have created an entity controlling more than 70 per cent of the market.

Tencent, which also operates the popular WeChat messaging app and one China’s largest online payment services, proposed the merger in October, just weeks before Xi’s administration blocked a $37bn initial public offering by Jack Ma’s internet finance platform, Ant Group, which would have been the largest ever. DouYu and Huya have a combined market value of $5.3bn.

The blocking of Ant’s IPO was the first salvo in a wide-ranging crackdown that has ensnared tech giants including Ma’s ecommerce flagship, Alibaba, Tencent and Didi.

Tencent, Didi’s third-largest shareholder with a 6.8 per cent stake, said it had accepted the regulators’ decision on the DouYu-Huya merger and would “fulfil our social responsibilities”. Tencent had previously been fined for not seeking regulatory approval of some acquisitions.

Scott Yu, an antitrust expert at Zhong Lun Law in Beijing, said it was the first time the market regulator had blocked a domestic merger. “It will make other companies more cautious in assessing antitrust prospects,” he said.

Tencent’s business is surging despite the crackdown. For the first quarter it reported a better than expected 25 per cent year-on-year increase in revenues, to Rmb135bn ($20.8bn).

Jeff Bezos speaking to press in front of a Blue Origin space system

Bezos, shown here in 2017, recently said he would fly to space on July 20th. Hours later, Branson announced his own plans for such a journey—nine days before Bezos’s.Photograph by Nick Cote / NYT / Redux

Rich men don’t like to lose. Last month, the Amazon founder Jeff Bezos announced that he was leaving Earth in July. He would be going to space for eleven minutes on a rocket ship built by his company, Blue Origin. Space travel, he said, in a hype video posted to Instagram, was the thing he’d wanted to do all his life. Bezos didn’t seem to be exaggerating. “I am really interested in space exploration, but the truth is, it’s some number of years off,” he told an Amazon employee, back in 1996. Selling books online, Bezos said, was something “to do in the meantime.”

The meantime took longer than Bezos had hoped. He created Blue Origin in 2000, before Elon Musk had SpaceX or Richard Branson had Virgin Galactic. But Branson beat him by first putting an astronaut into space, in 2018; Musk beat him by first putting a rocket into orbit, in 2010; and Musk, the recipient of a giant nasa contract to build a lunar lander, will likely beat him to the moon.

Bezos is eager to steal a win from his rivals. The announcement of his coming mission, on July 20th, coinciding with the anniversary of the Apollo moon landing, would do just that. Bezos would achieve something that neither Branson nor Musk has yet done: he would put himself into space.

Bezos will not be going alone: he plans to take his brother, Mark; the as yet unidentified winner of an auction who paid twenty-eight million dollars for a seat; and an eighty-two-year-old female pilot named Wally Funk, who, in the early sixties, along with twelve other women, was put through the same rigorous tests to which nasa was subjecting its male astronauts. The privately funded program was cancelled, Funk and the other women went home, and her dream of becoming an astronaut died. Or so she thought. “I can hardly wait!” Funk said, in another video that Bezos put on Instagram.

As of his announcement last month, Bezos appeared on the verge of triumph. Branson, his main suborbital challenger, wasn’t due to fly on Virgin Galactic’s rocket ship until the company completed at least one more test flight. But Branson, a showman as much as a businessman, is not one to cede the stage. Only hours after Bezos posted the video of Funk’s joy, Branson broke some news of his own: he would be on the next Virgin Galactic flight—nine days before Bezos. (The flight is scheduled for this Sunday; Stephen Colbert will host the live cast, and Khalid will perform a new song for the occasion.) So much for stealing a win. “The billionaire space race is heating up,” the Washington Post said. Branson has subsequently tried to downplay the rivalry, asserting that what appears to be a ploy to leapfrog Bezos is just “an incredible, wonderful coincidence,” adding, in a separate interview, “I’ve never seen this as a race.”

Nonsense. In the past, Branson has stated his ambitions plainly. “I hope that Virgin Galactic will be the first of the three entrepreneurs fighting to put people into space to get there,” he said, in 2018. I spent four years inside Virgin Galactic, first for this magazine and then for my new book, “Test Gods: Virgin Galactic and the Making of a Modern Astronaut.” Branson’s employees know the game. “It was always important for us to be first and beat Blue,” a former Virgin Galactic executive told me. In 2015, shortly after Blue Origin conducted a successful test flight, Mike Moses, Virgin Galactic’s president, said, “I look at their timeline and see that they have a good shot at beating us.” But “beating us” to where? The space race is actually many races: Musk versus Bezos to Mars, Musk versus Bezos to the moon, and Bezos versus Branson to shuttle tourists to the low edge of space.

Bezos and Branson have unique visions for their respective shuttle services. Blue Origin uses a traditional, vertical-launch configuration; Virgin Galactic flies a winged rocket ship that is launched into the air from a mother ship. Blue Origin is mostly automated; Virgin Galactic is mostly analog, with its ships flown by élite test pilots, the type familiar to fans of “The Right Stuff.” Mark Stucky, Virgin Galactic’s lead test pilot, once described Blue Origin to me. “They’ve got some astronauts,” he said, “but I don’t know what the hell they’re going to do besides act like they’re doing something. It’s ‘Three, two, one—blastoff.’ ”

Bezos and Branson also have different definitions of “outer space.” The edge of space, according to the leading international aerospace body, the Fédération Aéronautique Internationale, is three hundred and twenty-eight thousand feet in the sky. There is nothing magical about three hundred and twenty-eight thousand feet; freeze-dried ice cream tastes bad above or below it.

But, in 1957, when humans began thinking about space travel, an American lawyer named Andrew Haley, the president of the International Astronautical Federation—unrelated to the Fédération Aéronautique Internationale—thought that it would be wise to demarcate space. Haley proposed a “critical jurisdictional line” two hundred and seventy-five thousand feet above sea level, where “airspace” ended and “outer space” began—an imaginary line “separat[ing] the territory of air-breathing vehicles from that of rocket vehicles.” Drawing from the research of a Hungarian-born physicist, Theodore von Kármán, Haley called his line the Kármán Line.

A year later, the Fédération Aéronautique Internationale convened a group of American and Soviet scientists, who proposed their own space boundary: a hundred kilometres, an even number that translated to about three hundred and twenty-eight thousand feet. Haley, curiously, accepted this new boundary and said that it “coincides” with his own, despite being fifty-three thousand feet higher. The Kármán Line has been an invisible obsession for aspiring astronauts ever since. When Scaled Composites, a boutique aviation firm in Mojave, California, was building SpaceShipOne to compete in, and ultimately win, the 2004 Ansari X Prize, they made its tail number N328KF.

Originally, Virgin Galactic’s goal was to reach three hundred and twenty-eight thousand feet. (Branson, upon SpaceShipOne’s victory, hired Scaled Composites to build him a bigger version, with seats for eight—two pilots, six passengers—called SpaceShipTwo.) But, over the years, as engineers made the ship stronger, it has become heavier, and Virgin Galactic has revised its expectations. First it reduced the number of passengers from six to four; then it reconsidered its definition of space, from a hundred kilometres to another round number: fifty miles, or about eighty kilometres.

Virgin Galactic was not the only one rethinking the boundaries of space. Jonathan McDowell, an astrophysicist at Harvard, had been exploring the same question. In October of 2018, he published an article in Acta Astronautica, a peer-reviewed academic monthly, titled “The Edge of Space: Revisiting the Karman Line.” He drew on history, explaining how, in the late fifties, the U.S. Air Force began awarding astronaut wings to pilots who flew above fifty statute miles, and how fifty miles was not only a “nice round figure” but also “the right choice from a physical point of view” because the mesosphere starts about fifty miles above sea level.

McDowell made a scientific argument, too. As von Kármán had done, he contended that our notion of space should begin wherever orbital dynamics exceed aerodynamic forces—wherever an airplane can no longer operate like an airplane—and demonstrated that, based on ballistic coefficients and modern atmospheric models, fifty miles is a “suitable choice to use as the canonical lower ‘edge of space’ in circumstances where such a dividing line between atmosphere and space is desired.” For some, the new line for outer space became fifty miles, or two hundred and sixty-four thousand feet.

Two months after McDowell’s article appeared, Branson was in the Mojave Desert to witness Virgin Galactic’s first space mission. The company’s ship peaked at two hundred and seventy-one thousand feet above sea level—below the Kármán Line but above McDowell’s proposed edge of space. On the way up, while travelling at almost three times the speed of sound, Stucky, the lead test pilot, radioed, “Great motor burn, everybody. We’re going to space, Richard!” Branson shed tears of joy. He later flew to Washington, D.C., to attend a Federal Aviation Administration ceremony where Stucky and his co-pilot received commercial astronaut wings; they were officially astronauts.

Some remained skeptical. Burt Rutan, the founder of Scaled Composites and the designer of SpaceShipOne, is a Kármán fundamentalist. “If SS1 flew only to fifty-nine miles, we would have not considered it space and we would not have won the ten-millon-dollar X Prize,” he said. After Virgin Galactic’s December, 2018, flight, he e-mailed some of the engineers and pilots who had worked on SpaceShipOne to remind them that SpaceShipTwo hadn’t reached the “internationally recognized” boundary of space. “SpaceShipOne remains the only non-government vehicle to fly humans to space,” he wrote.

This all seemed rather petty. Anyone could watch the cockpit footage from Virgin Galactic’s flight and see the blackness of space outside and the blue orb of the Earth below, and how untethered objects floated around the cockpit, and how the ship’s wings were useless in the thin air. It looked like space to me. “It’s public perception,” Moses, Virgin Galactic’s president, told me, in January of 2019. Virgin Galactic may not yet be aiming for the Kármán Line, but he thought that only naysayers and rivals would really care about that technicality if the company succeeded in making commercial space travel a reality.“If we flew twice, we’d never win the battle of eighty [kilometres] versus a hundred [kilometres],” he said. “If we fly eight thousand times, nobody is going to talk about it, because there’s going to be eight thousand flights to eighty kilometres.”

Moses added, “I’ve always been in the mind-set of this only being a problem for our first year. Or if somebody wants to make it our problem.” Perhaps somebody like Bezos? But Moses did not name names. “Neither side wants to turn this into a cold war,” he said.

A month later, Bezos did just that. At a private event at the Yale Club in New York, Bezos was asked about Blue Origin’s rivalry with Virgin Galactic. “We’ve always had as our mission that we wanted to fly above the Kármán Line because we didn’t want there to be any asterisks next to your name about whether you’re an astronaut,” he said. Last week, after Branson’s announcement, the C.E.O. of Blue Origin, Bob Smith, piled on, saying, “We wish [Branson] a great and safe flight, but they’re not flying above the Kármán Line and it’s a very different experience.”

Bezos may not want a cold war, but he’s spoiling for an asterisk war—for anything to undermine his rival. Make no mistake: there is public value in these private space programs, because all ambitious technological ventures spawn new discoveries, anticipated or not. But Bezos and Branson are not research scientists. They are men of mesospheric egos, vying for the same suborbital tourism market, running the same race. If only they could agree on the finish line.

The figures from Australia are in line with evidence from other countries, including the U.K. and Israel

SYDNEY—Early data from Australia’s outbreak of the Covid-19 Delta variant suggest that two vaccine doses offer significant protection against severe illness and hospitalization.

Health authorities in Sydney, Australia’s most populous city that is currently under lockdown because of its Delta outbreak, said Saturday that no one who has received two doses of a vaccine needed to be hospitalized. Of the 47 people now in the hospital, 37 haven’t been vaccinated.

Four people who are in the hospital got one dose of the AstraZeneca PLC vaccine and one person got one dose of the Pfizer Inc. - BioNTech SE vaccine. The other five people received two Pfizer-BioNTech doses—but they are nursing-home residents who were admitted as a precautionary measure.

“Two doses of either the AstraZeneca or the Pfizer vaccine is incredibly effective at preventing hospitalization and death, which is an incredibly positive contribution,” said Kerry Chant, the chief health officer for New South Wales state, which includes Sydney.

The figures from Australia are in line with evidence from other countries, including the U.K. and Israel, showing that vaccines offer a high degree of protection against severe illness from the Delta variant. Recent data from Israel, though, showed the Pfizer vaccine is less effective at protecting against infection from the Delta variant when compared with previous strains, posing a challenge for health authorities as many countries ease coronavirus restrictions as vaccination programs progress.

“Conclusions we can tentatively take from these small NSW numbers is that our experience is likely to be similar to that reported in other countries with larger sample sizes,” said Alex Martiniuk, an epidemiologist and professor at the University of Sydney. That “just underscores the need to vaccinate, quickly, and two doses.”

Despite being small by global standards, Sydney’s outbreak provides a view into how quickly the Delta variant can spread in a lightly vaccinated population despite lockdown measures, mask mandates and social distancing. Nearly 500 people have fallen ill since the outbreak began in mid-June and new cases have climbed in recent days even though the city has been locked down for two weeks. On Saturday, authorities said another 50 people were infected locally, up from 44 a day earlier.

Just 8% of Australia’s population has been fully vaccinated, according to Our World in Data, compared with roughly half in the U.S. and the U.K. and 60% in Israel. Australia has successfully controlled the virus in the past by closing its borders and requiring returning citizens to quarantine in hotels. But its vaccine rollout has been slow in part because the AstraZeneca vaccine—which can be made in Australia—was deemed inadvisable for people under 60 due to fears about rare blood clots.

There have been no deaths tied to the current Delta outbreak in Sydney, but one concern for authorities is the number of relatively young people who have become seriously ill. Eight of the 47 people in the hospital are under 35 and four of the 16 people in intensive care are younger than 50. One person in intensive care is a teenager.

One factor could be that people under 40 are generally not yet eligible to be vaccinated, as Australian authorities focus first on front-line workers and older people, who are considered to be at higher risk of severe illness. Australian officials have said they would like all adults to receive at least their first vaccine dose by the end of the year.

Sydney’s lockdown is supposed to end next week, but officials have said it could be extended. One key metric is whether contact tracers can quickly find close contacts of confirmed cases and have them isolate at home so they don’t spread the virus to others. Officials said Friday that 14,000 people have been considered close contacts and were told to isolate. But on Saturday, they said that 37 of the 50 new cases were out and about for all or part of their infectious period.

“What we are seeing is chains of transmission and we’re having difficulty getting ahead of those chains,” Dr. Chant said Saturday. “We need everyone to stay hunkered down this weekend.”

Semiconductor maker talks of ‘ecosystem-wide project’ as it lobbies for support from bloc

US chipmaker Intel has said investment in its planned new European $20bn semiconductor factory could be spread across several EU member states, as it lobbies to win the bloc’s financial and political support for the project.

Pat Gelsinger, the group’s chief executive, recently met French president Emmanuel Macron and Italian prime minister Mario Draghi to discuss the global chip shortage that has hit industries in Europe and beyond. 

His visit followed signals from the EU that substantial sums could be made available to help the bloc meet a new target to double semiconductor production to 20 per cent of the global market by 2030, including making the most advanced chips. 

Talking to the Financial Times, the chipmaker’s executives suggested there could be “EU-wide benefits” if Intel’s requirements for a new European fabrication plant were met, raising the possibility of spreading the facilities and services to support chip production across multiple member states.

“We could put manufacturing on one site and packaging on another,” said Greg Slater, Intel vice-president of global regulatory affairs, part of the team exploring possibilities for expansion in Europe. Research and development could also be shared across EU countries, while spending with European suppliers would increase “dramatically”.

“We are well placed to make this an ecosystem-wide project, not just a couple of isolated paths in one member state,” he said. “We do believe that this is a project that will benefit Europe at large.” 

As well as financial support, Intel is looking for a site of roughly 1,000 acres with developed infrastructure, which would be capable of supporting up to eight chip fabrication facilities, known as fabs, and which has access to talent. Intel has looked at countries including Germany, the Netherlands, France and Belgium to explore potential for a factory. A decision is expected by the end of the year.

Initially, two fabs would be established, at a total cost of some $20bn for 10 years of operation, he said. Over the lifetime of the plant, total investment could top $100bn, Intel executives have said. 

French officials said Intel was looking at bringing fairly advanced 10 nanometre chip technology, or better, to Europe. Discussions continued over whether this would suit the needs of European customers, who currently rely on more mature technologies. “It takes a lot of money to position yourself to go on the most advanced technologies,” an official said. “We are looking at what is feasible and what is desirable.”

State aid will be crucial to ensuring the factory’s competitiveness. “The cost disadvantage is 30 to 40 per cent with Asia . . . and a lot of that is due to government support,” Slater said.

However, Intel was not just looking for a handout, French officials said. “They are looking at the ecosystem, the location of the site . . . It’s not just a question of what the states will give them in terms of money. It’s a complex set of factors.”

Intel said it was also “factoring in the value of being near European customers that would put us in a better and stronger position to meet their growing demand”.

Thierry Breton, Brussels commissioner for the single market and in charge of industrial strategy, has said Europe should aim eventually to produce the most advanced 2nm chips.

However his ambition has raised concerns that Europe could be wasting money, given the high costs and complexities of producing advanced semiconductors. 

Jacob Wallenberg, one of Europe’s most respected industrialists, told the Financial Times that while he understood the ambition, there were substantial risks. “The question is whether you can ever catch up. It would be unfortunate if we went down a path that costs too much and didn’t really solve the problem.”

Intel is investing $20bn in two new factories in the US and a further $7bn to double the capacity of its plant in Ireland, as part of a multiyear strategy to catch up with Asian semiconductor giants TSMC and Samsung. It is also planning to bring its most advanced 7nm chip production to the Irish site, the group said.

Jeff Bezos speaking to press in front of a Blue Origin space system

Bezos, shown here in 2017, recently said he would fly to space on July 20th. Hours later, Branson announced his own plans for such a journey—nine days before Bezos’s.Photograph by Nick Cote / NYT / Redux

Rich men don’t like to lose. Last month, the Amazon founder Jeff Bezos announced that he was leaving Earth in July. He would be going to space for eleven minutes on a rocket ship built by his company, Blue Origin. Space travel, he said, in a hype video posted to Instagram, was the thing he’d wanted to do all his life. Bezos didn’t seem to be exaggerating. “I am really interested in space exploration, but the truth is, it’s some number of years off,” he told an Amazon employee, back in 1996. Selling books online, Bezos said, was something “to do in the meantime.”

The meantime took longer than Bezos had hoped. He created Blue Origin in 2000, before Elon Musk had SpaceX or Richard Branson had Virgin Galactic. But Branson beat him by first putting an astronaut into space, in 2018; Musk beat him by first putting a rocket into orbit, in 2010; and Musk, the recipient of a giant nasa contract to build a lunar lander, will likely beat him to the moon.

Bezos is eager to steal a win from his rivals. The announcement of his coming mission, on July 20th, coinciding with the anniversary of the Apollo moon landing, would do just that. Bezos would achieve something that neither Branson nor Musk has yet done: he would put himself into space.

Bezos will not be going alone: he plans to take his brother, Mark; the as yet unidentified winner of an auction who paid twenty-eight million dollars for a seat; and an eighty-two-year-old female pilot named Wally Funk, who, in the early sixties, along with twelve other women, was put through the same rigorous tests to which nasa was subjecting its male astronauts. The privately funded program was cancelled, Funk and the other women went home, and her dream of becoming an astronaut died. Or so she thought. “I can hardly wait!” Funk said, in another video that Bezos put on Instagram.

As of his announcement last month, Bezos appeared on the verge of triumph. Branson, his main suborbital challenger, wasn’t due to fly on Virgin Galactic’s rocket ship until the company completed at least one more test flight. But Branson, a showman as much as a businessman, is not one to cede the stage. Only hours after Bezos posted the video of Funk’s joy, Branson broke some news of his own: he would be on the next Virgin Galactic flight—nine days before Bezos. (The flight is scheduled for this Sunday; Stephen Colbert will host the live cast, and Khalid will perform a new song for the occasion.) So much for stealing a win. “The billionaire space race is heating up,” the Washington Post said. Branson has subsequently tried to downplay the rivalry, asserting that what appears to be a ploy to leapfrog Bezos is just “an incredible, wonderful coincidence,” adding, in a separate interview, “I’ve never seen this as a race.”

Nonsense. In the past, Branson has stated his ambitions plainly. “I hope that Virgin Galactic will be the first of the three entrepreneurs fighting to put people into space to get there,” he said, in 2018. I spent four years inside Virgin Galactic, first for this magazine and then for my new book, “Test Gods: Virgin Galactic and the Making of a Modern Astronaut.” Branson’s employees know the game. “It was always important for us to be first and beat Blue,” a former Virgin Galactic executive told me. In 2015, shortly after Blue Origin conducted a successful test flight, Mike Moses, Virgin Galactic’s president, said, “I look at their timeline and see that they have a good shot at beating us.” But “beating us” to where? The space race is actually many races: Musk versus Bezos to Mars, Musk versus Bezos to the moon, and Bezos versus Branson to shuttle tourists to the low edge of space.

Bezos and Branson have unique visions for their respective shuttle services. Blue Origin uses a traditional, vertical-launch configuration; Virgin Galactic flies a winged rocket ship that is launched into the air from a mother ship. Blue Origin is mostly automated; Virgin Galactic is mostly analog, with its ships flown by élite test pilots, the type familiar to fans of “The Right Stuff.” Mark Stucky, Virgin Galactic’s lead test pilot, once described Blue Origin to me. “They’ve got some astronauts,” he said, “but I don’t know what the hell they’re going to do besides act like they’re doing something. It’s ‘Three, two, one—blastoff.’ ”

Bezos and Branson also have different definitions of “outer space.” The edge of space, according to the leading international aerospace body, the Fédération Aéronautique Internationale, is three hundred and twenty-eight thousand feet in the sky. There is nothing magical about three hundred and twenty-eight thousand feet; freeze-dried ice cream tastes bad above or below it.

But, in 1957, when humans began thinking about space travel, an American lawyer named Andrew Haley, the president of the International Astronautical Federation—unrelated to the Fédération Aéronautique Internationale—thought that it would be wise to demarcate space. Haley proposed a “critical jurisdictional line” two hundred and seventy-five thousand feet above sea level, where “airspace” ended and “outer space” began—an imaginary line “separat[ing] the territory of air-breathing vehicles from that of rocket vehicles.” Drawing from the research of a Hungarian-born physicist, Theodore von Kármán, Haley called his line the Kármán Line.

A year later, the Fédération Aéronautique Internationale convened a group of American and Soviet scientists, who proposed their own space boundary: a hundred kilometres, an even number that translated to about three hundred and twenty-eight thousand feet. Haley, curiously, accepted this new boundary and said that it “coincides” with his own, despite being fifty-three thousand feet higher. The Kármán Line has been an invisible obsession for aspiring astronauts ever since. When Scaled Composites, a boutique aviation firm in Mojave, California, was building SpaceShipOne to compete in, and ultimately win, the 2004 Ansari X Prize, they made its tail number N328KF.

Originally, Virgin Galactic’s goal was to reach three hundred and twenty-eight thousand feet. (Branson, upon SpaceShipOne’s victory, hired Scaled Composites to build him a bigger version, with seats for eight—two pilots, six passengers—called SpaceShipTwo.) But, over the years, as engineers made the ship stronger, it has become heavier, and Virgin Galactic has revised its expectations. First it reduced the number of passengers from six to four; then it reconsidered its definition of space, from a hundred kilometres to another round number: fifty miles, or about eighty kilometres.

Virgin Galactic was not the only one rethinking the boundaries of space. Jonathan McDowell, an astrophysicist at Harvard, had been exploring the same question. In October of 2018, he published an article in Acta Astronautica, a peer-reviewed academic monthly, titled “The Edge of Space: Revisiting the Karman Line.” He drew on history, explaining how, in the late fifties, the U.S. Air Force began awarding astronaut wings to pilots who flew above fifty statute miles, and how fifty miles was not only a “nice round figure” but also “the right choice from a physical point of view” because the mesosphere starts about fifty miles above sea level.

McDowell made a scientific argument, too. As von Kármán had done, he contended that our notion of space should begin wherever orbital dynamics exceed aerodynamic forces—wherever an airplane can no longer operate like an airplane—and demonstrated that, based on ballistic coefficients and modern atmospheric models, fifty miles is a “suitable choice to use as the canonical lower ‘edge of space’ in circumstances where such a dividing line between atmosphere and space is desired.” For some, the new line for outer space became fifty miles, or two hundred and sixty-four thousand feet.

Two months after McDowell’s article appeared, Branson was in the Mojave Desert to witness Virgin Galactic’s first space mission. The company’s ship peaked at two hundred and seventy-one thousand feet above sea level—below the Kármán Line but above McDowell’s proposed edge of space. On the way up, while travelling at almost three times the speed of sound, Stucky, the lead test pilot, radioed, “Great motor burn, everybody. We’re going to space, Richard!” Branson shed tears of joy. He later flew to Washington, D.C., to attend a Federal Aviation Administration ceremony where Stucky and his co-pilot received commercial astronaut wings; they were officially astronauts.

Some remained skeptical. Burt Rutan, the founder of Scaled Composites and the designer of SpaceShipOne, is a Kármán fundamentalist. “If SS1 flew only to fifty-nine miles, we would have not considered it space and we would not have won the ten-millon-dollar X Prize,” he said. After Virgin Galactic’s December, 2018, flight, he e-mailed some of the engineers and pilots who had worked on SpaceShipOne to remind them that SpaceShipTwo hadn’t reached the “internationally recognized” boundary of space. “SpaceShipOne remains the only non-government vehicle to fly humans to space,” he wrote.

This all seemed rather petty. Anyone could watch the cockpit footage from Virgin Galactic’s flight and see the blackness of space outside and the blue orb of the Earth below, and how untethered objects floated around the cockpit, and how the ship’s wings were useless in the thin air. It looked like space to me. “It’s public perception,” Moses, Virgin Galactic’s president, told me, in January of 2019. Virgin Galactic may not yet be aiming for the Kármán Line, but he thought that only naysayers and rivals would really care about that technicality if the company succeeded in making commercial space travel a reality.“If we flew twice, we’d never win the battle of eighty [kilometres] versus a hundred [kilometres],” he said. “If we fly eight thousand times, nobody is going to talk about it, because there’s going to be eight thousand flights to eighty kilometres.”

Moses added, “I’ve always been in the mind-set of this only being a problem for our first year. Or if somebody wants to make it our problem.” Perhaps somebody like Bezos? But Moses did not name names. “Neither side wants to turn this into a cold war,” he said.

A month later, Bezos did just that. At a private event at the Yale Club in New York, Bezos was asked about Blue Origin’s rivalry with Virgin Galactic. “We’ve always had as our mission that we wanted to fly above the Kármán Line because we didn’t want there to be any asterisks next to your name about whether you’re an astronaut,” he said. Last week, after Branson’s announcement, the C.E.O. of Blue Origin, Bob Smith, piled on, saying, “We wish [Branson] a great and safe flight, but they’re not flying above the Kármán Line and it’s a very different experience.”

Bezos may not want a cold war, but he’s spoiling for an asterisk war—for anything to undermine his rival. Make no mistake: there is public value in these private space programs, because all ambitious technological ventures spawn new discoveries, anticipated or not. But Bezos and Branson are not research scientists. They are men of mesospheric egos, vying for the same suborbital tourism market, running the same race. If only they could agree on the finish line.