China unveils a sweeping overhaul of its $100 billion education tech sector. Fauci warns the U.S. is heading in the “wrong direction” as delta tears across the world. China’s economic recovery is showing signs of weakness. Here’s what you need to know.
China announced a broad set of reforms for private education companies, seeking to decrease workloads for students and overhaul a sector it says has been “hijacked by capital.” The overhaul of the $100 billion sector bans companies that teach school curriculums from making profits, raising capital or going public. One-time stock market darlings TAL Education, New Oriental Education & Technology and Gaotu Techedu all plummeted more than 50% on Friday after early reports about the reforms. Meanwhile, China’s ongoing economic recovery showed signs of weakness in July, while an index launched a year ago to give investors greater exposure to China’s internet giants is now the world’s worst-performing major technology gauge.
Stocks are set for a mixed start to the week as traders weigh a U.S. rally spurred by spectacular corporate earnings. The dollar was steady. Equity futures rose in Japan and Australia but slid in Hong Kong. U.S. stocks closed Friday at a record and the S&P 500 has almost doubled from the depths of the pandemic. About 87% of the S&P 500 firms reporting results so far this season have beaten estimates. But concerns about inflation and the delta strain linger, portending bouts of volatility.
The U.S. is moving in the “ wrong direction” in combating a surge in delta variant infections. Booster shots may be needed especially for the most vulnerable, said Anthony Fauci, the nation’s top infectious disease expert. Meanwhile, Indonesia is extending its tightest mobility curbs for another week as cases remain high; thousands of anti-lockdown protesters flooded into Australia’s largest cities over the weekend, clashing with police and defying strict stay-at-home orders; and complacency drove an unusually deadly outbreak in Taiwan. Finally, this is why the delta variant is the worst strain of all.
Malaysia’s parliament will sit for the first time this year, providing lawmakers an opportunity to grill Prime Minister Muhyiddin Yassin over his government’s handling of the pandemic.The five-day sitting will see Malaysia’s emergency declaration and bills on fake news and penalties for breaching Covid protocols finally laid before the house for legislators to scrutinize. The emergency, set to end on August 1, handed the premier wide-ranging powers to tackle the coronavirus outbreak, including shuttering parliament and introducing ordinances without legislative approval. But despite Muhyiddin’s actions, daily cases have more than tripled since the emergency was first imposed on January 12, confirmed cases have breached the one million mark and public anger is intensifying.
China’s crackdown on cryptocurrencies will probably intensify and may even lead to an outright ban on holding the tokens, according to Bobby Lee, one of the country’s first Bitcoin moguls. Lee knows what it’s like to be on the wrong side of Beijing: He sold BTC China, the nation’s first Bitcoin exchange and at one point the second biggest worldwide, in the aftermath of a crackdown in 2017. Meanwhile, Bitcoin traded above a crucial technical level over the weekend for the first time since early May, after comments from Ark’s Cathie Wood and Tesla’s Elon Musk helped boost its momentum.
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
Uniswap, one of the world's biggest decentralized crypto exchanges, announced over the weekend that it would be restricting access to certain tokens. The list of banned tokens seems to include many tokenized stocks and derivatives, and the exchange cited an "evolving regulatory landscape" in explaining the move. This is a big deal because one of the special things about Uniswap is that unlike many other crypto exchanges, it lists almost every coin or token in existence, with founder Hayden Adams once describing the platform as creating "liquidity in the long tail of assets."
It should be noted that this only affects the front-end (the website) of Uniswap. Any sort of token can still trade via the Uniswap protocol (the underlying smart contracts). But the ban highlights two of the big challenges for DeFi. The first one is obviously regulatory scrutiny, which seems to be growing under Gary Gensler, the new head of the U.S. Securities watchdog. The second — and less obvious — one is usability.
Yes, users can still trade tokens via Uniswap through alternative front-ends. But searching out reliable alternatives is time-consuming and sometimes risky. Ultimately there's a big tension between stuff being truly “decentralized” and being easy to trade.
You can follow Tracy Alloway on Twitter at @tracyalloway.
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