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The World
It’s Obamacare day at the Supreme Court. In California v. Texas, the Affordable Care Act returns to the court for the seventh time in eight years. The case is the second full-fledged constitutional challenge seeking to invalidate the entire law. Republican state officials, joined by the Trump administration, argue that Congress rendered the law’s individual insurance mandate unconstitutional when, in 2017, Congress zero-ed out the penalty for failing to comply with the mandate. The Republican states argue further that the mandate cannot be severed from the rest of the law and that, as a result, the entirety of the law must be struck down. (SCOTUSBlog)
The Dow reached its highest close since February and the S&P 500 to its second-highest-ever close. Companies that have suffered the most during the pandemic broke out as winners, while a number of stay-at-home stocks (like Zoom and Clorox) plunged. Firearms stocks also dropped as post-election political unrest failed to materialize. U.S. banks are in line for windfall after the vaccine progress generated a steeper yield curve and sent long-term interest rates sharply higher. (Finance 202, Financial Times)
The U.S. has broken records for new Covid-19 infections on six consecutive days with 59,008 Americans now hospitalized, shattering the previous record high from June. Nearly 10,000 U.S. coronavirus patients returned to the hospital within two months of discharge, the CDC reports, while health officials will allow the 1st emergency use of a COVID-19 antibody drug, similar to a treatment President Trump received. New MIT research shows one cause: The pandemic has more superspreading events than expected. Meanwhile, Europe is running low on ICU beds and hospital staff: In Italy, ambulances line up outside hospitals awaiting beds; while France’s ICU capacity is 92.5% taken up by Covid-19 patients.(Daily Beast, Washington Post, Associated Press, WBUR, Associated Press-2)
What does Pfizer’s vaccine news mean? The claim is based on an interim analysis of Phase III clinical trials on only 44,000 people. The public doesn’t know if the vaccine will work when tested on a bigger sample size, or if the initial results will hold later on. If they do, the drug will still have to go through a process of national-level approvals. It will then have to be made accessible to the global population (at the moment, 11 other vaccines are in Phase III trials; Russia and China have started administering their own drugs — though Brazil suspended its trial of the Chinese vaccine). Finally, governments will have to convince citizens to take the vaccine. Meanwhile, the UK may green light the vaccine next month, as BioNTech will price the vaccine below market rates and differentiate between regions. (GZERO Media, Financial Times, The Times, Reuters)
Most Americans won’t get a Covid-19 vaccine unless it cuts risk by half. (STATNews/Harris poll)
The European Union foreign policy chief extolled Biden's victory, welcoming "the chance to work once again with a U.S. president who doesn't consider us a foe," and adding that Europe is ready to team with the U.S. to deal with China on the South China Sea, China’s unfair trade practices and security. Canadian Prime Minister Trudeau and Biden spoke, while the presidents of Brazil and Mexico have held back from congratulating Biden. A prominent economic adviser to Japan's prime minister says Tokyo should prepare for a "leaderless era" as U.S. global leadership gradually withers, and expand other strategic ties while bolstering its security alliance with Washington. (Reuters, South China Morning Post, Reuters-2, Reuters-3)
Former UK PM John Major fears Brexit may be "even more brutal than expected" due to the UK's negotiating "failures," making future trade "less profitable." In China, as its consumer inflation rate hits 11-year low, economists warn of possible deflation, expecting headline consumer inflation rate to turn negative in November and possibly stay there into 2021, while East Asia developed markets have also been boosted by reduced political and trade concerns, a weaker dollar and better control over the pandemic than in the West. (BBC News, South China Morning Post, Wall Street Journal)
Armenia and Azerbaijan agreed to halt fighting over the Nagorno-Karabakh region, in a deal the Armenian Prime Minister called "incredibly painful both for me and both for our people." Azerbaijan will keep areas it has taken during the conflict, while Armenia also agreed to withdraw from several other adjacent areas. Australia and Japan will sign a defense pact as a bulwark against Beijing’s growing military power and assertiveness. In Peru, President Martín Vizcarra stepped down after an impeachment vote on corruption allegations. (Los Angeles Times, BBC News, The Times, Financial Times)
The White House removed the top adviser responsible for leading the government’s assessment of the status of climate change, returning him to his previous Department of Energy post. After $15B and 450 miles, Biden will halt border wall. (The Hill, Dallas Morning News)
UNC-Chapel Hill began defending how it considers race in its undergraduate admissions process as a trial about affirmative action in federal court in Winston-Salem. (Raleigh Observer)
Economy
Goldman Sachs Research updated its global economic outlook: It is above consensus forecasts for growth in most major economies in 2021. At the most basic level, Goldman Sachs Research views the coronavirus recession as much more V-shaped than previous postwar cycles. Just as the global economy rebounded quickly (albeit partially) from the lockdowns in the spring, the expectation is for the current weakness to give way to much stronger growth when European lockdowns end and a vaccine becomes available. One important assumption underlying the forecast is that governments continue to do a reasonable job replacing private sector income lost in the disruption. In the U.S., Goldman Sachs Research expects a $1 trillion stimulus package, potentially enacted before President-elect Joe Biden’s inauguration. While this is less than half of what might have been seen under a Democratic sweep in the election, it should suffice for a small positive fiscal impulse to U.S. growth in coming quarters. (Goldman Sachs)
Private equity assets under management will increase from USD 4.41 trillion in 2020 to USD9.11 trillion in 2025 – and with a CAGR of 15.6%, it will be the fastest-growing asset class over the next five years, according to Preqin. At the end of 2020, alternative assets firms will hold USD10.74 trillion in assets under management overall. Already the largest asset class in the alternatives sector, by the end of 2025, PE class will come to account for 53% of all alternatives AUM. (Private Equity Wire)
Rents are rising on suburban homes, as companies that own single-family homes are raising rents at the fastest rate since they emerged from last decade’s foreclosure crisis, capitalizing on a rush for suburban housing. Said one CEO: “The demand we see today is totally insatiable, and it’s growing.” Meanwhile, corporate tenants are dumping excess office space: They offered a record 42 million square feet in 2&3Q20. (Wall Street Journal, Wall Street Journal-2)
Washington may be headed for a split government, but don’t expect that to lift the stock market over the long term. The S&P 500 has slightly outperformed when control of the presidency and Congress has been unified under one party. (Wall Street Journal)
3 ways retail stores can survive — and maybe even grow — against the odds: 1) Know what makes people shop in stores (relevance, resources, relationships); 2) Use nudges, winks, and smiles to build smart rewards programs; 3) Don’t rely on discounting. (MIT Sloan Management School)
This year’s explosion in the number of SPACs on the stock market has created massive competition among SPACs for businesses to buy. “It’s a seller’s market,” said Jay Heller, head of capital markets at Nasdaq: Tech firms looking to go public not only have a new and increasingly popular route for doing so, but also find themselves in the driver’s seat of bidding wars—known as SPAC-offs—between SPACs. (The Information)
Technology
The EU agreed to stricter rules on the sale and export of cyber-surveillance technologies like facial recognition and spyware. The regulation requires companies to get a government license to sell technology with military applications; calls for more due diligence on such sales to assess the possible human rights risks; and requires governments to publicly share details of the licenses they grant. (MIT Technology Review)
Inside Amazon’s Trucking Ambitions: The e-commerce giant is quietly becoming a force in the trucking of goods between Amazon warehouse facilities, manufacturing centers and ports, a part of shipping known as middle-mile delivery. By the end of 2019 Amazon was shipping more than two-thirds of the freight between company facilities in the U.S., weaning much of its business off big third-party freight brokers, which were hauling the vast majority of its freight just two years earlier. (The Information)
Scale AI, a startup that helps companies such as Lyft, Toyota and DoorDash train artificial intelligence systems to recognize objects and analyze written documents, could soar past a $3 billion valuation with a new financing. (The Information)
Bloomberg LP built its multibillion-dollar business selling high-priced data terminals to institutional customers such as financial-services companies. Now it is focusing much of its energy on reaching media consumers. The company launched a streaming TV channel, built around its social-media brand QuickTake, with greater focus on general-interest and lifestyle news. It began with 10½ hours of daily news and documentary programming, and launched on streaming platforms including Apple TV, Roku and Amazon Fire TV. (Wall Street Journal)
Smart Links
Former Google CEO Eric Schmidt has applied to become a citizen of Cyprus. (Recode)
How the coronavirus made it nearly impossible to renounce U.S. citizenship. (Washington Post)
Money Manager Cathie Wood could be the first star of exchange-traded funds. (Bloomberg)
IPO pipeline looks robust for the rest of 2020. (Crunchbase)
Thanksgiving will soon empty campuses. Will students bring coronavirus home? (New York Times)
Beyond Meat shares sink as Wall Street startled by slowing sales. (Reuters)
Do spoilers harm movie box-office revenue? (Science Daily)
Apple hosts “One More Thing,” its last big hardware event of 2020 at 10 am PT / 1pm ET. (The Verge)