Tuesday,
December 1, 2020

Market recap

Dow Jones

29638.64

-271.73 (-0.91%)

S&P 500

3621.66

-16.69 (-0.46%)

Nasdaq

12198.74

-7.11 (-0.06%)

Moderna

$152.74

$25.71 (20.24%)

Nikola

$20.41

-$7.52 (-26.92%)

Shopify

$1,089.35

$54.96 (5.31%)

Amid evolving news + uncertainty surrounding COVID-19, your financial needs are our top priority. For more information on COVID-19 and your finances click here.

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Top Story

Moderna Requests Vaccine Authorization

Let the Reviews Begin

Two Fridays ago Pfizer (PFE) and BioNTech (BNTX) requested emergency approval for the COVID-19 vaccine they jointly developed. Now Moderna (MRNA) is following suit. Yesterday the biotech company asked American and European regulators for authorization of its new coronavirus vaccine after it performed well in a recent trial of 30,000 participants, showing 94.1% efficacy. In the trial, 196 participants contracted COVID-19. According to the results, 185 of those participants had taken the placebo. This means only 11 received the Moderna vaccine and still contracted the coronavirus. In terms of next steps, outside experts advising the FDA on authorization for vaccines are now expected to meet December 10th to first discuss the Pfizer-BioNTech shot. At this meeting they will vote on whether or not the FDA should give the vaccine emergency use authorization. A week later, Moderna hopes experts will also evaluate its vaccine. If the FDA does grant emergency use authorization to the vaccines, distribution could start before the end of the year.

How COVID-19 Vaccines Work

Both Pfizer-BioNTech and Moderna are using gene-based technology that has never been licensed for use prior to the coronavirus. Using what's known as "messenger RNA," scientists are able to send DNA instructions for how to generate certain proteins. Once prompted by the vaccines, human cells produce "spike proteins" which trigger an immune response that can help fight off the virus. If Moderna’s vaccine is approved by the FDA, the company has said it can produce enough doses to vaccinate 10 million people. The trial also demonstrated the vaccine’s versatility. Its efficacy in people over 18 years old held consistent across races, ethnicities, and genders. Because of the vaccine’s limited initial production, healthcare workers and those on the front lines of COVID-19 will likely be the first to be vaccinated.

Partnering with Grocery Stores and Pharmacies for Vaccine Distribution

When the vaccines do arrive, many Americans will be able to access them through their local supermarket pharmacies. The Department of Health and Human Services has reached out to chains like Kroger (KR), Albertsons (ACI), and CVS Health (CVS) to eventually distribute the vaccines. Those pharmacies are already getting in position. Food City, a grocery chain in the south owned by K-VA-T Food Stores, acquired 30 specialized freezers to store the vaccines, which need to be kept at a very low temperature. Other pharmacies are training staff and purchasing freezers, thermometers, and PPE in anticipation of vaccine approval. Most Americans will likely pay nothing for the vaccines, as they’ll be covered by tax dollars, health insurance, and government subsidies for the uninsured.

S&P Global Acquires IHS Markit in Mega Financial Data Deal

Merger Could Be Biggest of 2020

In what’s being called the biggest corporate acquisition of the year, S&P Global (SPGI) plans to buy IHS Markit (INFO) in an all-stock deal worth $44 billion. The deal exemplifies how important big data has become in the financial trading industry. S&P Global assigns debt ratings and provides worldwide market data, while IHS Markit collects pricing and reference data. The merger will create another financial information giant that could compete with other providers like Bloomberg and Refinitiv. According to executives, the companies have been negotiating the merger for the last few months. The next step is for the antitrust regulatory approval process to begin.

What the Deal Means for Investors

IHS Markit is valued at roughly $36.88 billion, and its shares have climbed by about 32% this year. When the merger is completed, S&P Global shareholders will own about 67.75% of the new combined company and IHS shareholders will own the remainder. The deal must receive a green light from antitrust regulators before it can become a reality. Analysts expect watchdogs to closely examine how the IHS and S&P Global partnership will impact the financial data provider landscape which is quickly consolidating.

Acquisition Piggybacks On M&A Wave

The London Stock Exchange (LSE) is currently working on passing an antitrust examination before acquiring data giant Refinitiv for $27 billion. That review process has been drawn out, and the S&P Global and IHS merger is expected to be lengthy as well. Executives say the approval process could take six to nine months and wrap up in late 2021. The S&P Global and IHS takeover follows a wave of merger and acquisition activity that reached a record high in the third quarter. According to Refinitiv data, over the three months ending in September there were more than $1 trillion worth of transactions. Most of these were focused in the technology and healthcare sectors, which have weathered the pandemic relatively better than some other stock groups.

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OPEC+ Meets to Discuss Future of Oil

OPEC+ Ministers May Discuss Oil Cuts

Ministers of the Organization of the Petroleum Exporting Countries, also known as OPEC+, are meeting this week to discuss their plans for oil production in 2021. Originally their goal was to ease production cuts that are currently in place by two million barrels per day starting in January of next year. But the fall coronavirus flare-up in both the United States and Europe has prompted the group to think twice about that strategy given demand for fuel has once again dried up. As COVID cases once again spike around the world, some members of OPEC+ would like to extend the current limits on oil production to prop up the price of crude. In 2020 OPEC+ cut production by 7.7 million barrels per day, and these limits could stay in place for the first three to four months of 2021.

A Nuanced Approach

OPEC+ nations will have to decide whether to increase or cut overall crude oil production, but they will also need to take a nuanced look at a unique market landscape and respond accordingly. For example, demand for gasoline and diesel has bounced back to about 90% of where it was before COVID-19. In the Americas and Europe, driving and road usage fell by around 70% at the start of the pandemic. In November, however, driving was down by just 30%. In contrast, jet fuel demand is still down by about 50%. Demand for oil also varies based on geography. In Austria, where the OPEC+ summit is usually held, new lockdowns have led to empty streets. This is similar to other roads around the European Union. In China and India, however, recent festivals have spurred air, plane, and car travel.

Looking Ahead

OPEC+ ministers hope to hold an in-person meeting in 2021. Buoyed by hopes for a COVID-19 vaccine, the ministers have booked the Imperial Hofburg Palace for a two-day international oil seminar in June of next year. Analysts say that if vaccines are made widely available and are proven to be effective, OPEC+ may be able to balance inventory and increase production to something resembling normal levels. For right now, however, ministers have to make a plan for the start of 2021 for a market where a vaccine is still not widely available.

Not-So-Breaking News

  • Facebook (FB) announced on Monday that it is acquiring Kustomer for more than $1 billion. The customer relationship management startup helps clients manage client communication across multiple platforms including phone, email, text and Facebook products like WhatsApp and Messenger.
  • As companies like Airbnb, Wish, and Roblox aim to go public before the year’s end, DoorDash announced in a Monday filing that it hopes to raise $2.8 billion in its IPO. The IPO would value DoorDash at $32 billion—twice its June private valuation of $16 billion. The delivery company will list 33 million shares on the New York Stock Exchange under the ticker DASH.
  • Nikola (NKLA) shares plummeted on Monday after GM (GM) announced a smaller agreement than the two companies previously discussed. In September, GM announced it would acquire an equity stake in Nikola and produce a pickup truck, the Badger, for consumers. The new plan drops the pickup truck and the equity stake, but analysts say it is still a “good supply partnership.”
  • Shares of Novavax (NVAX) fell on Monday when the company delayed its United States coronavirus vaccine trial again. Representatives said the delay was related to problems with producing the vaccine on a large scale.
  • As Black Friday moved online for many shoppers this year, Shopify (SHOP) announced record global sales of $2.4 billion. Around the world, sales on Shopify rose by 75% compared to last year. In contrast, brick-and-mortar store visits in the United States were down 52% on Friday.
  • Looking to buy in a hot market? Here are few tips for buying in a seller’s market, when inventory is low and competition is high.

Financial Planner Tip of the Day

"By investing small amounts of money consistently over time, rather than attempting to time the market, investors average out the price they pay for investments. However, if there is a stock market correction, it can be a good time to pick up some extra assets while they’re at particularly low prices."

Brian Walsh, CFP® at SoFi

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