December 15, 2020

Market recap

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Top Story

Vaccine Rollout Begins in the United States

2.9 Million Doses in Transit

The first shipments of the Pfizer (PFE) and BioNTech (BNTX) vaccine have left manufacturing plants in the US. Now, FedEx (FDX) and the United Postal Service (UPS) are in the process of distributing the first 2.9 million doses of the vaccine to hospitals, clinics, and other vaccine administration points around the United States. Between them, FedEx and UPS have hired 170,000 additional employees to manage shipments of holiday packages and COVID-19 vaccine doses at the same time.

The vaccine distribution campaign has required shipping companies to think creatively. For example, UPS has started producing dry ice at its US facilities because the vaccine needs to be kept cold. The company is currently producing 1,200 pounds of dry ice per hour. UPS has also spent the past months building “freezer farms,” which are areas near air hubs in the US and Europe where the vaccine can be stored in freezers.

Cities and States Discuss How to Pay for Vaccine Distribution

American states are expecting a battle with the Federal Government over who will pay for the distribution of the coronavirus vaccine. In September CDC director Robert Redfield said, “It’s going to take somewhere between $5.5 to $6 billion to distribute this vaccine.”

So far the CDC has only granted $200 million to states for vaccine distribution. While states expect another $140 million to arrive this month, that’s just a small portion of the total anticipated bill. State officials have requested a total of $8.4 billion from the Federal Government to help with the complexities of COVID-19 vaccine distribution logistics.

The Vaccine Rollout Impacts Travel Stocks

As the first doses of the vaccine were loaded into delivery vans yesterday, shares of travel and leisure companies saw gains, including cruise operators like Carnival Corp (CCL) and Royal Carribean Cruises (RCL) and theme parks like Six Flags (SIX) and SeaWorld (SEAS).

But later in the day warnings of more severe lockdowns caused cyclical stocks to tumble. Though vaccine rollout is an important step forward, in the near-term COVID-19 cases are still spiking in many parts of the country. Analysts do not expect to see 2019 travel levels return before late next year or into 2022.

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Amazon Reimagines Transportation with Zoox

Zoox Reveals Fully-Autonomous Taxi

Amazon’s (AMZN) autonomous vehicle startup, Zoox, has unveiled an electric robotaxi that can carry as many as four people with no driver. In a video, Zoox CEO Aicha Evans demonstrated hailing the mint green vehicle from a San Francisco hotel before riding in it around the block.

The car has a symmetrical design with a motor at each end, so it can travel forward or backward. It can reach speeds of up to 75 miles per hour, and it has two batteries, which allow it to drive for 16 hours without recharging.

Manufacturing Already in the Works

Though Zoox does not expect to launch the vehicle on the streets for a few years, a Fremont, California facility is already manufacturing the robotaxis. Executives say the factory will one day be able to make 10,000 to 15,000 vehicles per year.

The car’s debut marks a significant milestone for Zoox, which has been working on developing a driverless passenger vehicle for the past six years. Zoox had to shut down operations twice this year due to the pandemic, which led executives to believe the company might not survive. So they focused on looking for funders who would invest in the long term future of Zoox. Amazon acquired Zoox in June for roughly $1.2 billion.

Race to Power Autonomous Vehicles

Zoox is not alone in working to develop successful driverless vehicles. In October Alphabet (GOOGL) launched a driverless taxi service in Arizona through its autonomous vehicle unit, Waymo. In San Francisco, General Motors’ (GM) Cruise LLC is testing a driverless car modeled after the Chevy Bolt.

Zoox executives say their robotaxi differs from these other companies’ vehicles. “Unlike many of the concept cars other companies have shown in the last several years, this vehicle has passed all the FMVSS crash tests,” said the company’s Chief Technology Officer Jesse Levinson. While Zoox does not currently plan to use the robotaxis for delivery, it does expect to launch a ride-hailing service that could compete with Lyft (LYFT) and Uber (UBER) in cities like San Francisco and Las Vegas.

Blackstone Acquires Lab Buildings for $3.46 Billion

Blackstone’s Life Science Portfolio Grows

Blackstone Group (BX) has ramped up its presence in the life sciences real estate market with the acquisition of a $3.45 billion portfolio of biotechnology lab buildings. Even before the COVID-19 pandemic began, Blackstone was one of the world’s top investors in life science buildings. Now the company, and others, are even more focused on the industry.

In the fall Blackstone recapitalized BioMed Realty, the biggest private holder of life sciences real estate in the US, for $14.6 billion. Blackstone is also in the process of purchasing two more life sciences buildings in the Boston area for $1 billion, according to people familiar with the matter.

Weighing the Risks of Investing in Life Sciences Real Estate

While the pandemic has battered demand for commercial real estate, office space, and other sectors of the real estate industry, demand for lab space has soared. Many office buildings have sat vacant while employees work from home during the pandemic. Meanwhile, most lab workers need to come in to work each day because their jobs require specific equipment, as well as specialized ventilation and other safety measures.

Still, some analysts suspect that prices for life science real estate may be nearing their peak. It is also possible that new buildings being constructed will saturate the market. Blackstone’s strategy is to invest heavily in markets like Cambridge where it is challenging to build new spaces and where there is a lot of demand for biotech space.

In addition to its life sciences real estate holdings, Blackstone has also invested in biotech companies themselves. In July the firm raised $5 billion in a private fund for life sciences investments. In August, Blackstone invested $275 million in CryoPort (CYRX), a company that specializes in temperature-controlled logistics.

Blackstone Eyes Other Growth Trends

Blackstone has $341 billion in assets under management and is among the world’s largest real estate investors. While the company has been investing heavily in life science properties, it is also looking at other trends in real estate demand.

Blackstone sees a bright future for industrial properties that can be used as distribution centers since demand for ecommerce is climbing and shows no signs of slowing down. Blackstone is also investing in studio spaces and offices for video production, as streaming services like Netflix (NFLX) and Disney+ (DIS) rush to fill demand for new content.

Not-So-Breaking News

  • Shares of Alexion Pharmaceuticals (ALXN) popped on Monday after news that the drugmaker would be acquired by AstraZeneca (AZN) in a $39 billion deal. On the flip side, AstraZeneca’s stock fell after the reports emerged.
  • Virgin Galactic (SPCE) shares slumped 15% after the space tourism company reported an engine ignition issue and halted a spaceflight test in the middle of a launch.
  • Popeyes Louisiana Kitchen, the fried chicken chain owned by Restaurant Brands International (QSR) is adding beignets to its menu in an effort to bring in customers over the holidays. Starting this week, Popeyes will offer packs of the deep-fried, Hershey’s (HSY) chocolate-stuffed pastry for a limited time.
  • Halo, the fitness tracker created by Amazon (AMZN), is now available for everyone to purchase after an invite-only launch in August, during which the gadget received mixed reviews.
  • Reddit has purchased the short-video app Dubsmash in a bid to attract younger users and develop a presence in the competitive video app industry, where TikTok, Instagram Reels (FB), and other apps are vying for users’ attention. The Dubsmash platform will stay in place, but Reddit hopes to incorporate the company’s video features into its flagship online forums as well.
  • How can I invest $1,000? This is a question with many potential answers. Read more to learn a few ways to effectively begin investing with just $1,000.

Financial Planner Tip of the Day

"You can’t guarantee against the possibility of loss completely—after all, risk is inherent in investing. But spreading your assets out reduces your vulnerability because your money is distributed across areas that aren’t likely to react in the same way to the same occurrence."

Brian Walsh, CFP® at SoFi

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