Pre-market actions: Germany, Europe’s largest economy, is heading towards blockage. Will the recession follow?

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What’s going on? Chancellor Angela Merkel said on Sunday that Germany will enter a “hard” lockdown from this week and continue into the Christmas period. Non-essential shops and schools will be closed from Wednesday, and Christmas gatherings will drop from 10 people to just five in two different households.

The announcement comes after Germany recorded nearly 30,000 new coronavirus infections and nearly 600 deaths in 24 hours on Friday, breaking records.

Economy Minister Peter Altmaier said in an interview on Monday that he believes the country can avert another recession thanks to the government’s supportive measures. Reuters reports that the number of people who will work reduced hours and whose salaries will be subsidized by the state is expected to increase.

“It is possible, if we act wisely, to once again preserve the economic substance of the country,” Altmaier said. But he stressed that it “depends in a very decisive way on the sequence of events”.

Given the scale of the new restrictions, economists are worried.
“Germany must prepare for a second recession,” Commerzbank chief economist Dr Jörg Krämer told clients on Monday.

Big picture: Germany is not the only country struggling with a spiraling health situation. South Korea has also sounded the alarm over the increase in cases and may announce new social distancing measures. And the mayor of London is calling on the government to close schools for the holidays earlier than expected given the rise in infections in the city.

In the United States, as medical staff prepare to distribute the first doses of the Pfizer-BioNTech Covid-19 vaccine, the prospects for infections and hospitalizations remain extremely worrying. The country is approaching 300,000 dead after hitting the 200,000 mark in September.

It is a reminder that while the deployment of vaccines is an important moment in a devastating pandemic, it will not be an immediate remedy to the dual health and economic crisis.

“After being the relative European success of the first wave, Germany has struggled in recent weeks,” Deutsche Bank’s Jim Reid said in a research note Monday. The new lockdown, he said, would deal a “short-term blow to activity and confidence, although the damage will be limited by knowledge of the imminent vaccine deployment.”

“Blank” companies have billions to spend in 2021

On Wall Street, 2020 has become the year of the PSPC.

Special-purpose acquisition companies, or so-called “blank check” contracting companies, have been all the rage. These companies raise funds from investors by going public, then have two years to put that money to work.

According to Goldman Sachs, 206 PSPCs raised a record $ 70 billion in IPO revenue this year, a five-fold increase from 2019. A record number of PSPCs have also announced or entered into merger deals. .

Remember: Companies like DraftKings and electric truck maker Lordstown Motors went public in 2020 by merging with PSPCs, a faster route than a traditional IPO. Shares of both companies have skyrocketed since then, helping to spark interest in the process.

The momentum is expected to continue in 2021, with a wall of capital awaiting deployment.

Goldman estimates that $ 61 billion in IPO equity raised by 205 PSPC “is currently seeking acquisition targets.” This money must find a home in 2021 or 2022, or it will have to be returned to investors.

Until now, electric and self-driving car makers have been among the most popular PSPC targets. But there are only a limited number of these companies, which means that the scope of interests will have to expand.

« [There’s an] imbalance between supply and demand, with more capital raised and less obvious goals, ”said Dirk Albersmeier, co-head of global mergers and acquisitions at JPMorgan.

As competition for U.S. buyout targets intensifies, more of that money could be directed to Europe and Asia, Albersmeier noted.

Watch this space: Massive demand from high-growth companies is already reviving the debate over whether valuations are too tight and heading lower. Demand among PSPCs can only fuel these fears.

With so many technology-driven PSPCs, and with a limited amount of time to deploy capital, potential buyers could end up “bidding on,” Albersmeier said.

Pfizer and Moderna to benefit from vaccine sales

The authorization of Pfizer (PFE) and BioNTech’s Covid-19 vaccine in the United States is a momentous opportunity for science, the economy and humanity. It’s also a big source of income for the companies that developed the vaccines, reports my CNN Business colleague Matt Egan.

Wall Street analysts predict that Pfizer and Modern (RNAm) – whose vaccine is the next to be reviewed by regulators – will generate $ 32 billion in revenue from the Covid-19 vaccine next year alone.

That doesn’t take into account the goodwill gain these companies will receive in helping to end the worst pandemic in a century. The effect is magnified for Moderna, a young biotech company that few people had heard of before 2020.

Investor Insight: Pfizer stock has only risen 10.7% this year, behind the S&P 500’s 13.4% gain. But shares of German partner BioNTech, which trades in New York, have jumped. over 275%, valuing the company at $ 30.7 billion.

Moderna stock has soared 702% this year, giving the company a market cap of $ 62.1 billion. Investors see the efficacy and safety results of its coronavirus vaccine as validation of Moderna’s entire product pipeline. They are increasingly convinced that this won’t be the company’s only blockbuster.

But profits from vaccine sales are also drawing criticism. More than 1.6 million people have died from Covid-19 today worldwide.

“It is absolutely wrong for pharmaceutical companies like Pfizer and Moderna to profit, and for their executives to make huge personal fortunes, from the Covid-19 vaccines which have been so heavily subsidized and supported by American taxpayers,” Eli said Zupnick, a spokesperson. for Accountable.US, a progressive watchdog and patient advocacy group.

next

OPEC is due to release its monthly report after producers agreed to start pumping more oil in January.

Coming tomorrow: European Commission set to publish new regulations Facebook (FB), Google (GOOGL), Amazone (AMZN) and Apple (AAPL).

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