The Economist - USA (2020-11-28)

10 The EconomistNovember 28th 2020
The world this week Business

ResearchersatAstraZeneca,a

drugcompany,andOxford

Universityreportedthattheir

vaccineforcovid-19is70%

effectiveonaverage.Inone

courseoftreatmentthatrises

to90%,closetotheefficacyof

theothertworecentvaccine

successes,thoughquestions

havebeenraisedaboutthedata

behindAstraZeneca’strial.Its

jabisexpectedtobecheaper

andeasiertodistributeglobal-

ly.Threebilliondosescouldbe

readynextyear.

Thegoodnewsonvaccinesis

onefactorthathaspushed

stockmarketsintonewterri-

tory.TheDowJonesIndustrial

Averagepassedthe30,

markforthefirsttimeandis

oncourseforitsbestmonthly

gainsince1987.Thes&p 500 hit

a newrecord;it isupbymore

than10%thismonth.

Mellow Yellen

The growing probability of a

smooth transfer of power to Joe

Biden also cheered investors.

His choice of Janet Yellenas

treasury secretary was seen as a

safe bet. The former chair-

woman of the Federal Reserve

should pass her confirmation

hearing in the Senate, even if it

remains under Republican

control. Her first task will be to

help craft a new stimulus bill.

One of the clearest signs yet

that businesses are adapting to

the new administration came

from General Motors. The

carmaker is withdrawing its

support from the current

government’s legal challenge

to California’s vehicle-emis-

sion standards, the toughest in

America. Mr Biden will bring in

“ambitious” targets when he

takes office, when he will also

have a new climate tsar.

Tesla’sshare price soared

again, following the news that

it is to be included in the s&p

500 index from next month,

which means tracker funds

will be obliged to buy its stock.

The electric-car maker’s mar-

ket capitalisation raced past

$500bn this week. That is more

than five times the combined

value of gmand Ford.

Rishi Sunak, Britain’schancel-

lor of the exchequer, produced

his spending review, which

was as grim as expected. Mr

Sunak noted that the emergen-

cy had “only just begun”, fore-

casting that borrowing will be

£394bn ($530bn) this year, or

19% of gdp, which would be the

highest deficit in peacetime. In

addition to a public-sector pay

freeze he also took a swipe at

foreign aid, by abandoning a

policy of spending 0.7% of

national income on it.

With the roll-out of vaccines

for covid-19 on the horizon,

airlinesannounced a raft of

measures that they hope will

make flying easier. Qantas

became the first big carrier to

suggest that it may ask pas-

sengers to prove they have had

a vaccination before boarding a

plane. Five airlines, including

United and Lufthansa, said

they would offer a “common

pass” to travellers who have

tested negative. American

airports had their busiest

weekend since March, han-

dling more than 3m people

ahead of Thanksgiving.

The good news about vaccines

also spurred a rally in oil mar-

kets. Brent crude rose above

$48 a barrel, its highest price

since early March, before

markets went into meltdown

over the coronavirus.

Bertelsmannemerged the

winner in a bidding war for

Simon & Schuster, the pub-

lishing arm of Viacomcbs.

Bertelsmann, which owns

Penguin Random House, is

paying $2.2bn for the firm,

though getting the deal com-

pleted will be a page turner.

Regulators will look closely at

the rationale for combining the

publishers, which would have

a third of the American market.

The drastic slowdown in global

human activity because of

covid-19 has led to only a “tiny

blip” in the concentration of

greenhouse gasesin the atmo-

sphere, according to the World

Meteorological Organisation.

Emissions may have been

reduced by between 4% and

7.5% for the whole of the year

relative to 2019, but CO 2 re-

mains in the atmosphere for

centuries, so any amount of

emissions contributes to a

build-up. According to the

wmothis year’s “blip” will be

no bigger than normal annual

fluctuations.

Showing that America is not

the only country that has a

problem with Chinese tech

firms, India’s government

banned another 43 apps that it

said were “prejudicial” to the

country’s “sovereignty and

integrity”. Tension along the

Himalayan border between

China and India has risen since

June and Delhi has banned 200

Chinese apps in all, in what it

describes as a “digital strike”.

Move over Hollywood

Netflixannounced that it

would spend $1bn on expand-

ing its studios in Albuquerque,

creating one of the largest

film-production sites in North

America. Ten new stages,

backlots and other facilities

will generate 1,000 production

jobs and almost 1,500 in con-

struction. It will make films

there, as well as the next series

of “Stranger Things”. Last year

Netflix opened a production

hub at Britain’s Shepperton

Studios and earlier this year

plans were approved to build a

studio complex near Ashford

in southern England that may

house Netflix and Amazon.

S&P 500

1941-43=

Source:RefinitivDatastream

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2020

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