Overview of TOP weekly news 9.9.2020

09 / 09 / 2020
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AstraZeneca has stopped testing the vaccine

AstraZeneca, in collaboration with Oxford University working on the development of a vaccine against COVID-19, suspended testing in humans after one of those tested suspected a serious adverse reaction. Following this, the British drug manufacturer voluntarily suspended the tests and stated that it was working to re-evaluate the incident to ensure that this would not result in a significant delay in the study.

“The tests were expected to run by November at the latest, but potentially in the coming weeks,” analysts at Shore Capital noted. “However, any interruption in the process is likely to delay these time horizons.”

AstraZeneca is commercializing a vaccine developed in collaboration with scientists from Oxford University under an agreement signed in April. To speed up the process, the pharmaceutical manufacturer started producing vaccines before the trials were completed and the vaccine approved.

Although AstraZeneca will eventually be approved, concerns about side effects may discourage people from getting vaccinated.

Republicans’ proposal for incentives

Republicans who have a majority in the US Senate have proposed new government funding of $200 billion for future emergency loans from the Federal Reserve. The proposal should be part of a package that Democrats in Congress have swept off the table in the past as insufficient to pull the economy out of the worst crisis since World War II.

McConnell, a Republican party spokesman, said: “Republicans believe that many serious differences between our two parties should not stand in the way of us agreeing and making laws that will help our nation.”

Republican legislation that has the support of the Trump administration (White House) includes new money for federal unemployment benefits worth $300 a week, half replacing the $600 payments a week that expired in late July.

The reduction in the amount of funds that the Fed will use for crisis loans was one of the biggest surprises in the legislation published on Tuesday.

The oil slump continues

The recovery in COVID-19 cases in some countries is reducing hopes for a stable recovery in global oil demand. According to these reports, oil futures WTI and Brent are trading close to three-month lows.

“The fundamentals of the short-term oil market appear to be volatile: demand recovery is fragile, inventories and spare capacity are high, and refining margins are low,” said Morgan Stanley.

A record reduction in production by the Organization of the Petroleum Exporting Countries and Allies (OPEC +) has helped boost prices, but as negative economic data is reported almost every day, the outlook for oil demand remains negative.

Performance of the WTI oil futures contracts (Source of the graph: Tradingview)

German carmakers need state aid

German carmakers are unanimously asking for help in the form of reintroducing scrap metal and capital injections by the state. The German government has so far approved the introduction of a scrapping fee for other types of vehicles, such as electric cars, with effect from Tuesday’s meeting of the heads of the automotive industry with government representatives. Representatives of the German government have also promised to try to figure out how to help them with capital.

Such a program would mean a turn in the policy of the German government by 180 degrees and a shift from the pressure to switch to electromobility. According to the outcome of the meeting, Angela Merkel has no plans yet.

The production of German cars is currently about 40% below the highs from 2017 and 2018, and although new orders have been growing in recent months, it does not look like a quick turn for the better. Unlike in 2009, the German carmaker is still waiting in vain for a more significant turnaround and, above all, subcontracting chains are starting to have more serious problems.

Buffett’s next interesting investment

Berkshire Hathaway intends to invest more than $570 million in the cloud database company Snowflake, a rare enterprise in the enterprise technology market.

The report was released shortly after Snowflake clarified the planned price range of its upcoming initial public offering, which the company valued at up to $23.7 billion. The goal, well above the valuation’s expectations, in the face of the sharp sell-off of technology stocks in the last week, points to the high expectations of the company, whose technology is purposefully focused on processing large amounts of data during the cloud computing period.

On Tuesday, Snowflake revealed that Berkshire Hathaway and Salesforce Ventures would buy $250 million worth of stock from the company at the time of the listing. Berkshire Hathaway also plans to purchase an additional volume of more than $320 million from one of the company’s investors.

Watch this week:

Thursday, September 10, 2020

The euro area will have a planned meeting of the ECB. Analysts expect key interest rates to remain unchanged, but Christine Lagarde’s speech will set the direction for the eurozone.

The second major report will be initial applications for unemployment benefits in the United States. Analysts expect a slight decrease compared to last month by 35 thousand to 846 thousand applications.

Friday, September 11, 2020

The United States will publish inflation developments in August. Unchanged core CPI inflation is expected at 1.6% year-on-year growth.

Source of the text: Investing, Zerohedge, Financial Times, Reuters, Tradingview

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