Local Governments Face Deadline: The Cares Act provided $150 billion to states, large cities and counties for costs related to the pandemic. The funds, however, must be used by December 30th. With daily deaths from covid-19 reaching a high of 2,836 last week attorney generals from 43 states came together to write a letter to congress asking for an extension to the deadline. Although the funds can’t be used to help with state a local government budget shortfalls, which are currently estimated at $480-$620 billion, they would provide help as Covid-19 cases are expected to rise into the new year.
NextEra Saw the Future: Nextera Energy Inc (ticker: NEE) is now the largest US energy company thanks to its focus on renewable energy. Although the company was originally a traditional utility company, it started heavily investing in wind and solar back in 2002 (with the help of government subsidies), knowing that the cost of producing clean energy would drop over time. Today Nextera produces enough energy from wind and solar farms to power a country as big as Greece and has plans to ultimately provide power to around 11 million American households.
All Eyes on Airbnb: Airbnb joins the IPO club on Wednesday under the ticker ABNB. It increased its share price range on Sunday evening, which will value the company at around $42 billion. The company has $5.6 million listings in 220 countries, generates half its revenue outside the US, and skews towards a younger millennial demographic. Currently its expected valuation would be above traditional hotel companies such as Marriott and Hilton, which trade a 3x-4x estimated 2021 sales but below online competitors such as Booking (BKNG).
Asset Managers Continue Consolidation: Last week Macquarie announced it will acquire Waddell & Reed Financial for $1.7 billion. The deal will bring Macquarie into the top 25 mutual fund managers in the US by size. Other similar deals in the sector this year include Morgan Stanley’s acquisition of Eaton Vance and Trian Fund Managements purchase of ownership in Invesco. The consolidation will likely continue as firms continue to adapt to investors showing a preference for lower cost ETFs.
Reports this week include:
Monday: Consumer credit index
Tuesday: Non-farm productivity
Wednesday: Wholesale inventories
Thursday: Consumer price index, Household change in net worth 3Q
Friday: PPI, University of Michigan sentiment index
