3 charts for you today:
There is a new kid on the (trading) bloc. This week 15 countries signed a free-trade agreement to create the Regional Comprehensive Economic Partnership (RCEP). That makes RCEP the largest trading bloc in the world — bigger than both the EU and the US-Canada-Mexico agreement.
China takes centre stage
This deal is a big... deal. For China it cements their status as the chief economic power of the region, and it gives them another avenue and institution to exert soft power from.
The deal signed represents the climax of more than a decade of negotiations, essentially combining a number of separate agreements between individual countries into one single agreement. In total RCEP is set to eliminate 90% of tariffs and will cover ~30% of the world's population.
India bails out
The one major omission from the deal is India. A major economic power in its own right, India was involved in negotiations up until last year. In the end India decided to skip the agreement, after fears that the deal would see a flood of cheap Chinese imports into the country, while doing little to help India sell its services — where it has more of a relative advantage.
Oh and in case you were wondering, the answer is yes — even multi trillion dollar deals like this one get signed on Zoom in 2020.
Over the summer many experts were concerned that a possible COVID-19 vaccine might only be 50% effective, roughly similar to estimates of how effective the flu vaccine is. That is why the initial numbers reported by Pfizer-BioNTech and Moderna are particularly encouraging in the context of other vaccine efficacy rates.
Data from the CDC in this chart, which we've reproduced from Axios, compares the COVID-19 vaccines with those for other infectious diseases. If the 95% numbers turn out to be true and replicable then the COVID vaccines will rank among some of the most effective in modern medicine.
What does 95% effective mean?
Okay let's run some numbers using the Pfizer-BioNTech vaccine as an example. The trial involved 41,000 people, half were given the actual vaccine, half were given a placebo. At the end of the trial 170 cases of COVID-19 had been recorded in the total group. 162 of those were in the placebo group, and just 8 of them in the vaccine group. Hence the vaccinated group had 95% fewer infections = 95% effectiveness.
This week electric vehicle start-up Arrival announced a deal to become a public company — valuing the stealthy British company at a lofty $5.4bn.
Like many other companies this year, Arrival isn't going public via the traditional IPO route where you hire bankers, they talk to people and allocate shares in the deal. Instead Arrival is merging with a SPAC — a Special Purpose Acquisition Company.
SPACs are essentially a big blank cheque, and to say they are booming this year would be about as understated as saying 2020 has been a weird year. According to data from SPAC Analytics 187 companies have gone public by merging with, or being acquired by, one of these blank cheque companies, raising more than $66bn in the process — not far off the $76bn raised in the traditional IPO process.
Why use a SPAC?
For the companies going public, SPACs seem like a great idea. They just have to negotiate with one party and they don't have to go through the formal rigour of a roadshow. The managers of the SPAC probably aren't complaining either, they get fat fees for finding deals and usually some upside if the deal goes well.
What's less obvious is why investing in SPACs has become so popular. Giving someone a blank cheque to go and buy a company is a good way of saying you are fresh out of ideas yourself. Fewer investors doing due diligence, and a big incentive to get deals done quickly is usually not a great recipe.
1) In its latest report Facebook claims that 95% of hate speech is caught by its algorithms before anyone has to report it.
2) Radio France Internationale unintentionally announced the deaths of 100 unlucky public figures this week. Queen Elizabeth, Clint Eastwood, Pelé and many other famous names had their "pre-written" obituaries published by RFI, which has since apologised.
3) Apple looks set to pay another $113m to settle "batterygate" — the accusations that Apple hid battery degradation and throttling from users.
4) Get the Charty Party game today, use code "CHARTR" at checkout for a 15% discount.**
5) Password managing platform NordPass has released the 200 worst — and most commonly cracked — passwords of 2020. "123456" came top. Check out the full list of passwords.
6) The pandemic has pushed debt levels to record highs, with global debt on track to reach $277 trillion by the end of this year, according to the IIF.
**This is a sponsored snack.
