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Millions to vote as Angela Merkel’s era ends

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A voting booth is decorated with a German national flag.

PETER ENDIG | DPA | Getty Images

Millions of Germans are heading to the polls on Sunday in an election that will change the face of Germany, and Europe, as Chancellor Angela Merkel prepares to leave office after 16 years in power.

Voting in polling stations across Germany takes place between 8 a.m. and 6 p.m. local time, but many have cast their votes already via postal ballots. Exit polls giving an indication of the election result will be released shortly after the polls close.

Recent German elections have failed to throw up any real surprises and Merkel’s re-election was usually assured. Since announcing she would step down, however, the election race has been wide open with voters forced to look elsewhere for new leadership.

Voter polls in the run-up to the Sept. 26 vote have fascinated pundits and the public alike. The Green Party enjoyed a bounce in popularity and took the lead in the polls at one point in April to then be overtaken by the Social Democratic Party, which has managed to hang on to a slight lead in recent weeks.

In the meantime, Merkel’s ruling conservative alliance of the Christian Democratic Union and Christian Social Union has failed to break away from the pack and recent opinion polls have seen the party trailing in second place behind the SPD.

Still, the vote is too close to call with polls in the last week putting the SPD with 25% of the vote and the CDU-CSU with around 22%, while the Green Party is seen with around 16%.

Further behind lies the pro-business, liberal Free Democratic Party with 11%, with the right-wing Alternative for Germany seen with the same vote share. The far-left Die Linke party is seen with 6% of the vote.

The contenders

German voters are known to favor stability over charismatic leadership, with Merkel in power for 16 years and presiding over what many Germans have seen as the country’s “golden age.”

Olaf Scholz, the SPD’s candidate for chancellor, is likely to have benefitted from this preference for a “safe pair of hands” in power, given that he has been Germany’s finance minister and vice chancellor in the current government given the SPD’s role in the current coalition with the CDU-CSU.

The other candidates for chancellor — the CDU-CSU’s Armin Laschet and the Green Party’s Annalena Baerbock — have seen more mediocre successes during their election campaigns with both of them hit by several controversies and questions over their suitability to lead.

The CDU’s Laschet, in particular, has seen his ratings dive due to a disappointing campaign trail and lackluster performance on the public stage. Being caught on camera laughing during a visit to a German town hit by devastating floods, for which he later apologized, did nothing to boost his public persona either.

Three TV debates between the leading candidates have failed to translate into a reversal of the CDU-CSU’s popularity, despite outgoing Merkel trying to revive Laschet’s chances of succeeding her.

Coalition ahead

The 2021 vote is again more unpredictable for a variety of factors, such as the split in the votes that signals no obvious winner, and the amount of mail-in votes expected this year.

Mail-in voting was already common in Germany before the pandemic but election organizers expect as many as 50% mail-in ballots this time around, up from 28.6% in the 2017 election, given the Covid-19 situation, Deutsche Welle reported.

What’s certain is that the next government will be a coalition, with no one party expected to gain enough seats to govern alone. Analysts have spent many months speculating on what form a coalition government could take, and whether the CDU-CSU could find itself in opposition after many years in power. Coalition talks in any case are likely to take weeks, and potentially months.

“Each of the two major parties (the SPD and CDU/CSU) could form a coalition with the Greens and the center-right Liberals (FDP),” Carsten Nickel, deputy director of research at Teneo Intelligence, said in a note Wednesday.

“A left-of-center government of SPD, the Greens, and the post-communist Left (Die Linke) – and perhaps even another grand coalition of SPD and CDU/CSU – might also be possible numerically, but will not be the first choice,”

“Party leaderships will assess the official results in meetings on Monday morning, formally offering exploratory talks to potential coalition partners. These talks, as well as subsequent coalition negotiations, might take several weeks, given the likely need to forge an untested three-way coalition. As in 2017, coalition negotiations could still fail at a late stage, necessitating the search for alternative combinations,” Nickel noted.

Angela Merkel has been the face of the CDU, and Germany, for 16 years.

Volker Hartmann | Getty Images News | Getty Images

Factors to watch will be whether the slight improvement in the polls for CDU-CSU turns into some last-minute momentum on election day, Nickel said, as well as how the Greens fare.

“Since Annalena Baerbock fell back into third place, she has put in solid performances in the TV debates, presenting herself as an alternative to her two male contenders wrangling with each other; combined with the expected high turnout in cities and via postal ballot, the Greens’ result could potentially still surprise.”

The economy

As for the economy, Europe’s largest, whoever takes the helm at the chancellery will have challenges on their hands, Barclays’ Macro Research Analyst Mark Cus Babic noted Thursday.

“A robust economic recovery is underway and the short-term outlook remains solid, in our view, irrespective of the election outcome but with the drawdown of pandemic savings and supply disruptions as key risks. However, several challenges loom. The medium-term outlook will depend on how the new government tackles them,” he said.

Journalists and party members watch on a screen from the press centre (L-R) Olaf Scholz, German Finance Minister, Vice-Chancellor and the Social Democrats (SPD) candidate for Chancellor and Armin Laschet, North Rhine-Westphalia’s State Premier and the Christian Democratic Union (CDU) candidate for Chancellor as they attend an election TV debate in Berlin on September 12.

JOHN MACDOUGALL | AFP | Getty Images

“Germany faces key challenges such as implementing and paying for the green transition, the need for digital transformation, a rapidly ageing population, sluggish productivity growth, and reliance on exports, including to China.”

Whether Germany remains the engine of European growth will likely depend on economic policies that the next German government puts in place to overcome these key challenges, Cus Babic noted. “Uncertainty on the outcome of the elections is high, with polls suggesting the new German government will likely be a three-party coalition whose economic policy agenda will be defined during the coalition talks, with the first consequences materialising from 2023.”

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SpaceX to become more valuable than Tesla: Morgan Stanley survey

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Starship prototype SN15 returns for a landing on May 5, 2021 after a high-altitude flight test.

SpaceX

Between Elon Musk’s two largest companies, investors and experts have a long-term favorite.

Most “institutional investors and industry experts” surveyed by Morgan Stanley expect SpaceX to become more valuable than Tesla and see it as a more attractive investment.

“The majority of our clients (by survey and client discussions) believe SpaceX could ultimately command a higher valuation and significance than even Tesla,” Morgan Stanley analyst Adam Jonas wrote in a note Tuesday.

Tesla has a market value of $858 billion. SpaceX reached a valuation of $100.3 billion after a secondary share sale, CNBC reported earlier this month.

Morgan Stanley issued the survey about Musk’s companies with two questions: “Which do you think is a more attractive investment from here?” and “Which do you think has the potential to be a more valuable company over the long term?”

Out of 32 responses, 63% of those Morgan Stanley surveyed answered SpaceX to both questions.

“From our investor conversations, the sentiment on SpaceX has increased substantially along with the company’s valuation in the private market,” Jonas said.

SpaceX: The “Apex Player” in space

Jonas said that “investors are beginning to appreciate the potentially wide-ranging use-cases for SpaceX’s reusable launch architecture across communications, transportation, earth observation and other space-related domains.”

SpaceX is “clearly seen” as the “Apex Player” in the global space industry, Jonas said. The sentiment shows in its soaring valuation, which makes it the second-most valuable private company in the world, according to CB Insights.

The company’s valuation has spiked in the last few years as SpaceX has raised billions to fund work on two capital-intensive projects: Starship and Starlink.

Starlink is the company’s plan to build an interconnected internet network with thousands of satellites, known in the space industry as a constellation. The project is designed to deliver high-speed internet to consumers anywhere on the planet.

SpaceX has launched 1,740 Starlink satellites to date. The network has more than 100,000 users in 14 countries who are participating in a public beta. Service is priced at $99 a month.

Starship is the massive, next-generation rocket SpaceX is developing to launch cargo and people on missions to the moon and Mars. The company is testing prototypes at a facility in southern Texas and has flown multiple short test flights.

Reaching orbit is the next step in testing the rocket. SpaceX is awaiting regulatory approval for its next launch.

“In our view, having access to nearly unlimited sources of capital will be an extremely important part of the narrative around building the space economy,” Jonas added.

Morgan Stanley, in a separate note Monday, also said that “more than one client” has suggested that Musk may become the first trillionaire, because of SpaceX.

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Tesla TSLA earnings Q3 2021

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Tesla Motors CEO Elon Musk unveils a new all-wheel-drive version of the Model S car in Hawthorne, California October 9, 2014.

Lucy Nicholson | Reuters

Tesla reports third-quarter results on Wednesday after the bell.

Here’s what analysts are expecting:

  • Earnings per share (adjusted): $1.59 expected per Refinitiv
  • Revenue: $13.63 billion expected per Refinitiv

The company previously reported deliveries of 241,300 electric vehicles and production of 237,823 vehicles during the period ending September 30, 2021.

Unlike other automakers, Tesla’s sales rose during the quarter, setting a new company record, despite chip shortages and supply chain challenges weighing on the industry. (Deliveries are the closest approximation of sales that Tesla reports.)

Last quarter, CEO Elon Musk said he would no longer lead earnings calls by default. He may choose not to address shareholders and analysts on Wednesday, which would surely disappoint his fans.

Investors submitted questions to Say Technologies, a site Tesla uses to poll shareholders ahead of earnings calls, seeking updates on the now-delayed Cybertruck, Tesla’s 4680 battery cells, and whether a $25,000 electric car, which Musk teased last year, is still underway.

Tesla’s strategy for weathering supply chain issues will also be in focus, along with the company’s ongoing investments in and sales of cryptocurrency and regulatory credits.

Ahead of the report, Bank of America raised its price objective for Tesla shares higher to $900 per share from $800.

BofA research analyst John Murphy, in a note to investors on Tuesday, laid out downside risks and upside potential for Tesla. Improving battery tech could be a boon for the company, he suggested, but if better battery cells don’t come about as soon as hoped, that could slow Tesla’s roll. Competition from incumbent automakers is also growing, he noted. Loss of management, a perpetual risk, could cause share prices to decline, too.

BofA raised its price target because Tesla has a “track record of growth, consistent capital raises, and overall investor hype.” Tesla could also potentially benefit from increases in federal or state incentives, rising gasoline prices, better execution and cost containment, and benefit from short sellers covering their positions.

Loup Ventures’ Gene Munster, who is also bullish Tesla, told CNBC ahead of the Q3 report that while competition in battery electric vehicles is building, he believes Tesla will still gain market share in the broader car market.

“It’s a simple equation to stay ahead of all of the upcoming competition, sell at scale the best value EV. That is a combination of design, range, advanced driving features and buying experience,” he said.

According to the latest numbers from Alix Partners, electric vehicles including fully battery electric cars like Tesla’s are on a path to comprise 28% of all new light commercial and passenger car sales worldwide by 2030.

The Biden administration is targeting a 50% overall reduction in greenhouse gas emissions by the US by 2030.

According to a 2021 study by Common Energy Labs, the transportation sector is the single largest driver of greenhouse gas emissions in the US today, representing about 28% of total emissions. The majority of transportation emissions derive from passenger vehicles, light- and medium-duty trucks. No significant reduction in greenhouse gas emissions can be achieved in the US without both electrifying these vehicles, and moving the power sector off of fossil fuels.

This is a developing story. Check back for updates.

— CNBC’s Michael Wayland contributed reporting.

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UK health minister says Covid cases may hit 100,000 a day in winter

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Commuters, some wearing face coverings to help prevent the spread of coronavirus, ride a Transport for London (TfL) underground train in London on October 20, 2021.

TOLGA AKMEN | AFP | Getty Images

LONDON — U.K. Health Secretary Sajid Javid on Wednesday said that the government won’t be implementing the so-called plan B strategy of its fall-winter Covid plan, defying warnings from health leaders that the country risks “stumbling into a winter crisis.”

“We are looking closely at the data and we won’t be implementing our plan B of contingency measures at this point,” Javid said, speaking at the government’s first coronavirus news conference in more than a month.

“But we will be staying vigilant, preparing for all eventualities while strengthening our vital defenses that can help us fight back against this virus.”

Javid said the NHS was “performing with distinction,” acknowledging that the health service was seeing greater pressure but rejected the suggestion that it was unsustainable.

“We will do what it takes to make sure that this pressure doesn’t become unsustainable and that we don’t allow the NHS to become overwhelmed.”

Javid said that winter poses the “greatest threat” to the recovery from Covid, adding that cases could yet climb as high as 100,000 per day.

It comes shortly after the National Health Service Confederation, which represents organizations across the U.K. health-care sector, warned some Covid restrictions must be reintroduced “without delay” if the government is to keep people healthy and prevent hospitals from becoming overwhelmed this winter.

This is because the NHS is seeing a “worrying” increase in Covid cases in hospitals and the community as it prepares for a busy winter period, they added.

Britain’s Health Secretary Sajid Javid speaks during a press conference at Downing Street on October 20, 2021 in London, England.

Toby Melville | WPA Pool | Getty Images News

The U.K. recorded 49,139 new Covid cases on Wednesday, according to the latest government data, and 179 deaths within 28 days of a positive test.

The seven-day average of new Covid cases in the U.K. has jumped from around 34,000 at the beginning of October. Meanwhile, the number of people in the hospital who have Covid has surged by 11% in a week.

To date, the U.K. has recorded more than 8.5 million Covid cases and 139,265 deaths, according to data compiled by Johns Hopkins University. The U.K. ranks among the countries with the highest death tolls worldwide.

Making matters worse, potentially, is a new mutation of the delta variant that British experts are watching closely.

Downing Street said earlier this week that it was closely monitoring rising cases, but the Cabinet had not yet discussed contingency measures.

Business Secretary Kwasi Kwarteng told Sky News on Wednesday that it was not yet time for the government’s so-called Plan B strategy, saying the focus should be on administering more booster shots instead.

Kwarteng also ruled out the prospect of another national lockdown.

Rising cases across Europe

If the NHS was deemed to be at risk of coming under unsustainable pressure, Javid said those contingency measures could kick in across England. That includes the possibility of making masks mandatory in certain settings, vaccine passports for events and encouraging remote working.

Health and care policy is devolved across the U.K., with different provisions made in Wales, Scotland and Northern Ireland.

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