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Our briefing for Monday June 14, 2021:
Jun 14, 2021 4:00:12 PM
- United Kingdom Prime Minister Boris Johnson and his government have pushed back its plans to lift England’s coronavirus restrictions at least another four weeks. Prime Minister Johnson was forced to make the move on Monday after modeling showed hospital admissions could reach similar levels to the pandemic’s first wave back in March 2020, to just over 3,000 a day if the government stuck to its schedule of ending social distancing rules as of June 21st. “As things stand, and on the evidence I can see right now, I’m confident that we will not need more than four weeks,” Johnson said. “By being cautious now, we have the chance in the next four weeks to save many thousands of lives by vaccinating millions of people.” The government will review the data again on June 28th, with the possibility of easing restrictions by July 5th if it looks better than expected, but this is considered unlikely.
- In the United States, biotech company Novavax announced on Monday that its coronavirus vaccine candidate has shown an overall efficacy of 90.4% in Phase 3 trials conducted across the country and Mexico. The study has been ongoing since December 2020 and enrolled close to 30,000 adults across 113 sites in the United States and six sites in Mexico. Novavax’s next step is to apply in the United States for emergency use authorization of its vaccine in the third quarter of this year and is on track to manufacture about 100 million doses per month once given the green light.
- In Canada, the land border between the country’s two most populous provinces is set to reopen to all forms of travel starting Wednesday. The border between Ontario and Quebec was initially closed in late April to non-essential trips as Ontario was enduring a spike in COVID-19 cases. The decision comes as the coronavirus cases continue to improve in both provinces. As of Monday morning, all Quebec regions that were previously classified in the orange zone on the province’s COVID-19 alert system were downgraded to yellow. The Ontario land border will also re-open to Manitoba on Wednesday.
- France’s central bank said the economy is expected to return to pre-pandemic output at the start of 2022. The Bank of France stated the lifting of restrictions and the acceleration of vaccinations will fuel a stronger than previously expected rebound in the second half of 2021. The quickening of the economic recovery has triggered talks from members of the European Central Bank (ECB) on how and when to end its emergency support measures. Bank of France Central Governor Francois Villeroy de Galhau stated any talk of tapering support measures is speculative and the recent acceleration in inflation that could lead the ECB to tighten policy is only temporary.
- In Germany, Health Minister Jens Spahn suggested over the weekend to end the mask mandate for outdoor activities as COVID-19 infections continue to decline. Speaking in an interview, Spahn said ending the mask mandate should proceed in stages and will remain recommended “when in doubt” for instance when travelling or meeting indoors. Germany registered just 549 COVID-19 cases on Monday – the lowest daily total since September 21st.
- Saudi Arabia will bar foreign pilgrims from visiting the Hajj for a second straight year due to COVID-19. The nation has restricted the annual pilgrimage to citizens and residents, set a maximum of 60,000 and those wishing to partake must be free of chronic diseases, be vaccinated and between the ages of 18 and 65. Last year, the kingdom reduced the number of pilgrims to just about 1,000 Saudi citizens and residents and was the first time Muslims from abroad were barred from the religious rite of passage in modern times. Before the pandemic, some 2.5 million pilgrims used to visit the holiest sites of Islam in Mecca and Medina for the week-long Hajj, which earned Saudi Arabia about $12 billion a year, according to official data.
Covid-19 – Due Diligence And Asset Management
Wall Street’s Return-to-Office Divide Laid Bare by Goldman, Citi
Brief : It’s a short stroll from Goldman Sachs Group Inc.’s global headquarters to Citigroup Inc.’s, but when it comes to reopening after the pandemic, the two Manhattan towers might as well be thousands of miles apart. Starting this morning, Goldman Sachs is requiring almost all employees at its perch over the Hudson River to report to their desks, marking one of Wall Street’s most ambitious returns to the workplace since COVID-19 besieged the city more than a year ago. Meanwhile, Citigroup won’t recall more of its staff to its mostly empty Tribeca tower in downtown Manhattan until July. Even then, the firm has told most workers that they can adopt a so-called hybrid schedule between home and the office longer term. Such divergences are popping up across Manhattan’s mighty financial industry, creating pockets of optimism within the city’s economy, but widespread anxiety inside workplaces. Bosses worry their teams will be less competitive if members are slow to come back. Parents fret about losing remote-work flexibility, but also that young, single colleagues and competitors may rush back sooner and soak up face time with executives or clients. “Women are absolutely nervous about it,” said Rob Dicks, Accenture Plc’s talent and organization lead for capital markets. “I’m seeing the HR and business leaders at banks recognizing, understanding and starting to plan around fairness in evaluations.”
Club Deals Are Back. Here’s Why Asset Owners Are Skeptical
Brief: Club deals are back, whether institutional investors want them or not. Since the beginning of June, Blackstone has announced that it completed three massive transactions alongside fellow private equity firms. Asset owners are watching closely to see if they're a sign that club deals are becoming market mainstays. And it’s for good reason: when multiple private equity firms join forces and pool their resources to buy a big company, limited partners in their funds don't always benefit… Club deals were popular in the lead up to the Great Financial Crisis of 2008, as PitchBook noted in a recent analyst note. In fact, in retrospect, they ended up being a signal for the peak of the market, unsustainable valuations, and a symptom of how much money the industry was sitting on. In some cases, they also ended in bankruptcy. For instance, after KKR, TPG, and Goldman Sachs acquired Energy Future Holdings for $45 billion, the company filed for bankruptcy in 2014. And it’s not the only one: Toys R Us and Caesars Entertainment were also victims of club deals, according to PitchBook. While the return of these deals may not signal a 2008-like market downturn, they do show that there is a mountain of dry powder waiting to be invested, but not enough companies to go around.
Dimon Warns of Bigger Trading Revenue Drop After Covid Boom
Brief: Wall Street’s pandemic-era trading boom could be drawing to a close, with JPMorgan Chase & Co. Chief Executive Officer Jamie Dimon signaling a 38% decline in trading revenue from a year ago -- a bigger drop than previously expected. Trading revenue at the largest U.S. bank will drop to just north of $6 billion in the second quarter, Dimon said Monday at a Morgan Stanley virtual conference. That tally could end up lower than the already reduced average analyst estimate of $6.5 billion, according to data compiled by Bloomberg. The drop comes after a year of pandemic-induced market volatility proved lucrative for the biggest Wall Street operations. JPMorgan shares dropped as much as 2% after Dimon’s comments, continuing a slide after the stock hit an all-time high earlier this month, with other bank stocks declining as well. This quarter will be “more normal” for fixed-income and equities trading, meaning “something a little bit north of $6 billion, which is still pretty good, by the way,” he said. Investment-banking revenue, meanwhile, will be driven up by an active mergers-and-acquisitions market, resulting in what “could be one of the best quarters you’ve ever seen” for that business.
Aviva Investors to Dismiss Ten Equity Fund Managers
Brief: Aviva Investors, the investment arm of insurer Aviva, is reported to be laying off ten equity managers in an attempt to cut costs, with high-profile managers including Mikhail Zverev set to leave the firm. Aviva Investors has confirmed that "a number of roles have been put at risk" in its equities team, and said that consultations with the "impacted individuals" were underway, adding that "we are unable to provide further details while we go through the consultation process". According to The Mail on Sunday, the decision to reduce its equity management team will leave 25 fund managers at Aviva Investors and comes as activist investor Cevian Capital has built up a 5% stake in the insurer. Aviva Investors has confirmed that chief investment officer for equities David Cumming has already left the business. In a statement, Aviva Investors said: "We have taken the decision to focus our equities business on sustainable outcomes and core strategies where there is clear client demand, namely UK and global equities, while retaining sufficient coverage to support our multi-asset strategies." It added: "As a result of this decision, we have mutually agreed with David Cumming that he will leave Aviva Investors to pursue other opportunities. We would like to thank David for his positive contribution to the business since joining in 2018 and wish him all the best for the future."
Fed-up Young Workers Fear They Need Offices to Save Their Careers
Brief: Managers hoping to lure employees into offices may find their youngest and newest staff are their strongest allies. Young white-collar staff feel caught between a rock and a hard place — they value quality of life over old-fashioned 9-5 commuting, but are even more worried about seeing their careers stall unless they head back into an office. That’s encouraging many to be among the first to return to their desks. While experienced employees often have established professional networks and dedicated home offices, younger staff say the pandemic has left them under-informed and cut off from their teams. There are now growing concerns that they are missing out on career opportunities older colleagues took for granted. Well over half of staff aged 21-30 stressed the importance of being able to meet and work with colleagues in person again, according to a 6,000-person survey carried out for Sharp Corp., results of which were shared with Bloomberg. Nearly 60 per cent said working in a modern, collegiate office environment has become more important to them over the past year. Despite a majority under 30 saying remote work made them more productive, over half of the survey’s respondents across Europe — ranging in age from 18 to 45 — say they feel anxious about a lack of training and career opportunities when thinking long-term about the future of work.
