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Our briefing for Monday, March 21, 2022:
Mar 21, 2022 3:12:06 PM
- In the United States, the country’s top infectious disease expert says a new surge of cases is likely thanks to the BA.2 virus subvariant. Dr. Anthony Fauci told ABC’s This Week on Sunday that the latest surge will not be a dangerous one, and also added that he thinks the country is “clearly going in the right direction” on the coronavirus pandemic. According to Fauci, the BA.2 variant is about 50-60% more transmissible than Omicron. “So the bottom line is we likely will see an uptick in cases as we’ve seen in the European countries, particularly the UK, where … they have BA.2,” Fauci said. “Hopefully, we won’t see a surge. I don’t think we will. The easiest way to prevent that is to continue to get people vaccinated.
- In Canada, the popular organization known as Vaccine Hunters will shut down its operations after one year of helping Canadians hunt for vaccines across the country. Vaccine Hunters launched in March 2021 and quickly grew in popularity on several social media channels. The organization became so widely known that it partnered with the City of Toronto and got shoutouts from Prime Minister Justin Trudeau and Dr. Theresa Tam. “While Canada’s fight against COVID-19 isn’t over, we are happy that millions of Canadians are fully vaccinated with vaccines now being readily available for anyone who is looking,” the group said in a news release. To date, 85% of Canadians are fully vaccinated, 89% of eligible Canadians have received at least one dose and 47% have received their boosters.
- In the United Kingdom, the National Health Service (NHS) has started offering second booster shots to those who are at higher risk from Covid-19. Approximately 5 million people will be eligible; those who are 75 and over, those living in long-term care homes and those who are immunocompromised. These groups will be contacted by NHS and advised to book an appointment online or by phone. The rollout comes after the Joint Committee on Vaccination and Immunisation advised the government last month that the three at-risk groups be offered a second booster to deal with waning immunity. Covid-19 cases and hospitalizations in the U.K. are on the rise, which experts say is linked to the lifting of restrictions.
- Germany’s parliament voted on Friday in favour of abolishing all remaining coronavirus restrictions, despite rising case numbers and hospitalizations. The new legislation would see the end of mask mandates except in places like long-term care homes and public transportation. Initially the new rules were supposed to take effect from Sunday, but a transitional period will take place until April 2 after some opposition from Germany’s 16 state leaders. Health Minister Karl Lauterbach defended the decision. "We can't continue to put the entire country under a shield in order to protect a small group of people who are unwilling to get vaccinated," he said. "The balance is being shifted."
- Hong Kong will ease some coronavirus restrictions next month, in an apparent shift from the country’s zero-Covid policy to living with the virus. Chief Executive Carrie Lam announced that a ban on flights from nine countries will be lifted, quarantine will be reduced and schools reopened, after much backlash from businesses and citizens. A ban on flights from Australia, Britain, Canada, France, India, Nepal, Pakistan, the Philippines and the United States will be lifted from April 1, as Lam says the ban is “no longer timely or appropriate.” Restrictions on gathering limits, masking and business operations will begin to lift in three phases from April 20. Schools will resume face-to-face learning on April 19, and the country’s mandatory mass testing scheme has been suspended for now.
- In Australia, the federal government has announced a new $75.5 million support package for those in the travel industry dealing with Covid-19. The new program, which will consist of grants between $7,500 and $90,000, intends to offer targeted assistance to travel agents and tour arrangement providers. The funds are to be directed to helping travellers rebook trips with Covid-related credits. Dan Tehan, the country’s tourism minister, said the package would help the industry rebound from the pandemic downturns. “Australia’s tourism industry is bouncing back, with international and state borders now open and a date set for the resumption of cruising,” he said.
Covid-19 – Due Diligence And Asset Management
KKR Says Investors Will Need to Take More Risk to See Returns
Brief: KKR & Co. warned that investing will require more risk given the market turmoil driven by Russia’s invasion of Ukraine. There may be opportunities in beaten-down growth stocks, liquid credit and inflation-hedging proxies including real estate and infrastructure, KKR’s Henry McVey and Racim Allouani said in a March 9 report to clients. Tightened financial conditions are also creating the prospect of partnering with companies facing temporary business disruptions or that have weak capital structures, they said. Low rates and government stimulus have boosted markets in recent years, with investors enjoying outsized returns even with relative safe portfolios. The war has created turmoil across asset classes from stocks and bonds to commodities and “tremendous volatility,” they noted.“The current crisis makes forecasting risk parameters such as risk of loss, volatilities, and correlations only more challenging,” said McVey, KKR’s head of global macro, balance sheet and risk, and Allouani, a managing director.
The stock market is depressed, and apparently that's great
Brief: Markets have rallied nicely off the early March lows that were triggered by the start of Russia's war on Ukraine, but they are still dealing with a bout of depression. The percentage of individual investors who consider themselves bullish has averaged just 23.9% over the past 10 weeks, according to the American Association of Individual Investors (AAII). Truist co-chief investment officer Keith Lerner points out this is the lowest average level of bullishness since the June 2016 Brexit referendum and one of the least optimistic readings since the survey's inception in 1987. So what has this level of depression historically meant for the stock market in the months ahead? You guessed it, a rally! Historically, these low levels on the survey have been followed by consistent and positive returns on a six- to 12-month basis for the S&P 500, Lerner notes. Only in the land of investing does bad equal good (maybe it does in other places, who knows).
Companies Shelve $25 Billion of Fund-Raising Deals as War Rages
Brief: Firms across the globe are ditching fund-raising deals at a quickening pace, as volatility destabilizes credit markets following Russia’s invasion of Ukraine. Electric car giant Tesla Inc. is the latest big name firm to scrap financing plans, as it postponed a $1 billion offering of bonds backed by leases on its vehicles last week. Almost 80 companies, nearly half from the U.S., have put at least $25 billion of deals on hold since the start of the war nearly a month ago. “There has been a severe jolt to investor confidence since the invasion of Ukraine as sanctions have been slapped on Russia and commodity prices roared upwards,” said Susannah Streeter, senior investment and markets analyst with Hargreaves Lansdown Plc. The caution has reached all corners of the globe. India’s Mumbai International Airport Ltd. recently delayed a dollar bond deal, SS&C Technologies Holdings Inc. halted a $1.7 billion buyout loan on Wednesday and Brazil’s Trocafone SA scrapped an initial public offering.
Pandemic hiring boom: Federal government added nearly 20,000 workers in a single year
Brief: The Trudeau administration spent so much money during the first year of the pandemic that it was easy to lose track of the profound growth taking place in the size of the federal government’s workforce.Employment across the country jumped more than six per cent year over year to 319,600 for all departments and agencies, according to data compiled by Treasury Board. That’s an increase of nearly 20,000 between the first three months of 2020 and the same period last year. Last year’s increase was more than double the average annual employment gains posted by federal government workers between 2015 and 2020, covering years the Liberals have been in power. The financial impact was significant: The federal government’s total payroll reached nearly $60 billion in fiscal 2021, up $4.4 billion from the previous year, according to the public accounts.
Investor behavior in Europe is mirroring the market’s worst crises, new research shows
Brief: European fund flow patterns so far this year are emulating historical crisis periods for markets, including the 2008 global financial cash, according to new research from data firm Refinitiv. A sluggish market environment, lingering concerns around the Covid-19 pandemic and the emerging geopolitical tensions in Europe meant the continent’s fund industry saw net outflows in February that took overall flows so far this year to -57.2 billion euros (-$63.2 billion), according to the research. Mutual funds — pools from investors allocated by fund managers into stocks, bonds, money market instruments and other securities — faced 67.6 billion euros of outflows in February alone. Meanwhile exchange-traded funds (ETFs) — baskets of securities that trade on regular stock exchanges — enjoyed inflows of 9.2 billion euros.
