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Our briefing for Thursday April 16, 2020:
Apr 16, 2020 4:38:33 PM
- In the United States 22 million Americans have filed for unemployment benefits in the last month. The country released their latest numbers on Thursday and another 5.2 million workers filed for benefits in the last week. New York state Governor Andrew Cuomo extended the lockdown of his state until May 15th. New Yorkers must now also wear masks while riding public transportation and in hired cars as state officials try to reduce the risk of spread. New York state was the hotspot for the virus and is the epicentre for the world economy, which may put a speed bump in President Donald Trump’s plan of reopening the country.
- Canada’s long-term care facilities continue to be a top priority for government officials as the coronavirus has displayed noticeable holes in its checks and balances. Prime Minister Justin Trudeau is set to speak with the country’s premiers on Thursday about how to boost pay for critical support workers in long-term care homes. Canada’s chief public health official has noted in the past, half of the COVID-19 deaths in the country are linked to long-term care facilities. Quebec has even requested more doctors and members of the Canadian Armed Forces to come and help with the situation.
- The United Kingdom has extended its nationwide lockdown for at least another three weeks. Deputy leader Dominic Raab stated the country has not yet passed its peak infection rate and that the government has five tests set out that must be met before restrictions can be relaxed, or the lockdown ended. They include a sustained, and consistent fall in daily death rates, confidence in testing, and that the National Health Service can cope with demand, just to name a few.
- France’s President Emmanuel Macron said during a French radio interview that he has the backing of world leaders such as the United States, the United Kingdom and China for a global ceasefire and essentially world peace as the coronavirus pandemic spreads throughout the world. Macron also stated he was hopeful of obtaining Russia President Vladimir Putin’s support as well.
- Australia will keep its restrictions in place for at least four more weeks. Prime Minister Scott Morrison notes that over the next month, he hopes his country can expand testing, improve its capacity to trace contacts of known coronavirus cases, and plan a response to any further local outbreaks. Current measures in place include restriction of citizen movement, and the closures of schools, restaurants, and pubs.
- Japan’s Prime Minister Shinzo Abe has issued a nationwide state of emergency due to the coronavirus worsening throughout the country. The state of emergency will remain in place until May 6th. Prime Minister Abe’s response to the virus outbreak has been met with criticism. A recent poll has 75% of Japanese residents thinking it took their prime minister too long to declare a state of emergency in the country’s largest city, Tokyo.
Covid-19 – Due Diligence And Asset Management
Algebris Liquidates Quant Arbitrage Fund After Performance Collapses in Virus Turmoil
Brief: Algebris Investments, the London-based hedge fund, is liquidating its Quant Arbitrage fund following prolonged poor performance in 2020.The $12bn hedge fund firm, which manages credit and equity market-focused strategies, launched the Quant Arbitrage fund in May 2019 to take advantage of spikes in volatility. But according to data on MorningStar.com, the €26m fund was down 48% in 2020 until 14 April, having fallen foul of the Coronavirus-induced market turmoil and with its equity portfolio suffering as a result of recent marked declines in equity markets. A person close to the situation said the Quant Arbitrage fund, managed by Gianluca Lobefalo, the firm’s head of quant strategies, was in the process of being liquidated. “It was an experiment that didn’t work,” they said, adding Algebris didn’t want the “contagion effect to spread to other funds” run by the firm.
Morgan Stanley CEO James Gorman sees Coronavirus-Induced Recession Lasting Through all of 2021
Brief: Morgan StanleyCEOJames Gormansees the coronavirus-induced global recession lasting for the entirety of this year and 2021. When asked about how a potential economic recovery expected in the second half of this year would take shape, Gorman said that while he hopes it will be a sharp “V” recovery, in reality it will probably take longer to reopen cities and factories. “If I were a betting man, it’s somewhere between a `U’ or ‘L’” shaped recovery, Gorman told CNBC Thursday in an interview. “I would say through the end of next year, we’re going to be working through the global recession.”
Hedge Fund Elliott says Stocks Could Fall 50% From February Highs
Brief: Billionaire Paul Singer’s Elliott Management said global stocks could tumble more — ultimately losing half of their value from February’s high— as the world braces for the deepest recession since the 1930s-era Great Depression, according to a letter sent to clients on Wednesday and reviewed by Reuters. The New York-based hedge fund firm, which controls $40.4 billion in assets and whose views on markets and economics are closely watched by investors, wrote that the sharp market decline seen between late February and late March “provided a heavy bookend to a dozen years of basically nonstop positive returns in global stocks, bonds and real estate.“ And the rout is likely not yet over.
BlackRock’s Assets Under Management Shrink Amid Market Turmoil
Brief: BlackRock Inc’s (BLK.N) assets under management dipped sharply in the first quarter amid turmoil in global markets caused by concerns about the economic fallout of the coronavirus outbreak. BlackRock’s assets fell to $6.47 trillion from $7.43 trillion at the end of the fourth quarter. “We had vast de-risking from February 21 to the end of the quarter,” Chief Executive Officer Larry Fink said on a conference call with analysts. Worries about the economic fallout of the coronavirus pandemic hammered global financial markets in the first quarter and soured investor appetite for riskier assets like stocks. The benchmark S&P 500 index fell 20% during the period.
Fortress Targets $3 Billion for New Credit Opportunities Fund
Brief: Fortress Investment Group is talking to investors about raising at least $3 billion for a new credit fund as it anticipates forced selling and broader illiquidity as companies around the world grapple with the Covid-19 pandemic. The New York-based firm this week began sounding out interest in a vehicle known as Fortress Credit Opportunities Fund V Expansion, according to people with knowledge of the matter, who requested anonymity because the information is private. The firm could raise $5 billion or more depending on demand, one of the people said. Gordon Runte, a spokesman for the firm, declined to comment. The credit arm of Fortress is led by co-founder Pete Briger and fared well in the prior financial crisis. Its first credit opportunities fund, launched in 2008 at $3 billion, delivered an annualized gross internal rate of return of 34% through the end of last year, according to a document sent to investors this week.
SEC Staff Urges Investment Cos. To Update Info Despite Virus
Brief: Investment companies should make every effort to deliver timely financial information and risk disclosures to investors despite the disruptive effect of the coronavirus pandemic, U.S. Securities and Exchange Commissionstaff said.While the SEC has worked to provide selective relief to companies affected by COVID-19, investment companies should remain mindful of their obligations to provide key information to investors, Division of Investment Management staff said in a statement Tuesday.“In light of the current uncertainties and market disruptions, investors need high-quality financial information more than ever,” the statement said. “We are committed to promoting the updating and delivery of such information, which is particularly important to keep Main Street investors up to date about their investments.”Investment companies must update information in their prospectuses, including the underlying financial statements, SEC staff said. Companies should also weigh whether to update their risk disclosures in light of the pandemic, the statement said.
