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Our briefing for Thursday April 9, 2020:
Apr 9, 2020 3:35:42 PM
- United Kingdom Prime Minister Boris Johnson was moved out of the intensive care unit (ICU) of a London hospital Thursday evening and was described as being in “extremely good spirits”. Johnson had been in St. Thomas Hospital’s ICU unit since Monday evening when his coronavirus symptoms took a turn for the worse. Downing Street officials noted Johnson is now back in the ward unit of the hospital and is being closely monitored. Meanwhile, deputy leader Dominic Raab noted the government will not consider lifting its lockdown of the country until the end of next week at the earliest. The UK have over 65,000 confirmed cases and close to 8,000 deaths due to the coronavirus.
- As the United States are suffering from their deadliest week so far due to the coronavirus, a new model forecasts fewer projected deaths. The model shows just over 60,000 might succumb to the disease by August, much lower than 100,000-200,000 forecasted just a few weeks ago. The updated model though assumes social distancing measures, such as school closures and businesses remain closed until August. This may be difficult as the newest unemployment numbers were released on Thursday with 6.6 million more Americans filing for benefits this week. This brings the total number to 16.8 million, or about 11% of the country’s workforce unemployed.
- Canada was dealing with some grim realities on Thursday. During his media briefing, Canadian Prime Minister Justin Trudeau outlined the country’s projected numbers for the coronavirus. Trudeau said there could be nearly 32,000 cases by this time next week (currently 20,000+) with between 500-700 deaths. Over the course of the pandemic, Canada could have anywhere between 11,000-22,000 deaths even with strong control measures in place. Similar to America, those strong measures will be hard to keep with the first wave possibly lasting into the summer, with other outbreaks erupting after that, and likely no vaccine. The Prime Minister called this the challenge of the generation and cited “this will be the new normal until a vaccine is developed.” Government officials also announced the country’s worst monthly job loss ever, with more than a million Canadians finding themselves unemployed in March.
- Germany will be the first country in the world to carry out large-scale antibody testing for the coronavirus. The tests will be split into blood donations, one of four distinct areas that saw outbreaks of the virus and a representative study of the broader population. The aim of the study is to find out how many Germans are immune to the virus.
- In what could be an alarming trend in a virus that is so new, 74 people in South Korea who had been diagnosed as recovered from the coronavirus have tested positive for it a second time after being released from hospitals. The director for the country’s disease control and prevention said some of the patients didn’t show any symptoms before the follow-up tests turned positive, while others did show respiratory symptoms. So far, none of these patients have seen their illness worsen to serious conditions.
Covid-19 – Due Diligence And Asset Management
Mnunchin Says U.S. Economy Could Open in May, Defying Experts
Brief: U.S. Treasury Secretary Steven Mnuchin said on Thursday that the American economy could start to reopen for business in May, despite many medical experts saying that closures and social distancing measures will need to stay in place for longer to defeat the coronavirus. Asked on CNBC whether he thought President Donald Trump could reopen the U.S. economy in May, Mnuchin said, “I do.” “As soon as the president feels comfortable with the medical issues, we are making everything necessary that American companies and American workers can be open for business and that they have the liquidity they need to operate the business in the interim.” U.S. economists have cautioned against bringing large numbers of people back to their workplaces too quickly.
Morgan Stanley CEO James Gorman Recovers from COVID-19
Brief: Morgan Stanley’s (MS.N) Chief Executive Officer James Gorman said he has fully recovered from the illness caused by the novel coronavirus, according to a video that was sent to the bank’s employees on Thursday. Gorman released the 10-minute video to staff by email in which he said he had tested positive for coronavirus and had been fully cleared by doctors more than a week ago. Gorman is currently undergoing self-isolation at home and working remotely, according to the video. A Morgan Stanley spokesman confirmed the contents of the video, adding the development was not considered to be material because Gorman was not incapacitated at any time.
UK Accounting Watchdog Postpones Break-Up of Big Four
Brief: The UK’s accountancy watchdog has paused its plans to separate the Big Four accountancy firms, as the profession tackles the disruptions caused by the Covid-19 downturn. In astatementfrom the Financial Reporting Council on April 9, the watchdog said it would stop all “demands on, requests from and meetings with audit firms on operational separation”. The pause will be reviewed in one month’s time. The decision to put the break-up on hold comes shortly after the FRC wrote to the leaders ofDeloitte, EY, KPMG and PwC outlining its separation plans. In a statement at the end of February, Claire Lindridge, the FRC’s director of audit firm monitoring and supervision had said the firms would be expected to ensure their “audit practice is properly ring fenced”, so that “financial results are clear and transparent”.
BlackRock’s Fink Vows No Layoffs Due to Impact of Coronavirus
Brief: BlackRock Inc. won’t layoff any employees this year as a result of the coronavirus, according to chief executive officer Larry Fink. The world’s largest asset manager will also pay full-time wages to the people staffing its facilities, including cafeteria and maintenance workers, even if they can’t come to work, Fink said Wednesday in a post on LinkedIn. More than 90% of BlackRock employees are working remotely. The firm employs more than 16,000 people worldwide. The announcement comes as global companies grapple with major changes to their businesses, with the pandemic spurring an unprecedented shift to working from home. Fink said last month he had “never experienced anything like this” in more than four decades working in finance, but expected the economy to recover eventually.
Hedge Fund Billionaire Paul Singer Reportedly Warned his Employees of Coronavirus More than a Month Before US Officials Started to Prepare
Brief: Paul Singer, billionaire founder of the $40 billion Elliot Management hedge fund, apparently warned his staff of the coronavirus' ramifications well before many other leaders appeared concerned. On February 1, according to a memo seen by Bloomberg News' Katia Porzecanski, Singer told employees to prepare for at least a month of self-isolation at home. That meant making sure they had "access to sufficient food, water, and medicines." His memo came well before many US officials warned of such drastic effects. New York State, for example, did not close bars and restaurants until March 16, the same week the Centers for Disease Control warned against gatherings of more than 10 people.
Eyeing Defaults, U.S. Direct Lender Colchis Capital to Shut Funds
Brief: San Francisco-based Colchis Capital Management LP, a pioneer backer of online direct lending platforms, is winding down its main funds as disruptions caused by the novel coronavirus have started to hit its consumer and real estate loans, according to materials reviewed by Reuters. “The largest risk to the Colchis Income Funds is unemployment for our consumer loans and weakness in the housing market for our bridge real estate loans,” Colchis Chief Investment Officer Robert Conrads wrote in a letter to investors on March 31. “Moreover, there is no consensus as to the timing or strength of the recovery in employment and economic conditions.”
