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Our briefing for Thursday July 22, 2021:
Jul 22, 2021 1:23:48 PM
- In the United States, the government announced that the land border will remain closed to non-essential travel until August 21st, shortly after Canada announced it would open its border to fully vaccinated American travellers on August 9th. The existing U.S. border restrictions have been in place since March 2020 and were set to expire on Wednesday. Canadian Prime Minister Justin Trudeau said it’s not up to Canadians to “dictate” how the United States reopens its border. “I think every country should and does set its own border policies. We have been working with the United States to keep them informed to make sure that as much as possible our choices are aligned, but you will have seen, everyone will have seen that our countries took different approaches certainly during the beginning of the pandemic,” he said.
- In Canada, the demand for vaccines has slowed, according to statistics provided by Our World in Data. Less than one per cent of Canadians were vaccinated per day over the last week, a decrease from the all-time high of 1.44 per day at the end of June. The drop is to be expected considering almost 80% of the population has now had at least one dose of vaccine. A new poll by Leger and the Association for Canadian Studies suggests that the majority of Canadians believe proof of vaccination should be required for all travellers. Travellers should be required to show a “vaccine passport” according to 58% of survey respondents, while about 30% say the document is not necessary.
- The world is watching the United Kingdom, as they continue to live without Covid-19 restrictions while cases numbers rise. The daily numbers have been close to 50,000, higher than those reported in Brazil, India or South Africa. Nadhim Zahawi, the vaccine deployment minister, announced the rollout of the National Health Service (NHS) Covid-19 pass, which may soon be required at events where there are large numbers of people. “For proprietors of venues and events where large numbers are likely to gather and likely to mix with people from outside their households for prolonged periods, deploying the pass is the right thing to do,” Zahawi said. “The pass has an important role to play in slowing the spread of the virus and so we reserve the right to mandate its use in the future.”
- France rolled out their Covid-19 health pass on Wednesday as new infections soared. People wanting to visit cultural venues like museums or cinemas now have to present the pass in order to do so. To get the pass, French citizens must show proof that they are fully vaccinated, have tested negative for the coronavirus or recovered from Covid-19. In August, the pass will be extended to include restaurants and shopping centres. On Tuesday France reported over 18,000 new infections in a 24 hour period. Authorities have warned that the rise in cases means France has officially entered a fourth wave of infections.
- In Germany, Chancellor Angela Merkel is urging citizens to get vaccinated as the country anticipates another rise in coronavirus case numbers. Although Germany’s infection rate remains very low compared to most European countries, Merkel says the numbers are rising with “worrying momentum.” Slightly over 60% of the German population has received a first dose of vaccine, while about 48% are fully vaccinated. While she encouraged Germans to stick to mask wearing and social distancing rules, Merkel said vaccination is the only way out of the pandemic. “We all want our normality back,” she told reporters. “But we won’t get this normality back alone, only as a community. And for this we need significantly more vaccine protection.”
- In Japan, Tokyo has hit a six-month high for new Covid-19 cases, just before the Olympic opening ceremony. There were 1,832 new cases reported on Wednesday, the highest number reported since January. Experts have warned that infections will likely worsen in the coming weeks, and noted that cases are rising among younger, unvaccinated people. The African country of Guinea pulled out of this year’s Olympics, citing concerns about Covid-19 and the need to protect the health and safety of their athletes.
Covid-19 – Due Diligence And Asset Management
Hedge Fund Assets Near USD4 Trillion as Fresh Inflation Fears Push Investors Towards Alternatives
Brief : Growing numbers of investors are turning to hedge funds to protect their portfolios in the face of inflationary fears, with total industry capital swelling to almost USD4 trillion and more allocators set to tilt towards alternative assets, new research shows. Alternatives technology provider Vidrio Financial’s latest allocator market survey suggests inflation fears during the first half of 2021 are driving further allocations to alternative asset classes, such as hedge funds and private equity, which have historically outperformed equities and bonds during periods of inflation. The Vidrio Financial Allocator Market Survey quizzed some 4,500 institutional investors globally in late June, collectively representing USD100 billion in assets under management and split roughly 60/40 between North America and EMEA,
Investors Unlikely to Reward Pandemic-Boosted Canadian Bank Results: Analyst
Brief: Long-time Bay Street banking analyst Nigel D’Souza doesn’t think investors are poised to reward Canada's Big Six banks for their upcoming financial results that may see a boost from pandemic-related factors. D’Souza, the financial services investment analyst at Veritas Investment Research, said in a broadcast interview Wednesday that investors would likely look through the pandemic-related noise towards a more normalized operating environment, which could limit the upside for shares of the Big Six banks. “We think the market is no longer going to reward banks that do well on earnings based on temporary pandemic-related factors such as record or elevated capital market revenues and significant credit loss reversals,” he said.
Embedded as a Risk, New COVID Cycle Could Challenge Fed, Recovery
Brief: Five weeks after dropping its reference to the coronavirus as a weight on the economy, the U.S. Federal Reserve is confronting a challenging new rise in cases that has fueled doubts about the global recovery and is already forcing other central banks to consider retooling their policies. The daily pace of new infections has more than doubled since the Fed's June 16 policy meeting, when Chair Jerome Powell said that while it was "premature to declare victory" given the appearance of the more infectious coronavirus Delta variant, a decline in infections, hospitalizations and deaths "should continue." It hasn't, and while the worst current outbreaks have been localized, news of rising case loads once again straining hospital capacity spilled into financial markets with a sharp Monday sell-off.
Morgan Stanley: 'No Need' to Lower GDP Forecasts on Delta Variant Risks
Brief : The surge in COVID-19 cases from the Delta variant is not yet substantial enough to darken the U.S. economic outlook, said Morgan Stanley’s top U.S. economist. “I feel no need to take down GDP growth forecasts on the risks around the Delta variant,” Ellen Zentner told Yahoo Finance on Wednesday. “I think we’ve done a good job of self-policing all through COVID and that means it can dampen some of the effects.” On Monday, rising case counts rattled equity markets as the major stock indexes logged their worst declines since May. The fear: that the reinstatement of mask mandates in some corners of the country could foreshadow the return of lockdowns if the spread gets worse. Markets largely reversed those losses on Tuesday.
Hedge Fund Born in Pandemic Reaps 23% Gain From AMC, Hertz
Brief: Hedge fund manager Dan Gropper was short AMC Entertainment Holdings Inc. when the Redditors began their moon launch of the movie theater chain. Just six months into running a new fund, he decided he wouldn’t be going down like that. Gropper, who had managed money at Aurelius Capital Management and Fortress Investment Group before starting Carronade Capital Management, covered 20% of his short on Jan. 26, when AMC closed under $5, and the rest a day later, as the stock soared to $20. AMC wasn’t even a directional short bet for Carronade, a multi-strategy credit fund that now runs $300 million. It shorted the stock as a hedge on an investment in AMC’s second-lien debt, which had been trading at deeply distressed levels. Gropper started buying the bonds at around 20 cents on the dollar, said a person familiar with the matter.
