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Our briefing for Thursday, July 29, 2021:
Jul 29, 2021 2:50:18 PM
- In the United States, slow vaccination rates and the highly infectious delta variant account for a rise in case numbers. Cases are up in 49 states, and 35 of those states are seeing a seven-day average of new cases at least 50% greater than last week, data from Johns Hopkins University shows. According to data from the U.S. Centers for Disease Control and Prevention (CDC), approximately 49.3% of Americans are fully vaccinated, still nowhere near the 70-80% required to stop the spread of the virus. U.S. Surgeon General Dr. Vivek Murthy says vaccinated people don’t need boosters just yet, CNN reports.
- In Canada, one of the first major large-scale Canadian events to take place during Covid-19 has been deemed a success, organizers say. The Calgary Stampede ran for 10 days and only one in 10,000 visitors were said to have contracted Covid-19. A spokesperson for Alberta Health said the Stampede was not believed to be a significant driver of cases. In Ontario, Premier Doug Ford has said the province will not introduce a system on vaccine credentials or “vaccine passports,” despite pressure from both business and health advocates. Quebec has said it will consider issuing vaccine credentials and Manitoba is issuing vaccine cards.
- In the United Kingdom, case numbers are on the rise again after a week of sharp decline. The latest Covid-19 data published Wednesday showed 27,734, people testing positive across the U.K., up by 4000 from a day earlier. It’s unclear whether the July relaxing of restrictions is reflected in the data or not. Health Secretary Sajid Javid said no one really knows how the case numbers are going to unfold in the coming days. “I hope that the falls that we’re seeing now are sustained. That’s of course what I want to see. But we’ve already seen with the Delta variant, a new variant that emerged over the last year, that’s more infectious than the previous one, that things can change,” he said.
- In Spain, one of the countries hit hardest at the beginning of the pandemic, the prime minister announced an extension of social benefits to protect its most vulnerable. Spain will extend subsidies for the unemployed and furloughs for companies that have gone out of business until the end of October. The current expiration date is August 9 but Prime Minister Pedro Sanchez says the social benefits will now be extended until October 31. Approximately 55.7% of people in Spain are vaccinated, although the country has among the highest infection rates in Europe for the past two weeks.
- In Japan, officials are sounding the alarm as Covid-19 cases reached record levels on Thursday for the third straight day. Cases were at 3,865 on Thursday, up from 3,177 on Wednesday and double the numbers a week ago. “We have never experienced the expansion of the infections of this magnitude,” Chief Cabinet Secretary Katsunobu Kato told reporters. He added cases were rising across the country and not just in Tokyo. Tokyo has been under a state of emergency since July 12 and will remain so until after the Olympics.
- In Australia, the military will step in to help enforce lockdowns as the new outbreak in Sydney reached record levels. On Thursday New South Wales announced 239 cases, their highest one-day total recorded since the pandemic began. The state’s premier, Gladys Berejiklian, says they could be worse off. ““If you look at other places around the world and the way the Delta strain has taken over communities, even when vaccination rates have been higher than ours, we can take some comfort in the fact that today we haven’t had thousands and thousands of cases, thousands of people in hospital and many more deaths, and that’s what these lockdowns are about,” she said in response to questions of whether her lockdown should have been stricter from the start.
Covid-19 – Due Diligence And Asset Management
Investors Shrug Off Regulators’ Leveraged Debt Bubble Warnings
Brief: To hear the central bankers tell it, leveraged-debt markets are overheating and could face tougher rules. For investors, there’s no bubble in sight and a fresh deal surge is on the way. As developed economies learn to live with the coronavirus, M&A activity and debt refinancings have accelerated, driving lending to indebted firms to a near-record in the year so far in Europe. Loan prices are back to pre-pandemic levels and junk-bond yields have tumbled as waves of stimulus and inflation fears push investors into higher-yielding riskier credits. “We have elevated valuations across many financial markets these days, and I would say the loan asset class is indeed well valued at this point,” said Thierry de Vergnes, head of bank loans at Amundi SA, Europe’s largest asset manager. “I don’t think we are in market bubble.”
Bank of Canada's Macklem warns against overreacting to hot inflation
Brief: Bank of Canada Governor Tiff Macklem took to the pages of a major newspaper to defend a three-month run of excessive consumer price gains.The central banker’s opinion piece, published Thursday on the front page of the Financial Post, comes a day after Statistics Canada reported inflation rose 3.1 per cent in June. While a decline from the 3.6 per cent recorded in May, consumer price gains have exceeded Macklem’s 1 per cent to 3 per cent control range since April. Policy makers expect inflation to creep to an average of 3.9 per cent in the third quarter -- a level not seen since the early 2000s -- but maintain the run-up in the aftermath of the COVID-19 crisis will be short-lived. “We shouldn’t overreact to these temporary price increases,” Macklem wrote. “You can be confident that we will keep the cost of living under control as the economy reopens.”
Euro-Area Reopening Boom Lifts Confidence to All-Time High
Brief: Confidence in the euro-area economy climbed to a record in July as business resurges following the end of coronavirus lockdowns. Factories in the 19-nation region are running at full steam, bolstered by a strong global recovery, and consumers are splurging on travel and services unavailable during long stretches of the pandemic. A gauge measuring sentiment rose to 119, the highest since the series began in 1985, from 117.9 in June. In industry, booming demand lifted the mood among executives, though it’s also squeezing capacity and causing bottlenecks. Services confidence showed the best reading since 2007.
Billions of lockdown savings funnelled to funds
Brief: Asset managers St James's Place, Rathbone and Man Group saw billions of pounds in inflows during the first half of the year, as household savings jumped during COVID-19 lockdowns, their results showed on Wednesday. Wealth managers have seen their fortunes turn around drastically as stimulus cheques and vaccinations reassured investors about the economic outlook following the first few months of last year when clients pulled out money. St. James's Place (SJP) expects gross inflows to grow 20% in the second half of 2021, the money manager said, after attracting 5.5 billion pounds ($7.64 billion) in net inflows in the first half.Improving confidence and an increase in household savings rates have helped attract 9.2 billion pounds of gross inflows, SJP's chief executive Andrew Croft said in a statement. Funds under management at SJP, which provides advice on investment and retirement planning, swelled to 143.8 billion pounds at end-June from 129.3 billion pounds in December.
Fed holds rates near zero, says economy has gotten better even with pandemic worries
Brief: The Federal Reserve on Wednesday held its benchmark interest rate near zero and said the economy continues to progress despite concerns over the pandemic spread. As expected, the Federal Open Market Committee concluded its two-day meeting by keeping interest rates in a target range between zero and 0.25%. Along with that, the committee said in a unanimously approved statement that the economy continues to “strengthen.” Despite the optimism about the economy, Chairman Jerome Powell said the Fed is nowhere near considering a rate hike. “Our approach here has been to be as transparent as we can. We have not reached substantial further progress yet,” he said. “We see ourselves having some ground to cover to get there.”
