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Our briefing for Thursday, October 28, 2021:
Oct 28, 2021 3:06:57 PM
- The United States economy slowed sharply to a 2% annual growth rate in the third quarter, the weakest quarterly expansion since the recovery from the pandemic recession began last year. The last quarter growth fell below expectations and would have been weaker if not for an increase in restocking by businesses, according to the Associated Press. Consumer spending, which fuels about 70% of overall economic activity, slowed to annual growth rate of just 1.6% after surging at a 12% clip the previous quarter. The news has Republicans zeroing in on higher inflation rates this year to support their charges that President Joe Biden’s economic policies aren’t working.
- In Canada, Prime Minister Justin Trudeau left Thursday for Europe ahead of a G20 meeting in Rome and subsequent 26th “conference of the parties” (COP26) climate summit in Glasgow. While climate change will be top of mind for Trudeau and other top world leaders, the race to vaccinate people in low-and-middle income countries will also dominate the conversation. The G20 countries alone represent 80% of the global economy.
- The United Kingdom’s travel “red list” will have zero countries on it as of Monday November 1st. Grant Shapps, the government’s Secretary of State for Transport, confirmed on Thursday that the seven remaining countries on the “red list” would be removed. The seven remaining countries were Columbia, the Dominican Republic, Ecuador, Haiti, Panama, Peru and Venezuela. Arrivals from those countries are currently required to confine themselves to ten days of hotel quarantine at a cost of £2,285 per person. This marks a drastic improvement for people who want to be on move in the UK. As of early October, there were 54 countries on the “red list”. The list will reportedly be maintained as a “lever” for government minsters in the future should they feel the need to protect the country from another dangerous COVID-19 variant.
- Israeli public health experts are warning the country must do more to break down vaccine resistance and implement tougher safeguards as foreign tourists start returning next month or risk a fifth wave. Although Israel is a relatively small country in terms of population on the world stage, they have often been ahead of the curve in handling the coronavirus, from sweeping restrictions to well-run vaccine programs and the first widespread booster program. Epidemiologist Hagai Levine, chairman of the Israeli Association of Public Health Physicians, has urged officials to set up a permanent epidemiological unit at the main airport that will serve as an early warning system for new variants as well as future epidemics.
- Singapore health officials are looking into an “unusual surge” in infections after the city-state reported 5,324 new COVID-19 cases on Wednesday, the most since the beginning of the pandemic. In a statement Wednesday night, the Ministry of Health (MOH) noted “the infection rates are unusually high today, mostly due to many COVID-positive cases detected by the testing laboratories within a few hours in the afternoon.” Singapore extended some of its social curbs last week to contain the spread of COVID-19 for around a month to ease the strain on the healthcare system. According to a Reuters report, about 84% of Singapore’s population has been vaccinated against the virus.
- Ahead of the G20 meetings in Rome, the World Health Organization (WHO) and other aid groups are again calling on the richest countries in the world for help. On Thursday, the WHO appealed to the world’s 20 largest economies to fund a $23.4 billion USD plan to bring COVID-19 vaccines, tests and drugs to poorer countries over the next 12 months. About 82 countries are likely to miss the WHO global target of 40% vaccination coverage by year-end. Nearly a million booster jabs are being given each day to richer countries; three times the number of vaccines being administered in low-income countries, according to WHO chief scientist Soumya Swaminathan.
Covid-19 – Due Diligence And Asset Management
Biden Goes All-In to End Deadlock with $1.75 Trillion Blueprint
Brief: President Joe Biden unveiled a framework for a $1.75 trillion tax and spending package his administration believes can pass Congress and urged House Democrats to quickly clear a separate public works bill for his signature, despite misgivings by progressives. Biden visited Capitol Hill on Thursday to sell the package of tax increases and climate and social-welfare spending to House Democrats. The legislation would expand federal support for child care, health care and climate programs, funded by a minimum tax on corporations, a tax on stock buybacks and new taxes on incomes above $10 million annually. Total new revenue from the measure is estimated at $2 trillion over a decade, according to a White House fact sheet. The president asked the lawmakers to break a deadlock on a separate, Senate-passed $550 billion infrastructure bill and vote to send it to his desk, according to Representatives Mike Quigley of Illinois and Richard Neal of Massachusetts. House Speaker Nancy Pelosi immediately began pressing lawmakers to vote on Thursday.
Some 5% of Unvaccinated Adults Quit Their Jobs over Covid Vaccine Mandates, survey shows
Brief: Five percent of unvaccinated adults say they have left a job due to a vaccine mandate, according to a survey released Thursday by the Kaiser Family Foundation. This early read on whether workers will actually quit their jobs over mandates comes as more employers are requiring shots. One-quarter of workers surveyed by KFF in October said their employer has required them to get vaccinated, up from 9% in June and 19% last month. President Joe Biden announced in September a mandate for businesses with 100 or more employees to ensure workers are vaccinated against Covid or tested weekly for the virus. The mandate, which is currently still under review, is estimated to cover roughly two-thirds of the private sector workforce once it’s implemented. The Kaiser survey only asked whether people have quit over a vaccine requirement, not a vaccine requirement with a testing option. More than a third of unvaccinated workers said they would quit rather than comply with a vaccine or testing mandate, the Kaiser survey shows, a share that jumps to 72% if no testing option is offered.
Australia Advises Caution Overseas when Border Opens Monday
Brief: Australia advised its nationals traveling overseas on Thursday to “exercise a high degree of caution” as it prepares to open its borders for the first time in 19 months. The Department of Foreign Affairs and Trade reinstated its travel advice for 177 countries and territories ahead of fully vaccinated Australians becoming free to travel from Monday. No destination has been given a risk assessment lower than the second-tier warning: “Exercise a high degree of caution.” The vast majority of Australian permanent residents and citizens have been stranded in the island nation since March last year by some of the most draconian pandemic restrictions of any democracy. They had to request exemptions from the ban and demonstrate exceptional circumstances. Most requests were rejected or approved too late for Australians to reach death beds or funerals. Travel to and from Australia for tourism has never been allowed. A few categories of citizen, including public servants on government business, were exempt from the international travel ban. International travel will be initially restricted to Sydney’s airport because New South Wales has the highest vaccination rate of any state. More than 86% of the population of Australia’s most populous state aged 16 and older are fully vaccinated, and over 93% of the target population had received at least a single vaccine shot.
AEW Forecasts 5.1 Per Cent Average Prime Total Return from European Residential Sector over Five Years
Brief: AEW, the global real estate investment manager, has released its latest research on the European residential sector, publishing its internal forecasts on rental growth, yields and total returns across 24 different European residential markets for the first time. Key findings of the report include: On a risk-adjusted basis, residential stands out as the most attractive property sector. Also known as the private-rented sector or multifamily, residential is the most resilient of all property types. Residential income streams are underpinned by a primary human need and come from a diversified individual tenant base, while supply constraints limit void periods. Residential investments therefore offer bond-like, stable and predictable cash flows. For these reasons, residential total returns have historically been less volatile than for the other property types, while at the same time generating prime total returns close to 8 per cent pa; Continued lack of supply and strong demand from new household formations is driving prime rental growth in most European markets. Despite an increasing number of rental regulations to ensure affordability for tenants, prime residential rental growth is projected at 2.6 per cent pa over the next five years on average in Europe…
Hedge Fund Allocations Soar
Brief: The hedge fund industry continued to attract new assets in August with USD30.5 billion in inflows. August’s inflows represented 0.69 per cent of industry assets, according to the Barclay Fund Flow Indicator published by BarclayHedge, a division of Backstop Solutions. August marked the sixth consecutive month of hedge fund industry inflows, totalling USD143.8 billion since March. A USD37.8 billion monthly trading profit brought total industry assets to nearly USD4.52 trillion as August ended. “As economies continued to rebound and equity markets surged throughout the summer, investors saw growth and speculative opportunities in hedge fund investments,” says Ben Crawford, Head of Research at BarclayHedge. “Hedge Funds may also be having a moment for less optimistic reasons: They have a history of performing well during inflationary periods. While central bankers contend that the recent spike in the cost of living will be transitory, forecasters in the U.S. and elsewhere are revising their inflation expectations upward for multiple periods to come.” Most hedge fund sub-sectors reported inflows in August. Fixed Income funds set the pace bringing in USD10.4 billion, 1.1 per cent of assets while Multi-Strategy funds added USD7.5 billion, 1.6 per cent of assets, Balanced (Stocks & Bonds) funds saw USD5.1 billion in inflows, 0.8 per cent of assets, Sector Specific funds added USD2.96 billion, 0.8 per cent of assets, and Event Driven funds brought in USD2.28 billion, 0.8 per cent of assets.
