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Our briefing for Tuesday, April 12, 2022:
Apr 12, 2022 4:23:12 PM
- In the United States, the number of Covid-19 cases is again on the rise, especially in the Northeast. Four of the five states with the highest weekly case rates per 100,000 are in the Northeast, according to data from the Centers of Disease Control and Prevention (CDC). The state of Rhode Island currently has the highest number of new cases, with 172.4 cases per 100,000, which is nearly three times higher than the national average of 59 per 100,000. Over a two-week period, new daily cases in Rhode Island have risen 53 per cent, from 170 a day to nearly 260. New Jersey, New York, Connecticut, and Maine are also seeing a rise in new infections. The Omicron variant BA.2 now makes up 84 per cent of new cases in the Northeast, which is higher than any other region in the country. Dr. Ali Mokdad, an epidemiologist with the University of Washington's Institute for Health Metrics and Evaluation said that people who had been infected with the previous Omicron variant may have some degree of immunity from the BA.2 strain and areas where the first Omicron strain flourished may be less effected by BA.2. “States that did a good job controlling infections with mandates, most in the Northeast and West, are more susceptible now with BA.2,” he said.
- In Canada, Public Health Minister Theresa Tam is advising Canadians to continue to wear a mask and get boosted regardless of local guidelines. Cases from coast to coast are on the rise and while regional guidelines differ across the provinces, Tam is urging the public to remain masked and get boosted as soon as possible. “Let me just emphasize all across Canada, doesn't matter where you are, it’s very likely that the Omicron variant, the BA.2 sub-lineage is spreading quite widely in your community,” she said. “So doesn't matter where you are in Canada right now, I would advise getting that booster shot, masking and improving ventilation.” Tam also acknowledged that while restrictions may be lifted in most areas, provincial health authorities are still encouraging individual responsibility without forcing people to comply. When asked if the definition of fully vaccinated should be moved to three doses instead of two, Tam said that is “an ongoing discussion,” while stressing the importance of boosters.
- Prime Minister of the United Kingdom Boris Johnson and Chancellor of the Exchequer Rishi Sunak have both been fined for breaking Covid-19 lockdown rules, the prime minister’s office confirmed on Tuesday. “The prime minister and Chancellor of the Exchequer have today received notification that the Metropolitan Police intend to issue them with fixed penalty notices,” a spokesman for Johnson’s office said. Throughout the Partygate saga there have been several calls for Johnson to resign if he was to receive a fine for his role in the lockdown parties. However, Johnson said Tuesday that he has paid the fine and that he has no intentions of resigning. The prime minister and his finance minister were in attendance at least two parties held throughout lockdowns in the in U.K. which prevented people from attending gatherings, including funerals. Although members of the opposition parties continue to call for Johnson’s resignation, the choice rests with his own Conservative party who can challenge his leadership if 54 of the 360 Tory parliamentarians request a vote of confidence. Yet, due to the hostile European environment caused by Russia’s invasion of Ukraine, some who previously demanded the prime minister’s resignation have now changed their tune. “In the middle of war in Europe, when Vladimir Putin is committing war crimes and the UK is Ukraine’s biggest ally…it wouldn’t be right to remove the prime minister at this time,” said Douglas Ross, leader of the Scottish Conservative Party.
- Germany’s health ministry said on Monday that the country may have to destroy 3 million doses of Covid-19 vaccines that expire at the end of June. Ministry spokesman Hanno Kautz said in an interview that “we have more vaccines available at the moment than is being used and than we can donate.” He continued that the global vaccine sharing program, COVAX, is not currently taking donations. The German government originally thought that 10 million doses would have to be destroyed, until recently, when they found out that the Pfizer BioNTech vaccine has a longer shelf life than originally expected. “There is certainly a danger of vaccines being discarded,” Kautz said, but assured the public that “not many” have been discarded thus far. The vaccine effort in Germany has slowed considerably in recent months, with only 33,000 new shots being administered per day over the last week. Nearly 76 per cent of the population is considered fully vaccinated, with 59 per cent having received a booster. The government last week rejected a proposal to require anyone over the age of 60 to get vaccinated.
- Taiwan’s Health Minister Chen Shih-chung said the country expects over 1000 daily domestic cases of Covid-19 by the end of the month. Chen continued that the public need not panic as only a small number of cases have caused serious illness. Taiwan has been able to largely contain outbreaks throughout the pandemic by closing down its borders early on and implementing a rigorous contact-tracing program. Since the beginning of the year the island nation has only recorded 4900 cases of Covid-19 and almost all have been driven by the highly infectious Omicron variant. “I think that, looking at the present trends, by the end of April local cases will almost certainly top 1,000,” Chen said. The government is sticking by its “new Taiwan model” that will try to eliminate serious illness and community spread without shutting down its economy, like it was forced to do in May and July of last year. Approximately 80 per cent of the population has been fully vaccinated, and only two deaths have been recorded in the country this year. “There's no need to panic, absolutely none,” Chen said.
Covid-19 – Due Diligence And Asset Management
Pandemic continues to drive investors to active management
Brief: If the latest numbers from the Investment Funds Institute of Canada (IFIC) are any indication, the pandemic has created a resurgence in active management. Investors who rushed to beat the March 1 registered retirement savings plan (RRSP) contribution deadline pumped nearly $10 billion into mutual funds in February alone, according to IFIC. As of March 1, total mutual fund assets reached $2 trillion in Canada. A big chunk of that came from a $111.5-billion bump in mutual fund sales in 2021. That’s nearly four times the $29 billion in mutual fund sales in 2020, which was in line with average annual sales going back to 2000. In comparison, sales in passively-managed exchange-traded funds (ETFs) totaled $4 billion in February, bringing total assets to $317.7 billion by March 1. Over half of February’s mutual fund sales went into balanced funds, which have been the funds of choice throughout the pandemic. Like the name implies, balanced funds attempt to strike a balance between equities and fixed income.
Fund managers most gloomy on record on recession woes: BofA
Brief: Global growth optimism has sunk to an all-time low, with recession fears surging in the world’s investment community, according to the latest Bank of America Corp. fund manager survey. The share of investors expecting the economy to deteriorate is the highest ever, according to the April survey. Stagflation expectations jumped to the highest since August 2008, while monetary risk increased to a historic high, BofA strategists said, after surveying 292 panelists with $833 billion in assets under management in the first week of April. The results highlight how gloom is taking hold among investors as the Federal Reserve turns more aggressive in its attempt to tame soaring inflation. The bearishness has been extreme enough to trigger BofA’s own buy signal, a contrarian indicator for detecting entry points into equities. Global stocks have been under pressure this month after rallying from lows in March as bond yields have soared. BofA’s strategists disagree with the tactical buy signal, saying they “remain in ‘sell-the-rally’ camp,” as the stock market slump earlier in the year was just an “appetizer not main course of 2022.”
China stocks end higher on hopes of policy easing, relaxation in curbs
Brief: China stocks rebounded in afternoon trading to close higher on Tuesday, as hopes of easing in COVID-19 curbs in some pilot areas lifted tourism and consumer goods sectors, while expectations of policy support for the economy lifted sentiment. The blue-chip CSI300 index ended 2.0% higher at 4,179.97, while the Shanghai Composite Index gained 1.5% to 3,213.33 points. The Hang Seng index rose 0.5% to 21,319.13, while the China Enterprises Index gained 0.8%, to 7,264.43 points. Tourism stocks surged 8.4%, transport firms soared 5.1%, while consumer staples added 3.9%. An unverified document about picking pilot regions, including Shanghai, for relaxed quarantine requirements is circulating and traders say it pushed up related sectors. New bank lending in China rose more than expected in March, while broad credit growth accelerated from the previous month.
Wall Street’s Enthusiasm Wanes for Bonds Backed by Risky Consumer Debt
Brief: Runaway inflation and a shaky economy are setting the stage for financial uncertainty, igniting fear in Wall Street investors that bonds and other investments backed by consumer debt might be weighed down by high risk. “When we’re investing, we’re investing less,” Clayton Triick, Angel Oak Capital Advisors portfolio manager told the Wall Street Journal on Tuesday (April 12). He added that investments backed by debt that is owed by borrowers with lower credit scores are especially troublesome. When the COVID-19 pandemic gripped the world in 2020, investors were less than enthusiastic about bonds backed by consumer debt. The assumption was that defaults would be the rule rather than the exception as businesses locked down and people were furloughed and laid off. Government stimulus programs and lender forbearance made many of those fears unfounded as even the most borderline borrowers stayed current. Many consumers used the extra funds to pay down debt beyond staying current, and anything leftover was squirreled away.
AMP: After Covid hibernation, the shopping centre is back
Brief: Near-record low unemployment, a $250 billion national savings pool and rising wages will see shopping centers bounce back strongly over the next 12 months according to AMP Capital. AMP Capital Head of Retail and Investment, Marco Ettorre said Australians remained reluctant to travel internationally due to COVID-19 and have continued to save over the last two years, pointing to a strong boost for shopping centers. "As COVID restrictions wane and consumers regain the confidence to go shopping, conditions for retail real estate are starting to look favourable again. And for all the pain of the pandemic, households in 2022 are in a better position to spend," Marco Ettorre said. "It's not back to the pre-Covid levels but there are good returns available and retail-led mixed-use opportunities for investors on the right shopping center assets," he added. Newer shopping centers that cater for a mix of uses should deliver excellent returns. "Leading shopping centers are blurring the lines across real estate categories by adding office space, residential, education facilities, healthcare and other services under the same roof," Mr Ettorre said.
