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Our briefing for Tuesday, December 7, 2021:
Dec 7, 2021 2:59:44 PM
- The United States announced a new international vaccine initiative on Monday that will see more vaccines sent to developing nations. The U.S. Government’s Initiative for Global Vaccine Access, or Global VAX, will invest $315 million to aid foreign vaccine programs. The program will also include $10 million for in-country vaccine manufacturing and another $75 million for life saving resources, including oxygen and ICU equipment. The initiative will prioritize the Sub-Saharan African region where vaccine rates remain staggeringly low. In Botswana, where the Omicron variant was first detected, vaccine rates are sitting at roughly 17 per cent. The World Health Organization has said that lower to middle income countries will not see wider vaccine dispersion until late 2022 into 2023. President Joe Biden prided the U.S. effort to export vaccines to developing nations saying that America has "shipped for free more vaccine[sic] than all other countries in the world combined."
- According to a recent poll by the Leger, a market research company and the Association for Canadian Studies, Canadians are in favor of temporary border closures, and stricter government intervention in wake of the Omicron variant’s spread across the globe. The poll, conducted between December 3 and December 5, reported that 4 out of 5 of the people polled would support closing the border to travelers coming from countries where the Omicron variant is already present. Leger executive vice-president Christian Bourque said that “expectations aren’t overly optimistic,” noting that 44 per cent of respondents believe that the Omicron variant will be worse than the already-present Delta variant and 43 per cent believe it will be the same. On the topic of lockdown restrictions, 68 per cent would approve of more stringent measures in high density settings, which Bourque said is down from the nearly 80 per cent of people who were in favor of the lockdowns in a previous poll.
- The United Kingdom on Monday detected its first instance of community transmission of the Omicron variant. UK Health Secretary Sajid Javid, addressing the House of Commons, said “we can conclude there is now community transmission across multiple regions of England.” He confirmed that U.K. has seen 336 cases of the Omicron variant, 261 in England, 71 in Scotland, and 4 in Wales. "Recent analysis from the UK Health Security Agency suggests that the window between infection and infectiousness may be shorter for the Omicron variant than for the Delta variant," Javid said. He went on to say that it is still too early to tell whether the effects of the Omicron variant will be more or less severe than the now-dominant Delta variant and that “we can't say for certain at this point whether Omicron has the potential to knock us off our road to recovery."
- Less than one person a day is dying from Covid-19 in Japan. The country recorded just six deaths resulting from the virus in the last week. Japan has the lowest death rate among G-7 nations, despite having a larger population than every country except the United States. What makes the number even more staggering is that Japan has the oldest population of all G-7 nations, which increases the likelihood of death. In the past three weeks, Japan has remained under 200 new cases a day, which is down drastically from the 25,000 a day witnessed in August. As of Monday, 77 per cent of population has been fully vaccinated, with 92 per cent of people over the age of 65 having received 2 or more shots. Another likely possibility for the low number of deaths is the near-universal use of face masks, despite not having a government issued mandates.
- Finnish Prime Minister Sanna Marin has been the target of criticism after enjoying a night out after learning she had been exposed to Covid-19. The Social-Democrat learned of her exposure while at a bar on Saturday night, after having come in to close contact with Foreign Minister Pekka Haavisto the day before. Marin said she had not received any instruction to isolate, as people who have been double vaccinated are not required by law to do so in Finland. Critics of the prime minister said that such an instruction should not have been necessary from a public figure charged with stymieing the virus, and that such behavior sets a bad example for the public. Marin has since tested negative twice. Marin was the third Nordic official to be accused of flaunting Covid regulations, she now joins former Swedish Premier, Stefan Lofven, and former Norwegian Prime Minister, Erna Solberg. The former was caught shopping without a mask, while the latter was fined for celebrating her 60th birthday at a party.
Covid-19 – Due Diligence And Asset Management
AstraZeneca blocks take-private buyout of Sobi
Brief: The biggest take-private buyout of the year has been blocked AstraZeneca (AZ) over concerns that it would lose out to a rival if the company was then sold. One of the world’s biggest private equity firms, Advent International and GIC, one of the three investment entities that manage Singapore government reserves, offered a 34% premium on the share price for the rare disease company in September 2021 as part of a $7.6bn offer. While the deal was approved by the Sobi board, it was conditional on 90% of shareholders agreeing. AstraZeneca, which owns 8% of Sobi from an earlier rights deal, reportedly collapsed the deal, which then failed to meet its threshold. Sobi lost a quarter of its value after news of the failed deal reached the markets, leading Sobi chairman Håkan Björklund to express disappointment. “The Board supported the public offer by Advent and GIC as we believed in the strategic merit of the transaction,” but added that “it is the shareholders who decide this”.
Morgan Stanley Sees Fed as Greater Threat to Stocks Than Omicron
Brief: Stock investors probably have more important things to worry about than the emergence of the new coronavirus strain, according to Morgan Stanley’s strategists. While “not that concerned about omicron as a major risk factor for equities,” the strategists led by Michael Wilson see headwinds building elsewhere, after Federal Reserve Chairman Jerome Powell signaled the possible accelerated tapering of asset purchases. “Tapering is tightening for the markets, and it will lead to lower valuations like it always does at this stage of any recovery,” the strategists wrote in a note to clients. Brian Nick of Nuveen, the investment arm of TIAA, with $1.3 trillion in assets under management, also said Monday that “the major risk to our outlook remains a sudden tightening of financial conditions if central banks are forced to respond to inflation driven by an overly tight labor market.” In contrast, most of the economic and market risks associated with the virus “are behind,” according to Nuveen’s outlook for 2022. Other strategists, including those at JPMorgan Chase & Co., have also singled out a hawkish turn by central banks, and not Covid-19, as the main risk to their outlook for stocks. But while JPMorgan reiterated on Monday that its base-case scenario is for the equities rally to continue into next year, Morgan Stanley sees the S&P 500 trending lower, and valuations declining.
Pandemic spurs shift in financial, investing attitudes among millennials, Gen Z
Brief: The economic fallout from the pandemic has been a harsh reminder of how fleeting financial security can be. Many millennials have taken that lesson to heart and not only want to save more but also learn more about the investment companies behind their funds. Four in 10 millennials changed their savings and investment attitudes during the pandemic, according to the latest survey from Hearts & Wallets, a market research and benchmarking firm. Three key metrics are at the highest level of the past decade, reflecting an overall positive mood about finances and investing: More than half of U.S. households feel no or little “anxiety about their financial situation as they look to their future.” Nationally, nearly 30 percent of households feel “very” or “somewhat” experienced with investing. More than a third of households feel “very” or “somewhat” comfortable in “accepting volatility in the hope of getting a higher return.” Millennials showed an 11 percent increase in one year of feeling experienced as investors. They also were the generation most comfortable with investing risk this year where previously this generation had been the most skittish.
Omicron ends CTA performance run
Brief: CTAs' run of positive performance over the last 12 months came to an abrupt end in November, as news of the Omicron Covid-19 variant hit markets at the end of the month, according to the latest figures from Society Generale. The flagship SG CTA Index was down -3.79 per cent in November but is still strongly positive so far this year at 5.71 per cent. Likewise, the SG Trend Index lost -4.71 per cent for the month, but still stands up 8.59 per cent year-to-date, with one month still to go. All of the individual CTA constituents of both indices experienced losses in November, driven by a fall at the end of the month in particular on Friday, 26 November: the CTA Index lost -3.52 per cent in one day, the worst single day since the index started in 2000; and the Trend Index lost -4.43 per cent, the fourth biggest single day loss ever and worst since 2007.
Billionaires' Wealth Surged To Record During Pandemic, Piketty Lab Says
Brief: Wealth gaps are reflected in bigger carbon footprints, too. In North America, for example, the top 10% emits an average 73 metric tons per capita each year, compared with less than 10 tons for the poorest half. Measured by both income and wealth, Europe is the most equitable region, according to the report. The 19% of total income earned by the poorest half of Europeans is higher than the equivalent share for that group anywhere else. Pandemic policies like income support for workers thrown out of their jobs likely helped prevent that gap from widening further. “The Covid crisis has exacerbated inequalities between the very wealthy and the rest of the population,” said Chancel. “Yet in rich countries, government intervention prevented a massive rise in poverty.”
