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Our briefing for Tuesday, February 8, 2022:
Feb 8, 2022 3:27:01 PM
- Several American states are rolling back mask requirements in schools in the coming weeks. Despite recommendations for continued mask use from the White House and the Centers for Disease Control (CDC), governors in New Jersey, Delaware and Connecticut are all planning to remove state-level mask mandates, leaving the choice up to individual municipalities. Connecticut Gov. Ned Lamont said "I think now is the time for us to say, the statewide mask mandate is no longer at our level. Each and every mayor, each and every superintendent, can make that call for themselves.” Officials in Oregon have also decided to end indoor mask mandates in schools on March 31 and will consider repealing the mandate for all indoor gatherings if cases continue to drop. After the changes were announced, White House press secretary Jen Psaki argued on Monday that the changes were too soon. “The guidance is very clear, which is that we recommend masking in schools,” she said. “That is the recommendation from the CDC. It is also true that at some point when the science and the data warrants, of course, our hope is that that's no longer the recommendation.”
- On Tuesday, Canadian truckers were blocking the busiest bridge to the United States as part of an ongoing protest over vaccination mandates for cross-border trucking. The truckers blocked both sides of the Ambassador Bridge linking Windsor, Ontario and Detroit shutting the passage down early Tuesday morning. The bridge sees over 8000 trucks on a regular day, and is an important route for Canadian exports, 75 per cent of which are sent to the United States. Prime Minister Justin Trudeau is set to be back in the House of Commons on Tuesday, after spending 10 days in isolation following a positive Covid-19 test. “Individuals are trying to blockade our economy, our democracy, and our fellow citizens’ daily lives. It has to stop,” Trudeau told an emergency debate in the House of Commons on Monday night. Ottawa Mayor Jim Watson has called for independent mediator to be chosen to deal with the disruptions caused by the protests in his city, however, federal ministers have said that is unlikely to occur.
- Although Covid-19 restrictions in the United Kingdom have largely gone by the wayside, offices in the country are still seeing empty desks. As cases drop throughout the U.K. and the rest of Europe, offices are beginning to reopen, but many employees are still choosing to work from home. It is becoming increasingly difficult for employers to suggest that their offices will fill up once the pandemic abates. This is according to Julia Hobsbawm, author of The Nowhere Office: Reinventing Work and the Workplace of the Future, who says “everybody really did have an expectation that it would all go back to normal. And I think now is a dawning realization that it isn’t.” Both large and small companies across the country are now implementing a hybrid work week that sees at least a portion of the time usually spent at the office now spent at home. Overall, only the largest – and richest – companies are requiring that employees spend all their time at the office, including Goldman Sachs whose CEO David Solomon has called working from home “an aberration.” According to Future Forum, over 68 per cent of the 11,000 knowledge workers surveyed say that they prefer a hybrid working model, while 95 per cent want flexibility in work hours.
- The European Commission (EC) has proposed to extend the EU Digital COVID Certificate until June 30, 2022. Currently, member states can accept the digital certificate for nine months showing that a person has received at least two doses of a primary vaccine allowing them to travel throughout the bloc unimpeded. ‘The COVID-19 virus continues to be prevalent in Europe,” the EC said, “and at this stage, it is not possible to determine the impact of a potential increase in infections in the second half of 2022 or of the emergence of new variants.” The EC is also considering a number of amendments to the certificate including the addition of high-quality laboratory-based antigen tests to widen the scope of diagnostics at a time when tests are in high demand. It aims to have the digital certificate show vaccines administered in any member state, not just the member state issuing the certificate. The certificate is not all encompassing, and each member state has the authority on whether to use it domestically, it also does not prescribe or prohibit lifestyle choices nor does it allow access to public gatherings.
- For the first time since the pandemic began, Hong Kong is limiting gatherings in private homes. Beginning on Thursday, private gatherings will be limited to two households in an effort to stop the spread of the virus which has been rapidly circulating across the country in the last few weeks. “Now given this severe epidemic, I hope the public will accept that we have to go back to the most stringent level,” Chief Executive Carrie Lam said on Tuesday. Public gatherings will be limited to two people, down from four, and shopping malls, hair salons and food markets will require proof of vaccination. Hong Kong reported 625 new cases of Covid-19 on Tuesday, which has dealt a massive blow to the Covid-Zero approach the city has taken thus far in the pandemic. Although Hong Kong officials are attempting to avoid large-scale lockdowns seen throughout the rest of the continent, rising case numbers have put a severe strain on the health care system, including testing and quarantine facilities.
Covid-19 – Due Diligence And Asset Management
Bond Rout Wipes Out Europe Government Investors’ Pandemic Return
Brief: A plummet in European bond prices on the prospect of the European Central Bank withdrawing its stimulus has erased two-and-a-half years of gains. The total return on investment-grade debt from the region’s governments has fallen more than 3% this year to the lowest since the middle of 2019, according to the Bloomberg Euro Government Index. That means any investors tracking the benchmark have lost their gains since then. The latest leg lower reflects bonds losing value following the ECB’s shift to a more hawkish stance last week to deal with a surge in inflation. That followed the first loss in European government securities last year since 2006. Italian debt has been the worst performer.
Even Bosses Are Giving Up on the Five-Day Office Week
Brief: With pandemic restrictions in the U.K. largely gone, offices are getting busier. Yet vast numbers of desks still remain empty. Even with Covid-19 case numbers flat or falling in the U.K., U.S. and much of Europe, many employees are still actively choosing to work from home for at least part of the week. It’s increasingly hard for managers to claim that their offices will simply fill up when the virus abates. Companies large and small are now adopting hybrid work patterns unrecognizable from pre-pandemic routines — all but killing off the five-day-a-week commute. Few predicted such a seismic shift, even when the pandemic began. “Everybody really did have an expectation that it would all go back to normal. And I think now is a dawning realization that it isn’t,” said Julia Hobsbawm, author of The Nowhere Office: Reinventing Work and the Workplace of the Future, to be published in the U.K. this month and the U.S. in April.
Downturns Can Throw Portfolios Out of Whack. Here’s How to Fix Them.
Brief: How asset owners rebalance their portfolios depends on how they value private investments — and there’s more than one way to get it right. According to a recent paper published by PGIM, massive market dislocations like the one that took place in March 2020 leave asset owners with a conundrum: if, and when, they should rebalance. “When reported private equity valuations lag public market valuations during public market declines, CIOs often find their portfolios over-allocated to PE,” the paper said. But the lag in valuations may not represent the most updated private equity performance data, meaning that allocators could be rebalancing when they don’t have to. PGIM explored two different ways to value private investments: proxy market value (PMV) and the Takahashi Alexander (TA) model. What PGIM found is that the decision to rebalance is affected significantly by the valuation method an allocator uses, and that the appropriate use for each depends on the type of institution using it.
Air Canada, WestJet And Pearson Want End Of Airport Covid-19 Testing
Brief: Medical officers from Canada’s two major airlines and Toronto Pearson Airport have written an open letter requesting that the Canadian government move PCR testing from travellers at airports and into communities. Canada’s mandatory testing requirements for travel have led to significant flight cancellations for Air Canada and WestJet. The letter argues that because people travelling to Canada must get a PCR test prior to entering Canada and must be fully vaccinated, there is no good public health reason to require a second test upon arrival. “Over the last two months, Omicron has quickly become the predominant variant of Covid-19. As it spreads throughout our communities, we need to ensure Canada's limited testing resources are being used where Canadians need them most—to support our communities, schools, hospitals and long-term care homes.
How investors should approach a potentially bumpy 2022: Portfolio manager
Brief: Coming off a volatile five-day period to close out January last week, the stock market continues to run wild as investors reconsider rebalancing their portfolios. Consistent profits may be more difficult to come by in the near future as markets adjust to new financial conditions, one portfolio manager asserts. First Republic Private Wealth Management CIO Christopher Wolfe joined Yahoo Finance Live on Monday to discuss the outlook for the market in 2022. “It is [an investible market], let’s be clear about it,” Wolfe said. “But I think the Fed’s gonna make it a bit more challenging than it has in the past. Just so we’re clear, it’s been really easy in the past, because the monetary base has been growing so wildly.” As the Fed pursues a more hawkish monetary policy to curtail inflation, which reached 7% last December, markets have been especially jittery. Consensus economists expect a 7.2% increase in the Consumer Price Index in January, reflecting a cooling — though still undesirably high — rise in inflation.
