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Our briefing for Tuesday June 15, 2021:
Jun 15, 2021 4:14:46 PM
- In the United States, California is lifting most of its COVID-19 restrictions as part of a grand reopening on Tuesday. The state is America’s most populous with close to 40 million residents and was the first to implement stay-at-home orders due to the pandemic more than 15 months ago. California will end capacity limits, physical distancing and at least for those vaccinated – mask requirements. Vaccinated people can go without a mask in most situations, except for public transportation, hospitals, jails, schools and child care centers. Public health measures will only remain for mega-events, which are categorized as 5,000 or more people indoors, or 10,000 outdoors with vaccine verification required or at least recommended, according to the revised health order.
- In Canada, it looks like the Atlantic bubble is getting closer to being re-inflated for a second summer. After its success last summer after the onset of the pandemic, the province of Nova Scotia announced Tuesday residents from New Brunswick, Prince Edward Island and Newfoundland and Labrador can travel to the province without self-isolating for 14 days. Nova Scotia Premier Iain Rankin said the move will be in effect as of June 23rd. The premier added he is in talks with the three other Atlantic premiers as discussions are ongoing on coordinating timing on when to reopen to the rest of Canada. Currently Nova Scotia is on track to do so by July 14th if COVID-19 cases continue to track in the right direction. The Atlantic region of Canada is home to close to 2.5 million residents and relies heavily on the tourism industry in terms of their economic needs.
- The United Kingdom’s hospitality sector is to no surprise, not taking the news well of COVID-19 lockdown rules being extended for another month. UKHospitality, which represents restaurants, hotels and bars said its members will lose another £3 billion in sales, along with the €87 billion already lost since the outset of the pandemic. The extension also threatens the 300,000 jobs across the industry. The British Chambers of Commerce also weighed in on Prime Minister Boris Johnson’s decision to delay the full reopening, calling the move a “hammer blow” to small companies already at the brink of bankruptcy. Economists though don’t see the move in quite the same light, noting while it would mean slower growth than previously estimated in the third quarter, the UK economy could then recoup some of the lost ground in the following three months.
- Israel told its citizens they could stop wearing masks as of Tuesday, ending one if its last main restrictions against COVID-19. According to the government’s latest data, 55% of Israel’s 9.3 million population are fully vaccinated and in the last month have either logged zero, or one daily COVID-19 deaths per day. The Israeli health ministry said masks would still be required of unvaccinated patients or staff in medical facilities, along with people en route to quarantine and of passengers on commercial flights. Israelis have not had to wear masks outdoors since April.
- The Philippines government have extended partial coronavirus curbs in Manila and nearby provinces until the end of June. President Rodrigo Duterte announced the move on Monday, along with placing more areas under tighter quarantine measures because of rising infections and high hospital occupancy. President Duterte didn’t sugar coat the situation the country is facing right now urging the public to get inoculated and comply with health regulations: “If you do not get vaccinated, you will really die.” The government now has imposed tighter measures in nine cities and 12 provinces, including those in central and southern Philippines, that limit the operating capacity of businesses and shut down non-essential establishments.
- In Japan, the government is considering placing Tokyo under a quasi-state of emergency during the Olympics. The plan is due to a number of health experts having expressed concern over a potential spike in COVID-19 cases. The Olympics are set to begin on July 23rd and were given the seal of approval by other G7 nations over the weekend. Tokyo, along with nine other prefectures in Japan have been under a state of emergency since at least late April, but it will likely end for the country’s capital city on June 20th as the latest wave of infections have somewhat subsided. The quasi-emergency will likely take the form of smaller fines for noncompliance under which restaurants and bars will still be asked to shorten hours but might be allowed to serve alcohol.
Covid-19 – Due Diligence And Asset Management
Morgan Stanley CEO to Staff: Be Back at New York Headquarters by September
Brief : Morgan Stanley's chief executive officer said on Monday that if most employees are not back to work at the bank's Manhattan headquarters in September, he will be "very disappointed." "If you want to get paid in New York, you need to be in New York," CEO James Gorman, speaking from the bank's offices at 1585 Broadway, told analysts and investors during a virtual conference. Like the rest of Wall Street, most of Morgan Stanley's nearly 70,000 employees worked remotely during the pandemic. But in recent weeks, rival banks JPMorgan Chase & Co and Goldman Sachs Group Inc have begun to bring employees back to U.S. offices on a rotational basis. Gorman said his bank's policy will vary by location, noting the firm's 2,000 employees in India will not return to offices this year. As of Monday, India has reported more than 29 million cases of COVID-19. During the wide-ranging conversation, Gorman said the bank's revenues in the second quarter "look good" and that it will "likely" make another acquisition in its wealth management business.
Billionaire’s Hedge Fund Offers Hefty Pay to Combat Talent Squeeze
Brief: After the best year for hedge funds in a decade, promising traders can seek a place at the many major firms on a hiring spree or strike out on their own to seize on investor appetite. But a push by Schonfeld Strategic Advisors is a prominent example of a lucrative third option. The firm is dangling a hefty cut of profits as part of a foray into macro trading, taking a page out of the books of industry giants Citadel and Millennium Management. The pitch has already won over hedge fund veterans Colin Lancaster and Mitesh Parikh, who are in turn offering recruits the combination of a big firm’s backing and a stable capital base with the ability to set one’s own financial destiny with an average 20% of trading gains. The duo are among dozens of traders who are settling for the safety net of being part of a bigger firm rather than taking the risk of running their own shops. It strengthens an entrenched trend in the hedge fund industry: assets as well as trading talent concentrating in fewer and fewer players, reducing the ability clients have to negotiate fees.
EU Raises €20 Billion in 10-Year Bond to Fund Virus Recovery
Brief: The European Commission said on Tuesday it has raised €20 billion ($24.2 billion) through a 10-year bond as part of its plans to finance the 27-nation bloc's recovery from the coronavirus crisis. EU Commission president Ursula von der Leyen said the inaugural transaction of the NextGeneration EU program is the largest ever institutional bond issuance in Europe. The money will help finance the national recovery plans devised by member states to get their economies back on track. Von der Leyen said the bond was priced at “very attractive terms" and that the European Union will pay less than 0.1% interest on it. “Europe is attractive," she said. “By the end of this year, we expect to have issued around 100 billion in bonds and bills." The commissioner in charge of Budget and Administration, Johannes Hahn, said the recovery plan’s first borrowing operation attracted interest from investors across Europe and the rest of the world, including central banks and pension funds. To finance the stimulus, the EU's executive arm said it will raise from capital markets up to an estimated €800 billion by the end of 2026. In total, member states have agreed on a €1.8 trillion budget and pandemic recovery package.
Why Bumpy Data Shows There is No Roadmap for this Economic Recovery
Brief: As the world emerges tentatively from the pandemic, economic data has been unpredictable at best. The April US jobs report showed 266,000 new hires, against economists’ estimates of 1 million. Inflation data also continues to diverge significantly from expectations. This has prompted Treasury Secretary Janet Yellen to say: “As the economy gets back on line, it is going to be a bumpy process.” There are plenty of reasons for this bumpiness. The first is that there is no rule book for the economic impact of a pandemic. No-one really knows what happens when an economy is forcibly shut down and then reopened. Is it more akin to a natural disaster? Or to the global financial crisis? The Blackrock Investment Institute recently acknowledged the difficulties of interpreting data during this period: “Investors are grappling with how to interpret unusual growth dynamics and new central bank frameworks. On the first, US activity looks set to restart strongly this year, powered by pent-up demand across income cohorts and sky-high excess savings. Growth forecasts have been catching up, but the magnitude of the restart may still be underappreciated.
Wealth Fund ADIA Reviews Real Estate Strategy as Pandemic Bites
Brief: The Abu Dhabi Investment Authority, one of the world’s biggest property investors, is considering changes to its real estate strategy after some of its major holdings suffered during the coronavirus pandemic, people with knowledge of the matter said. The sovereign wealth fund is reviewing the performance of its property assets following weakness in a number of the shopping malls and office buildings in its portfolio, according to the people, who asked not to be identified because the information is private. ADIA may consider cutting its exposure to some troubled investments, the people said. ADIA has shifted in recent years to making more direct property investments and relying less on external managers. The state-owned investor has amassed just under $700 billion in assets, according to estimates from data provider Global SWF, and ADIA has said real estate traditionally accounts for about 5% to 10% of that overall portfolio. While ADIA will continue to be a major player in property, it could shift its focus for future deals and increase exposure to areas like warehouses, life sciences properties, technology hubs and affordable housing, one of the people said.
