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Our briefing for Tuesday June 22, 2021:
Jun 22, 2021 3:56:17 PM
- In the United States, President Joe Biden’s administration is set to announce on Tuesday they will not be able to meet their latest COVID-19 vaccination goal for the country. President Biden had set the goal of having 70% of American adults with at least one shot of a COVID-19 vaccine by the July 4th holiday. According to their latest data, about 70% of all adults 30 or over have gotten their first dose, but White House COVID-19 coordinator Jeffery Zients will concede they have more work to do with 18–26-year-olds. The pace of vaccinations has fallen off steadily since April, dropping by about two-thirds, with approximately 1.1 million doses administered per day. At that rate, it would take another five months to have 75% of the American population vaccinated.
- In Canada, a new poll seems to show Canadians are still on the side of the federal government and their cautious approach in reopening from the coronavirus pandemic. An online poll from Leger and the Association for Canadian Studies shows 69% of respondents say restrictions should remain in place as people continue to get vaccinated against the coronavirus. The poll also revealed the pandemic has not been good for Canadian’s health – both mentally and physically. The survey found 63% of respondents said their mental health has been bad since the start of the COVID-19 crisis, 36% have seen their level of exercise decreasing and 16% have consumed more alcohol. “Canadians, anyway seem to be opting for a more gradual, careful, prudent approach to getting out there and enjoying some of the things that they used to enjoy prior to the pandemic period,” said Leger executive vice-president Christian Bourque.
- United Kingdom Prime Minister Boris Johnson seems to be losing his patience on when “Freedom Day” can officially begin. The prime minister will announce on Monday whether all COVID-19 restrictions can be lifted in England on July 5th – two weeks earlier than the intended July 19th deadline. Between now and Monday, a government spokesperson said Prime Minister Johnson will pore over data including cases, hospitalizations and deaths to see if he can bring the date forward. The latest numbers don’t seem to suggest moving up the date should be in the cards with the number of patients in the hospital due to COVID-19 rising to its highest total since April and up 21% from the previous week.
- Saudi Arabia has extended a loan deferral program for small businesses still coping with the coronavirus pandemic. The country has extended the plan by three months – taking it to the end of September. The deferred payment program has already impacted 167 billion riyals ($45 billion USD) of payments since it began in March 2020, according to the Saudi central bank. They added micro, small and medium-sized businesses benefiting from the program will be assessed to determine to what extent they’re still affected by the pandemic.
- In the Philippines, President Rodrigo Duterte is threatening jail to those who refuse to take a COVID-19 vaccine. “If you’re a person who’s not vaccinated and potential carrier, to protect the people, I have to sequester you in jail,” Duterte said on Monday. The president went on to add village leaders should keep a list of those who refuse to be vaccinated. Almost immediately, government officials were trying to downplay the president’s remarks. Justice Secretary Menardo Guevarra said there is no law compelling citizens to get vaccinated and President Duterte spokesman Harry Roque added the leader’s remarks were meant to “emphasize what the state can do.”
- Australia is having a hard time dealing with coronavirus flareups as the city of Sydney is now battling a fresh COVID-19 cluster after Melbourne’s recent outbreak. Monday night, 10 people were diagnosed with COVID-19 in Sydney, bringing the cluster that first emerged in the city’s Bondi Beach area last week to 21 cases. In response, the state government has reimposed mandatory mask-wearing in public transport and retail outlets across greater Sydney but hasn’t yet ordered a lockdown. Australia has administered close to 6.7 million COVID-19 inoculations to date for a population of 25 million, with only a small fraction of those receiving both jabs.
Covid-19 – Due Diligence And Asset Management
Fed’s Powell says High Inflation Temporary, will ‘Abate’
Brief : Federal Reserve Chair Jerome Powell said Tuesday that he expects recent price spikes will soon subside and reduce inflation to a sustainable level. Consumer prices jumped 5% in May compared with a year earlier, the largest increase in 13 years. But Powell said the increase mostly reflected temporary supply bottlenecks, and the fact that prices fell sharply last spring at the onset of the pandemic, which make inflation figures now, compared with a year ago, look much larger. “As these transitory supply effects abate, inflation is expected to drop back toward our longer-run goal,” he said in testimony prepared for a congressional oversight panel. Powell’s comments come at a time that financial markets are struggling to interpret the Federal Reserve’s recent moves. Last week Fed officials signaled that they may increase the central bank’s benchmark interest rate twice in 2023, an earlier time frame than they set out in March, when no rate hike was expected until after that year. Powell also said the Fed had formally begun discussing when and how the central bank might reduce the current $120 billion a month of Treasury’s and mortgage-backed bonds that the Fed is purchasing each month. Those purchases are intended to keep longer-term interest rates lower to encourage more borrowing and spending.
Canadian Employees Want Workplace Flexibility to Continue Post-Pandemic, says Survey
Brief: An Ernst & Young survey has found that Canadian employees have embraced workplace flexibility and want it to continue post-pandemic. The 2021 Work Reimagined Employee Survey found that 93 per cent of respondents said they would likely remain with their organization for the next year or more if they have control over where and when they work. But 54 per cent would be willing to quit if flexibility on schedule and work location is not maintained. Even if top-notch, on-site office amenities are offered, two-thirds would prefer to control where and then they work with respondents being 1.4 times more likely to opt for having control over working hours. Some 61 per cent want their company to require vaccines before returning to physical workspaces. Nearly half say company culture has improved since the beginning of the pandemic in early 2020. "Whether you know — and accept — it or not, your employees have been forever transformed, and walking back this sea of change isn't an option," says Darryl Wright, partner, People Advisory Services at EY Canada.
GHO Capital Gathers Over £2bn for Europe’s Largest Ever Healthcare Fund
Brief: GHO Capital Partners has amassed the largest ever healthcare-focused private equity fund for a Europe-headquartered firm in a sign LPs are backing GPs in one of the most sought-after secular growth industries. The London-based healthcare specialist raised more than €2 billion in LP commitments for GHO Capital III, according to two sources with knowledge of the fundraise. The firm began raising capital for the vehicle six months ago with a €1.25 billion target. The launch was a little over one year after GHO raised €975 million for its oversubscribed sophomore vehicle. It is unclear what the hard-cap is for Fund III and the firm is understood to have not yet held the final close on the fund. Los Angeles County Employees’ Retirement Association committed €100 million to the vehicle, according to PEI data. Fund III is the biggest Europe-headquartered healthcare fund in history, knocking out ArchiMed’s MED Platform I, which collected €1 billion in August last year. Similar to prior funds, Fund III will back mid-market companies in Europe within healthcare subsectors pharmabio, medtech, outsourced services and patient services. It is unclear how much of Fund III has been deployed thus far.
Market Volatility is Back as Covid and Fed Uncertainty hit Sentiment
Brief : Volatility is back for global stock markets, triggered by uncertainty over central banks’ plans for monetary policy and rising Covid-19 cases around the world. The VIX volatility index, a real-time measure of volatility expectations over the next 30 days, inched lower on Monday. Last week, the VIX spiked more than 16% to its highest point since May, as markets digested a surprisingly hawkish turn from the U.S. Federal Reserve. The Dow Jones Industrial Average also logged its worst week since October, and futures contracts tied to the index initially fell more than 200 points in early premarket trade on Monday before reversing course to open higher. Monday’s choppy trade also played out in Asia, where Japan’s Nikkei 225 closed 3.3% down, and Europe, where the continental Stoxx 600 index dropped 0.8% in early trade, only to recoup its losses and advance into positive territory. Matteo Andreetto, head of State Street Global Advisors’ SPDR ETF business in the EMEA region, told CNBC on Monday that with Covid cases rising, the potential for monetary tightening and high equity valuations on a historical basis, a market correction could be possible.
CSA 2020/2021 Enforcement Report Highlights Commitment of Canadian Securities Regulators During Unprecedented Times
Brief: The Canadian Securities Administrators (CSA) today released its fiscal year 2020/2021 Enforcement Report, which provides details on enforcement efforts and outlines how securities regulators are protecting investors and the integrity of Canada’s capital markets… “This year’s Enforcement Report highlights how CSA members adapted quickly to evolving circumstances by introducing new ways of protecting investors, while staying ahead of emerging issues and trends,” said Louis Morisset, Chair of the CSA and President and CEO of the Autorité des marchés financiers. The report outlines how CSA members continued to strengthen their technical knowledge on critical and emerging topics, such as open-source intelligence and mobile forensics, and implement best practices and tools across the country to recognize and target fraudulent activity. The CSA also formally launched the Market Analysis Platform (MAP) in October 2020. MAP is a data repository and analytics system designed to help all CSA members identify and analyze market misconduct. The system has increased efficiency and speed in accessing and analyzing trading activity, which is critical as capital markets continue to evolve.
Hedge Funds Held on to Pandemic Losers and Now it’s Paying Off
Brief: As the world went into lockdown last year, hedge funds stuck by the companies that suffered the most. It paid off. Some of the industry’s biggest names loaded up on companies that were pummeled as Covid-19 prompted government lockdowns and social-distancing guidelines, according to hedge fund consultant PivotalPath. They’re the hotels, casinos, cruise lines, restaurant chains and theme park companies that people are longing to frequent again as the pandemic recedes in the U.S. “Despite popular belief that hedge funds all made money shifting into tech and remote-environment stocks, most hedge funds actually made money because they stayed in the beaten-down names, or they ramped up those investments,” said PivotalPath Chief Executive Officer Jon Caplis. “They saw that a lot of the economy was going to come back.” While some funds bought up stocks that boomed as workers stayed at home -- like Zoom Video Communications Inc. and Peloton Interactive Inc. -- those wagers were on the margin, Caplis said. And, they were placed early in the pandemic -- even in February, before stocks plunged as major cities ground to a halt in March, he said. Those bets helped offset losses from the selloff. But once technology stocks jumped in April, hedge funds pivoted into the hammered “Social Distance Loser” stocks -- as Caplis calls them -- or increased their existing positions in them, he said.
