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Our briefing for Tuesday, October 19, 2021:
Oct 19, 2021 3:19:46 PM
- In the United States, political divides over vaccinations are deepening, in a phenomenon experts say is uniquely American. President Joe Biden has been pushing hard for vaccinations, particularly with a widespread vaccine mandate for federal employees and businesses with more than 100 workers. But some Republican lawmakers have pushed back, fighting against what they say is government overreach. Texas Governor Greg Abbott issued an executive order earlier this week banning vaccine mandates for private companies. Republican Governor of Florida Ron DeSantis says he will sue the Biden administration for its federal vaccine mandates. While recent polls found that Americans are generally in favor of Biden’s vaccine mandates, Republicans specifically were not.
- In Canada, the province of Saskatchewan has asked other provinces for help in addressing their current Covid-19 crisis. As intensive care units become overwhelmed, largely by unvaccinated patients, Saskatchewan is seeking healthcare workers from other provinces. They are looking for nurses, respiratory therapists and perfusionists (people who operate heart-lung machines). Saskatchewan also recently announced they will be sending some of their Covid-19 patients out of province as they deal with record numbers of intensive care patients. At least six Covid-19 patients will be transferred to Ontario, with more possibly being transferred to Manitoba in the coming days.
- In the United Kingdom, the government is under pressure to reimpose social restrictions as case numbers soar back to the 50,000 range. The U.K. reported 49,156 new coronavirus cases on Monday, up from 45,140 on Sunday and the highest number since mid-July. Hospitalizations and deaths have been steadily rising since the summer, when the government lifted almost all coronavirus restrictions in England. Last month Prime Minister Boris Johnson said the country might move to a “Plan B” if infections rose to a point that the healthcare system was under pressure. Johnson’s spokesman Max Blaine says right now the government has no plans to enact Plan B and that the autumn rise infections was to be expected. “We always knew the next few months would be challenging,” Blaine said.
- Italy’s president has condemned the violence that broke out amid protests over the country’s coronavirus health pass. President Sergio Mattarella spoke out during a speech at the University of Pisa, as police in riot gear clashed with protesters in the northern city of Trieste. Mattarella said it was surprising that the protests are happening now, "not during the dark moments when we feared the collapse of the country, but now, today when we see an encouraging economic, social and cultural recovery." Protesters are opposing the country’s Green Pass, which is now required for all workers in the public and private sectors. The government says the Green Pass is necessary to keep workers safe and to protect the economy.
- New Zealand has reported its highest daily number of cases since the beginning of the pandemic, at 94 new infections. Most of the new cases were found in Auckland but seven of them were found outside of the nation’s biggest city. Authorities have raised concerns about people breaking the rules and pointed out that many of the new infections were among younger people. "The rules matter for everyone and the ask of testing if you are symptomatic applies to everyone," Prime Minister Jacinda Ardern said at a news conference. “We need everyone who can be, to be vaccinated...we all have a part to play," she said.
- Australia’s case numbers remain steady as lockdowns in the nations’ biggest cities draw to a close. While Sydney and Canberra exited their lockdowns last week, Melbourne is still on track to ease stay-at-home orders this week as the state reaches their 70% double inoculation rate. Queensland outlined a plan for reopening its state borders once vaccination rates reach 80%, expected around Christmas time. Victoria state reported 1749 new coronavirus cases, down from 1903 on Monday, while New South Wales reported 273 new cases, a slight rise from the day before but still well below its pandemic highs in early September.
Covid-19 – Due Diligence And Asset Management
Dubai’s Tourism Sector Won’t Rebound Until Late 2022, S&P Says
Brief: Dubai’s key tourism sector is unlikely to rebound for at least a year, according to S&P Global Ratings.While the city will witness a modest recovery this year helped by one of the world’s highest vaccination rates, “weak international tourism is likely to drag on the economy until late 2022 at the earliest,” Ratings Credit Analyst Trevor Cullinan said on Tuesday.Last year, S&P estimated Dubai’s gross domestic product would contract about 11%, given the impact of coronavirus on sectors including travel and tourism that contribute more than a third of the city’s economy. Dubai also has a “sizable” overall public debt burden projected at around 141% of GDP, according to S&P.
Fund Managers Sour on Global Growth Expectations, BofA Says
Brief: Fund managers may be quickly souring on global growth and earnings expectations, but their positioning remains pro-risk as they slash bond holdings to a record low and buy U.S. equities. This is a key takeaway from the latest Bank of America Corp. monthly fund manager survey, conducted in the week through Oct. 14. While the outlook for global growth turned negative for the first time since April 2020 and the overall survey was the least bullish in a year, the allocation to bonds fell to the lowest level ever as inflation woes drove expectations for higher rates, according to BofA strategists. Investors boosted their exposure to U.S. equities to a 16% overweight, the most since November 2020, while the overall positioning in stocks remained “very high,” but steady at a net 50%.
World faces fiscal problems worse than those from COVID: OECD
Brief: The COVID-19 pandemic may have bloated public debt to levels already pushing some governments to consider consolidation, but that’s nothing compared to the fiscal difficulties brewing in the coming decades, the OECD said. According to its long-term scenario, a deceleration in large emerging economies, demographic change and slowing productivity gains will drag trend economic growth among the OECD’s 38 members and the Group-of-20 nations to 1.5 per cent in 2060 from around 3 per cent currently. At the same time, states will face rising costs, particular from pensions and health care.To maintain public services and benefits while stabilizing debt in that environment, governments would have to raise revenues by nearly 8 per cent of gross domestic product, the OECD said.
Patience Key for U.K. Bulls as Pre-Pandemic High Remains Elusive
Brief: Hang in there -- that’s been the simple motto of equity market mavens who are bullish on the FTSE 100 Index. The U.K. benchmark is one of only a handful of major indexes that have yet to fully recover pandemic losses, being down more than 3% in that time. Among the main concerns of investors is a supply crunch that’s more acute for Britain than many other advanced economies due to the country’s high dependence on trade and because Brexit exacerbated a trucker shortage. “Brexit disruptions are having a huge sentiment effect on U.K. assets,” said Edmund Shing, chief investment officer at BNP Paribas Wealth. The energy crisis is another cause for concern, he said. After years of relative underperformance, dating back before the 2016 referendum on leaving the European Union, U.K. stocks are cheap. The FTSE 100 trades at a near-record 40% valuation discount to the S&P 500, and at 20% discount to the euro-area benchmark Euro Stoxx 50.
'Worries me a lot': CIBC's Tal warns on uneven labour recovery risks
Brief: One prominent Bay Street economist is warning that Canada's uneven labour recovery post-pandemic could have long-lasting economic effects if not addressed. “We still see this asymmetrical widening in the income gap. So, not only are we seeing the wealth gap widening, but also the income gap is widening,” Benjamin Tal, deputy chief economist at CIBC World Markets Inc., said Monday. “That worries me a lot.” His comments come on the same day BDO Debt Solutions released new data showing the deepening financial divide among Canadians. The latest BDO Affordability Index showed 43 per cent of respondents acquired additional debt because of the pandemic, up from four per cent from 2020. Around 28 per cent of people polled reported their financial situation improved during the pandemic as they saved money and paid down debt.
