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Our briefing for Tuesday, October 26, 2021:
Oct 26, 2021 3:13:20 PM
- In the United States, the negative attention Facebook and its founder, Mark Zuckerberg are receiving continues to mount. The Associated Press (AP) is reporting Tuesday that the social media giant “froze” as anti-vaccine comments swarmed users earlier in the year. In March, the AP reported some Facebook employees tried to find ways to help stop the false claims of COVID-19 vaccine dangers and ineffectiveness. One of the methods suggested was to disable comments on vaccine posts until the platform could do a better job of tackling anti-vaccine messages. The employees noted senior executives either shelved ideas like this entirely, or other changes weren’t made until a month later. “Why would you not remove comments? Because engagement is the only thing that matters,” said Imran Ahmed, the CEO of Center for Countering Digital Hate, an internet watchdog group. “It drives attention and attention equals eyeballs and eyeballs equals ad revenue.”
- In Canada, a group that calls themselves “Feds for Freedom” are organizing efforts to avoid complying with the government’s new mandatory vaccination rules. The Federal Liberal government unveiled its vaccine policy for public servants earlier this month, giving federal employees until this Friday to disclose their vaccination status. Those who don’t, or who say they won’t be fully vaccinated, could be forced into an unpaid leave of absence. According to a report from CBC, the Feds for Freedom group say there are hundreds of federal public servants who are not anti-vaccine but don’t agree with the government policy – because in their view – it violates their rights to privacy and bodily autonomy.
- The United Kingdom’s Evening Standard is reporting via a government leaked report, that a return to millions more people working from home would blow a multi-billion hole into the economy. The Treasury document, leaked originally to Politico London Playbook, had the cost of the government’s “Plan B” at between £11 billion to £18 billion if it were in force for five months until the end of March. Government ministers are desperate in their attempt to avoid this scenario – wanting to keep London and other large city centres open – and pleading with citizens to either become fully vaccinated or receive booster jabs to strengthen the nation’s defences.
- In Brazil, a Senate committee was scheduled to vote Tuesday on a report recommending President Jair Bolsonaro face a series of criminal indictments for his handling of the coronavirus pandemic. The report is the culmination of a six-month investigation into the government’s handling of the pandemic that has left Latin America’s most populous country with more than 600,000 deaths related to COVID-19. Even if the committee were to approve the decision to file charges, it will likely do little to effect President Bolsonaro, outside of fueling more criticism against the leader of Brazil. The country’s prosecutor general, the person responsible on whether to file charges against Bolsonaro, was appointed by the controversial leader and is widely viewed as protecting the president.
- Singapore is set to open its borders to Australian and Swiss residents as of November 8th as the Southeast Asian financial hub takes another step in reviving its economy. The plan is to let fully-vaccinated travelers from the two countries to enter Singapore freely after taking PCR COVID-19 tests. Australians and Swiss residents will not have to self-isolate once given the green light from a negative PCR test. Singapore had recently opened travel corridors with 10 other countries, including the United States, UK and Germany.
- China is maintaining its zero-COVID approach as multiple media outlets have reported the country has placed a city of four million people under lockdown in attempt to crush a domestic outbreak. After reporting six cases – the city of Lanzhou – the provincial capital of the northwestern Gansu province – will have its residents required to stay at home, except in emergencies. Officials said the “entry and exit of residents” would be strictly controlled and limited to essential supplies and medical treatment. China reported 29 new domestic cases of COVID-19 on Tuesday.
Covid-19 – Due Diligence And Asset Management
Performing Under Pressure: How Hedge Funds Can Weather Q4’s Choppy Markets
Brief: Hedge funds are well-placed to outperform other assets classes in a potentially choppy market environment during the fourth quarter, with commodities, event driven and certain credit strategies faced with a rich opportunity set and strong upside potential as markets adjust to a post-Covid world. In its latest ‘Fourth-Quarter Hedge-Fund Strategy Outlook’, K2 Advisors said global equities and bond markets are now locked in a “tug-of-war” between good news and bad news, which is shaping the way investors position their portfolios. “Change creates opportunities for those nimble enough to capture the new tailwinds while hedging out the risks associated with a shifting environment,” K2, the hedge fund investing unit of Franklin Templeton, observed. Specifically, Covid cases are set against tightening central bank policies, stronger employment numbers are balanced against supply chain problems, while solid earnings growth this year face worsening year-over-year comparisons in early 2022.
‘Painful’ Disruption Looms with Inflation Approaching 7 Per Cent in 2022, warns Aegon AM
Brief: Markets, households and students face painful disruption next year if inflation hits 7 per cent as currently implied by inflation-linked bonds, says Mark Benbow, high yield portfolio manager at Aegon Asset Management. With GDP RPI inflation swaps implying a surge in inflation in 2022, Benbow says few will escape the squeeze on prices, with RPI-linked loan holders particularly exposed to much higher borrowing costs. “You don’t need to look far to see inflation – commodity prices are rising rapidly, as are other input costs such as shipping,” he says. “And with the rising cost of living, it’s only a matter of time before employers realise that they will need to increase wages. “That may sound like a good thing, but consider that index-linked bonds are implying that RPI will hit 7 per cent in 2022. If that comes to fruition, it will disrupt markets, households and students, who are painfully charged student loan interest on an RPI +3 per cent basis, meaning they will be paying interest of 10 per cent.”
UK Regulator sets out Rules for Long-Term Fund with Minimum 90-Day Notice Period
Brief: Britain’s financial watchdog set out rules for a new type of fund for investing over the longer term to help tackle climate change and economic recovery from COVID-19, while ruling out daily redemptions to avoid suspensions in rocky markets. The new Long-Term Asset Fund (LTAF) regime creates a category of authorised open-ended fund for investing in long-term, illiquid assets such as venture capital, private equity, private debt, real estate and infrastructure. “We want investment in long-term, illiquid assets, including productive finance, to be a viable option for investors… seeking the potential for higher long-term returns in return for less or no immediate liquidity,” the Financial Conduct Authority said in a statement. It had proposed a notice period for redemptions of between 90 and 180 days in a consultation paper last year. “So we have set a minimum notice period of 90 days and a requirement that LTAF cannot offer redemptions more frequently than monthly,” it said on Monday. Funds that invested in illiquid property and offered daily redemptions had to be suspended last year when markets suffered extreme volatility as economies entered lockdowns to fight the pandemic.
UK Budget to Mark Shift Away from Pandemic Firefighting
Brief: Britain has experienced a series of shortages these past few months, from a lack of fuel at gas stations to not enough workers picking the fall harvest, but Treasury chief Rishi Sunak is unlikely to dwell on them when he delivers his annual budget statement on Wednesday. The Chancellor of the Exchequer, as he is formally known, will instead likely use one of the most high-profile, choreographed events in the country’s political calendar to paint a relatively rosy picture of the state of the British economy following the devastating shock of the pandemic. With government borrowing less than anticipated a few months ago — following a fairly solid recovery from Britain's deepest recession in around 300 years — Sunak has a bit of wiggle room on the taxes and spending front. However, with the next general election not due until 2024 at the latest, Sunak is not expected to turn into Father Christmas — big tax giveaways in Britain are traditionally timed for the run-up to a general election.
Dealmakers Race Past $4.1 Trillion Record with Months to Spare
Brief: The global boom in mergers and acquisitions has just delivered dealmakers their best-ever year -- on $4.11 trillion and counting. Numerous records have already tumbled in recent months and it was just a matter of time before the previous high set in 2007 was cleared. “M&A bankers are always blamed for being perpetually optimistic but the data is quite compelling,” said Stephan Feldgoise, co-head of global M&A at Goldman Sachs Group Inc. “Whether it be large-cap M&A, sponsor M&A, SPACs, strategic repositioning coming out of Covid, the numbers have been just extraordinary.” Volumes have been rising across sectors and regions, fueled by cheap financing and super-acquisitive private equity buyers. Deals in the $1 billion to $10 billion range -- a sweet spot for buyout firms -- have underpinned the boom, in the notable absence of $50 billion-plus blockbusters. Standout transactions this year have included the leveraged buyout of Medline Industries Inc., Canadian Pacific Railway Ltd.’s hard-fought takeover of Kansas City Southern, and the long-awaited merger of German real-estate firms Deutsche Wohnen SE and Vonovia SE.
