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Our briefing for Wednesday June 16, 2021:
Jun 16, 2021 4:14:19 PM
- In the United States, Treasury Secretary Janet Yellen told the Senate Finance Committee on Wednesday that America is “well on the way” to a strong recovery from the COVID-19 pandemic. Yellen referred to the $1.9 trillion pandemic-relief bill enacted in March as helping in the process. However, America still faces challenges in wage inequality, declined labor force participation, racial gaps and climate change. Yellen urged lawmakers to back President Joe Biden’s proposals for a multi-year $4 trillion spending plan on child care, infrastructure and green investments.
- Canada’s transport minister says the government’s plans for a phased reopening of the border to international travel following COVID-19 restrictions will be shared “in the coming days.” Minister Omar Alghabra told reporters on Wednesday that talks are happening between the government, the airports and airlines to make sure they can be ready for when those travel rules begin to relax. Prime Minister Justin Trudeau has said in the past any easing of rules will focus on “fully vaccinated” Canadians. Prime Minister Trudeau has also tested negative for COVID-19 following his return from the G7 summit in the United Kingdom. Trudeau was following the rules set-out by his government staying in an Ottawa based hotel on Tuesday and can leave hotel quarantine – continuing the remaining time, isolating at home.
- United Kingdom Health Minister Matt Hancock has said home care workers will be required to be fully vaccinated against COVID-19 or risk losing their jobs. The new legislation will require home care workers to have two full doses of a vaccine by October. The measures won’t apply to those medically exempt and there will be a 16-week grace period. The news comes as five boroughs in London have more than 50% of their home care staff for the elderly with one shot or fewer. Recent data has shown England has 69% of its adult population with both jabs of an inoculation, which makes the vaccine at least 81% effective against the fast-spreading Delta variant. Those who have only received one dose of a vaccine, are only guaranteed around 31% effectiveness against the variant first discovered in India.
- The European Union (EU) is recommending to its 27-member bloc to start lifting restrictions on tourists travelling from the United States. The move is generally seen as symbolic as the recommendation from the EU is non-binding, and national governments have the authority to require test results or vaccination records and to set other entry conditions as they see fit. The EU also has no unified COVID-19 tourism or border policy for the 27-member bloc but have been working for months on a joint digital travel certificate for those vaccinated, freshly tested or recently recovered from the virus. The certificate is generally meant for EU nations, but Americans and other countries from around the world can obtain the certificate too.
- India government authorities are allowing the Taj Mahal and several other monuments to reopen as new coronavirus cases continue to decline. As of Wednesday, 650 tourists with online bookings will be allowed to day visit the Taj Mahal, one of the seven wonders of the world. Temperatures will be checked at the gates, face masks must be worn and physical distancing must be observed. The Health Ministry reported 62,224 new infections on Wednesday, down from the peak of more than 400,000 new infections a day just two months ago.
- Australia’s city of Melbourne will start to see more restrictions lifted as of 11:59 PM Thursday night. Acting Victoria state premier James Merlino said the 25 KM distance limit to travel for Melbourne residents will be dropped, public gatherings will be allowed up to 20 people and businesses, including gyms and indoor entertainment venues can reopen. Masks will no longer be required outdoors, but will still be the case indoors, on public transport and in workplaces. As Australia heads into their winter months, Premier Merlino asked residents to get tested as soon as possible and don’t assume a sore throat or a cough are symptoms of the common cold.
Covid-19 – Due Diligence And Asset Management
Fed Holds Rates at Near Zero, Projects Two Possible Rate Hikes by End of 2023
Brief : The Federal Reserve on Wednesday held interest rates at near-zero but optimism over the progression of the U.S. economic recovery spurred more Fed officials to pencil in rate hikes by the end of 2023. The Fed also reiterated for now its commitment to its asset purchase program, which is absorbing about $120 billion a month in assets. “Progress on vaccinations will likely continue to reduce the effects of the public health crisis on the economy, but risks to the economic outlook remain,” the Federal Open Market Committee said in a statement. A fresh round of its quarterly economic projections reflected the central bank’s optimism over the economic outlook, with 13 of the FOMC’s 18 members projecting at least one rate hike by the end of 2023. The median member of the FOMC in the so-called “dot plot,” which maps out each member’s expectations for rates over coming years, now expects two rate hikes by the end of 2023. For comparison, the Fed’s dot plots in March of this year showed the median member expecting no rate hikes through that time horizon. The upward revision suggests that the Fed sees a faster-than-expected recovery. The economic projections raised expectations for real GDP growth in 2021 to 7.0%, a notch up from March projections for 6.5%.
Blackstone Offers $3.05 Billion for Majority of Soho China
Brief: Blackstone Group Inc. offered to take over office developer Soho China Ltd. for as much as HK$23.7 billion ($3.05 billion), its biggest bet yet on the real estate market in Asia’s largest economy. The New York-based private equity firm is offering HK$5 in cash for each Soho share, it said in a Hong Kong stock exchange filing Wednesday, confirming an earlier Bloomberg News report that it was nearing a deal. The bid represents a 31.6% premium to Soho’s last closing price before trading was suspended. Soho Chairman Pan Shiyi and Chief Executive Officer Zhang Xin, who own a majority stake in Soho China, have agreed to sell most of their shares to Blackstone, according to the statement. They plan to keep a 9% stake after the deal closes. Blackstone intends to keep Soho listed on the Hong Kong stock exchange, the statement shows. Blackstone has been investing in office, retail and logistics assets in China since 2008 and owns approximately 6 million square meters of properties in the country, according to the statement. The firm is doubling down on Asia, seeking to raise at least $5 billion for a fund focused on the region, people familiar with the matter have said.
State Street Survey Identifies Actions Alternative Asset Managers Plan to Take to Meet Growing Investor Demands
Brief: State Street Corporation has published new research which reveals that with increasing pressures and demands on returns and reporting, alternative asset managers have work to do to meet the growing needs of institutional investors. The survey found that just 57 per cent of the alternative asset managers interviewed said their investment operations are built to scale to deal with increasing volume and complexity. 70 per cent believe they will need to increase the amount they invest in data storage, management and analysis; and only 24 per cent have already done so. Despite market instability, shifting business models and pressure on asset valuations, the vast majority (82 per cent) of alternative managers surveyed believe their organisation has been effective at responding to increasing investor demand for transparency and additional types of data. However, when highlighting areas for improvement, 57 per cent positively rated their companies data management, but less than half (48 per cent) said they have a good level of efficiency and effectiveness in their business’ technology systems, which underpins their use and management of data.
Pfizer CEO sees a Return to ‘Normal’ Globally by the end of 2022
Brief: Pfizer CEO Albert Bourla told CNBC on Wednesday he expects life could return to normal for developed countries by the end of this year and the rest of the world by the end of 2022. By the end of next year, there should be enough Covid-19 vaccine doses for most world leaders to successfully inoculate their populations against the virus, Bourla said during an interview with Andrew Ross Sorkin at the CNBC Evolve Global Summit. “I think the whole world will have enough volumes [of vaccine doses] by the end of 2022 to vaccinate, to protect everyone,” he said. “And I think that by the end of this year, the developed world will already be in this situation.” Pfizer and German partner BioNTech reached the milestone of manufacturing 1 billion doses of their Covid vaccine last week, Bourla told CNBC. The two companies expect to produce up to 3 billion doses this year. The vaccine, one of three authorized for use in the U.S., has played a major role in driving down the number of new infections and hospitalizations across the country. As many states begin to lift their Covid restrictions and return to normal, leaders from other countries are urging the U.S. to donate leftover shots.
Is Higher Inflation Here to Stay? Fund Managers Don’t Think So.
Brief: Nearly three-quarters of fund managers believe inflation will be short-lived, according to Bank of America’s latest investor survey. The survey, which was published Tuesday, found that 72 percent respondents view the current state of rising inflation as “transitory.” Still, fund managers don’t believe inflation has peaked yet, with net 64 percent of survey respondents predicting higher inflation in the next 12 months. The survey, which included 224 participants with a total of $667 billion in assets under management, aggregated responses from June 4 to June 10. According to BofA, economic expectations among survey participants have peaked. Three-quarters of investors said they expect a stronger economy, a percentage that indicates investors’ “cruising altitude” when it comes to the market, according to David Jones, investment strategist at BofA Securities. “They are watching rates and inflation carefully, but people, at the moment, think inflation is transitory,” Jones told Institutional Investor. “We are seeing signs of a peak in optimism.” Jones said the survey responses indicate that the market is evolving from the early part of the cycle into a mid-cycle position. As for expectations for future downturns, 68 percent of respondents think the next recession will occur in 2024 — no earlier.
