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Our briefing for Wednesday, September 8, 2021:
Sep 8, 2021 4:28:43 PM
- In the United States, President Joe Biden will make an announcement outlining a new six-point strategy for dealing with Covid-19 and the delta variant. The announcement will come on Thursday, the White House said, and will address important matters like rising case numbers and vaccine hesitancy. Over the holiday weekend, the U.S. reached 40 million cases of the virus, the highest tally in the world. Hospitalizations have also increased and seven states–Alaska, Georgia, Hawaii, Idaho, Kentucky, Tennessee and Washington–reported record numbers this month. The U.S. is struggling to keep the delta variant under control as concerns grow around children heading back to school.
- In Canada, British Columbia has officially launched their vaccine passport for residents to access non-essential services. Premier John Horgan says the new system will help get the economy running and allow social events to return safely. The new rules come into effect on Sept.13 and will apply to fully and partially vaccinated people until Oct. 24. Beginning on Oct. 24, residents will have to be fully vaccinated in order to access those non-essential services. British Columbia joins provinces of Quebec, Ontario and Manitoba in launching similar programs to try and augment vaccination rates.
- In the United Kingdom, Prime Minister Boris Johnson laid out plans on Tuesday to raise taxes to fund health and social care, after spending billions on the coronavirus pandemic. The tax on workers and companies across England would be a 1.25% levy, which is expected to generate about $62 billion over three years, according to the government. Speaking in the House of Commons on Tuesday, Johnson said it would be “wrong for me to say that we can pay for this pandemic without taking the difficult but responsible decisions about how we finance it.” In July, government reports said the U.K’s Covid-19 spending was around the equivalent of nearly $648 billion.
- In France, the government’s “pass sanitaire” was introduced about a month ago on August 9. The pass makes it mandatory to provide vaccination status or show a negative test, in order to enter indoor restaurants, cinemas, shopping malls, or for travel on planes and trains. Since the pass was introduced, vaccination rates in France have gone up. Approximately 72% of the French population had received one dose of vaccine by August 30, compared to 53.6% on July 12 when the pass was announced. More than one million people booked their vaccine appointments the day after President Emmanuel Macron announced the policy.
- In Germany, the health minister is urging more people to get vaccinated, as vaccination rates fall and case numbers rise. Health Minister Jens Spahn tweeted on Saturday that at least 5 million vaccinations are needed to make the autumn and winter safer. The minister warned of hospitals becoming overwhelmed if not enough people are vaccinated. For weeks, case numbers have been rising in the country and vaccination rates have been falling. Currently about 61% of the German population has been fully vaccinated, a rate lower than most other European countries.
- In Australia, vaccinations are accelerating as the country deals with lockdowns in its two biggest cities. Around three quarters of people over the age of 16 in New South Wales (NSW) have now had their first dose of vaccine. NSW reported 1480 new cases, up from 1220 a day earlier, and nine further deaths. In neighbouring Victoria state, cases fell from 246 to 221. The country now aims to live with the virus instead of eliminating it, with restrictions to lift once 70% of the adult population has been fully vaccinated, a goal that’s predicted for mid-October.
Covid-19 – Due Diligence And Asset Management
U.S. Stocks Cut to Underweight at Morgan Stanley on Higher Risk
Brief: Morgan Stanley cut its recommendation on U.S. equities to underweight and its call on global stocks to equal-weight, citing “outsized risk” to growth through October. Rising cases of the delta strain of Covid-19, and tension between elevated inflation expectations and low yields and easy monetary policy are at play during a time “that has historically poor seasonality,” strategists including Andrew Sheets wrote in a note on Tuesday. The investment bank’s caution on U.S. equities comes as the S&P 500 Index has outperformed global equities this year to make new records, even as coronavirus infections have started rising again in many parts of the world, and as the U.S. Federal Reserve edges closer to setting a path toward tapering stimulus.
European Equity Research Has Changed — ‘And That’s a Good Thing’
Brief: More than a year and half since the Covid-19 pandemic plunged Europe into lockdown and ushered the equity research industry into a virtual environment, there are some changes on the near horizon. The region’s vaccine effort — sluggish at first — has now reached 70 percent of adults in Europe, according to European Union officials, and the end of the summer signals a return to the office for many employees, despite the looming Delta variant. This shift is poised to recalibrate the industry and its relationships once again — and finding the right balance for both research teams and their institutional investor clients will be key.
Dow, S&P 500 drop, tech stocks notch gains as Delta variant clouds gather
Brief: Stocks fell on Tuesday, with Wall Street indices retreating from last week's record highs, with analysts closely watching the labor market as rising COVID-19 infections cloud the outlook. Last week, the S&P 500 Index set an all-time high, and the Nasdaq Composite briefly hitting an intraday record, despite August's jobs data falling far short of market expectations. While payrolls showed the economy creating a relatively slim 235,000 new positions, the data stoked speculation that the Federal Reserve's Open Market Committee (FOMC) could alter its timetable for scaling back its stimulative bond-buying, which has propped up investor confidence. “On balance, we expect the September FOMC statement to confirm the July minutes that tapering can begin later this year," wrote Marc Chandler, chief market strategist at Bannockburn Global Forex, in a morning research note.
European Stocks Slip as Investors Mull ECB Stimulus, Inflation
Brief: European equities fell Tuesday as investors assessed how soon pandemic stimulus could potentially be withdrawn and the effects of rising inflation. The Stoxx Europe 600 Index was 0.5% lower by the close in London, weighed down by chemicals, health-care and utilities shares. Luxury shares outperformed, with Switzerland’s Swatch Group AG and Gucci-owner Kering SA gaining after Hong Kong moved toward reopening the border with China. European stocks are hovering near a record high reached mid-August on the back of strong corporate earnings and economic growth potential. But the focus has now shifted to the risks of inflation and monetary policy, with investors awaiting the European Central Bank meeting on Thursday for clues on how soon it will move dial down emergency stimulus.
Deutsche Bank Calls End of Honeymoon Phase With Remote Work
Brief: Deutsche Bank AG is calling the end of the honeymoon phase for employees’ relationship with remote work. A growing number of workers report feeling isolated from colleagues, Deutsche Bank said in a report to clients. Women are increasingly likely to develop musculoskeletal problems due to inadequate remote-work setups. Nearly 40% of workers in the U.S. say they feel exhausted after a full week of virtual meetings. “Despite our initial honeymoon, people are starting to realize that the freedom of work-from-home does have some downsides: dilution of company culture, coordination issues, and even the mental wellbeing of some workers,” Marion Laboure, an analyst at Deutsche Bank, said in the report.
