.png?width=200&height=78&name=CH%20Diligence%20(thicker%20line).png "CH Diligence (thicker line).png")
Brief: New research from Unigestion’s equities team suggests investor confidence has been dented in recent weeks as the Delta variant has taken hold in several countries that had earlier been buoyed by the vaccine rollout. Earlier, the stock market rally towards the end of 2020 into 2021 – propelled by the vaccine push – had reversed the fortunes of certain so-called Covid “winner” and “loser” equities, such as healthcare and software. Unigestion said this ‘winners and losers’ theme in equities, which emerged out of the disruption of the pandemic, has underpinned the performance of both Momentum and Value names for much of the past year – but is now being disrupted as investors shift their focus toward economic reopening and recovery.
Brief:The coronavirus pandemic has increased the importance of the social aspects of ESG for investors, according to a survey by Berenberg WAM. Among 112 respondents, who were primarily from the UK and Germany, some 47% considered the social ‘S' element of ESG as the most important, followed by 35% selecting environmental factors ('E'), while 18% said governance (‘G') took precedence. The survey found the pandemic had increased the importance of social factors the most, followed by environmental factors. When asked to predict what the most relevant ESG product would be for respondents in five years' time, actively managed ESG strategies emerged as the favourite for 19%. This was followed by 17% for impact investments and 15% for Sustainability/SDG-linked bonds.
Brief: U.S. personal spending accelerated more than expected in June, reflecting a ramp up in outlays on services, while a closely watched inflation measure continued to climb. Purchases of goods and services increased 1 per cent from a month earlier, following a downwardly revised 0.1 per cent drop in May, Commerce Department figures showed Friday. The personal consumption expenditures price gauge, which the Federal Reserve uses for its inflation target, rose 0.5 per cent for a second month. Thanks to vaccinations and a broader reopening of the economy, consumers had the confidence and ability to spend money on services like dining out as well as merchandise. With goods spending well above pre-pandemic levels, outlays have increasingly shifted to the pandemic-battered service sector.
Brief: George Weston Ltd. is reporting a profit in its latest quarter, a year after enduring its most difficult three months of the COVID-19 pandemic. The Toronto-based company says its net income attributable to common shareholders was $108 million or 70 cents per diluted share, compared with a loss of $255 million or $1.66 per share a year earlier. Excluding one-time items, adjusted profits nearly doubled to $272 million or $1.78 per share, from $139 million or 91 cents per share in the second quarter of 2020. Revenues for the three months ended June 19 increased four per cent to $12.9 billion, from $12.4 billion in the prior year quarter.
Brief: The U.S. economy is now larger than it was before the pandemic, but its growth rate may have peaked this year at a much slower pace than expected. That doesn’t mean the second half of the year won’t be strong or the recovery will be derailed. The question is how strong growth can be, with a number of factors that can impact it, including the delta variant of the coronavirus. Gross domestic product accelerated at a 6.5% annualized rate in the second quarter, slightly better than the revised 6.3% gain in the first quarter. But it was well below the 8.4% expected by economists, and far less than their earlier forecasts that growth in this year’s peak quarter would be 10% or higher.
Brief: To hear the central bankers tell it, leveraged-debt markets are overheating and could face tougher rules. For investors, there’s no bubble in sight and a fresh deal surge is on the way. As developed economies learn to live with the coronavirus, M&A activity and debt refinancings have accelerated, driving lending to indebted firms to a near-record in the year so far in Europe. Loan prices are back to pre-pandemic levels and junk-bond yields have tumbled as waves of stimulus and inflation fears push investors into higher-yielding riskier credits. “We have elevated valuations across many financial markets these days, and I would say the loan asset class is indeed well valued at this point,” said Thierry de Vergnes, head of bank loans at Amundi SA, Europe’s largest asset manager. “I don’t think we are in market bubble.”
Brief: Bank of Canada Governor Tiff Macklem took to the pages of a major newspaper to defend a three-month run of excessive consumer price gains.The central banker’s opinion piece, published Thursday on the front page of the Financial Post, comes a day after Statistics Canada reported inflation rose 3.1 per cent in June. While a decline from the 3.6 per cent recorded in May, consumer price gains have exceeded Macklem’s 1 per cent to 3 per cent control range since April. Policy makers expect inflation to creep to an average of 3.9 per cent in the third quarter -- a level not seen since the early 2000s -- but maintain the run-up in the aftermath of the COVID-19 crisis will be short-lived. “We shouldn’t overreact to these temporary price increases,” Macklem wrote. “You can be confident that we will keep the cost of living under control as the economy reopens.”
Brief: Confidence in the euro-area economy climbed to a record in July as business resurges following the end of coronavirus lockdowns. Factories in the 19-nation region are running at full steam, bolstered by a strong global recovery, and consumers are splurging on travel and services unavailable during long stretches of the pandemic. A gauge measuring sentiment rose to 119, the highest since the series began in 1985, from 117.9 in June. In industry, booming demand lifted the mood among executives, though it’s also squeezing capacity and causing bottlenecks. Services confidence showed the best reading since 2007.
Brief: Asset managers St James's Place, Rathbone and Man Group saw billions of pounds in inflows during the first half of the year, as household savings jumped during COVID-19 lockdowns, their results showed on Wednesday. Wealth managers have seen their fortunes turn around drastically as stimulus cheques and vaccinations reassured investors about the economic outlook following the first few months of last year when clients pulled out money. St. James's Place (SJP) expects gross inflows to grow 20% in the second half of 2021, the money manager said, after attracting 5.5 billion pounds ($7.64 billion) in net inflows in the first half.Improving confidence and an increase in household savings rates have helped attract 9.2 billion pounds of gross inflows, SJP's chief executive Andrew Croft said in a statement. Funds under management at SJP, which provides advice on investment and retirement planning, swelled to 143.8 billion pounds at end-June from 129.3 billion pounds in December.
Brief: The Federal Reserve on Wednesday held its benchmark interest rate near zero and said the economy continues to progress despite concerns over the pandemic spread. As expected, the Federal Open Market Committee concluded its two-day meeting by keeping interest rates in a target range between zero and 0.25%. Along with that, the committee said in a unanimously approved statement that the economy continues to “strengthen.” Despite the optimism about the economy, Chairman Jerome Powell said the Fed is nowhere near considering a rate hike. “Our approach here has been to be as transparent as we can. We have not reached substantial further progress yet,” he said. “We see ourselves having some ground to cover to get there.”
Brief: Almost forty per cent of UK institutional investors are optimistic about the economy as the country emerges from the pandemic, according to the latest Institutional Investor Compass Survey from MFS Investment Management. The survey found that almost half of respondents (48 per cent) are confident about achieving their three- to-five-year goals but are less certain (24 per cent) of meeting their shorter-term objectives, post-pandemic. Adding to this mixed sentiment, the survey showed that more than 57 per cent of institutional investors agree some industries will not recover, with more than 47 per cent agreeing that Covid-19 has created investment opportunities and 35 per cent agreeing that markets do not fully reflect the long-term economic impact of the pandemic.
Brief: IBM Security today announced the results of a global study which found that data breaches now cost surveyed companies $4.24 million per incident on average – the highest cost in the 17-year history of the report. Based on in-depth analysis of real-world data breaches experienced by over 500 organizations, the study suggests that security incidents became more costly and harder to contain due to drastic operational shifts during the pandemic, with costs rising 10% compared to the prior. Businesses were forced to quickly adapt their technology approaches last year, with many companies encouraging or requiring employees to work from home, and 60% of organizations moving further into cloud-based activities during the pandemic.
Brief: The three largest banks in the United Arab Emirates reported a drop in impairment charges by nearly a third in the first half as they took advantage of an economic recovery from the Covid-19 pandemic. Emirates NBD PJSC, Dubai’s biggest lender, and its counterpart in the UAE capital, First Abu Dhabi Bank PJSC, posted an increase in profit in the first half, supported by higher fee income and a drop in the cost of risk. Dubai Islamic Bank’s first-half impairments fell 29% even though profit dropped. The results reflect an improvement in economic conditions in the UAE, OPEC’s third-biggest producer, whose vaccine rollout fed an upswing in activity and as oil prices rebounded. Executives emphasized lower-than-expected loan-loss charges, pointing to their banks’ strengthening balance sheets and adequate provisioning while still sounding caution about the outlook.
Brief: The Nasdaq 100 Index trades for 38 times earnings. Abby Joseph Cohen says it’s a market with “no margin for error.” It’s only July, and the S&P 500 Index has put in a gain that most fund managers would consider a stellar year. So when big drops like Tuesday’s land with no obvious bad news to explain them, it’s useful to consider how far the market has already come. “It’s priced to short-term perfection,” said Kim Forrest, founder and chief investment officer at Bokeh Capital Partners. “Was yesterday the high? Because that’s what everyone is acting on. I don’t believe yesterday was the high of the year,” she added, citing views on earnings over the next six months.
Brief: It’s everywhere. At the White House. In consumer data. On earnings calls: Anxiety that inflation is about to gut the economy. Two places it isn’t are the stock and bond markets, where investors have taken Jerome Powell’s “transitory” mantra to heart. Breakeven rates -- a gauge of bond market inflation expectations -- have barely budged in a month, even after the hottest price print in more than a decade. Meanwhile, tech giants -- thought to be vulnerable to a pickup in price pressures -- have overpowered cyclical shares, which normally fare better in an inflationary environment. The divide highlights a dynamic that has persisted since pandemic lockdowns began 16 months ago: Economic hardships crimping companies real time, while markets stay calm on grounds this too shall pass. So far it’s been a winning strategy for investors, who stood firm amid the deepest recession in generations and now seem bent on reprising the high-wire act as the latest stresses play out.
Brief: In a recent snap poll by audit, tax and consulting firm RSM, almost three quarters (74 per cent) of private equity backed middle market businesses said that their investor has had a positive effect on their firm’s future prospects. Nearly seven in 10 (69 per cent) believed their private equity investor had a positive effect on their firm’s resilience during the global Coronavirus pandemic, as communication between businesses and investors increased for nearly three fifths of the companies (68 per cent). With 59 per cent of businesses saying that the pandemic has had a negative or very negative effect on trade, the findings highlight that the strength and guidance private equity investment brings has supported growing middle market businesses throughout a difficult year.
Brief: When the Covid-19 pandemic shut the world down last year, there was little time for anyone to adapt. But for the business of corporate access — which until last year connected investors and companies largely through travel and in-person events — the transition was especially stark. For Brazilian provider BTG Pactual, this happened in the middle of a roadshow where, after one day of meetings, the event went instantly, if unexpectedly, virtual on the second day. “Companies from their end understood that they had to be in contact with investors and clients and converted their interactions to online meetings as well,” recalls Carlos Sequeira, head of research at BTG Pactual. “Our straight relationship with IR and management teams helped to enhance the events calendar with several online group meetings since the first week of lockdown.”
Brief: The vast majority of hedge fund investors were pleased with the performance of their funds during the first half of this year, according to a new study from HFM and the Alternative Investment Management Association (AIMA). As a result, more than one-third of investors are planning to boost their allocation to hedge funds. The study is based on surveys and interviews with 108 investors in alternatives and 128 senior hedge fund investor relations and marketing professionals during the second quarter. With an 8.9% average return, hedge funds reported their most robust first half of a year since 2009, which is one reason investors were so pleased with their fund returns. HFM and AIMA also said investors have been rewarding hedge funds for their performance as inflows in the first five months of the year amounted to $57.8 billion, more than double the $23.4 billion recorded in the first five months of 2021.
Brief: The last 16 months have provided every aspect of society with an unprecedented challenge, yet Europe's venture capitalists are fuelling a red-hot market that looks to be anything but challenged. While the startup market is booming globally, Europe's scene of private startup investment deserves close attention for the particularly astounding rate at which innovation is accelerating. According to Dealroom's latest report, Europe is the fastest growing major region by venture capital investment - outpacing both the US and China - with investment in European startups having grown by 2.9x YoY to EUR49 billion in the first six months of 2021 alone.
Brief: The International Monetary Fund is sharply upgrading its economic outlook this year for the world’s wealthy countries, especially the United States, as COVID-19 vaccinations help sustain solid rebounds from the pandemic recession. But the 190-country lending agency has downgraded its forecast for poorer countries, most of which are struggling to vaccinate. Overall, the IMF said Tuesday that it expects the global economy to expand 6% this year — a dramatic bounce-back from the 3.2% contraction in the pandemic year of 2020. The IMF's forecast, unchanged from its previous estimate in April, would mark the fastest calendar-year global growth in records dating to 1980.
Brief : New COVID variants now tops the list of concerns for financial markets, followed by inflation and economic growth, according to Deutsche Bank's monthly market sentiment survey for July published on Monday. A surging Delta variant of the coronavirus has rattled markets in recent weeks, fuelling concerns that world economic growth may have peaked. In a Deutsche Bank survey conducted July 21-23 covering around 550 market professionals globally, over 60% of respondents said they viewed new variants as more worrisome than they did back in April when it was last the top risk.
Brief: U.S. economic growth will likely slow significantly in 2022 as the services sector’s recovery fades, according to Goldman Sachs Group Inc. The U.S. bank expects the world’s biggest economy to return to trend-like expansion in the second half of next year. It also cut its forecast for gross domestic product growth in the final two quarters of 2021 by one percentage point to 8.5% and 5% respectively. “Until a couple of months ago, our GDP growth forecast had been distinguished for the prior year by being well above consensus expectations,” economists led by Jan Hatzius wrote in a report to clients. “At this point, our forecast is instead distinguished from consensus expectations by the sharpness of the deceleration that we expect over the next year and a half,” they wrote
Brief: No calls, no emails and no meetings. That's the order this week from Aquiline Capital Partners to its staff. The private equity firm is putting all employees on vacation, people familiar with the matter said. It's an unusual move intended to recognize employees and avoid burnout from the physical and mental pressure of the COVID-19 pandemic and the frenetic pace of dealmaking. Aquiline has more than $6 billion in assets and over 60 employees in its New York headquarters and London office. The firm has canceled all internal meetings for the week and told employees to refrain from calls, emails and chatroom messages, the sources said. If a company owned by Aquiline has an emergency, an employee will step in, one added
Brief :Billionaire Jeremy Grantham's investment firm says stocks are too pricey, outlining their view as US equities sit at record highs, with the team offering their advice on how to navigate through what they call a global growth bubble. "Global equity markets rallied impressively in the quarter, pushing some year-to-date numbers into double-digit territory only halfway through the calendar year," said GMO in its second-quarter outlook published this week. Grantham, co-founder of investment firm Grantham, Mayo, van Otterloo & Co., is a legendary investor who is well known for calling for a burst of the 1989 Japanese asset-price bubble, the 2000 tech bubble, and the 2008 real-estate bubble.
Brief: PEWire spoke to Randy Schwimmer, who heads up senior lending origination and capital markets at Nuveen affiliate Churchill Asset Management, to hear how he experienced the lending market throughout the crisis and how it keeps evolving into 2021. Churchill AM is structured as a private equity firm and is headquartered in New York but works with clients globally, and provides structuring, credit analysis, equity, debt, and capital investment to middle market companies, primarily those owned by private equity investment firms. From Schwimmer's perspective, he noted that the period going into 2020 was tainted with a certain degree of apprehension.
Brief : A rally in the U.S. dollar has investors looking at a broad range of factors -- from global COVID-19 infections to yield gaps -- to determine whether the greenback will continue appreciating. The dollar is up 4% from its lows of 2021 and is among the world's best performing currencies this year, boosted by last month's hawkish shift from the Federal Reserve, burgeoning inflation and safe-haven demand driven by COVID-19 worries. Because of the dollar’s central role in the global financial system, its moves ripple out towards a broad range of asset classes and are closely watched by investors. For the United States, a period of sustained dollar strength would be a double-edged sword, helping tamp down inflation by increasing the currency's buying power while denting the balance sheets of exporters by making their products less competitive abroad.
Brief: Another raft of blockbuster corporate profits pushed stocks toward a record at the end of a week that started with concern about a peak in earnings and a coronavirus resurgence. About 87 per cent of the S&P 500 companies reporting results so far this season have beaten Wall Street estimates, according to data compiled by Bloomberg. Twitter Inc. and Snap Inc. led a rally in social-media firms as sales blew past forecasts, while American Express Co. jumped after adding a record number of new customers to its tony Platinum card in the second quarter. Stocks extended their weekly advance, with most major groups moving higher. While the rapid spread of the delta variant has sown volatility in financial markets, thus far economists are maintaining their forecasts for a historically strong U.S. recovery. A measure of activity at U.S. service providers settled back in July to a five-month low, a separate manufacturing gauge climbed to a fresh record.
Brief: The Bank of Canada will allow most of its employees to work remotely as much as 50 per cent of the time once public health guidelines allow it to fully reopen its offices.A limited number of staff are currently working in the central bank’s offices in Ottawa. The coronavirus pandemic has eased in Canada, with vaccinations rising and cases dropping, so the bank expects to bring back many employees after the summer. But it doesn’t see a return to normal conditions until 2022, an official said. “More employees will be allowed access over the fall, in line with federal and provincial public health guidelines. Based on current conditions, we are not anticipating full on-site staffing levels until the new year,” Chief Human Resources Officer Alexis Corbett said in an email. The 50 per cent guideline will be measured over two-week periods.
Brief : New York City’s hotel industry is starting to revive as tourists return, driving demand for rooms to the highest since the city became an epicenter of the pandemic in March 2020, Mayor Bill de Blasio said. City hotels sold more than 481,000 room nights last week, a 17,000 increase from the previous week, de Blasio said. Visits to the Statue of Liberty were up 22% last week compared with the last week in June, and the mayor said the city is on its way to exceeding its weekly goal of 500,000 hotel room nights. “We need to see our economy coming back, our jobs coming back,” de Blasio said during a Thursday news briefing, when he spent much of the time promoting musical concerts intended to draw visitors back.
Brief: A still-fledgling secondary market for private real estate funds is getting a big push forward from institutional investors eager to invest in newly hot areas of real estate and sell off other, less desirable parts of the sector. “Secondaries are really coming into their own. Covid just accelerated the increase,” said Eric Adler, president and CEO of PGIM Real Estate. “Some investors want to stay in real estate, but others want out. Secondaries are becoming a good solution.” In private markets, secondaries trading allows investors to buy and sell fund stakes at any point in that fund’s life, rather than stay in a vehicle designed to be held for a decade or more.
Brief : Growing numbers of investors are turning to hedge funds to protect their portfolios in the face of inflationary fears, with total industry capital swelling to almost USD4 trillion and more allocators set to tilt towards alternative assets, new research shows. Alternatives technology provider Vidrio Financial’s latest allocator market survey suggests inflation fears during the first half of 2021 are driving further allocations to alternative asset classes, such as hedge funds and private equity, which have historically outperformed equities and bonds during periods of inflation. The Vidrio Financial Allocator Market Survey quizzed some 4,500 institutional investors globally in late June, collectively representing USD100 billion in assets under management and split roughly 60/40 between North America and EMEA,
Brief: Long-time Bay Street banking analyst Nigel D’Souza doesn’t think investors are poised to reward Canada's Big Six banks for their upcoming financial results that may see a boost from pandemic-related factors. D’Souza, the financial services investment analyst at Veritas Investment Research, said in a broadcast interview Wednesday that investors would likely look through the pandemic-related noise towards a more normalized operating environment, which could limit the upside for shares of the Big Six banks. “We think the market is no longer going to reward banks that do well on earnings based on temporary pandemic-related factors such as record or elevated capital market revenues and significant credit loss reversals,” he said.
Brief: Five weeks after dropping its reference to the coronavirus as a weight on the economy, the U.S. Federal Reserve is confronting a challenging new rise in cases that has fueled doubts about the global recovery and is already forcing other central banks to consider retooling their policies. The daily pace of new infections has more than doubled since the Fed's June 16 policy meeting, when Chair Jerome Powell said that while it was "premature to declare victory" given the appearance of the more infectious coronavirus Delta variant, a decline in infections, hospitalizations and deaths "should continue." It hasn't, and while the worst current outbreaks have been localized, news of rising case loads once again straining hospital capacity spilled into financial markets with a sharp Monday sell-off.
Brief : The surge in COVID-19 cases from the Delta variant is not yet substantial enough to darken the U.S. economic outlook, said Morgan Stanley’s top U.S. economist. “I feel no need to take down GDP growth forecasts on the risks around the Delta variant,” Ellen Zentner told Yahoo Finance on Wednesday. “I think we’ve done a good job of self-policing all through COVID and that means it can dampen some of the effects.” On Monday, rising case counts rattled equity markets as the major stock indexes logged their worst declines since May. The fear: that the reinstatement of mask mandates in some corners of the country could foreshadow the return of lockdowns if the spread gets worse. Markets largely reversed those losses on Tuesday.
Brief: Hedge fund manager Dan Gropper was short AMC Entertainment Holdings Inc. when the Redditors began their moon launch of the movie theater chain. Just six months into running a new fund, he decided he wouldn’t be going down like that. Gropper, who had managed money at Aurelius Capital Management and Fortress Investment Group before starting Carronade Capital Management, covered 20% of his short on Jan. 26, when AMC closed under $5, and the rest a day later, as the stock soared to $20. AMC wasn’t even a directional short bet for Carronade, a multi-strategy credit fund that now runs $300 million. It shorted the stock as a hedge on an investment in AMC’s second-lien debt, which had been trading at deeply distressed levels. Gropper started buying the bonds at around 20 cents on the dollar, said a person familiar with the matter.
Brief : The pandemic has set back gender equality on company boards in the UK by as much as four years, with new research suggesting that parity between male and female members won’t be reached until 2036. The annual Women Count report, published by consultancy The Pipeline, found that progress in boosting gender diversity has slowed significantly over the past year, with men now holding 78% of all executive committee roles in the FTSE 350 – and women holding just 22% of positions. Although women are in a better position than five years ago, the pandemic has slowed the rate of change. In 2021, we witnessed an increase of 2.5% on the previous year, but in 2020 this same annual measure was 2.7%.
Brief: United Airlines Holdings Inc. expects to end a year and a half of losses this quarter despite rising investor anxiety about whether COVID-19 infections will upend a travel resurgence. The forecast for an adjusted pretax profit in the third quarter and another in the fourth quarter excludes any benefit from billions of dollars in federal airline aid, United said in a statement Tuesday as it reported earnings. While the carrier didn’t quantify how much it expected to earn, any profit would top the second-half losses expected by Wall Street. “Our airline has reached a meaningful turning point: We’re expecting to be back to making a profit once again,” United Chief Executive Officer Scott Kirby said in the statement.
Brief: The changes wrought by the pandemic on U.K. office life are here to stay, according to the chairman of one of the country’s biggest banks. NatWest Group Plc’s Howard Davies said in a Bloomberg TV interview Wednesday that he doesn’t expect central London’s footfall to revert to pre-pandemic levels as office workers resist a return to five days a week in the office and the daily commute. “The days when 2,500 people walked in through our office door at Bishopsgate at 8:30 a.m. and then walked out again at 6 p.m., I think that is gone,” Davies said. While some workers -- particularly traders -- may remain desk-bound, the majority of NatWest’s staff are expected to come in only intermittently, he said.
Brief : Most Wall Street strategists agree that Monday's market rout — fueled by yawning worries about the fast-spreading COVID-19 Delta variant — should serve as a wake-up call to investors who have sent stock prices to record valuations. And they also generally agree on what could send stocks spiraling even lower from here — a subpar second quarter earnings season chock-full of concerning guidance due to the ongoing uncertainty of the pandemic. "This market is vulnerable to a bigger pullback or correction if there’s a new negative introduced, and that negative could be disappointing earnings," warns Sevens Report Research founder Tom Essaye in a research note to clients. "If corporate earnings calls warn about (1) margins (which was hinted at by a few companies) or (2) overall economic activity (if management says activity declined in late June as COVID cases accelerated) then that will combine with the other issues (stretched valuations, complacent investors, summer doldrum trading) to cause a real pullback or a correction of 10% or more."
Brief: Canadian National Railway Co. reported a strong uptick in earnings and revenues in its second quarter as the company begins to recover from the COVID-19 pandemic. The Montreal-based railway earned $1.03 billion or $1.46 per share, up from $545 million or $0.77 per share in the first quarter of 2021. Excluding one-time items, adjusted profits were $1.06 billion or $1.49 per share, compared with $988 million or $1.28 per share in the first quarter. Revenue for the three months ended June 30 was $3.60 billion, up from $3.21 billion the previous quarter. The company also declared a dividend for its third quarter, of 61.5 cents per share to be paid in September.In 2020, CN was forced to build longer and heavier trains due to the sharp retreat in rail volumes and customer demand during the COVID-19 pandemic. The company said in a news release that as the economy rebounds, it has been able to revert to its standard operating plan and improve train speeds.
Brief : The great IPO boom of 2021 has already smashed the record for the busiest summer ever, and there are plenty of big deals still to come. Now wobbly markets are threatening to cool the frenzy. Since the start of June, listings by the likes of F45 Training Holdings Inc., the provider of fitness classes backed by actor Mark Wahlberg, Membership Collective Group Inc., the company behind the Soho House members clubs, and ride-hailing giant Didi Global Inc. have raised more than $90 billion through initial public offerings, according to data compiled by Bloomberg. Stock indexes at record levels, until last week at least, and cash-rich investors have lured private equity sponsors and startup founders alike to the equity market. But now investors have been spooked by the resurgent coronavirus, sending the MSCI World Index down for six straight sessions, heading for its longest losing streak since the pandemic began.
Brief: Moderna (MRNA) is set to join the S&P 500 index on Wednesday, replacing Alexion Pharmaceuticals Inc. (ALXN). The stock has soared amid the pandemic after its vaccine became instrumental in the fight against coronavirus. Moderna stock has “taken on a life of its own,” Michael Yee, Managing Director and Senior Research Analyst at Jefferies, told Yahoo Finance (video above). “It's priced in a huge amount of assumptions over the next ten years that haven't played out yet. People believe it’s the Tesla of biotech.” That the biotech firm would be so well-recognized and valued at over $113 billion was no sure bet. For those who invested early in the company, that wager paid off.
Brief: A likely summer of concerning COVID-19 Delta variant headlines sets the stage for an ugly stock market in the near-term, said Keith Lerner, Truist Advisory Services' chief markets strategist. "Our view is we're seeing another corrective period within a bull market trend," Lerner said in a note to clients after Monday's brutal start to trading. "While the Delta variant complicates the near-term picture, and is likely to lead to a continuation of sloppy trading through the seasonally-weak summer months, our base case remains that the primary trend over the next 12 months remains higher." To be sure, Monday's session was quite sloppy as investors reassessed their risk appetite with growing COVID-19 infections globally at the hands of the Delta variant.
Brief : The recent selloff in stocks set to benefit most from an improving economy has gone too far and a reversal is imminent, according to JPMorgan Chase & Co. chief global markets strategist Marko Kolanovic. The unwinding of the so-called reflation trade accelerated on Monday with the delta variant of the coronavirus quickly spreading and concerns flaring that the U.S. is reaching peak economic growth. Traders have been piling into growth sectors such as technology that are viewed as safe havens. But Kolanovic sees further gains in those value names that benefit from faster inflation as the global economy recovers from the pandemic.
Brief: Hopes that the easing of most Covid-19 restrictions in England this week – with 19 July having been dubbed ‘Freedom Day’ – would help accelerate the UK’s nascent economic recovery were soured as travel, manufacturing and retail names were all dented. Travel and tourism-related stocks were among the hardest hit amid continued uncertainty surrounding the UK’s traffic-light quarantine system for travellers, which threatens summer holidays for many. EasyJet dropped 6.8 per cent and IAG, which owns British Airways, fell 5.5 per cent at one point. Hedge funds betting against EasyJet’s share price include AHL Partners and Kintbury Capital, according to FCA regulatory disclosures. Carnival – the cruise line operator which is one of DE Shaw’s short positions – also fell in value on Monday.
Brief: As the Dow Jones Industrial Average posted its worst day since October of last year over pandemic fears, FOX Business has learned that top executives at the Big Banks are closely monitoring the spread of the coronavirus Delta variant and how it may impact plans to re-open offices particularly in large urban areas such as New York City. People at banks such as JPMorgan, Morgan Stanley and Goldman Sachs say that so far they’ve made no changes to their re-opening plans. JPMorgan and Goldman have already told employees to begin to return to the office after about a year of at-home working during the worst of the pandemic. While Morgan Stanley has said it expects employees to return to the office after Labor Day.
Brief : European airline and travel stocks tumbled Monday after Britain reimposed quarantine rules for people returning from France, stoking concern that the spread of coronavirus variants could halt a tourism rebound. U.K. discount carrier EasyJet Plc dropped as much as 6.5 per cent, British Airways owner IAG SA slumped 5.9 per cent, Ryanair Holdings Plc, which has its biggest hub at London Stansted airport, fell 4 per cent and package-holiday giant TUI AG slipped 4.3 per cent. Air France-KLM was down as much as 4.6 per cent. The declines were triggered by the British government’s decision late Friday to continue requiring fully vaccinated arrivals from France to isolate amid concern about the beta COVID variant, creating a new category between moderate and high-risk in its “traffic-light” system. As of Monday, inoculated U.K. residents returning from amber nations are no longer required to quarantine.
Brief: Bank of England policy maker Jonathan Haskel signaled he remains opposed to paring back stimulus for the economy now, saying the U.K. faces headwinds from a tighter fiscal stance and from a surge in the delta variant of the coronavirus. The remarks indicate divisions on the central bank’s Monetary Policy Committee likely to play out next month as the eight-member panel debates how to respond to an unexpected jump in inflation above its 2% target. Two members of the MPC last week said the BOE should consider reining in its bond-buying program. Haskel, who for months has been on the dovish end of the debate, acknowledged that the pace of investment in the economy and productivity gains due to home working may reducing scarring from the pandemic. However, he said that the U.K. is still at risk from a rapid spread of the delta variant of Covid-19 and that much of the growth the U.K. has enjoyed was spurred by government support measures are now in retreat.
Brief: Investors moved away from risky assets on Monday as a rise in worldwide coronavirus cases crushed bond yields and left stocks facing losing streaks, with Wall Street falling more than 1%. New COVID-19 cases rose in England and Asia, with U.S. infections soaring 70% last week, dampening optimism on the economic recovery. The 10-year yield fell 8.7 basis points to 1.212%, a low last seen in February, while the S&P 500 fell for a third straight session. “Investors shed risk assets in early morning trading amid fears of a surge in COVID infections that have the potential to curtail global growth," said Peter Essele, head of investment management for Commonwealth Financial Network, in an e-mailed statement. "The risk aversion was most pronounced in the 10-year Treasury yield, which fell to its lowest level since the early days of 2021.
Brief : Covid-19 upended almost everything, including the trajectory of the U.S. economy, which sank into one of the worst recessions in history and then rebounded into the fastest expansion in decades. One thing that barely changed this whole time? Professional stock pickers’ tastes. Active fund managers still favor stable growth stocks over cheap ones and are avoiding economically sensitive shares like banks and energy, just as they did during the market’s tumble in March 2020. Except for a growing aversion to industrial firms, managers’ preferences across sectors are almost identical to what they were almost 16 months ago, data compiled by Bank of America Corp. show. In fact, almost three-quarters of the same beloved stocks remain in their portfolios.
Brief: In 2019, Bas NieuweWeme became the chief executive officer of Aegon Asset Management, a global firm with around $447.3 billion in assets under management. Soon after he joined, NieuweWeme got to work on streamlining the business. Then, the Covid-19 pandemic hit. About a year into his tenure and a month into a restructuring campaign, NieuweWeme’s original plan to globalize the active asset manager was derailed. So, as he told Institutional Investor, the firm adapted. In the past year, Aegon has retired two of its brands, eliminating some overlap between businesses.
Castle Hall helps investors build comprehensive due diligence programs across hedge fund, private equity and long only portfolios More →
Montreal
1080 Côte du Beaver Hall, Suite 904
Montreal, QC
Canada, H2Z 1S8
+1-450-465-8880
Halifax
84 Chain Lake Drive, Suite 501
Halifax, NS
Canada, B3S 1A2
+1-902-429-8880
Manila
Ground Floor, Three E-com Center
Mall of Asia Complex
Pasay City, Metro Manila
Philippines 1300
Sydney
Level 36 Governor Phillip Tower
1 Farrer Place Sydney 2000
Australia
+61 (2) 8823 3370
Abu Dhabi
Floor No.15 Al Sarab Tower,
Adgm Square,
Al Maryah Island, Abu Dhabi, UAE
Tel: +971 (2) 694 8510
Copyright © 2021 Entreprise Castle Hall Alternatives, Inc. All Rights Reserved.
Terms of Service and Privacy Policy