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Brief: Billionaire investor Bill Ackman turned about $200 million in complex, pandemic-related bets into payoffs totaling nearly $4 billion, The Wall Street Journal reported Monday. The first bet happened early on in the pandemic. The CEO of Pershing Square Capital Management in February 2020 invested $27 million into instruments that would pay off if corporate bonds tumbled in value, the WSJ said. Ackman then sold his position a few weeks later for $2.6 billion after investors realized that companies affected by the crisis might not be able to pay off their debts. The second bet occurred as 2020 was winding down. This time, he assumed consumer spending would soar, stoke high inflation, and prompt the Federal Reserve to respond with rate hikes to cool prices.
Brief: With the pandemic wrecking the growth plans of some private equity-owned companies, lenders are helping buyout shops hold on to such assets until they develop further. Fund-to-fund transfers -- which allow a private equity firm to sell an asset from one of its fund to another -- are set to increase in 2022, bankers say. Strong investor demand for the debt package behind BC Partners’ transfer of CeramTec suggests more buyout firms may follow this model. The deal will let one arm of the buyout shop sell the commercial ceramics maker to satisfy the return requirements for one customer base, while allowing the other to sponsor an asset BC Partners believes has longer term potential. This kind of move isn’t entirely new, but it’s far from widespread. Bankers are entering into talks with a number of private equity firms about such transactions in a bid to deal with the adverse impacts of Covid-19. The moves are popular with institutional investors, as it’s quicker and easier to reinvest in an asset they already know and believe has bright prospects.
Brief: After posting its worst ever performance last year, Viking Global Investors is trying to explain its losses -- and it’s pinning the blame on the Covid-19 pandemic. The firm’s hedge fund, which invested in 2021 laggards such as Peloton Interactive Inc., Coupa Software Inc. and Adaptive Biotechnologies Corp., fell 4.5% in the year because it “underestimated the ongoing impact of Covid,” founder Andreas Halvorsen wrote in a letter to investors dated Jan. 18. Viking has been one of the hedge fund world’s biggest successes since its founding in 1999, registering only four down years, including the most recent one. But it suffered because of its bet that consumer spending would normalize, and that shoppers would shift back toward services such as travel and elective medical procedures. “In hindsight, these were bad bets,” Halvorsen said in the letter. But, he added, “we have maintained our positioning and believe companies exposed to reopening will benefit from both an improvement in fundamentals and a re-rating of multiples.”
Brief: Investors like family offices and high-net worth individuals have an opportunity to put their money into transformative real estate redevelopments planned by Hines, an international real estate firm that announced the first of a series of "tactical" real estate investment funds in January 2022. Investors have already committed about $590 million in equity to Hines U.S. Property Recovery Fund—the money gives the fund the capacity to invest $1.5 billion immediately. Hines plans to close the fund by May 2022 with a total investment of $1 billion, with a purchasing power of $2.5 billion after leverage. The fund has already bought assets like a trailer park in California with plans to redevelop it as industrial. Other projects might redevelop empty malls as mixed-use town centers or redevelop aging office buildings as apartments. So why does Hines believe now is a good time for a fund focused on redevelopment? And why is Hines so interested in small, equity investments from investors like family offices and high-net worth individuals?
Brief: In 2019 we interviewed Omiros D. Sarikas, the visionary CEO of Brookstreet Equity Partners – a London-based fund innovating the Private Equity and Venture Capital asset class – about the concept of investing in ‘asymmetric’ markets to generate alpha returns. In 2022, we ask Omiros what has changed in the aftermath of COVID-19. He talks to CEO Today about the development of Brookstreet 2.0, the era of ESG, and brings to the table Lucia Labuzikova to highlight the importance of Diversity, Inclusion and Talent Management in unlocking value for private equity investments. Omiros, good to have you back. Please reintroduce our readers to Brookstreet Equity Partners. Brookstreet Equity Partners (Brookstreet) is an award-winning, Mayfair-based investment platform that seeks out global asymmetric opportunities in undercapitalised markets. We set up the firm with the intention to be a beacon in the industry and developed a solid infrastructure. By means of example, our legal counsel also advised on Softbank’s $100bn+ Vision fund, our administrators handle $1.3+ trillion, our senior professionals have worked at McKinsey, Bulge Bracket Investment Banks and top tier Cross-Border Funds, our teams were educated at Harvard, Oxford and London and train at the British Venture Capital & Private Equity Association (BVCA) and the CFA Institute.
Brief: Athelas Inc., a startup that builds remote patient monitoring technology, raised $132 million in new funding, bringing its valuation to $1.5 billion. Founded in 2016, Athelas experienced sharp growth last year, spurred in part by a shift to remote care during the Covid-19 pandemic. Athelas now has 20,000 patients, 10 times the number of patients it had in the beginning of 2021, co-founder and Chief Executive Officer Tanay Tandon said. “The pandemic really showed folks that health care in the home has to be a thing and in a lot of ways is better than the traditional care model,” Tandon said. Athelas’ primary product is the Athelas One, an internet-connected device that uses a finger-prick to return blood diagnostics and shares that information with healthcare providers. The product, which has been approved by the Federal Drug Administration, is geared toward patients who are immunocompromised or have chronic conditions that need frequent monitoring. Tandon said remote monitoring allows doctors to address health issues earlier, potentially avoiding the pricier costs of more intensive treatment or hospitalization down the road.
Brief: The euro-area economy grew modestly in the fourth quarter amid another wave of surging coronavirus infections and curbs on activity. Gross domestic product rose 0.3%, slightly less than predicted, after a sharp contraction in output left Germany on the brink of recession. Meanwhile, a ramp-up in investment contributed to stronger-than-expected growth in France and Spain. Italy reported an expansion of 0.6% on Monday. The region’s economy is tackling headwinds better than earlier in the pandemic as businesses find ways to cope with restrictions and more people get vaccinated, but it’s still lagging recoveries in the U.S. and the U.K. Supply bottlenecks have weighed on manufacturing-heavy Germany for months, and coronavirus curbs are now disrupting all parts of the economy. Euro-area output increased 5.2% in 2021. European Central Bank President Christine Lagarde said in December she expects economy to reach pre-crisis levels in the current quarter.
Brief: Morgan Stanley’s top lawyer said Friday that veteran outsiders who criticized his push to end remote work are missing an opportunity to connect with the next generation of leaders. “Two years of not being together is fraying those bonds,” Eric Grossman said in a Fordham Law School talk. Almost a fourth of Morgan Stanley’s workers started during the coronavirus pandemic, and “a bunch of them have never spent time in the office—they don’t know what we’re like,” he said. Much of the negative reaction to his call to return to the office came from “fully formed lawyers,” Grossman said. “‘I don’t need to be in the office, I’m super-efficient at home, I’m serving my clients, I’m getting everything done,’” he said, paraphrasing the criticisms. “But we are stewards for the next generation.” Grossman, Morgan Stanley’s longtime chief legal officer and one of the top paid lawyers on Wall Street, in a July memo to outside law firms and legal service providers said they should end remote work and bring lawyers back to the office.
Brief: It’s time to stock up on the sunscreen at Apollo Global Management Inc. Come August, the private equity giant plans to allow staff in its buyout unit to work anywhere they would like for the month, said Matt Nord, one of the executives behind the decision. “We have seen over the last two years that we can give people more flexibility -- in how they manage, how they work -- and it doesn’t impact performance,” Nord, Apollo’s co-head of private equity, said in an interview. Private equity chiefs, like their peers across Wall Street, have taken an array of steps to provide employees flexibility as the pandemic persists. At Apollo, the August plan was also motivated by the desire to attract and retain talent in a cut-throat job market. That factor was in part what led companies including American Express Co. to offer hybrid work plans in recent months.
Brief: Hong Kong's city leader Carrie Lam announced on 27 January that the 21-day quarantine period most arrivals face, one of the world's most stringent timelines, would be cut to two weeks because the increasingly dominant Omicron variant has a shorter incubation period. This move to relax the rules comes against the backdrop of international businesses sounding alarm bells of a talent drain as rival financial hubs are reopening. In a draft report obtained this week by Bloomberg News, the European Chamber of Commerce warned businesses that the city could remain internationally isolated until 2024. "We anticipate an exodus of foreigners, probably the largest that Hong Kong has ever seen, and one of the largest in absolute terms from any city in the region," the draft report said. The Financial Times reported this week that Bank of America is the latest blue-chip firm to examine relocating staff to Singapore.
Brief: Stocks must slide another 20% before the Federal Reserve takes action, according to an investment chief at the world's largest hedge fund. Greg Jensen, co-chief investment officer at Bridgewater Associates, told Bloomberg News that the Fed won't come to the market's rescue — in what's known as a Fed put — until the market drops another 15% to 20%. Even if that happens, he said it would depend on how quickly the bottom falls out from the market. So far this year, the stock market has largely slumped. The S&P 500 has dipped 9% to 4,349.93 as of early Thursday. Another 20% decline would bring the index down to about 3,480 points — a level last seen around the early days of the COVID-19 pandemic in 2020. Investors were initially spooked by the potential for lower liquidity after Wednesday's Fed meeting when Chairman Jerome Powell said there's plenty of room to raise rates and declined to rule out rate hikes at every meeting this year.
Brief: For once since 2022 began, Thursday featured some good news on the economy. Last year’s fourth quarter and full year growth checked in at unexpectedly strong levels and Apple (AAPL) posted a record quarter, two recent instances where data or earnings haven’t disappointed investors. In spite of a litany of reasons like Omicron, inflation, impending rate hikes and a snarled supply chain, the world’s largest economy somehow finds new ways to defy expectations. Yet upward trends are masking a spotty recovery, with small businesses — the backbone of the U.S. economy — bearing the brunt. And at least some of the reasons have to do with remote work, a topic the Morning Brief has been exploring with increasing regularity, and for very important reasons. Two full years into the pandemic, legions of office workers are still camped out in makeshift home offices. It’s forcing employers to completely rethink the nature of the workplace, and how to attract and retain talent.
Brief: Strong demand and limited supply led to a historic jump in the value of the U.S. housing stock, which surged to $43.4 trillion last year. The aggregate value of homes has now doubled since a decade ago, when the market was recovering from the Great Recession, according Zillow Group Inc. Cities that have attracted people during the pandemic saw the biggest percentage gains last year, with Austin and Raleigh, North Carolina, topping the Zillow data. New York City, which many fled in the past two years, had the smallest increase among 50 metro areas, at 10.9%. “Even in the context of a year in which several housing records were topped, the scale of the housing market’s growth in 2021 is eye-popping,” Zillow senior economist Jeff Tucker said in a statement.
Brief: Up to 90% of global financial services firms in a survey said they planned to expand operations in the UK in 2022, according to an EY UK attractiveness report.The spike revealed the highest level of investor confidence seen in the region since the consultant began its attractiveness analysis.Financial services firm are confident about planned investment across the UK and 41% of the firms, who were surveyed in November 2021, said that the pandemic had led them to increase investment in the region.As many as 8% revealed they were planning a substantial increase in investment. This was markedly higher than in the spring of last year, when just 6% of surveyed firms said they were planning on increasing their level of activity in the UK.
Brief: US GDP grew at 5.7% last year, its fastest rate since 1984, despite two new virus variants emerging in 2021. Growth was uneven with the economy growing at 6.9% from October to December, a steep acceleration from growth of just 2.3% in the previous quarter. The growth created 6.4m jobs in 2021, but also saw the highest inflation in 40 years. After shrinking in the first three quarters of 2021, inventories rose at a $173.5bn annual rate in the last quarter, which may alleviate the concerns of supply chains problems that have plagued 2021. Housing fell 0.7% in the last quarter, its third consecutive drop, though it remained 13.2% above pre-pandemic level. Real spending at restaurants also fell in Q4, but is still 2.4% above pre-pandemic levels. Unusually, tobacco consumption plunged in the last quarter, now standing at 5.6% below pre-pandemic level.
Brief: The Federal Reserve signaled it will start raising interest rates “soon” and shrink its bond holdings after liftoff has begun, moving toward ending ultra-easy pandemic support to fight the hottest inflation in a generation. “With inflation well above 2% and a strong labor market, the committee expects it will soon be appropriate to raise the target range for the federal funds rate,” the Federal Open Market Committee said in a statement Wednesday following a two-day policy meeting. In a separate statement, the Fed said it expects the process of balance-sheet reduction “will commence after the process of increasing the target range for the federal funds rate has begun.” The pivot, against a backdrop of turmoil in stocks, comes amid consumer inflation readings that have repeatedly surprised and hit 7% — the most since the 1980s — and a tight labor market that’s pushed unemployment down faster than anticipated to almost its pre-pandemic level.
Brief: While the financial world waits for the Federal Reserve’s announcement on monetary policy Wednesday afternoon in Washington, some of the biggest bond-fund managers have already made their moves. They anticipate Fed Chairman Jerome Powell will confirm their expectations, based on his determined signaling that rates will rise for the first time since 2018, likely starting in March, to combat the fastest inflation in four decades. With the economy recovering from the pandemic’s disruptions, everyone knows the central bank at some point will withdraw a lot of the bountiful liquidity its provided through quantitative easing. In advance of Fed action, Vanguard Group Inc. is looking at floating-rate debt, BlackRock Inc. is heading toward neutral duration, and Pacific Investment Management Co. sees some attractive reopening trades in fixed income. Here’s what people handling trillions of dollars in assets under management expect to hear from Powell, and what they’re doing about it.
Brief: Wall Streeters shuddered as the news broke last year that U.S. regulators were examining whether bank employees were using personal phones to text about business with each other and clients -- a rule that just about everyone seemed to be breaking. Yet for those quietly worrying, there’s a silver lining emerging: It doesn’t appear to be a career killer. Shortly after being ousted over the scrutiny, a trio of executives from JPMorgan Chase & Co. -- the first bank hammered by authorities in the widening probe -- landed new jobs in the industry. The firm itself paid $200 million in fines for its surveillance lapses. Ben Sykes, an executive director who left last year, landed at competitor Jefferies Financial Group Inc. in September, according to records filed with brokerage regulators. Earl Dowling, a former managing director who people familiar with the matter say was also was pushed out, started this month at investment banking boutique PJT Partners Inc.
Brief: The U.S., Britain, Brazil and other nations with “populist” governments mishandled the Covid-19 pandemic in 2020 and caused unnecessary deaths with relatively lenient policies, according to an academic research paper. Excess mortality -- the number of deaths beyond those that could be expected without the pandemic -- was more than twice as high on average in populist-governed countries, Michael Bayerlein, a researcher at the Kiel Institute for the World Economy and one of the authors of the paper, said Thursday in a press release. The main reason for the difference was that “citizen mobility” -- measured using Google data on the number of people in places like grocery stores or parks -- was higher in populist countries at similar infection rates, the study showed. Excess mortality was 18% in populist-led countries and 8% in non-populist nations.
Brief: For three-quarters of a century, small and medium-sized enterprises (SMEs) have been the growth engine of the global economy. In recent years, they have created 62% of net new jobs in the US, and even more in developing economies. There is little doubt that as we emerge from the COVID-19 pandemic, any meaningful and sustainable economic recovery will again be driven by SMEs. However, this crisis has been like nothing in recent history – the whipsawing of real US GDP from a negative 36% in the second quarter of 2020 to a positive 30% in the third quarter has no parallel in modern economic history. Given the magnitude of the disruption, it is testimony to how resilient our economic systems are. However, three trends stand out in affecting SMEs disproportionately, and therefore threatening their role as economic growth engines.
Brief: Logitech International is seeing offices starting to re-equip for staff returning from working at home during the COVID-19 pandemic, Chief Executive Bracken Darrell said on Tuesday as the company raised its full-year outlook. The tech company has been a big beneficiary of people exiled from their workplaces during the pandemic stocking up on its computer mice, keyboards and webcams. It is now seeing companies examining how their offices will look in future, when people use a hybrid of home and on-site locations, Darrell said after Logitech reported smaller-than-forecast declines in third-quarter sales and operating income. "I do think it is the big thaw," Darrell told Reuters. "It's as if we have had the big freeze and ...we are starting to see people making decisions on what the offices are going to be like when we get back into them.
Brief: As the largest U.S. companies get set to report earnings, investors are torn between two ways of thinking about the technology industry. Tesla reports earnings on Wednesday and Apple on Thursday. Amazon, Meta and Alphabet all report next week. Microsoft reported earnings after the market close Tuesday. Each stock is down between 9% and 15% so far this year. Amid the slump, the bull thesis hasn’t changed much. The world’s digital transformation is in its early innings and has decades of growth ahead, whether it’s from the transition to electric vehicles, the surge in demand for connected devices or the emergence of the crypto-economy and the metaverse. Cloud computing and artificial intelligence will transform every industry in the coming years, and investments in cybersecurity are required at an unprecedented scale. Tech’s bellwethers are poised to capture huge amounts of consumer and business spending.
Brief: Bank of America Corp. is bringing employees back to offices in U.S. regions where new coronavirus cases have started to decline. The bank’s staff have returned or are making their way back in the coming weeks based on their region’s Covid-19 data and medical guidelines, according to people with knowledge of the plans. Previously the company had told employees to work remotely through at least the third week of January, and until they’re advised to come back. A Bank of America representative declined to comment. As coronavirus conditions improve across the country, employees across major financial firms are being asked to come back. Citigroup Inc. staffers in the New York City region and Credit Suisse Group AG’s workforce across the U.S. are being urged to return to offices in early February. In New York City, the percent of people testing positive for Covid-19 is decreasing, with a daily average of 8,269 cases in the past week.
Brief: Venture funds and bank loans are no longer the sole source of capital for emerging technology companies. Revenue-based financing, which allows companies to borrow against recurring revenue and return a fixed percentage of ongoing profits to investors, has become a new source of funding for entrepreneurs that don’t want to dilute current investors. Backers of the financing option are hoping it will become a new asset class. For so-called SaaS companies — technology firms that charge customers periodically for their software services — and similar businesses, the new financing option has reshaped the landscape of early-stage fundraising. Revenue-based financing “was invented a decade ago, but it really gained momentum in the last few years,” said Ed Goldstein, a partner at Pennington Alternative Income Management. The growth, he explained, is due in part to the rise of SaaS companies during the pandemic, as remote workers required reliable cloud infrastructures.
Brief: Johnson & Johnson forecast 2022 earnings and sales above Wall Street’s expectations as it prepares to separate its drug and medical device unit from its consumer business. Fourth-quarter revenue narrowly missed analysts’ estimates. The health-care giant expects annual earnings of $10.40 to $10.60 a share, according to a statement Tuesday, ahead of analysts’ average projection of $10.32 a share. Sales, including those of its Covid-19 vaccine, will be $98.9 billion to $100.4 billion, the company said. Chief Financial Officer Joseph Wolk said he hopes to see reduced Covid disruptions to the health-care system in 2022. “Each quarter is getting a little bit progressively better,” he said in an interview. Investors are preparing for a transformative year at New Brunswick, New Jersey-based J&J as new leadership has taken the helm and the conglomerate prepares to split, a move already underway at other health-care companies including GlaxoSmithKline Plc and Pfizer Inc.
Brief: Among the biggest worries that executives have about remote work is a phenomenon known as “proximity bias,” meaning that the people who choose to return to offices will get ahead, while those who stay home will fall behind. And yet, despite that very legitimate fear — and how it might hurt underrepresented workers — most bosses still prefer working in offices, and want their underlings do the same, a survey released Tuesday finds. More than four out of 10 executives ranked the potential inequities between remote and in-office employees as their number one concern, according to a Future Forum survey of more than 10,000 white-collar workers. (Around 2-3% of respondents are executives.) Yet, the quarterly poll found that bosses are twice as likely to prefer working in the office at least three days a week compared to rank-and-file staff. Women and minority workers are more likely than other groups to want to stay home, adding to fears that the return to office push could further exacerbate workplace inequalities.
Brief: The International Monetary Fund has downgraded its global growth forecast for this year as rising Covid-19 cases, supply chain disruptions and higher inflation hamper economic recovery. In its delayed World Economic Outlook report, published Tuesday, the IMF said it expects global gross domestic product to weaken from 5.9% in 2021 to 4.4% in 2022 — with this year’s figure being half a percentage point lower than previously estimated. “The global economy enters 2022 in a weaker position than previously expected,” the report noted, highlighting “downside surprises” such as the emergence of the omicron Covid variant, and subsequent market volatility, since its October forecast. The revised outlook is led by growth markdowns in the world’s two largest economies; the U.S. and China. The U.S. is expected to grow 4.0% in 2022, 1.2 percentage points lower than previously forecast as the Federal Reserve moves to withdraw its monetary stimulus, even as supply chain disruptions weigh on the economy.
Brief: UK dividends showed strong performance in 2021, rising by 46.1% to £94.1 billion on a headline basis, according to the latest Dividend Monitor from Link Group. One-off special dividends boosted the headline total by a record £16.9 billion, three times more than their normal level. Underlying payouts which exclude specials rose more modestly, up 21.9% to £77.2 billon in 2021, close to 2015 levels. Across 2021, the second and third quarters saw the strongest rebound which Link Group attributed to challenge conditions. In Q4, underlying growth slowed to 13.5%, but a large special dividend from DMGT took the headline total to £14.1 billion, 26.1% higher year-on-year. Last year also saw a greater dependence on mining companies, whose booming profits led to payouts that were three times larger than the long-term average. This accounted for almost a quarter of the UK total last year. The second most significant driver of growth was the restoration of banking distributions.
Brief: The ongoing third wave of the coronavirus pandemic has dragged business activity almost back to the pre-pandemic levels, a weekly report tracking the changes said on Monday. The Nomura India Business Resumption Index (NIBRI) -- which compares the activity in a particular week with that of the pre-pandemic levels -- fell further to 100.5 for the week ended January 23 from 102.2 in the previous week, the Japanese brokerage said. The index fell because of a fall in the mobility levels as seen in the Google workplace and retail and recreation mobility, which fell by 10.7 percentage points (pp) and 4.4 pp, respectively, while the Apple driving index inched 1.7 pp higher after a massive 84 pp fall over the past two weeks. The labour participation rate inched up to 39.8 per cent.
Brief: Market Research Intellect has released a new publication on the Property Insurance market, which has the title "Analysis and forecast of the Property Insurance market 2022."The publication provides an in-depth assessment of the global automotive chassis dynamometers market based on competition, market dynamics, market segmentation and other vital aspects. The market research report is a compilation of comprehensive intelligence studies that explore almost every aspect of the global Property Insurance market. Market participants can use the report to learn more about the competitive landscape and the level of competition in Property Insurance market. The report presents itself as a powerful tool that players can use to prepare to secure the lion's share of the global Property Insurance market.
Brief: UK dividends rebounded significantly on their 2020 lows, with the headline figure jumping 46.1% to £94.1bn, but payouts remain below their pre-covid levels, according to Link Group's latest UK Dividend Monitor. This figure was boosted by a record amount of one-off special dividends as companies paid out £16.9bn in this format, triple the normal level. The mining sector provided more than a third of the total special dividends, contributing £6bn from just six companies. As a result, Rio Tinto knocked Royal Dutch Shell of its typical top spot as the company paying the highest dividends, while BHP, Anglo American and Glencore all feature in the top ten. On a headline basis, mining dividends increased 160% year-on-year, one of five sectors to more than double payouts in 2021.
Brief: The surging omicron variant is complicating the recovery for a world economy that continues to be wracked by supply chain chaos, worker absenteeism and faltering assembly lines. Supermarkets are struggling to stock shelves amid chronic staff shortages. Airlines are grounding flights. Manufacturers are facing disruption and shipping lines remain backed up. At the same time, surging energy prices are adding to inflation, pressuring central banks to raise interest rates even as the recovery slows. Optimists argue that the economic hit from omicron will be limited as vaccinations and boosters allow the disease to shift from an acute phase to an endemic one. U.S. Treasury Secretary Janet Yellen said she doesn’t expect the variant to derail the U.S. recovery.
Brief: Just like everyone else this January, the stock market has the Omicron blues. Several "at-home" stocks, including Peloton and Netflix got crushed this week, amid reports of slipping demand and lower-than-anticipated performance. Meanwhile, the Nasdaq closed dow on Wednesday and fell deeper into correction territory on Friday when it dropped 2.7%—marking its worst week since 2020. It shows that the stock market is reassessing how to value the companies that cater to people putting up with COVID quarantines and reduced socializing amid high caseloads. Netflix tumbled more than 24% on Friday after the streaming service acknowledged it only added 8.3 million net new subscribers last quarter, missing expectations.
Brief: Bonus season has arrived on Wall Street, and the bankers who produced record revenue last year for firms including Goldman Sachs are reaping the rewards. Goldman and JPMorgan Chase informed investment bankers and traders of their pay packages this week, part of an annual ritual that can leave workers elated — or deflated — as they learn how much their 2021 efforts were valued. The compensation pool for Goldman’s investment bankers jumped 40% to 50%, according to people with knowledge of the situation. At rival JPMorgan, the bonus pool for that category rose 30% to 40%, other people with knowledge said, confirming a Bloomberg report. “I know bankers who are exceptionally happy, they generally did the best this year as opposed to traders,” said David McCormack, head of finance recruitment firm DMC Partners.
Brief: Citigroup has told staff in the New York Tri-State area to start returning to the office from Feb. 7, while BNP Paribas is targeting the same date for U.S. staff after recently postponing its return-to-office plans by nearly a month due to the Omicron variant. Wall Street firms were among the first to encourage staff to return to offices, but a winter wave of COVID-19 infections driven by Omicron has forced many to rethink their plans and review their vaccination policies in recent weeks. "With what happened with Omicron, we wanted to go back into a more conservative mode. So we only have people in the office if there's a business critical need for them to be in," said Kevin Abraszek, head of HR change and transformation at BNP Paribas in New York.
Brief: 2021 was a difficult year for biotech equities, with the Nasdaq Biotechnology Index giving a full year performance of -0.6% and a total return of 0%, underperforming the S&P 500 benchmark by more than 25 percentage points. It was one of the worst years for the index. As of 20 January, the Nasdaq Health Care Index was down 23.9% compared to 12 months prior. The industry experienced a lot of volatility throughout last year. Funds such as the L&G Healthcare Breakthrough UCITS ETF finished the year down 8.32%, while BB Biotech reported a net loss of CHF 405m (£327.3m). But biotech investors and analysts are looking to the new year with optimism. Investment in the sector, after all, is about long-term potential - and performance.Despite a boom in investment, catalysed by the pandemic, Covid-19 slowed growth for biotech and healthcare companies that are not Covid-focused, according to Howie Li, head of ETFs at Legal & General Investment Management.
Brief: “No place like home” has become “anywhere but here” for Canadian investment portfolios. According to Statistics Canada, Canadians pumped $17.5 billion into foreign securities last November compared to $5.4 billion in October - drastically accelerating a trend that has seen investment dollars flow out of the country since the onset of the pandemic. The bulk of those Canadian dollars - $7.4 billion - went toward purchases of U.S. shares with a focus on big technology companies, and funds that track broad market indices such as the benchmark S&P 500. Canadian investors also purchased $4 billion in non-U.S. foreign shares in November. The massive flow of foreign investments were made by Canadian businesses, governments and big institutional investors, but also include individual retail investors either directly or through pensions, mutual funds or exchange-traded funds (ETFs). I
Brief: The COVID-19 pandemic isn’t over yet, but the boom it helped create for stay-at-home stocks is vanishing. Netflix Inc. and Peloton Interactive Inc., two of the highest-profile stars of the lockdown era, both plunged Thursday -- the latest sign that investors have moved on from the so-called pandemic trade. Netflix expects to add a paltry 2.5 million users in the current quarter, well short of estimates. Peloton, meanwhile, is slashing costs to cope with slowing demand for its stationary bikes. Netflix shares were down about 20 per cent in premarket on Friday, holding the drop seen in late trade on Thursday. If the loss sticks, it would be the stock’s biggest drop in almost a decade. Peloton shares were up five per cent in premarket after sinking 24 per cent on Thursday.
Brief: In 2021, equity investment trusts saw their discounts widen by a weighted average of 4.8%, according to figures from the Association of Investment Companies (AIC) and Morningstar for Investment Week. However, when it comes to the individual winners and losers trusts swung drastically in both directions. Ten years ago, in 2011, the equity investment trust universe saw their discounts widen by a weighted average of 11.1%. Since then the widening has gradually been declining, reaching just 3% for 2020. However, 2021 saw the reversal of that trend, with the average widening ending up higher than that of 2019. "If we cast our minds back to this time last year there was a fair bit of euphoria around the ‘reopening' trade as Covid vaccines began to be rolled out," explained Sarah Godfrey, director of investment trusts at Edison Group.
Brief: Total hedge fund industry capital has passed the USD4 trillion milestone to begin 2022, with managers navigating a volatile Q4 21 driven by another wave of coronavirus variant, as well as rising interest rates and increased expectations for additional increases in 2022. Total hedge fund capital rose increased to an estimated USD4.01 trillion to begin 2022, representing an increase of over USD400 billion from the start of 2021, as reported by HFR in the latest release of the HFR Global Hedge Fund Industry Report. As reported previously, total hedge fund industry capital has soared by over USD1 trillion in the trailing seven quarters since falling below USD3 trillion in Q1 20 as the global pandemic began. The HFRI Fund Weighted Composite Index (FWC) posted a gain of +0.5 per cent for 4Q21, bringing the FY 2021 performance to +10.3 per cent.
Brief: Goldman Sachs Group Inc. and Citigroup Inc. are among the firms asking London staff to return to their desks, as finance firms start to push workers to return after the U.K. dropped its work-from-home guidance. Goldman employees are being asked to return in line with the government’s announcement on Wednesday, according to a person familiar with the matter. Citigroup has emailed its London staff telling them to come into the office at least three days a week. We are now free to gather in our offices, without restriction, where we are better able to generate the energy and collaborative spirit on which Citi thrives,” EMEA Chief Executive Officer David Livingstone and U.K. head James Bardrick said in an email to staff sent late Wednesday and seen by Bloomberg. Fidelity International CEO Anne Richards and Standard Chartered Plc Chairman Jose Vinals both said on Bloomberg Television Thursday that their firms are encouraging U.K. staff to return to its offices.
Brief: Evidence is piling up that traders are betting the coronavirus’s grip on the global economy is loosening for good — even as the spreading omicron variant ignites fresh supply-chain chaos and worries over the effectiveness of existing vaccines. A Wells Fargo basket of stocks that win in the great economic reopening has stormed back toward pre-pandemic levels versus a gauge of rate-sensitive tech companies. A rally in commodities has added to evidence that the investment and consumption cycle is rebounding. Meanwhile German bund yields have just turned positive as central banks around the world pare pandemic stimulus. “There’s growing optimism that we are nearing the end and we are seeing that reflected across the markets,” said Craig Erlam, senior market analyst at Oanda Corp. “Each market you look at there is a common theme of the recovery and the belief that it’s here to stay.”
Brief: More jobseekers in Britain are looking to work remotely, a survey showed, indicating that the shift away from office work may outlast the pandemic. Indeed, a job search website, said 10% of its advertisements now offer remote work as an option and about 2.4% of all searches by potential candidates, up 10-fold from 2019. Britain had one of the biggest increases in remote working during the pandemic and in the share of vacancies offering it as an option, Indeed said, citing its own research and work by the OECD. Those posts were disproportionately concentrated in higher-paying, non-client facing roles. “We are settling into seemingly permanent ways of working,” Pawel Adrjan, head of EMEA research at Indeed. “Firms face intense competition when trying to hire staff. So offering remote working makes sense. It can be a powerful way to grab the attention of the sizable number of candidates.”
Brief: Carlyle Group Inc. is preparing to raise its biggest-ever European buyout fund, taking advantage of a rush of capital into private equity firms, people with knowledge of the matter said.The U.S. investment firm could aim to raise around 7.5 billion euros ($8.5 billion) for its Carlyle Europe Partners VI fund, one of the people said. It plans to start fundraising efforts later this year, the people said, asking not to be identified because the information is private.
Brief: Renaissance Technologies double-digit returns in 2021 weren't enough to prevent the nearly $15 billion in outflows it experienced over the past 14 months, according to a Bloomberg report. The quant-focused hedge fund, founded by Jim Simons and Howard Morgan in 1982, has turned into a more than $100 billion behemoth over the years thanks to the consistently jaw-dropping performance of its Medallion fund, which is only open to current and former employees of the company. The allure of Renaissance's Medallion fund has helped drive investors to the three hedge fund strategies it makes available to the public. But the diverging returns between the private and public funds has led to consistent outflows over the past year.
Brief: Financial firms need to take more cues from Silicon Valley, according to Charles Schwab Corp. Chief Executive Officer Walt Bettinger. Consumers want their banks and brokerages to offer technology with the same level of personalization they get from ride-hailing and food-delivery apps, Bettinger said in a wide-ranging interview after Schwab reported fourth-quarter results this week. “The expectations for clients of the experience they have at their financial-services company is formed by the experiences they have at Uber, DoorDash or Amazon,” Bettinger said. Schwab, a 50-year-old firm with more than $8 trillion of client assets, upended the brokerage industry by eliminating commissions and announcing the $26 billion acquisition of rival TD Ameritrade just months before the pandemic turbocharged trading by individual investors.
Brief: Global foreign-direct investment flows surpassed their pre-pandemic levels in 2021, jumping 77% to an estimated $1.65 trillion, according to the United Nations Conference on Trade and Development. The U.S. and other developed economies saw the largest increase in foreign investment flows, which tripled to $777 billion in 2021 from the previous year, according to a report published Wednesday. Inward investment in the U.S. grew 114% to $323 billion, due to a surge in cross-border mergers and acquisitions. Foreign-direct investment in developing economies grew by 30% to nearly $870 billion, led by a 20% jump in East and Southeast Asia and a recovery to near pre-pandemic levels in Latin America and the Caribbean.
Brief: Philanthropist Bill Gates and Jeremy Farrar, director of the U.K.’s Wellcome foundation, called for caution in predicting the path of the coronavirus as their organizations committed a combined $300 million to help prepare for emerging variants and future pandemic threats. “Talk of the pandemic coming to an end or waking up one Tuesday morning and it’s finished, that is premature,” Farrar said. “We’ve got to prepare for other scenarios which may not be quite as rosy.” While the U.K. and some other countries have probably turned the corner in the fight against omicron thanks to vaccines, much of the world remains unprotected, and new variants continue to pose a risk, Farrar told reporters Tuesday on a call. Rising levels of immunity could reduce the impact of omicron and future variants, but forecasting the course of the pandemic remains perilous, Gates said.
Brief: As the coronavirus pandemic stretches into 2022, BlackRock CEO Larry Fink is predicting that some of the workplace changes spurred by the crisis – including flexible schedules and a renewed focus on employee mental health – will be permanent. “No relationship has been changed more by the pandemic than the one between employers and employees,” Fink writes in his annual letter to CEOs, published on Tuesday. He points to the historic quit rates and the wage growth we’re seeing in the United States as positive signs of “workers seizing new opportunities” as well as “their confidence in a growing economy.” Workers aren’t just looking for new opportunities now either – they’re demanding more from their employers in benefits and work-life balance, especially flexible work arrangements and work that aligns with their values.
Brief:Canada's two biggest airlines have cut thousands more flights as COVID-19 continues to surge, miring the sector in uncertainty nearly two years after the pandemic began. WestJet Airlines Inc. said Tuesday it will cancel 20 per cent of its February flights, less than three weeks after announcing flight reductions of 15 per cent for January. The move marks a response to "government barriers" amid the Omicron variant, which has also affected staffing levels, the Calgary-based airline said. "We continue to advocate for the elimination of cumbersome travel rules that are unnecessarily impacting Canadians and prolonging the recovery of the travel and tourism sector,” chief executive Harry Taylor said in a release.
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