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Our briefing for Friday July 3, 2020:
Jul 3, 2020 3:11:09 PM
- As the United States head into their Independence Day long weekend, at least 36 out of 50 states are seeing COVID-19 cases rising. Because of this, at least 19 states and Washington DC are mandating masks when out in public. Health officials are urging Americans to limit their 4th of July festivities to avoid more outbreaks, but are fearing the perfect storm due to travel, the already previously eased restrictions, and people just not following preventative guidelines such as social distancing and facial coverings in crowded areas.
- In Canada, Atlantic province travellers were facing long lineups on the highway as Friday marked the first day of the Atlantic travel bubble. Residents of New Brunswick, Nova Scotia, Prince Edward Island and Newfoundland & Labrador can freely travel across one another’s borders without having to self-isolate for 14 days. CBC is reporting there are currently six active cases of COVID-19 in Atlantic Canada, a region of 2.2M people.
- As of Monday July 6th, United Kingdom residents will be able to visit more than 70 destinations without having to self-isolate for 14 days upon their return to the country. As of July 10th, the UK will return the favour to those 70 countries, which means as long as people haven’t visited or stopped in any other country or territory in the preceding 14 days, those arriving will not be required to self-isolate once on British soil. Left off the list are the United States, Canada, Sweden, Portugal and African nations.
- Sweden has launched an inquiry into the country’s strategy in battling COVID-19. The country has just surpassed 70,000 cases with over 5,400 deaths, making it one of the highest per capita death rates due to the coronavirus in the world. Sweden’s strategy has been well publicized as unlike most other European countries; the country didn’t implement strict lockdown measures. Instead, many businesses, areas of the hospitality sector and schools remained open during the pandemic. Sweden had previously defended their coronavirus stance, believing they would better handle a potential second wave with a higher level of immunity. However, Sweden’s Prime Minister said at a recent press conference: “We have thousands dead. Now the question is how Sweden should change, not if.”
- India has approved a second possible coronavirus vaccine for trial use in as many days. Zydus, part of pharmaceutical group Cadila Healthcare, can start its candidate trial this month after “eliciting a strong immune response” in tests performed on mice, guinea pigs and rabbits. India is desperate for some light at the end of the tunnel as coronavirus cases overwhelm hospitals in New Delhi and Mumbai. The country reported their highest daily total on Friday with over 20,000 new infections and trail only the United States, Brazil and Russia in confirmed COVID-19 cases.
- Melbourne Australia’s new door-to-door coronavirus testing policy isn’t going as well as state health officials had hoped. The Victoria government said more than 10,000 people, including travel returnees have refused to be tested for COVID-19, despite a surge in the area. The state health minister is hearing all kinds of excuses from people claiming they have been tested elsewhere, that COVID-19 is a conspiracy, or that it won’t have an impact on them. In an interview on Thursday, Australia’s acting chief medical officer, Paul Kelly understood why testers coming and knocking on doors unannounced could make residents feel uncomfortable. Local media have reported the federal government was considering stiffer penalties such as fines for those who refuse to be tested.
Covid-19 – Due Diligence And Asset Management
Tiger Global, Coatue Score Double-Digit Hedge Fund Gains in 2020
Brief: Stock-picking hedge funds led by Chase Coleman, Philippe Laffont and Andreas Halversen notched double-digit gains in the first half, beating turbulent equity markets amid the coronavirus pandemic. Tiger Global Management, run by founder Coleman, has climbed roughly 17% this year in its flagship hedge fund, according to people with knowledge of the matter. It was up about 6.5% in June, said the people, asking not to be named because the information is private. Meanwhile, Halvorsen’s Viking Global Investors rose 2% in its hedge fund in June, bringing this year’s returns to 11%, according to another person. Laffont’s technology-focused Coatue Management surged 8.6% last month through June 26, extending gains for the year to 19%, a separate person said. That outpaced the gains of the Nasdaq 100 Index, which rose 16% in the first six months. After falling 20% in the first quarter, stocks soared 20% in the second quarter, the most since 1998, as the Federal Reserve offered unprecedented market support. But while U.S. consumer confidence rose in June by more than forecast, hopes of a quick economic recovery have been shaken by the increase in Covid-19 cases across the nation. The managers share a common background. They are all so-called Tiger Cubs, the term for alumni of legendary stock-picker Julian Robertson’s Tiger Management who went on to start their own hedge firms.
Asset Owners Say Coronavirus Pandemic a Boon for ESG
Brief: Environmental, social and governance factors will become more important as the global economy recovers from the coronavirus pandemic, say asset owners. Speaking during a virtual discussion Thursday organized and hosted by Bloomberg, panelists considered the investment implications of the COVID-19 outbreak on regions, assets and investments. While ESG has been a theme in investment for some time, the accommodation and help provided by governments to companies around the world means there is an "expectation that these companies will … be good corporate citizens and repay society in some way," said Morten Nilsson, CEO at BT Pension Scheme Management, which manages the assets of the £52.2 billion ($64.4 billion) BT Pension Scheme, London. Moves toward enhanced corporate responsibility have already been made, but due to the "bold" and "extreme" responses from governments in helping businesses, "I think that pressure will only increase," Mr. Nilsson said.
Wall Street Shifts Bets to Big Pharma as COVID-19 Vaccine Race Progresses
Brief: Wall Street is moving some bets on COVID-19 vaccines to large pharmaceutical companies with robust manufacturing capabilities, signaling that a love affair with small biotech firms might be ending after the sector’s best quarter in almost 20 years. Early signs of the shift came Wednesday, when positive data for one of Pfizer Inc’s (PFE.N) COVID-19 vaccine candidates sent shares of the large U.S. drugmaker up more than 3%. Shares of its partner on the vaccine, Germany’s BioNTech SE (22UAy.F), have been flat on the data. Although the news had little effect on shares of Pfizer’s large rivals in the vaccine race, smaller peers Moderna Inc (MRNA.O) and Inovio Pharmaceuticals Inc (INO.O), both of which have previously shown promising COVID-19 data of their own, ended down more than 4% and 25%, respectively. Inovio partially rebounded Thursday.For the week so far, shares of bigger players in the vaccine race, such as Johnson & Johnson (JNJ.N) and Merck (MRK.N), have also outperformed Inovio and Moderna.Some of the selling was likely driven by end-of-quarter profit-taking, locking in dizzying gains in an otherwise turbulent market. Moderna and Inovio shares have risen nearly 200 percent and 540 percent in the year-to-date, respectively, greatly eclipsing gains for large pharmaceutical companies.
Global Markets: COVID Recovery vs COVID Reality
Brief: World shares stalled near a four-month high on Friday and the industrial bellwether metal copper scuffed its longest weekly winning streak in nearly three years, as nagging coronavirus nerves tempered the recent recovery run. The market rally, fuelled by Thursday’s record U.S. jobs numbers, largely blew itself out after a record daily total of new U.S. COVID-19 cases, though news of the fastest expansion in China’s services sector in over a decade kept Asia’s tail up early in the day.Chinese shares had charged to their highest level in five years [.SS], helping the pan-Asian indexes to four-month peaks, so the sight of European markets stalling left traders floundering, especially with no Wall Street to pick things up again because of a U.S. market holiday. [.EU]Currency and commodity markets were also subdued after an otherwise strong week for confidence-sensitive stalwarts such oil, copper, sterling and the Australian dollar, which all struggled on Friday.More than three dozen U.S. states are now seeing increases in COVID-19 cases, including Florida, where they have leapt above 10,000 a day. And while Europe is largely easing restrictions, some places are having to keep them or reimpose them again.
Workers on Re-Openings: ‘I Would Like Never to go Back to the Office’
Brief: Reopening businesses has started in many states and cities across the country. For people who have been working from home, some are chomping at the bit to get out of the house. Others, however, are not psyched. So far, the forced work-from-home framework many companies have been forced to implement has been largely seen as a success by many businesses and workers, some of which have decided to allow more widespread remote work, like Facebook (FB), Twitter (TWTR), and Square (SQ). Most people have been able to get the job done from home. Whether it’s better or not is another story. Just over half of people (51%) who have been working from home think it’s better, according to arecent survey from Yahoo Finance-HarrisPoll, while 30% say it’s worse. Some surveys have shown even more optimism. According to Korn Ferry, almosttwo-thirdsof its survey respondents said they are more productive from home… Companies like JPMorgan Chase in New York have been considering their reopening plans for their massive offices in Midtown Manhattan. In a memo to employees, the bank said that it's time to go back in and plan to start on July 13, though some employees returned on June 22. The company is bringing back employees in waves and expects to be at around 20% occupancy until Labor Day. The idea is to go slow and figure things out for a larger fall return. Bank of America said Thursday it plans to bringemployees back to officesin phases after Labor Day.
These Hedge Funds Thrived in 2019. Are They Surviving 2020?
Brief: So far in 2020, the multistrategy hedge fund firm is earning that title. Citadel’s flagship Wellington fund was up 11.4 percent for the year through May, according to a person familiar with the fund, extending its win streak after delivering a19 percent gainin 2019. Multistrategy funds as a whole fared much worse, according to HFR, which reported losses ranging from 1.73 percent to 2.45 percent across its multistrategy indices. Across all strategies, hedge funds tracked by HFR were down 6.56 percent through April as the coronavirus pandemic rattled markets. At the end of May — the most recently available returns from the data provider — hedge funds were still down about five percent for the year. It’s a very different result from 2019, when hedge funds as an industry delivered double-digit returns amid soaring stock markets. The winners ofInstitutional Investor’s2020 Hedge Fund Industry Awardswere nominated on the basis of their strong performances in 2019 — but 2020 has proven more challenging.
