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Our briefing for Friday March 12, 2021:
Mar 12, 2021 3:20:37 PM
- During his first prime-time address as President of the United States Thursday evening, Joe Biden set out another goal for his administration in addressing the coronavirus pandemic. President Biden stated he wants all adults in the U.S. made eligible for vaccines by May 1st with a goal of having Americans return to a state of normalcy by the Fourth of July, which coincides with the country’s Independence Day. President Biden made another declaration before he entered office when it came to coronavirus vaccine distribution – 100 million doses into American arms in the first 100 days of his administration. According to Bloomberg, America was already close to nearing a pace of one million shots a day by Biden’s inauguration, so it should come as no surprise that he proudly proclaimed on Thursday that the nation would hit that threshold by next week – just 60 days into his presidency.
- In Canada, Prime Minister Justin Trudeau and his government is in no hurry to reopen the U.S. land border to non-essential travel. Speaking to a Canadian news morning show on Friday, Prime Minister Trudeau said the country will not reopen its land border to its southern neighbours until vaccination rates and case counts reach levels that would make doing so safe for Canadians. The prime minster when questioned didn’t rule out waiting until September or possibly later to reopen the land border, which has been closed since March 2020. The news comes as some American politicians have called for the border to be opened between the two countries for the start of the summer. Prime Minister Trudeau said the border closure has been renewed on a monthly basis and that plan will remain in place.
- In the United Kingdom, the economy shrank less than expected during the country’s lockdown in January. The UK’s GDP fell 2.9%, much less than the 4.9% contraction economists had forecasted thanks to stronger than expected gains in construction and stronger activity in the health sector. Prime Minister Boris Johnson and his government’s COVID-19 vaccine rollout, which has been deemed a success, especially compared to the European Union’s ongoing struggles, continues to bolster the economy in hopes that restrictions will be fully lifted by the middle of the year. The Bank of England is supposed to decide next week on whether the UK needs more stimulus to recover from their biggest economic slump in three centuries.
- Italy and its citizens might be having a case of déjà vu as one year out from their first coronavirus lockdown, new Prime Minster Mario Draghi is evoking a another one. Under the new rules, regions with more than 250 weekly case per 100,000 inhabitants will be automatically designated as high-risk “red zone”. According to Bloomberg, this could as send as many as 14 of Italy’s 20 regions, including those surrounding Milan and Rome, into lockdown as of Monday. Prime Minister Draghi also made the following declaration in one of his rare public appearances since becoming leader: “Italy is administering about 170,000 doses a day, our aim is to triple that. It is only with widespread vaccinations that we will be able to do without restrictions like the ones we had to adopt.”
- India reported its worst single-day increase in COVID-19 cases since late December on Thursday, which forced a densely populated city into an upcoming lockdown. Close to 23,000 new cases were reported in a 24-hour span, according to India’s health ministry – the highest daily rise since December 25th. Fresh outbreaks in the western state of Maharashtra have forced officials to announce a lockdown of Nagpur from March 15th-21st. India’s overall COVID-19 caseload of 11.3 million – trails only the United States and an increase in recent public gatherings and travel before a majority of Indians were vaccinated are being blamed for reasons in the spike of cases.
- The African Development Bank (AfDB) said Friday in its economic report that the coronavirus pandemic is forcing millions more into extreme poverty. Even though Africa is projected to rebound from its worst slump in half a century, the AfDB expects as many as 39 million more people will be pushed into extreme poverty in 2021. In 2020, about 30 million Africans suffered that fate, which means 34.4% of the continent’s population, or 465.3 million, could be living on less than $1.90/per day. Last year, Zambia became the first country in Africa to default on its debt and a United Nations Economic Commission member said last month more African nations will probably seek restructuring of their obligations.
Covid-19 – Due Diligence And Asset Management
Apollo Bets a New Roaring ‘20s Will Revive Vegas After Vaccines
Brief : The theater where Tony Bennett and Steely Dan once performed is still dark. Players at the blackjack tables are separated by plastic partitions. The gondoliers offering rides along faux canals wear face masks and aren’t allowed to sing. The Venetian Las Vegas isn’t the resort it was a year ago. But that didn’t stop Apollo Global Management Inc. and its real estate partner, Vici Properties Inc., from plunking down $6.25 billion to purchase the property, the neighboring Palazzo and the adjacent Sands Expo Convention Center from Las Vegas Sands Corp. last week. The deal surprised observers such as Stephen Miller, director of the Center for Business and Economic Research at the University of Las Vegas, Nevada. “Are they off their nut or are they on to something?” he asked. Despite a long list of problems, Apollo partner Alex van Hoek sees opportunity -- for soaring tourism and a return of convention travel that made the city one of the top destinations for business groups. “We are very bullish on the recovery of Las Vegas,” said van Hoek, who led the investment firm’s purchase. It’s no sure thing. A year after the coronavirus shut down its famous casinos, America’s gambling capital is trying to crawl back from one of its deepest slumps ever. The glittering palaces along the Strip began reopening last June, but business is still slow. Unemployment, at 10%, is the highest among big U.S. cities. Tourist traffic in January slumped almost two-thirds from last year. Gambling revenue on the Strip was off 44% and the convention business nonexistent.
Deutsche Bank CEO’s 46% Pay Rise Prompts Backlash
Brief: Deutsche Bank paid Chief Executive Christian Sewing 7.4 million euros ($8.8 million) in 2020, up 46% from a year earlier, prompting criticism from unions and politicians. The bank’s bonus pool was up 29% as it rewarded staff for a pandemic-related trading boom, which helped the German lender to eke out a profit after years of losses. The disclosure in the bank’s annual report on Friday came as Deutsche said revenue would be “marginally lower” this year. In Germany, which is facing an election year and where the public disapproves of high pay, the Verdi labour union called the payouts “grossly disproportionate” and politicians were critical. “It doesn’t fit with the times that Deutsche Bank, which has also indirectly benefited from bailouts time and again, is having a coronavirus party,” Fabio De Masi, a member of Germany’s parliament, said in a statement to Reuters. Last year marked a turnaround for Deutsche and Sewing, who took up his post in 2018, after the bank had faced a series of costly regulatory failings, including over money laundering. The bank has lost 8.2 billion euros over the last decade.
EU Recovery Fund Risks Delays With Spending Plans Judged Sub-Par
Brief: The European Union’s pandemic recovery fund has run into early trouble, with the bloc’s executive arm judging that most of the national spending plans submitted so far still need work to get approved, raising the risk of delays in disbursements to some of the region’s battered economies. Germany’s submission is among those deemed to fall short of expectations, with southern European nations including Greece and Spain having the strongest plans, according to officials familiar with the discussions who asked not to be identified. Some countries haven’t made proposals at all yet, and others are way behind, they said. The German government is in talks with the Commission to reduce some of the hurdles to investment in its plan, one official said. A commission spokeswoman said that staff are in “intensive dialogue” with member states with the aim of making disbursements starting from mid-2021, but that “it is also essential” that these plans meet the key objectives of the fund. A spokesperson for the Greek government also declined to comment, and spokespeople for the German finance ministry and Spanish government didn’t immediately respond to a request for comment.
Americans Support Restricting Unvaccinated People From Offices, Travel
Brief: A growing number of Americans want to get the coronavirus vaccine, and a majority also support workplace, lifestyle and travel restrictions for those not inoculated against COVID-19, according to a Reuters/Ipsos poll released on Friday. Altogether, 54% of respondents said they were “very interested” in getting vaccinated. That was up from a January survey, when 41% expressed the same level of interest, and 38% in a May 2020 poll before a coronavirus vaccine was developed. Interest in the vaccine increased over the past year among whites and racial minorities, with about six in 10 whites and five in 10 members of minority groups now expressing a high level of interest. Twenty-seven percent of Americans said they were not interested in getting vaccinated, which was relatively unchanged from a similar poll that ran in May. But foreshadowing the social challenges that may emerge as the United States begins to pull out of the yearlong pandemic, the latest poll showed a majority of Americans want to limit the ways in which unvaccinated people can mix in public.
The ‘Reflation’ Sensation: Emerging Markets Poised to Benefit From Vaccine Rollout and Sustained Global Recovery
Brief: In the first part of the year, the vaccine rollout is supporting a robust economic recovery and global central banks continue to operate very loose monetary policy. This scenario favours the emerging markets (EM) asset class, which is relatively well placed to benefit from the global 'reflation' trade. We are, however, mindful of the impact of higher US Treasury yields (and especially a rapid rise) on EM fixed income, especially some of the higher quality parts of EM. This is because the credit spread in this EM sector is insufficient to absorb the total return drag implied by a sell-off of US Treasuries. Today, higher yielding EM is better placed to navigate these challenges, although even in this asset class it is important to differentiate between the high yield EM sovereigns with positive credit stories and those with impaired balance sheets and a weakening outlook Another positive driver for EMs is the new US President. The Biden administration is, on balance, supportive for EM as it implies more international co-operation and less isolationism. Yet, the stance towards China is unlikely to change very much and remains a source of risk while attitudes to Russia may also become harsher.
Private Equity Sets Sights on Strengthening Portfolios with 35 Per Cent Jump in Buy and Build Deals
Brief: The number of private equity buy and build transactions in the UK rose by 35 per cent during 2020, as private equity houses looked to bolster their portfolio during the Covid-19 pandemic, according to research by Rickitt Mitchell. Analysis by the corporate finance boutique, in partnership with Experian Market iQ, reveals that a total of 370 bolt-on transactions were completed in 2020 – up from the 276 seen over the course of the previous year. The bounce back following the Covid-19 pandemic is highlighted by the active second half of 2020, with 232 transactions completed during that period. In contrast, just 46 deals were completed during the second quarter, at the height of the national lockdown. Despite the rise in volumes, the total value of transactions fell by a small portion over the last year. GBP1.2 billion of deals were completed in 2020, just lower than the GBP1.3 billion seen in 2019, which further highlights the trend of bolt-on deals during this period, which typically have smaller average values than other deal types.
