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Our briefing for Friday March 20, 2020:
Mar 20, 2020 3:44:16 PM
- In the United States, New York State joined the State of California in ordering all non-essential workers to stay home. These measures affect nearly 59 million people in America, or close to one in five Americans. California’s order exempts 16 critical sectors including emergency services, transportation and communications. New York state is working through their list of essential services.
- America also confirmed they will be closing their borders with Mexico and Canada, limiting non-essential travel. This will take effect on March 21st.
- Canadian Prime Minister Justin Trudeau announced on Friday that the country will turn back asylum seekers as part of the border shutdown with the United States. As of Friday afternoon, Canada is closing in on 1,000 presumptive cases of the coronavirus with Ontario and British Columbia, accounting for more than half.
- In Europe, Italy’s president of Lombardy, the country’s hardest hit region, has requested that the military be deployed on the streets of Milan to enforce the continued lockdown.
- United Kingdom Prime Minister Boris Johnson and the government has ordered all cafes, bars and restaurants to close “as soon as they reasonably can”. Johnson stated nightclubs, theatres, cinemas, gyms and leisure centres should also close and not re-open for the foreseeable future.
- The UK government also announced it will pay the wages of any employee facing redundancy in an unprecedented intervention to protect jobs amid sweeping economic uncertainty.
- In Saudi Arabia the country will be halting domestic air travel, trains, buses and taxis as of Saturday after reporting 70 new coronavirus cases on Friday.
Coronavirus – Due Diligence And Asset Management
Blackrock to Freeze Global Hiring for a Few Weeks
Brief: Blackrock, the world’s largest asset manager, will freeze global hiring for “a few weeks,” a source familiar with the situation said on condition of anonymity. As the new coronavirus has swept across the globe, killing thousands of people, companies have cut their investment plans, withdrawn financial outlooks and laid off employees in response to the economic impact. With $7.4 trillion of assets under management as of December 2019, making it the world’s biggest investment manager, Blackrock’s hiring freeze underlines how painful the impact of the global market selloff and the coronavirus will be for the real economy. A spokesman was not immediately available for comment.
Colony Capital Provides Update Regarding Impact of COVID-19
Brief: Colony Capital, Inc. (NYSE: CLNY) (“Colony Capital” or the “Company”) today announced a number of updates in connection with the impact of COVID-19 on its assets and business operations… “Since our earnings call on February 28, 2020, the coronavirus has been declared a pandemic and has fundamentally altered the global economy,” said Thomas. J. Barrack, Jr., Executive Chairman and Chief Executive Officer.
PE Firms Act to Save Portfolio Companies from Coronavirus Troubles
Brief: Private equity firms are taking steps to help their portfolio companies survive the coronavirus onslaught of forced closures, scattered workforces and upended markets. From providing millions of dollars in emergency aid to more mundane things like phone calls designed to boost managers’ morale, professionals in buyout shops around the US are trying to ensure the new coronavirus doesn’t bring down their investments.
Hedge Fund Manager: Market ‘Purging’ Could Lead to a Plunge of ‘at Least 74%’
Brief: Back in February, Kevin Smith, chief investment officer at Crescat Capital, urged investors to resist the temptation to buy the dip as he pushed his “macro trade of the century. “We certainly did not predict the coronavirus,” he wrote at the time. “But it may prove to be the catalyst to tip this market [into] a brutal bear market….We are looking for a 56% drop from the top in February. That just gets us to a reversion to the mean for historical market valuation,” he told MarketWatch. “Honestly, we think a more reasonable target for this global recession that is only beginning is at least a 74% decline from February’s highs to mark the bottom. There were just too many excesses in this one. The purging... has only just begun.”
Ray Dalio: Damage from Coronavirus: Will be ‘Much Greater’ Than Reported
Brief: Billionaire hedge fund manager Ray Dalio believes that policymakers and other leaders could be downplaying the impact of the coronavirus outbreak, a pandemic that he expects to result in “many trillions of dollars” in lost profits and “enormous” spending on relief efforts. “I believe that the health, economic, and market impact of the coronavirus will be much greater than most people are now conveying,” the Bridgewater Associates founder said in a LinkedIn post Wednesday evening. According to Dalio, the realities of the ongoing pandemic are “so bad that conveying them accurately could provoke panic.” To prevent that panic, he argued that “some leaders and knowledgeable researchers who are in the position to know are inclined to withhold the facts.”
Griffin’s Citadel Sending Aid to Chicago to Help in Pandemic
Brief: Partners at the hedge fund and securities firms founded by Ken Griffin are donating$2.5 millionfor public schools and food insecurity relief efforts in Chicago as the effects of the coronavirus pandemic take hold. In early February, Citadel and Citadel Securitiesdonated$7.5 millionto help contain the virus in China. The money helped send medical supplies to a hospital in Wuhan, support humanitarian aid there and fund the development of a vaccine. The firm’s latest effort is in partnership with Chicago Public Schools and the Greater Chicago Food Depository. As of 3 p.m. Central Standard Time, there had been 422 confirmed cases of COVID-19 in Illinois and four deaths.
