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Our briefing for Monday April 12, 2021:
Apr 12, 2021 4:21:26 PM
- In the United States, at the current pace, the country will likely hit a milestone this week with half of American adults receiving at least one dose of a COVID-19 vaccine. According to data, from the Centers for Disease Control and Prevention (CDC), 46% of adults in America have received at least one dose of vaccine and about 28% are fully vaccinated. Elsewhere in the country, the government posted a March deficit of $660 billion, a record high for the month as direct payments to Americans from the Biden administration’s coronavirus stimulus package started to be delivered. The deficit for the six months of the 2021 fiscal year ballooned to a record $1.706 trillion, according to a Reuters report.
- In Canada, Quebec’s decision to move a Montreal curfew to 8 PM from 10 PM was met with riots in the streets over the weekend. On Monday, Montreal police announced they were investigating multiple reports of mischief, arson, obstructing a police officer and breaking and entering. Officers also handed out 107 tickets to people who violated public health measures. Montreal Mayor Valerie Plante responded via social media condemning the riot, calling it “absolutely unacceptable” and “fatigue linked to your fight against #COVID19 does not in any way justify the destruction of public property and failure to respect the rules. We must remain united and stick together.”
- In what the media dubbed “Manic Monday”, England returned to restaurants and pubs in record numbers after more than five months of near continuous closure. Bookings were said to be “off the scale” for outdoor patios and rooftop terraces even though the temperature was hovering around 9 degrees Celsius (48 Fahrenheit). United Kingdom Prime Minister Boris Johnson has urged people in England to “behave responsibly” as non-essential shops, gyms and hairdressers also reopen. Scotland, Wales and Northern Ireland are following their own plans to ease lockdown restrictions.
- Philippines President Rodrigo Duterte has relaxed coronavirus lockdown restrictions in Metro Manila, along with four neighbouring provinces, as hospitals added capacity for patients infected by COVID-19. The nation’s capital along with the four other regions will be placed under a so-called modified enhanced community quarantine until the end of April. Under the loosened restrictions, most people are still required to stay home but more businesses will be allowed to operate while limits on those that have remained open will be eased.
- Bloomberg is reporting China is making a rare admission when it comes to their fight against the coronavirus. Speaking over the weekend at a forum, George Fu Gao, head of the Chinese Center for Disease Control and Prevention, said something needed to be done to address the low protection rate provided by Chinese vaccines. Research released Sunday showed efficacy rates for the Sinovac Biotech vaccine – deployed also in Brazil and Indonesia – was just above 50%. The number barely meets the minimum protection required for COVID-19 vaccines by leading global drug regulators. Gao suggested that following up inoculations with additional booster shots and mixing different types of vaccines could help address the effectiveness issue.
- Australia has abandoned its goal to vaccinate nearly all of its 26 million population by the end of 2021, due to the concerning news around the AstraZeneca vaccine. Australia had put most of their eggs in the AstraZeneca basket, but with a possible link to the product and rare cases of blood clots, the country is moving towards advising those under the age of 50 to take Pfizer’s COVID-19 vaccine instead. In a Facebook post on Sunday, Prime Minister Scott Morrison wouldn’t commit to setting any new targets for the country’s vaccination program. Australia had originally planned to have its entire adult population vaccinated by the end of October.
Covid-19 – Due Diligence And Asset Management
Fed’s Bullard says 75% Vaccinations Would Allow for Taper Debate
Brief : Federal Reserve Bank of St. Louis President James Bullard said that getting three-quarters of Americans vaccinated would be a signal that the Covid-19 crisis was ending, a necessary condition for the central bank to consider tapering its bond-buying program. “It’s too early to talk about changing monetary policy,” Bullard said in an interview with Bloomberg Television’s Kathleen Hays Monday. “We want to stay with our very easy monetary policy while we are still in the pandemic tunnel. If we get to the end of the tunnel, it will be time to start assessing where we want to go next.” About 36% of Americans had been given a first vaccine dose and 22% were fully vaccinated, according to the Bloomberg Vaccine Tracker. Centers for Disease Control and Prevention officials have urged Americans to continue to take safeguards, including restricting their travel, with the number of cases rising. “When you start to get to 75% vaccinated, 80% vaccinated and CDC starts to give more hopeful messages that we are bringing this under better control and starts relaxing some of their guidelines, then I think the whole economy will gain confidence from that,” Bullard said.
Goldman Risk Group Examines 2021 Market Events for Lessons
Brief: Goldman Sachs Group Inc executives are examining how well the bank navigated several major market events this year that caused extreme volatility, people familiar with the matter told Reuters. The review will include a market-wide fire sale of stocks triggered by Archegos Capital Management’s default on margin calls at banks including Goldman, the sources said. The meltdown of Archegos, a New York investment fund run by former Tiger Asia manager Bill Hwang, has sent shock waves across Wall Street and drawn regulatory scrutiny in three continents. Goldman Sachs is also looking more broadly at how it handled recent market events, with a particular lens on compliance and best practices, the sources said. That could include what happened during the Reddit-fueled trading frenzy in equity markets, including shares of GameStop Corp, as well as the U.S. Federal Reserve’s decision to end pandemic-related capital relief for banks, which caused issues in fixed-income markets. Also this year, there was chaos in energy markets in mid-February after a deep freeze in Texas sent the cost of fuel and power sky-high.
UN Chief Backs Wealth Tax on Rich Who “Profited” From Pandemic
Brief: United Nations Secretary-General Antonio Guterres is calling on nations to institute a wealth tax to help reduce global inequality exacerbated by the Covid-19 pandemic. There has been a $5 trillion surge in the wealth of the world’s richest in the past year even as those at the bottom were made increasingly vulnerable, Guterres told a UN economic and social forum on Monday. “I urge governments to consider a solidarity or wealth tax on those who have profited during the pandemic, to reduce extreme inequalities,” he said. “We need a new social contract, based on solidarity and investments in education, decent and green jobs, social protection, and health systems. This is the foundation for sustainable and inclusive development.” With the Covid-19 fallout causing government debt to swell, and hurting poorer people most, wealth taxes are being debated from California to the U.K. as a tool both to pay down debt and address inequality. U.S. Senator Elizabeth Warren, Nobel laureate Joseph Stiglitz and economist Thomas Piketty are among proponents. In the U.S., Warren, along with Representatives Pramila Jayapal and Brendan Boyle, have proposed a 2% annual tax on households and trusts valued at between $50 million and $1 billion, though the measure is unlikely to garner the support needed to pass, particularly in the evenly divided Senate.
OSC Study Finds Pandemic has Significant Impact on Retail Investors
Brief: The Ontario Securities Commission (OSC) today released a new study that explores the impact of the pandemic on the behaviours and attitudes of retail investors. This study is part of the OSC’s ongoing efforts to monitor the impact of the pandemic on investors and markets. The COVID-19 pandemic has uniquely affected the financial situation of each retail investor. Most investors are simply trying to endure the hardship and uncertainty of the pandemic, but some see it as an opportunity to increase their participation in the capital markets. “We continue to see the uneven impact that this crisis is having on retail investors,” said Tyler Fleming, Director of the Investor Office at the OSC. “Understanding how the pandemic is affecting different segments of the population is essential for supporting retail investors during this difficult time.”
Hedge Fund Managers are Feeling Confident
Brief: Hedge fund managers are feeling optimistic about their economic prospects over the next 12 months. In a recent survey, 90 percent of hedge funds reported a positive outlook for their firms’ futures, according to the Hedge Fund Confidence Index, a global index produced by the Alternative Investment Management Association with law firms Simmons & Simmons and Seward & Kissel. The HFCI was based on a poll over 300 hedge funds across the globe, accounting for approximately $1 trillion in assets, during the first quarter of 2021. Respondents were asked to rate their economic confidence levels on scale of -50 to +50, with +50 indicating the highest level of confidence. Based on responses, the average measure of confidence was +18 percent, a nearly 40 percent increase from the confidence levels reported last quarter. “Hedge funds appear to be riding a wave of optimism sweeping the globe as it moves closer to exiting the pandemic,” the group said in the report. The report attributes much of this “cautious optimism” to the increased distribution of Covid-19 vaccinations and the slow lifting of pandemic-related economic restrictions. In the first three months of 2021, hedge funds have also seen a “solid set of results,” returning 6 percent net of fees for the year as of March 2021, according to the report.
Singapore Firms Miss Women-on-Boards Target as Pandemic Blamed
Brief: Singapore’s largest companies missed a collective target to get more women on their boards, with diversity efforts taking a backseat to combating the coronavirus pandemic. The proportion of women on the boards of the 100 biggest listed companies rose 1.4 percentage points to 17.6% as of end-2020 from a year earlier, according to the Council for Board Diversity. The target was 20%. Some companies didn’t view board diversity as a priority last year as they battled the global outbreak, the council said. “Board diversity, a recognized hallmark of progressive boards even before Covid-19, is more critical now than before,” Loh Boon Chye, co-chair of the council, said in a statement. “Post-pandemic recovery offers opportunities for innovation and business repositioning. Having directors with a wider mix of gender, age, skills, experiences, and backgrounds allows boards the broad-based choices as they assess what is best for the future.” The percentage of top companies with 30% or more women on their boards rose to 16% in 2020 from 12% the year before, the report showed. There were still 18 all-male boards in 2020, and only seven of the top 100 firms were chaired by women.
