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Our briefing for Monday, August 16, 2021:
Aug 16, 2021 3:25:25 PM
- In the United States, the director of the National Institutes of Health says coronavirus cases could soon reach 200,000 per day. The U.S. is currently seeing an average of about 129,000 cases per day, a number that has increased daily since July 5. Dr. Francis Collins told Fox News on Sunday that he’d be surprised if the U.S. doesn’t cross the 200,000 threshold in the coming weeks. “That was January, February, that shouldn’t be August. But here we are with the Delta variant, which is so contagious, and this heartbreaking situation where 90 million people are still unvaccinated, who are sitting ducks for this virus, and that’s the mess we’re in,” he said.
- Canada will buy another 40 million doses of Moderna over the next two years, says Prime Minister Justin Trudeau. “We’ve reached an agreement with Moderna for additional supply of its Covid-19 vaccine for 2022 and 2023, with an option to extend into 2024,” the prime minister tweeted Saturday. The deal also grants Canada the option to purchase an additional 65 million doses. The news comes as the country enters its fourth wave of coronavirus infections, with the unvaccinated primarily driving the surge in cases. Approximately 71.3% of people age 12 and over in Canada have been fully vaccinated.
- In the United Kingdom, the “pingdemic” is believed to now be over as isolation rules have officially changed. Under the new rules, fully vaccinated people do not have to self-isolate when they come into contact with a positive case. Instead of being advised to quarantine for 10 days, it is recommended that they take a PCR test and wear a mask while they wait for the results. Those who test positive or show symptoms will still be legally required to self-isolate for 10 days. In Britain the pingdemic forced thousands of people into self-isolation because of close contact with positive cases, causing staff shortages across the country.
- In France, a week after the health pass came into effect, protests continue to unfold across the nation. The health pass shows whether a person has been vaccinated, had a recent negative test or a recent Covid-19 recovery. The protesters are opposed to the government’s decision to make the health pass mandatory for restaurants, theatres and most other indoor public buildings, and they accuse the government of infringing on their personal rights. About 1600 police were deployed to three different marches in Paris. There were 250,000 people expected at about 200 demonstrations.
- In Japan, the government is set to extend a state of emergency through to Sept. 12, rather than the end of the month when it is currently due to expire. Prime Minister Yoshihide Suga said the government will seek the support of experts to determine how to best implement emergency measures. With the latest extension, the state of emergency will cover the Tokyo Paralympics which begin on August 24 and run through to September 5. The emergency measures focus on bars and restaurants closing at 8:00 p.m. and not serving alcohol. Only around 36% of people in Japan have been fully vaccinated.
- In Australia, New South Wales state Premier Gladys Berejiklian told a news conference that fines for people breaking lockdown rules will increase from $1000 to $5000. "We have to accept that this is the worst situation New South Wales has been in since day one. And it's also regrettably, because of that, the worst situation Australia's been in," Berejiklian said. People entering rural areas without an official permit will also face a new $3000 fine. The news comes as New South Wales reported a record-high of 466 new cases in a 24-hour period on Saturday.
Covid-19 – Due Diligence And Asset Management
Wall Street Really Did Fumble Those Pandemic Earnings Estimates
Brief: There’s a whole class of Wall Street pundits whose lone job, it often seems, is to bash stock investors for assigning irrational valuations to companies. Rarely has the chatter from this crowd been as loud as it was in the Spring of 2020, when the pandemic was raging and the economy was collapsing and stocks were suddenly rebounding and nothing seemed to make any sense. It turns out in the end that they were right. Valuations were wildly off. But in exactly the opposite way that they had proclaimed they’d be. Corporate profits have roared higher in such a spectacular fashion that those valuations -- when analyzed against the actual earnings reported a year later -- were almost 20% cheaper than analysts thought when investors began piling into the S&P 500 in April 2020.
Wall Street lower amid pandemic, Afghanistan worries
Brief: Stocks fell in early trading Monday, amid worries about rising coronavirus infections in the U.S. and around the globe, as well as geopolitical concerns out of Asia. The S&P 500 index fell 0.5% as of 10:05 a.m. Eastern. The Dow Jones Industrial Average lost 0.7% and the Nasdaq composite fell 0.8%. The Russell 2000 index of small company stocks was down 1.2%. Shares of Tesla fell more than 3% after the U.S. government announced a formal investigation into the company's automated driving features, following a series of collisions with parked vehicles. Data out of China showed the global coronavirus pandemic continues to hurt economies around the world. Chinese industrial production and retail sales both rose last month, but at a far weaker pace than what economists had expected.
U.S banks walk tightrope of encouraging, but not mandating vaccines
Brief: Big Wall Street banks have started enforcing stricter mask and vaccine requirements for staff, sometimes communicating them behind the scenes, in an effort to combat coronavirus infections in their offices while avoiding a fierce national debate about individual rights, sources at the banks and consultants who work with them told Reuters. Specifics differ, but many big banks have tightened up policies or pushed back return-to-office dates from just a month ago. Now, Citigroup Inc and Morgan Stanley have the toughest rules at their New York headquarters, where staff entering must be vaccinated. PMorgan Chase & Co and Goldman Sachs Group Inc have not mandated vaccines the same way, but both require unvaccinated workers to wear masks and get tested at least weekly. Bank of America Corp will only allow vaccinated staff to return to its offices in early September, while encouraging other employees to get inoculated.
Schroders' Tina Fong: Has Covid actually mattered to markets?
Brief: The Covid-19 pandemic has clearly mattered to our daily lives and the well-being of the global economy. But the impact on financial markets has been less straightforward. The response from financial markets to Covid-19 has been mixed. Equities appear to have looked through the economic consequences of the virus. Last year, the Covid-19 crisis triggered one of the deepest recessions in history which saw global growth contract by 3.6% year-on-year. After the initial selloff in stock markets, global equities - as measured by the MSCI AC World index - went on to deliver a 15% return in 2020. Over the past decade, with the rise of the technology sector, global growth stocks have outperformed their value peers. But the difference in returns between growth and value was stark in 2020, with the MSCI AC World Growth index beating the value equivalent by a historical record of 33%.
How the Long Tech Rally Evolved
Brief: Since putting in a pandemic low on March 23, 2020, Nasdaq 100 futures have posted a stunning 125% rally in the subsequent 17 months, making an all-time high on July 26, 2021. This gain far outpaces the 100% rally of the broader S&P 500. The Nasdaq’s out performance has been generally attributed to several factors. The primary reason given for the initial gain was a belief that the pandemic and post pandemic economy would rely heavily on technology as work from home and remote communication became paramount. There was also the issue of interest rates. Technology companies tend to have a strong inverse correlation to interest rates because of commonly used discounted cash flow models. In short, the lower interest rates are today the more attractive the growth and technology sector becomes because of optimistic projections of future earnings.
