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Our briefing for Monday February 8, 2021:
Feb 8, 2021 4:51:56 PM
- In the United States, the new director of the Centers for Disease Control and Prevention (CDC) said that testing domestic airline travelers for COVID-19 would be “another mitigation measure” to combat virus spread. Director Dr. Rochelle Walensky didn’t expand on whether or not the CDC would test domestic travelers, however Transportation Secretary Pete Buttigieg said over the weekend that there was an “active conversation” with the CDC about requiring a negative COVID-19 test for passengers. On Monday, White House officials reiterated now is not the time to be travelling, if it at all possible.
- Canada’s most populous province has extended its stay-at-home order for most regions but will begin to transition back to the colour-coded shutdown system through a regional approach. Ontario Premier Doug Ford made the announcement on Monday that the stay-at-home order for Toronto, Peel and York regions will remain until at least February 22nd. In most other areas, Ontario will transition into the tiered colour system they were using before the entire province went into a lockdown on December 26th. Elsewhere in the country, Quebec is again allowing non-essential businesses, including personal care establishments like salons to reopen their doors. Restaurants and theatres will also be allowed to be open in the “orange zone” as of Monday, though those businesses will stay closed in harder-hit areas for now.
- The United Kingdom continues to state they are on track to have all those over the age of 50 vaccinated by May. They too, have another plan already in the works, which includes a top-up of immunizations to fight new variants of the coronavirus in the autumn, along with predicting an annual vaccination drive for COVID-19, similar to injections given for influenza each year. The UK is one month into their third national lockdown and Prime Minister Boris Johnson’s government is in a race against time to get as many people vaccinated as possible as the plan is to start lifting some of those restriction curbs next month.
- Italy has reintroduced localized “red zones” as areas across the country have identified new COVID-19 variant spread. According to the Italian Health Institute over the weekend, the UK and Brazilian COVID-19 variants were detected in a sample of 44 cases recently analyzed. Municipalities in the provinces of Perugia and Terni were sent into the red zone on Monday, which means people are prohibited from leaving their homes except for work or health reasons. The red zones will be imposed in those regions until February 21st. Elsewhere in the country, vaccinations of citizens over the age of 80 started on Monday. The vaccination of Italy’s elderly population was set to begin at the beginning of February but was delayed by the reduced number of doses of vaccines from Pfizer and Moderna.
- According to Bloomberg, the World Health Organization (WHO) wrapped up its weekslong investigation in Wuhan, China over the weekend and found some “important clues” about a Wuhan seafood market’s role in the outbreak. Bloomberg spoke with Peter Daszak, a New York-based zoologist assisting the WHO sponsored mission and said he anticipates the main findings will be released before the group departs on February 10th. “It’s the beginning of hopefully a really deep understanding of what happened so we can stop the next one,” said Daszak. “That’s what this is all about – trying to understand why these things emerge so we don’t continually have global economic crashes and horrific mortality while we wait for vaccines. It’s just not a tenable future.”
- South African health officials paused the country’s rollout of the AstraZeneca coronavirus vaccine over the weekend after a study showed it offered reduced protection against the COVID-19 variant circulating there. On Monday, South Africa said it would instead roll out the AstraZeneca vaccine in a “stepped manner”, giving out 100,000 doses and monitoring it to see if it prevents hospitalizations and deaths. The overall messaging though from the scientific world, including the WHO is don’t panic. Several global health officials noted that the South African study was small, and that the vaccine is known to work against the original COVID-19 variant, which is still very prevalent throughout the world.
Covid-19 – Due Diligence And Asset Management
Renaissance Clients Exit After Firm's Anemic Run of Results
Brief : For years, Renaissance Technologies was among the most exalted names in high finance, as close to a sure-thing as Wall Street had. But recent months have battered its reputation, and investors are now streaming to the exits. Renaissance has seen at least $5 billion in redemptions since Dec. 1 -- a once-unthinkable rebuke from clients after unprecedented losses from the East Setauket, New York-based firm. The walkout comes after three funds open to the public fell by double digits last year, their computer models flummoxed by the rapid stock market crash and even faster rebound. Renaissance now finds itself in a position unlike any other in its near 40-year history: Trying to convince investors who once clamored to get into its funds that it’s still worth their money, and can be trusted to deliver market-beating returns.
ECB's Largarde Sees Significant Economic Risk From Resurgent Virus
Brief: European Central Bank President Christine Lagarde pledged monetary support for the economy amid extended coronavirus lockdowns and said governments must do the same. “The renewed surge in Covid-19 cases, the mutations in the virus and the strict containment measures are a significant downside risk to euro-area economic activity,” she told European Parliament lawmakers on Monday. “It remains crucial that monetary and fiscal policy continue to work hand in hand. Fiscal policy -– both at the national and at the European level -– remains crucial to bolster the recovery.” While the outlook is highly uncertain, the ECB chief noted that the start of vaccination campaigns across the euro area “provides the eagerly awaited light at the end of the tunnel.”
Six Hedge Funds, Nine Brokers, and Thirteen Stocks Added to Robinhood Class Action Law Suit
Brief: A class action lawsuit filed in California Southern District Court on 28 January, 2021 has been amended to include six hedge fund companies worth billions of dollars, a total of ten online brokers who manipulated the stock market, and the thirteen stocks involved. The various brokers and hedge funds allegedly conspired together to knowingly deprive retail investors of the ability to invest in the open market during an unprecedented stock rise, in order to benefit the hedge fund companies, such as Citadel, Melvin Capital, and Maple Lane Capital. The lawsuit alleges that the online brokers involved froze the everyday investors out to enable the hedge funds to stop losing money when the stocks rose in value. The lawsuit continues to allege that Robinhood and nine other online brokers failed to provide duty of care to their customers and that they purposefully harmed their customers positions in GameStop Corp (NYSE: GME) and twelve other stocks, such as Blackberry, LTD (NYSE: BB), AMC Entertainment Holdings Inc. (NYSE: AMC), Nokia Oyj (NYSE: NOK), Koss Corporation (NYSE: KOSS), and Naked Brand Group Ltd (NYSE: NAKD). The lawsuit is also alleging that Robinhood was recently fined USD1.5 million by the SEC, and a monitor has been assigned to watch their activities closely.
Equity Funds' Year-End Inflows "Evaporate" as January Pandemic Surge Curbs Investor Risk Appetite
Brief: Investors pulled back from equity funds in January, with appetite for risk assets dampening as global coronavirus cases registered a post-holiday surge. Funds network Calastone found that December’s vaccine-fuelled inflows to equity funds “evaporated” in January, with net monthly inflows falling 97.5 per cent month-on-month to just GBP64.6 million. Total trading volumes in this period exceeded GBP21 billion. Heavy outflows of GBP965 million were dealt to active equity funds that lacked an ESG mandate, causing them to lose almost all of the GBP1 billion in new capital that they had gained in December. “The euphoria that characterised the huge inflows to equity funds in the last few weeks of 2020, including even unloved traditional active funds, dissipated with the cold light of the post-holiday hangover,” says Edward Glyn, head of global markets at Calastone. “The pandemic has increased in intensity in almost all parts of the globe, causing stock markets to falter and investors to curb their enthusiasm for equities.”
Hedge Funds Bet On Oil's 'Big Comeback' After Pandemic Hobbles Producers
Brief: Hedge funds are turning bullish on oil once again, betting the pandemic and investors’ environmental focus has severely damaged companies’ ability to ramp up production. Such limitations on supply would push prices to multi-year highs and keep them there for two years or more, several hedge funds said. The view is a reversal for hedge funds, which shorted the oil sector in the lead-up to global shutdowns, landing energy focused hedge funds gains of 26.8% in 2020, according to data from eVestment. By virtue of their fast-moving strategies, hedge funds are quick to spot new trends. Global oil benchmark Brent has jumped 59% since early November when news of successful vaccines emerged, after COVID-19 travel curbs and lockdowns last year hammered fuel demand and collapsed oil prices. Last week it hit pre-pandemic levels close to $60 a barrel.
How Face-to-Face Meetings Pay Off
Brief: It’s been almost a year since in-person meetings were wiped from the calendar and replaced with all-virtual interactions. While investors and other professionals have since adapted to the efficiency of Zoom and other video platforms, research shows that physical meetings were worth the extra time and money for fund managers. Meetings between portfolio managers and company leaders were found to predict higher investment returns in a recent paper by researchers at the Massachusetts Institute of Technology, China Investment Corp., and Remin University of China. The study, which examined investor meetings with firms listed on the Shenzhen Stock Exchange in China — where companies are required to disclose such meetings — found that a higher number of face-to-face meetings were tied to outperformance of about 70 to 100 basis points per month. According to authors Eric So of MIT, Rongfei Wang of CIC, and Remin University professor Ran Zhang, the results likely stem from investors allocating more time and resources to meetings with firms that they perceive to be undervalued.
