Coronavirus Diligence Briefing

• In the midst of the coronavirus pandemic, the United States are dealing with mass protests over the death of George Floyd, an unarmed black man at the hands of four former Minnesota police officers. Health officials are concerned, along with state and city leaders of spreading the coronavirus due to the close contact of the protestors. While many are wearing a mask, as the situation escalates with police and national guard members, health officials fear the use of tear gas and other methods are forcing protestors to cough and sneeze, which could spread the virus. As the unrest grows in America, the tension doesn’t appear to be dissipating anytime soon as United States President Donald Trump told state governors on Monday they must be tougher and use more aggressive tactics on the violent protestors.
  
  
• The World Health Organization (WHO) have called on President Trump to reconsider terminating their relationship with them over the handling of the coronavirus pandemic. On Friday during a news briefing, President Trump announced the United States would end its relationship with the WHO but provided no further details on what that separation would like. “The US government's and its' people's contribution and generosity toward global health over many decades has been immense, and it has made a great difference in public health all around the world," WHO Director-General Tedros Adhanom Ghebreyesus said. "It is WHO's wish for this collaboration to continue."
  
  
• Canadian Prime Minister Justin Trudeau said the federal government will be accelerating its plan of delivering infrastructure funding to cities who badly need it after suffering a hit from the coronavirus pandemic. Prime Minister Trudeau said $2.2 billion in annual infrastructure will be delivered in one payment this month to give municipalities earlier access to the funds instead of waiting on multiple payments. Government opposition have said the help is too little too late, and municipalities are only receiving money they were entitled too, not any additional help in operating shortfalls.
  
  
• Health officials in the United Kingdom have told Prime Minister Boris Johnson he has eased the coronavirus restrictions too soon in the country, which will risk a spike in infections. As of Monday, some school classes were allowed to resume, up to six people can meet outside and two million vulnerable people who were sheltering in place, were also allowed to spend time outdoors. Health officials believe the government doesn’t have a fully functioning tracking system in place to track new outbreaks and media reports showing Britons enjoying the nice weather at beaches, with little social distancing over the weekend, did nothing to ease their concerns.
  
  
• India began loosening some coronavirus-related restrictions on Monday even though the country is experiencing it largest daily increases of COVID-19 cases. Indian’s health authorities said close to 8,400 cases were recorded in back-to-back days. The country will shorten the nationwide curfew and allow some states and territories to decide if they want to resume intrastate and interstate travel. The first phase of India’s three-part reopening formally begins on June 8^th.
  
  
• Familiar traffic jams and crowds of commuters greeted those in the Philippine capital of Manila as one of the world’s longest lockdown restrictions was lifted. Public transportation could only carry a fraction of the people they normally could due to social distancing measures, which meant commuters had wait for hours to catch a ride. Police have warned citizens they will go after violators who don’t wear face masks, or don’t observe social distancing.
  
  
• In south Australia further restrictions have been eased as some business will be allowed to open their doors for the first time in more than two months. Australians will be allowed to return to the gym, go to the movies and have a seat at the bar, but capacity limits are still in place. For instance, a maximum of 80 people are allowed inside a gym and pubs in New South Wales can have up to 50 guests, instead of 10.

Covid-19 – Due Diligence And Asset Management

‘Appalled’ – Here’s What Wall Street CEOs are Saying about the Killing of George Floyd and Protests Rocking US Cities

Brief: Wall Street CEOs expressed horror, anger and empathy in staff emails and messages posted to social media as protests continued to roil U.S. cities in the week after the death of George Floyd in Minneapolis. The May 25 death of Floyd, who had been handcuffed when a police officer kneeled on his neck for more than eight minutes, sparked introspection and calls to fight racism by the biggest American financial firms. Floyd’s death followed the recent deaths of other black citizens including Ahmaud Arbery in Georgia and Breonna Taylor in Kentucky. Here’s what they said…

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Wall Street and Fed Fly Blind as Coronavirus upends Annual Stress Tests

Brief: U.S. financial regulators, banks and their investors will get their first glimpse into the health of the nation’s banking system as it confronts soaring corporate and consumer defaults in the economic crisis sparked by the novel coronavirus. And no-one, including the U.S. Federal Reserve which sets the annual bank “stress test” exams, has a clue what to expect. “That is the $100,000 question. Actually, it’s much bigger than that and I am sure the Fed is working hard to get it right. We’re curious, and we don’t have clarity,” said Kevin Fromer, CEO of the Financial Services Forum, which represents the biggest banks in the U.S. That could mean banks may be on the hook for billions more in capital than they had anticipated, which could ultimately force them to slash dividends, slim down their balance sheets or reduce lending.

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Pinto Endured Lonely Weeks Co-Running JPMorgan as World Lurched

Brief: Daniel Pinto checked into a hotel in midtown Manhattan around 2 a.m. on a Friday in early March, hoping to get a little rest after an epically hard day. Things were about to get much worse. His slog that day had begun in London with a routine call with his boss, JPMorgan Chase & Co. Chief Executive Officer Jamie Dimon. But just a few hours later Dimon was rushed into emergency heart surgery, and the board named Pinto — who oversees the firm’s Wall Street operations — to temporarily run the bank alongside Gordon Smith, the head of its consumer business. Pinto flew to New York for what he thought would be a brief stay. Then markets began panicking over the coronavirus pandemic. He didn’t check out until a month later. “I’ve seen crises my whole life,” Pinto said in an interview. Yet “we haven’t seen a crisis of this magnitude. It’s probably short-lived but very deep, and it’s everywhere around the world.”

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Howard Marks: Get Used to Uncertainty

Brief: When will the Covid-19 pandemic end? What’s going to happen to the economy? Investors have a lot of questions about the future — but no one, according to Howard Marks, has the answers. In his most recent client memo, the Oaktree Capital chairman addressed the current state of uncertainty and what he described as the “futility of forecasting,” arguing that not even expertise in a given field necessarily equips a person to predict what will happen.  It’s an argument the credit investor has made before, including in his last missive to clients in early May. In this newest letter, released publicly on Thursday, Marks explained that forecasting is impossible because the future is path-dependent — in other words, whatever happens between now and then can affect the ultimate outcome. “Not only how will the virus behave, morph, travel, react to warm weather and infect, but also how fast will we reopen the economy, how will people behave when we reopen it, and what will the virus do at that time?” he wrote.

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Private Equity Firms and Investors Overcome Covid-19 Fundraising Hurdles

Brief: Increased information flow, more transparency and informal settings have mitigated a lack of in-person meetings as investors and fund managers find ways to overcome roadblocks resulting from the coronavirus pandemic. Face-to-face meetings, a traditional linchpin in the process of checking out fund managers before investors make commitments, have been prevented by government restrictions aimed at reining in the pandemic. Investors, placement agents and fund managers say virtual meetings using video conferencing and presentations using other technologies have kept fundraising largely on track. In addition, the adaptations often lead general partners to offer greater stores of information on investments, returns, deals in the pipeline and strategy to prospective limited partners, helping to compensate for the lack of in-person visits and to increase investor confidence. “I had never had the opportunity to see these general partners in a time of stress, how on top they are of what private equity can do with and for their portfolio companies,” said a limited partner who is considering a follow-up capital commitment with a fund manager.

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