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Our briefing for Monday March 22, 2021:
Mar 22, 2021 3:28:03 PM
- In the United States, the latest data shows new COVID-19 cases rose 5% last week to 394,000, the first increase after declining for nine straight weeks. With the rising numbers, the White House is calling on governors, as well as the private sector, to maintain or reimpose coronavirus restrictions. However, it might be too late in that regard, with some states already lifting restrictions on restaurant capacity and other retail businesses in recent weeks and others going as far as relaxing mask mandates. Senior COVID-19 adviser Andy Slavitt reiterated that the White House believes “it’s a mistake to get rid of mask mandates” and that the administration is doing “concerted” outreach to the private sector.
- In Canada, the vaccination drive is expected to gear up this week as the country’s health agency prepares to accept delivery of the largest number of doses since their launch of the immunization effort. Nearly 1.2 million doses of the Pfizer vaccine, along with 846,000 doses of the Moderna shot are expected to arrive this week, with at least one million doses of the Pfizer vaccine being shipped per week for the foreseeable future. The uptick in vaccines comes on news late last week that Canada was looking to finalize a deal with the United States to see a shipment of 1.5 doses of the Oxford-AstraZeneca vaccine before the end of March.
- United Kingdom Prime Minister Boris Johnson tried to play down fears of a vaccine war with the European Union (EU) while admitting that the country will likely be affected by a third wave of the virus. Prime Minister Johnson said that he expects the latest wave in the EU to “wash up on our shores as well,” but said the government still planned to “bash on” with the road map out of lockdown already set out. The prime minister also added the need for international cooperation on vaccines as the EU escalated their language on threatening to block vaccine exports to the UK due to AstraZeneca not fulfilling contractual obligations to supply the bloc. Johnson is expected to call EU leaders this week and urge them to dismiss the proposal.
- Pandemic-weary Germans received some bad news on Monday with Chancellor Angela Merkel and regional leaders agreeing to an extension on current coronavirus restrictions. Chancellor Merkel and Germany’s 16 state leaders decided to prolong coronavirus restrictions until April 18th after contagion rates have nearly doubled in the past month. Restrictions in place include a partial closing of non-essential stores, along with shutdowns of hotels, restaurants, gyms and cultural venues. Chancellor Merkel and regional officials agreed to reconvene on April 12th to discuss the next steps, according to sources.
- The United Arab Emirates (UAE) are expanding their COVID-19 vaccination program after having covered the majority of at-risk citizens. Over the weekend, state-run media, citing the Ministry of Health, said those eligible for vaccination, including citizens and residents aged 16 and above, can now get inoculated for free at any of the 205 vaccination locations. The UAE have administered more than 7 million vaccine doses to its population of about 10 million.
- Australia is prepared to ramp up its vaccination drive this week, but mother nature may have other plans. The country’s largest state – New South Wales - has been hammered by heavy rains – causing the government to declare many areas a natural disaster in what is being called ‘once in 100 years’ floods. Finance Minister Simon Birmingham made the rounds on media shows over the weekend stating the weather is likely to cause disruptions to freight and logistic services across the state with vaccine deliveries likely to be impacted. Starting on Monday, anyone aged 70 and above, people with underlying health issues and members of Australia’s indigenous population over 55 years of age– all of these groups accounting for about 6 million people – are now eligible to receive the vaccine.
Covid-19 – Due Diligence And Asset Management
Black Exits Apollo Ahead of Schedule and Cedes Chairman Role
Brief : Leon Black, the Wall Street billionaire who appeared to be a main client of disgraced financier Jeffrey Epstein, is stepping down as chief executive officer of Apollo Global Management Inc. months ahead of schedule. Black’s departure from that role had been announced in January, though the firm said at the time that he would leave by July 1. A statement Monday confirmed his immediate exit from the position as well as the chairmanship he’d been expected to keep. Co-founder Marc Rowan has taken over as CEO, Jay Clayton was named non-executive chairman, and Apollo added two more independent directors to its board, according to the statement. It’s an abrupt turn for Black, 69, a Wall Street legend who built Apollo into one of the most fearsome -- and profitable -- names in American finance. He cited unspecified health issues for himself and his wife in announcing his exit. “Marc has seamlessly transitioned into the CEO role and I am confident Apollo will soar to new heights under his leadership,” Black said in the statement. Black and Apollo have been dealing with the fallout from his extensive links with convicted sex offender Epstein, which brought unprecedented scrutiny and unsettled clients and shareholders.
What We Have Learned in the 12 Months Since ‘the Bottom’
Brief: No one really likes a look back, especially when talking about the stock market. The past is done, it happened, and there’s no money to be made there. The juice to squeeze is the potential, the future, the edge, the unknown. But even though we know how the dice rolled, taking a moment to see whether we’ve learned anything is fair — and may sharpen our abilities for the future. While the future has no obligation to behave like the past, that doesn’t mean it doesn’t have anything to teach. Plus, it’s been a wild 12 months, with a tiny recession, massive government response, and the craziest roller coaster of a chart the S&P 500 has ever seen. DataTrek’s Nicholas Colas, former hedge fund manager, has spent the year writing about the “2009 playbook,” a way of viewing the parallels between 2020-2021 and 2008-2009. For him, the biggest lesson learned was that “every crisis is the same.” “Markets implode, sending a signal to policy makers. Policy makers respond. The size of the response informs the size of the market bounce-back,” Colas said.
Global Equities Stall, Bonds Gain as Europe COVID Cases Rise
Brief: Global equities stalled and safe haven assets such as U.S. Treasuries rallied Monday as investors weighed rising coronavirus cases in Europe against a break in the recent run-up of bond yields sparked by concerns of higher global inflation. An unsettled day on global markets saw risk assets such as oil and emerging market stocks rally alongside safe havens such as Treasuries, while Turkish assets took a beating after a shock weekend decision to replace the country’s hawkish central bank governor. A third wave of COVID-19 across Europe due to highly contagious coronavirus variants is increasing concerns of another round of economic restrictions, with Paris going into a four-week lockdown late last week. “The number of new COVID-19 cases is rising rapidly, and an extension of the lockdown inevitable for many European countries. No one will be surprised by such a decision,” said Milan Cutkovic, market analyst at Axi.
Nonprofit Investors Cautious About Stock Market in 2021, but Confident in Long-Term Prospects
Brief: Commonfund, a prominent investment manager for nonprofit institutions, has released the results of its survey of nearly 300 sophisticated institutional investors from endowments, foundations, healthcare organisations, family offices and public pensions in attendance at the recent 23rd Annual Commonfund Forum. Investors attending the conference represented USD1.1 trillion in total assets. The survey results underscore the themes that drove discussion at the event, including the dual-track economic recovery, ESG and environmentally sustainable investments, and the evolving opportunity set in private capital. When asked about their expectations for US stock market returns in 2021 versus the 10-year average annual return of 13.6 per cent for the S&P 500 Index, the majority (58 per cent) believe this year’s returns will be lower than average, while just 10 per cent expect that they will be higher. These investors are similarly apprehensive about the US economic recovery, with 76 per cent of respondents ranking the prolonged impact of Covid-19 among their top three concerns for 2021, followed by bubbles/narrowness of stock market valuations (60 per cent) and the expanding US deficit (5 per cent).
U.S. Air Travelers Top 1.5 Million for First Time Since March 2020
Brief: The number of U.S. air passengers screened topped 1.5 million Sunday for the first time since March 2020, as air travel continues to rebound from a pandemic-related drop, the U.S. Transportation Security Administration (TSA) said Monday. COVID-19 devastated air travel demand, with U.S. airline passengers down 60% in 2020. But with a growing number of Americans getting vaccinated, demand and advanced bookings have started to rise in recent weeks. TSA said it screened 1.54 million people Sunday, the highest single day since March 13, 2020 and the 11th consecutive day screening volume exceeding 1 million per day. Screening refers to security checks on passengers entering airports. Still, U.S. air travel demand was down Sunday about 30% versus pre-COVID 19 levels. International and business travel demand both still remain weak. For the last week, trade group Airlines for America said passenger demand was down 47% over pre-pandemic levels, while international travel demand was down 68%. The United States bars most non-U.S. citizens from travel who have been in Brazil, South Africa, China and most of Europe and many countries still restrict entry by Americans.
Pandemic Puts Rocket Under Healthcare Assets as Investors Scramble for Foothold
Brief: The global pandemic has placed health and wellbeing at the forefront of everyone’s minds, leading to a near-explosion in demand for healthcare property assets as investors and developers scramble to get a foothold in the sector. The search for yield is also driving infrastructure investors to expand beyond typical core assets into capital-heavy healthcare assets such as hospitals and diagnostic imaging. Healthcare assets share many characteristics with core infrastructure assets, particularly if investors think outside the box in relation to barriers to entry. Major listed players in the sector include Dexus, Centuria, HomeCo, Elanor Investments and Charter Hall, while QIC has teamed up with Nexus and the Singaporean sovereign fund GIC has joined forces with NorthWest Healthcare Properties. Andrew Hemming, managing director of the $1 billion Centuria Healthcare fund, said the scalable and quality assets now available to seed the funds and high-quality developments had underpinned the demand for the sector. Mr Hemming said the arrival of COVID-19, the vaccine rollout and the need for preventative medical care were also catalysts to investment in the sector.
