.png?width=200&height=78&name=CH%20Diligence%20(thicker%20line).png "CH Diligence (thicker line).png")
Our briefing for Thursday April 2, 2020:
Apr 2, 2020 3:58:49 PM
- In the United States, a new record of 6.6 million Americans have filed for unemployment benefits in the last week. This shattered the record that was set only a week prior of 3.28 million. According to NBC News, the 6.6 million is actually a low number and could be much higher due to many applicants being unable to file a claim as state labour departments are overwhelmed.
- As Canada has eclipsed more than 10,000 cases of COVID-19, Prime Minister Justin Trudeau again pleaded with Canadians to stay home. Multiple media reports have noted some citizens removing barriers of banned parks, sporting areas and continue to ignore social distancing measures outside, and in other public places, such as grocery stores.
- The United Kingdom’s health secretary has committed to a new target of 100,000 tests a day by the end of this month for either current infection, or for the antibodies which show immunity. The country currently only tests 10,000 people per day while Germany has been testing about 500,000 per week.
- Elsewhere in Europe, the number of deaths continue to rise. Spain has set another record for their most deaths in a 24-hour time span with 950 succumbing to the virus. Their total death toll is now over 10,000.
- In France, the country now joins Italy, Spain and the United States as the fourth country to have at least 4,000 deaths due to the coronavirus and a fifth of all private sector employees are now seeking temporary unemployment benefits.
- China responded to a Bloomberg article stating the country was concealing their true coronavirus numbers as a “despicable attempt to put political interests above human life.”
- During a television address on Wednesday, Philippine President Rodrigo Duterte warned its citizens not to cause any trouble during their lockdown and said anyone abusing medical workers could face the following: "My orders to the police and military ... if there is trouble and there's an occasion that they fight back and your lives are in danger, shoot them dead. Is that understood? Dead. Instead of causing trouble, I will bury you." Duterte’s chilling comments came after media reports of disturbances and several arrests in the poorer areas of Manila as people protested about insufficient government food aid.
Covid-19 – Due Diligence And Asset Management
JPMorgan CEO Jamie Dimon Back at Work After Heart Surgery
Brief: JPMorgan Chase & Co (JPM.N) Chief Executive Officer Jamie Dimon has returned to lead the largest U.S bank, after recovering from recent heart surgery, according to an internal memo to employees seen by Reuters. Dimon, who is working remotely due to the widespread lockdown caused by the coronavirus outbreak, had an emergency heart surgery on March 5 to repair a tear to his aorta. In an email to employees on Thursday, Dimon said he was “happy to be back to work this week”. “I have been recuperating well and getting stronger every day,” said Dimon, who is widely seen as the face of the U.S. banking industry.
Starboard Moves Ahead with GCP Proxy Fight Despite Outbreak
Brief: Starboard Value is pushing ahead with its second proxy fight since the outbreak of the coronavirus, arguing its board nominees for GCP Applied Technologies Inc. would be better able to navigate the company through the crisis. The New York-based hedge fund run by Jeff Smith, which owns 9% of GCP, has nominated eight directors to take control of the chemical maker’s board. It plans to push ahead with the fight because it believes its slate of directors have the right skills to turn around the company, according to a regulatory filing Thursday. “We recognize the Covid-19 crisis has created a difficult environment for many companies,” Starboard Managing Member Peter Feld said in a letter to shareholders. “GCP is no different and needs strong leadership and oversight during these challenging times. We believe the nominees we have put forth are uniquely capable to help govern the company through and after this crisis.”
One Hedge Fund has Surged 36% This Year by Betting Against Cruise Lines and Airlines Depleted by Coronavirus
Brief: Amid a major market rout spurred by the coronavirus pandemic, one hedge fund has had outsized returns betting against companies hit hardest. Valiant Capital Management led by Chris Hansen has gained 36% year-to-date through the end of March, before fees, The Wall Street Journal's Juliet Chung reported Thursday, citing people familiar with the firm. In the same timeframe, US stocks have tanked — the Dow Jones Industrial Average lost 23%, its worst first quarter ever. The S&P 500 lost about 20%. The $1.4 billion fund was able to profit in the wreckage by placing strategic bets against leveraged companies that it saw being hit the hardest by the coronavirus outbreak. The hedge fund shorted stocks of cruise lines, international airlines, and travel companies, according to the report.
Global Economic Recovery Possible “Within Six Months”
Brief: It could take up to six months for the global economy to recover from the downturn caused by the coronavirus, a leading market commentator has warned. But a recovery would only take place on two conditions: if mass testing of the virus is introduced, and governments guarantee to support demand, according to Nigel Green, chief executive of financial advisory firm deVere Group. His prediction comes the day after the United Nations released its latest trade report, according to which the world economy will go into recession this year with a predicted loss of global income of trillions of dollars.
The Asset Managers Most at Risk of Hemorrhaging Assets
Brief: Traditional asset management firms are expected to lose around a third of their assets under management as a result of the coronavirus pandemic, according to Fitch Ratings. The ratings agency projected an average decline in assets of between 29.9 percent and 36.9 percent for large, publicly traded U.S. firms, due to a combination of declining asset prices, fee pressures, and outflows. AllianceBernstein was projected to be the worst hit of the peer group analyzed by Fitch, with an expected AUM decline of 33.8 percent in the ratings agency’s best-case scenario.
Howard Marks Warns Economy Could Contract at Record Rate
Brief: Oaktree Capital founder Howard Marks believes the coronavirus pandemic could have a “much wider” range of negative outcomes than the 2008 financial crisis.In a newmemooutlining the potential economic repercussions associated with the virus, Marks sought to determine whether asset prices had fallen “appropriately, too much or too little” over the last few weeks. “In the last six weeks the markets have seen the best of times and the worst of times,” the Oaktree co-chairman wrote in the memo, released Tuesday evening.
