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Our briefing for Thursday April 30, 2020:
Apr 30, 2020 3:51:57 PM
- In the United States, almost one in five Americans have filed for unemployment benefits in the last six weeks. The Department of Labor released their latest numbers with 3.8 million Americans filing benefits claims in the last week, which brings the overall total to 30.3 million. The 30+ million represents 18.6 of the country’s labor force. CNN is reporting 31 of America’s 50 states will look to partially reopen over the next few days.
- United Kingdom Prime Minister Boris Johnson announced in a news briefing on Thursday that the government would release their plan to lead the country out of lockdown sometime next week. Johnson also confirmed the country was past its peak of the coronavirus outbreak but cautioned he would not risk the prospects of the country by easing restrictions too early and causing a second peak. The United Kingdom have over 171,000 confirmed coronavirus cases and close to 27,000 deaths.
- Canada’s parliamentary budget officer announced the federal deficit for the year could be over $250 billion due to the coronavirus. The Liberal government has spent $146 billion to combat the coronavirus so far. Prime Minister Justin Trudeau defended the spending in a media briefing on Thursday saying the investments need to be made now to ensure an economic recovery as quickly as possible.
- The European Union (EU) economy shrank by 3.5% in the first quarter of 2020, the worst quarterly drop since the EU started collecting data since 1995. In a move to counter the drastic decline, the European Central Bank (ECB) said it would lend money at minus one per cent to banks and launched a fresh round of unconditional repurchase operations to pump liquidity into the financial system.
- Russia’s Prime Minister Mikhail Mishustin has tested positive for the coronavirus. Mishustin proposed that his deputy Andrey Belousov become acting Prime Minister as he undergoes self-isolation rules. President Vladimir Putin signed a decree appointing Belousov as acting Prime Minister.
- Bloomberg is reporting one in five cases of coronavirus infections in the Philippines are either doctors or nurses. The country’s health care system has been overwhelmed due to the virus with a backlog in testing happening in mid-April because more than 40 staff in their main laboratory became infected. As of Wednesday, the confirmed cases of the coronavirus in the Philippines had risen to more than 8,000.
- The BBC is reporting on Japan’s bizarre response to the coronavirus pandemic. The country is not in a lockdown and very little testing has been completed. The report takes Tokyo as an example. The city of 9 million people has tested less than 11,000 since February with just over 4,000 of those testing positive. The official guidelines for doctors say they should only recommend a test if the patient has pneumonia. The few rules the country does have in place, such as a stay-at-home order, people seem to be ignoring. Wednesday marked the first day of the Golden Week holidays that run through May 5th in the country. Many people continue to dine out, picnic in parks and crowd grocery stores with little regard for social distancing.
Covid-19 – Due Diligence And Asset Management
Multi-Asset Fund Fulcrum ‘Taking on More Risk than Normal’ to Ride Virus Volatility
Brief: Fulcrum Asset Management, the multi-asset £5bn investment manager co-founded by former Goldman Sachs partners Gavyn Davies and Andrew Stevens, is reaping gains from riding the coronavirus-driven market turbulence. Fulcrum's flagship Diversified Absolute Return fund was up 7.5% until 20 April, according to a person familiar with the situation. While much of that gain came off the spike in volatility in March, Fulcrum CIO Suhail Shaikh told Financial News it capitalised on active "tailwind" hedging choices which included so-called dispersion strategies, or capitalising on differences in volatility between an index and index component stocks. The fund is also trading in gold and currencies.
Amundi Suffers ‘Crisis-Related’ Outflows During First Quarter
Brief: Amundi, Europe's largest asset manager, said its assets under management dropped by more than 7% during the first three months of the year due to onset of volatile markets prompted by the Covid-19 pandemic. According to its 30 April first quarter results, assets under management at the Paris-headquartered fund manager fell to €1.53tn at the end of March, down from €1.65tn at the end of last year — a drop which Amundi attributed to “a significant negative market effect at the end of March”. Outflows were heaviest across Amundi's institutional and corporate clients, which pulled a net €15.4bn during the quarter in what chief executive Yves Perrier called “crisis-related outflows”. However, more than €12bn of new money coming from retail clients and Amundi’s joint ventures helped limit total net outflows across the group to €3.2bn between January and the end of March.
Billionaire Sells More Lansdown Stock to ‘Spread the Risk’
Brief: Stephen Lansdown is paring his stake in Hargreaves Lansdown Plc, the financial firm he co-founded with fellow British billionaire Peter Hargreaves, to support other investments and give him the flexibility to pursue new ones. “Markets are defying a little bit of gravity at the moment, so I thought if I could see the opportunity to take some off it the table I would -- to spread the risk,” Lansdown, 67, said in a phone interview, referring to the sharp rebound in equities from their March lows. “We’re not out of the woods yet and won’t be for a long time, and you need to keep your powder dry to support what you’ve got and to take advantage of opportunities. It’s all about positioning.” A Guernsey-based company that Lansdown controls sold 160 million pounds ($202 million) of shares of Hargreaves Lansdown in an accelerated offering through Barclays Plc, according to terms seen by Bloomberg. He has sold more than $550 million of stock over the past five years, leaving him with a 7% stake worth about $600 million.
Goldman Sachs Shareholders Back Executive Pay Packages
Brief: Goldman Sachs Group Inc (GS.N) said on Thursday that 71% of shareholders voted to approve the bank’s executive pay packages, according to preliminary tallies. The vote, taken at the bank’s annual shareholder meeting, is significant, as it comes after the influential proxy adviser Institutional Shareholder Services (ISS) recommended investors cast their votes against the pay of top bank leaders earlier this month. Early in the meeting, which was conducted by conference call online, bank director M. Michele Burns defended the board’s reasoning for executive compensation. The board awarded Chief Executive David Solomon $24.7 million for 2019, a 19.4% raise over his total 2018 pay.
Carlyle Group Reports a Loss, Withdraws Forecasts
Brief: The coronavirus pandemic has hit theCarlyle Grouphard. It reported a first-quarter net loss of $612 million, or $1.76 a share.Carlyle (ticker: CG) reported a profit of $137 million, or $1.18 diluted earnings per share, a year earlier.The Washington, D.C., firm said it posted a loss in revenue of $745.7 million for the period ended in March. In the first quarter of 2019, Carlyle reported nearly $1.1 billion in revenue.The global investment firm declared a quarterly dividend of 25 cents per share. Assets under management were $217 billion, a 3% drop from the fourth quarter and 2% decrease from the same period in 2019. Fee-earning AUM slid 1% to $158 billion, driven by a 6% drop in real assets, which include real estate and natural resources.
Abu Dhabi Shelves Sale of $2bn Private Equity Book due to Coronavirus
Brief: The Abu Dhabi Investment Authority (ADIA) is delaying the sale of $2bn in private-equity fund stakes after the outbreak of the deadly coronavirus. The sovereign wealth fund, which is estimated to have about $580bn under management, was in talks with several investors including money manager Ardian about selling chunks of the portfolio, according to people familiar with the discussions. The market turmoil triggered by the crisis made it difficult for them to agree on how much the stakes were worth, said the people, who asked not to be identified because the talks are private. ADIA plans to restart the sales process in the second half of the year, one of the people said. Spokespeople for ADIA and Ardian declined to comment.
